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As filed with the Securities and Exchange Commission on March 31, 1999
Registration No. 333-18333
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 7 ON FORM S-3 TO
FORM S-1 ON FORM S-3
UNDER
THE SECURITIES ACT OF 1933
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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)
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Approximate date of commencement of proposed sale to the public: As soon
after the effective date of this Registration Statement as is practicable.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _______________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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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.
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LOGO
THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT POINTS THAT YOU SHOULD
KNOW AND CONSIDER BEFORE PURCHASING THE POLARISII VARIABLE ANNUITY. THE ANNUITY
IS MORE FULLY DESCRIBED IN THE PROSPECTUS. PLEASE READ THE PROSPECTUS CAREFULLY.
June 1, 1999
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1. THE POLARISII VARIABLE ANNUITY
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The PolarisII Variable Annuity is a contract between you and Anchor National
Life Insurance Company. It is designed to help you invest on a tax-deferred
basis and meet long-term financial goals, such as retirement funding. Tax
deferral means all your money, including the amount you would otherwise pay in
current income taxes, remains in your contract to generate more earnings. Your
money could grow faster than it would in a comparable taxable investment.
PolarisII offers a diverse selection of money managers and investment options.
You may divide your money among any or all 27 variable portfolios and 7 fixed
account options. To the extent you invest in the variable portfolios, your
investment is not guaranteed. The value of your PolarisII contract can fluctuate
up and down, based on the performance of the underlying investments you select
and you may experience a loss.
The variable portfolios offer professionally managed investment choices with
goals ranging from capital preservation to aggressive growth. Your choices for
the various investment options are found on the next page.
The contract also offers 7 fixed account options, for different time periods.
Each may have a different interest rate. Interest rates are guaranteed by Anchor
National.
Like most annuities, the contract has an accumulation phase and an income phase.
During the accumulation phase, you invest money in your contract. Your earnings
are based on the investment performance of the variable portfolios to which your
money is allocated and/or the interest rate(s) earned on the fixed account
option(s) in which you invest. You may withdraw money from your contract during
the accumulation phase. However, as with other tax-deferred investments, you
will pay taxes on earnings and untaxed contributions when you withdraw them. A
federal tax penalty may apply if you make withdrawals before age 59 1/2.
During the income phase, you may receive income payments from your annuity. Your
income payments may be fixed in dollar amount, vary with investment performance
or a combination of both, depending on where your money is allocated. Among
other factors, the amount of money you are able to accumulate in your contract
during the accumulation phase will affect the amount of your income payments
during the income phase.
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2. INCOME OPTIONS
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You can select from one of five income options:
(1) payments for your lifetime;
(2) payments for your lifetime and your survivor's lifetime;
(3) payments for your lifetime and your survivor's lifetime, but for not less
than 10 or 20 years;
(4) payments for your lifetime, but for not less than 10 or 20 years; and
(5) payments for a specified period of 5 to 30 years.
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
income payment is taxable as income.
In addition to the above income options, you may elect to take income payments
under the income protector feature, subject to the provisions thereof.
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3. PURCHASING A POLARISII VARIABLE
ANNUITY CONTRACT
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You can buy a contract through your financial representative, who can also help
you complete the proper forms. For non-qualified contracts, the minimum initial
purchase payment is $5,000 and subsequent amounts of $500 or more may be added
to your contract at any time during the accumulation phase. For qualified
contracts, the minimum initial purchase payment is $2,000 and subsequent amounts
of $250 or more may be added to your contract at any time during the
accumulation phase.
You may elect to participate in the principal rewards program when you apply for
your contract. Under this program, we add an amount to your contract (an
"initial payment enhancement") each time you invest a purchase payment.
Additionally, we may also pay an amount to your contract at a future date (a
"deferred payment enhancement"). Payment enhancement amounts are calculated as a
percentage of each purchase payment. The principal rewards program may not be
available through your broker-dealer. Please check with your financial
representative regarding availability of this program.
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4. INVESTMENT OPTIONS
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You may allocate money to the following variable portfolios of the Anchor Series
Trust and/or the SunAmerica Series Trust:
ANCHOR SERIES TRUST
MANAGED BY WELLINGTON MANAGEMENT COMPANY, LLP
- Capital Appreciation Portfolio
- Growth Portfolio
- Natural Resources Portfolio
- Government and Quality Bond Portfolio
SUNAMERICA SERIES TRUST
MANAGED BY ALLIANCE CAPITAL MANAGEMENT L.P.
- Global Equities Portfolio
- Alliance Growth Portfolio
- Growth-Income Portfolio
MANAGED BY DAVIS SELECTED ADVISERS, L.P.
- Venture Value Portfolio
- Real Estate Portfolio
MANAGED BY FEDERATED INVESTORS
- Federated Value Portfolio
- Utility Portfolio
- Corporate Bond Portfolio
MANAGED BY GOLDMAN SACHS ASSET MANAGEMENT/ GOLDMAN SACHS ASSET MANAGEMENT
INTERNATIONAL
- Asset Allocation Portfolio
- Global Bond Portfolio
MANAGED BY MASSACHUSETTS FINANCIAL SERVICES COMPANY
- MFS Mid-Cap Growth
- MFS Growth and Income Portfolio
- MFS Total Return Portfolio
MANAGED BY MORGAN STANLEY ASSET MANAGEMENT
- International Diversified Equities Portfolio
- Worldwide High Income Portfolio
MANAGED BY PUTNAM INVESTMENT MANAGEMENT, INC.
- Putnam Growth Portfolio
- International Growth and Income Portfolio
- Emerging Markets Portfolio
MANAGED BY SUNAMERICA ASSET MANAGEMENT CORP.
- Aggressive Growth Portfolio
- "Dogs" of Wall Street Portfolio
- SunAmerica Balanced Portfolio
- High-Yield Bond Portfolio
- Cash Management Portfolio
You may also allocate money to the 1-year fixed account option or the 3, 5, 7
and 10-year market value adjustment ("MVA") fixed account options and, under
certain circumstances, the 6-month and 1-year Dollar Cost Averaging ("DCA")
fixed account options.
The interest rates applicable for these fixed account options may differ from
time to time, however, we will never credit less than a 3% annual effective
rate. Once established, the rate will not change during the selected period.
Your contract value will be adjusted up or down for withdrawals or transfers
from the 3, 5, 7 and 10-year fixed account options prior to the end of the
guarantee period.
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5. EXPENSES
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Each year, we deduct a $35 contract maintenance fee ($30 in North Dakota) from
your contract. We also deduct insurance charges which equal 1.52% annually of
the average daily value of your contract allocated to the variable portfolios.
As with other professionally managed investments, there are investment charges
imposed on contracts with money allocated to the variable portfolios. We
estimate these fees to range from .58 to 1.90.
If you take money out of your contract, you may be assessed a withdrawal charge
which is a percentage of purchase payments. The percentage declines over the
time the money is in the contract. The withdrawal charge schedule also varies
dependent upon whether you elect to participate in the principal rewards program
when you purchase your contract. The two withdrawal charge schedules are as
follows:
WITHDRAWAL CHARGE WITHOUT THE PRINCIPAL REWARDS PROGRAM (SCHEDULE A)
<TABLE>
<CAPTION>
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Year 1 2 3 4 5 6 7 8
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
WITHDRAWAL
CHARGE 7% 6% 5% 4% 3% 2% 1% 0%
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</TABLE>
WITHDRAWAL CHARGE WITH THE PRINCIPAL REWARDS PROGRAM (SCHEDULE B)
<TABLE>
<CAPTION>
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Year 1 2 3 4 5 6 7 8 9 10
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WITHDRAWAL
CHARGE 9% 9% 8% 7% 6% 5% 4% 3% 2% 0%
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</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) applies to
each subsequent transfer.
In a limited number of states, you may also be assessed a state premium tax of
up to 3.5% depending upon the state.
The following chart is designed to help you understand the charges in your
contract. The column "Total Annual Charges" shows the total of the 1.52%
insurance charges, the $35 contract maintenance fee and the investment charges
for each variable portfolio. We converted the contract maintenance fee to a
percentage using an assumed contract size of $40,000. The actual impact of this
charge on your contract may differ from this percentage.
The next two columns show two examples of the charges you would pay under the
contract. The examples assume that you invested $1,000 in a contract which earns
5% annually and that you withdraw your money: (1) at the end of year 1, and (2)
at the end of year 10. The premium tax is assumed to be 0% in both examples.
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<TABLE>
<CAPTION>
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EXAMPLES:
TOTAL EXPENSES
AT END OF
1 YEAR
TOTAL ANNUAL TOTAL ANNUAL WITHOUT/WITH TOTAL EXPENSES
INSURANCE INVESTMENT TOTAL ANNUAL PRINCIPAL AT END OF
ANCHOR SERIES TRUST PORTFOLIO CHARGES CHARGES CHARGES REWARDS PROGRAM 10 YEARS
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<S> <C> <C> <C> <C> <C>
Capital Appreciation 1.61% .68% 2.29% $ 93/$ $262
Growth 1.61% .75% 2.36% $ 94/$ $269
Natural Resources 1.61% .88% 2.49% $ 95/$ $282
Government and Quality Bond 1.61% .67% 2.28% $ 93/$ $261
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SUNAMERICA SERIES TRUST PORTFOLIO
Emerging Markets* 1.61% 1.90% 3.51% $105/$ $378
International Diversified
Equities 1.61% 1.26% 2.87% $ 99/$ $319
Global Equities 1.61% .88% 2.49% $ 95/$ $282
International Growth and Income* 1.61% 1.46% 3.07% $101/$ $338
Aggressive Growth* 1.61% .83% 2.44% $ 95/$ $277
MFS Mid-Cap Growth 1.61% 1.00% 2.61% $ 96/$ $294
Real Estate* 1.61% .95% 2.56% $ 96/$ $289
Putnam Growth 1.61% .86% 2.47% $ 95/$ $280
MFS Growth and Income(1) 1.61% .73% 2.34% $ 94/$ $267
Alliance Growth 1.61% .64% 2.25% $ 93/$ $258
"Dogs" of Wall Street* 1.61% .85% 2.46% $ 95/$ $279
Venture Value 1.61% .75% 2.36% $ 94/$ $269
Federated Value* 1.61% .83% 2.44% $ 95/$ $277
Growth-Income 1.61% .60% 2.21% $ 92/$ $254
Utility* 1.61% 1.01% 2.62% $ 96/$ $295
Asset Allocation 1.61% .64% 2.25% $ 93/$ $258
MFS Total Return(2) 1.61% .77% 2.38% $ 94/$ $271
SunAmerica Balanced* 1.61% .78% 2.39% $ 94/$ $272
Worldwide High Income 1.61% 1.08% 2.69% $ 97/$ $302
High-Yield Bond 1.61% .69% 2.30% $ 93/$ $263
Corporate Bond 1.61% .77% 2.38% $ 94/$ $271
Global Bond 1.61% .85% 2.46% $ 95/$ $279
Cash Management 1.61% .58% 2.19% $ 92/$ $252
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</TABLE>
* For these Portfolios, the adviser, SunAmerica Asset Management Corp., has
voluntarily agreed to waive fees or reimburse expenses, if necessary, to
keep operating expenses at or below an established maximum amount. All
waivers or reimbursements may be terminated at any time. For more detailed
information, see Fee Tables and Examples in the prospectus.
(1) Formerly named Growth/Phoenix and managed by Phoenix Investment Counsel,
Inc.
(2) Formerly named Balanced/Phoenix and managed by Phoenix Investment Counsel,
Inc.
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6. TAXES
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Unlike taxable investments where earnings are taxed in the year they are earned,
taxes on amounts earned in a non-qualified contract are deferred until they are
withdrawn. In a qualified contract, all amounts are taxable when they are
withdrawn.
When you begin taking distributions or withdrawals from your contract, earnings
are considered to be taken out first and will be taxed at your ordinary income
rate. You may be subject to a 10% federal tax penalty for distributions or
withdrawals before age 59 1/2.
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7. ACCESS TO YOUR MONEY
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During the first year, you may withdraw free of a withdrawal charge an amount
that is equal to the penalty-free earnings in your contract as of the date you
make the withdrawal or, if you participate in the systematic withdrawal program,
you may withdraw 10% of your total invested amount less any withdrawals made
during the year. The penalty-free earnings amount is calculated by taking the
value of your contract on the day you make the withdrawal and subtracting your
total invested amount. After the first year, your maximum free withdrawal amount
is the greater of: (1) the penalty-free earnings or (2) 10% of your total
invested amount that has been invested for at least one year, less any
withdrawals made during the year. Withdrawals in excess of these limits will be
assessed a withdrawal charge.
If you withdraw your entire contract value, you will not receive the benefit of
any free withdrawal amount. After a purchase payment has been in the contract
for seven years, or nine years if you participate in the principal rewards
program, there are no withdrawal charges on that purchase payment.
<PAGE> 5
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8. PERFORMANCE
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When you invest in the PolarisII Variable Annuity, your money is actually
invested in the underlying portfolios of the Anchor Series Trust and/or the
SunAmerica Series Trust. The value of your annuity will fluctuate depending upon
the investment performance of the portfolio(s) you choose.
The following chart shows total returns for each portfolio for the time periods
shown. These numbers reflect the insurance charges, the contract maintenance fee
and the investment charges. Withdrawal charges are not reflected in the chart.
Past performance is no guarantee of future results.
<TABLE>
<CAPTION>
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ANCHOR SERIES CALENDAR
TRUST PORTFOLIO YEAR 1998
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<S> <C>
Capital Appreciation 20.27%
Growth 26.93%
Natural Resources (18.80)%
Government and Quality Bond 7.42%
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SUNAMERICA SERIES
TRUST PORTFOLIO
Emerging Markets (25.62)%
International Diversified Equities 16.60%
Global Equities 20.86%
International Growth and Income 9.03%
Aggressive Growth 15.55%
MFS Mid-Cap Growth --*
Real Estate (16.76)%
Putnam Growth 32.60%
MFS Growth and Income1 27.22%
Alliance Growth 49.83%
"Dogs" of Wall Street (1.83)%**
Venture Value 11.96%
Federated Value 16.05%
Growth-Income 28.74%
Utility 12.21%
Asset Allocation 1.67%
MFS Total Return2 17.64%
SunAmerica Balanced 22.67%
Worldwide High Income (18.45)%
High-Yield Bond (4.51)%
Corporate Bond 4.31%
Global Bond 9.04%
Cash Management 3.51%
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</TABLE>
* This portfolio was not available for sale during calendar year 1998.
** Inception to 12/31/98.
1 Formerly named Growth/Phoenix and managed by Phoenix Investment Counsel, Inc.
2 Formerly named Balanced/Phoenix and managed by Phoenix Investment Counsel,
Inc.
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9. DEATH BENEFIT
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If you should die during the accumulation phase, your beneficiary will receive a
death benefit. You must select from the two death benefit options described
below at the time you purchase your contract. Once selected, your death benefit
may not be changed. You should discuss with your financial representative the
options available to you and which option is best for you.
OPTION 1 - PURCHASE PAYMENT ACCUMULATION OPTION:
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 withdrawals (and any fees or charges applicable
to such withdrawals), compounded at a 4% annual growth rate until the date
of death (3% growth rate if 70 or older at the time of contract issue) plus
any purchase payments less withdrawals recorded after the date of death (and
any fees or charges applicable to such withdrawals); or
(3) the value of your contract on the seventh contract anniversary, plus any
purchase payments since the seventh anniversary and less any withdrawals
(and any fees or charges applicable to such withdrawals), all compounded at
a 4% annual growth rate until the date of death (3% if 70 or older at the
time of contract issue) plus any purchase payments less withdrawals recorded
after the date of death (and any fees or charges applicable to such
withdrawals).
OPTION 2 - MAXIMUM ANNIVERSARY OPTION:
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 prior to your 81st
birthday. The anniversary value equals the value of your contract on a
contract anniversary plus any purchase payments and less any withdrawals
(and any fees or charges applicable to such withdrawals) since that
anniversary.
If you participate in the principal rewards program and die prior to a deferred
payment enhancement date, we will not allocate the corresponding deferred
payment enhancement(s) to your contract.
If you are age 90 or older at the time of death and selected the option 2 death
benefit, the death benefit will be equal to the value of your contract at the
time we receive satisfactory proof of death.
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10. OTHER INFORMATION
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FREE LOOK: You may cancel your contract within ten days (or longer if required
by your state) by mailing it to our Annuity Service Center. Your contract will
be treated as void on the date we receive it and we will pay you an amount equal
to the value of your contract (unless otherwise required by state law) less any
payment enhancement(s). Its value may be more or less than the money you
initially invested.
PRINCIPAL REWARDS PROGRAM: If elected by you, we add an amount to your contract
(an "initial payment enhancement") each time you submit a purchase payment.
Additionally, we may also add an amount to your contract at a future date (a
"deferred payment enhancement"). Payment enhancement
<PAGE> 6
amounts are calculated as a percentage of your purchase payment amount.
ASSET ALLOCATION REBALANCING: If elected by you, this program seeks to keep your
investment in line with your goals. We will maintain your specified allocation
mix in the variable portfolios and the 1-year fixed account option by
readjusting your money on a calendar quarter, semiannual or annual basis.
SYSTEMATIC WITHDRAWAL PROGRAM: If elected by you, this program allows you to
receive either monthly, quarterly, semiannual or annual checks during the
accumulation phase. Systematic withdrawals may also be electronically
transferred to your bank account. Of course, withdrawals may be taxable and a
10% federal tax penalty may apply if you are under age 59 1/2.
PRINCIPAL ADVANTAGE PROGRAM: If elected by you, this program allows you to
obtain growth potential without any market risk to your principal. We will
guarantee that the portion of your money allocated to the 1, 3, 5, 7 or 10-year
fixed account option will grow to equal your principal investment when it is
allocated in accordance with the program.
DOLLAR COST AVERAGING: If elected by you, this program allows you to invest
gradually in the variable portfolios from any of the variable portfolios or the
1-year fixed account option. You may also invest in the variable portfolios from
the 6-month DCA fixed account option or the 1-year DCA fixed account option if
you do not participate in the principal rewards program..
AUTOMATIC PAYMENT PLAN: You can add to your contract directly from your bank
account with as little as $20 per month.
CONFIRMATIONS AND QUARTERLY STATEMENTS: During the accumulation phase, you will
receive a confirmation of each transaction within your contract. During the
accumulation and income phases, you will receive a statement of your
transactions over the past quarter and a summary of your account values.
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11. INQUIRIES
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If you have questions about your contract or need to make changes, call your
financial representative or contact us at:
Anchor National Life Insurance Company
Annuity Service Center
P.O. Box 54299
Los Angeles, California 90054-0299
Telephone Number: (800) 445-SUN2
If money accompanies your correspondence, you should direct it to:
Anchor National Life Insurance Company
P.O. Box 100330
Pasadena, California 91189-0001
<PAGE> 7
[POLARIS II LOGO]
PROSPECTUS
JUNE 1, 1999
<TABLE>
<S> <C> <C>
Please read this prospectus carefully FLEXIBLE PAYMENT DEFERRED ANNUITY CONTRACTS
before investing and keep it for issued by
future reference. It contains ANCHOR NATIONAL LIFE INSURANCE COMPANY
important information about the in connection with
Polaris(II) Variable Annuity. VARIABLE SEPARATE ACCOUNT
The annuity has 34 investment choices -7 fixed account
To learn more about the annuity options and 27 Variable Portfolios listed below. The 7 fixed
offered by this prospectus, you can account options include specified periods of 1, 3, 5, 7 and
obtain a copy of the Statement of 10 years and DCA accounts for 6-month and 1-year periods.
Additional Information ("SAI") dated The 27 Variable Portfolios are part of the Anchor Series
June 1, 1999. The SAI has been filed Trust or the SunAmerica Series Trust.
with the Securities and Exchange
Commission ("SEC") and is ANCHOR SERIES TRUST:
incorporated by reference into this MANAGED BY WELLINGTON MANAGEMENT COMPANY, LLP
prospectus. The Table of Contents of - Capital Appreciation Portfolio
the SAI appears on page 22 of this - Growth Portfolio
prospectus. For a free copy of the - Natural Resources Portfolio
SAI, call us at (800) 445-SUN2 or - Government and Quality Bond Portfolio
write to us at our Annuity Service
Center, P.O. Box 54299, Los Angeles, SUNAMERICA SERIES TRUST:
California 90054-0299. MANAGED BY ALLIANCE CAPITAL MANAGEMENT L.P.
- Global Equities Portfolio
In addition, the SEC maintains a - Alliance Growth Portfolio
website (http://www.sec.gov) that - Growth-Income Portfolio
contains the SAI, materials MANAGED BY DAVIS SELECTED ADVISERS, L.P.
incorporated by reference and other - Venture Value Portfolio
information filed electronically with - Real Estate Portfolio
the SEC by Anchor National. MANAGED BY FEDERATED INVESTORS
- Federated Value Portfolio
ANNUITIES INVOLVE RISKS, INCLUDING - Utility Portfolio
POSSIBLE LOSS OF PRINCIPAL, AND ARE - Corporate Bond Portfolio
NOT A DEPOSIT OR OBLIGATION OF, OR MANAGED BY GOLDMAN SACHS ASSET MANAGEMENT/
GUARANTEED OR ENDORSED BY, ANY BANK. GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL
THEY ARE NOT FEDERALLY INSURED BY THE - Asset Allocation Portfolio
FEDERAL DEPOSIT INSURANCE - Global Bond Portfolio
CORPORATION, THE FEDERAL RESERVE MANAGED BY MASSACHUSETTS FINANCIAL SERVICES COMPANY
BOARD OR ANY OTHER AGENCY. - MFS Mid-Cap Growth
- MFS Growth and Income Portfolio
- MFS Total Return Portfolio
MANAGED BY MORGAN STANLEY ASSET MANAGEMENT
- International Diversified Equities Portfolio
- Worldwide High Income Portfolio
MANAGED BY PUTNAM INVESTMENT MANAGEMENT, INC.
- Putnam Growth Portfolio
- International Growth and Income Portfolio
- Emerging Markets Portfolio
MANAGED BY SUNAMERICA ASSET MANAGEMENT CORP.
- Aggressive Growth Portfolio
- "Dogs" of Wall Street Portfolio
- SunAmerica Balanced Portfolio
- High-Yield Bond Portfolio
- Cash Management Portfolio
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE> 8
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
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Anchor National's Annual Report on Form 10-K for the year ended September 30,
1998, and its quarterly report on Form 10-Q for the quarter ended December 31,
1998 are incorporated herein by reference. In addition, Anchor National filed
three reports on Form 8-K on January 14 and 15 and March 12, 1999. These reports
are also incorporated herein by reference.
All documents or reports filed by Anchor National under Section 13(a), 13(c),
14, or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") after the effective date of this prospectus shall also be incorporated by
reference. Statements contained in this prospectus and subsequently filed
documents which are incorporated by reference or deemed to be incorporated by
reference are deemed to modify or supersede documents incorporated herein by
reference.
Anchor National files its Exchange Act documents and reports, including its
annual and quarterly reports on Form 10-K and Form 10-Q, electronically pursuant
to EDGAR under CIK No. 0000006342.
Anchor National is subject to the informational requirements of the Securities
and Exchange Act of 1934 (as amended). We file reports and other information
with the SEC to meet those requirements. You can inspect and copy this
information at SEC public facilities at the following locations:
WASHINGTON, DISTRICT OF COLUMBIA
450 Fifth Street, N.W., Room 1024
Washington, D.C. 20549
CHICAGO, ILLINOIS
500 West Madison Street
Chicago, IL 60661
NEW YORK, NEW YORK
7 World Trade Center, 13th Fl.
New York, NY 10048
To obtain copies by mail 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.
Anchor National will provide without charge to each person to whom this
prospectus is delivered, upon written or oral request, a copy of the above
documents incorporated herein by reference. Requests for these documents should
be directed to Anchor National's Annuity Service Center, as follows:
Anchor National Life Insurance Company
Annuity Service Center
P.O. Box 54299
Los Angeles, California 90054-0299
Telephone Number: (800) 445-SUN2
- ----------------------------------------------------------------
- ----------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Indemnification for liabilities arising under the Securities Act of 1933 (the
"Act") is provided to Anchor National's officers, directors and controlling
persons. The SEC has advised Anchor National that it believes such
indemnification is against public policy under the Act and unenforceable. If a
claim for indemnification against such liabilities (other than for Anchor
National's payment of expenses incurred or paid by its directors, officers or
controlling persons in the successful defense of any legal action) is asserted
by a director, officer or controlling person of Anchor National in connection
with the securities registered under this prospectus, Anchor National will
submit to a court with jurisdiction to determine whether the indemnification is
against public policy under the Act. Anchor National will be governed by final
judgment of the issue. However, if in the opinion of Anchor National's counsel,
this issue has been determined by controlling precedent, Anchor National need
not submit the issue to a court for determination.
2
<PAGE> 9
<TABLE>
<S> <C> <C>
------------------------------------------------------------------
------------------------------------------------------------------
TABLE OF CONTENTS
------------------------------------------------------------------
------------------------------------------------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............. 2
SECURITIES AND EXCHANGE COMMISSION POSITION ON
INDEMNIFICATION........................................... 2
GLOSSARY.................................................... 3
FEE TABLES.................................................. 4
Owner Transaction Expenses............................ 4
Annual Separate Account Expenses...................... 4
Portfolio Expenses.................................... 4
EXAMPLES.................................................... 5
THE POLARIS(II) VARIABLE ANNUITY............................ 6
PURCHASING A POLARIS(II) VARIABLE ANNUITY................... 6
Allocation of Purchase Payments....................... 7
Principal Rewards Program............................. 8
Accumulation Units.................................... 8
Free Look............................................. 9
INVESTMENT OPTIONS.......................................... 9
Variable Portfolios................................... 9
Anchor Series Trust................................... 9
SunAmerica Series Trust............................... 9
Fixed Account Options................................. 10
Market Value Adjustment ("MVA")....................... 10
Transfers During the Accumulation Phase............... 11
Dollar Cost Averaging................................. 11
Asset Allocation Rebalancing.......................... 12
Principal Advantage Program........................... 12
Voting Rights......................................... 13
Substitution.......................................... 13
ACCESS TO YOUR MONEY........................................ 13
Systematic Withdrawal Program......................... 13
Nursing Home Waiver................................... 14
Minimum Contract Value................................ 14
DEATH BENEFIT............................................... 14
EXPENSES.................................................... 15
Insurance Charges..................................... 15
Withdrawal Charges.................................... 15
Investment Charges.................................... 15
Contract Maintenance Fee.............................. 16
Transfer Fee.......................................... 16
Premium Tax........................................... 16
Income Taxes.......................................... 16
Reduction or Elimination of Charges and Expenses, and
Additional Amounts Credited........................... 16
INCOME OPTIONS.............................................. 16
Annuity Date.......................................... 16
Income Options........................................ 16
Fixed or Variable Income Payments..................... 17
Income Payments....................................... 17
Transfers During the Income Phase..................... 17
Deferment of Payments................................. 17
The Income Protector Feature.......................... 17
TAXES....................................................... 19
Annuity Contracts in General.......................... 19
Tax Treatment of Distributions - Non-Qualified
Contracts............................................. 19
Tax Treatment of Distributions - Qualified
Contracts............................................. 19
Minimum Distributions................................. 20
Diversification....................................... 20
PERFORMANCE................................................. 20
OTHER INFORMATION........................................... 20
Anchor National....................................... 20
The Separate Account.................................. 21
The General Account................................... 21
Distribution of the Contract.......................... 21
Administration........................................ 21
Year 2000............................................. 21
Legal Proceedings..................................... 22
Ownership............................................. 22
Custodian............................................. 22
Independent Accountants............................... 22
Legal Matters......................................... 22
Registration Statement................................ 22
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION....
22
APPENDIX A -- CONDENSED FINANCIAL INFORMATION............... A-1
APPENDIX B -- MARKET VALUE ADJUSTMENT ("MVA")............... B-1
APPENDIX C -- PREMIUM TAXES................................. C-1
------------------------------------------------------------------
------------------------------------------------------------------
GLOSSARY
------------------------------------------------------------------
------------------------------------------------------------------
We have capitalized some of the technical terms used in this
prospectus. To help you understand these terms, we have defined
them in this glossary.
ACCUMULATION PHASE - The period during which you invest money in
your contract.
ACCUMULATION UNITS - A measurement we use to calculate the value
of the variable portion of your contract during the Accumulation
Phase.
ANNUITANT(S) - The person(s) on whose life (lives) we base income
payments.
ANNUITY DATE - The date on which income payments are to begin, as
selected by you.
ANNUITY UNITS - 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.
COMPANY - Anchor National Life Insurance Company, We, Us, the
insurer which issues this contract.
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").
PAYMENT ENHANCEMENT(S) - The amount(s) allocated to your contract
by us under the Principal Rewards Program. Payment Enhancements
are calculated as a percentage of your Purchase Payments and are
considered earnings.
PURCHASE PAYMENTS - The money you give us to buy the contract, as
well as any additional money you give us to invest in the contract
after you own it.
QUALIFIED (CONTRACT) - A contract purchased with pretax dollars.
These contracts are generally purchased under a pension plan,
specially sponsored program or IRA.
TRUSTS - Refers to the Anchor Series Trust and the SunAmerica
Series Trust collectively.
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
Anchor Series Trust or the SunAmerica Series Trust.
</TABLE>
ALL FINANCIAL REPRESENTATIVES OR AGENTS THAT SELL THE CONTRACTS OFFERED BY THIS
PROSPECTUS ARE REQUIRED TO DELIVER A PROSPECTUS.
3
<PAGE> 10
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FEE TABLES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE (AS A PERCENTAGE OF EACH PURCHASE PAYMENT)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
YEARS:.................. 1 2 3 4 5 6 7 8 9 10
Schedule A*............. 7% 6% 5% 4% 3% 2% 1% 0% 0% 0%
Schedule B**............ 9% 9% 8% 7% 6% 5% 4% 3% 2% 0%
</TABLE>
* This schedule applies to each Purchase Payment if you are not participating
in the Principal Rewards Program.
** This schedule applies to each Purchase Payment if you are participating in
the Principal Rewards Program.
<TABLE>
<S> <C> <C> <C>
TRANSFER FEE.................... No charge for first 15 transfers
each contract year; thereafter,
fee is $25 ($10 in Pennsylvania
and Texas) per transfer
</TABLE>
CONTRACT MAINTENANCE FEE*
$35 ($30 in North Dakota)
*waived if contract value is $50,000 or more
ANNUAL SEPARATE ACCOUNT EXPENSES
(AS A PERCENTAGE OF AVERAGE ACCOUNT VALUE)
<TABLE>
<S> <C>
Mortality and Expense Risk Charge................ 1.37%
Distribution Expense Charge...................... 0.15%
-----
TOTAL SEPARATE ACCOUNT EXPENSES 1.52%
=====
</TABLE>
PORTFOLIO EXPENSES
ANCHOR SERIES TRUST
(AS A PERCENTAGE OF AVERAGE NET ASSETS FOR THE TRUST'S TWELVE-MONTH PERIOD ENDED
NOVEMBER 30, 1998)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
PORTFOLIO FEE EXPENSES EXPENSES
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
Capital Appreciation .64% .04% .68%
- -----------------------------------------------------------------------------------------------------------
Growth .70% .05% .75%
- -----------------------------------------------------------------------------------------------------------
Natural Resources .75% .13% .88%
- -----------------------------------------------------------------------------------------------------------
Government and Quality Bond .61% .06% .67%
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
SUNAMERICA SERIES TRUST
(AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER REIMBURSEMENT OR WAIVER OF EXPENSES
FOR THE TRUST'S FISCAL YEAR ENDED NOVEMBER 30, 1998)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
PORTFOLIO FEE EXPENSES EXPENSES
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
Emerging Markets* 1.25% .65% 1.90%
- -----------------------------------------------------------------------------------------------------------
International Diversified Equities 1.00% .26% 1.26%
- -----------------------------------------------------------------------------------------------------------
Global Equities .74% .14% .88%
- -----------------------------------------------------------------------------------------------------------
International Growth and Income** 1.00% .46% 1.46%
- -----------------------------------------------------------------------------------------------------------
Aggressive Growth .74% .09% .83%
- -----------------------------------------------------------------------------------------------------------
MFS Mid-Cap Growth*** .75% .25% 1.00%
- -----------------------------------------------------------------------------------------------------------
Real Estate** .80% .15% .95%
- -----------------------------------------------------------------------------------------------------------
Putnam Growth .81% .05% .86%
- -----------------------------------------------------------------------------------------------------------
MFS Growth and Income****+ .70% .03% .73%
- -----------------------------------------------------------------------------------------------------------
Alliance Growth+ .61% .03% .64%
- -----------------------------------------------------------------------------------------------------------
"Dogs" of Wall Street* .60% .25% .85%*****
- -----------------------------------------------------------------------------------------------------------
Venture Value .72% .03% .75%
- -----------------------------------------------------------------------------------------------------------
Federated Value .75% .08% .83%
- -----------------------------------------------------------------------------------------------------------
Growth-Income .56% .04% .60%
- -----------------------------------------------------------------------------------------------------------
Utility** .75% .26% 1.01%
- -----------------------------------------------------------------------------------------------------------
Asset Allocation .59% .05% .64%
- -----------------------------------------------------------------------------------------------------------
MFS Total Return****+ .67% .10% .77%
- -----------------------------------------------------------------------------------------------------------
SunAmerica Balanced .68% .10% .78%
- -----------------------------------------------------------------------------------------------------------
Worldwide High Income 1.00% .08% 1.08%
- -----------------------------------------------------------------------------------------------------------
High-Yield Bond .63% .06% .69%
- -----------------------------------------------------------------------------------------------------------
Corporate Bond .65% .12% .77%
- -----------------------------------------------------------------------------------------------------------
Global Bond .70% .15% .85%
- -----------------------------------------------------------------------------------------------------------
Cash Management .53% .05% .58%
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
* Absent fee waivers or reimbursement of expenses by the adviser, you would
have incurred the following expenses during the last fiscal year: Emerging
Markets (2.01%) and "Dogs" of Wall Street (.92%).
** Absent recoupment of expenses by the adviser, you would have incurred the
following expenses during the last fiscal year: International Growth and
Income (1.40%); Real Estate (.93%); and Utility (.92%).
*** This Portfolio was not available for sale during fiscal year 1998. The
percentages are based on estimated amounts for the current fiscal year.
**** As of January 4, 1998, the Growth/Phoenix Portfolio was renamed the MFS
Growth and Income Portfolio, and the Balanced/Phoenix Portfolio was
renamed the MFS Total Return Portfolio, each managed by Massachusetts
Financial Services Company.
***** Annualized.
+ The expenses noted here are restated to reflect an estimate of fees for
each portfolio for the current fiscal year.
THE ABOVE PORTFOLIO EXPENSES WERE PROVIDED BY THE TRUSTS. WE HAVE NOT
INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION.
4
<PAGE> 11
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXAMPLES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
You will pay the following expenses on a $1,000 investment in each Variable
Portfolio, assuming a 5% annual return on assets, no participation in the
Principal Rewards Program and:
(a) you surrender the contract at the end of the stated time period.
(b) you do not surrender the contract.*
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Capital Appreciation (a) $ 93 (a) $121 (a) $152 (a) $262
(b) $ 23 (b) $ 71 (b) $122 (b) $262
- ------------------------------------------------------------------------------------------------------
Growth (a) $ 94 (a) $124 (a) $156 (a) $269
(b) $ 24 (b) $ 74 (b) $126 (b) $269
- ------------------------------------------------------------------------------------------------------
Natural Resources (a) $ 95 (a) $127 (a) $162 (a) $282
(b) $ 25 (b) $ 77 (b) $132 (b) $282
- ------------------------------------------------------------------------------------------------------
Government and Quality Bond (a) $ 93 (a) $121 (a) $152 (a) $261
(b) $ 23 (b) $ 71 (b) $122 (b) $261
- ------------------------------------------------------------------------------------------------------
Emerging Markets (a) $105 (a) $158 (a) $212 (a) $378
(b) $ 35 (b) $108 (b) $182 (b) $378
- ------------------------------------------------------------------------------------------------------
International Diversified Equities (a) $ 99 (a) $139 (a) $181 (a) $319
(b) $ 29 (b) $ 89 (b) $151 (b) $319
- ------------------------------------------------------------------------------------------------------
Global Equities (a) $ 95 (a) $127 (a) $162 (a) $282
(b) $ 25 (b) $ 77 (b) $132 (b) $282
- ------------------------------------------------------------------------------------------------------
International Growth and Income (a) $101 (a) $145 (a) $191 (a) $338
(b) $ 31 (b) $ 95 (b) $161 (b) $338
- ------------------------------------------------------------------------------------------------------
Aggressive Growth (a) $ 95 (a) $126 (a) $160 (a) $277
(b) $ 25 (b) $ 76 (b) $130 (b) $277
- ------------------------------------------------------------------------------------------------------
MFS Mid-Cap Growth (a) $ 96 (a) $131 (a) $168 (a) $294
(b) $ 26 (b) $ 81 (b) $138 (b) $294
- ------------------------------------------------------------------------------------------------------
Real Estate (a) $ 96 (a) $130 (a) $166 (a) $289
(b) $ 26 (b) $ 80 (b) $136 (b) $289
- ------------------------------------------------------------------------------------------------------
Putnam Growth (a) $ 95 (a) $127 (a) $161 (a) $280
(b) $ 25 (b) $ 77 (b) $131 (b) $280
- ------------------------------------------------------------------------------------------------------
MFS Growth and Income (a) $ 94 (a) $123 (a) $155 (a) $267
(b) $ 24 (b) $ 73 (b) $125 (b) $267
- ------------------------------------------------------------------------------------------------------
Alliance Growth (a) $ 93 (a) $120 (a) $150 (a) $258
(b) $ 23 (b) $ 70 (b) $120 (b) $258
- ------------------------------------------------------------------------------------------------------
"Dogs" of Wall Street (a) $ 95 (a) $127 (a) $161 (a) $279
(b) $ 25 (b) $ 77 (b) $131 (b) $279
- ------------------------------------------------------------------------------------------------------
Venture Value (a) $ 94 (a) $124 (a) $156 (a) $269
(b) $ 24 (b) $ 74 (b) $126 (b) $269
- ------------------------------------------------------------------------------------------------------
Federated Value (a) $ 95 (a) $126 (a) $160 (a) $277
(b) $ 25 (b) $ 76 (b) $130 (b) $277
- ------------------------------------------------------------------------------------------------------
Growth-Income (a) $ 92 (a) $119 (a) $148 (a) $254
(b) $ 22 (b) $ 69 (b) $118 (b) $254
- ------------------------------------------------------------------------------------------------------
Utility (a) $ 96 (a) $131 (a) $169 (a) $295
(b) $ 26 (b) $ 81 (b) $139 (b) $295
- ------------------------------------------------------------------------------------------------------
Asset Allocation (a) $ 93 (a) $120 (a) $150 (a) $258
(b) $ 23 (b) $ 70 (b) $120 (b) $258
- ------------------------------------------------------------------------------------------------------
MFS Total Return (a) $ 94 (a) $124 (a) $157 (a) $271
(b) $ 24 (b) $ 74 (b) $127 (b) $271
- ------------------------------------------------------------------------------------------------------
SunAmerica Balanced (a) $ 94 (a) $124 (a) $157 (a) $272
(b) $ 24 (b) $ 74 (b) $127 (b) $272
- ------------------------------------------------------------------------------------------------------
Worldwide High Income (a) $ 97 (a) $133 (a) $172 (a) $302
(b) $ 27 (b) $ 83 (b) $142 (b) $302
- ------------------------------------------------------------------------------------------------------
High-Yield Bond (a) $ 93 (a) $122 (a) $153 (a) $263
(b) $ 23 (b) $ 72 (b) $123 (b) $263
- ------------------------------------------------------------------------------------------------------
Corporate Bond (a) $ 94 (a) $124 (a) $157 (a) $271
(b) $ 24 (b) $ 74 (b) $127 (b) $271
- ------------------------------------------------------------------------------------------------------
Global Bond (a) $ 95 (a) $127 (a) $161 (a) $279
(b) $ 25 (b) $ 77 (b) $131 (b) $279
- ------------------------------------------------------------------------------------------------------
Cash Management (a) $ 92 (a) $118 (a) $147 (a) $252
(b) $ 22 (b) $ 68 (b) $117 (b) $252
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
* We do not currently charge a surrender charge upon annuitization
unless the contract is annuitized using the Income Protector feature.
We will assess any applicable surrender charge upon annuitizations
effected using the Income Protector feature as if you had fully
surrendered your contract.
5
<PAGE> 12
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXAMPLES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
You will pay the following expenses on a $1,000 investment in each Variable
Portfolio, assuming a 5% annual return on assets, participation in the Principal
Rewards Program and:
(a) you surrender the contract at the end of the stated time period.
(b) you do not surrender the contract*
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Capital Appreciation (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
Growth (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
Natural Resources (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
Government and Quality Bond (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
Emerging Markets (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
International Diversified Equities (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
Global Equities (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
International Growth and Income (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
Aggressive Growth (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
MFS Mid-Cap Growth (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
Real Estate (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
Putnam Growth (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
MFS Growth and Income (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
Alliance Growth (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
"Dogs" of Wall Street (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
Venture Value (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
Federated Value (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
Growth-Income (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
Utility (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
Asset Allocation (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
MFS Total Return (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
SunAmerica Balanced (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
Worldwide High Income (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
High-Yield Bond (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
Corporate Bond (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
Global Bond (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
Cash Management (a) $ (a) $ (a) $ (a) $
(b) $ (b) $ (b) $ (b) $
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
* We do not currently charge a surrender charge upon annuitization
unless the contract is annuitized using the Income Protector feature.
We will assess any applicable surrender charge upon annuitizations
effected using the Income Protector feature as if you had fully
surrendered your contract.
6
<PAGE> 13
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 certain Variable Portfolios, the adviser, SunAmerica Asset Management
Corp., has voluntarily agreed to waive fees or reimburse certain expenses,
if necessary, to keep annual operating expenses at or below the lesser of
the maximum allowed by any applicable state expense limitations or the
following percentages of each Variable Portfolio's average net assets:
SunAmerica Balanced (1.00%); "Dogs" of Wall Street (.85%); Aggressive Growth
(.90%); Federated Value (1.03%); Utility (1.05%); Emerging Markets (1.90%);
International Growth and Income (1.60%); and Real Estate (1.25%). The
adviser also may voluntarily waive or reimburse additional amounts to
increase a Variable Portfolio'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 Variable Portfolio is able to
make such payment and remain in compliance with the foregoing expense
limitations.
3. The Examples assume that no transfer fees were imposed. Although premium
taxes may apply in certain states, they are not reflected in the Examples.
4. THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
THE HISTORICAL ACCUMULATION UNIT VALUES ARE CONTAINED IN APPENDIX A -- CONDENSED
FINANCIAL INFORMATION.
- ----------------------------------------------------------------
- ----------------------------------------------------------------
THE POLARIS(II) VARIABLE ANNUITY
- ----------------------------------------------------------------
- ----------------------------------------------------------------
An annuity is a contract between you and an insurance company. You are the owner
of the contract. The contract provides three main benefits:
- Tax Deferral: This means that you do not pay taxes on your earnings from
the annuity until you withdraw them.
- Death Benefit: If you die during the Accumulation Phase, the insurance
company pays a death benefit to your Beneficiary.
- Guaranteed Income: If elected, you receive a stream of income for your
lifetime, or another available period you select.
This annuity was developed to help you contribute to your retirement savings.
This annuity works in two stages, the Accumulation Phase and the Income Phase.
Your contract is in the Accumulation Phase during the period when you make
payments into the contract. The Income Phase begins when you request us to start
making income payments to you out of the money accumulated in your contract.
The contract is called a "variable" annuity because it allows you to invest in
variable portfolios which, like mutual funds, have different investment
objectives and performance which varies. You can gain or lose money if you
invest in these Variable Portfolios. The amount of money you accumulate in your
contract depends on the performance of the Variable Portfolios in which you
invest. This contract currently offers 27 Variable Portfolios.
The contract also offers several fixed account options for varying time periods.
Fixed account options earn interest at a rate set and guaranteed by Anchor
National. If you allocate money to the fixed account options, the amount of
money that accumulates in the contract depends on the total interest credited to
the particular fixed account option(s) in which you invest.
For more information on investment options available under this contract SEE
INVESTMENT OPTIONS ON PAGE 9.
Anchor National Life Insurance Company (Anchor National, The Company, Us, We)
issues the PolarisII Variable Annuity. When you purchase a PolarisII Variable
Annuity, a contract exists between you and Anchor National. The Company is a
stock life insurance company organized under the laws of the state of Arizona.
Its principal place of business is 1 SunAmerica Center, Los Angeles, California
90067. The Company conducts life insurance and annuity business in the District
of Columbia and all states except New York. Anchor National is an indirect,
wholly owned subsidiary of American International Group, Inc. ("AIG"), a
Delaware corporation.
- ----------------------------------------------------------------
- ----------------------------------------------------------------
PURCHASING A POLARIS(II) VARIABLE ANNUITY
- ----------------------------------------------------------------
- ----------------------------------------------------------------
An initial Purchase Payment is the money you give us to buy a contract. Any
additional money you give us to invest in the contract after purchase is a
subsequent Purchase Payment.
This chart shows the minimum initial and subsequent Purchase Payments permitted
under your contract. These amounts depend upon whether a contract is Qualified
or Non-qualified for tax purposes. FOR FURTHER EXPLANATION, SEE TAXES ON PAGE
19.
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------
Minimum
Minimum Initial Subsequent
Purchase Payment Purchase Payment
- -----------------------------------------------------------
Qualified $2,000 $250
- -----------------------------------------------------------
Non-Qualified $5,000 $500
- -----------------------------------------------------------
</TABLE>
Prior Company approval is required to accept Purchase Payments greater than
$1,000,000. The Company reserves the right to refuse any Purchase Payment
including, but not limited, to one which would cause the contract value to
exceed $1,000,000 at the time of the Purchase Payment. Also, the optional
automatic payment plan allows you to make subsequent Purchase Payments of as
little as $20.00.
7
<PAGE> 14
We may refuse any Purchase Payment. In general, we will not issue a Qualified
contract to anyone who is age 70 1/2 or older, unless 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 90.
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 will invest the money according to your last
allocation instructions. SEE INVESTMENT OPTIONS ON PAGE 9.
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.
PRINCIPAL REWARDS PROGRAM
If you elect to participate in this program at contract issue, we contribute an
amount to your contract for each Purchase Payment you invest. This amount is
referred to as a Payment Enhancement. If you elect to participate in this
program, all Purchase Payments are subject to a nine year withdrawal charge
period. Payment Enhancements are considered earnings under your contract and are
allocated to your contract according to the terms discussed below.
Initial Payment Enhancement
An Initial Payment Enhancement is the amount we add to your contract on the day
we receive a Purchase Payment. An Initial Payment Enhancement is calculated as a
percentage of each Purchase Payment and is allocated among the fixed and
variable investment options according to the allocation instructions in effect
on the day we receive the Purchase Payment. Purchase Payments may not be
invested in the six-month or the one year Dollar Cost Averaging fixed accounts
if you participate in the Principal Rewards Program. The Initial Payment
Enhancement is 2.00% of each Purchase Payment.
Deferred Payment Enhancement
A Deferred Payment Enhancement is the amount we may add to your contract on a
future date (the "Deferred Payment Enhancement Date"). The amount(s) and date(s)
of a Deferred Payment Enhancement are guaranteed based on the Current Deferred
Payment Enhancement Percentage and Current Deferred Payment Enhancement Date in
effect at the time we receive your Purchase Payment.
The Deferred Payment Enhancement amount, if any, is determined as a percentage
of each Purchase Payment (the "Deferred Payment Enhancement Percentage"). If you
withdraw any portion of a Purchase Payment prior to the Deferred Payment
Enhancement Date, we reduce the amount of the corresponding Deferred Payment
Enhancement in the same proportion that your withdrawal reduces your Purchase
Payment (and any fees and charges associated with such withdrawals). Withdrawals
are assumed to be taken from earnings first then from Purchase Payments, on a
first-in-first-out basis. APPENDIX B shows how we calculate the Deferred Payment
Enhancement amount.
We periodically establish the Current Deferred Payment Enhancement Percentage(s)
and Date(s). For Purchase Payments received by March 31, 2000, the Current
Deferred Payment Enhancement Percentage is 2.00% and the Current Deferred
Payment Enhancement Date is nine years from the date we receive each Purchase
Payment. After March 31, 2000, the Current Deferred Payment Enhancement
Percentage may be increased, decreased or eliminated by the Company.
We will not allocate a Deferred Payment Enhancement to your contract if any of
the following circumstances occurs prior to the Deferred Payment Enhancement
Date:
- You surrender your contract;
- A death benefit is paid on your contract;
- You switch to the Income Phase of your contract; or
- You fully withdraw the corresponding Purchase Payment.
The Principal Rewards Program may not be available through your broker-dealer.
Please check with your financial representative regarding the availability of
this program.
We reserve the right to modify, suspend or terminate the Principal Rewards
Program at any time.
ACCUMULATION UNITS
When you allocate a Purchase Payment to the Variable Portfolios, we credit your
contract with Accumulation Units of the separate account. We base the number of
Accumulation Units you receive on the unit value of the Variable Portfolio as of
the day we receive your money if we receive it before 1 p.m. Pacific Standard
Time, or on the next business day's unit value if we receive your money after 1
p.m. Pacific Standard Time. The value of an Accumulation Unit goes 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 and Payment Enhancement, if applicable, by the
Accumulation Unit value for the specific Variable Portfolio.
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EXAMPLE (CONTRACTS WITHOUT PRINCIPAL REWARDS):
We receive a $25,000 Purchase Payment from you on Wednesday. You allocate
the money to the Global Bond Portfolio. We determine that the value of an
Accumulation Unit for the Global Bond Portfolio is $11.10 when the NYSE
closes on Wednesday. We then divide $25,000 by $11.10 and credit your
contract on Wednesday night with 2252.2523 Accumulation Units for the
Global Bond Portfolio.
EXAMPLE (CONTRACTS WITH PRINCIPAL REWARDS):
We receive a $25,000 Purchase Payment from you on Wednesday. You allocate
the money to the Global Bond Portfolio. The Initial Payment Enhancement is
2.00% of your Purchase Payment. Therefore, we add an Initial Payment
Enhancement of $500 to your contract. We determine that the value of an
Accumulation Unit for the Global Bond Portfolio is $11.10 when the NYSE
closes on Wednesday. We then divide $25,500 by $11.10 and credit your
contract on Wednesday with 2,297.2973 Accumulation Units for the Global
Bond Portfolio.
Performance of the Variable Portfolios and expenses under your contract affect
Accumulation Unit values. These factors cause the value of your contract to go
up and down.
FREE LOOK
You may cancel your contract within ten days after receiving it (or longer if
required by state law). We call this a "free look." To cancel, you must mail the
contract along with your free look request to our Annuity Service Center at P.O.
Box 54299, Los Angeles, California 90054-0299. We will refund to you the value
of your contract on the day we receive your request less any Payment
Enhancement. 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. With respect to those contracts, we reserve
the right to put your money in the Cash Management Portfolio during the free
look period. If you cancel your contract during the free look period, we return
your Purchase Payment or the value of your contract, less any Payment
Enhancement whichever is larger. At the end of the free look period, we allocate
your money according to your instructions.
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INVESTMENT OPTIONS
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VARIABLE PORTFOLIOS
The contract currently offers 27 Variable Portfolios. These Variable Portfolios
invest in shares of the Anchor Series Trust and the SunAmerica Series Trust (the
"Trusts"). Additional Variable Portfolios may be available in the future. The
Variable Portfolios operate similar to a mutual fund but are only available
through the purchase of certain insurance contracts.
SunAmerica Asset Management Corp., an indirect wholly owned subsidiary of AIG,
is the investment adviser to the Trusts. The Trusts serve as the underlying
investment vehicles for other variable annuity contracts issued by Anchor
National, and other affiliated/unaffiliated insurance companies. Neither Anchor
National nor the Trusts believe that offering shares of the Trusts in this
manner disadvantages you. The adviser monitors the Trusts for potential
conflicts.
The Variable Portfolios along with their respective subadvisers are listed
below:
ANCHOR SERIES TRUST
Wellington Management Company, LLP serves as subadviser to the Anchor Series
Trust Portfolios. Anchor Series Trust has investment portfolios in addition to
those listed below which are not available for investment under the contract.
The 4 available investment portfolios are:
MANAGED BY WELLINGTON MANAGEMENT COMPANY, LLP
- Capital Appreciation Portfolio
- Growth Portfolio
- Natural Resources Portfolio
- Government and Quality Bond Portfolio
SUNAMERICA SERIES TRUST
Various subadvisers provide investment advice for the SunAmerica Series Trust
Portfolios. SunAmerica Series Trust has investment portfolios in addition to
those listed below which are not available for investment under the contract.
The 23 investment portfolios and the subadvisers are:
MANAGED BY ALLIANCE CAPITAL MANAGEMENT L.P.
- Global Equities Portfolio
- Alliance Growth Portfolio
- Growth Income Portfolio
MANAGED BY DAVIS SELECTED ADVISERS, L.P.
- Venture Value Portfolio
- Real Estate Portfolio
MANAGED BY FEDERATED INVESTORS
- Federated Value Portfolio
- Utility Portfolio
- Corporate Bond Portfolio
MANAGED BY GOLDMAN SACHS ASSET MANAGEMENT/GOLDMAN
SACHS ASSET MANAGEMENT INTERNATIONAL
- Asset Allocation Portfolio
- Global Bond Portfolio
MANAGED BY MASSACHUSETTS FINANCIAL SERVICES COMPANY
- MFS Mid-Cap Growth
- MFS Growth and Income Portfolio
- MFS Total Return Portfolio
MANAGED BY MORGAN STANLEY ASSET MANAGEMENT
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- International Diversified Equities Portfolio
- Worldwide High Income Portfolio
MANAGED BY PUTNAM INVESTMENT MANAGEMENT
- Putnam Growth Portfolio
- International Growth and Income Portfolio
- Emerging Markets Portfolio
MANAGED BY SUNAMERICA ASSET MANAGEMENT, INC.
- Aggressive Growth Portfolio
- "Dogs" of Wall Street Portfolio
- SunAmerica Balanced Portfolio
- High-Yield Bond Portfolio
- Cash Management Portfolio
YOU SHOULD READ THE ATTACHED PROSPECTUSES FOR THE TRUSTS CAREFULLY. THESE
PROSPECTUSES CONTAIN DETAILED INFORMATION ABOUT THE VARIABLE PORTFOLIOS,
INCLUDING EACH VARIABLE PORTFOLIO'S INVESTMENT OBJECTIVE AND RISK FACTORS.
FIXED ACCOUNT OPTIONS
The contract also offers seven fixed account options. Anchor National will
guarantee the interest rate earned on money you allocate to any of these fixed
account options. We currently offer fixed account options for periods of one,
three, five, seven and ten years, which we call guarantee periods. Additionally,
we guarantee the interest rate for money allocated to the six-month DCA fixed
account and/or the one year DCA fixed account (the "DCA fixed accounts") which
are available in conjunction with the Dollar Cost Averaging Program if you do
not participate in the Principal Rewards Program. Please see the section on
DOLLAR COST AVERAGING ON PAGE 11 for additional information about, including
limitations on, the availability and operation of the DCA fixed accounts. The
DCA fixed accounts are only available for new Purchase Payments.
Each guarantee period may offer a different interest rate but will never be less
than an annual effective rate of 3%. Once established the rates for specified
payments do not change during the guarantee period. The guarantee period is that
period for which we credit the applicable rate (one, three, five, seven or ten
years).
There are three scenarios in which you may put money into the MVA fixed account
options. In each scenario your money may be credited a different rate of
interest as follows:
- Initial Rate: Rate credited to amounts allocated to the fixed account
when you purchase your contract.
- Current Rate: Rate credited to subsequent amounts allocated to the fixed
account.
- Renewal Rate: Rate credited to money transferred from one fixed account
or one of the Variable Portfolios to another fixed account.
Each of these rates may differ from one another. Once declared, the applicable
rate is guaranteed until the corresponding guarantee period expires.
When a guarantee period ends, you may leave your money in the same fixed
investment option. You may also reallocate your money to another fixed
investment option (other than the DCA fixed accounts) or to the Variable
Portfolios. If you want to reallocate your money to a different fixed account
option or a Variable Portfolio, you must contact us within 30 days after the end
of the current interest guarantee period and instruct us how to reallocate the
money. We do not contact you. If we do not hear from you, your money will remain
in the same fixed account option, where it will earn interest at the renewal
rate then in effect for the fixed account option.
The DCA fixed accounts also credit a fixed rate of interest for a predetermined
amount of time. The interest rate in the 1-year or 6-month DCA fixed account is
credited while your investment is systematically transferred to the Variable
Portfolios. The rates applicable to the DCA fixed accounts may differ from each
other and/or the other fixed account options. See DOLLAR COST AVERAGING ON PAGE
11 for more information.
MARKET VALUE ADJUSTMENT ("MVA")
NOTE: THE FOLLOWING DISCUSSION APPLIES TO THE 3, 5, 7 AND 10-YEAR FIXED ACCOUNT
OPTIONS, ONLY. THESE OPTIONS ARE NOT AVAILABLE IN ALL STATES. PLEASE CONTACT
YOUR FINANCIAL REPRESENTATIVE FOR MORE INFORMATION.
If you take money out of the multi-year fixed account options before the end of
the guarantee period, we make an adjustment to your contract. We refer to the
adjustment as a market value adjustment (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 or transfer
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 first 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
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withdrawal. Where the MVA is positive, we add the adjustment to your withdrawal
amount.
Anchor National does not assess a MVA against withdrawals under the following
circumstances:
- If made within 30 days after the end of a guarantee period;
- If made to pay contract fees and charges;
- To pay a death benefit; and
- If annuitization occurs on the latest Annuity Date.
The one year fixed account option and the DCA fixed accounts do not impose a
MVA. These fixed accounts are not registered under the Securities Act of 1933
and are not subject to the provisions of the Investment Company Act of 1940.
APPENDIX C shows how we calculate the MVA.
TRANSFERS DURING THE ACCUMULATION PHASE
During the Accumulation Phase you may transfer funds between the Variable
Portfolios and/or the fixed account options. Funds already in your contract
cannot be transferred into the DCA fixed accounts. 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. We charge $25 ($10 in Pennsylvania and
Texas) for each additional transfer in any contract year. 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 tell us 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 transactions we will have appropriate
procedures in place to provide reasonable assurance that the transactions
executed are genuine. Thus, we would not be responsible for any claim, loss or
expense from any error resulting from instructions received over the internet.
If we fail to follow our procedures, we may be liable for any losses due to
unauthorized or fraudulent 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 Variable
Portfolios.
Where permitted by law, we may accept your authorization for a third party to
make transfers for you subject to our rules. We reserve the right to suspend or
cancel such acceptance at any time and will notify you accordingly.
Additionally, we may restrict the investment options available for transfers
during any period in which such third party acts for you. We notify such third
party beforehand regarding any restrictions. However, we will not enforce these
restrictions if we are satisfied that:
- such third party has been appointed by a court of competent jurisdiction
to act on your behalf; or
- such third party is a trustee/fiduciary, 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 you extra for providing these support services. This includes, but is not
limited to, transfers between investment options in accordance with market
timing strategies. Such independent third parties may or may not be appointed
with us for the sale of annuities. However, WE DO NOT ENGAGE ANY THIRD PARTIES
TO OFFER INVESTMENT ALLOCATION SERVICES OF ANY TYPE. WE TAKE NO RESPONSIBILITY
FOR THE INVESTMENT ALLOCATION AND TRANSFERS TRANSACTED ON YOUR BEHALF BY SUCH
THIRD PARTIES OR FOR ANY INVESTMENT ALLOCATION RECOMMENDATIONS MADE BY SUCH
PARTIES.
For information regarding transfers during the Income Phase, SEE INCOME OPTIONS
ON PAGE 16.
We reserve the right to modify, suspend, waive or terminate these transfer
provisions at any time.
DOLLAR COST AVERAGING
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 one Variable Portfolio or the
1-year fixed account option (source accounts) to any other Variable Portfolio.
Transfers may be monthly or quarterly and count against your 15 free transfers
per contract year. 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.
We also offer the 6-month and 1-year DCA fixed accounts exclusively to
facilitate this program. If you elected to participate in the Principal Rewards
Program, the 6-month and 1-year DCA fixed accounts are not available under your
contract. The DCA fixed accounts only accept new Purchase Payments. You cannot
transfer money already in your contract into these options. If you allocate new
Purchase Payments into a DCA fixed account, we transfer all your
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money allocated to that account into the Variable Portfolios over the selected
6-month or 1-year period. You cannot change the option or the frequency of
transfers once selected.
If allocated to the 6-month DCA fixed account, we transfer your money over a
maximum of 6 monthly transfers. We base the actual number of transfers on the
total amount allocated to the account. For example, if you allocate $500 to the
6-month DCA fixed account, we transfer your money over a period of five months,
so that each payment complies with the $100 per transfer minimum.
We determine the amount of the transfers from the 1-year DCA fixed account based
on
- the total amount of money allocated to the account, and
- the frequency of transfers selected.
For example, let's say you allocate $1,000 to the 1-year DCA account. You select
monthly transfers. We completely transfer all of your money to the selected
investment options over a period of ten months.
You may terminate your DCA program at any time. If money remains in the DCA
fixed accounts, we transfer the remaining money to the 1-year fixed account
option, unless we receive different instructions from you. Transfers resulting
from a termination of this program do not count towards your 15 free transfers.
The DCA program is designed to lessen the impact of market fluctuations on your
investment. However, we cannot ensure that you will make a profit. When you
elect the DCA program, you are continuously investing in securities regardless
of fluctuating price levels. You should consider your tolerance for investing
through periods of fluctuating price levels.
We reserve the right to modify, suspend or terminate this program at any time.
EXAMPLE:
Assume that you want to gradually move $750 each quarter from the Cash
Management Portfolio to the Aggressive Growth Portfolio over six quarters.
You set up dollar cost averaging and purchase Accumulation Units at the
following values:
<TABLE>
<CAPTION>
- -------------------------------------------
ACCUMULATION UNITS
QUARTER UNIT PURCHASED
- -------------------------------------------
<S> <C> <C>
1 $ 7.50 100
2 $ 5.00 150
3 $10.00 75
4 $ 7.50 100
5 $ 5.00 150
6 $ 7.50 100
- -------------------------------------------
</TABLE>
You paid an average price of only $6.67 per Accumulation Unit over six
quarters, while the average market price actually was $7.08. By investing
an equal amount of money each month, you automatically buy more
Accumulation Units when the market price is low and fewer Accumulation
Units when the market price is high. This example is for illustrative
purposes only.
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 in the variable Portfolios to return your allocations
to their original percentages. Asset rebalancing typically involves shifting a
portion of your money out of an investment option with a higher return into an
investment option with a lower return.
At your request, rebalancing occurs on a quarterly, semiannual or annual basis.
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 Corporate Bond Portfolio and 50%
in the Growth Portfolio. Over the next calendar quarter, the bond market
does very well while the stock market performs poorly. At the end of the
calendar quarter, the Corporate Bond Portfolio now represents 60% of your
holdings because it has increased in value and the Growth Portfolio
represents 40% of your holdings. If you had chosen quarterly rebalancing,
on the last day of that quarter, we would sell some of your units in the
Corporate Bond Portfolio to bring its holdings back to 50% and use the
money to buy more units in the 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
account options and Variable Portfolios. You decide how much you want to invest
and approximately when you want a return of principal. We calculate how much of
your Purchase Payment to allocate to the particular fixed account option to
ensure that it grows to an amount equal to your total principal invested under
this program. We invest the rest of your principal in the Variable Portfolio(s)
of your choice.
We reserve the right to modify, suspend or terminate this program at any time.
EXAMPLE:
Assume that you want to allocate a portion of your initial Purchase Payment
of $100,000 to the fixed account option. You want the amount allocated to
the fixed account option to grow to $100,000 in 7 years. If the
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7-year fixed account option is offering a 5% interest rate,
we will allocate $71,069 to the 7-year fixed account option to ensure that
this amount will grow to $100,000 at the end of the 7-year period. The
remaining $28,931 may be allocated among the Variable Portfolios, as
determined by you, to provide opportunity for greater growth.
VOTING RIGHTS
Anchor National is the legal owner of the Trusts' shares. However, when a
Variable Portfolio solicits proxies in conjunction with a vote of shareholders,
we must obtain your instructions on how to vote those shares. We vote all of the
shares we own in proportion to your instructions. This includes any shares we
own on our own behalf. Should we determine that we are no longer required to
comply with these rules, we will vote the shares in our own right.
SUBSTITUTION
If underlying funds of the Trusts 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.
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ACCESS TO YOUR MONEY
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You can access money in your contract in two ways:
- by making a partial or total withdrawal, and/or;
- by receiving income payments during the Income Phase. SEE INCOME OPTIONS
ON PAGE 16.
Generally, we deduct a withdrawal charge applicable to any total or partial
withdrawal and a MVA if a partial withdrawal comes from the 3, 5, 7 or 10 year
fixed account options. If you withdraw your entire contract value, we also
deduct premium taxes and a contract maintenance fee. SEE EXPENSES ON PAGE 15.
Your contract provides for a free withdrawal amount each year. A free withdrawal
amount is the portion of your account that we allow you to take out each year
without being charged a surrender penalty. However, upon a future full surrender
of your contract we will recoup any withdrawal charges which would have been due
if your free withdrawal had not been free. Additionally, you will not receive
your Deferred Payment Enhancement if you fully withdraw the Purchase Payment or
your contract value prior to the corresponding Deferred Payment Enhancement
Date. SEE PRINCIPAL REWARDS PROGRAM ON PAGE 8.
To determine your free withdrawal amount and your withdrawal charge, we refer to
two special terms. These are penalty free earnings and the total invested
amount.
The penalty-free earnings portion of your contract is simply your account value
less your total invested amount. The total invested amount is the total of all
Purchase Payments you have made into the contract less portions of some prior
withdrawals you made. The portions of prior withdrawals that reduce your total
invested amount are as follows:
- Free withdrawals in any year that were in excess of your penalty-free
earnings and were based on the part of the total invested amount that was
no longer subject to withdrawal charges at the time of the withdrawal,
and
- Any prior withdrawals (including withdrawal charges on those withdrawals)
of the total invested amount on which you already paid a surrender
penalty.
When you make a withdrawal, we assume that it is taken from penalty-free
earnings first, then from the total invested amount on a first-in, first-out
basis. This means that you can also access your Purchase Payments which are no
longer subject to a withdrawal charge before those Purchase Payments which are
still subject to the withdrawal charge.
During the first year after we issue your contract your free withdrawal amount
is the greater of (1) your penalty-free earnings; and (2) if you are
participating in the Systematic Withdrawal program, a total of 10% of your total
invested amount. If you are a Washington resident, you may withdraw during the
first contract year, the greater of (1); (2); or (3) interest earnings from the
amounts allocated to the fixed account options, not previously withdrawn.
After the first contract year, you can take out the greater of the following
amounts each year (1) your penalty-free earnings and any portion of your total
invested amount no longer subject to withdrawal charges; and (2) 10% of the
portion of your total invested amount that has been in your contract for at
least one year. If you are a Washington resident, your maximum free withdrawal
amount, after the first contract year, is the greater of (1); (2); or (3)
interest earnings from amounts allocated to the fixed account options, not
previously withdrawn.
Although we do not assess a withdrawal charge when you take a 10% penalty-free
withdrawal, we will proportionally reduce the amount of any corresponding
Deferred Payment Enhancement.
We calculate charges due on a total withdrawal on the day after we receive your
request and your contract. We return to you your contract value less any
applicable fees and charges.
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 us
with different instructions, partial withdrawals will be made pro rata from each
Variable Portfolio and the fixed account option in which your contract is
invested.
Under certain Qualified plans, access to the money in your contract may be
restricted. Additionally, withdrawals made prior to age 59 1/2 may result in a
10% IRS penalty tax. SEE TAXES ON PAGE 19.
We may be required to suspend or postpone the payment of a withdrawal for any
period of time when: (1) the NYSE is closed (other than a customary weekend and
holiday closings); (2) trading with the NYSE is restricted; (3) an emergency
exists such that disposal of or determination of the value of shares of the
Variable Portfolios is not reasonably practicable; (4) the SEC, by order, so
permits for the protection of contract owners.
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Additionally, we reserve the right to defer payments for a withdrawal from a
fixed account in option. Such deferrals are limited to no longer than six
months.
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, semi-annual or annual payments from your contract.
Electronic transfer of these funds to your bank account is also available. The
minimum amount of each withdrawal is $100. If you are an Oregon resident, the
minimum withdrawal amount is $100 per withdrawal or an amount equal to your free
withdrawal amount, as described on page 10. There must be at least $500
remaining in your contract at all times. Withdrawals may be taxable 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, although a withdrawal charge and/or
MVA may apply.
The program is not available to everyone. Please check with our Annuity Service
Center, which can provide the necessary enrollment forms. We reserve the right
to modify, suspend or terminate this program at any time.
NURSING HOME WAIVER
If you are confined to a nursing home for 60 days or longer, we may waive the
withdrawal charge and/or market value adjustment 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 contract prohibits use of this waiver during the
first 90 days after you purchase your contract. 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.
MINIMUM CONTRACT VALUE
Where permitted by state law, we may terminate your contract if both of the
following occur: (1) your contract is less than $500 as a result of withdrawals;
and (2) you have not made any Purchase Payments during the past three years. We
will provide you with sixty days written notice. At the end of the notice
period, we will distribute the contract's remaining value to you.
- ----------------------------------------------------------------
- ----------------------------------------------------------------
DEATH BENEFIT
- ----------------------------------------------------------------
- ----------------------------------------------------------------
If you die during the Accumulation Phase of your contract, we pay a death
benefit to your Beneficiary. At the time you purchase your contract, you must
select one of the two death benefits described below. Once selected, you can not
change your death benefit option. You should discuss the available options with
your financial representative to determine which option is best for you.
OPTION 1 - PURCHASE PAYMENT ACCUMULATION OPTION
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 withdrawals (and any fees or charges
applicable to such withdrawals), compounded at a 4% annual growth rate
until the date of death (3% growth rate if 70 or older at the time of
contract issue) plus any Purchase Payments less withdrawals recorded
after the date of death (and any fees or charges applicable to such
withdrawals); or
3. the value of your contract on the seventh contract anniversary, plus any
Purchase Payments and less any withdrawals (and any fees or charges
applicable to such withdrawals), since the seventh contract anniversary,
all compounded at a 4% annual growth rate until the date of death (3%
growth rate if age 70 or older at the time of contract issue) plus any
Purchase Payments less withdrawals recorded after the date of death (and
any fees or charges applicable to such withdrawals).
OPTION 2 - MAXIMUM ANNIVERSARY OPTION
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 prior to your
81st birthday. The anniversary value equals the value of your contract
on a contract anniversary plus any Purchase Payments and less any
withdrawals (and any fees or charges applicable to such withdrawals),
since that contract anniversary.
If you are age 90 or older at the time of death and selected the Option 2 death
benefit, the death benefit will be equal to the value of your contract at the
time we receive satisfactory proof of death. Accordingly, you do not get the
advantage of option 2 if:
- you are over age 80 at the time of contract issue, or
- you are 90 or older at the time of your death.
We will not pay a Deferred Payment Enhancement on a Purchase Payment if you die
before the corresponding Deferred Payment Enhancement Date. SEE PRINCIPAL
REWARDS PROGRAM ON PAGE 8.
We do not pay the death benefit if you die after you switch to the Income Phase.
However, if you die during the Income
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<PAGE> 21
Phase, your Beneficiary receives any remaining guaranteed income payments in
accordance with the income option you selected. SEE INCOME OPTIONS ON PAGE 16.
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 your
death.
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.
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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EXPENSES
- ----------------------------------------------------------------
- ----------------------------------------------------------------
There are charges and expenses associated with your contract. These charges and
expenses reduce your investment return. We will not increase the contract
maintenance fee or the insurance and withdrawal charges under your contract.
However, the investment charges under your contract may increase or decrease.
Some states may require that we charge less than the amounts described below.
INSURANCE CHARGES
The amount of this charge is 1.52% 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 assumed by Anchor National.
If these charges do not cover all of our expenses, we will pay the difference.
Likewise, if these charges exceed our expenses, we will keep the difference.
WITHDRAWAL CHARGES
The contract provides a free withdrawal amount every year. SEE ACCESS TO YOUR
MONEY, PAGE 13. If you take money out in excess of the free withdrawal amount,
and upon a full surrender, 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 7 complete
years, or 9 years if you elected to participate in the Principal Rewards
Program, 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. The two
withdrawal charge schedules are as follows:
WITHDRAWAL CHARGE WITHOUT THE PRINCIPAL REWARDS PROGRAM
(SCHEDULE A)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Year 1 2 3 4 5 6 7 8
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WITHDRAWAL
CHARGE 7% 6% 5% 4% 3% 2% 1% 0%
- -----------------------------------------------------------------------------------------
</TABLE>
WITHDRAWAL CHARGE WITH THE PRINCIPAL REWARDS PROGRAM
(SCHEDULE B)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Year 1 2 3 4 5 6 7 8 9 10
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WITHDRAWAL
CHARGE 9% 9% 8% 7% 6% 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, we deduct any
applicable withdrawal charges from the amount withdrawn.
We will not assess a withdrawal charge for money withdrawn to pay a death
benefit or to pay contract fees or charges. We will not assess a withdrawal
charge when you switch to the Income Phase, except when you elect to receive
income payments using the Income Protector feature. If you elect to receive
income payments using the Income Protector feature, we assess the entire
withdrawal charge applicable to Purchase Payments remaining in your contract
when calculating your income benefit base. SEE INCOME OPTIONS ON PAGE 16.
Withdrawals made prior to age 59 1/2 may result in tax penalties. SEE, TAXES ON
PAGE 19.
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<PAGE> 22
INVESTMENT CHARGES
Charges are deducted from your Variable Portfolios for the advisory and other
expenses of the Variable Portfolios. THE FEE TABLES LOCATED AT PAGE 4 illustrate
these charges and expenses. For more detailed information on these investment
charges, refer to the prospectuses for the Trusts, enclosed or attached.
CONTRACT MAINTENANCE FEE
During the Accumulation Phase, we subtract a contract maintenance fee from your
account once per year. This charge compensates us for the cost of contract
administration. We deduct the $35 contract maintenance fee ($30 in North Dakota)
from your account value on your contract anniversary. If you withdraw your
entire contract value, we deduct the fee from that withdrawal.
If your contract value is $50,000 or more on your contract anniversary date, we
will waive the charge. This waiver is subject to change without notice.
TRANSFER FEE
We currently permit 15 free transfers between investment options each contract
year. We charge you $25 for each additional transfer that contract year ($10 in
Pennsylvania and Texas). SEE INVESTMENT OPTIONS ON PAGE 9.
PREMIUM TAX
Certain states charge the Company a tax on the premiums you pay into the
contract. We deduct from your contract these premium tax charges. Currently we
deduct the charge for premium taxes when you take a full withdrawal or 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 we evaluate to make a determination are: size of the group; amount of
expected Purchase Payments; relationship existing between us and prospective
purchaser; nature of the purchase; length of time a group of contracts is
expected to remain active; purpose of the purchase and whether that purpose
increases the likelihood that our expenses will be reduced; and/or any other
factors that we believe indicate that administrative and/or sales expenses may
be reduced.
Anchor National may make such a determination regarding sales to its employees,
it affiliates' employees and employees of currently contracted broker-dealers;
its registered representatives and immediate family members of all of those
described.
We reserve the right to change or modify any such determination or the treatment
applied to a particular group, at any time.
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INCOME OPTIONS
- ----------------------------------------------------------------
- ----------------------------------------------------------------
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 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. Except as indicated under Option
5 below, once you begin receiving income payments, you cannot otherwise access
your money through a withdrawal or surrender.
If you switch to the Income Phase prior to a Deferred Payment Enhancement Date,
we will not allocate the corresponding Deferred Payment Enhancement to your
contract. SEE PRINCIPAL REWARDS PROGRAM ON PAGE 8.
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 ON PAGE 19.
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 for a period of 10 years.
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
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<PAGE> 23
time prior to the Annuity Date. You must notify us if the Annuitant dies before
the Annuity Date and designate a new Annuitant.
OPTION 1 - LIFE INCOME ANNUITY
This option provides income payments for the life of the Annuitant. Income
payments stop when the Annuitant dies.
OPTION 2 - JOINT AND SURVIVOR LIFE ANNUITY
This option provides income payments for the life of the Annuitant and for the
life of another designated person. Upon the death of either person, we will
continue to make income payments during the lifetime of the survivor. Income
payments stop when the survivor dies.
OPTION 3 - JOINT AND SURVIVOR LIFE ANNUITY WITH 10 OR 20 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 5 to
30 years. If the Annuitant dies before all the guaranteed income payments are
made, the remaining income payments are made to the Beneficiary under your
contract. Additionally, if variable income payments are elected under this
option, you (or the Beneficiary under the contract if the Annuitant dies prior
to all guaranteed payments being made) may redeem any remaining guaranteed
variable income payments after the Annuity Date for a discounted value
determined by Us. If provided for in your contract, any applicable withdrawal
charge will be deducted from the discounted value as if you fully surrendered
your contract.
The value of an Annuity Unit, regardless of the option chosen, takes into
account the Mortality and Expense Risk Charge. Since Option 5 does not contain
an element of mortality risk, no benefit is derived from this charge.
Please read the Statement of Additional Information ("SAI") for a more detailed
discussion of the income options.
FIXED OR VARIABLE INCOME PAYMENTS
You can choose income payments that are fixed, variable or both. If at the date
when income payments begin you are invested in the 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 fixed and variable investment options when income 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.
INCOME PAYMENTS
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, we may decrease the
frequency of payments, 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 annuity payments.
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 payments for up to six months, or less if required by
law. Interest is credited to you during the deferral period.
THE INCOME PROTECTOR FEATURE
The Income Protector feature is a future "safety net" which offers you the
ability to receive a guaranteed fixed minimum retirement income when you switch
to the Income Phase. With the Income Protector feature you can know the level of
minimum income that will be available to you, regardless of fluctuating market
conditions.
The Income Protector is a standard feature of your contract, if available in
your state. There is no additional charge associated with this feature.
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<PAGE> 24
Other options were previously available under the Income Protector feature. If
you purchased your contract between November 2, 1998 and March 31, 1999, the
other provisions continue to apply to your contract. Please contact our Annuity
Service Center for more information.
We reserve the right to modify, suspend or terminate the Income Protector
feature at any time.
HOW WE DETERMINE THE AMOUNT OF YOUR MINIMUM GUARANTEED INCOME
We base the amount of minimum income available to you if you elect to receive
income payments using the Income Protector feature upon a calculation we call
the income benefit base.
The income benefit base is only a calculation. It does not represent a contract
value, nor does it guarantee performance of the Variable Portfolios in which you
invest.
Your income benefit base increases if you make subsequent Purchase Payments and
decreases if you withdraw money from your contract. The exact income benefit
base calculation is equal to (a) plus (b) minus (c) where:
(a) is equal to, for the first year of calculation, your initial Purchase
Payment, or for each subsequent year of calculation, the income benefit
base on the prior contract anniversary, and;
(b) is equal to the sum of all subsequent Purchase Payments made into the
contract since the last contract anniversary, and;
(c) is equal to all withdrawals and applicable fees and charges since the
last contract anniversary, in an amount proportionate to the amount by
which such withdrawals decreased your contract value.
ELECTING TO RECEIVE INCOME PAYMENTS
You may elect to begin the Income Phase of your contract using the Income
Protector feature ONLY within the 30 days after the seventh or later contract
anniversary.
The contract anniversary prior to your election to begin receiving income
payments is your income benefit date. This is the date as of which we calculate
your income benefit base to use in determining your guaranteed minimum fixed
retirement income. Your final income benefit base is equal to (a) minus (b)
where:
(a) is equal to your income benefit base as of your income benefit date,
and;
(b) is equal to any partial withdrawals of contract value and any charges
applicable to those withdrawals and any withdrawal charges otherwise
applicable, calculated as if you fully surrender your contract as the
income benefit date, and any applicable premium taxes.
To arrive at the minimum guaranteed retirement income available to you we apply
to your final income benefit base the annuity rates stated in your Income
Protector endorsement for the income option you select. You then choose if you
would like to receive that income annually, semi-annually quarterly or monthly
for the time guaranteed under your selected income option. The income options
available when using the income protector feature to receive your retirement
income are:
- Life Annuity with 10 Years Guaranteed, or
- Joint and Survivor Life Annuity with 20 Years Guaranteed
At the time you elect to begin receiving income payments, we will calculate your
income payments using both your income benefit base and your contract value. We
will use the same income option for each calculation, however, the annuity
factors used to calculate your income under the Income Protector feature will be
different. You will receive whichever provides a greater stream of income. If
you elect to receive income payments using the Income Protector feature your
income payments will be fixed in amount. You are not required to use the Income
Protector feature to receive income payments.
NOTE TO QUALIFIED CONTRACT HOLDERS
Qualified contracts generally require that you select an income option which
does not exceed your life expectancy. That restriction, if it applies to you,
may limit your ability to use the Income Protector feature.
You may wish to consult your tax advisor for information concerning your
particular circumstances.
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<PAGE> 25
HYPOTHETICAL EXAMPLE OF THE OPERATION OF THE INCOME PROTECTOR FEATURE
This table assumes $100,000 initial investment in a Non-qualified contract with
no withdrawals, additional Purchase Payments or premium taxes.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Minimum annual income if you elect to receive income payments
If at issue on contract anniversary . . .
you are . . . 7 10 15 20
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Male 6,108 6,672 7,716 8,832
age 60*
- -------------------------------------------------------------------------------------------------------------
Female 5,388 5,880 6,900 8,112
age 60*
- -------------------------------------------------------------------------------------------------------------
Joint** 4,716 5,028 5,544 5,928
Male-60
Female-60
- -------------------------------------------------------------------------------------------------------------
</TABLE>
* Life annuity with 10 years guaranteed
** Joint and survivor life annuity with 20 years guaranteed
- ----------------------------------------------------------------
- ----------------------------------------------------------------
TAXES
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NOTE: WE PREPARED THE FOLLOWING INFORMATION ON TAXES AS A GENERAL DISCUSSION OF
THE SUBJECT. IT IS NOT TAX ADVICE. WE CAUTION YOU TO SEEK COMPETENT TAX ADVICE
ABOUT YOUR OWN CIRCUMSTANCES. WE DO NOT GUARANTEE THE TAX STATUS OF YOUR
ANNUITY. TAX LAWS CONSTANTLY CHANGE, THEREFORE WE CANNOT GUARANTEE THAT THE
INFORMATION CONTAINED HEREIN IS COMPLETE AND/OR ACCURATE.
ANNUITY CONTRACTS IN GENERAL
The Internal Revenue Code ("IRC") provides for special rules regarding the tax
treatment of annuity contracts. Generally, taxes on the earnings in your annuity
contract are deferred until you take the money out. Qualified retirement
investments automatically provide tax deferral regardless of whether the
underlying contract is an annuity. Different rules apply depending on how you
take the money out and whether your contract is Qualified or Non-qualified.
If you do not purchase your contract under a pension plan, a specially sponsored
employer program or an individual retirement account, your contract is referred
to as a Non-qualified contract. A Non-qualified contract receives different tax
treatment than a Qualified contract. In general, your cost basis in a
Non-qualified contract is equal to the Purchase Payments you put into the
contract. You have already been taxed on the cost basis in your contract.
If you purchase your contract under a pension plan, a specially sponsored
employer program or as an individual retirement account, your contract is
referred to as a Qualified contract. Examples of qualified plans are: Individual
Retirement Accounts ("IRAs"), Roth IRAs, Tax-Sheltered Annuities (referred to as
403(b) contracts), H.R. 10 Plans (referred to as Keogh Plans) and pension and
profit sharing plans, including 401(k) plans. Typically you have not paid any
tax on the Purchase Payments used to buy your contract and therefore, you have
no cost basis in your contract.
TAX TREATMENT OF DISTRIBUTIONS -
NON-QUALIFIED CONTRACTS
If you make a withdrawal from a Non-qualified contract, the IRC treats such a
withdrawal as first coming from the earnings and then as coming from your
Purchase Payments. For 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.
TAX TREATMENT OF DISTRIBUTIONS - QUALIFIED CONTRACTS
Generally, you have not paid any taxes on the Purchase Payments used to buy a
Qualified contract. Any amount of money you take out as a withdrawal or as
income payments is taxable income. The IRC further provides for a 10% penalty
tax on any withdrawal or income payment paid to you other than in conjunction
with the following circumstances: (1) after reaching age 59 1/2; (2) when paid
to your Beneficiary after you die; (3) after you become disabled (as defined in
the IRC); (4) in a series of substantially equal installments made for your life
or for the joint lives of you and your Beneficiary; (5) to the extent such
withdrawals do not exceed limitations set by the IRC for amounts paid during the
taxable year for medical care; (6) to fund higher education expenses (as defined
in IRC); (7) to fund certain first-time
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<PAGE> 26
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 a hardship (as defined in the IRC). In the case of
hardship, the owner can only withdraw Purchase Payments.
MINIMUM DISTRIBUTIONS
Generally, the IRS requires that you begin taking annual distributions from
qualified annuity contracts by April 1 of the calendar year following the later
of (1) the calendar year in which you attain age 70 1/2 or (2) the calendar year
in which you retire. Failure to satisfy the minimum distribution requirements
may result in a tax penalty. You should consult your tax advisor for more
information.
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.
- ----------------------------------------------------------------
- ----------------------------------------------------------------
PERFORMANCE
- ----------------------------------------------------------------
- ----------------------------------------------------------------
We advertise the Cash Management Portfolio's yield and effective yield. In
addition, the other Variable Portfolios advertise total return, gross yield and
yield-to-maturity. These figures represent past performance of the Variable
Portfolios. These performance numbers do not indicate future results.
When we advertise performance for periods prior to the date the contracts were
first issued, we derive the figures from the performance of the corresponding
portfolios for the Trusts, if available. We modify these numbers to reflect
charges and expenses as if the contract was in existence during the period
stated in the advertisement. Figures calculated in this manner do not represent
actual historic performance of the particular Variable Portfolio.
Consult the SAI for more detailed information regarding the calculation of
performance data. The performance of each Variable Portfolio may also be
measured against unmanaged market indices. The indices we use include but are
not limited to the Dow Jones Industrial Average, the Standard & Poor's 500, the
Russell 1000 Growth Index, the Morgan Stanley Capital International Europe,
Australia and Far East Index ("EAFE") and the Morgan Stanley Capital
International World Index. We may compare the Variable Portfolios' performance
to that of other variable annuities with similar objectives and policies as
reported by independent ranking agencies such as Morningstar, Inc., Lipper
Analytical Services, Inc. or Variable Annuity Research & Data Service ("VARDS").
Anchor National may also advertise the rating and other information assigned to
it by independent industry ratings organizations. Some of those organizations
are A.M. Best Company ("A.M. Best"), Moody's Investor's Service ("Moody's"),
Standard & Poor's Insurance Rating Services ("S&P"), and Duff & Phelps. A.M.
Best's and Moody's ratings reflect their current opinion of our financial
strength and performance in comparison to others in the life and health
insurance industry. S&P's and Duff & Phelps' ratings measure the ability of an
insurance company to meet its obligations under insurance policies it issues.
These two ratings do not measure the insurer's ability to meet non-policy
obligations. Ratings in general do not relate to the performance of the Variable
Portfolios.
- ----------------------------------------------------------------
- ----------------------------------------------------------------
OTHER INFORMATION
- ----------------------------------------------------------------
- ----------------------------------------------------------------
ANCHOR NATIONAL
Anchor National is a stock life insurance company originally organized under the
laws of the state of California in April 1965. On January 1, 1996, Anchor
National redomesticated under the laws of the state of Arizona.
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., Resources
Trust Company, and six broker-dealers, specialize in retirement savings and
investment products and
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<PAGE> 27
services. Business focuses include fixed and variable annuities, mutual funds,
broker-dealer services and trust administration services.
THE SEPARATE ACCOUNT
Anchor National established Variable Separate Account ("separate account"),
under Arizona law on January 1, 1996 when it assumed the separate account,
originally established under California law on June 25, 1981. The separate
account is registered with the SEC as a unit investment trust under the
Investment Company Act of 1940, as amended.
Anchor National owns the assets in the separate account. However, the assets in
the separate account are not chargeable with liabilities arising out of any
other business conducted by Anchor National. Income gains and losses (realized
and unrealized) resulting from assets in the separate account are credited to or
charged against the separate account without regard to other income gains or
losses of Anchor National.
THE GENERAL ACCOUNT
Money allocated to the fixed account options goes into Anchor National's general
account. The general account consists of all of Anchor National's assets other
than assets attributable to a separate account. All of the assets in the general
account are chargeable with the claims of any Anchor National contract holders
as well as all of its creditors. The general account funds are invested as
permitted under state insurance laws.
DISTRIBUTION OF THE CONTRACT
Registered representatives of broker-dealers sell the contract. We pay
commissions to these representatives for the sale of the contracts. We do not
expect the total commissions to exceed 7% of your Purchase Payments. We may also
pay a bonus to representatives for contracts which stay active for a particular
period of time, in addition to standard commissions. We do not deduct
commissions paid to registered representatives directly from your Purchase
Payments.
From time to time, we may pay or allow additional promotional incentives in the
form of cash or other compensation. We reserve the right to offer these
additional incentives only to certain broker-dealers that sell or are expected
to sell, certain minimum amounts of the contract, or other contracts offered by
us. Promotional incentives may change at any time.
SunAmerica Capital Services, Inc., 733 Third Avenue, 4th Floor, New York, New
York 10017 distributes the contracts. SunAmerica Capital Services, an affiliate
of Anchor National, is registered as a broker-dealer under the Exchange Act of
1934 and is a member of the National Association of Securities Dealers, Inc. No
underwriting fees are paid in connection with the distribution of the contracts.
ADMINISTRATION
We are responsible for the administrative servicing of your contract. Please
contact our Annuity Service Center
at 1-800-445-SUN2, if you have any comment, question or service request.
We send out transaction confirmations and quarterly statements. It is your
responsibility to review these documents carefully and notify us of any
inaccuracies immediately. We investigate all inquiries. To the extent that we
believe we made an error, we retroactively adjust your contract, provided you
notify us within 30 days of receiving the transaction confirmation or quarterly
statement. Any other adjustments we deem warranted are made as of the time we
receive notice of the error.
YEAR 2000
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 make necessary repairs of
certain specific noncompliant systems of which $6.2 million was allocated to
Anchor National. Anchor National's management is making expenditures which we
expect will ultimately total $5.0 million to replace certain other noncompliant
systems. Total expenditures relating to the replacement of noncompliant systems
will be capitalized by the Company as software costs and will be amortized over
future periods. Both phases of the project are progressing according to plan and
were substantially completed by the end of calendar 1998. Testing of both the
repaired and replacement systems is being conducted 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
21
<PAGE> 28
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 our year 2000 plan. If we determine that our business
is at material risk of disruption due to the year 2000 issue or anticipate that
we will not complete our year 2000 conversion in a timely fashion, we will work
to enhance our contingency plans.
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 the 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.
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.
OWNERSHIP
The PolarisII Variable Annuity is a Flexible Payment Group Deferred Annuity
contract. We issue 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.
CUSTODIAN
State Street Bank and Trust Company, 255 Franklin Street, Boston, Massachusetts
02110, serves as the custodian of the assets of the separate account. Anchor
National pays State Street Bank for services provided, based on a schedule of
fees.
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
incorporated by reference 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.
LEGAL MATTERS
The organization of Anchor National, its authority to issue the contracts and
the validity of the form of the contracts have been passed upon by Susan L.
Harris, Senior Vice President and General Counsel of SunAmerica Inc., of which
Anchor National is an indirect-wholly owned subsidiary.
REGISTRATION STATEMENT
A registration statement has been filed with the SEC under the Securities Act of
1933 relating to the contract. This prospectus does not contain all the
information in the registration statement as permitted by SEC regulations. The
omitted information can be obtained from the SEC's principal office in
Washington, D.C., upon payment of a prescribed fee.
- ----------------------------------------------------------------
- ----------------------------------------------------------------
TABLE OF CONTENTS OF
STATEMENT OF ADDITIONAL INFORMATION
- ----------------------------------------------------------------
- ----------------------------------------------------------------
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)
445-SUN2. The contents of the SAI are tabulated below.
<TABLE>
<S> <C>
Separate Account.............................. 3
General Account............................... 3
Performance Data.............................. 4
Income Payments............................... 9
Annuity Unit Values........................... 10
Taxes......................................... 12
Distribution of Contracts..................... 16
Financial Statements.......................... 16
</TABLE>
22
<PAGE> 29
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
APPENDIX A - CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCEPTION TO FISCAL YEAR
PORTFOLIOS 11/30/97 11/30/98
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Appreciation (Inception Date - 6/3/97)
Beginning AUV.................................. $ 18.52 $ 21.26
Ending AUV..................................... $ 21.26 $ 23.72
Ending Number of AUs........................... 1,392,262 7,356,862
- -------------------------------------------------------------------------------------------
Growth (Inception Date - 6/3/97)
Beginning AUV.................................. $ 17.93 $ 20.31
Ending AUV..................................... $ 20.31 $ 24.41
Ending Number of AUs........................... 789,274 3,678,108
- -------------------------------------------------------------------------------------------
Natural Resources (Inception Date - 6/4/97)
Beginning AUV.................................. $ 12.39 $ 11.14
Ending AUV..................................... $ 11.14 $ 9.30
Ending Number of AUs........................... 195,946 641,479
- -------------------------------------------------------------------------------------------
Government and Quality Bond (Inception Date - 6/11/97)
Beginning AUV.................................. $ 11.99 $ 12.65
Ending AUV..................................... $ 12.65 $ 13.66
Ending Number of AUs........................... 395,258 5,697,571
- -------------------------------------------------------------------------------------------
Emerging Markets (Inception Date - 6/5/97)
Beginning AUV.................................. $ 10.14 $ 7.97
Ending AUV..................................... $ 7.97 $ 6.14
Ending Number of AUs........................... 663,212 2,574,316
- -------------------------------------------------------------------------------------------
International Diversified Equities (Inception Date - 6/4/97)
Beginning AUV.................................. $ 12.04 $ 11.62
Ending AUV..................................... $ 11.62 $ 13.53
Ending Number of AUs........................... 1,040,812 4,519,545
- -------------------------------------------------------------------------------------------
Global Equities (Inception Date - 6/3/97)
Beginning AUV.................................. $ 16.54 $ 16.90
Ending AUV..................................... $ 16.90 $ 19.21
Ending Number of AUs........................... 600,294 2,566,912
- -------------------------------------------------------------------------------------------
International Growth and Income (Inception Date - 6/4/97)
Beginning AUV.................................. $ 9.97 $ 10.33
Ending AUV..................................... $ 10.33 $ 11.16
Ending Number of AUs........................... 1,310,126 6,738,263
- -------------------------------------------------------------------------------------------
Aggressive Growth (Inception Date - 6/9/97)
Beginning AUV.................................. $ 10.03 $ 11.51
Ending AUV..................................... $ 11.51 $ 11.86
Ending Number of AUs........................... 821,105 2,794,187
- -------------------------------------------------------------------------------------------
MFS Mid-Cap Growth (Inception Date - 4/1/99)
Beginning AUV.................................. $ -- $ --
Ending AUV..................................... $ -- $ --
Ending Number of AUs........................... -- --
- -------------------------------------------------------------------------------------------
Real Estate (Inception Date - 6/4/97)
Beginning AUV.................................. $ 9.98 $ 11.44
Ending AUV..................................... $ 11.44 $ 9.80
Ending Number of AUs........................... 887,321 3,336,767
- -------------------------------------------------------------------------------------------
Putnam Growth (Inception Date - 6/3/97)
Beginning AUV.................................. $ 15.80 $ 18.47
Ending AUV..................................... $ 18.47 $ 22.29
Ending Number of AUs........................... 831,178 4,949,624
- -------------------------------------------------------------------------------------------
MFS Growth and Income* (Inception Date - 6/4/97)
Beginning AUV.................................. $ 15.82 $ 17.63
Ending AUV..................................... $ 17.63 $ 20.46
Ending Number of AUs........................... 191,101 694,076
- -------------------------------------------------------------------------------------------
Alliance Growth (Inception Date - 6/2/97)
Beginning AUV.................................. $ 21.81 $ 24.51
Ending AUV..................................... $ 24.51 $ 32.81
Ending Number of AUs........................... 2,092,044 12,001,651
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
* Formerly named Growth/Phoenix and managed by Phoenix Investment
Counsel, Inc.
AUV - Accumulation Unit Value
AU - Accumulation Units
A-1
<PAGE> 30
<TABLE>
<CAPTION>
INCEPTION TO FISCAL YEAR
PORTFOLIOS 11/30/97 11/30/98
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
<S> <C> <C>
"Dogs of Wall Street" (Inception Date - 4/1/98)
Beginning AUV.................................. $ -- $ 10.00
Ending AUV..................................... $ -- $ 9.71
Ending Number of AUs........................... -- 4,324,225
- -------------------------------------------------------------------------------------------
Venture Value (Inception Date - 6/2/97)
Beginning AUV.................................. $ 18.63 $ 21.30
Ending AUV..................................... $ 21.30 $ 23.36
Ending Number of AUs........................... 4,281,879 20,734,371
- -------------------------------------------------------------------------------------------
Federated Value (Inception Date - 6/4/97)
Beginning AUV.................................. $ 12.14 $ 13.62
Ending AUV..................................... $ 13.62 $ 15.86
Ending Number of AUs........................... 736,333 3,783,248
- -------------------------------------------------------------------------------------------
Growth-Income (Inception Date - 6/3/97)
Beginning AUV.................................. $ 18.84 $ 21.41
Ending AUV..................................... $ 21.41 $ 25.71
Ending Number of AUs........................... 1,949,292 9,786,202
- -------------------------------------------------------------------------------------------
Utility (Inception Date - 6/6/97)
Beginning AUV.................................. $ 11.41 $ 12.74
Ending AUV..................................... $ 12.74 $ 14.56
Ending Number of AUs........................... 177,618 1,807,529
- -------------------------------------------------------------------------------------------
Asset Allocation (Inception Date - 6/3/97)
Beginning AUV.................................. $ 16.59 $ 17.98
Ending AUV..................................... $ 17.98 $ 18.22
Ending Number of AUs........................... 1,498,681 8,996,522
- -------------------------------------------------------------------------------------------
MFS Total Return** (Inception Date - 6/10/97)
Beginning AUV.................................. $ 14.44 $ 15.45
Ending AUV..................................... $ 15.45 $ 17.28
Ending Number of AUs........................... 218,391 1,492,175
- -------------------------------------------------------------------------------------------
SunAmerica Balanced (Inception Date - 6/5/97)
Beginning AUV.................................. $ 11.84 $ 13.22
Ending AUV..................................... $ 13.22 $ 15.60
Ending Number of AUs........................... 363,136 3,543,245
- -------------------------------------------------------------------------------------------
Worldwide High Income (Inception Date - 6/5/97)
Beginning AUV.................................. $ 15.57 $ 15.98
Ending AUV..................................... $ 15.98 $ 13.57
Ending Number of AUs........................... 596,308 2,430,509
- -------------------------------------------------------------------------------------------
High-Yield Bond (Inception Date - 6/9/97)
Beginning AUV.................................. $ 13.63 $ 14.66
Ending AUV..................................... $ 14.66 $ 14.25
Ending Number of AUs........................... 758,856 5,006,115
- -------------------------------------------------------------------------------------------
Corporate Bond (Inception Date - 6/9/97)
Beginning AUV.................................. $ 11.83 $ 12.54
Ending AUV..................................... $ 12.54 $ 13.15
Ending Number of AUs........................... 328,300 3,633,064
- -------------------------------------------------------------------------------------------
Global Bond (Inception Date - 6/11/97)
Beginning AUV.................................. $ 12.41 $ 13.08
Ending AUV..................................... $ 13.08 $ 14.40
Ending Number of AUs........................... 183,563 1,342,157
- -------------------------------------------------------------------------------------------
Cash Management (Inception Date - 6/5/97)
Beginning AUV.................................. $ 11.24 $ 11.43
Ending AUV..................................... $ 11.43 $ 11.83
Ending Number of AUs........................... 1,514,290 5,488,046
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
** Formerly named Balanced/Phoenix and managed by Phoenix
Investment Counsel, Inc.
AUV - Accumulation Unit Value
AU - Accumulation Units
A-2
<PAGE> 31
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
APPENDIX B - PRINCIPAL REWARDS PROGRAM
DEFERRED PAYMENT ENHANCEMENT EXAMPLES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
If you elect to participate in the Principal Rewards Program at contract issue,
we contribute 2.00% of each Purchase Payment to your contract for each Purchase
Payment we receive. Any applicable Deferred Payment Enhancement is allocated to
your contract on the corresponding Deferred Payment Enhancement Date and, if
declared by the Company, is a percentage of your REMAINING Purchase Payment on
the Deferred Payment Enhancement Date. Deferred Purchase Payment Enhancements
are reduced proportionately by partial withdrawals of that Purchase Payment
prior to the Deferred Payment Enhancement Date.
The examples that follow assume an initial Purchase Payment of $50,000 and that
the Deferred Payment Enhancement is 2.00%. For purposes of the example, the
Deferred Payment Enhancement Date is the 9th anniversary of the Purchase
Payment.
EXAMPLE 1 - NO WITHDRAWALS ARE MADE
The Initial Payment Enhancement allocated to your contract is $1,000.00 (2.00%
of $50,000.00).
On your 9th contract anniversary, the Deferred Payment Enhancement Date, your
Deferred Payment Enhancement of $1,000.00 (2.00% of your remaining Purchase
Payment or $50,000.00) will be allocated to your contract.
EXAMPLE 2 - WITHDRAWAL MADE PRIOR TO DEFERRED PAYMENT ENHANCEMENT DATE
As in Example 1, your Initial Payment Enhancement is $1,000.00.
This example also assumes the following:
1. Your contract value on your 5th contract anniversary is $75,000.00.
2. You request a withdrawal of $30,000.00 on your 5th contract anniversary.
3. No subsequent Purchase Payments have been made.
4. No prior withdrawals have been taken.
5. Funds are not allocated to any of the MVA Fixed Accounts.
On your 5th contract anniversary, your penalty-free earnings in the contract are
$25,000.00 ($75,000.00 contract value less your $50,000.00 investment in the
contract). Therefore, you are withdrawing $5,000.00 of your initial Purchase
Payment. Your contract value will also be reduced by a $250.00 withdrawal charge
on the $5,000.00 Purchase Payment (5.00% of $5,000.00). Your gross withdrawal is
$30,250.00 of which $5,250 constitutes part of your initial Purchase Payment.
The withdrawal of $5,250.00 of your $50,000.00 Purchase Payment is a withdrawal
of 10.50% of your Purchase Payment. Therefore, only 89.50%, or $44,750.00, of
your initial Purchase Payment remains in your contract.
On your 9th contract anniversary, the Deferred Payment Enhancement Date,
assuming no other transactions occur affecting the Purchase Payment, we allocate
your Deferred Payment Enhancement of $895.00 (2.00% of your remaining Purchase
Payment, $44,750.00) to your contract.
B-1
<PAGE> 32
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
APPENDIX C - 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 switched to the Income Phase by the following factor:
[(1+I/(1+J+0.005)](N/12) - 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; 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 5%;
(2) You make a partial withdrawal of $4,000 when 1 year (12 months) remains
in the 10-year term you initially agreed to leave your money in the
fixed account option (N=12); and
(3) You have not made any other transfers, additional Purchase Payments, or
withdrawals.
No withdrawal charges are reflected because your Purchase Payment has been in
the contract for nine full years. If a withdrawal charge applies, it is deducted
before the 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 1-year fixed account option is 4%.
The MVA factor is = [(1+I/(1+J+0.005)](N/12) - 1
= [(1.05)/(1.04+0.005)](12/12) - 1
= (1.004785)(1) - 1
= 1.004785 - 1
= + 0.004785
The requested withdrawal amount is multiplied by the MVA factor to determine the
MVA:
$4,000 x (+0.004785) = +$19.14
$19.14 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 1-year fixed account option is 6%.
The MVA factor is = [(1+I)/(1+J+0.005)](N/12) - 1
= [(1.05)/(1.06+0.005)](12/12) - 1
= (0.985915)(1) - 1
= 0.985915 - 1
= - 0.014085
The requested withdrawal amount is multiplied by the MVA factor to determine the
MVA:
$4,000 X (-0.014085) = -$56.34
$56.34 represents the MVA that will be deducted from the money remaining in the
10-year fixed account option.
C-1
<PAGE> 33
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
APPENDIX D - 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%
- ----------------------------------------------------------------------------------------
Kentucky 2% 2%
- ----------------------------------------------------------------------------------------
Maine 0% 2%
- ----------------------------------------------------------------------------------------
Nevada 0% 3.5%
- ----------------------------------------------------------------------------------------
South Dakota 0% 1.25%
- ----------------------------------------------------------------------------------------
West Virginia 1% 1%
- ----------------------------------------------------------------------------------------
Wyoming 0% 1%
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
</TABLE>
D-1
<PAGE> 34
- --------------------------------------------------------------------------------
Please forward a copy (without charge) of the Polaris(II) Variable Annuity
Statement of Additional Information to:
(Please print or type and fill in all information.)
------------------------------------------------------------------------
Name
------------------------------------------------------------------------
Address
------------------------------------------------------------------------
City/State/Zip
<TABLE>
<S> <C> <C> <C>
Date: ------------------------------------ Signed: ---------------------------------------
</TABLE>
Return to: Anchor National Life Insurance Company, Annuity Service Center,
P.O. Box 52499, Los Angeles, California 90054-0299
- --------------------------------------------------------------------------------
<PAGE> 35
LOGO
THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT POINTS THAT YOU SHOULD
KNOW AND CONSIDER BEFORE PURCHASING THE POLARISII VARIABLE ANNUITY. THE ANNUITY
IS MORE FULLY DESCRIBED IN THE PROSPECTUS. PLEASE READ THE PROSPECTUS CAREFULLY.
June 1, 1999
- ----------------------------------------------------------------
- ----------------------------------------------------------------
1. THE POLARISII VARIABLE ANNUITY
- ----------------------------------------------------------------
- ----------------------------------------------------------------
The PolarisII Variable Annuity is a contract between you and Anchor National
Life Insurance Company. It is designed to help you invest on a tax-deferred
basis and meet long-term financial goals, such as retirement funding. Tax
deferral means all your money, including the amount you would otherwise pay in
current income taxes, remains in your contract to generate more earnings. Your
money could grow faster than it would in a comparable taxable investment.
PolarisII offers a diverse selection of money managers and investment options.
You may divide your money among any or all 27 variable portfolios and 7 fixed
account options. To the extent you invest in the variable portfolios, your
investment is not guaranteed. The value of your PolarisII contract can fluctuate
up and down, based on the performance of the underlying investments you select
and you may experience a loss.
The variable portfolios offer professionally managed investment choices with
goals ranging from capital preservation to aggressive growth. Your choices for
the various investment options are found on the next page.
The contract also offers 7 fixed account options, for different time periods.
Each may have a different interest rate. Interest rates are guaranteed by Anchor
National.
Like most annuities, the contract has an accumulation phase and an income phase.
During the accumulation phase, you invest money in your contract. Your earnings
are based on the investment performance of the variable portfolios to which your
money is allocated and/or the interest rate(s) earned on the fixed account
option(s) in which you invest. You may withdraw money from your contract during
the accumulation phase. However, as with other tax-deferred investments, you
will pay taxes on earnings and untaxed contributions when you withdraw them. A
federal tax penalty may apply if you make withdrawals before age 59 1/2.
During the income phase, you may receive income payments from your annuity. Your
income payments may be fixed in dollar amount, vary with investment performance
or a combination of both, depending on where your money is allocated. Among
other factors, the amount of money you are able to accumulate in your contract
during the accumulation phase will affect the amount of your income payments
during the income phase.
- ----------------------------------------------------------------
- ----------------------------------------------------------------
2. INCOME OPTIONS
- ----------------------------------------------------------------
- ----------------------------------------------------------------
You can select from one of five income options:
(1) payments for your lifetime;
(2) payments for your lifetime and your survivor's lifetime;
(3) payments for your lifetime and your survivor's lifetime, but for not less
than 10 or 20 years;
(4) payments for your lifetime, but for not less than 10 or 20 years; and
(5) payments for a specified period of 5 to 30 years.
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
income payment is taxable as income.
In addition to the above income options, you may elect to take income payments
under the income protector feature, subject to the provisions thereof.
- ----------------------------------------------------------------
- ----------------------------------------------------------------
3. PURCHASING A POLARISII VARIABLE
ANNUITY CONTRACT
- ----------------------------------------------------------------
- ----------------------------------------------------------------
You can buy a contract through your financial representative, who can also help
you complete the proper forms. For non-qualified contracts, the minimum initial
purchase payment is $5,000 and subsequent amounts of $500 or more may be added
to your contract at any time during the accumulation phase. For qualified
contracts, the minimum initial purchase payment is $2,000 and subsequent amounts
of $250 or more may be added to your contract at any time during the
accumulation phase.
<PAGE> 36
----------------------------------------------------------------
----------------------------------------------------------------
4. INVESTMENT OPTIONS
----------------------------------------------------------------
----------------------------------------------------------------
You may allocate money to the following variable portfolios of the Anchor Series
Trust and/or the SunAmerica Series Trust:
ANCHOR SERIES TRUST
MANAGED BY WELLINGTON MANAGEMENT COMPANY, LLP
- Capital Appreciation Portfolio
- Growth Portfolio
- Natural Resources Portfolio
- Government and Quality Bond Portfolio
SUNAMERICA SERIES TRUST
MANAGED BY ALLIANCE CAPITAL MANAGEMENT L.P.
- Global Equities Portfolio
- Alliance Growth Portfolio
- Growth-Income Portfolio
MANAGED BY DAVIS SELECTED ADVISERS, L.P.
- Venture Value Portfolio
- Real Estate Portfolio
MANAGED BY FEDERATED INVESTORS
- Federated Value Portfolio
- Utility Portfolio
- Corporate Bond Portfolio
MANAGED BY GOLDMAN SACHS ASSET MANAGEMENT/ GOLDMAN SACHS ASSET MANAGEMENT
INTERNATIONAL
- Asset Allocation Portfolio
- Global Bond Portfolio
MANAGED BY MASSACHUSETTS FINANCIAL SERVICES COMPANY
- MFS Mid-Cap Growth
- MFS Growth and Income Portfolio
- MFS Total Return Portfolio
MANAGED BY MORGAN STANLEY ASSET MANAGEMENT
- International Diversified Equities Portfolio
- Worldwide High Income Portfolio
MANAGED BY PUTNAM INVESTMENT MANAGEMENT, INC.
- Putnam Growth Portfolio
- International Growth and Income Portfolio
- Emerging Markets Portfolio
MANAGED BY SUNAMERICA ASSET MANAGEMENT CORP.
- Aggressive Growth Portfolio
- "Dogs" of Wall Street Portfolio
- SunAmerica Balanced Portfolio
- High-Yield Bond Portfolio
- Cash Management Portfolio
You may also allocate money to the 1-year fixed account option or the 3, 5, 7
and 10-year market value adjustment ("MVA") fixed account options and, under
certain circumstances, the 6-month and 1-year Dollar Cost Averaging ("DCA")
fixed account options.
The interest rates applicable for these fixed account options may differ from
time to time, however, we will never credit less than a 3% annual effective
rate. Once established, the rate will not change during the selected period.
Your contract value will be adjusted up or down for withdrawals or transfers
from the 3, 5, 7 and 10-year fixed account options prior to the end of the
guarantee period.
----------------------------------------------------------------
----------------------------------------------------------------
5. EXPENSES
----------------------------------------------------------------
----------------------------------------------------------------
Each year, we deduct a $35 contract maintenance fee ($30 in North Dakota) from
your contract. We also deduct insurance charges which equal 1.52% annually of
the average daily value of your contract allocated to the variable portfolios.
As with other professionally managed investments, there are investment charges
imposed on contracts with money allocated to the variable portfolios. We
estimate these fees to range from .58 to 1.90.
If you take money out of your contract, you may be assessed a withdrawal charge
which is a percentage of the money you withdraw. The percentage declines over
the time the money is in the contract.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Year 1 2 3 4 5 6 7 8
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WITHDRAWAL
CHARGE 7% 6% 5% 4% 3% 2% 1% 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) applies to
each subsequent transfer.
In a limited number of states, you may also be assessed a state premium tax of
up to 3.5% depending upon the state.
The following chart is designed to help you understand the charges in your
contract. The column "Total Annual Charges" shows the total of the 1.52%
insurance charges, the $35 contract maintenance fee and the investment charges
for each variable portfolio. We converted the contract maintenance fee to a
percentage using an assumed contract size of $40,000. The actual impact of this
charge on your contract may differ from this percentage.
The next two columns show two examples of the charges you would pay under the
contract. The examples assume that you invested $1,000 in a contract which earns
5% annually and that you withdraw your money: (1) at the end of year 1, and (2)
at the end of year 10. The premium tax is assumed to be 0% in both examples.
<PAGE> 37
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
EXAMPLES:
TOTAL ANNUAL TOTAL ANNUAL TOTAL EXPENSES TOTAL EXPENSES
INSURANCE INVESTMENT TOTAL ANNUAL AT END OF AT END OF
ANCHOR SERIES TRUST PORTFOLIO CHARGES CHARGES CHARGES 1 YEAR 10 YEARS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Capital Appreciation 1.61% .68% 2.29% $ 93 $262
Growth 1.61% .75% 2.36% $ 94 $269
Natural Resources 1.61% .88% 2.49% $ 95 $282
Government and Quality Bond 1.61% .67% 2.28% $ 93 $261
- ----------------------------------------------------------------------------------------------------------------------------
SUNAMERICA SERIES TRUST PORTFOLIO
Emerging Markets* 1.61% 1.90% 3.51% $105 $378
International Diversified Equities 1.61% 1.26% 2.87% $ 99 $319
Global Equities 1.61% .88% 2.49% $ 95 $282
International Growth and Income* 1.61% 1.46% 3.07% $101 $338
Aggressive Growth* 1.61% .83% 2.44% $ 95 $277
MFS Mid-Cap Growth 1.61% 1.00% 2.61% $ 96 $294
Real Estate* 1.61% .95% 2.56% $ 96 $289
Putnam Growth 1.61% .86% 2.47% $ 95 $280
MFS Growth and Income(1) 1.61% .73% 2.34% $ 94 $267
Alliance Growth 1.61% .64% 2.25% $ 93 $258
"Dogs" of Wall Street* 1.61% .85% 2.46% $ 95 $279
Venture Value 1.61% .75% 2.36% $ 94 $269
Federated Value* 1.61% .83% 2.44% $ 95 $277
Growth-Income 1.61% .60% 2.21% $ 92 $254
Utility* 1.61% 1.01% 2.62% $ 96 $295
Asset Allocation 1.61% .64% 2.25% $ 93 $258
MFS Total Return(2) 1.61% .77% 2.38% $ 94 $271
SunAmerica Balanced* 1.61% .78% 2.39% $ 94 $272
Worldwide High Income 1.61% 1.08% 2.69% $ 97 $302
High-Yield Bond 1.61% .69% 2.30% $ 93 $263
Corporate Bond 1.61% .77% 2.38% $ 94 $271
Global Bond 1.61% .85% 2.46% $ 95 $279
Cash Management 1.61% .58% 2.19% $ 92 $252
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* For these Portfolios, the adviser, SunAmerica Asset Management Corp., has
voluntarily agreed to waive fees or reimburse expenses, if necessary, to keep
operating expenses at or below an established maximum amount. All waivers or
reimbursements may be terminated at any time. For more detailed information,
see Fee Tables and Examples in the prospectus.
(1) Formerly named Growth/Phoenix and managed by Phoenix Investment Counsel,
Inc.
(2) Formerly named Balanced/Phoenix and managed by Phoenix Investment Counsel,
Inc.
----------------------------------------------------------------
----------------------------------------------------------------
6. TAXES
----------------------------------------------------------------
----------------------------------------------------------------
Unlike taxable investments where earnings are taxed in the year they are earned,
taxes on amounts earned in a non-qualified contract are deferred until they are
withdrawn. In a qualified contract, all amounts are taxable when they are
withdrawn.
When you begin taking distributions or withdrawals from your contract, earnings
are considered to be taken out first and will be taxed at your ordinary income
rate. You may be subject to a 10% federal tax penalty for distributions or
withdrawals before age 59 1/2.
----------------------------------------------------------------
----------------------------------------------------------------
7. ACCESS TO YOUR MONEY
----------------------------------------------------------------
----------------------------------------------------------------
During the first year, you may withdraw free of a withdrawal charge an amount
that is equal to the penalty-free earnings in your contract as of the date you
make the withdrawal or, if you participate in the systematic withdrawal program,
you may withdraw 10% of your total invested amount less any withdrawals made
during the year. The penalty-free earnings amount is calculated by taking the
value of your contract on the day you make the withdrawal and subtracting your
total invested amount. After the first year, your maximum free withdrawal amount
is the greater of: (1) the penalty-free earnings or (2) 10% of your total
invested amount that has been invested for at least one year, less any
withdrawals made during the year. Withdrawals in excess of these limits will be
assessed a withdrawal charge.
If you withdraw your entire contract value, you will not receive the benefit of
any free withdrawal amount. After your money has been in the contract for seven
full years, there are no withdrawal charges on that portion of the money that
you have invested for at least seven full years.
----------------------------------------------------------------
----------------------------------------------------------------
8. PERFORMANCE
----------------------------------------------------------------
----------------------------------------------------------------
When you invest in the PolarisII Variable Annuity, your money is actually
invested in the underlying portfolios of the Anchor Series Trust and/or the
SunAmerica Series Trust. The value of your annuity will fluctuate depending upon
the investment performance of the portfolio(s) you choose.
The following chart shows total returns for each portfolio for the time periods
shown. These numbers reflect the insurance charges, the contract maintenance fee
and the investment charges. Withdrawal charges are not reflected in the chart.
Past performance is no guarantee of future results.
<PAGE> 38
<TABLE>
<CAPTION>
- --------------------------------------------------------------
ANCHOR SERIES CALENDAR
TRUST PORTFOLIO YEAR 1998
- --------------------------------------------------------------
<S> <C>
Capital Appreciation 20.27%
Growth 26.93%
Natural Resources (18.80)%
Government and Quality Bond 7.42%
- --------------------------------------------------------------
SUNAMERICA SERIES
TRUST PORTFOLIO
Emerging Markets (25.62)%
International Diversified Equities 16.60%
Global Equities 20.86%
International Growth and Income 9.03%
Aggressive Growth 15.55%
MFS Mid-Cap Growth --*
Real Estate (16.76)%
Putnam Growth 32.60%
MFS Growth and Income1 27.22%
Alliance Growth 49.83%
"Dogs" of Wall Street (1.83)%**
Venture Value 11.96%
Federated Value 16.05%
Growth-Income 28.74%
Utility 12.21%
Asset Allocation 1.67%
MFS Total Return2 17.64%
SunAmerica Balanced 22.67%
Worldwide High Income (18.45)%
High-Yield Bond (4.51)%
Corporate Bond 4.31%
Global Bond 9.04%
Cash Management 3.51%
- --------------------------------------------------------------
- --------------------------------------------------------------
</TABLE>
* This portfolio was not available for sale during calendar year 1998.
** Inception to 12/31/98.
1 Formerly named Growth/Phoenix and managed by Phoenix Investment Counsel, Inc.
2 Formerly named Balanced/Phoenix and managed by Phoenix Investment Counsel,
Inc.
----------------------------------------------------------------
----------------------------------------------------------------
9. DEATH BENEFIT
----------------------------------------------------------------
----------------------------------------------------------------
If you should die during the accumulation phase, your beneficiary will receive a
death benefit. You must select from the two death benefit options described
below at the time you purchase your contract. Once selected, your death benefit
may not be changed. You should discuss with your financial representative the
options available to you and which option is best for you.
OPTION 1 - PURCHASE PAYMENT ACCUMULATION OPTION:
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 withdrawals (and any fees or charges applicable
to such withdrawals), compounded at a 4% annual growth rate until the date
of death (3% growth rate if 70 or older at the time of contract issue) plus
any purchase payments less withdrawals recorded after the date of death (and
any fees or charges applicable to such withdrawals); or
(3) the value of your contract on the seventh contract anniversary, plus any
purchase payments since the seventh anniversary and less any withdrawals
(and any fees or charges applicable to such withdrawals), all compounded at
a 4% annual growth rate until the date of death (3% if 70 or older at the
time of contract issue) plus any purchase payments less withdrawals recorded
after the date of death (and any fees or charges applicable to such
withdrawals).
OPTION 2 - MAXIMUM ANNIVERSARY OPTION:
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 prior to your 81st
birthday. The anniversary value equals the value of your contract on a
contract anniversary plus any purchase payments and less any withdrawals
(and any fees or charges applicable to such withdrawals) since that
anniversary.
If you are age 90 or older at the time of death and selected the option 2 death
benefit, the death benefit will be equal to the value of your contract at the
time we receive satisfactory proof of death.
----------------------------------------------------------------
----------------------------------------------------------------
10. OTHER INFORMATION
----------------------------------------------------------------
----------------------------------------------------------------
FREE LOOK: You may cancel your contract within ten days (or longer if required
by your state) by mailing it to our Annuity Service Center. Your contract will
be treated as void on the date we receive it and we will pay you an amount equal
to the value of your contract (unless otherwise required by state law). Its
value may be more or less than the money you initially invested.
ASSET ALLOCATION REBALANCING: If selected by you, this program seeks to keep
your investment in line with your goals. We will maintain your specified
allocation mix in the variable portfolios and the 1-year fixed account option by
readjusting your money on a calendar quarter, semiannual or annual basis.
SYSTEMATIC WITHDRAWAL PROGRAM: If selected by you, this program allows you to
receive either monthly, quarterly, semiannual or annual checks during the
accumulation phase. Systematic withdrawals may also be electronically
transferred to your bank account. Of course, withdrawals may be taxable and a
10% federal tax penalty may apply if you are under age 59 1/2.
PRINCIPAL ADVANTAGE PROGRAM: If selected by you, this program allows you to
obtain growth potential without any market risk to your principal. We will
guarantee that the portion of your money allocated to the 1, 3, 5, 7 or 10-year
fixed account option will grow to equal your principal investment when it is
allocated in accordance with the program.
DOLLAR COST AVERAGING: If selected by you, this program allows you to invest
gradually in the variable portfolios from any of the variable portfolios, the
1-year fixed account option,
<PAGE> 39
the 6-month DCA fixed account option or the 1-year DCA fixed account option.
AUTOMATIC PAYMENT PLAN: You can add to your contract directly from your bank
account with as little as $20 per month.
CONFIRMATIONS AND QUARTERLY STATEMENTS: During the accumulation phase, you will
receive a confirmation of each transaction within your contract. During the
accumulation and income phases, you will receive a statement of your
transactions over the past quarter and a summary of your account values.
----------------------------------------------------------------
----------------------------------------------------------------
11. INQUIRIES
----------------------------------------------------------------
----------------------------------------------------------------
If you have questions about your contract or need to make changes, call your
financial representative or contact us at:
Anchor National Life Insurance Company
Annuity Service Center
P.O. Box 54299
Los Angeles, California 90054-0299
Telephone Number: (800) 445-SUN2
If money accompanies your correspondence, you should direct it to:
Anchor National Life Insurance Company
P.O. Box 100330
Pasadena, California 91189-0001
<PAGE> 40
[POLARIS II LOGO]
PROSPECTUS
JUNE 1, 1999
<TABLE>
<S> <C> <C>
Please read this prospectus carefully FLEXIBLE PAYMENT DEFERRED ANNUITY CONTRACTS
before investing and keep it for issued by
future reference. It contains ANCHOR NATIONAL LIFE INSURANCE COMPANY
important information about the in connection with
Polaris(II) Variable Annuity. VARIABLE SEPARATE ACCOUNT
The annuity has 34 investment choices -7 fixed account
To learn more about the annuity options and 27 Variable Portfolios listed below. The 7 fixed
offered by this prospectus, you can account options include specified periods of 1, 3, 5, 7 and
obtain a copy of the Statement of 10 years and DCA accounts for 6-month and 1-year periods.
Additional Information ("SAI") dated The 27 Variable Portfolios are part of the Anchor Series
June 1, 1999. The SAI has been filed Trust or the SunAmerica Series Trust.
with the Securities and Exchange
Commission ("SEC") and is ANCHOR SERIES TRUST:
incorporated by reference into this MANAGED BY WELLINGTON MANAGEMENT COMPANY, LLP
prospectus. The Table of Contents of - Capital Appreciation Portfolio
the SAI appears on page 21 of this - Growth Portfolio
prospectus. For a free copy of the - Natural Resources Portfolio
SAI, call us at (800) 445-SUN2 or - Government and Quality Bond Portfolio
write to us at our Annuity Service
Center, P.O. Box 54299, Los Angeles, SUNAMERICA SERIES TRUST:
California 90054-0299. MANAGED BY ALLIANCE CAPITAL MANAGEMENT L.P.
- Global Equities Portfolio
In addition, the SEC maintains a - Alliance Growth Portfolio
website (http://www.sec.gov) that - Growth-Income Portfolio
contains the SAI, materials MANAGED BY DAVIS SELECTED ADVISERS, L.P.
incorporated by reference and other - Venture Value Portfolio
information filed electronically with - Real Estate Portfolio
the SEC by Anchor National. MANAGED BY FEDERATED INVESTORS
- Federated Value Portfolio
ANNUITIES INVOLVE RISKS, INCLUDING - Utility Portfolio
POSSIBLE LOSS OF PRINCIPAL, AND ARE - Corporate Bond Portfolio
NOT A DEPOSIT OR OBLIGATION OF, OR MANAGED BY GOLDMAN SACHS ASSET MANAGEMENT/
GUARANTEED OR ENDORSED BY, ANY BANK. GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL
THEY ARE NOT FEDERALLY INSURED BY THE - Asset Allocation Portfolio
FEDERAL DEPOSIT INSURANCE - Global Bond Portfolio
CORPORATION, THE FEDERAL RESERVE MANAGED BY MASSACHUSETTS FINANCIAL SERVICES COMPANY
BOARD OR ANY OTHER AGENCY. - MFS Mid-Cap Growth
- MFS Growth and Income Portfolio
- MFS Total Return Portfolio
MANAGED BY MORGAN STANLEY ASSET MANAGEMENT
- International Diversified Equities Portfolio
- Worldwide High Income Portfolio
MANAGED BY PUTNAM INVESTMENT MANAGEMENT, INC.
- Putnam Growth Portfolio
- International Growth and Income Portfolio
- Emerging Markets Portfolio
MANAGED BY SUNAMERICA ASSET MANAGEMENT CORP.
- Aggressive Growth Portfolio
- "Dogs" of Wall Street Portfolio
- SunAmerica Balanced Portfolio
- High-Yield Bond Portfolio
- Cash Management Portfolio
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE> 41
- ----------------------------------------------------------------
- ----------------------------------------------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Anchor National's Annual Report on Form 10-K for the year ended September 30,
1998, and its quarterly report on Form 10-Q for the quarter ended December 31,
1998 are incorporated herein by reference. In addition, Anchor National filed
three reports on Form 8-K on January 14 and 15 and March 12, 1999. These reports
are also incorporated herein by reference.
All documents or reports filed by Anchor National under Section 13(a), 13(c),
14, or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") after the effective date of this prospectus shall also be incorporated by
reference. Statements contained in this prospectus and subsequently filed
documents which are incorporated by reference or deemed to be incorporated by
reference are deemed to modify or supersede documents incorporated herein by
reference.
Anchor National files its Exchange Act documents and reports, including its
annual and quarterly reports on Form 10-K and Form 10-Q, electronically pursuant
to EDGAR under CIK No. 0000006342.
Anchor National is subject to the informational requirements of the Securities
and Exchange Act of 1934 (as amended). We file reports and other information
with the SEC to meet those requirements. You can inspect and copy this
information at SEC public facilities at the following locations:
WASHINGTON, DISTRICT OF COLUMBIA
450 Fifth Street, N.W., Room 1024
Washington, D.C. 20549
CHICAGO, ILLINOIS
500 West Madison Street
Chicago, IL 60661
NEW YORK, NEW YORK
7 World Trade Center, 13th Fl.
New York, NY 10048
To obtain copies by mail 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.
Anchor National will provide without charge to each person to whom this
prospectus is delivered, upon written or oral request, a copy of the above
documents incorporated herein by reference. Requests for these documents should
be directed to Anchor National's Annuity Service Center, as follows:
Anchor National Life Insurance Company
Annuity Service Center
P.O. Box 54299
Los Angeles, California 90054-0299
Telephone Number: (800) 445-SUN2
- ----------------------------------------------------------------
- ----------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Indemnification for liabilities arising under the Securities Act of 1933 (the
"Act") is provided to Anchor National's officers, directors and controlling
persons. The SEC has advised Anchor National that it believes such
indemnification is against public policy under the Act and unenforceable. If a
claim for indemnification against such liabilities (other than for Anchor
National's payment of expenses incurred or paid by its directors, officers or
controlling persons in the successful defense of any legal action) is asserted
by a director, officer or controlling person of Anchor National in connection
with the securities registered under this prospectus, Anchor National will
submit to a court with jurisdiction to determine whether the indemnification is
against public policy under the Act. Anchor National will be governed by final
judgment of the issue. However, if in the opinion of Anchor National's counsel,
this issue has been determined by controlling precedent, Anchor National need
not submit the issue to a court for determination.
2
<PAGE> 42
<TABLE>
<S> <C> <C>
------------------------------------------------------------------
------------------------------------------------------------------
TABLE OF CONTENTS
------------------------------------------------------------------
------------------------------------------------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............. 2
SECURITIES AND EXCHANGE COMMISSION POSITION ON
INDEMNIFICATION........................................... 2
GLOSSARY.................................................... 3
FEE TABLES.................................................. 4
Owner Transaction Expenses............................ 4
Annual Separate Account Expenses...................... 4
Portfolio Expenses.................................... 4
EXAMPLES.................................................... 5
THE POLARIS(II) VARIABLE ANNUITY............................ 6
PURCHASING A POLARIS(II) VARIABLE ANNUITY................... 6
Allocation of Purchase Payments....................... 7
Accumulation Units.................................... 7
Free Look............................................. 7
INVESTMENT OPTIONS.......................................... 7
Variable Portfolios................................... 7
Anchor Series Trust................................... 7
SunAmerica Series Trust............................... 8
Fixed Account Options................................. 8
Market Value Adjustment ("MVA")....................... 9
Transfers During the Accumulation Phase............... 9
Dollar Cost Averaging................................. 10
Asset Allocation Rebalancing.......................... 11
Principal Advantage Program........................... 11
Voting Rights......................................... 11
Substitution.......................................... 11
ACCESS TO YOUR MONEY........................................ 11
Systematic Withdrawal Program......................... 12
Nursing Home Waiver................................... 12
Minimum Contract Value................................ 12
DEATH BENEFIT............................................... 12
EXPENSES.................................................... 13
Insurance Charges..................................... 13
Withdrawal Charges.................................... 13
Investment Charges.................................... 14
Contract Maintenance Fee.............................. 14
Transfer Fee.......................................... 14
Premium Tax........................................... 14
Income Taxes.......................................... 14
Reduction or Elimination of Charges and Expenses, and
Additional Amounts Credited........................... 14
INCOME OPTIONS.............................................. 14
Annuity Date.......................................... 14
Income Options........................................ 15
Fixed or Variable Income Payments..................... 15
Income Payments....................................... 15
Transfers During the Income Phase..................... 16
Deferment of Payments................................. 16
The Income Protector Feature.......................... 16
TAXES....................................................... 17
Annuity Contracts in General.......................... 17
Tax Treatment of Distributions -
Non-Qualified Contracts............................... 18
Tax Treatment of Distributions -
Qualified Contracts................................... 18
Minimum Distributions................................. 18
Diversification....................................... 18
PERFORMANCE................................................. 18
OTHER INFORMATION........................................... 19
Anchor National....................................... 19
The Separate Account.................................. 19
The General Account................................... 19
Distribution of the Contract.......................... 19
Administration........................................ 19
Year 2000............................................. 19
Legal Proceedings..................................... 20
Ownership............................................. 20
Custodian............................................. 20
Independent Accountants............................... 21
Legal Matters......................................... 21
Registration Statement................................ 21
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION....
21
APPENDIX A -- CONDENSED FINANCIAL INFORMATION............... A-1
APPENDIX B -- MARKET VALUE ADJUSTMENT ("MVA")............... B-1
APPENDIX C -- PREMIUM TAXES................................. C-1
------------------------------------------------------------------
------------------------------------------------------------------
GLOSSARY
------------------------------------------------------------------
------------------------------------------------------------------
We have capitalized some of the technical terms used in this
prospectus. To help you understand these terms, we have defined
them in this glossary.
ACCUMULATION PHASE - The period during which you invest money in
your contract.
ACCUMULATION UNITS - A measurement we use to calculate the value
of the variable portion of your contract during the Accumulation
Phase.
ANNUITANT(S) - The person(s) on whose life (lives) we base income
payments.
ANNUITY DATE - The date on which income payments are to begin, as
selected by you.
ANNUITY UNITS - 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.
COMPANY - Anchor National Life Insurance Company, We, Us, the
insurer which issues this contract.
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 pretax dollars.
These contracts are generally purchased under a pension plan,
specially sponsored program or IRA.
TRUSTS - Refers to the Anchor Series Trust and the SunAmerica
Series Trust collectively.
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
Anchor Series Trust or the SunAmerica Series Trust.
</TABLE>
ALL FINANCIAL REPRESENTATIVES OR AGENTS THAT SELL THE CONTRACTS OFFERED BY THIS
PROSPECTUS ARE REQUIRED TO DELIVER A PROSPECTUS.
3
<PAGE> 43
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FEE TABLES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OWNER TRANSACTION EXPENSES
WITHDRAWAL CHARGE (AS A PERCENTAGE OF EACH PURCHASE PAYMENT)
<TABLE>
<S> <C> <C> <C>
Year 1...................... 7% Year 5...................... 3%
Year 2...................... 6% Year 6...................... 2%
Year 3...................... 5% Year 7...................... 1%
Year 4...................... 4% Year 8+..................... 0%
TRANSFER FEE.................... No charge for first 15 transfers
each contract year; thereafter,
fee is $25 ($10 in Pennsylvania
and Texas) per transfer
CONTRACT MAINTENANCE FEE*....... $35 ($30 in North Dakota)
*waived if contract value is $50,000 or more
</TABLE>
ANNUAL SEPARATE ACCOUNT EXPENSES
(AS A PERCENTAGE OF AVERAGE ACCOUNT VALUE)
<TABLE>
<S> <C>
Mortality and Expense Risk Charge................ 1.37%
Distribution Expense Charge...................... 0.15%
-----
TOTAL SEPARATE ACCOUNT EXPENSES 1.52%
=====
</TABLE>
PORTFOLIO EXPENSES
ANCHOR SERIES TRUST
(AS A PERCENTAGE OF AVERAGE NET ASSETS FOR THE TRUST'S TWELVE-MONTH PERIOD ENDED
NOVEMBER 30, 1998)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
PORTFOLIO FEE EXPENSES EXPENSES
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
Capital Appreciation .64% .04% .68%
- -----------------------------------------------------------------------------------------------------------
Growth .70% .05% .75%
- -----------------------------------------------------------------------------------------------------------
Natural Resources .75% .13% .88%
- -----------------------------------------------------------------------------------------------------------
Government and Quality Bond .61% .06% .67%
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
SUNAMERICA SERIES TRUST
(AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER REIMBURSEMENT OR WAIVER OF EXPENSES
FOR THE TRUST'S FISCAL YEAR ENDED NOVEMBER 30, 1998)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
PORTFOLIO FEE EXPENSES EXPENSES
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
Emerging Markets* 1.25% .65% 1.90%
- -----------------------------------------------------------------------------------------------------------
International Diversified Equities 1.00% .26% 1.26%
- -----------------------------------------------------------------------------------------------------------
Global Equities .74% .14% .88%
- -----------------------------------------------------------------------------------------------------------
International Growth and Income** 1.00% .46% 1.46%
- -----------------------------------------------------------------------------------------------------------
Aggressive Growth .74% .09% .83%
- -----------------------------------------------------------------------------------------------------------
MFS Mid-Cap Growth*** .75% .25% 1.00%
- -----------------------------------------------------------------------------------------------------------
Real Estate** .80% .15% .95%
- -----------------------------------------------------------------------------------------------------------
Putnam Growth .81% .05% .86%
- -----------------------------------------------------------------------------------------------------------
MFS Growth and Income****+ .70% .03% .73%
- -----------------------------------------------------------------------------------------------------------
Alliance Growth+ .61% .03% .64%
- -----------------------------------------------------------------------------------------------------------
"Dogs" of Wall Street* .60% .25% .85%*****
- -----------------------------------------------------------------------------------------------------------
Venture Value .72% .03% .75%
- -----------------------------------------------------------------------------------------------------------
Federated Value .75% .08% .83%
- -----------------------------------------------------------------------------------------------------------
Growth-Income .56% .04% .60%
- -----------------------------------------------------------------------------------------------------------
Utility** .75% .26% 1.01%
- -----------------------------------------------------------------------------------------------------------
Asset Allocation .59% .05% .64%
- -----------------------------------------------------------------------------------------------------------
MFS Total Return****+ .67% .10% .77%
- -----------------------------------------------------------------------------------------------------------
SunAmerica Balanced .68% .10% .78%
- -----------------------------------------------------------------------------------------------------------
Worldwide High Income 1.00% .08% 1.08%
- -----------------------------------------------------------------------------------------------------------
High-Yield Bond .63% .06% .69%
- -----------------------------------------------------------------------------------------------------------
Corporate Bond .65% .12% .77%
- -----------------------------------------------------------------------------------------------------------
Global Bond .70% .15% .85%
- -----------------------------------------------------------------------------------------------------------
Cash Management .53% .05% .58%
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
* Absent fee waivers or reimbursement of expenses by the adviser, you would
have incurred the following expenses during the last fiscal year: Emerging
Markets (2.01%) and "Dogs" of Wall Street (.92%).
** Absent recoupment of expenses by the adviser, you would have incurred the
following expenses during the last fiscal year: International Growth and
Income (1.40%); Real Estate (.93%); and Utility (.92%).
*** This Portfolio was not available for sale during fiscal year 1998. The
percentages are based on estimated amounts for the current fiscal year.
**** As of January 4, 1998, the Growth/Phoenix Portfolio was renamed the MFS
Growth and Income Portfolio, and the Balanced/Phoenix Portfolio was
renamed the MFS Total Return Portfolio, each managed by Massachusetts
Financial Services Company.
***** Annualized.
+ The expenses noted here are restated to reflect an estimate of fees for
each portfolio for the current fiscal year.
THE ABOVE PORTFOLIO EXPENSES WERE PROVIDED BY THE TRUSTS. WE HAVE NOT
INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION.
4
<PAGE> 44
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXAMPLES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
You will pay the following expenses on a $1,000 investment in each Variable
Portfolio, assuming a 5% annual return on assets and:
(a) you surrender the contract at the end of the stated time period.
(b) you do not surrender the contract.*
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Capital Appreciation (a) $ 93 (a) $121 (a) $152 (a) $262
(b) $ 23 (b) $ 71 (b) $122 (b) $262
- ------------------------------------------------------------------------------------------------------
Growth (a) $ 94 (a) $124 (a) $156 (a) $269
(b) $ 24 (b) $ 74 (b) $126 (b) $269
- ------------------------------------------------------------------------------------------------------
Natural Resources (a) $ 95 (a) $127 (a) $162 (a) $282
(b) $ 25 (b) $ 77 (b) $132 (b) $282
- ------------------------------------------------------------------------------------------------------
Government and Quality Bond (a) $ 93 (a) $121 (a) $152 (a) $261
(b) $ 23 (b) $ 71 (b) $122 (b) $261
- ------------------------------------------------------------------------------------------------------
Emerging Markets (a) $105 (a) $158 (a) $212 (a) $378
(b) $ 35 (b) $108 (b) $182 (b) $378
- ------------------------------------------------------------------------------------------------------
International Diversified Equities (a) $ 99 (a) $139 (a) $181 (a) $319
(b) $ 29 (b) $ 89 (b) $151 (b) $319
- ------------------------------------------------------------------------------------------------------
Global Equities (a) $ 95 (a) $127 (a) $162 (a) $282
(b) $ 25 (b) $ 77 (b) $132 (b) $282
- ------------------------------------------------------------------------------------------------------
International Growth and Income (a) $101 (a) $145 (a) $191 (a) $338
(b) $ 31 (b) $ 95 (b) $161 (b) $338
- ------------------------------------------------------------------------------------------------------
Aggressive Growth (a) $ 95 (a) $126 (a) $160 (a) $277
(b) $ 25 (b) $ 76 (b) $130 (b) $277
- ------------------------------------------------------------------------------------------------------
MFS Mid-Cap Growth (a) $ 96 (a) $131 (a) $168 (a) $294
(b) $ 26 (b) $ 81 (b) $138 (b) $294
- ------------------------------------------------------------------------------------------------------
Real Estate (a) $ 96 (a) $130 (a) $166 (a) $289
(b) $ 26 (b) $ 80 (b) $136 (b) $289
- ------------------------------------------------------------------------------------------------------
Putnam Growth (a) $ 95 (a) $127 (a) $161 (a) $280
(b) $ 25 (b) $ 77 (b) $131 (b) $280
- ------------------------------------------------------------------------------------------------------
MFS Growth and Income (a) $ 94 (a) $123 (a) $155 (a) $267
(b) $ 24 (b) $ 73 (b) $125 (b) $267
- ------------------------------------------------------------------------------------------------------
Alliance Growth (a) $ 93 (a) $120 (a) $150 (a) $258
(b) $ 23 (b) $ 70 (b) $120 (b) $258
- ------------------------------------------------------------------------------------------------------
"Dogs" of Wall Street (a) $ 95 (a) $127 (a) $161 (a) $279
(b) $ 25 (b) $ 77 (b) $131 (b) $279
- ------------------------------------------------------------------------------------------------------
Venture Value (a) $ 94 (a) $124 (a) $156 (a) $269
(b) $ 24 (b) $ 74 (b) $126 (b) $269
- ------------------------------------------------------------------------------------------------------
Federated Value (a) $ 95 (a) $126 (a) $160 (a) $277
(b) $ 25 (b) $ 76 (b) $130 (b) $277
- ------------------------------------------------------------------------------------------------------
Growth-Income (a) $ 92 (a) $119 (a) $148 (a) $254
(b) $ 22 (b) $ 69 (b) $118 (b) $254
- ------------------------------------------------------------------------------------------------------
Utility (a) $ 96 (a) $131 (a) $169 (a) $295
(b) $ 26 (b) $ 81 (b) $139 (b) $295
- ------------------------------------------------------------------------------------------------------
Asset Allocation (a) $ 93 (a) $120 (a) $150 (a) $258
(b) $ 23 (b) $ 70 (b) $120 (b) $258
- ------------------------------------------------------------------------------------------------------
MFS Total Return (a) $ 94 (a) $124 (a) $157 (a) $271
(b) $ 24 (b) $ 74 (b) $127 (b) $271
- ------------------------------------------------------------------------------------------------------
SunAmerica Balanced (a) $ 94 (a) $124 (a) $157 (a) $272
(b) $ 24 (b) $ 74 (b) $127 (b) $272
- ------------------------------------------------------------------------------------------------------
Worldwide High Income (a) $ 97 (a) $133 (a) $172 (a) $302
(b) $ 27 (b) $ 83 (b) $142 (b) $302
- ------------------------------------------------------------------------------------------------------
High-Yield Bond (a) $ 93 (a) $122 (a) $153 (a) $263
(b) $ 23 (b) $ 72 (b) $123 (b) $263
- ------------------------------------------------------------------------------------------------------
Corporate Bond (a) $ 94 (a) $124 (a) $157 (a) $271
(b) $ 24 (b) $ 74 (b) $127 (b) $271
- ------------------------------------------------------------------------------------------------------
Global Bond (a) $ 95 (a) $127 (a) $161 (a) $279
(b) $ 25 (b) $ 77 (b) $131 (b) $279
- ------------------------------------------------------------------------------------------------------
Cash Management (a) $ 92 (a) $118 (a) $147 (a) $252
(b) $ 22 (b) $ 68 (b) $117 (b) $252
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
</TABLE>
* We do not currently charge a surrender charge upon annuitization
unless the contract is annuitized using the
Income Protector feature. We will assess any applicable surrender
charge upon annuitizations effected using
the Income Protector feature as if you had fully surrendered your
contract.
5
<PAGE> 45
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 certain Variable Portfolios, the adviser, SunAmerica Asset Management
Corp., has voluntarily agreed to waive fees or reimburse certain expenses,
if necessary, to keep annual operating expenses at or below the lesser of
the maximum allowed by any applicable state expense limitations or the
following percentages of each Variable Portfolio's average net assets:
SunAmerica Balanced (1.00%); "Dogs" of Wall Street (.85%); Aggressive Growth
(.90%); Federated Value (1.03%); Utility (1.05%); Emerging Markets (1.90%);
International Growth and Income (1.60%); and Real Estate (1.25%). The
adviser also may voluntarily waive or reimburse additional amounts to
increase a Variable Portfolio'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 Variable Portfolio is able to
make such payment and remain in compliance with the foregoing expense
limitations.
3. The Examples assume that no transfer fees were imposed. Although premium
taxes may apply in certain states, they are not reflected in the Examples.
4. THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
THE HISTORICAL ACCUMULATION UNIT VALUES ARE CONTAINED IN APPENDIX A -- CONDENSED
FINANCIAL INFORMATION.
- ----------------------------------------------------------------
- ----------------------------------------------------------------
THE POLARIS(II) VARIABLE ANNUITY
- ----------------------------------------------------------------
- ----------------------------------------------------------------
An annuity is a contract between you and an insurance company. You are the owner
of the contract. The contract provides three main benefits:
- Tax Deferral: This means that you do not pay taxes on your earnings from
the annuity until you withdraw them.
- Death Benefit: If you die during the Accumulation Phase, the insurance
company pays a death benefit to your Beneficiary.
- Guaranteed Income: If elected, you receive a stream of income for your
lifetime, or another available period you select.
This annuity was developed to help you contribute to your retirement savings.
This annuity works in two stages, the Accumulation Phase and the Income Phase.
Your contract is in the Accumulation Phase during the period when you make
payments into the contract. The Income Phase begins when you request us to start
making income payments to you out of the money accumulated in your contract.
The contract is called a "variable" annuity because it allows you to invest in
variable portfolios which, like mutual funds, have different investment
objectives and performance which varies. You can gain or lose money if you
invest in these Variable Portfolios. The amount of money you accumulate in your
contract depends on the performance of the Variable Portfolios in which you
invest. This contract currently offers 27 Variable Portfolios.
The contract also offers several fixed account options for varying time periods.
Fixed account options earn interest at a rate set and guaranteed by Anchor
National. If you allocate money to the fixed account options, the amount of
money that accumulates in the contract depends on the total interest credited to
the particular fixed account option(s) in which you invest.
For more information on investment options available under this contract SEE
INVESTMENT OPTIONS ON PAGE 7.
Anchor National Life Insurance Company (Anchor National, The Company, Us, We)
issues the PolarisII Variable Annuity. When you purchase a PolarisII Variable
Annuity, a contract exists between you and Anchor National. The Company is a
stock life insurance company organized under the laws of the state of Arizona.
Its principal place of business is 1 SunAmerica Center, Los Angeles, California
90067. The Company conducts life insurance and annuity business in the District
of Columbia and all states except New York. Anchor National is an indirect,
wholly owned subsidiary of American International Group, Inc. ("AIG"), a
Delaware corporation.
- ----------------------------------------------------------------
- ----------------------------------------------------------------
PURCHASING A POLARIS(II) VARIABLE ANNUITY
- ----------------------------------------------------------------
- ----------------------------------------------------------------
An initial Purchase Payment is the money you give us to buy a contract. Any
additional money you give us to invest in the contract after purchase is a
subsequent Purchase Payment.
This chart shows the minimum initial and subsequent Purchase Payments permitted
under your contract. These amounts depend upon whether a contract is Qualified
or Non-qualified for tax purposes. FOR FURTHER EXPLANATION, SEE TAXES ON PAGE
17.
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------
Minimum
Minimum Initial Subsequent
Purchase Payment Purchase Payment
- -----------------------------------------------------------
Qualified $2,000 $250
- -----------------------------------------------------------
Non-Qualified $5,000 $500
- -----------------------------------------------------------
</TABLE>
Prior Company approval is required to accept Purchase Payments greater than
$1,000,000. The Company reserves the right to refuse any Purchase Payment
including, but not limited to, one which would cause the contract value to
exceed $1,000,000 are the time of the Purchase Payment. Also, the optional
automatic payment plan allows you to make subsequent Purchase Payments of as
little as $20.00.
6
<PAGE> 46
We may refuse any Purchase Payment. In general, we will not issue a Qualified
contract to anyone who is age 70 1/2 or older, unless 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 90.
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 will invest the money according to your last
allocation instructions. SEE INVESTMENT OPTIONS BELOW.
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 base the number of
Accumulation Units you receive on the unit value of the Variable Portfolio as of
the day we receive your money if we receive it before 1 p.m. Pacific Standard
Time, or on the next business day's unit value if we receive your money after 1
p.m. Pacific Standard time. The value of an Accumulation Unit goes 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 Global Bond Portfolio. We determine that the value of an
Accumulation Unit for the Global Bond Portfolio is $11.10 when the NYSE
closes on Wednesday. We then divide $25,000 by $11.10 and credit your
contract on Wednesday night with 2252.52 Accumulation Units for the Global
Bond Portfolio.
Performance of the Variable Portfolios and expenses under your contract affect
Accumulation Unit values. These factors cause the value of your contract to go
up and down.
FREE LOOK
You may cancel your contract within ten days after receiving it (or longer if
required by state law). We call this a "free look." To cancel, you must mail the
contract along with your free look request to our Annuity Service Center at P.O.
Box 54299, Los Angeles, California 90054-0299. We will refund to you 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. With respect to those contracts, we reserve
the right to put your money in the Cash Management Portfolio during the free
look period. If you cancel your contract during the free look period, we return
your Purchase Payment or the value of your contract, whichever is larger. At the
end of the free look period, we allocate your money according to your
instructions.
- ----------------------------------------------------------------
- ----------------------------------------------------------------
INVESTMENT OPTIONS
- ----------------------------------------------------------------
- ----------------------------------------------------------------
VARIABLE PORTFOLIOS
The contract currently offers 27 Variable Portfolios. These Variable Portfolios
invest in shares of the Anchor Series Trust and the SunAmerica Series Trust (the
"Trusts"). Additional Variable Portfolios may be available in the future. The
Variable Portfolios operate similar to a mutual fund but are only available
through the purchase of certain insurance contracts.
SunAmerica Asset Management Corp., an indirect wholly owned subsidiary of AIG,
is the investment adviser to the Trusts. The Trusts serve as the underlying
investment vehicles for other variable annuity contracts issued by Anchor
National, and other affiliated/unaffiliated insurance companies. Neither Anchor
National nor the Trusts believe that offering shares of the Trusts in this
manner disadvantages you. The adviser monitors the Trusts for potential
conflicts.
The Variable Portfolios along with their respective subadvisers are listed
below:
ANCHOR SERIES TRUST
Wellington Management Company, LLP serves as subadviser to the Anchor Series
Trust portfolios. Anchor Series Trust has investment portfolios in addition to
those listed below which
7
<PAGE> 47
are not available for investment under the contract. The 4 available investment
portfolios are:
MANAGED BY WELLINGTON MANAGEMENT COMPANY, LLP
- Capital Appreciation Portfolio
- Growth Portfolio
- Natural Resources Portfolio
- Government and Quality Bond Portfolio
SUNAMERICA SERIES TRUST
Various subadvisers provide investment advice for the SunAmerica Series Trust
portfolios. SunAmerica Series Trust has investment portfolios in addition to
those listed below which are not available for investment under the contract.
The 23 investment portfolios and the subadvisers are:
MANAGED BY ALLIANCE CAPITAL MANAGEMENT L.P.
- Global Equities Portfolio
- Alliance Growth Portfolio
- Growth Income Portfolio
MANAGED BY DAVIS SELECTED ADVISERS, L.P.
- Venture Value Portfolio
- Real Estate Portfolio
MANAGED BY FEDERATED INVESTORS
- Federated Value Portfolio
- Utility Portfolio
- Corporate Bond Portfolio
MANAGED BY GOLDMAN SACHS ASSET MANAGEMENT/GOLDMAN
SACHS ASSET MANAGEMENT INTERNATIONAL
- Asset Allocation Portfolio
- Global Bond Portfolio
MANAGED BY MASSACHUSETTS FINANCIAL SERVICES COMPANY
- MFS Mid-Cap Growth
- MFS Growth and Income Portfolio
- MFS Total Return Portfolio
MANAGED BY MORGAN STANLEY ASSET MANAGEMENT
- International Diversified Equities Portfolio
- Worldwide High Income Portfolio
MANAGED BY PUTNAM INVESTMENT MANAGEMENT
- Putnam Growth Portfolio
- International Growth and Income Portfolio
- Emerging Markets Portfolio
MANAGED BY SUNAMERICA ASSET MANAGEMENT, INC.
- Aggressive Growth Portfolio
- "Dogs" of Wall Street Portfolio
- SunAmerica Balanced Portfolio
- High-Yield Bond Portfolio
- Cash Management Portfolio
YOU SHOULD READ THE ATTACHED PROSPECTUSES FOR THE TRUSTS CAREFULLY. THESE
PROSPECTUSES CONTAIN DETAILED INFORMATION ABOUT THE VARIABLE PORTFOLIOS,
INCLUDING EACH VARIABLE PORTFOLIO'S INVESTMENT OBJECTIVE AND RISK FACTORS.
FIXED ACCOUNT OPTIONS
The contract also offers seven fixed account options. Anchor National will
guarantee the interest rate earned on money you allocate to any of these fixed
account options. We currently offer fixed account options for periods of one,
three, five, seven and ten years, which we call guarantee periods. Additionally,
we guarantee the interest rate for money allocated to the six-month DCA fixed
account and/or the one year DCA fixed account (the "DCA fixed accounts") which
are available only in conjunction with the Dollar Cost Averaging Program. Please
see the section on DOLLAR COST AVERAGING ON PAGE 10 for additional information
about, including limitations on, the availability and operation of the DCA fixed
accounts. The DCA fixed accounts are only available for new Purchase Payments.
Each guarantee period may offer a different interest rate but will never be less
than an annual effective rate of 3%. Once established the rates for specified
payments do not change during the guarantee period. The guarantee period is that
period for which we credit the applicable rate (one, three, five, seven or ten
years).
There are three scenarios in which you may put money into the MVA fixed account
options. In each scenario your money may be credited a different rate of
interest as follows:
- Initial Rate: Rate credited to new Purchase Payments allocated to the
fixed account when you purchase your contract.
- Current Rate: Rate credited to subsequent Purchase Payments allocated to
the fixed account.
- Renewal Rate: Rate credited to money transferred from one fixed account
or one of the Variable Portfolios to another fixed account.
Each of these rates may differ from one another. Once declared, the applicable
rate is guaranteed until the corresponding guarantee period expires.
When a guarantee period ends, you may leave your money in the same fixed
investment option. You may also reallocate your money to another fixed
investment option (other than the DCA fixed accounts) or to the Variable
Portfolios. If you want to reallocate your money to a different fixed account
option or a Variable Portfolio, you must contact us within 30 days after the end
of the current interest guarantee period and instruct us how to reallocate the
money. We do not contact you. If we do not hear from you, your money will remain
in the same fixed account option, where it will earn interest at the renewal
rate then in effect for the fixed account option.
The DCA fixed accounts also credit a fixed rate of interest for a predetermined
amount of time. The interest rate in the 1-year or 6-month DCA fixed account is
credited while your investment is systematically transferred to the Variable
Portfolios. The rates applicable to the DCA fixed accounts may differ from each
other and/or the other fixed account
8
<PAGE> 48
options. See DOLLAR COST AVERAGING ON PAGE 10 for more information.
MARKET VALUE ADJUSTMENT ("MVA")
NOTE: THE FOLLOWING DISCUSSION APPLIES TO THE 3, 5, 7 AND 10-YEAR FIXED ACCOUNT
OPTIONS, ONLY. THESE OPTIONS ARE NOT AVAILABLE IN ALL STATES. PLEASE CONTACT
YOUR FINANCIAL REPRESENTATIVE FOR MORE INFORMATION.
If you take money out of the multi-year fixed account options before the end of
the guarantee period, we make an adjustment to your contract. We refer to the
adjustment as a market value adjustment (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 first 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.
Anchor National does not assess a MVA against withdrawals under the following
circumstances:
- If made within 30 days after the end of a guarantee period;
- If made to pay contract fees and charges;
- To pay a death benefit; and
- If annuitization occurs on the latest Annuity Date.
The one year fixed account option and the DCA fixed accounts do not impose a
MVA. These fixed accounts are not registered under the Securities Act of 1933
and are not subject to the provisions of the Investment Company Act of 1940.
APPENDIX B shows how we calculate the MVA.
TRANSFERS DURING THE ACCUMULATION PHASE
During the Accumulation Phase you may transfer funds between the Variable
Portfolios and/or the fixed account options. Funds already in your contract
cannot be transferred into the DCA fixed accounts. 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. We charge $25 ($10 in Pennsylvania and
Texas) for each additional transfer in any contract year. 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 tell us 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 transactions we will have appropriate
procedures in place to provide reasonable assurance that the transactions
executed are genuine. Thus, we would not be responsible for any claim, loss or
expense from any error resulting from instructions received over the internet.
If we fail to follow our procedures, we may be liable for any losses due to
unauthorized or fraudulent 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 Variable
Portfolios.
9
<PAGE> 49
Where permitted by law, we may accept your authorization for a third party to
make transfers for you subject to our rules. We reserve the right to suspend or
cancel such acceptance at any time and will notify you accordingly.
Additionally, we may restrict the investment options available for transfers
during any period in which such third party acts for you. We notify such third
party beforehand regarding any restrictions. However, we will not enforce these
restrictions if we are satisfied that:
- such third party has been appointed by a court of competent jurisdiction
to act on your behalf; or
- such third party is a trustee/fiduciary, 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 you extra for providing these support services. This includes, but is not
limited to, transfers between investment options in accordance with market
timing strategies. Such independent third parties may or may not be appointed
with us for the sale of annuities. However, WE DO NOT ENGAGE ANY THIRD PARTIES
TO OFFER INVESTMENT ALLOCATION SERVICES OF ANY TYPE. WE TAKE NO RESPONSIBILITY
FOR THE INVESTMENT ALLOCATION AND TRANSFERS TRANSACTED ON YOUR BEHALF BY SUCH
THIRD PARTIES OR FOR ANY INVESTMENT ALLOCATION RECOMMENDATIONS MADE BY SUCH
PARTIES.
For information regarding transfers during the Income Phase, SEE INCOME OPTIONS
ON PAGE 14.
We reserve the right to modify, suspend, waive or terminate these transfer
provisions at any time.
DOLLAR COST AVERAGING
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 one Variable Portfolio or the
1-year fixed account option (source accounts) to any other Variable Portfolio.
Transfers may be monthly or quarterly and count against your 15 free transfers
per contract year. 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.
We also offer the 6-month and 1-year DCA fixed accounts exclusively to
facilitate this program. The DCA fixed accounts only accept new Purchase
Payments. You cannot transfer money already in your contract into these options.
If you allocate a Purchase Payment into a DCA fixed account, we transfer all
your money allocated to that account into the Variable Portfolios over the
selected 6-month or 1-year period. You cannot change the option or the frequency
of transfers once selected.
If allocated to the 6-month DCA fixed account, we transfer your money over a
maximum of 6 monthly transfers. We base the actual number of transfers on the
total amount allocated to the account. For example, if you allocate $500 to the
6-month DCA fixed account, we transfer your money over a period of five months,
so that each payment complies with the $100 per transfer minimum.
We determine the amount of the transfers from the 1-year DCA fixed account based
on
- the total amount of money allocated to the account, and
- the frequency of transfers selected.
For example, let's say you allocate $1,000 to the 1-year DCA account. You select
monthly transfers. We completely transfer all of your money to the selected
investment options over a period of ten months.
You may terminate your DCA program at any time. If money remains in the DCA
fixed accounts, we transfer the remaining money to the 1-year fixed account
option, unless we receive different instructions from you. Transfers resulting
from a termination of this program do not count towards your 15 free transfers.
The DCA program is designed to lessen the impact of market fluctuations on your
investment. However, we cannot ensure that you will make a profit. When you
elect the DCA program, you are continuously investing in securities regardless
of fluctuating price levels. You should consider your tolerance for investing
through periods of fluctuating price levels.
We reserve the right to modify, suspend or terminate this program at any time.
EXAMPLE:
Assume that you want to gradually move $750 each quarter from the Cash
Management Portfolio to the Aggressive Growth Portfolio over six quarters.
You set up dollar cost averaging and purchase Accumulation Units at the
following values:
<TABLE>
<CAPTION>
- -------------------------------------------
ACCUMULATION UNITS
QUARTER UNIT PURCHASED
- -------------------------------------------
<S> <C> <C>
1 $ 7.50 100
2 $ 5.00 150
3 $10.00 75
4 $ 7.50 100
5 $ 5.00 150
6 $ 7.50 100
- -------------------------------------------
</TABLE>
You paid an average price of only $6.67 per Accumulation Unit over six
quarters, while the average market price actually was $7.08. By investing
an equal amount of money each month, you automatically buy more
Accumulation Units when the market price is low
10
<PAGE> 50
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 in the variable Portfolios to return your allocations
to their original percentages. Asset rebalancing typically involves shifting a
portion of your money out of an investment option with a higher return into an
investment option with a lower return.
At your request, rebalancing occurs on a quarterly, semiannual or annual basis.
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 Corporate Bond Portfolio and 50%
in the Growth Portfolio. Over the next calendar quarter, the bond market
does very well while the stock market performs poorly. At the end of the
calendar quarter, the Corporate Bond Portfolio now represents 60% of your
holdings because it has increased in value and the Growth Portfolio
represents 40% of your holdings. If you had chosen quarterly rebalancing,
on the last day of that quarter, we would sell some of your units in the
Corporate Bond Portfolio to bring its holdings back to 50% and use the
money to buy more units in the 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
account options and Variable Portfolios. You decide how much you want to invest
and approximately when you want a return of principal. We calculate how much of
your Purchase Payment to allocate to the particular fixed account option to
ensure that it grows to an amount equal to your total principal invested under
this program. We invest the rest of your principal in the Variable Portfolio(s)
of your choice.
We reserve the right to modify, suspend or terminate this program at any time.
EXAMPLE:
Assume that you want to allocate a portion of your initial Purchase Payment
of $100,000 to the fixed account option. You want the amount allocated to
the fixed account option to grow to $100,000 in 7 years. If the 7-year
fixed account option is offering a 5% interest rate, we will allocate
$71,069 to the 7-year fixed account option to ensure that this amount will
grow to $100,000 at the end of the 7-year period. The remaining $28,931 may
be allocated among the Variable Portfolios, as determined by you, to
provide opportunity for greater growth.
VOTING RIGHTS
Anchor National is the legal owner of the Trusts' shares. However, when a
Variable Portfolio solicits proxies in conjunction with a vote of shareholders,
we must obtain your instructions on how to vote those shares. We vote all of the
shares we own in proportion to your instructions. This includes any shares we
own on our own behalf. Should we determine that we are no longer required to
comply with these rules, we will vote the shares in our own right.
SUBSTITUTION
If underlying funds of the Trusts 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.
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ACCESS TO YOUR MONEY
- ----------------------------------------------------------------
- ----------------------------------------------------------------
You can access money in your contract in two ways:
- by making a partial or total withdrawal, and/or;
- by receiving income payments during the Income Phase. SEE INCOME OPTIONS
ON PAGE 14.
Generally, we deduct a withdrawal charge applicable to any total or partial
withdrawal and a MVA if a partial withdrawal comes from the 3, 5, 7 or 10 year
fixed account options. If you withdraw your entire contract value, we also
deduct premium taxes and a contract maintenance fee. SEE EXPENSES ON PAGE 13.
Your contract provides for a free withdrawal amount each year. A free withdrawal
amount is the portion of your account that we allow you to take out each year
without being charged a surrender penalty. However, upon a future full surrender
of your contract we will recoup any withdrawal charges which would have been due
if your free withdrawal had not been free.
To determine your free withdrawal amount and your withdrawal charge, we refer to
two special terms. These are penalty free earnings and the total invested
amount.
The penalty-free earnings portion of your contract is simply your account value
less your total invested amount. The total invested amount is the total of all
Purchase Payments you have made into the contract less portions of some prior
withdrawals you made. The portions of prior withdrawals that reduce your total
invested amount is as follows:
- Free withdrawals in any year that were in excess of your penalty free
earnings and were based on the part of the total invested amount that was
no longer subject to withdrawal charges at the time of the withdrawal,
and
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- Any prior withdrawals (including surrender charges on those withdrawals)
of the total invested amount on which you already paid a surrender
penalty.
When you make a withdrawal, we assume that it is taken from penalty-free
earnings first, then from the total invested amount on a first-in, first-out
basis. This means that you can also access your Purchase Payments which are no
longer subject to a withdrawal charge before those Purchase Payments which are
still subject to the withdrawal charge.
During the first year after we issue your contract your free withdrawal amount
is the greater of (1) your penalty-free earnings; and (2) if you are
participating in the Systematic Withdrawal program, a total of 10% of your total
invested amount. If you are a Washington resident, you may withdraw during the
first contract year, the greater of (1); (2); or (3) interest earnings from the
amounts allocated to the fixed account options, not previously withdrawn.
After the first contract year, you can take out the greater of the following
amounts each year (1) your penalty free earnings and any portion of your total
invested amount no longer subject to withdrawal charges; and (2) 10% of the
portion of your total invested amount that has been in your contract for at
least one year. If you are a Washington resident, your maximum free withdrawal
amount, after the first contract year, is the greater of (1); (2); or (3)
interest earnings from amounts allocated to the fixed account options, not
previously withdrawn.
We calculate charges due on a total withdrawal on the day after we receive your
request and your contract. We return to you your contract value less any
applicable fees and charges.
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 us
with different instructions, partial withdrawals will be made pro rata from each
Variable Portfolio and the fixed account option in which your contract is
invested.
Under certain Qualified plans, access to the money in your contract may be
restricted. Additionally, withdrawals made prior to age 59 1/2 may result in a
10% IRS penalty tax. SEE TAXES ON PAGE 17.
We may be required to suspend or postpone the payment of a withdrawal for any
period of time when: (1) the NYSE is closed (other than a customary weekend and
holiday closings); (2) trading with the NYSE is restricted; (3) an emergency
exists such that disposal of or determination of the value of shares of the
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 in option. Such deferrals are limited to no longer than six
months.
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, semi-annual or annual payments from your contract.
Electronic transfer of these funds to your bank account is also available. The
minimum amount of each withdrawal is $250. If you are an Oregon resident, the
minimum withdrawal amount is $250 per withdrawal or an amount equal to your free
withdrawal amount, as described on page 10. There must be at least $500
remaining in your contract at all times. Withdrawals may be taxable 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, although a withdrawal charge and/or
MVA may apply.
The program is not available to everyone. Please check with our Annuity Service
Center, which can provide the necessary enrollment forms. We reserve the right
to modify, suspend or terminate this program at any time.
NURSING HOME WAIVER
If you are confined to a nursing home for 60 days or longer, we may waive the
withdrawal charge and/or market value adjustment 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 contract prohibits use of this waiver during the
first 90 days after you purchase your contract. 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.
MINIMUM CONTRACT VALUE
Where permitted by state law, we may terminate your contract if both of the
following occur: (1) your contract is less than $500 as a result of withdrawals;
and (2) you have not made any Purchase Payments during the past three years. We
will provide you with sixty days written notice. At the end of the notice
period, we will distribute the contract's remaining value to you.
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DEATH BENEFIT
- ----------------------------------------------------------------
- ----------------------------------------------------------------
If you die during the Accumulation Phase of your contract, we pay a death
benefit to your Beneficiary. At the time you purchase your contract, you must
select one of the two death benefits described below. Once selected, you can not
change your death benefit option. You should discuss the available options with
your financial representative to determine which option is best for you.
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<PAGE> 52
OPTION 1 - PURCHASE PAYMENT ACCUMULATION OPTION
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 withdrawals (and any fees or charges
applicable to such withdrawals), compounded at a 4% annual growth rate
until the date of death (3% growth rate if 70 or older at the time of
contract issue) plus any Purchase Payments less withdrawals recorded
after the date of death (and any fees or charges applicable to such
withdrawals); or
3. the value of your contract on the seventh contract anniversary, plus any
Purchase Payments and less any withdrawals (and any fees or charges
applicable to such withdrawals), since the seventh contract anniversary,
all compounded at a 4% annual growth rate until the date of death (3%
growth rate if age 70 or older at the time of contract issue) plus any
Purchase Payments less withdrawals recorded after the date of death (and
any fees or charges applicable to such withdrawals).
OPTION 2 - MAXIMUM ANNIVERSARY OPTION
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 prior to your
81st birthday. The anniversary value equals the value of your contract
on a contract anniversary plus any Purchase Payments and less any
withdrawals (and any fees or charges applicable to such withdrawals),
since that contract anniversary.
If you are age 90 or older at the time of death and selected the Option 2 death
benefit, the death benefit will be equal to the value of your contract at the
time we receive satisfactory proof of death. Accordingly, you do not get the
advantage of option 2 if:
- you are over age 80 at the time of contract issue, or
- you are 90 or older at the time of your 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 OPTIONS ON PAGE 14.
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 your
death.
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.
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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EXPENSES
- ----------------------------------------------------------------
- ----------------------------------------------------------------
There are charges and expenses associated with your contract. These charges and
expenses reduce your investment return. We will not increase the contract
maintenance fee or the insurance and withdrawal charges under your contract.
However, the investment charges under your contract may increase or decrease.
Some states may require that we charge less than the amounts described below.
INSURANCE CHARGES
The amount of this charge is 1.52% 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 assumed by Anchor National.
If these charges do not cover all of our expenses, we will pay the difference.
Likewise, if these charges exceed our expenses, we will keep the difference.
WITHDRAWAL CHARGES
The contract provides a free withdrawal amount every year. SEE ACCESS TO YOUR
MONEY, PAGE 11. If you take
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<PAGE> 53
money out in excess of the free withdrawal amount, and upon a full surrender,
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 7 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
- -------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C> <C>
WITHDRAWAL CHARGE 7% 6% 5% 4% 3% 2% 1% 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, we deduct any
applicable withdrawal charges from the amount withdrawn.
We will not assess a withdrawal charge for money withdrawn to pay a death
benefit or to pay contract fees or charges. We will not assess a withdrawal
charge when you switch to the Income Phase, except when you elect to receive
income payments using the Income Protector feature. If you elect to receive
income payments using the Income Protector feature, we assess the entire
withdrawal charge applicable to Purchase Payments remaining in your contract
when calculating your income benefit base. SEE INCOME OPTIONS ON THIS PAGE.
Withdrawals made prior to age 59 1/2 may result in tax penalties. SEE, TAXES ON
PAGE 17.
INVESTMENT CHARGES
Charges are deducted from your Variable Portfolios for the advisory and other
expenses of the Variable Portfolios. THE FEE TABLES LOCATED AT PAGE 4 illustrate
these charges and expenses. For more detailed information on these investment
charges, refer to the prospectuses for the Trusts, enclosed or attached.
CONTRACT MAINTENANCE FEE
During the Accumulation Phase, we subtract a contract maintenance fee from your
account once per year. This charge compensates us for the cost of contract
administration. We deduct the $35 contract maintenance fee ($30 in North Dakota)
from your account value on your contract anniversary. If you withdraw your
entire contract value, we deduct the fee from that withdrawal.
If your contract value is $50,000 or more on your contract anniversary date, we
will waive the charge. This waiver is subject to change without notice.
TRANSFER FEE
We currently permit 15 free transfers between investment options each contract
year. We charge you $25 for each additional transfer that contract year ($10 in
Pennsylvania and Texas). SEE INVESTMENT OPTIONS ON PAGE 7.
PREMIUM TAX
Certain states charge the Company a tax on the premiums you pay into the
contract. We deduct from your contract these premium tax charges. Currently we
deduct the charge for premium taxes when you take a full withdrawal or 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 we evaluate to make a determination are: size of the group; amount of
expected Purchase Payments; relationship existing between us and prospective
purchaser; nature of the purchase; length of time a group of contracts is
expected to remain active; purpose of the purchase and whether that purpose
increases the likelihood that our expenses will be reduced; and/or any other
factors that we believe indicate that administrative and/or sales expenses may
be reduced.
Anchor National may make such a determination regarding sales to its employees,
it affiliates' employees and employees of currently contracted broker-dealers;
its registered representatives and immediate family members of all of those
described.
We reserve the right to change or modify any such determination or the treatment
applied to a particular group, at any time.
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INCOME OPTIONS
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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
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<PAGE> 54
contract anniversary. You select the month and year 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. Except as indicated under Option 5 below, once
you begin receiving income payments, you cannot otherwise access your money
through a withdrawal or surrender.
Income payments must begin on or before your 90th birthday or on your tenth
contract anniversary, whichever occurs later. If you do not choose an Annuity
Date, your income payments will automatically begin on this date. Certain states
may require your income payments to start earlier.
If the Annuity Date is past your 85th birthday, your contract could lose its
status as an annuity under Federal tax laws. This may cause you to incur adverse
tax consequences.
In addition, most Qualified contracts require you to take minimum distributions
after you reach age 70 1/2. SEE TAXES ON PAGE 17.
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.
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 when the survivor dies.
OPTION 3 - JOINT AND SURVIVOR LIFE ANNUITY WITH 10 OR 20 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 5 to
30 years. If the Annuitant dies before all the guaranteed income payments are
made, the remaining income payments are made to the Beneficiary under your
contract. Additionally, if variable income payments are elected under this
option, you (or the Beneficiary under the contract if the Annuitant dies prior
to all guaranteed payments being made) may redeem the contract value after the
Annuity Date. The amount available upon such redemption would be the discounted
present value of any remaining guaranteed payments.
The value of an Annuity Unit, regardless of the option chosen, takes into
account the Mortality and Expense Risk Charge. Since Option 5 does not contain
an element of mortality risk, no benefit is derived from this charge.
Please read the Statement of Additional Information ("SAI") for a more detailed
discussion of the income options.
FIXED OR VARIABLE INCOME PAYMENTS
You can choose income payments that are fixed, variable or both. If at the date
when income payments begin you are invested in the 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 fixed and variable investment options when income 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.
INCOME PAYMENTS
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, we may decrease the
frequency of payments, 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;
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<PAGE> 55
- 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 annuity payments.
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 payments for up to six months, or less if required by
law. Interest is credited to you during the deferral period.
THE INCOME PROTECTOR FEATURE
The Income Protector feature is a future "safety net" which offers you the
ability to receive a guaranteed fixed minimum retirement income when you switch
to the Income Phase. With the Income Protector feature you can know the level of
minimum income that will be available to you, regardless of fluctuating market
conditions.
The Income Protector is a standard feature of your contract, if available in
your state. There is no additional charge associated with this feature.
Other options were previously available under the Income Protector feature. If
you purchased your contract between November 2, 1998 and March 31, 1999, the
other provisions continue to apply to your contract. Please contact our Annuity
Service Center for more information.
We reserve the right to modify, suspend or terminate the Income Protector
feature at any time.
HOW WE DETERMINE THE AMOUNT OF YOUR MINIMUM GUARANTEED INCOME
We base the amount of minimum income available to you if you elect to receive
income payments using the Income Protector feature upon a calculation we call
the income benefit base.
The income benefit base is only a calculation. It does not represent a contract
value, nor does it guarantee performance of the Variable Portfolios in which you
invest.
Your income benefit base increases if you make subsequent Purchase Payments and
decreases if you withdraw money from your contract. The exact income benefit
base calculation is equal to (a) plus (b) minus (c) where:
(a) is equal to, for the first year of calculation, your initial Purchase
Payment, or for each subsequent year of calculation, the income benefit
base on the prior contract anniversary, and;
(b) is equal to the total of all Purchase Payments made to the contract
since the last contract anniversary, and;
(c) is equal to all withdrawals and applicable fees and charges since the
last contract anniversary, in an amount proportionate to the amount by
which such withdrawals decreased your contract value.
ELECTING TO RECEIVE INCOME PAYMENTS
You may elect to begin the Income Phase of your contract using the Income
Protector feature ONLY within the 30 days after the seventh or later contract
anniversary.
The contract anniversary prior to your election to begin receiving income
payments is your income benefit date. This is the date as of which we calculate
your income benefit base to use in determining your guaranteed minimum fixed
retirement income. Your final income benefit base is equal to (a) minus (b)
where:
(a) is equal to your income benefit base as of your income benefit date,
and;
(b) is equal to any partial withdrawals of contract value and any charges
applicable to those withdrawals and any withdrawal charges otherwise
applicable, calculated as if you fully surrender your contract as the
income benefit date, and any applicable premium taxes.
To arrive at the minimum guaranteed retirement income available to you we apply
your final income benefit base to the annuity rates stated in your Income
Protector endorsement for the income option you select. You then choose if you
would like to receive that income annually, semi-annually quarterly or monthly
for the time guaranteed under your selected income option. The income options
available when using the Income Protector feature to receive your retirement
income are:
- Life Annuity with 10 Years Guaranteed, or
- Joint and Survivor Life Annuity with 20 Years Guaranteed
At the time you elect to begin receiving income payments, we will calculate your
annual income using both your income benefit base and your contract value. We
will use the same income option for each calculation, however, the annuity
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<PAGE> 56
factors used to calculate your income under the Income Protector feature will be
different. You will receive whichever provides a greater stream of income. If
you elect to receive income payments using the Income Protector feature your
income payments will be fixed in amount. You are not required to use the Income
Protector feature to receive income payments.
NOTE TO QUALIFIED CONTRACT HOLDERS
Qualified contracts generally require that you select an income option which
does not exceed your life expectancy. That restriction, if it applies to you,
may limit your ability to use the Income Protector feature.
You may wish to consult your tax advisor for information concerning your
particular circumstances.
HYPOTHETICAL EXAMPLE OF THE OPERATION OF THE INCOME PROTECTOR FEATURE
This table assumes $100,000 initial investment in a Non-qualified contract with
no withdrawals, additional Purchase Payments or premium taxes.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Minimum annual income if you elect to receive income payments
If at issue on contract anniversary . . .
you are . . . 7 10 15 20
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
Male 6,108 6,672 7,716 8,832
age 60*
- -------------------------------------------------------------------------------------------------------------
Female 5,388 5,880 6,900 8,112
age 60*
- -------------------------------------------------------------------------------------------------------------
Joint** 4,716 5,028 5,544 5,928
Male-60
Female-60
- -------------------------------------------------------------------------------------------------------------
</TABLE>
* Life annuity with 10 years guaranteed
** Joint and survivor life annuity with 20 years guaranteed
- ----------------------------------------------------------------
- ----------------------------------------------------------------
TAXES
- ----------------------------------------------------------------
- ----------------------------------------------------------------
NOTE: WE PREPARED THE FOLLOWING INFORMATION ON TAXES AS A GENERAL DISCUSSION OF
THE SUBJECT. IT IS NOT TAX ADVICE. WE CAUTION YOU TO SEEK COMPETENT TAX ADVICE
ABOUT YOUR OWN CIRCUMSTANCES. WE DO NOT GUARANTEE THE TAX STATUS OF YOUR
ANNUITY. TAX LAWS CONSTANTLY CHANGE, THEREFORE WE CANNOT GUARANTEE THAT THE
INFORMATION CONTAINED HEREIN IS COMPLETE AND/OR ACCURATE.
ANNUITY CONTRACTS IN GENERAL
The Internal Revenue Code ("IRC") provides for special rules regarding the tax
treatment of annuity contracts. Generally, taxes on the earnings in your annuity
contract are deferred until you take the money out. Qualified retirement
investments automatically provide tax deferral regardless of whether the
underlying contract is an annuity. Different rules apply depending on how you
take the money out and whether your contract is Qualified or Non-qualified.
If you do not purchase your contract under a pension plan, a specially sponsored
employer program or an individual retirement account, your contract is referred
to as a Non-qualified contract. A Non-qualified contract receives different tax
treatment than a Qualified contract. In general, your cost basis in a
Non-qualified contract is equal to the Purchase Payments you put into the
contract. You have already been taxed on the cost basis in your contract.
If you purchase your contract under a pension plan, a specially sponsored
employer program or as an individual retirement account, your contract is
referred to as a Qualified contract. Examples of qualified plans are: Individual
Retirement Accounts ("IRAs"), Roth IRAs, Tax-Sheltered Annuities (referred to as
403(b) contracts), H.R. 10 Plans (referred to as Keogh Plans) and pension and
profit sharing plans, including 401(k) plans. Typically you have not paid any
tax on the Purchase Payments used to buy your contract and therefore, you have
no cost basis in your contract.
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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.
TAX TREATMENT OF DISTRIBUTIONS - QUALIFIED CONTRACTS
Generally, you have not paid any taxes on the Purchase Payments used to buy a
Qualified contract. Any amount of money you take out as a withdrawal or as
income payments is taxable income. The IRC further provides for a 10% penalty
tax on any withdrawal or income payment paid to you other than in conjunction
with the following circumstances: (1) after reaching age 59 1/2; (2) when paid
to your Beneficiary after you die; (3) after you become disabled (as defined in
the IRC); (4) in a series of substantially equal installments made for your life
or for the joint lives of you and your Beneficiary; (5) to the extent such
withdrawals do not exceed limitations set by the IRC for amounts paid during the
taxable year for medical care; (6) to fund higher education expenses (as defined
in IRC); (7) to fund certain first-time home purchase expenses; and, except in
the case of an IR; (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 a hardship (as defined in the IRC). In the case of
hardship, the owner can only withdraw Purchase Payments.
MINIMUM DISTRIBUTIONS
Generally, the IRS requires that you begin taking annual distributions from
qualified annuity contracts by April 1 of the calendar year following the later
of (1) the calendar year in which you attain age 70 1/2 or (2) the calendar year
in which you retire. Failure to satisfy the minimum distribution requirements
may result in a tax penalty. You should consult your tax advisor for more
information.
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.
- ----------------------------------------------------------------
- ----------------------------------------------------------------
PERFORMANCE
- ----------------------------------------------------------------
- ----------------------------------------------------------------
We advertise the Cash Management Portfolio's yield and effective yield. In
addition, the other Variable Portfolios advertise total return, gross yield and
yield-to-maturity. These figures represent past performance of the Variable
Portfolios. These performance numbers do not indicate future results.
When we advertise performance for periods prior to the date the contracts were
first issued, we derive the figures from the performance of the corresponding
portfolios for the Trusts, if available. We modify these numbers to reflect
charges and expenses as if the contract was in existence during the period
stated in the advertisement. Figures calculated in this manner do not represent
actual historic performance of the particular Variable Portfolio.
Consult the SAI for more detailed information regarding the calculation of
performance data. The performance of each Variable Portfolio may also be
measured against unmanaged market indices. The indices we use include but are
not limited to the Dow Jones Industrial Average, the Standard & Poor's 500, the
Russell 1000 Growth Index, the Morgan Stanley Capital International Europe,
Australia and Far East Index ("EAFE") and the Morgan Stanley Capital
International World Index. We may compare the Variable Portfolios' performance
to that of other variable annuities with similar objectives and policies as
reported by independent ranking agencies such as Morningstar, Inc., Lipper
Analytical
18
<PAGE> 58
Services, Inc. or Variable Annuity Research & Data Service ("VARDS").
Anchor National may also advertise the rating and other information assigned to
it by independent industry ratings organizations. Some of those organizations
are A.M. Best Company ("A.M. Best"), Moody's Investor's Service ("Moody's"),
Standard & Poor's Insurance Rating Services ("S&P"), and Duff & Phelps. A.M.
Best's and Moody's ratings reflect their current opinion of our financial
strength and performance in comparison to others in the life and health
insurance industry. S&P's and Duff & Phelps' ratings measure the ability of an
insurance company to meet its obligations under insurance policies it issues.
These two ratings do not measure the insurer's ability to meet non-policy
obligations. Ratings in general do not relate to the performance of the Variable
Portfolios.
- ----------------------------------------------------------------
- ----------------------------------------------------------------
OTHER INFORMATION
- ----------------------------------------------------------------
- ----------------------------------------------------------------
ANCHOR NATIONAL
Anchor National is a stock life insurance company originally organized under the
laws of the state of California in April 1965. On January 1, 1996, Anchor
National redomesticated under the laws of the state of Arizona.
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., Resources
Trust Company, and six broker-dealers, specialize in retirement savings and
investment products and services. Business focuses include fixed and variable
annuities, mutual funds, broker-dealer services and trust administration
services.
THE SEPARATE ACCOUNT
Anchor National established Variable Separate Account ("separate account"),
under Arizona law on January 1, 1996 when it assumed the separate account,
originally established under California law on June 25, 1981. The separate
account is registered with the SEC as a unit investment trust under the
Investment Company Act of 1940, as amended.
Anchor National owns the assets in the separate account. However, the assets in
the separate account are not chargeable with liabilities arising out of any
other business conducted by Anchor National. Income gains and losses (realized
and unrealized) resulting from assets in the separate account are credited to or
charged against the separate account without regard to other income gains or
losses of Anchor National.
THE GENERAL ACCOUNT
Money allocated to the fixed account options goes into Anchor National's general
account. The general account consists of all of Anchor National's assets other
than assets attributable to a separate account. All of the assets in the general
account are chargeable with the claims of any Anchor National contract holders
as well as all of its creditors. The general account funds are invested as
permitted under state insurance laws.
DISTRIBUTION OF THE CONTRACT
Registered representatives of broker-dealers sell the contract. We pay
commissions to these representatives for the sale of the contracts. We do not
expect the total commissions to exceed 7% of your Purchase Payments. We may also
pay a bonus to representatives for contracts which stay active for a particular
period of time, in addition to standard commissions. We do not deduct
commissions paid to registered representatives directly from your Purchase
Payments.
From time to time, we may pay or allow additional promotional incentives in the
form of cash or other compensation. We reserve the right to offer these
additional incentives only to certain broker-dealers that sell or are expected
to sell, certain minimum amounts of the contract, or other contracts offered by
us. Promotional incentives may change at any time.
SunAmerica Capital Services, Inc., 733 Third Avenue, 4th Floor, New York, New
York 10017 distributes the contracts. SunAmerica Capital Services, an affiliate
of Anchor National, is registered as a broker-dealer under the Exchange Act of
1934 and is a member of the National Association of Securities Dealers, Inc. No
underwriting fees are paid in connection with the distribution of the contracts.
ADMINISTRATION
We are responsible for the administrative servicing of your contract. Please
contact our Annuity Service Center
at 1-800-445-SUN2, if you have any comment, question or service request.
We send out transaction confirmations and quarterly statements. It is your
responsibility to review these documents carefully and notify us of any
inaccuracies immediately. We investigate all inquiries. To the extent that we
believe we made an error, we retroactively adjust your contract, provided you
notify us within 30 days of receiving the transaction confirmation or quarterly
statement. Any other adjustments we deem warranted are made as of the time we
receive notice of the error.
YEAR 2000
We rely significantly on computer systems and applications in our daily
operations. Many of our systems are not presently
19
<PAGE> 59
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 make necessary repairs of
certain specific noncompliant systems, of which $6.2 million was allocated to
Anchor National. Anchor National's management is making expenditures which we
expect will ultimately total $5.0 million to replace certain other noncompliant
systems. Total expenditures relating to the replacement of noncompliant systems
will be capitalized by the Company as software costs and will be amortized over
future periods. Both phases of the project are progressing according to plan and
were substantially completed by the end of calendar 1998. Testing of both the
repaired and replacement systems is being conducted 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 our year 2000 plan. If we determine that our business
is at material risk of disruption due to the year 2000 issue or anticipate that
we will not complete our year 2000 conversion in a timely fashion, we will work
to enhance our contingency plans.
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 the 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.
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.
OWNERSHIP
The PolarisII Variable Annuity is a Flexible Payment Group Deferred Annuity
contract. We issue 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.
CUSTODIAN
State Street Bank and Trust Company, 255 Franklin Street, Boston, Massachusetts
02110, serves as the custodian of the assets of the separate account. Anchor
National pays State Street Bank for services provided, based on a schedule of
fees.
20
<PAGE> 60
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
incorporated by reference 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.
LEGAL MATTERS
The organization of Anchor National, its authority to issue the contracts and
the validity of the form of the contracts have been passed upon by Susan L.
Harris, Senior Vice President and General Counsel of SunAmerica Inc., of which
Anchor National is an indirect-wholly owned subsidiary.
REGISTRATION STATEMENT
A registration statement has been filed with the SEC under the Securities Act of
1933 relating to the contract. This prospectus does not contain all the
information in the registration statement as permitted by SEC regulations. The
omitted information can be obtained from the SEC's principal office in
Washington, D.C., upon payment of a prescribed fee.
- ----------------------------------------------------------------
- ----------------------------------------------------------------
TABLE OF CONTENTS OF
STATEMENT OF ADDITIONAL INFORMATION
- ----------------------------------------------------------------
- ----------------------------------------------------------------
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)
445-SUN2. The contents of the SAI are tabulated below.
<TABLE>
<S> <C>
Separate Account.............................. 3
General Account............................... 3
Performance Data.............................. 4
Income Payments............................... 9
Annuity Unit Values........................... 10
Taxes......................................... 12
Distribution of Contracts..................... 16
Financial Statements.......................... 16
</TABLE>
21
<PAGE> 61
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
APPENDIX A - CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCEPTION TO FISCAL YEAR
PORTFOLIOS 11/30/97 11/30/98
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Appreciation (Inception Date - 6/3/97)
Beginning AUV.................................. $ 18.52 $ 21.26
Ending AUV..................................... $ 21.26 $ 23.72
Ending Number of AUs........................... 1,392,262 7,356,862
- -------------------------------------------------------------------------------------------
Growth (Inception Date - 6/3/97)
Beginning AUV.................................. $ 17.93 $ 20.31
Ending AUV..................................... $ 20.31 $ 24.41
Ending Number of AUs........................... 789,274 3,678,108
- -------------------------------------------------------------------------------------------
Natural Resources (Inception Date - 6/4/97)
Beginning AUV.................................. $ 12.39 $ 11.14
Ending AUV..................................... $ 11.14 $ 9.30
Ending Number of AUs........................... 195,946 641,479
- -------------------------------------------------------------------------------------------
Government and Quality Bond (Inception Date - 6/11/97)
Beginning AUV.................................. $ 11.99 $ 12.65
Ending AUV..................................... $ 12.65 $ 13.66
Ending Number of AUs........................... 395,258 5,697,571
- -------------------------------------------------------------------------------------------
Emerging Markets (Inception Date - 6/5/97)
Beginning AUV.................................. $ 10.14 $ 7.97
Ending AUV..................................... $ 7.97 $ 6.14
Ending Number of AUs........................... 663,212 2,574,316
- -------------------------------------------------------------------------------------------
International Diversified Equities (Inception Date - 6/4/97)
Beginning AUV.................................. $ 12.04 $ 11.62
Ending AUV..................................... $ 11.62 $ 13.53
Ending Number of AUs........................... 1,040,812 4,519,545
- -------------------------------------------------------------------------------------------
Global Equities (Inception Date - 6/3/97)
Beginning AUV.................................. $ 16.54 $ 16.90
Ending AUV..................................... $ 16.90 $ 19.21
Ending Number of AUs........................... 600,294 2,566,912
- -------------------------------------------------------------------------------------------
International Growth and Income (Inception Date - 6/4/97)
Beginning AUV.................................. $ 9.97 $ 10.33
Ending AUV..................................... $ 10.33 $ 11.16
Ending Number of AUs........................... 1,310,126 6,738,263
- -------------------------------------------------------------------------------------------
Aggressive Growth (Inception Date - 6/9/97)
Beginning AUV.................................. $ 10.03 $ 11.51
Ending AUV..................................... $ 11.51 $ 11.86
Ending Number of AUs........................... 821,105 2,794,187
- -------------------------------------------------------------------------------------------
MFS Mid-Cap Growth (Inception Date - 4/1/99
Beginning AUV.................................. $ -- $ --
Ending AUV..................................... $ -- $ --
Ending Number of AUs........................... -- --
- -------------------------------------------------------------------------------------------
Real Estate (Inception Date - 6/4/97)
Beginning AUV.................................. $ 9.98 $ 11.44
Ending AUV..................................... $ 11.44 $ 9.80
Ending Number of AUs........................... 887,321 3,336,767
- -------------------------------------------------------------------------------------------
Putnam Growth (Inception Date - 6/3/97)
Beginning AUV.................................. $ 15.80 $ 18.47
Ending AUV..................................... $ 18.47 $ 22.29
Ending Number of AUs........................... 831,178 4,949,624
- -------------------------------------------------------------------------------------------
MFS Growth and Income* (Inception Date - 6/4/97)
Beginning AUV.................................. $ 15.82 $ 17.63
Ending AUV..................................... $ 17.63 $ 20.46
Ending Number of AUs........................... 191,101 694,076
- -------------------------------------------------------------------------------------------
Alliance Growth (Inception Date - 6/2/97)
Beginning AUV.................................. $ 21.81 $ 24.51
Ending AUV..................................... $ 24.51 $ 32.81
Ending Number of AUs........................... 2,092,044 12,001,651
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
* Formerly named Growth/Phoenix and managed by Phoenix Investment
Counsel, Inc.
AUV - Accumulation Unit Value
AU - Accumulation Units
A-1
<PAGE> 62
<TABLE>
<CAPTION>
INCEPTION TO FISCAL YEAR
PORTFOLIOS 11/30/97 11/30/98
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
<S> <C> <C>
"Dogs of Wall Street" (Inception Date - 4/1/98)
Beginning AUV.................................. $ -- $ 10.00
Ending AUV..................................... $ -- $ 9.71
Ending Number of AUs........................... -- 4,324,225
- -------------------------------------------------------------------------------------------
Venture Value (Inception Date - 6/2/97)
Beginning AUV.................................. $ 18.63 $ 21.30
Ending AUV..................................... $ 21.30 $ 23.36
Ending Number of AUs........................... 4,281,879 20,734,371
- -------------------------------------------------------------------------------------------
Federated Value (Inception Date - 6/4/97)
Beginning AUV.................................. $ 12.14 $ 13.62
Ending AUV..................................... $ 13.62 $ 15.86
Ending Number of AUs........................... 736,333 3,783,248
- -------------------------------------------------------------------------------------------
Growth-Income (Inception Date - 6/3/97)
Beginning AUV.................................. $ 18.84 $ 21.41
Ending AUV..................................... $ 21.41 $ 25.71
Ending Number of AUs........................... 1,949,292 9,786,202
- -------------------------------------------------------------------------------------------
Utility (Inception Date - 6/6/97)
Beginning AUV.................................. $ 11.41 $ 12.74
Ending AUV..................................... $ 12.74 $ 14.56
Ending Number of AUs........................... 177,618 1,807,529
- -------------------------------------------------------------------------------------------
Asset Allocation (Inception Date - 6/3/97)
Beginning AUV.................................. $ 16.59 $ 17.98
Ending AUV..................................... $ 17.98 $ 18.22
Ending Number of AUs........................... 1,498,681 8,996,522
- -------------------------------------------------------------------------------------------
MFS Total Return** (Inception Date - 6/10/97)
Beginning AUV.................................. $ 14.44 $ 15.45
Ending AUV..................................... $ 15.45 $ 17.28
Ending Number of AUs........................... 218,391 1,492,175
- -------------------------------------------------------------------------------------------
SunAmerica Balanced (Inception Date - 6/5/97)
Beginning AUV.................................. $ 11.84 $ 13.22
Ending AUV..................................... $ 13.22 $ 15.60
Ending Number of AUs........................... 363,136 3,543,245
- -------------------------------------------------------------------------------------------
Worldwide High Income (Inception Date - 6/5/97)
Beginning AUV.................................. $ 15.57 $ 15.98
Ending AUV..................................... $ 15.98 $ 13.57
Ending Number of AUs........................... 596,308 2,430,509
- -------------------------------------------------------------------------------------------
High-Yield Bond (Inception Date - 6/9/97)
Beginning AUV.................................. $ 13.63 $ 14.66
Ending AUV..................................... $ 14.66 $ 14.25
Ending Number of AUs........................... 758,856 5,006,115
- -------------------------------------------------------------------------------------------
Corporate Bond (Inception Date - 6/9/97)
Beginning AUV.................................. $ 11.83 $ 12.54
Ending AUV..................................... $ 12.54 $ 13.15
Ending Number of AUs........................... 328,300 3,633,064
- -------------------------------------------------------------------------------------------
Global Bond (Inception Date - 6/11/97)
Beginning AUV.................................. $ 12.41 $ 13.08
Ending AUV..................................... $ 13.08 $ 14.40
Ending Number of AUs........................... 183,563 1,342,157
- -------------------------------------------------------------------------------------------
Cash Management (Inception Date - 6/5/97)
Beginning AUV.................................. $ 11.24 $ 11.43
Ending AUV..................................... $ 11.43 $ 11.83
Ending Number of AUs........................... 1,514,290 5,488,046
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
** Formerly named Balanced/Phoenix and managed by Phoenix
Investment Counsel, Inc.
AUV - Accumulation Unit Value
AU - Accumulation Units
A-2
<PAGE> 63
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
APPENDIX B - 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 switched to the Income Phase 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; 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 5%;
(2) You make a partial withdrawal of $4,000 when 1 1/2 years (18 months)
remain in the 10-year term you initially agreed to leave your money in
the fixed account option (N=18); and
(3) You have not made any other transfers, additional Purchase Payments, or
withdrawals.
No withdrawal charges are reflected because your Purchase Payment has been in
the contract for 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 1-year fixed account option is 3.5% and the 3-year
fixed account option is 4.5%. By linear interpolation, the interest rate for the
remaining 2 years (1 1/2 years rounded up to the next full year) in the contract
is calculated to be 4%.
(N/12)
The MVA factor is = [(1+I/(1+J+0.005)] - 1
(18/12)
= [(1.05)/(1.04+0.005)] - 1
(1.5)
= (1.004785) - 1
= 1.007186 - 1
= + 0.007186
The requested withdrawal amount is multiplied by the MVA factor to determine the
MVA:
$4,000 x (+0.007186) = +$28.74
$28.74 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 1-year fixed account option is 5.5% and the 3-year
fixed account option is 6.5%. By linear interpolation, the interest rate for the
remaining 2 years (1 1/2 years rounded up to the next full year) in the contract
is calculated to be 6%.
(N/12)
The MVA factor is = [(1+I)/(1+J+0.005)] - 1
(18/12)
= [(1.05)/(1.06+0.005)] - 1
(1.5)
= (0.985915) - 1
= 0.978948 - 1
= - 0.021052
The requested withdrawal amount is multiplied by the MVA factor to determine the
MVA:
$4,000 X (- 0.021052) = -$84.21
$84.21 represents the MVA that will be deducted from the money remaining in the
10-year fixed account option.
B-1
<PAGE> 64
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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%
- ----------------------------------------------------------------------------------------
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> 65
- --------------------------------------------------------------------------------
Please forward a copy (without charge) of the Polaris(II) Variable Annuity
Statement of Additional Information to:
(Please print or type and fill in all information.)
------------------------------------------------------------------------
Name
------------------------------------------------------------------------
Address
------------------------------------------------------------------------
City/State/Zip
<TABLE>
<S> <C> <C> <C>
Date: ------------------------------------ Signed: ---------------------------------------
</TABLE>
Return to: Anchor National Life Insurance Company, Annuity Service Center,
P.O. Box 52499, Los Angeles, California 90054-0299
- --------------------------------------------------------------------------------
<PAGE> 66
PART II
-------
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses in connection with the issuance
and distribution of the securities being registered, other than underwriting
discounts and commissions. All of the amounts shown are estimates, except the
SEC registration fee.
<TABLE>
<S> <C>
SEC registration fee ................................. $ 15,152
Printing and engraving ............................... 50,000
Legal fees and expenses .............................. 10,000
Rating agency fees ................................... 7,500
Miscellaneous ........................................ 10,000
--------
Total ............................................ $ 93,259
========
</TABLE>
Item 15. Indemnification of Directors and Officers.
Section 10-851 of the Arizona Corporations and Associations law permits the
indemnification of directors, officers, employees and agents of Arizona
corporations. Article Eight of the Company's Restated Articles of Incorporation,
as amended and restated (the "Articles") and Article Five of the Company's
By-Laws ("By-Laws") authorize the indemnification of directors and officers to
the full extent required or permitted by the Laws of the State of Arizona, now
or hereafter in force, whether such persons are serving the Company, or, at its
request, any other entity, which indemnification shall include the advance of
expenses under the procedures and to the full extent permitted by law. In
addition, the Company's officers and directors are covered by certain directors'
and officers' liability insurance policies maintained by the Company's parent.
Reference is made to section 10-851 of the Arizona Corporations and Associations
Law, Article Eight of the Articles, and Article Five of the By-Laws, which are
incorporated herein by reference.
Item 16. Exhibits and Financial Statement Schedules.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
(1) Form of Underwriting Agreement***
(2) Plan of Acquisition, Reorganization,
Arrangement, Liquidation or Succession**
(3) (a) Articles of Incorporation***
(b) By-Laws***
(4) (a) Polaris II Group Annuity Certificate***
(b) Polaris II (Principal Rewards)
Group Annuity Certificate*
(c) Polaris II Individual Annuity Contract***
(d) Polaris II (Principal Rewards)
Individual Annuity Contract*
(e) Polaris II Participant Enrollment Form*
(f) Polaris II Annuity Application*
(5) Opinion of Counsel re: Legality**
(included on Exhibit (23)(b))
(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**
(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**
</TABLE>
* Herewith
** Not Applicable
*** Incorporated by Reference to
Pre-Effective Amendment No. 1 to
Registration Statement No. 333-18338
on Form S-1 filed on April 18, 1997.
**** Incorporated by Reference to
Post-Effective Amendment No. 5 to
Registration Number 333-18333 on
Form S-3 Filed February 2, 1999.
<PAGE> 67
Item 17. Undertakings.
The undersigned registrant 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 thereof)
which, individually or in the aggregate, represents a
fundamental change in the information set forth 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 such 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.
(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.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement 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.
<PAGE> 68
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, State of California on this 31st
day of March, 1999.
By: ANCHOR NATIONAL LIFE INSURANCE COMPANY
By: /s/ JAY S. WINTROB
---------------------------------------
Jay S. Wintrob
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
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
JAY S. WINTROB* Director
- ----------------
Jay S. Wintrob
/s/ SUSAN L. HARRIS Director March 31, 1999
- -------------------
Susan L. Harris
PETER McMILLAN* Director
- ----------------
Peter McMillan
JAMES W. ROWAN* Director
- -----------------
James W. Rowan
*By: /s/ SUSAN L. HARRIS Attorney-in-Fact
-----------------------
Susan L. Harris
</TABLE>
Date: March 31, 1999
<PAGE> 69
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
(4) (b) Polaris II (Principal Rewards)
Group Annuity Certificate
(d) Polaris II (Principal Rewards)
Individual Annuity Contract*
(e) Polaris II Participant Enrollment Form
(f) Polaris II Annuity Application
(23) (a) Consent of Independent Accountants
</TABLE>
<PAGE> 1
ANCHOR NATIONAL LIFE INSURANCE COMPANY
A STOCK COMPANY LOS ANGELES, CALIFORNIA
CERTIFICATE NUMBER P9999999999
PARTICIPANT JOHN DOE
<TABLE>
<CAPTION>
<S> <C> <C>
STATUTORY HOME OFFICE EXECUTIVE OFFICE ANNUITY SERVICE CENTER
2999 NORTH 44TH ST., STE 250 1 SUNAMERICA CENTER P. O. BOX 54299
PHOENIX, AZ 85018 LOS ANGELES, CA 90067-6022 LOS ANGELES, CA 90054-0299
</TABLE>
ANCHOR NATIONAL LIFE INSURANCE COMPANY ("We", "Us", the "Company", or "Anchor
National") agrees to provide benefits to the Participant under the Group
Contract, in accordance with the provisions set forth in this Certificate and in
consideration of Purchase Payments We receive.
THIS CERTIFICATE IS EVIDENCE OF COVERAGE UNDER THE GROUP CONTRACT. THE COVERAGE
WILL BEGIN AS OF THE CERTIFICATE DATE, SHOWN ON THE CERTIFICATE DATA PAGE.
THE VALUE OF AMOUNTS ALLOCATED TO THE SEPARATE ACCOUNT DURING THE ACCUMULATION
AND ANNUITY PERIODS IS NOT GUARANTEED, AND WILL INCREASE OR DECREASE BASED UPON
THE INVESTMENT EXPERIENCE OF THE VARIABLE PORTFOLIOS YOU CHOOSE.
THE CASH SURRENDER BENEFIT OF AMOUNTS ALLOCATED TO ANY FIXED-MVA ACCOUNT OPTION
INCREASES OR DECREASES BASED ON THE APPLICATION OF THE MARKET VALUE ADJUSTMENT
EXCEPT DURING THE 30 DAYS AFTER THE END OF THE GUARANTEE PERIOD. THERE IS NO
MARKET VALUE ADJUSTMENT TO AMOUNTS ALLOCATED TO THE NON-MVA FIXED ACCOUNT
OPTION.
RIGHT TO EXAMINE - YOU MAY RETURN THIS CERTIFICATE TO OUR ANNUITY SERVICE CENTER
OR TO THE AGENT THROUGH WHOM THE CERTIFICATE WAS PURCHASED WITHIN 10 DAYS AFTER
YOU RECEIVE IT, IF YOU ARE NOT SATISFIED WITH IT. THE COMPANY WILL REFUND THE
CERTIFICATE VALUE, LESS ANY PAYMENT ENHANCEMENT(S), ON THE BUSINESS DAY DURING
WHICH THE CERTIFICATE IS RECEIVED. UPON SUCH REFUND, THE CERTIFICATE SHALL BE
VOID.
For Individual Retirement Annuities, a refund of the Purchase Payment(s) may be
required. Therefore, We reserve the right to allocate Your Purchase Payment(s)
and any Payment Enhancement to the Cash Management Portfolio until the end of
the Right To Examine period. Thereafter, allocations will be made as shown on
the Certificate Data Page.
THIS IS A LEGAL DOCUMENT. READ IT CAREFULLY.
/s/ Susan L. Harris /s/ Eli Broad
- ---------------------------- ----------------------------
Susan L. Harris Eli Broad
Secretary President
ALLOCATED FIXED AND
VARIABLE GROUP ANNUITY CERTIFICATE
Nonparticipating
1
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
CERTIFICATE DATA PAGE.............................................PAGE 3
PURCHASE PAYMENT ALLOCATION.......................................PAGE 4
DEFINITIONS.......................................................PAGE 5
PURCHASE PAYMENT PROVISIONS.......................................PAGE 8
ACCUMULATION PROVISIONS...........................................PAGE 9
PAYMENT ENHANCEMENT PROVISIONS...................................PAGE 11
FEES AND CHARGES.................................................PAGE 12
TRANSFER PROVISIONS..............................................PAGE 12
WITHDRAWAL PROVISIONS............................................PAGE 13
GENERAL PROVISIONS...............................................PAGE 15
DEATH PROVISIONS.................................................PAGE 17
ANNUITY PROVISIONS...............................................PAGE 20
ANNUITY PAYMENT OPTIONS .........................................PAGE 22
FIXED ANNUITY PAYMENT OPTIONS TABLE..............................PAGE 23
VARIABLE ANNUITY PAYMENT OPTIONS TABLE...........................PAGE 26
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
CERTIFICATE DATA PAGE
<S> <C>
CERTIFICATE NUMBER: ANNUITY SERVICE CENTER:
P9999999999 P. O. BOX 54299
LOS ANGELES, CA 90054-0299
PARTICIPANT: AGE AT ISSUE:
JOHN DOE 35
ANNUITANT: INITIAL PURCHASE PAYMENT:
JOHN DOE $10,000.00
CERTIFICATE DATE: FIXED ACCOUNT OPTIONS -
March 1, 1999 Minimum Guarantee Rate:
3.0%
ANNUITY DATE: INITIAL PAYMENT ENHANCEMENT:
March 1, 2029 2.0%
LATEST ANNUITY DATE: MORTALITY RISK CHARGE:
March 1, 2054 [0.35%]
ANNUAL CERTIFICATE MAINTENANCE FEE: EXPENSE RISK CHARGE:
$35.00 [0.90%]
GUARANTEED DEATH BENEFIT RISK CHARGE: DISTRIBUTION EXPENSE CHARGE:
[0.12%] [0.15%]
BENEFICIARY: SEPARATE ACCOUNT:
As named by You. Variable Separate Account
DEATH BENEFIT OPTION:
Option I: Purchase Payment Accumulation
</TABLE>
<TABLE>
<CAPTION>
PAYMENT ENHANCEMENT SCHEDULE FOR INITIAL PURCHASE PAYMENT
- ------------------------------------------------- -----------------------------------------------
PAYMENT ENHANCEMENT DATE PAYMENT ENHANCEMENT
- ------------------------------------------------- -----------------------------------------------
<S> <C>
INITIAL PAYMENT ENHANCEMENT:
- ------------------------------------------------- -----------------------------------------------
March 1, 1999 $200.00
- ------------------------------------------------- -----------------------------------------------
DEFERRED PAYMENT ENHANCEMENT(S):
- ------------------------------------------------- -----------------------------------------------
[March 1, 2008] [$200.00*]
- ------------------------------------------------- -----------------------------------------------
</TABLE>
*May be reduced by certain withdrawals of Certificate Value. Please see Payment
Enhancement Provisions.
FOR INQUIRIES
CALL 1-800-445-SUN2
3
<PAGE> 4
PURCHASE PAYMENT ALLOCATION
<TABLE>
<CAPTION>
Variable Portfolios
-------------------
<S> <C> <C> <C>
SUNAMERICA ANCHOR
SERIES TRUST SERIES TRUST
0.00% Cash Management 0.00% Government & Quality Bond
0.00% Corporate Bond 0.00% Growth
0.00% Global Bond 25.00% Natural Resources
0.00% High-Yield Bond 0.00% Capital Appreciation
0.00% Worldwide High Income
0.00% SunAmerica Balanced
25.00% MFS Total Return
0.00% Asset Allocation
0.00% Utility
0.00% Growth-Income
0.00% MFS Growth and Income
0.00% Federated Value
0.00% Venture Value
0.00% "Dogs" of Wall St.
0.00% Alliance Growth
25.00% Putnam Growth
0.00% Real Estate
0.00% MFS Mid-Cap Growth
0.00% Aggressive Growth
0.00% International Growth
and Income
0.00% Global Equities
0.00% International Diversified
Equities
0.00% Emerging Markets
</TABLE>
<TABLE>
<CAPTION>
Fixed Account Options
---------------------
Guarantee Initial
Period Interest Rate
--------- -------------
<S> <C> <C>
25.00% 1-Year Fixed Non-MVA 3.00%
0.00% 3-Year Fixed MVA
0.00% 5-Year Fixed MVA
0.00% 7-Year Fixed MVA
0.00% 10-Year Fixed MVA
</TABLE>
4
<PAGE> 5
DEFINITIONS
Defined in this section are some of the words and phrases used in this
Certificate. These terms are capitalized when used in the Certificate. Other
capitalized terms in the Certificate refer to the captioned paragraph explaining
that particular concept in the Certificate.
ACCUMULATION UNIT
A measurement used to compute the Certificate Value in a Variable Portfolio
prior to the Annuity Date.
AGE
Age as of last birthday.
ANNUITANT
The natural person or persons (collectively, Joint Annuitants) whose life or
lives is/are used to determine the annuity benefits under the Certificate. If
the Certificate is in force and the Annuitant(s) is/are alive on the Annuity
Date, We will begin payments to the Payee. This Certificate cannot have Joint
Annuitants if it is issued on a tax-qualified basis.
ANNUITY DATE
The date on which annuity payments ("income payments") to the Payee are to
start. The Participant specifies the Annuity Date, which must be at least two
years after the Certificate Date.
ANNUITY SERVICE CENTER
As specified on the Certificate Data Page.
ANNUITY UNIT
A unit of measurement used to compute annuity payments from the Variable
Portfolio.
BENEFICIARY
The Beneficiary is as named by You unless later changed by You in a written
request to Us at Our Annuity Service Center.
CERTIFICATE
This Certificate, which describes Your interest as a Participant under the group
annuity contract.
CERTIFICATE DATE
The date Your Certificate is issued, as shown on the Certificate Data Page. It
is the date from which Certificate Years and anniversaries are measured.
CERTIFICATE VALUE
The sum of: (1) the Accumulation Unit Values for Your amounts allocated to the
Variable Portfolios and (2) the value of amounts allocated to the Fixed Account
Options.
CERTIFICATE YEAR
5
<PAGE> 6
A year starting from the Certificate Date in one calendar year and ending on the
day preceding the anniversary of such date in the succeeding calendar year.
CONTRIBUTION YEAR
A year starting from the date a Purchase Payment is made in one calendar year
and ending on the day preceding the anniversary of such date in succeeding
calendar years.
CURRENT INTEREST RATE
The rate(s) of interest declared by Us applicable to allocations of subsequent
Purchase Payments to the Fixed Account Options. The Current Interest Rate will
not be less than the Minimum Guarantee Rate as shown on the Certificate Data
Page.
DEFERRED PAYMENT ENHANCEMENT
Any Payment Enhancement allocated to Your Certificate Value on any Deferred
Payment Enhancement Date.
FIXED ACCOUNT OPTIONS
The investment options under this Certificate that are credited with a fixed
rate of interest declared by the Company. All amounts allocated to the Fixed
Account Options become part of the Company's general asset account. The general
asset account contains all the assets of the Company except for the Separate
Account and other segregated asset accounts. The Fixed Account Options for this
Certificate are shown on page 4.
FIXED ANNUITY
A series of periodic annuity payments in predetermined amounts that do not vary
with investment experience. Such payments are made from the Company's general
asset account.
GUARANTEE PERIOD
The period for which either the Initial Interest Rate, the Current Interest Rate
or the Renewal Interest Rate is credited to amounts allocated to the Fixed
Account Options.
INITIAL INTEREST RATE
The rate(s) of interest credited to any portion of the initial Purchase Payment
allocated to the Fixed Account Option(s), as described in the Accumulation
Provisions section. The Initial Interest Rate(s) for this Certificate is/are
listed on page 4. The Initial Interest Rate may not be less than the Minimum
Guarantee Rate as shown on the Certificate Data Page.
INITIAL PAYMENT ENHANCEMENT
The Payment Enhancement allocated to Your Certificate Value on the date a
Purchase Payment is credited to Your Certificate.
IRC
The Internal Revenue Code of 1986, as amended, or as it may be amended or
superseded.
JOINT PARTICIPANT
If Joint Participants are named, they must be spouses. Each Joint Participant
has an equal ownership interest in the Certificate unless We are advised
otherwise in writing.
6
<PAGE> 7
NYSE
New York Stock Exchange. Generally, the close of any NYSE business day is
4:00PM, Eastern Time. Financial transactions and/or Purchase Payments received
after the close of any NYSE business day will be credited with the next NYSE
business day's Accumulation Unit Value for the selected Variable Portfolio.
PARTICIPANT
The person or entity named in the Certificate who is entitled to
exercise all rights and privileges of ownership under the Certificate.
Participant means both Joint Participants, if applicable.
PAYEE
The person receiving payment of annuity benefits under this Certificate.
PAYMENT ENHANCEMENT
Payment Enhancements are amounts allocated to Your Certificate Value by Us.
Payment Enhancements are not considered Purchase Payments.
PURCHASE PAYMENTS
Payments in U.S. currency made by or on behalf of the Participant to the Company
for the Certificate. Payment Enhancements are not considered Purchase Payments.
RENEWAL INTEREST RATE
The rate(s) of interest declared by Us applicable to transfers from the Variable
Portfolios into the Fixed Account Options and to amounts previously allocated to
a Fixed Account Option wherein the Guarantee Period has expired. The Renewal
Interest Rate may not be less than the Minimum Guarantee Rate as shown on the
Certificate Data Page.
SEPARATE ACCOUNT
A segregated asset account named on the Certificate Data Page. The Separate
Account consists of the Variable Portfolios. The assets of the Separate Account
are not comingled with the general assets and liabilities of the Company. The
value of amounts allocated to the Variable Portfolios of the Separate Account is
not guaranteed.
SUBSEQUENT PURCHASE PAYMENTS
Purchase Payments made after the Initial Purchase Payment.
TOTAL INVESTED AMOUNT
The sum of all Purchase Payments less amounts previously withdrawn that incurred
a Withdrawal Charge, less Purchase Payments withdrawn that were no longer
subject to a Withdrawal Charge.
VARIABLE ANNUITY
A series of periodic annuity payments which vary in amount according to the
investment experience of one or more Variable Portfolio, as selected by You.
VARIABLE PORTFOLIO
The variable investment options available under this Certificate. Each Variable
Portfolio has its own investment objective and is invested in an underlying fund
of the Anchor Series Trust or the SunAmerica Series Trust. Each Variable
Portfolio is not chargeable with liabilities arising out of any other Variable
Portfolio. The available Variable Portfolios are shown on page 4. Additional
Variable Portfolios may become available in the future.
7
<PAGE> 8
WE, OUR, US, THE COMPANY
Anchor National Life Insurance Company.
YOU, YOUR
The Participant.
PURCHASE PAYMENT PROVISIONS
PURCHASE PAYMENTS
Purchase Payments are flexible. This means that, subject to Company declared
minimums and maximums, You may change the amounts, frequency or timing of
Purchase Payments. Purchase Payments will be allocated to the Fixed Account
Option(s) and Variable Portfolio(s) in accordance with instructions from You. We
reserve the right to specify the minimum Purchase Payment that may be allocated
to a Variable Portfolio under the Certificate.
PRINCIPAL ADVANTAGE PROGRAM
An optional program under which We allocate a portion of Your Purchase Payment
to a Fixed Account Option selected by You. This allocation will accumulate to
the full amount of that Purchase Payment by the end of the Guarantee Period,
provided there are no withdrawals or transfers prior to the end of the Guarantee
Period from that Fixed Account Option. The amount of the allocation depends
upon: (a) the Guarantee Period for the Fixed Account Option You select; and (b)
the interest rate applicable to that allocation. We reserve the right to modify,
suspend or terminate the Principal Advantage Program at any time.
DEFERMENT OF PAYMENTS
We may defer making payments from the Fixed Account Options for up to six (6)
months. Interest, subject to state requirements, will be credited during the
deferral period.
SUSPENSION OF PAYMENTS
We may suspend or postpone any payments from the Variable Portfolios if any of
the following occur:
(a) the NYSE is closed;
(b) trading on the NYSE is restricted;
(c) an emergency exists such that it is not reasonably practical to dispose
of securities in the Variable Portfolios or to determine the value of
its assets; or
(d) the Securities and Exchange Commission, by order, so permits for the
protection of Participants.
Conditions in (b) and (c) will be decided by or in accordance with rules of the
Securities and Exchange Commission.
8
<PAGE> 9
SUBSTITUTION OF VARIABLE PORTFOLIO
If: (a) the shares of the underlying funds of the SunAmerica Series Trust or the
Anchor Series Trust should no longer be available for investment by the Separate
Account; or (b) in the judgment of the Board of Trustees for the SunAmerica
Series Trust and the Anchor Series Trust, further investment in the underlying
funds of such entities is no longer appropriate in view of the purpose of the
Certificate, then We may substitute shares of another underlying fund, for
shares already purchased, or to be purchased in the future by subsequent
Purchase Payments under the Certificate. No substitution of securities may take
place without prior approval of the Securities and Exchange Commission and under
such requirements as it may impose.
ACCUMULATION PROVISIONS
SEPARATE ACCOUNT ACCUMULATION VALUE
The Separate Account Accumulation Value under the Certificate shall be the sum
of the values of the Accumulation Units held in the Variable Portfolios for each
Participant.
NUMBER OF ACCUMULATION UNITS
Your Certificate is credited with Accumulation Units of the Separate Account
when Purchase Payments are allocated to the Variable Portfolios. For that
portion of each Purchase Payment allocated to a Variable Portfolio, the number
of Accumulation Units credited is equal to the sum of each Purchase Payment, any
Payment Enhancement and/or transfer amount allocated to that Variable Portfolio,
reduced by premium taxes, if any:
Divided by
The Accumulation Unit value for that Variable Portfolio for the NYSE business
day on which the Purchase Payment, Payment Enhancement or transfer amount is
allocated.
The number of Accumulation Units will be similarly adjusted for withdrawals,
annuitizations, transfers and charges. Adjustments will be made as of the NYSE
business day on which We receive all requirements for the transaction, as
appropriate.
ACCUMULATION UNIT VALUE (AUV)
The AUV of a Variable Portfolio for any NYSE business day is calculated by
subtracting (2) from (1) and dividing the result by (3) where:
(1) is the total value for the given NYSE business day of the assets
attributable to the Accumulation Units of the Variable Portfolio, minus
the total liabilities;
(2) is the cumulative unpaid charge for assumption of Expense Risk,
Distribution Expense, Mortality Risk and Guaranteed Death Benefit Risk
charges (See CHARGES AND DEDUCTIONS); and
(3) is the number of Accumulation Units outstanding at the end of the given
NYSE business day.
9
<PAGE> 10
FIXED ACCOUNT ACCUMULATION VALUE
Under the Certificate, the Fixed Account Accumulation Value shall be the sum of
all monies then invested in the Fixed Account Option(s), reduced by any
applicable premium taxes, plus all interest credited thereto. This amount shall
be adjusted for withdrawals (which includes any Withdrawal Charges associated
with those withdrawals), annuitizations, transfers, any applicable MVA on such
transactions, and the deduction of the Certificate Maintenance Fee. The Fixed
Account Accumulation Value shall not be less than the minimum values required by
law in the state where this Certificate is issued.
FIXED ACCOUNT GUARANTEE PERIOD OPTIONS AND INTEREST CREDITING
Any amounts allocated to the Fixed Account Options from the initial Purchase
Payment and the Payment Enhancement for the initial Purchase Payment will earn
interest at the Initial Interest Rate for the Fixed Account Option(s) selected
for the duration of the Guarantee Period.
Subsequent Purchase Payments and the initial Payment Enhancement for Subsequent
Purchase Payments, if any, allocated to the Fixed Account Options will earn
interest at the Current Interest Rate for the Fixed Account Option(s) selected
for the duration of the Guarantee Period. Transfers to the Fixed Account Options
from the Variable Portfolios and amounts renewed into the Fixed Account Options
will earn interest at the Renewal Interest Rate for the Fixed Account Option(s)
selected for the duration of the Guarantee Period.
For thirty (30) days following the date of expiration of a Guarantee Period, You
may renew for the same or any other Guarantee Period at the Renewal Interest
Rate or You may transfer all or a portion of the amount to the Variable
Portfolios. If during that 30-day period You do not specify a different
Guarantee Period or otherwise transfer to a Variable Portfolio, We will select
the same Guarantee Period as has just expired, crediting Your Certificate with
the Renewal Interest Rate in effect on the date of expiration of the Guarantee
Period, so long as such Guarantee Period does not extend beyond the Annuity
Date. If the guarantee period extends beyond the Annuity Date, We will credit
interest up to the Annuity Date at the Renewal Interest Rate for the 1-Year
Fixed Account Option.
MARKET VALUE ADJUSTMENT (MVA)
Any payments and values based on the 3, 5, 7 or 10-year Fixed Account Options
may be subject to a MVA, the operation of which may result in upward or downward
adjustments in the Certificate Value, if withdrawn, transferred or annuitized
prior to the end of the respective Guarantee Period. The MVA will be calculated
by multiplying the amount withdrawn, transferred or annuitized by the following
formula:
(N/12)
{(1 + I)/(1+J+0.0050)} -1
I = The interest rate currently in effect for that Guarantee Period.
10
<PAGE> 11
J = The Initial Interest Rate available for the Guarantee Period equal to the
number of years (rounded up to an integer) remaining in the current Guarantee
Period at the time of withdrawal, transfer or annuitization. In the
determination of J, if the Company currently does not offer the applicable
Guarantee Period, then the rate will be determined by linear interpolation of
the Initial Interest Rate for the nearest two Guarantee Periods that are
available.
N = The number of full months remaining in the current Guarantee Period at the
time the withdrawal or annuitization request is processed.
There will be no MVA from the Fixed Account Options in the following situations:
(1) upon withdrawal or transfer within thirty (30) days after the end of the
Guarantee Period; (2) upon withdrawal to pay fees or charges; (3) upon payment
of the death benefit; or (4) upon annuitization on the latest Annuity Date.
PAYMENT ENHANCEMENT PROVISIONS
Payment Enhancements are amounts allocated to Your Certificate Value by Us.
Payment Enhancements are not considered Purchase Payments. Payment Enhancements
are subject to Our terms and conditions as discussed below.
PAYMENT ENHANCEMENT FOR INITIAL PURCHASE PAYMENT
We will allocate the Initial Payment Enhancement shown on the Certificate Data
Page to the Fixed Account Options and Variable Portfolios in the same proportion
as Your Initial Purchase Payment. The Initial Payment Enhancement will be
allocated on Your Certificate Date.
We will allocate any Deferred Payment Enhancement(s) shown on the Certificate
Data Page to the Cash Management Portfolio on the corresponding Deferred Payment
Enhancement Date(s) shown. Any Deferred Payment Enhancement(s) will be reduced
proportionately by Partial Withdrawals (including any fees or charges associated
with such withdrawals) of the Initial Purchase Payment(s), prior to the Deferred
Payment Enhancement Date(s).
PAYMENT ENHANCEMENT FOR SUBSEQUENT PURCHASE PAYMENT(S)
The Initial Payment Enhancement for Subsequent Purchase Payments is a percentage
of each Subsequent Purchase Payment. This percentage is shown on the Certificate
Data Page. We will allocate the Initial Payment Enhancement for the Subsequent
Purchase Payment to the Fixed Account Options and Variable Portfolios in the
same proportion as that Subsequent Purchase Payment.
Any Deferred Payment Enhancement(s) and Deferred Payment Enhancement date(s) for
Subsequent Purchase Payment(s) will be determined by Us at the time the
Subsequent Purchase Payment is received. We will allocate any Deferred Payment
Enhancement(s) for Subsequent Purchase Payments to the Cash Management
Portfolio. Deferred Payment Enhancement(s) corresponding to Subsequent Purchase
Payments will be reduced proportionately by Partial Withdrawals (including any
fees or charges associated with such withdrawals) of that Subsequent Purchase
Payment, prior to the Deferred Payment Enhancement Date(s).
DEFERRED PAYMENT ENHANCEMENTS
11
<PAGE> 12
For purposes of determining a Deferred Payment Enhancement, Partial Withdrawals
are assumed to be withdrawn from earnings first, then from Purchase Payments on
a first-in-first-out (FIFO) basis. No Deferred Payment Enhancement will be
allocated if prior to the Deferred Payment Enhancement Date: (a) the Certificate
Value is fully withdrawn; or (b) a death benefit has been paid; or (c) Annuity
payments have begun; or (d) the entire Purchase Payment has been withdrawn.
FEES AND CHARGES
We will deduct the following charges from the Certificate:
CERTIFICATE MAINTENANCE FEE
The charge specified on the Certificate Data Page will be deducted on each
Certificate anniversary that occurs on or prior to the Annuity Date. It will
also be deducted when the Certificate Value is withdrawn in full if the
withdrawal is not on the Certificate anniversary. We reserve the right to assess
a charge on a class basis which is less than the charge specified on the
Certificate Data Page.
WITHDRAWAL CHARGE
The charge, if any, to be deducted upon withdrawal of any portion of the
Certificate Value. See WITHDRAWAL PROVISIONS.
MORTALITY RISK CHARGE
On an annual basis this charge, as shown on the Certificate Data Page, equals a
percentage of the average daily total net asset value of the Variable Portfolios
to which Your Purchase Payments are allocated. This charge is to compensate Us
for assuming the mortality risks under the Certificate.
EXPENSE RISK CHARGE
On an annual basis this charge, as shown on the Certificate Data Page, equals a
percentage of the average daily total net asset value of the Variable Portfolios
to which Your Purchase Payments are allocated. This charge is to compensate Us
for assuming the expense risks under the Certificate.
DISTRIBUTION EXPENSE CHARGE
On an annual basis this charge, as shown on the Certificate Data Page, equals a
percentage of the average daily total net asset value of the Variable Portfolios
to which Your Purchase Payments are allocated. This charge is to compensate Us
for all distribution expenses associated with the Certificate.
GUARANTEED DEATH BENEFIT RISK CHARGE
On an annual basis this charge, as shown on the Certificate Data Page, equals a
percentage of the average daily total net asset value of the Variable Portfolios
to which Your Purchase Payments are allocated. This charge is to compensate Us
for the risk assumed as a result of contractual obligations to provide a minimum
guaranteed Death Benefit prior to the Annuity Date.
12
<PAGE> 13
TRANSFER PROVISIONS
Prior to the Annuity Date, You may transfer all or part of Your Certificate
Value to any of the Variable Portfolios or Fixed Account Options. We reserve the
right to charge a fee for transfers if the number of transfers exceeds the limit
specified by Us. The minimum amount that can be transferred and the amount that
can remain in a Variable Portfolio or Fixed Account Option are subject to
Company limits.
TRANSFERS OF ACCUMULATION AND ANNUITY UNITS BETWEEN VARIABLE PORTFOLIOS
Prior to the Annuity Date, You may transfer all or a portion of Your Certificate
Value between Variable Portfolios. A transfer will result in the redemption of
Accumulation Units in a Variable Portfolio and the purchase of Accumulation
Units in the other Variable Portfolio. Transfers will be effected at the next
computed Accumulation Unit Value following Our receipt of Your request for
transfer. Accumulation Unit Values are calculated at the close of each NYSE
business day.
After the Annuity Date, You may transfer all or a portion of Your Certificate
Value from one Variable Portfolio to another Variable Portfolio. A transfer will
result in the redemption of Annuity Units in a Variable Portfolio and the
purchase of Annuity Units in the other Variable Portfolio. Transfers will be
effected for the last NYSE business day of the month in which We receive Your
request for the transfer.
TRANSFERS OF ACCUMULATION AND ANNUITY UNITS TO AND FROM THE FIXED ACCOUNT
OPTIONS
Prior to the Annuity Date, You may transfer all or any part of Your
Certificate Value from the Variable Portfolio(s) to any Fixed Account Option(s)
or from the Fixed Account Option(s) to the Variable Portfolio(s) of the
Contract.
After the Annuity Date, transfers into or out of the Fixed Account Option(s) are
not allowed.
DOLLAR COST AVERAGING (DCA)
An optional program under which You authorize the automatic transfer of
specified amounts or percentages, at the interval selected by You, from the
1-Year Fixed Account Option or any Variable Portfolio(s) into any Variable
Portfolio, other than the source account. The unit values credited and applied
to Your Certificate are determined on each date of transfer. You may terminate
the DCA program at any time. We reserve the right to modify, suspend or
terminate the DCA program at any time.
WITHDRAWAL PROVISIONS
On or before the Annuity Date and while the Participant is living, You may
withdraw all or part of Your Certificate Value under this Certificate by
informing Us at Our Annuity Service Center. For a full withdrawal, this
Certificate must be returned to Our Annuity Service Center. The minimum amount
that can be withdrawn and the amount remaining after withdrawal are subject to
Company limits.
13
<PAGE> 14
Without a written notice to the contrary, withdrawals will be deducted from the
Certificate Value in proportion to their allocation among the Fixed Account
Options and the Variable Portfolios. Withdrawals will be based on values for the
NYSE business day in which the request for withdrawal and the Certificate (in
the case of a full withdrawal), are received at Our Annuity Service Center.
Unless the SUSPENSION OF PAYMENTS or DEFERMENT OF PAYMENTS sections are in
effect, payment of withdrawals will be made within seven calendar days.
WITHDRAWAL CHARGE
Withdrawals of all or a portion of the Certificate Value may be subject to a
Withdrawal Charge as shown in the chart below. The Withdrawal Charge applied to
any withdrawal will depend on how long the Purchase Payment to which the
withdrawal is attributed has been in the Certificate. No Withdrawal Charge is
made on an amount withdrawn which is considered to be a withdrawal of
penalty-free earnings.
For the purpose of determining the Withdrawal Charge, a withdrawal will be
attributed to amounts in the following order: (1) penalty-free earnings in the
Certificate; (2) Purchase Payments which are both no longer subject to the
Withdrawal Charge and not yet withdrawn; (3) any remaining Penalty-Free
Withdrawal amount (except in the case of a full surrender); and (4) Purchase
Payments subject to a Withdrawal Charge. Purchase Payments, when withdrawn, are
assumed to be withdrawn on a first-in-first-out (FIFO) basis. You will not
receive the benefit of a Penalty-Free Withdrawal in the case of a full
surrender.
<TABLE>
<CAPTION>
Number of Years Elapsed Withdrawal Charge as a
Between Purchase Payment Contribution Percentage of Withdrawn
and Date of Withdrawal Purchase Payment
- ------------------------------------- ------------------------
<S> <C>
0 9%
1 9%
2 8%
3 7%
4 6%
5 5%
6 4%
7 3%
8 2%
9+ 0%
</TABLE>
The Withdrawal Charge will be deducted from amounts remaining in the Variable
Portfolios and the Fixed Account Options after the withdrawal, in the same
proportion as the remaining Certificate Value is allocated, unless You request
that the withdrawal come from a particular Fixed Account Option or Variable
Portfolio. If the remaining Certificate Value is insufficient to cover the
Withdrawal Charge, any remaining balance will be deducted from the withdrawal
amount requested.
PENALTY-FREE WITHDRAWALS
As of any day, You may make a withdrawal of up to the Penalty-Free Withdrawal
amount for that day without incurring a Withdrawal Charge. Any Penalty-Free
Withdrawal made in excess of
14
<PAGE> 15
penalty-free earnings in the Certificate is considered to be a withdrawal of
future penalty-free earnings and is therefore not a withdrawal of the Total
Invested Amount. On any day, penalty-free earnings in the Certificate are
calculated as the Certificate Value at the end of that day less the Total
Invested Amount.
During the first Certificate Year, the Penalty-Free Withdrawal amount is equal
to the penalty-free earnings in the Certificate as of the date of withdrawal.
Alternatively, during the first Certificate Year, You may make withdrawals of
the Penalty-Free Withdrawal amount through the Systematic Withdrawal Program.
The Penalty-Free Withdrawal amount as of any systematic withdrawal date is 10%
of the Total Invested Amount less any withdrawals already made during the
Certificate Year. After the first Certificate Year, the maximum Penalty-Free
Withdrawal amount as of the date of the withdrawal is the greater of:
(a) penalty-free earnings in the Certificate as of that date; or
(b) 10% of the Total Invested Amount on deposit for at least one year, less
any withdrawals already made during the year.
Although amounts withdrawn free of a Withdrawal Charge may reduce principal,
they do not reduce the Total Invested Amount for purposes of calculating the
Withdrawal Charge or for the purposes of calculating penalty-free earnings in
the Certificate. As a result, You will not receive the benefit of a Penalty-Free
Withdrawal in a full surrender.
SYSTEMATIC WITHDRAWAL PROGRAM
Prior to the Annuity Date, You may elect to participate in the Systematic
Withdrawal Program by informing Us at Our Annuity Service Center. The Systematic
Withdrawal Program allows You to make automatic withdrawals from Your account
monthly, quarterly, semiannually or annually. The minimum systematic withdrawal
amount is subject to Company limits. Any amount withdrawn through the Systematic
Withdrawal Program may be subject to a Withdrawal Charge and/or a Market Value
Adjustment. See the WITHDRAWAL CHARGE and MARKET VALUE ADJUSTMENT provisions.
You may terminate Your participation in the Systematic Withdrawal Program at any
time by sending Us a written request. We reserve the right to modify, suspend or
terminate the Systematic Withdrawal Program at any time.
GENERAL PROVISIONS
ENTIRE CONTRACT
The entire contract between You and Us consists of the group annuity contract,
the application, the Participant Enrollment Form as completed by You at the time
of purchase, this Certificate and any attached endorsement(s). No one can change
the terms or conditions of this contract other than Us. Any change must be in
writing and approved by Us. Only Our President, Secretary, or one of Our
Vice-Presidents can give Our approval.
CHANGE OF ANNUITANT
If the Participant is an individual, the Participant may change the Annuitant(s)
at any time prior to the Annuity Date. To make a change, the Participant must
send a written notice to Us at least 30
15
<PAGE> 16
days before the Annuity Date. If the Participant is a non-natural person, the
Participant may not change the Annuitant.
DEATH OF ANNUITANT
If the Participant and Annuitant are different, and the Annuitant dies before
the Annuity Date, the Participant becomes the Annuitant until the Participant
elects a new Annuitant. If there are Joint Annuitants, upon the death of any
Annuitant prior to the Annuity Date, the Participant may elect a new Joint
Annuitant. However, if the Participant is a non-natural person, We will treat
the death of any Annuitant as the death of the "Primary Annuitant" and as the
death of the Participant, see DEATH PROVISIONS.
MISSTATEMENT OF AGE OR SEX
If the Age or sex of any Annuitant has been misstated, future annuity payments
will be adjusted using the correct Age and sex, according to Our rates in effect
on the date that annuity payments were determined. Any overpayment from the
Fixed Account Options, plus interest at the rate of 4% per year, will be
deducted from the next payment(s) due. Any underpayment from the Fixed Account
Options, plus interest at the rate of 4% per year, will be paid in full with the
next payment due. Any overpayment from the Variable Portfolios will be deducted
from the next payment(s) due. Any underpayment from the Variable Portfolios will
be paid in full with the next payment due.
PROOF OF AGE, SEX, OR SURVIVAL
The Company may require satisfactory proof of correct Age or sex at any time. If
any payment under this Certificate depends on the Annuitant being alive, the
Company may require satisfactory proof of survival.
CONFORMITY WITH STATE LAWS
The provisions of this Certificate will be interpreted by the laws of the state
in which the enrollment form was signed or such other state as is required by
law. Any provision which, on the Certificate Date, is in conflict with the law
of such state is amended to conform to the minimum requirements of such law.
CHANGES IN LAW
If the laws governing this Certificate or the taxation of benefits under the
Certificate change, We reserve the right to amend this Certificate to comply
with these changes.
ASSIGNMENT
You may assign this Certificate before the Annuity Date, but We will not be
bound by an assignment unless it is received by Us in writing. Your rights and
those of any other person referred to in this Certificate will be subject to the
assignment. Certain assignments may be taxable. We do not assume any
responsibility for the validity or tax consequences of any assignment.
CLAIMS OF CREDITORS
To the extent permitted by law, no right or proceeds payable under this
Certificate will be subject to claims of creditors or legal process.
16
<PAGE> 17
PREMIUM TAXES OR OTHER TAXES
The Company may deduct from Your Certificate Value any premium tax or other
taxes payable to a state or other government entity, if applicable. Should We
advance any amount so due, We are not waiving any right to collect such amount
at a later date. The Company will deduct any withholding taxes required by
applicable law.
WRITTEN NOTICE
Any notice We send to You will be sent to Your address shown in the Participant
Enrollment Form unless You request otherwise. Any written request or notice to
Us must be sent to Our Annuity Service Center, as specified on the Certificate
Data Page.
PERIODIC REPORTS
During each Certificate Year, We will send You quarterly statements of the
account activity of the Certificate as well as confirmation reports after each
financial transaction. The quarterly statements will include all transactions
which have occurred during the accounting period shown on the statement.
INCONTESTABILITY
This Certificate will be incontestable from the Certificate Date.
NONPARTICIPATING
This Certificate does not share in Our surplus.
DEATH PROVISIONS
Notwithstanding any provision of this Certificate to the contrary, all payments
of benefits under this Certificate will be made in a manner that satisfies the
requirements of IRC Section 72(s), as amended from time to time. If the
Certificate is owned by a trust or other non-natural person, We will treat the
death of any Annuitant as the death of the "Primary Annuitant" and as the death
of any Participant.
DEATH OF PARTICIPANT BEFORE THE ANNUITY DATE
We will pay a death benefit to the Beneficiary upon Our receiving all required
documentation including: (a) due proof that any Participant died before the
Annuity Date; and (b) an election form selecting the payment option from the
options listed below. If no election is received within 60 days of our receipt
of due proof of death, the death benefit will be paid in accordance with option
1 below. The Beneficiary must select one of the following options:
1. Immediately collect the death benefit in a lump sum
payment. If a lump sum payment is elected, payment will be
in accordance with any applicable laws and regulations
governing payments on death; or
2. Collect the death benefit in the form of one of the
Annuity Payment Options. The payments must be over the
life of the Beneficiary or over a period not extending
beyond the life expectancy of the Beneficiary.
17
<PAGE> 18
Payments under this option must commence within one year
after the Participant's death, otherwise, the death
benefit will be paid in accordance with option 1 above; or
3. If the Beneficiary is the Participant's spouse, the
Beneficiary may elect to become the Participant and
continue the Certificate in force. If this option is
elected, no death benefit is paid. Upon the new
Participant's subsequent death, the entire interest must
be distributed immediately under option 1 or 2 above.
DUE PROOF OF DEATH
Due Proof of Death means:
1. a certified copy of a 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 Participant at the time of death; or
4. any other proof satisfactory to Us.
AMOUNT OF DEATH BENEFIT
The amount of the death benefit will be determined based upon Your death benefit
option selection. Once selected, the death benefit option cannot be changed. The
death benefit options are as described below.
OPTION I: PURCHASE PAYMENT ACCUMULATION DEATH BENEFIT OPTION
Prior to the Annuity Date and upon death of the Participant, the Beneficiary
will receive the greatest of:
1. the Certificate Value for the NYSE business day during which We receive
all required documentation including due proof of death of the
Participant and an election of the type of payment to be made at Our
Annuity Service Center; or
2. Purchase Payments less any withdrawals (and any fees or charges
applicable to such withdrawals), compounded until the date of death at
4% interest, plus any Purchase Payments and less any withdrawals (and
any fees or charges applicable to such withdrawals) recorded after the
date of death; or
3. the Certificate Value at the seventh Certificate anniversary, plus any
subsequent Purchase Payments and less any subsequent withdrawals (and
any fees or charges applicable to such withdrawals) compounded until the
date of death at 4% interest, plus any Purchase Payments and less any
withdrawals (and any fees or charges applicable to such withdrawals)
recorded after the date of death.
18
<PAGE> 19
If the Participant was age 70 or older on the Certificate Date, both (2) and (3)
above will be compounded at 3%, rather than 4%. If the death benefit is paid on
the death of a Participant who was not originally named in the application and
was age 70 or older on the Certificate Date, both (2) and (3) above will be
compounded at 3%, rather than 4%.
OPTION II: MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT OPTION
If, upon the death of the Participant and prior to the Annuity Date, the
Participant has not attained his or her 90th birthday, the Beneficiary will
receive the greatest of:
1. the Certificate Value for the NYSE business day during which We receive
all required documentation including due proof of death of the
Participant and an election of the type of payment to be made at Our
Annuity Service Center; or
2. Purchase Payments less any withdrawals (and any fees or charges
applicable to such withdrawals); or
3. the maximum anniversary value preceding the date of death. The maximum
anniversary value is equal to the greatest anniversary value attained
from the following:
As of the date of receipt of due proof of death and an election of the
type of payment to be made, at our Annuity Service Center, We will
calculate an anniversary value for each Certificate anniversary prior to
the Participant's 81st birthday. The anniversary value is equal to the
Certificate Value on a Certificate anniversary, increased by the dollar
amount of any Purchase Payments made since that anniversary and reduced
by the dollar amount of any withdrawals (and any fees or charges
applicable to such withdrawals) since that anniversary.
If the deceased Participant has attained age 90, then the death benefit will be
the Certificate Value as defined in (1) above.
DEATH OF PARTICIPANT OR ANNUITANT ON OR AFTER THE ANNUITY DATE.
If any Participant or Annuitant dies on or after the Annuity Date and before the
entire interest in the Certificate has been distributed, We will pay the
remaining portion of the interest of the Certificate under the annuity payment
option being used on the date of death. For further information pertaining to
death of the Annuitant, see ANNUITY PAYMENT OPTIONS.
BENEFICIARY
19
<PAGE> 20
The Beneficiary is selected by the Participant. While (a) the Participant is
living; and (b) before the Annuity Date, the Participant may change the
Beneficiary by written notice in a form satisfactory to Us. The change will take
effect on the date We record the proper notice subject to any payments We have
made. If two or more persons are named, (a) those surviving the Participant will
share equally unless otherwise stated; and (b) the Beneficiaries must elect to
receive their respective portions of the death benefit according to the options
listed under DEATH OF PARTICIPANT BEFORE THE ANNUITY DATE. If the Annuitant
survives the Participant, and there are no surviving Beneficiaries, the
Annuitant will be deemed the Beneficiary.
Joint Participants, if applicable, shall be each other's primary Beneficiary.
Joint Annuitants, if any, when the Participant is a non-natural person, shall be
each other's primary Beneficiary. Any other Beneficiary designation will be
treated as a contingent Beneficiary.
If the Participant is also the Annuitant and there are no surviving
Beneficiaries at the death of the Participant, the death benefit will be paid to
the estate of the Participant in accordance with option 1, under DEATH OF
PARTICIPANT BEFORE THE ANNUITY DATE.
ANNUITY PROVISIONS
ANNUITY DATE
The Participant selects an Annuity Date (the date on which annuity payments are
to begin) at the time of application. The Participant may change the Annuity
Date at any time, at least seven days prior to the Annuity Date, by written
notice to the Company at its Annuity Service Center. The Annuity Date must
always be the first day of the calendar month and must be at least two years
after the Certificate Date, but not beyond the later of the Participant's 90th
birthday or ten years after the Certificate Date. If the Participant is a
non-natural person, the latest Annuity Date is the later of the Annuitant's 90th
birthday or ten years after the Certificate Date. If no Annuity Date is
selected, the Annuity Date will be the latest Annuity Date, as set by the
Company.
PAYMENTS TO PARTICIPANT
Unless You request otherwise, We will make annuity payments to You. If You want
the annuity payments to be made to some other Payee, We will make such payments
subject to receipt of a written request filed at the Annuity Service Center no
later than thirty (30) days before the due date of the first annuity payment.
Any such request is subject to the rights of any assignee. No payments available
to or being paid to the Payee while the Annuitant is alive can be transferred,
commuted, anticipated or encumbered.
FIXED ANNUITY PAYMENTS
If a Fixed Annuity payment option has been elected, the proceeds payable under
this Certificate less any applicable premium taxes, shall be applied to the
payment of the Fixed Annuity payment option elected at rates which are at least
equal to the annuity rates based upon the applicable tables. In no event will
the Fixed Annuity payments be changed once they begin.
AMOUNT OF FIXED ANNUITY PAYMENTS
The amount of each Fixed Annuity payment will be determined by applying the
portion of the Certificate Value allocated to Fixed Annuity payments less any
applicable premium taxes to the annuity table applicable to the Fixed Annuity
payment option chosen.
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<PAGE> 21
AMOUNT OF VARIABLE ANNUITY PAYMENTS
(a) FIRST VARIABLE ANNUITY PAYMENT: The dollar amount of the first
Variable Annuity payment will be determined by applying the portion of
the Certificate Value allocated to the Variable Portfolio, less any
applicable premium taxes, to rates which are equal to the annuity rates
based upon the annuity table applicable to the Variable Annuity payment
option chosen. If the Certificate Value is allocated to more than one
Variable Portfolio, the value of Your interest in each Variable
Portfolio is applied separately to the Variable Annuity payment option
table to determine the amount of the first annuity payment attributable
to each Variable Portfolio.
(b) NUMBER OF VARIABLE ANNUITY UNITS: The number of Annuity Units for each
applicable Variable Portfolio is the amount of the first annuity payment
attributable to that Variable Portfolio divided by the value of the
applicable Annuity Unit for that Variable Portfolio as of the Annuity
Date. The number will not change as a result of investment experience.
(c) VALUE OF EACH VARIABLE ANNUITY UNIT: The value of an Annuity Unit may
increase or decrease from one month to the next. For any month, the
value of an Annuity Unit of a particular Variable Portfolio is the value
of that Annuity Unit as of the last NYSE business day of the preceding
month, multiplied by the Net Investment Factor for that Variable
Portfolio for the last NYSE business day of the current month.
The Net Investment Factor for any Variable Portfolio for a certain month is
determined by dividing (1) by (2) where:
(1) is the Accumulation Unit Value of the Variable Portfolio
determined as of the last business day at the end of that
month, and
(2) is the Accumulation Unit Value of the Variable Portfolio
determined as of the last business day at the end of the
preceding month.
The result is then multiplied by a factor that neutralizes the assumed
investment rate of 3.5%.
(d) SUBSEQUENT VARIABLE ANNUITY PAYMENTS: After the first Variable Annuity
payment, subsequent Variable Annuity payments will vary in amount
according to the investment performance of the applicable Variable
Portfolio(s) to which a portion of Your Certificate Value is allocated.
The amount may change from month to month. The amount of each subsequent
payment for each Variable Portfolio is:
The number of Annuity Units for each Variable Portfolio as determined for the
first annuity payment
Multiplied by
The value of an Annuity Unit for that Variable Portfolio at the end of the month
immediately preceding the month in which payment is due.
We guarantee that the amount of each Variable Annuity payment will not be
affected by variations in expenses or mortality experience.
21
<PAGE> 22
ANNUITY PAYMENT OPTIONS
During the Annuitant's life, upon written election and the return of this
Certificate to the Company at its Annuity Service Center, the Certificate Value
may be applied to provide one of the following options or any annuity payment
option that is mutually agreeable. After two years from the Certificate Date,
and prior to the Annuity Date, You can choose one of the options described
below. If no option has been selected by the Annuity Date, You will
automatically receive option 4, below, with 120 monthly payments guaranteed.
OPTIONS 1 & 1v - LIFE ANNUITY, LIFETIME PAYMENTS GUARANTEED
Payments payable to a Payee during the lifetime of the Annuitant. No further
payments are payable after the death of the Annuitant.
OPTIONS 2 & 2v - JOINT AND 100% SURVIVOR LIFE ANNUITY
Payments payable to the Payee during the lifetime of the Annuitant and during
the lifetime of a designated second person. No further payments are payable
after the deaths of both the Annuitant and the designated second person.
OPTIONS 3 & 3v - JOINT AND 100% SURVIVOR LIFE ANNUITY WITH PAYMENTS GUARANTEED
FOR 10 OR 20 YEARS
Payments are payable to the Payee during the lifetime of the Annuitant and
during the lifetime of a designated second person. If, at the death of the
survivor, payments have been made for less than the 10 or 20 years, as selected
at the time of annuitization, the remaining guaranteed annuity payments will be
continued to the Beneficiary.
OPTIONS 4 & 4v - LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 OR 20 YEARS
Payments payable to the Payee during the lifetime of the Annuitant. If, at the
death of the Annuitant, payments have been made for less than the 10 or 20
years, as selected at the time of annuitization, the remaining guaranteed
annuity payments will be continued to the Beneficiary.
22
<PAGE> 23
OPTIONS 5 & 5v - FIXED PAYMENTS FOR A SPECIFIED PERIOD CERTAIN
Payments payable to the Payee for any specified period of time for five (5)
years or more, but not exceeding thirty (30) years, as selected at the time of
annuitization. The selection must be made for full twelve month periods. In the
event of death of the Annuitant, any remaining guaranteed annuity payments will
be continued to the Beneficiary. If Variable Annuity Payments are elected under
this Annuity Payment Option, any remaining guaranteed Variable Annuity payments
may be redeemed for a discounted value determined by Us. Any applicable
Withdrawal Charges will be deducted from the discounted value as if You fully
surrendered Your Certificate.
23
<PAGE> 24
FIXED ANNUITY PAYMENT OPTIONS TABLE
BASIS OF COMPUTATION
The actuarial basis for the Table of Annuity Rates is the 1983a Annuity
Mortality Table with projection and a guaranteed interest rate of 3%. The
mortality table is projected using Projection Scale G factors, assuming
annuitization in the year 2000. The Fixed Annuity Payment Options Table does not
included any applicable premium tax.
OPTIONS 1 & 4 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.)
<TABLE>
<CAPTION>
OPTION 1
OPTION 4 OPTION 4
AGE OF LIFE ANNUITY LIFE ANNUITY
ANNUITANT LIFE ANNUITY (w/120 PAYMENTS GUARANTEED) (w/240 PAYMENTS GUARANTEED)
--------- ------------ -------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
MALE FEMALE MALE FEMALE MALE FEMALE
55 4.23 3.84 4.19 3.82 4.05 3.76
56 4.32 3.91 4.27 3.88 4.11 3.81
57 4.41 3.98 4.35 3.95 4.17 3.87
58 4.51 4.05 4.44 4.02 4.24 3.93
59 4.61 4.13 4.54 4.10 4.31 4.00
60 4.72 4.22 4.64 4.18 4.37 4.06
61 4.84 4.31 4.74 4.27 4.44 4.13
62 4.96 4.40 4.85 4.36 4.51 4.20
63 5.10 4.51 4.97 4.45 4.58 4.27
64 5.24 4.62 5.10 4.55 4.65 4.35
65 5.40 4.73 5.22 4.66 4.72 4.42
66 5.56 4.86 5.36 4.78 4.79 4.50
67 5.74 4.99 5.50 4.90 4.86 4.57
68 5.93 5.14 5.65 5.02 4.92 4.65
69 6.13 5.29 5.80 5.16 4.99 4.73
70 6.35 5.46 5.96 5.30 5.05 4.80
71 6.58 5.64 6.13 5.46 5.10 4.88
72 6.82 5.84 6.29 5.62 5.16 4.95
73 7.08 6.05 6.47 5.78 5.20 5.02
74 7.36 6.28 6.64 5.96 5.25 5.08
75 7.66 6.53 6.82 6.14 5.29 5.14
76 7.98 6.80 7.00 6.33 5.33 5.19
77 8.33 7.09 7.19 6.53 5.36 5.24
78 8.69 7.41 7.37 6.73 5.39 5.29
79 9.09 7.75 7.55 6.94 5.41 5.33
80 9.51 8.11 7.73 7.14 5.43 5.36
81 9.97 8.51 7.91 7.35 5.45 5.39
82 10.45 8.94 8.08 7.55 5.47 5.42
83 10.97 9.41 8.24 7.76 5.48 5.44
84 11.52 9.92 8.40 7.95 5.49 5.46
85 12.10 10.47 8.54 8.13 5.50 5.48
</TABLE>
24
<PAGE> 25
OPTION 2 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.)
JOINT & 100% SURVIVOR LIFE ANNUITY
<TABLE>
<CAPTION>
AGE OF
MALE
ANNUITANT AGE OF FEMALE ANNUITANT
--------- -----------------------
55 60 65 70 75 80 85
<S> <C> <C> <C> <C> <C> <C> <C>
55 3.54 3.69 3.84 3.96 4.06 4.13 4.17
60 3.63 3.83 4.04 4.23 4.39 4.52 4.60
65 3.70 3.95 4.23 4.51 4.78 5.00 5.16
70 3.75 4.04 4.39 4.78 5.18 5.56 5.85
75 3.78 4.11 4.51 5.01 5.57 6.14 6.65
80 3.81 4.15 4.60 5.18 5.89 6.70 7.52
85 3.82 4.18 4.66 5.30 6.14 7.18 8.35
</TABLE>
OPTION 3 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST)
JOINT & 100% SURVIVOR LIFE ANNUITY (w/120 PAYMENTS GUARANTEED)
<TABLE>
<CAPTION>
AGE OF
MALE
ANNUITANT AGE OF FEMALE ANNUITANT
--------- -----------------------
55 60 65 70 75 80 85
<S> <C> <C> <C> <C> <C> <C> <C>
55 3.54 3.69 3.83 3.96 4.05 4.12 4.16
60 3.63 3.83 4.03 4.22 4.38 4.50 4.57
65 3.70 3.95 4.22 4.50 4.76 4.97 5.10
70 3.75 4.04 4.38 4.76 5.15 5.48 5.72
75 3.78 4.10 4.50 4.98 5.50 6.00 6.40
80 3.80 4.14 4.58 5.13 5.78 6.46 7.04
85 3.81 4.16 4.62 5.22 5.97 6.80 7.55
</TABLE>
OPTION 3 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST)
JOINT & 100% SURVIVOR LIFE ANNUITY (w/240 PAYMENTS GUARANTEED)
<TABLE>
<CAPTION>
AGE OF
MALE
ANNUITANT AGE OF FEMALE ANNUITANT
--------- -----------------------
55 60 65 70 75 80 85
<S> <C> <C> <C> <C> <C> <C> <C>
55 3.53 3.68 3.81 3.92 3.99 4.03 4.04
60 3.62 3.81 4.00 4.16 4.27 4.34 4.37
65 3.68 3.92 4.16 4.39 4.56 4.66 4.71
70 3.72 3.99 4.29 4.58 4.81 4.96 5.03
75 3.74 4.03 4.36 4.70 4.99 5.17 5.26
80 3.75 4.05 4.40 4.77 5.09 5.30 5.40
85 3.76 4.06 4.42 4.80 5.13 5.35 5.46
</TABLE>
25
<PAGE> 26
OPTION 5 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
<TABLE>
<CAPTION>
FIXED PAYMENT FOR SPECIFIED PERIOD
NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY
OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT
-------- ------- -------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
10 9.61 17 6.23 24 4.84
11 8.86 18 5.96 25 4.71
5 17.91 12 8.24 19 5.73 26 4.59
6 15.14 13 7.71 20 5.51 27 4.47
7 13.16 14 7.26 21 5.32 28 4.37
8 11.68 15 6.87 22 5.15 29 4.27
9 10.53 16 6.53 23 4.99 30 4.18
</TABLE>
26
<PAGE> 27
VARIABLE ANNUITY PAYMENT OPTIONS TABLE
BASIS OF COMPUTATION
The actuarial basis for the Table of Annuity Rates is the 1983a Annuity
Mortality Table with projection and an effective annual Assumed Investment Rate
of 3.5%. The mortality table is projected using Projection Scale G factors,
assuming annuitization in the year 2000. The Variable Annuity Payment Options
Table does not include any applicable premium tax.
OPTIONS 1v & 4v - TABLE OF MONTHLY INSTALLMENTS PER $1,000
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.)
<TABLE>
<CAPTION>
OPTION 1v OPTION 4v OPTION 4v
LIFE ANNUITY LIFE ANNUITY
AGE OF (w/120 PAYMENTS (w/240 PAYMENTS
ANNUITANT LIFE ANNUITY GUARANTEED) GUARANTEED)
--------- ------------ --------------- ---------------
MALE FEMALE MALE FEMALE MALE FEMALE
<S> <C> <C> <C> <C> <C> <C>
55 4.53 4.13 4.48 4.11 4.33 4.05
56 4.62 4.20 4.56 4.18 4.39 4.10
57 4.71 4.27 4.64 4.24 4.45 4.16
58 4.80 4.34 4.73 4.31 4.52 4.22
59 4.90 4.42 4.82 4.39 4.58 4.28
60 5.01 4.51 4.92 4.47 4.65 4.34
61 5.13 4.60 5.03 4.55 4.71 4.41
62 5.26 4.69 5.14 4.64 4.78 4.48
63 5.39 4.80 5.25 4.74 4.85 4.55
64 5.54 4.91 5.38 4.84 4.92 4.62
65 5.69 5.02 5.51 4.94 4.99 4.69
66 5.86 5.15 5.64 5.06 5.05 4.77
67 6.03 5.28 5.78 5.18 5.12 4.84
68 6.22 5.43 5.93 5.30 5.18 4.92
69 6.43 5.58 6.08 5.44 5.24 4.99
70 6.64 5.75 6.23 5.58 5.30 5.06
71 6.87 5.93 6.40 5.73 5.36 5.14
72 7.12 6.13 6.56 5.89 5.41 5.21
73 7.38 6.34 6.73 6.06 5.46 5.27
74 7.66 6.57 6.91 6.23 5.50 5.33
75 7.96 6.82 7.09 6.41 5.54 5.39
76 8.28 7.09 7.27 6.60 5.57 5.44
77 8.63 7.38 7.45 6.79 5.61 5.49
78 9.00 7.70 7.63 6.99 5.63 5.54
79 9.40 8.04 7.81 7.19 5.66 5.58
80 9.82 8.41 7.98 7.40 5.68 5.61
81 10.28 8.81 8.16 7.60 5.70 5.64
82 10.76 9.24 8.32 7.81 5.71 5.66
83 11.28 9.71 8.48 8.00 5.72 5.69
84 11.83 10.23 8.64 8.19 5.73 5.70
85 12.42 10.78 8.78 8.38 5.74 5.72
</TABLE>
27
<PAGE> 28
OPTION 2v - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.)
JOINT & 100% SURVIVOR LIFE ANNUITY
<TABLE>
<CAPTION>
AGE OF
MALE
ANNUITANT AGE OF FEMALE ANNUITANT
--------- ------------------------
55 60 65 70 75 80 85
<S> <C> <C> <C> <C> <C> <C> <C>
55 3.83 3.98 4.12 4.24 4.34 4.42 4.46
60 3.92 4.11 4.32 4.51 4.67 4.80 4.89
65 3.99 4.23 4.50 4.79 5.05 5.28 5.44
70 4.04 4.33 4.67 5.05 5.46 5.83 6.13
75 4.07 4.39 4.79 5.28 5.84 6.41 6.93
80 4.10 4.44 4.88 5.45 6.16 6.97 7.79
85 4.11 4.47 4.94 5.57 6.41 7.45 8.61
</TABLE>
OPTION 3v - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST)
JOINT AND 100% SURVIVOR LIFE ANNUITY (w/120 PAYMENTS GUARANTEED)
<TABLE>
<CAPTION>
AGE OF
MALE
ANNUITANT AGE OF FEMALE ANNUITANT
--------- ------------------------
55 60 65 70 75 80 85
<S> <C> <C> <C> <C> <C> <C> <C>
55 3.83 3.98 4.12 4.24 4.34 4.40 4.45
60 3.92 4.11 4.31 4.50 4.66 4.78 4.86
65 3.99 4.23 4.50 4.78 5.03 5.24 5.38
70 4.04 4.32 4.66 5.03 5.41 5.75 5.99
75 4.07 4.38 4.78 5.25 5.77 6.26 6.66
80 4.09 4.43 4.86 5.40 6.05 6.72 7.29
85 4.10 4.45 4.90 5.50 6.24 7.05 7.80
</TABLE>
OPTION 3v - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST)
JOINT & 100% SURVIVOR LIFE ANNUITY (w/240 PAYMENTS GUARANTEED)
<TABLE>
<CAPTION>
AGE OF
MALE
ANNUITANT AGE OF FEMALE ANNUITANT
--------- ------------------------
55 60 65 70 75 80 85
<S> <C> <C> <C> <C> <C> <C> <C>
55 3.82 3.97 4.10 4.20 4.27 4.31 4.33
60 3.91 4.09 4.28 4.44 4.55 4.61 4.64
65 3.97 4.20 4.44 4.66 4.83 4.93 4.97
70 4.01 4.27 4.56 4.84 5.07 5.21 5.28
75 4.03 4.31 4.64 4.97 5.25 5.42 5.51
80 4.04 4.33 4.67 5.03 5.34 5.55 5.65
85 4.05 4.34 4.69 5.06 5.38 5.60 5.70
</TABLE>
28
<PAGE> 29
OPTION 5v - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
PAYMENTS FOR A SPECIFIED PERIOD
<TABLE>
<CAPTION>
NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY
OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT
-------- ------- -------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
10 9.83 17 6.47 24 5.09
11 9.09 18 6.20 25 4.96
5 18.12 12 8.46 19 5.97 26 4.84
6 15.35 13 7.94 20 5.75 27 4.73
7 13.38 14 7.49 21 5.56 28 4.63
8 11.90 15 7.10 22 5.39 29 4.53
9 10.75 16 6.76 23 5.24 30 4.45
</TABLE>
29
<PAGE> 30
ANCHOR NATIONAL LIFE INSURANCE COMPANY
A STOCK COMPANY LOS ANGELES, CALIFORNIA
30
<PAGE> 31
ALLOCATED FIXED AND
VARIABLE GROUP ANNUITY CERTIFICATE
Nonparticipating
31
<PAGE> 1
ANCHOR NATIONAL LIFE INSURANCE COMPANY
A STOCK COMPANY LOS ANGELES, CALIFORNIA
CONTRACT NUMBER P9999999999
OWNER JOHN DOE
<TABLE>
<S> <C> <C>
STATUTORY HOME OFFICE EXECUTIVE OFFICE ANNUITY SERVICE CENTER
2999 NORTH 44TH ST., STE 250 1 SUNAMERICA CENTER P. O. BOX 54299
PHOENIX, AZ 85018 LOS ANGELES, CA 90067-6022 LOS ANGELES, CA 90054-0299
</TABLE>
ANCHOR NATIONAL LIFE INSURANCE COMPANY ("We", "Us", the "Company", or "Anchor
National") agrees to provide benefits to the Owner under the Group Contract, in
accordance with the provisions set forth in this Contract and in consideration
of Purchase Payments We receive.
THE VALUE OF AMOUNTS ALLOCATED TO THE SEPARATE ACCOUNT DURING THE ACCUMULATION
AND ANNUITY PERIODS IS NOT GUARANTEED, AND WILL INCREASE OR DECREASE BASED UPON
THE INVESTMENT EXPERIENCE OF THE VARIABLE PORTFOLIOS YOU CHOOSE.
THE CASH SURRENDER BENEFIT OF AMOUNTS ALLOCATED TO ANY FIXED-MVA ACCOUNT OPTION
INCREASES OR DECREASES BASED ON THE APPLICATION OF THE MARKET VALUE ADJUSTMENT
EXCEPT DURING THE 30 DAYS AFTER THE END OF THE GUARANTEE PERIOD. THERE IS NO
MARKET VALUE ADJUSTMENT TO AMOUNTS ALLOCATED TO THE NON-MVA FIXED ACCOUNT
OPTION.
RIGHT TO EXAMINE - YOU MAY RETURN THIS CONTRACT TO OUR ANNUITY SERVICE CENTER OR
TO THE AGENT THROUGH WHOM THE CONTRACT WAS PURCHASED WITHIN 10 DAYS AFTER YOU
RECEIVE IT, IF YOU ARE NOT SATISFIED WITH IT. THE COMPANY WILL REFUND THE
CONTRACT VALUE, LESS ANY PAYMENT ENHANCEMENT(S), ON THE BUSINESS DAY DURING
WHICH THE CONTRACT IS RECEIVED. UPON SUCH REFUND, THE CONTRACT SHALL BE VOID.
For Individual Retirement Annuities, a refund of the Purchase Payment(s) may be
required. Therefore, We reserve the right to allocate Your Purchase Payment(s)
and any Payment Enhancement to the Cash Management Portfolio until the end of
the Right To Examine period. Thereafter, allocations will be made as shown on
the Contract Data Page.
THIS IS A LEGAL DOCUMENT. READ IT CAREFULLY.
/s/ SUSAN L. HARRIS /s/ ELI BROAD
- ------------------------------ ----------------------------
Susan L. Harris Eli Broad
Secretary President
INDIVIDUAL FIXED AND VARIABLE
ANNUITY CONTRACT
Nonparticipating
1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
CONTRACT DATA PAGE......................................................................PAGE 3
PURCHASE PAYMENT ALLOCATION.............................................................PAGE 4
DEFINITIONS.............................................................................PAGE 5
PURCHASE PAYMENT PROVISIONS.............................................................PAGE 8
ACCUMULATION PROVISIONS.................................................................PAGE 9
PAYMENT ENHANCEMENT PROVISIONS.........................................................PAGE 11
FEES AND CHARGES.......................................................................PAGE 12
TRANSFER PROVISIONS....................................................................PAGE 12
WITHDRAWAL PROVISIONS..................................................................PAGE 13
GENERAL PROVISIONS.....................................................................PAGE 15
DEATH PROVISIONS.......................................................................PAGE 17
ANNUITY PROVISIONS.....................................................................PAGE 20
ANNUITY PAYMENT OPTIONS ...............................................................PAGE 22
FIXED ANNUITY PAYMENT OPTIONS TABLE....................................................PAGE 23
VARIABLE ANNUITY PAYMENT OPTIONS TABLE.................................................PAGE 26
</TABLE>
2
<PAGE> 3
CONTRACT DATA PAGE
<TABLE>
<S> <C>
CONTRACT NUMBER: ANNUITY SERVICE CENTER:
P9999999999 P. O. BOX 54299
LOS ANGELES, CA 90054-0299
OWNER: AGE AT ISSUE:
JOHN DOE 35
ANNUITANT: INITIAL PURCHASE PAYMENT:
JOHN DOE $10,000.00
CONTRACT DATE: FIXED ACCOUNT OPTIONS -
March 1, 1999 Minimum Guarantee Rate:
3.0%
ANNUITY DATE: INITIAL PAYMENT ENHANCEMENT:
March 1, 2029 2.0%
LATEST ANNUITY DATE: MORTALITY RISK CHARGE:
March 1, 2054 [0.35%]
ANNUAL CONTRACT MAINTENANCE FEE: EXPENSE RISK CHARGE:
$35.00 [0.90%]
GUARANTEED DEATH BENEFIT RISK CHARGE: DISTRIBUTION EXPENSE CHARGE:
[0.12%] [0.15%]
BENEFICIARY: SEPARATE ACCOUNT:
As named by You. Variable Separate Account
DEATH BENEFIT OPTION:
Option I: Purchase Payment Accumulation
PAYMENT ENHANCEMENT SCHEDULE FOR INITIAL PURCHASE PAYMENT
PAYMENT ENHANCEMENT DATE PAYMENT ENHANCEMENT
INITIAL PAYMENT ENHANCEMENT:
March 1, 1999 $200.00
DEFERRED PAYMENT ENHANCEMENT(S):
[March 1, 2008] [$200.00*]
</TABLE>
*May be reduced by certain withdrawals of Contract Value. Please see Payment
Enhancement Provisions.
FOR INQUIRIES
CALL 1-800-445-SUN2
3
<PAGE> 4
PURCHASE PAYMENT ALLOCATION
Variable Portfolios
<TABLE>
<CAPTION>
SUNAMERICA ANCHOR
SERIES TRUST SERIES TRUST
<S> <C> <C> <C>
0.00% Cash Management 0.00% Government & Quality Bond
0.00% Corporate Bond 0.00% Growth
0.00% Global Bond 25.00% Natural Resources
0.00% High-Yield Bond 0.00% Capital Appreciation
0.00% Worldwide High Income
0.00% SunAmerica Balanced
25.00% MFS Total Return
0.00% Asset Allocation
0.00% Utility
0.00% Growth-Income
0.00% MFS Growth and Income
0.00% Federated Value
0.00% Venture Value
0.00% "Dogs" of Wall St.
0.00% Alliance Growth
25.00% Putnam Growth
0.00% Real Estate
0.00% MFS Mid-Cap Growth
0.00% Aggressive Growth
0.00% International Growth
and Income
0.00% Global Equities
0.00% International Diversified
Equities
0.00% Emerging Markets
</TABLE>
Fixed Account Options
<TABLE>
<CAPTION>
Guarantee Initial
Period Interest Rate
<S> <C> <C>
25.00% 1-Year Fixed Non-MVA 3.00%
0.00% 3-Year Fixed MVA
0.00% 5-Year Fixed MVA
0.00% 7-Year Fixed MVA
0.00% 10-Year Fixed MVA
</TABLE>
4
<PAGE> 5
DEFINITIONS
Defined in this section are some of the words and phrases used in this Contract.
These terms are capitalized when used in the Contract. Other capitalized terms
in the Contract refer to the captioned paragraph explaining that particular
concept in the Contract.
ACCUMULATION UNIT
A measurement used to compute the Contract Value in a Variable Portfolio prior
to the Annuity Date.
AGE
Age as of last birthday.
ANNUITANT
The natural person or persons (collectively, Joint Annuitants) whose life or
lives is/are used to determine the annuity benefits under the Contract. If the
Contract is in force and the Annuitant(s) is/are alive on the Annuity Date, We
will begin payments to the Payee. This Contract cannot have Joint Annuitants if
it is issued on a tax-qualified basis.
ANNUITY DATE
The date on which annuity payments ("income payments") to the Payee are to
start. The Owner specifies the Annuity Date, which must be at least two years
after the Contract Date.
ANNUITY SERVICE CENTER
As specified on the Contract Data Page.
ANNUITY UNIT
A unit of measurement used to compute annuity payments from the Variable
Portfolio.
BENEFICIARY
The Beneficiary is as named by You unless later changed by You in a written
request to Us at Our Annuity Service Center.
CONTRACT DATE
The date Your Contract is issued, as shown on the Contract Data Page. It is the
date from which Contract Years and anniversaries are measured.
CONTRACT VALUE
The sum of: (1) the Accumulation Unit Values for Your amounts allocated to the
Variable Portfolios and (2) the value of amounts allocated to the Fixed Account
Options.
CONTRACT YEAR
A year starting from the Contract Date in one calendar year and ending on the
day preceding the anniversary of such date in the succeeding calendar year.
5
<PAGE> 6
CONTRIBUTION YEAR
A year starting from the date a Purchase Payment is made in one calendar year
and ending on the day preceding the anniversary of such date in succeeding
calendar years.
CURRENT INTEREST RATE
The rate(s) of interest declared by Us applicable to allocations of subsequent
Purchase Payments to the Fixed Account Options. The Current Interest Rate will
not be less than the Minimum Guarantee Rate as shown on the Contract Data Page.
DEFERRED PAYMENT ENHANCEMENT
Any Payment Enhancement allocated to Your Contract Value on any Deferred Payment
Enhancement Date.
FIXED ACCOUNT OPTIONS
The investment options under this Contract that are credited with a fixed rate
of interest declared by the Company. All amounts allocated to the Fixed Account
Options become part of the Company's general asset account. The general asset
account contains all the assets of the Company except for the Separate Account
and other segregated asset accounts. The Fixed Account Options for this Contract
are shown on page 4.
FIXED ANNUITY
A series of periodic annuity payments in predetermined amounts that do not vary
with investment experience. Such payments are made from the Company's general
asset account.
GUARANTEE PERIOD
The period for which either the Initial Interest Rate, the Current Interest Rate
or the Renewal Interest Rate is credited to amounts allocated to the Fixed
Account Options.
INITIAL INTEREST RATE
The rate(s) of interest credited to any portion of the initial Purchase Payment
allocated to the Fixed Account Option(s), as described in the Accumulation
Provisions section. The Initial Interest Rate(s) for this Contract is/are listed
on page 4. The Initial Interest Rate may not be less than the Minimum Guarantee
Rate as shown on the Contract Data Page.
INITIAL PAYMENT ENHANCEMENT
The Payment Enhancement allocated to Your Contract Value on the date a Purchase
Payment is credited to Your Contract.
IRC
The Internal Revenue Code of 1986, as amended, or as it may be amended or
superseded.
JOINT OWNER
If Joint Owners are named, they must be spouses. Each Joint Owner has an equal
ownership interest in the Contract unless We are advised otherwise in writing.
6
<PAGE> 7
NYSE
New York Stock Exchange. Generally, the close of any NYSE business day is
4:00 PM, Eastern Time. Financial transactions and/or Purchase Payments received
after the close of any NYSE business day will be credited with the next NYSE
business day's Accumulation Unit Value for the selected Variable Portfolio.
OWNER
The person or entity named in the Contract who is entitled to exercise all
rights and privileges of ownership under the Contract. Owner means both Joint
Owners, if applicable.
PAYEE
The person receiving payment of annuity benefits under this Contract.
PAYMENT ENHANCEMENT
Payment Enhancements are amounts allocated to Your Contract Value by Us. Payment
Enhancements are not considered Purchase Payments.
PURCHASE PAYMENTS
Payments in U.S. currency made by or on behalf of the Owner to the Company for
the Contract. Payment Enhancements are not considered Purchase Payments.
RENEWAL INTEREST RATE
The rate(s) of interest declared by Us applicable to transfers from the Variable
Portfolios into the Fixed Account Options and to amounts previously allocated to
a Fixed Account Option wherein the Guarantee Period has expired. The Renewal
Interest Rate may not be less than the Minimum Guarantee Rate as shown on the
Contract Data Page.
SEPARATE ACCOUNT
A segregated asset account named on the Contract Data Page. The Separate Account
consists of the Variable Portfolios. The assets of the Separate Account are not
comingled with the general assets and liabilities of the Company. The value of
amounts allocated to the Variable Portfolios of the Separate Account is not
guaranteed.
SUBSEQUENT PURCHASE PAYMENTS
Purchase Payments made after the Initial Purchase Payment.
TOTAL INVESTED AMOUNT
The sum of all Purchase Payments less amounts previously withdrawn that incurred
a Withdrawal Charge, less Purchase Payments withdrawn that were no longer
subject to a Withdrawal Charge.
VARIABLE ANNUITY
A series of periodic annuity payments which vary in amount according to the
investment experience of one or more Variable Portfolio, as selected by You.
VARIABLE PORTFOLIO
The variable investment options available under this Contract. Each Variable
Portfolio has its own investment objective and is invested in an underlying fund
of the Anchor Series Trust or the SunAmerica Series Trust. Each Variable
Portfolio is not chargeable with liabilities arising out of any other Variable
Portfolio. The available Variable Portfolios are shown on page 4. Additional
Variable Portfolios may become available in the future.
7
<PAGE> 8
WE, OUR, US, THE COMPANY
Anchor National Life Insurance Company.
YOU, YOUR
The Owner.
PURCHASE PAYMENT PROVISIONS
PURCHASE PAYMENTS
Purchase Payments are flexible. This means that, subject to Company declared
minimums and maximums, You may change the amounts, frequency or timing of
Purchase Payments. Purchase Payments will be allocated to the Fixed Account
Option(s) and Variable Portfolio(s) in accordance with instructions from You. We
reserve the right to specify the minimum Purchase Payment that may be allocated
to a Variable Portfolio under the Contract.
PRINCIPAL ADVANTAGE PROGRAM
An optional program under which We allocate a portion of Your Purchase Payment
to a Fixed Account Option selected by You. This allocation will accumulate to
the full amount of that Purchase Payment by the end of the Guarantee Period,
provided there are no withdrawals or transfers prior to the end of the Guarantee
Period from that Fixed Account Option. The amount of the allocation depends
upon: (a) the Guarantee Period for the Fixed Account Option You select; and (b)
the interest rate applicable to that allocation. We reserve the right to modify,
suspend or terminate the Principal Advantage Program at any time.
DEFERMENT OF PAYMENTS
We may defer making payments from the Fixed Account Options for up to six (6)
months. Interest, subject to state requirements, will be credited during the
deferral period.
SUSPENSION OF PAYMENTS
We may suspend or postpone any payments from the Variable Portfolios if any of
the following occur:
(a) the NYSE is closed;
(b) trading on the NYSE is restricted;
(c) an emergency exists such that it is not reasonably practical to dispose
of securities in the Variable Portfolios or to determine the value of
its assets; or
(d) the Securities and Exchange Commission, by order, so permits for the
protection of Owners.
Conditions in (b) and (c) will be decided by or in accordance with rules of the
Securities and Exchange Commission.
SUBSTITUTION OF VARIABLE PORTFOLIO
If: (a) the shares of the underlying funds of the SunAmerica Series Trust or the
Anchor Series Trust should no longer be available for investment by the Separate
Account; or (b) in the judgment of the Board of Trustees for the SunAmerica
Series Trust and the Anchor Series Trust,
8
<PAGE> 9
further investment in the underlying funds of such entities is no longer
appropriate in view of the purpose of the Contract, then We may substitute
shares of another underlying fund, for shares already purchased, or to be
purchased in the future by subsequent Purchase Payments under the Contract. No
substitution of securities may take place without prior approval of the
Securities and Exchange Commission and under such requirements as it may impose.
ACCUMULATION PROVISIONS
SEPARATE ACCOUNT ACCUMULATION VALUE
The Separate Account Accumulation Value under the Contract shall be the sum of
the values of the Accumulation Units held in the Variable Portfolios for each
Owner.
NUMBER OF ACCUMULATION UNITS
Your Contract is credited with Accumulation Units of the Separate Account when
Purchase Payments are allocated to the Variable Portfolios. For that portion of
each Purchase Payment allocated to a Variable Portfolio, the number of
Accumulation Units credited is equal to the sum of each Purchase Payment, any
Payment Enhancement and/or transfer amount allocated to that Variable Portfolio,
reduced by premium taxes, if any: Divided by
The Accumulation Unit value for that Variable Portfolio for the NYSE business
day on which the Purchase Payment, Payment Enhancement or transfer amount is
allocated.
The number of Accumulation Units will be similarly adjusted for withdrawals,
annuitizations, transfers and charges. Adjustments will be made as of the NYSE
business day on which We receive all requirements for the transaction, as
appropriate.
ACCUMULATION UNIT VALUE (AUV)
The AUV of a Variable Portfolio for any NYSE business day is calculated by
subtracting (2) from (1) and dividing the result by (3) where:
(1) is the total value for the given NYSE business day of the assets
attributable to the Accumulation Units of the Variable Portfolio, minus
the total liabilities;
(2) is the cumulative unpaid charge for assumption of Expense Risk,
Distribution Expense, Mortality Risk and Guaranteed Death Benefit Risk
charges (See CHARGES AND DEDUCTIONS); and
(3) is the number of Accumulation Units outstanding at the end of the given
NYSE business day.
FIXED ACCOUNT ACCUMULATION VALUE
Under the Contract, the Fixed Account Accumulation Value shall be the sum of all
monies then invested in the Fixed Account Option(s), reduced by any applicable
premium taxes, plus all interest credited thereto. This amount shall be adjusted
for withdrawals (which includes any Withdrawal Charges associated with those
withdrawals), annuitizations, transfers, any applicable MVA on such
transactions, and the deduction of the Contract Maintenance Fee. The Fixed
9
<PAGE> 10
Account Accumulation Value shall not be less than the minimum values required by
law in the state where this Contract is issued.
FIXED ACCOUNT GUARANTEE PERIOD OPTIONS AND INTEREST CREDITING
Any amounts allocated to the Fixed Account Options from the initial Purchase
Payment and the Payment Enhancement for the initial Purchase Payment will earn
interest at the Initial Interest Rate for the Fixed Account Option(s) selected
for the duration of the Guarantee Period.
Subsequent Purchase Payments and the initial Payment Enhancement for Subsequent
Purchase Payments, if any, allocated to the Fixed Account Options will earn
interest at the Current Interest Rate for the Fixed Account Option(s) selected
for the duration of the Guarantee Period. Transfers to the Fixed Account Options
from the Variable Portfolios and amounts renewed into the Fixed Account Options
will earn interest at the Renewal Interest Rate for the Fixed Account Option(s)
selected for the duration of the Guarantee Period.
For thirty (30) days following the date of expiration of a Guarantee Period, You
may renew for the same or any other Guarantee Period at the Renewal Interest
Rate or You may transfer all or a portion of the amount to the Variable
Portfolios. If during that 30-day period You do not specify a different
Guarantee Period or otherwise transfer to a Variable Portfolio, We will select
the same Guarantee Period as has just expired, crediting Your Contract with the
Renewal Interest Rate in effect on the date of expiration of the Guarantee
Period, so long as such Guarantee Period does not extend beyond the Annuity
Date. If the guarantee period extends beyond the Annuity Date, We will credit
interest up to the Annuity Date at the Renewal Interest Rate for the 1-Year
Fixed Account Option.
MARKET VALUE ADJUSTMENT (MVA)
Any payments and values based on the 3, 5, 7 or 10-year Fixed Account Options
may be subject to a MVA, the operation of which may result in upward or downward
adjustments in the Contract Value, if withdrawn, transferred or annuitized prior
to the end of the respective Guarantee Period. The MVA will be calculated by
multiplying the amount withdrawn, transferred or annuitized by the following
formula:
{(1 + I)/(1+J+0.0050)}N/12 -1
I = The interest rate currently in effect for that Guarantee Period.
J = The Initial Interest Rate available for the Guarantee Period equal to the
number of years (rounded up to an integer) remaining in the current Guarantee
Period at the time of withdrawal, transfer or annuitization. In the
determination of J, if the Company currently does not offer the applicable
Guarantee Period, then the rate will be determined by linear interpolation of
the Initial Interest Rate for the nearest two Guarantee Periods that are
available.
N = The number of full months remaining in the current Guarantee Period at the
time the withdrawal or annuitization request is processed. There will be no MVA
from the Fixed Account Options in the following situations: (1) upon withdrawal
or transfer within thirty (30) days after the end of the Guarantee Period; (2)
upon withdrawal to pay fees or charges; (3) upon payment of the death benefit;
or (4) upon annuitization on the latest Annuity Date.
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PAYMENT ENHANCEMENT PROVISIONS
Payment Enhancements are amounts allocated to Your Contract Value by Us. Payment
Enhancements are not considered Purchase Payments. Payment Enhancements are
subject to Our terms and conditions as discussed below.
PAYMENT ENHANCEMENT FOR INITIAL PURCHASE PAYMENT
We will allocate the Initial Payment Enhancement shown on the Contract Data Page
to the Fixed Account Options and Variable Portfolios in the same proportion as
Your Initial Purchase Payment. The Initial Payment Enhancement will be allocated
on Your Contract Date.
We will allocate any Deferred Payment Enhancement(s) shown on the Contract Data
Page to the Cash Management Portfolio on the corresponding Deferred Payment
Enhancement Date(s) shown. Any Deferred Payment Enhancement(s) will be reduced
proportionately by Partial Withdrawals (including any fees or charges associated
with such withdrawals) of the Initial Purchase Payment(s), prior to the Deferred
Payment Enhancement Date(s).
PAYMENT ENHANCEMENT FOR SUBSEQUENT PURCHASE PAYMENT(S)
The Initial Payment Enhancement for Subsequent Purchase Payments is a percentage
of each Subsequent Purchase Payment. This percentage is shown on the Contract
Data Page. We will allocate the Initial Payment Enhancement for the Subsequent
Purchase Payment to the Fixed Account Options and Variable Portfolios in the
same proportion as that Subsequent Purchase Payment.
Any Deferred Payment Enhancement(s) and Deferred Payment Enhancement date(s) for
Subsequent Purchase Payment(s) will be determined by Us at the time the
Subsequent Purchase Payment is received. We will allocate any Deferred Payment
Enhancement(s) for Subsequent Purchase Payments to the Cash Management
Portfolio. Deferred Payment Enhancement(s) corresponding to Subsequent Purchase
Payments will be reduced proportionately by Partial Withdrawals (including any
fees or charges associated with such withdrawals) of that Subsequent Purchase
Payment, prior to the Deferred Payment Enhancement Date(s).
DEFERRED PAYMENT ENHANCEMENTS
For purposes of determining a Deferred Payment Enhancement, Partial Withdrawals
are assumed to be withdrawn from earnings first, then from Purchase Payments on
a first-in-first-out (FIFO) basis. No Deferred Payment Enhancement will be
allocated if prior to the Deferred Payment Enhancement Date: (a) the Contract
Value is fully withdrawn; or (b) a death benefit has been paid; or (c) Annuity
payments have begun; or (d) the entire Purchase Payment has been withdrawn.
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FEES AND CHARGES
We will deduct the following charges from the Contract:
CONTRACT MAINTENANCE FEE
The charge specified on the Contract Data Page will be deducted on each Contract
anniversary that occurs on or prior to the Annuity Date. It will also be
deducted when the Contract Value is withdrawn in full if the withdrawal is not
on the Contract anniversary. We reserve the right to assess a charge on a class
basis which is less than the charge specified on the Contract Data Page.
WITHDRAWAL CHARGE
The charge, if any, to be deducted upon withdrawal of any portion of the
Contract Value. See WITHDRAWAL PROVISIONS.
MORTALITY RISK CHARGE
On an annual basis this charge, as shown on the Contract Data Page, equals a
percentage of the average daily total net asset value of the Variable Portfolios
to which Your Purchase Payments are allocated. This charge is to compensate Us
for assuming the mortality risks under the Contract.
EXPENSE RISK CHARGE
On an annual basis this charge, as shown on the Contract Data Page, equals a
percentage of the average daily total net asset value of the Variable Portfolios
to which Your Purchase Payments are allocated. This charge is to compensate Us
for assuming the expense risks under the Contract.
DISTRIBUTION EXPENSE CHARGE
On an annual basis this charge, as shown on the Contract Data Page, equals a
percentage of the average daily total net asset value of the Variable Portfolios
to which Your Purchase Payments are allocated. This charge is to compensate Us
for all distribution expenses associated with the Contract.
GUARANTEED DEATH BENEFIT RISK CHARGE
On an annual basis this charge, as shown on the Contract Data Page, equals a
percentage of the average daily total net asset value of the Variable Portfolios
to which Your Purchase Payments are allocated. This charge is to compensate Us
for the risk assumed as a result of contractual obligations to provide a minimum
guaranteed Death Benefit prior to the Annuity Date.
TRANSFER PROVISIONS
Prior to the Annuity Date, You may transfer all or part of Your Contract Value
to any of the Variable Portfolios or Fixed Account Options. We reserve the right
to charge a fee for transfers if the number of transfers exceeds the limit
specified by Us. The minimum amount that can be transferred and the amount that
can remain in a Variable Portfolio or Fixed Account Option are subject to
Company limits.
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TRANSFERS OF ACCUMULATION AND ANNUITY UNITS BETWEEN VARIABLE PORTFOLIOS
Prior to the Annuity Date, You may transfer all or a portion of Your Contract
Value between Variable Portfolios. A transfer will result in the redemption of
Accumulation Units in a Variable Portfolio and the purchase of Accumulation
Units in the other Variable Portfolio. Transfers will be effected at the next
computed Accumulation Unit Value following Our receipt of Your request for
transfer. Accumulation Unit Values are calculated at the close of each NYSE
business day.
After the Annuity Date, You may transfer all or a portion of Your Contract Value
from one Variable Portfolio to another Variable Portfolio. A transfer will
result in the redemption of Annuity Units in a Variable Portfolio and the
purchase of Annuity Units in the other Variable Portfolio. Transfers will be
effected for the last NYSE business day of the month in which We receive Your
request for the transfer.
TRANSFERS OF ACCUMULATION AND ANNUITY UNITS TO AND FROM THE FIXED ACCOUNT
OPTIONS
Prior to the Annuity Date, You may transfer all or any part of Your Contract
Value from the Variable Portfolio(s) to any Fixed Account Option(s) or from the
Fixed Account Option(s) to the Variable Portfolio(s) of the Contract.
After the Annuity Date, transfers into or out of the Fixed Account Option(s) are
not allowed.
DOLLAR COST AVERAGING (DCA)
An optional program under which You authorize the automatic transfer of
specified amounts or percentages, at the interval selected by You, from the
1-Year Fixed Account Option or any Variable Portfolio(s) into any Variable
Portfolio, other than the source account. The unit values credited and applied
to Your Contract are determined on each date of transfer. You may terminate the
DCA program at any time. We reserve the right to modify, suspend or terminate
the DCA program at any time.
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WITHDRAWAL PROVISIONS
On or before the Annuity Date and while the Owner is living, You may withdraw
all or part of Your Contract Value under this Contract by informing Us at Our
Annuity Service Center. For a full withdrawal, this Contract must be returned to
Our Annuity Service Center. The minimum amount that can be withdrawn and the
amount remaining after withdrawal are subject to Company limits.
Without a written notice to the contrary, withdrawals will be deducted from the
Contract Value in proportion to their allocation among the Fixed Account Options
and the Variable Portfolios. Withdrawals will be based on values for the NYSE
business day in which the request for withdrawal and the Contract (in the case
of a full withdrawal), are received at Our Annuity Service Center. Unless the
SUSPENSION OF PAYMENTS or DEFERMENT OF PAYMENTS sections are in effect, payment
of withdrawals will be made within seven calendar days.
WITHDRAWAL CHARGE
Withdrawals of all or a portion of the Contract Value may be subject to a
Withdrawal Charge as shown in the chart below. The Withdrawal Charge applied to
any withdrawal will depend on how long the Purchase Payment to which the
withdrawal is attributed has been in the Contract. No Withdrawal Charge is made
on an amount withdrawn which is considered to be a withdrawal of penalty-free
earnings.
For the purpose of determining the Withdrawal Charge, a withdrawal will be
attributed to amounts in the following order: (1) penalty-free earnings in the
Contract; (2) Purchase Payments which are both no longer subject to the
Withdrawal Charge and not yet withdrawn; (3) any remaining Penalty-Free
Withdrawal amount (except in the case of a full surrender); and (4) Purchase
Payments subject to a Withdrawal Charge. Purchase Payments, when withdrawn, are
assumed to be withdrawn on a first-in-first-out (FIFO) basis. You will not
receive the benefit of a Penalty-Free Withdrawal in the case of a full
surrender.
<TABLE>
<CAPTION>
Number of Years Elapsed Withdrawal Charge as a
Between Purchase Payment Contribution Percentage of Withdrawn
and Date of Withdrawal Purchase Payment
------------------------------------- -----------------------
<S> <C>
0 9%
1 9%
2 8%
3 7%
4 6%
5 5%
6 4%
7 3%
8 2%
9+ 0%
</TABLE>
The Withdrawal Charge will be deducted from amounts remaining in the Variable
Portfolios and the Fixed Account Options after the withdrawal, in the same
proportion as the remaining Contract
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Value is allocated, unless You request that the withdrawal come from a
particular Fixed Account Option or Variable Portfolio. If the remaining Contract
Value is insufficient to cover the Withdrawal Charge, any remaining balance will
be deducted from the withdrawal amount requested.
PENALTY-FREE WITHDRAWALS
As of any day, You may make a withdrawal of up to the Penalty-Free Withdrawal
amount for that day without incurring a Withdrawal Charge. Any Penalty-Free
Withdrawal made in excess of penalty-free earnings in the Contract is considered
to be a withdrawal of future penalty-free earnings and is therefore not a
withdrawal of the Total Invested Amount. On any day, penalty-free earnings in
the Contract are calculated as the Contract Value at the end of that day less
the Total Invested Amount.
During the first Contract Year, the Penalty-Free Withdrawal amount is equal to
the penalty-free earnings in the Contract as of the date of withdrawal.
Alternatively, during the first Contract Year, You may make withdrawals of the
Penalty-Free Withdrawal amount through the Systematic Withdrawal Program. The
Penalty-Free Withdrawal amount as of any systematic withdrawal date is 10% of
the Total Invested Amount less any withdrawals already made during the Contract
Year. After the first Contract Year, the maximum Penalty-Free Withdrawal amount
as of the date of the withdrawal is the greater of:
(a) penalty-free earnings in the Contract as of that date; or
(b) 10% of the Total Invested Amount on deposit for at least one year, less any
withdrawals already made during the year.
Although amounts withdrawn free of a Withdrawal Charge may reduce principal,
they do not reduce the Total Invested Amount for purposes of calculating the
Withdrawal Charge or for the purposes of calculating penalty-free earnings in
the Contract. As a result, You will not receive the benefit of a Penalty-Free
Withdrawal in a full surrender.
SYSTEMATIC WITHDRAWAL PROGRAM
Prior to the Annuity Date, You may elect to participate in the Systematic
Withdrawal Program by informing Us at Our Annuity Service Center. The Systematic
Withdrawal Program allows You to make automatic withdrawals from Your account
monthly, quarterly, semiannually or annually. The minimum systematic withdrawal
amount is subject to Company limits. Any amount withdrawn through the Systematic
Withdrawal Program may be subject to a Withdrawal Charge and/or a Market Value
Adjustment. See the WITHDRAWAL CHARGE and MARKET VALUE ADJUSTMENT provisions.
You may terminate Your participation in the Systematic Withdrawal Program at any
time by sending Us a written request. We reserve the right to modify, suspend or
terminate the Systematic Withdrawal Program at any time.
GENERAL PROVISIONS
ENTIRE CONTRACT
The entire contract between You and Us consists of the application as completed
by You at the time of purchase, this Contract and any attached endorsement(s).
No one can change the terms or
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conditions of this contract other than Us. Any change must be in writing and
approved by Us. Only Our President, Secretary, or one of Our Vice-Presidents can
give Our approval.
CHANGE OF ANNUITANT
If the Owner is an individual, the Owner may change the Annuitant(s) at any time
prior to the Annuity Date. To make a change, the Owner must send a written
notice to Us at least 30 days before the Annuity Date. If the Owner is a
non-natural person, the Owner may not change the Annuitant.
DEATH OF ANNUITANT
If the Owner and Annuitant are different, and the Annuitant dies before the
Annuity Date, the Owner becomes the Annuitant until the Owner elects a new
Annuitant. If there are Joint Annuitants, upon the death of any Annuitant prior
to the Annuity Date, the Owner may elect a new Joint Annuitant. However, if the
Owner is a non-natural person, We will treat the death of any Annuitant as the
death of the "Primary Annuitant" and as the death of the Owner, see DEATH
PROVISIONS.
MISSTATEMENT OF AGE OR SEX
If the Age or sex of any Annuitant has been misstated, future annuity payments
will be adjusted using the correct Age and sex, according to Our rates in effect
on the date that annuity payments were determined. Any overpayment from the
Fixed Account Options, plus interest at the rate of 4% per year, will be
deducted from the next payment(s) due. Any underpayment from the Fixed Account
Options, plus interest at the rate of 4% per year, will be paid in full with the
next payment due. Any overpayment from the Variable Portfolios will be deducted
from the next payment(s) due. Any underpayment from the Variable Portfolios will
be paid in full with the next payment due.
PROOF OF AGE, SEX, OR SURVIVAL
The Company may require satisfactory proof of correct Age or sex at any time. If
any payment under this Contract depends on the Annuitant being alive, the
Company may require satisfactory proof of survival.
CONFORMITY WITH STATE LAWS
The provisions of this Contract will be interpreted by the laws of the state in
which the enrollment form was signed or such other state as is required by law.
Any provision which, on the Contract Date, is in conflict with the law of such
state is amended to conform to the minimum requirements of such law.
CHANGES IN LAW
If the laws governing this Contract or the taxation of benefits under the
Contract change, We reserve the right to amend this Contract to comply with
these changes.
ASSIGNMENT
You may assign this Contract before the Annuity Date, but We will not be bound
by an assignment unless it is received by Us in writing. Your rights and those
of any other person
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referred to in this Contract will be subject to the assignment. Certain
assignments may be taxable. We do not assume any responsibility for the validity
or tax consequences of any assignment.
CLAIMS OF CREDITORS
To the extent permitted by law, no right or proceeds payable under this Contract
will be subject to claims of creditors or legal process.
PREMIUM TAXES OR OTHER TAXES
The Company may deduct from Your Contract Value any premium tax or other taxes
payable to a state or other government entity, if applicable. Should We advance
any amount so due, We are not waiving any right to collect such amount at a
later date. The Company will deduct any withholding taxes required by applicable
law.
WRITTEN NOTICE
Any notice We send to You will be sent to Your address shown in the Application
unless You request otherwise. Any written request or notice to Us must be sent
to Our Annuity Service Center, as specified on the Contract Data Page.
PERIODIC REPORTS
During each Contract Year, We will send You quarterly statements of the account
activity of the Contract as well as confirmation reports after each financial
transaction. The quarterly statements will include all transactions which have
occurred during the accounting period shown on the statement.
INCONTESTABILITY
This Contract will be incontestable from the Contract Date.
NONPARTICIPATING
This Contract does not share in Our surplus.
DEATH PROVISIONS
Notwithstanding any provision of this Contract to the contrary, all payments of
benefits under this Contract will be made in a manner that satisfies the
requirements of IRC Section 72(s), as amended from time to time. If the Contract
is owned by a trust or other non-natural person, We will treat the death of any
Annuitant as the death of the "Primary Annuitant" and as the death of any Owner.
DEATH OF OWNER BEFORE THE ANNUITY DATE
We will pay a death benefit to the Beneficiary upon Our receiving all required
documentation including: (a) due proof that any Owner died before the Annuity
Date; and (b) an election form selecting the payment option from the options
listed below. If no election is received within 60 days of our receipt of due
proof of death, the death benefit will be paid in accordance with option 1
below. The Beneficiary must select one of the following options:
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1. Immediately collect the death benefit in a lump sum
payment. If a lump sum payment is elected, payment will be
in accordance with any applicable laws and regulations
governing payments on death; or
2. Collect the death benefit in the form of one of the
Annuity Payment Options. The payments must be over the
life of the Beneficiary or over a period not extending
beyond the life expectancy of the Beneficiary. Payments
under this option must commence within one year after the
Owner's death, otherwise, the death benefit will be paid
in accordance with option 1 above; or
3. If the Beneficiary is the Owner's spouse, the Beneficiary
may elect to become the Owner and continue the Contract in
force. If this option is elected, no death benefit is
paid. Upon the new Owner's subsequent death, the entire
interest must be distributed immediately under option 1 or
2 above.
DUE PROOF OF DEATH
Due Proof of Death means:
1. a certified copy of a 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 Owner at the time of death; or
4. any other proof satisfactory to Us.
AMOUNT OF DEATH BENEFIT
The amount of the death benefit will be determined based upon Your death benefit
option selection. Once selected, the death benefit option cannot be changed. The
death benefit options are as described below.
OPTION I: PURCHASE PAYMENT ACCUMULATION DEATH BENEFIT OPTION
Prior to the Annuity Date and upon death of the Owner, the Beneficiary will
receive the greatest of:
1. the Contract Value for the NYSE business day during which We receive all
required documentation including due proof of death of the Owner and an
election of the type of payment to be made at Our Annuity Service
Center; or
2. Purchase Payments less any withdrawals (and any fees or charges
applicable to such withdrawals), compounded until the date of death at
4% interest, plus any Purchase
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Payments and less any withdrawals (and any fees or charges applicable
to such withdrawals) recorded after the date of death; or
3. the Contract Value at the seventh Contract anniversary, plus any
subsequent Purchase Payments and less any subsequent withdrawals (and
any fees or charges applicable to such withdrawals) compounded until the
date of death at 4% interest, plus any Purchase Payments and less any
withdrawals (and any fees or charges applicable to such withdrawals)
recorded after the date of death.
If the Owner was age 70 or older on the Contract Date, both (2) and (3) above
will be compounded at 3%, rather than 4%. If the death benefit is paid on the
death of a Owner who was not originally named in the application and was age 70
or older on the Contract Date, both (2) and (3) above will be compounded at 3%,
rather than 4%.
OPTION II: MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT OPTION
If, upon the death of the Owner and prior to the Annuity Date, the Owner
has not attained his or her 90th birthday, the Beneficiary will receive the
greatest of:
1. the Contract Value for the NYSE business day during which We receive all
required documentation including due proof of death of the Owner and an
election of the type of payment to be made at Our Annuity Service
Center; or
2. Purchase Payments less any withdrawals (and any fees or charges
applicable to such withdrawals); or
3. the maximum anniversary value preceding the date of death. The maximum
anniversary value is equal to the greatest anniversary value attained
from the following:
As of the date of receipt of due proof of death and an election of the
type of payment to be made, at our Annuity Service Center, We will
calculate an anniversary value for each Contract anniversary prior to
the Owner's 81st birthday. The anniversary value is equal to the
Contract Value on a Contract anniversary, increased by the dollar amount
of any Purchase Payments made since that anniversary and reduced by the
dollar amount of any withdrawals (and any fees or charges applicable to
such withdrawals) since that anniversary.
If the deceased Owner has attained age 90, then the death benefit will be the
Contract Value as defined in (1) above.
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DEATH OF OWNER OR ANNUITANT ON OR AFTER THE ANNUITY DATE. If any Owner or
Annuitant dies on or after the Annuity Date and before the entire interest in
the Contract has been distributed, We will pay the remaining portion of the
interest of the Contract under the annuity payment option being used on the date
of death. For further information pertaining to death of the Annuitant, see
ANNUITY PAYMENT OPTIONS.
BENEFICIARY
The Beneficiary is selected by the Owner. While (a) the Owner is living; and (b)
before the Annuity Date, the Owner may change the Beneficiary by written notice
in a form satisfactory to Us. The change will take effect on the date We record
the proper notice subject to any payments We have made. If two or more persons
are named, (a) those surviving the Owner will share equally unless otherwise
stated; and (b) the Beneficiaries must elect to receive their respective
portions of the death benefit according to the options listed under DEATH OF
OWNER BEFORE THE ANNUITY DATE. If the Annuitant survives the Owner, and there
are no surviving Beneficiaries, the Annuitant will be deemed the Beneficiary.
Joint Owners, if applicable, shall be each other's primary Beneficiary. Joint
Annuitants, if any, when the Owner is a non-natural person, shall be each
other's primary Beneficiary. Any other Beneficiary designation will be treated
as a contingent Beneficiary.
If the Owner is also the Annuitant and there are no surviving Beneficiaries at
the death of the Owner, the death benefit will be paid to the estate of the
Owner in accordance with option 1, under DEATH OF OWNER BEFORE THE ANNUITY DATE.
ANNUITY PROVISIONS
ANNUITY DATE
The Owner selects an Annuity Date (the date on which annuity payments are to
begin) at the time of application. The Owner may change the Annuity Date at any
time, at least seven days prior to the Annuity Date, by written notice to the
Company at its Annuity Service Center. The Annuity Date must always be the first
day of the calendar month and must be at least two years after the Contract
Date, but not beyond the later of the Owner's 90th birthday or ten years after
the Contract Date. If the Owner is a non-natural person, the latest Annuity Date
is the later of the Annuitant's 90th birthday or ten years after the Contract
Date. If no Annuity Date is selected, the Annuity Date will be the latest
Annuity Date, as set by the Company.
PAYMENTS TO OWNER
Unless You request otherwise, We will make annuity payments to You. If You want
the annuity payments to be made to some other Payee, We will make such payments
subject to receipt of a written request filed at the Annuity Service Center no
later than thirty (30) days before the due date of the first annuity payment.
Any such request is subject to the rights of any assignee. No payments available
to or being paid to the Payee while the Annuitant is alive can be transferred,
commuted, anticipated or encumbered.
FIXED ANNUITY PAYMENTS
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If a Fixed Annuity payment option has been elected, the proceeds payable under
this Contract less any applicable premium taxes, shall be applied to the payment
of the Fixed Annuity payment option elected at rates which are at least equal to
the annuity rates based upon the applicable tables. In no event will the Fixed
Annuity payments be changed once they begin.
AMOUNT OF FIXED ANNUITY PAYMENTS
The amount of each Fixed Annuity payment will be determined by applying the
portion of the Contract Value allocated to Fixed Annuity payments less any
applicable premium taxes to the annuity table applicable to the Fixed Annuity
payment option chosen.
AMOUNT OF VARIABLE ANNUITY PAYMENTS
(a) FIRST VARIABLE ANNUITY PAYMENT: The dollar amount of the first Variable
Annuity payment will be determined by applying the portion of the
Contract Value allocated to the Variable Portfolio, less any applicable
premium taxes, to rates which are equal to the annuity rates based upon
the annuity table applicable to the Variable Annuity payment option
chosen. If the Contract Value is allocated to more than one Variable
Portfolio, the value of Your interest in each Variable Portfolio is
applied separately to the Variable Annuity payment option table to
determine the amount of the first annuity payment attributable to each
Variable Portfolio.
(b) NUMBER OF VARIABLE ANNUITY UNITS: The number of Annuity Units for each
applicable Variable Portfolio is the amount of the first annuity payment
attributable to that Variable Portfolio divided by the value of the
applicable Annuity Unit for that Variable Portfolio as of the Annuity
Date. The number will not change as a result of investment experience.
(c) VALUE OF EACH VARIABLE ANNUITY UNIT: The value of an Annuity Unit may
increase or decrease from one month to the next. For any month, the
value of an Annuity Unit of a particular Variable Portfolio is the value
of that Annuity Unit as of the last NYSE business day of the preceding
month, multiplied by the Net Investment Factor for that Variable
Portfolio for the last NYSE business day of the current month.
The Net Investment Factor for any Variable Portfolio for a certain month is
determined by dividing (1) by (2) where:
(1) is the Accumulation Unit Value of the Variable Portfolio
determined as of the last business day at the end of
that month, and
(2) is the Accumulation Unit Value of the Variable Portfolio
determined as of the last business day at the end of the
preceding month.
The result is then multiplied by a factor that neutralizes the assumed
investment rate of 3.5%.
(d) SUBSEQUENT VARIABLE ANNUITY PAYMENTS: After the first Variable Annuity
payment, subsequent Variable Annuity payments will vary in amount
according to the investment performance of the applicable Variable
Portfolio(s) to which a portion of Your Contract Value is allocated. The
amount may change from month to month. The amount of each subsequent
payment for each Variable Portfolio is:
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The number of Annuity Units for each Variable Portfolio as determined for the
first annuity payment
Multiplied by
The value of an Annuity Unit for that Variable Portfolio at the end of the month
immediately preceding the month in which payment is due.
We guarantee that the amount of each Variable Annuity payment will not be
affected by variations in expenses or mortality experience.
ANNUITY PAYMENT OPTIONS
During the Annuitant's life, upon written election and the return of this
Contract to the Company at its Annuity Service Center, the Contract Value may be
applied to provide one of the following options or any annuity payment option
that is mutually agreeable. After two years from the Contract Date, and prior to
the Annuity Date, You can choose one of the options described below. If no
option has been selected by the Annuity Date, You will automatically receive
option 4, below, with 120 monthly payments guaranteed.
OPTIONS 1 & 1V - LIFE ANNUITY, LIFETIME PAYMENTS GUARANTEED
Payments payable to a Payee during the lifetime of the Annuitant. No further
payments are payable after the death of the Annuitant.
OPTIONS 2 & 2V - JOINT AND 100% SURVIVOR LIFE ANNUITY
Payments payable to the Payee during the lifetime of the Annuitant and during
the lifetime of a designated second person. No further payments are payable
after the deaths of both the Annuitant and the designated second person.
OPTIONS 3 & 3V - JOINT AND 100% SURVIVOR LIFE ANNUITY WITH PAYMENTS GUARANTEED
FOR 10 OR 20 YEARS
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Payments are payable to the Payee during the lifetime of the Annuitant and
during the lifetime of a designated second person. If, at the death of the
survivor, payments have been made for less than the 10 or 20 years, as selected
at the time of annuitization, the remaining guaranteed annuity payments will be
continued to the Beneficiary.
OPTIONS 4 & 4V - LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 OR 20 YEARS
Payments payable to the Payee during the lifetime of the Annuitant. If, at the
death of the Annuitant, payments have been made for less than the 10 or 20
years, as selected at the time of annuitization, the remaining guaranteed
annuity payments will be continued to the Beneficiary.
OPTIONS 5 & 5V - FIXED PAYMENTS FOR A SPECIFIED PERIOD CERTAIN
Payments payable to the Payee for any specified period of time for five (5)
years or more, but not exceeding thirty (30) years, as selected at the time of
annuitization. The selection must be made for full twelve month periods. In the
event of death of the Annuitant, any remaining guaranteed annuity payments will
be continued to the Beneficiary. If Variable Annuity Payments are elected under
this Annuity Payment Option, any remaining guaranteed Variable Annuity payments
may be redeemed for a discounted value determined by Us. Any applicable
Withdrawal Charges will be deducted from the discounted value as if You fully
surrendered Your Certificate.
23
<PAGE> 24
FIXED ANNUITY PAYMENT OPTIONS TABLE
BASIS OF COMPUTATION
The actuarial basis for the Table of Annuity Rates is the 1983a Annuity
Mortality Table with projection and a guaranteed interest rate of 3%. The
mortality table is projected using Projection Scale G factors, assuming
annuitization in the year 2000. The Fixed Annuity Payment Options Table does not
included any applicable premium tax.
OPTIONS 1 & 4 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.)
<TABLE>
<CAPTION>
OPTION 1
OPTION 4 OPTION 4
AGE OF LIFE ANNUITY LIFE ANNUITY
ANNUITANT LIFE ANNUITY (W/120 PAYMENTS GUARANTEED) (W/240 PAYMENTS GUARANTEED)
MALE FEMALE MALE FEMALE MALE FEMALE
<S> <C> <C> <C> <C> <C> <C>
55 4.23 3.84 4.19 3.82 4.05 3.76
56 4.32 3.91 4.27 3.88 4.11 3.81
57 4.41 3.98 4.35 3.95 4.17 3.87
58 4.51 4.05 4.44 4.02 4.24 3.93
59 4.61 4.13 4.54 4.10 4.31 4.00
60 4.72 4.22 4.64 4.18 4.37 4.06
61 4.84 4.31 4.74 4.27 4.44 4.13
62 4.96 4.40 4.85 4.36 4.51 4.20
63 5.10 4.51 4.97 4.45 4.58 4.27
64 5.24 4.62 5.10 4.55 4.65 4.35
65 5.40 4.73 5.22 4.66 4.72 4.42
66 5.56 4.86 5.36 4.78 4.79 4.50
67 5.74 4.99 5.50 4.90 4.86 4.57
68 5.93 5.14 5.65 5.02 4.92 4.65
69 6.13 5.29 5.80 5.16 4.99 4.73
70 6.35 5.46 5.96 5.30 5.05 4.80
71 6.58 5.64 6.13 5.46 5.10 4.88
72 6.82 5.84 6.29 5.62 5.16 4.95
73 7.08 6.05 6.47 5.78 5.20 5.02
74 7.36 6.28 6.64 5.96 5.25 5.08
75 7.66 6.53 6.82 6.14 5.29 5.14
76 7.98 6.80 7.00 6.33 5.33 5.19
77 8.33 7.09 7.19 6.53 5.36 5.24
78 8.69 7.41 7.37 6.73 5.39 5.29
79 9.09 7.75 7.55 6.94 5.41 5.33
80 9.51 8.11 7.73 7.14 5.43 5.36
81 9.97 8.51 7.91 7.35 5.45 5.39
82 10.45 8.94 8.08 7.55 5.47 5.42
83 10.97 9.41 8.24 7.76 5.48 5.44
84 11.52 9.92 8.40 7.95 5.49 5.46
85 12.10 10.47 8.54 8.13 5.50 5.48
</TABLE>
24
<PAGE> 25
OPTION 2 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.)
JOINT & 100% SURVIVOR LIFE ANNUITY
<TABLE>
<CAPTION>
AGE OF
MALE
ANNUITANT AGE OF FEMALE ANNUITANT
--------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 60 65 70 75 80 85
55 3.54 3.69 3.84 3.96 4.06 4.13 4.17
60 3.63 3.83 4.04 4.23 4.39 4.52 4.60
65 3.70 3.95 4.23 4.51 4.78 5.00 5.16
70 3.75 4.04 4.39 4.78 5.18 5.56 5.85
75 3.78 4.11 4.51 5.01 5.57 6.14 6.65
80 3.81 4.15 4.60 5.18 5.89 6.70 7.52
85 3.82 4.18 4.66 5.30 6.14 7.18 8.35
</TABLE>
OPTION 3 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST)
JOINT & 100% SURVIVOR LIFE ANNUITY (W/120 PAYMENTS GUARANTEED)
<TABLE>
<CAPTION>
AGE OF
MALE
ANNUITANT AGE OF FEMALE ANNUITANT
--------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 60 65 70 75 80 85
55 3.54 3.69 3.83 3.96 4.05 4.12 4.16
60 3.63 3.83 4.03 4.22 4.38 4.50 4.57
65 3.70 3.95 4.22 4.50 4.76 4.97 5.10
70 3.75 4.04 4.38 4.76 5.15 5.48 5.72
75 3.78 4.10 4.50 4.98 5.50 6.00 6.40
80 3.80 4.14 4.58 5.13 5.78 6.46 7.04
85 3.81 4.16 4.62 5.22 5.97 6.80 7.55
</TABLE>
OPTION 3 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST)
JOINT & 100% SURVIVOR LIFE ANNUITY (W/240 PAYMENTS GUARANTEED)
<TABLE>
<CAPTION>
AGE OF
MALE
ANNUITANT AGE OF FEMALE ANNUITANT
--------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 60 65 70 75 80 85
55 3.53 3.68 3.81 3.92 3.99 4.03 4.04
60 3.62 3.81 4.00 4.16 4.27 4.34 4.37
65 3.68 3.92 4.16 4.39 4.56 4.66 4.71
70 3.72 3.99 4.29 4.58 4.81 4.96 5.03
75 3.74 4.03 4.36 4.70 4.99 5.17 5.26
80 3.75 4.05 4.40 4.77 5.09 5.30 5.40
85 3.76 4.06 4.42 4.80 5.13 5.35 5.46
</TABLE>
25
<PAGE> 26
OPTION 5 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
FIXED PAYMENT FOR SPECIFIED PERIOD
<TABLE>
<CAPTION>
NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY
OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT
-------- ------- -------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
10 9.61 17 6.23 24 4.84
11 8.86 18 5.96 25 4.71
5 17.91 12 8.24 19 5.73 26 4.59
6 15.14 13 7.71 20 5.51 27 4.47
7 13.16 14 7.26 21 5.32 28 4.37
8 11.68 15 6.87 22 5.15 29 4.27
9 10.53 16 6.53 23 4.99 30 4.18
</TABLE>
26
<PAGE> 27
VARIABLE ANNUITY PAYMENT OPTIONS TABLE
BASIS OF COMPUTATION
The actuarial basis for the Table of Annuity Rates is the 1983a Annuity
Mortality Table with projection and an effective annual Assumed Investment Rate
of 3.5%. The mortality table is projected using Projection Scale G factors,
assuming annuitization in the year 2000. The Variable Annuity Payment Options
Table does not include any applicable premium tax.
OPTIONS 1V & 4V - TABLE OF MONTHLY INSTALLMENTS PER $1,000
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.)
<TABLE>
<CAPTION>
OPTION 1V OPTION 4V OPTION 4V
LIFE ANNUITY LIFE ANNUITY
AGE OF (W/120 PAYMENTS (W/240 PAYMENTS
ANNUITANT LIFE ANNUITY GUARANTEED) GUARANTEED)
MALE FEMALE MALE FEMALE MALE FEMALE
<S> <C> <C> <C> <C> <C> <C>
55 4.53 4.13 4.48 4.11 4.33 4.05
56 4.62 4.20 4.56 4.18 4.39 4.10
57 4.71 4.27 4.64 4.24 4.45 4.16
58 4.80 4.34 4.73 4.31 4.52 4.22
59 4.90 4.42 4.82 4.39 4.58 4.28
60 5.01 4.51 4.92 4.47 4.65 4.34
61 5.13 4.60 5.03 4.55 4.71 4.41
62 5.26 4.69 5.14 4.64 4.78 4.48
63 5.39 4.80 5.25 4.74 4.85 4.55
64 5.54 4.91 5.38 4.84 4.92 4.62
65 5.69 5.02 5.51 4.94 4.99 4.69
66 5.86 5.15 5.64 5.06 5.05 4.77
67 6.03 5.28 5.78 5.18 5.12 4.84
68 6.22 5.43 5.93 5.30 5.18 4.92
69 6.43 5.58 6.08 5.44 5.24 4.99
70 6.64 5.75 6.23 5.58 5.30 5.06
71 6.87 5.93 6.40 5.73 5.36 5.14
72 7.12 6.13 6.56 5.89 5.41 5.21
73 7.38 6.34 6.73 6.06 5.46 5.27
74 7.66 6.57 6.91 6.23 5.50 5.33
75 7.96 6.82 7.09 6.41 5.54 5.39
76 8.28 7.09 7.27 6.60 5.57 5.44
77 8.63 7.38 7.45 6.79 5.61 5.49
78 9.00 7.70 7.63 6.99 5.63 5.54
79 9.40 8.04 7.81 7.19 5.66 5.58
80 9.82 8.41 7.98 7.40 5.68 5.61
81 10.28 8.81 8.16 7.60 5.70 5.64
82 10.76 9.24 8.32 7.81 5.71 5.66
83 11.28 9.71 8.48 8.00 5.72 5.69
84 11.83 10.23 8.64 8.19 5.73 5.70
85 12.42 10.78 8.78 8.38 5.74 5.72
</TABLE>
27
<PAGE> 28
OPTION 2V - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.)
JOINT & 100% SURVIVOR LIFE ANNUITY
<TABLE>
<CAPTION>
AGE OF
MALE
ANNUITANT AGE OF FEMALE ANNUITANT
--------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 60 65 70 75 80 85
55 3.83 3.98 4.12 4.24 4.34 4.42 4.46
60 3.92 4.11 4.32 4.51 4.67 4.80 4.89
65 3.99 4.23 4.50 4.79 5.05 5.28 5.44
70 4.04 4.33 4.67 5.05 5.46 5.83 6.13
75 4.07 4.39 4.79 5.28 5.84 6.41 6.93
80 4.10 4.44 4.88 5.45 6.16 6.97 7.79
85 4.11 4.47 4.94 5.57 6.41 7.45 8.61
</TABLE>
OPTION 3V - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST)
JOINT AND 100% SURVIVOR LIFE ANNUITY (W/120 PAYMENTS GUARANTEED)
<TABLE>
<CAPTION>
AGE OF
MALE
ANNUITANT AGE OF FEMALE ANNUITANT
--------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 60 65 70 75 80 85
55 3.83 3.98 4.12 4.24 4.34 4.40 4.45
60 3.92 4.11 4.31 4.50 4.66 4.78 4.86
65 3.99 4.23 4.50 4.78 5.03 5.24 5.38
70 4.04 4.32 4.66 5.03 5.41 5.75 5.99
75 4.07 4.38 4.78 5.25 5.77 6.26 6.66
80 4.09 4.43 4.86 5.40 6.05 6.72 7.29
85 4.10 4.45 4.90 5.50 6.24 7.05 7.80
</TABLE>
OPTION 3V - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST)
JOINT & 100% SURVIVOR LIFE ANNUITY (W/240 PAYMENTS GUARANTEED)
<TABLE>
<CAPTION>
AGE OF
MALE
ANNUITANT AGE OF FEMALE ANNUITANT
--------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 60 65 70 75 80 85
55 3.82 3.97 4.10 4.20 4.27 4.31 4.33
60 3.91 4.09 4.28 4.44 4.55 4.61 4.64
65 3.97 4.20 4.44 4.66 4.83 4.93 4.97
70 4.01 4.27 4.56 4.84 5.07 5.21 5.28
75 4.03 4.31 4.64 4.97 5.25 5.42 5.51
80 4.04 4.33 4.67 5.03 5.34 5.55 5.65
85 4.05 4.34 4.69 5.06 5.38 5.60 5.70
</TABLE>
28
<PAGE> 29
OPTION 5V - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
PAYMENTS FOR A SPECIFIED PERIOD
<TABLE>
<CAPTION>
NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY
OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT
-------- ------- -------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
10 9.83 17 6.47 24 5.09
11 9.09 18 6.20 25 4.96
5 18.12 12 8.46 19 5.97 26 4.84
6 15.35 13 7.94 20 5.75 27 4.73
7 13.38 14 7.49 21 5.56 28 4.63
8 11.90 15 7.10 22 5.39 29 4.53
9 10.75 16 6.76 23 5.24 30 4.45
</TABLE>
29
<PAGE> 30
ANCHOR NATIONAL LIFE INSURANCE COMPANY
A STOCK COMPANY LOS ANGELES, CALIFORNIA
30
<PAGE> 31
INDIVIDUAL FIXED AND VARIABLE
ANNUITY CONTRACT
Nonparticipating
31
<PAGE> 1
<TABLE>
<S> <C>
Overnight Address with checks:
Mailing Address F.C.N.P.C. Mailing Address [LOGO] ANCHOR NATIONAL
with checks: Attn: P.O. Box 100330 without checks:
P. O. Box 100330 1111 Arroyo Parkway P. O. Box 54299 1 SunAmerica Center
Pasadena, CA 91189-0001 Pasadena, CA 91105 Los Angeles, CA 90054-0299 Los Angeles, CA 90067-6022
- --------------------------------------------------------------------------------------------------------------------------------
PARTICIPANT ENROLLMENT FORM ANG-512 (3/99)
DO NOT USE HIGHLIGHTER. Please Print or type.
A. PARTICIPANT [ ] Mr. [ ] Mrs. [ ] Ms. [ ] Miss [ ] Dr. [ ] Sr. [ ] Jr.
----------------------------------------------------------------------------------------------------------
LAST NAME FIRST NAME MIDDLE INITIAL
----------------------------------------------------------------------------------------------------------
STREET ADDRESS
----------------------------------------------------------------------------------------------------------
CITY STATE ZIP CODE
MO. DAY YR. [ ] M [ ] F ( )
-------------------- --------------------------- ---- ----------------
DATE OF BIRTH SEX SOC. SEC. OR TAX ID NUMBER TELEPHONE NUMBER
JOINT PARTICIPANT(IF ANY, MUST BE SPOUSE)
-----------------------------------------------------------------
LAST NAME FIRST NAME MIDDLE INITIAL
MO. DAY YR. [ ] M [ ] F ( )
-------------------- --------------------------- ---- ----------------
DATE OF BIRTH SEX SOC. SEC. OR TAX ID NUMBER TELEPHONE NUMBER
B. ANNUITANT
(Complete only ----------------------------------------------------------------------------------------------------------
if different from LAST NAME FIRST NAME MIDDLE INITIAL
participant)
----------------------------------------------------------------------------------------------------------
STREET ADDRESS
----------------------------------------------------------------------------------------------------------
CITY STATE ZIP CODE
MO. DAY YR. [ ] M [ ] F ( )
-------------------- --------------------------- ---- ----------------
DATE OF BIRTH SEX SOC. SEC. OR TAX ID NUMBER TELEPHONE NUMBER
JOINT PARTICIPANT(IF ANY, MUST BE SPOUSE)
-----------------------------------------------------------------
LAST NAME FIRST NAME MIDDLE INITIAL
MO. DAY YR. [ ] M [ ] F ( )
-------------------- --------------------------- ---- ----------------
DATE OF BIRTH SEX SOC. SEC. OR TAX ID NUMBER TELEPHONE NUMBER
C. WITHDRAWAL [ ] Option 1: 7 Years (with DCA Fixed Account Options)
CHARGE PERIOD [ ] Option 2: 9 Years (with Payment Enhancement Provisions)
(Participant must (See your financial representative and the prospectus for information about these options.)
choose one option)
D. DEATH BENEFIT [ ] Purchase Payment Accumulation Death Benefit Option
(Participant must [ ] Maximum Anniversary Value Death Benefit Option
choose one) (See your financial representative and the prospectus for information about these options.)
E. BENEFICIARY ----------------------------------------------------------------------------- PRIMARY [ ] CONTINGENT [ ]
LAST NAME FIRST NAME MIDDLE INITIAL RELATIONSHIP
----------------------------------------------------------------------------- PRIMARY [ ] CONTINGENT [ ]
LAST NAME FIRST NAME MIDDLE INITIAL RELATIONSHIP
F. TYPE OF [ ] NON-QUALIFIED. If non-qualified, is this a 1035 Exchange? [ ] YES [ ] NO
CONTRACT If yes, please complete a "Request for Transfer or 1035 Exchange" form (SA-2500RL).
[ ] QUALIFIED, as indicated below. Is this a direct transfer? [ ] YES [ ] NO
If yes, please complete a "Request for Transfer or 1035 Exchange" form (SA-2500RL).
Please select an appropriate plan for qualified monies.
[ ] SEP [ ] 403(b) [ ] Terminal funding [ ] 457 [ ] 401 retirement plan [ ] IRA Tax Year______
[ ] IRA rollover [ ] IRA transfer [ ] Roth IRA Roth IRA origination date__________ [ ] Other_______
G. ANNUITY DATE MO. DAY YR. Date annuity payments ("income payments") begin. (Must be at least 2 years
----------------------- after the Certificate Date. Maximum age is the later of the Participant's Age
ANNUITY DATE 90 or 10 years after Certificate Date. NOTE: If left blank, the Annuity Date
will default to maximum for non-qualified and to 70 1/2 for qualified contracts.)
ANG-512 (3/99) OVER Group Allocated
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------------------------------------
PARTICIPANT ENROLLMENT FORM ANG-512 (3/99) SIDE 2
- --------------------------------------------------------------------------------------------------------------------------------
H. PURCHASE [ ] INITIAL PURCHASE PAYMENT: $_____________________
PAYMENT(S) Minimum initial payment is [$5,000] for nonqualified contracts; [$2,000] for qualified contracts.
Payments may be wired or mailed. Make check payable to: Anchor National Life Insurance Company and
Include Social Security Number on the check.
[ ] AUTOMATIC PAYMENTS: $_____________________
To establish automatic bank drafts for future Purchase Payments, include a completed "Automatic
Payment Authorization" ( Form SA-2233POS), and a voided check.
I. SPECIAL [ ] SYSTEMATIC WITHDRAWAL: Check the box at left and include a "Systematic Withdrawal
FEATURES Application" ( Form R-5550SW).
[ ] DOLLAR COST AVERAGING: Check the box at left and include a completed "Dollar Cost Averaging
Application" (Form R2-5551DCA).
[ ] PRINCIPAL ADVANTAGE: Check the box at left. Under Investment Instructions, indicate the fixed account
desired and specify other allocations as percentages.
J. TELEPHONE/ Do you wish to authorize telephone TRANSFERS, subject to the conditions set forth below? [ ] YES [ ] NO
INTERNET Do you wish to authorize Internet TRANSFERS, subject to the conditions set forth below? [ ] YES [ ] NO
TRANSFERS (If no election is indicated the Company will default to yes for transfers via the
AUTHORIZATION telephone or Internet.) I authorize the Company to accept telephone and/or Internet instructions for
transfers in any amount among investment options from anyone providing proper identification subject to
restrictions and limitations contained in the certificate and related prospectus, if any. I understand
that I bear the risk of loss in the event of a telephone or Internet instruction not authorized by me. The
Company will not be responsible for any losses resulting from unauthorized transactions if it follows
reasonable procedures designed to verify the identity of the requestor and therefore, the Company will
record telephone conversations containing transaction instructions, request personal identification
information before acting upon telephone instructions and send written confirmation statements of
transactions to the address of record. For Internet transfers the Company will require proper password
or Internet authentication, keep records of all such transactions and send confirmations to the address
of record.
Do you authorize the delivery of the prospectus and other required documentation to your personal
Internet Address in lieu of receipt by mail? [ ] YES [ ] NO
If YES, You MUST indicate Your Internet Address in the space provided.
----------------------------------
Internet Address
K. SPECIAL
INSTRUCTIONS ----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
L. STATEMENT OF This Certificate [ ] WILL [ ] WILL NOT replace an existing life insurance or annuity contract.
PARTICIPANT (If this will replace an existing policy, please indicate name of issuing company and contract number
below.)
COMPANY NAME CONTRACT NUMBER
------------------------------------ ------------------------------------
I hereby represent my answers to the above questions to be correct and true to the best of my knowledge
and belief and agree that this Enrollment Form shall be a part of any Certificate issued by the COMPANY. I
VERIFY MY UNDERSTANDING THAT ALL PURCHASE PAYMENTS AND VALUES PROVIDED BY THE CERTIFICATE, WHEN BASED ON
INVESTMENT EXPERIENCE OF THE VARIABLE PORTFOLIOS, ARE VARIABLE AND NOT GUARANTEED AS TO DOLLAR AMOUNT. IF
THE RETURN OF PURCHASE PAYMENTS IS REQUIRED UNDER THE RIGHT TO EXAMINE PROVISION OF THE CERTIFICATE, I
UNDERSTAND THAT THE COMPANY RESERVES THE RIGHT TO ALLOCATE MY PURCHASE PAYMENT(S) AND ANY INITIAL PAYMENT
ENHANCEMENT(S), IF APPLICABLE, TO THE CASH MANAGEMENT PORTFOLIO UNTIL THE END OF THE RIGHT TO EXAMINE
PERIOD. I FURTHER UNDERSTAND THAT AT THE END OF THE RIGHT TO EXAMINE PERIOD, THE COMPANY WILL ALLOCATE MY
FUNDS ACCORDING TO MY INVESTMENT INSTRUCTIONS. I UNDERSTAND THAT ALL PAYMENTS AND VALUES BASED ON THE
MULTI-YEAR FIXED ACCOUNT OPTIONS ARE SUBJECT TO A MARKET VALUE ADJUSTMENT FORMULA, WHICH MAY RESULT IN
UPWARD AND DOWNWARD ADJUSTMENTS IN AMOUNTS AVAILABLE FOR WITHDRAWAL. I UNDERSTAND THE TERMS OF THE
WITHDRAWAL CHARGE PERIOD THAT I SELECTED. I ACKNOWLEDGE RECEIPT OF THE CURRENT PROSPECTUSES FOR
[POLARIS II] INCLUDING THE SUNAMERICA SERIES TRUST AND ANCHOR SERIES TRUST PROSPECTUSES. I HAVE READ THEM
CAREFULLY AND UNDERSTAND THEIR CONTENTS.
Signed at
---------------------------------------------------------------- ----------------------------
CITY STATE DATE
---------------------------------------------------------- --------------------------------------
OWNER'S SIGNATURE REGISTERED REPRESENTATIVE'S SIGNATURE
----------------------------------------------------------
JOINT OWNER'S SIGNATURE (IF APPLICABLE)
M. LICENSED/ Will this Certificate replace in whole or in part any existing life insurance or annuity contract?
REGISTERED [ ] YES [ ] NO
REPRESENTATIVE
----------------------------------------------------------------------------------------------------------
REPRESENTATIVE'S LAST NAME FIRST NAME MIDDLE INITIAL SOC. SEC. NUMBER
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
INFORMATION
------------------------------------------------------------------------------- ------------------------
REPRESENTATIVE'S STREET ADDRESS CITY STATE ZIP CODE
( )
------------------------ --------------------------------------------------- ------------------------
BROKER/DEALER FIRM NAME REPRESENTATIVE'S TELEPHONE NO. LICENSED AGENT ID NUMBER
ANG-512 (3/99)
- --------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INSTRUCTIONS FOR FIXED ACCOUNT OPTIONS AND VARIABLE PORTFOLIOS ANG-512 (3/99) Side 3
- --------------------------------------------------------------------------------------------------------------------------------
Choose from the Variable Portfolios and the applicable Fixed Account Options listed below. If Dollar Cost Averaging was selected
in Section I, then [Form R2-5551DCA] must accompany this Participant Enrollment Form. Allocations must be expressed in whole
percentages and total allocation must equal 100%.
VARIABLE PORTFOLIOS
_____ PORTFOLIO _____ _____ MANAGER ______ _____ PORTFOLIO _____ _____ MANAGER ______
__% Cash Management SunAmerica Asset Mgmt. __% "Dogs" of Wall SunAmerica Asset Mgmt.
Corp. Street Corp.
__% Government & Wellington Mgmt. Co., LLP __% Alliance Growth Alliance Capital Mgmt.
Quality Bond L.P.
__% Corporate Bond Federated Investors __% Growth Wellington Mgmt. Co.,
LLP
__% Global Bond Goldman Sachs Asset Mgmt. __% Putnam Growth Putnam Investment Mgmt.,
Inc.
__% High-Yield Bond SunAmerica Asset Mgmt. __% Real Estate Davis Selected Advisers,
Corp. L.P.
__% Worldwide High Morgan Stanley Asset __% Natural Resources Wellington Mgmt. Co.,
Income Mgmt. LLP
__% SunAmerica Balanced SunAmerica Asset Mgmt. __% MFS Mid-Cap Growth Massachusetts Financial
Corp. Services Co.
__% MFS Total Return Massachusetts Financial __% Capital Wellington Mgmt. Co.,
Services Co. Appreciation LLP
__% Asset Allocation Goldman Sachs Asset Mgmt. __% Aggressive Growth SunAmerica Asset Mgmt.
Corp.
__% Utility Federated Investors __% Int'l. Growth and Putnam Investment Mgmt.,
Income Inc.
__% Growth-Income Alliance Capital Mgmt. __% Global Equities Alliance Capital Mgmt.
L.P. L.P.
__% MFS Growth and Massachusetts Financial __% Int'l. Diversified Morgan Stanley Asset
Income Services Co. Equities Mgmt.
__% Federated Value Federated Investors __% Emerging Markets Putnam Investment Mgmt.,
Inc.
__% Venture Value Davis Selected Advisers, L.P.
FIXED ACCOUNT OPTION GUARANTEE PERIODS
_____% 1 yr. _____ % 3 yr. ______% 5 yr. ______% 7 yr. _____%10 yr.
DCA FIXED ACCOUNT OPTION GUARANTEE PERIODS
IMPORTANT: THE DCA FIXED ACCOUNT OPTIONS ARE AVAILABLE ONLY IF OPTION 1 (THE 7 YEAR WITHDRAWAL CHARGE PERIOD) IN SECTION C
WAS SELECTED. [Form R2-5551DCA] must accompany this Participant Enrollment Form.
_____% 6 Month DCA _____% 1 yr. DCA
FRAUD WARNING: ANY PERSON WHO WITH INTENT TO DEFRAUD OR KNOWING THAT HE IS FACILITATING A FRAUD AGAINST AN INSURER, SUBMITS
AN APPLICATION OR FILES A CLAIM CONTAINING A FALSE OR DECEPTIVE STATEMENT MAY BE GUILTY OF INSURANCE FRAUD.
- ------------------------------------------- ------------------------------------------ --------------------
PARTICIPANT'S SIGNATURE REGISTERED REPRESENTATIVE'S SIGNATURE DATE
- -------------------------------------------
JOINT PARTICIPANT'S SIGNATURE
REGISTERED/LICENSED REPRESENTATIVE INFORMATION
( )
- ------------------------------------------- ------------------------------------- ----------------------------
REPRESENTATIVE'S TELEPHONE NO. LICENSED AGENT ID NUMBER BROKER/DEALER FIRM NAME
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------------------------------------
FOR OFFICE USE ONLY
- --------------------------------------------------------------------------------------------------------------------------------
ANG-512 (3/99)
</TABLE>
<PAGE> 1
<TABLE>
<S> <C>
Overnight Address with checks:
Mailing Address F.C.N.P.C. Mailing Address [LOGO] ANCHOR NATIONAL
with checks: Attn: P.O. Box 100330 without checks:
P. O. Box 100330 1111 Arroyo Parkway P. O. Box 54299 1 SunAmerica Center
Pasadena, CA 91189-0001 Pasadena, CA 91105 Los Angeles, CA 90054-0299 Los Angeles, CA 90067-6022
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DEFERRED ANNUITY APPLICATION ANA-513 (3/99)
DO NOT USE HIGHLIGHTER. Please Print or type.
A. OWNER [ ] Mr. [ ] Mrs. [ ] Ms. [ ] Miss [ ] Dr. [ ] Sr. [ ] Jr.
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LAST NAME FIRST NAME MIDDLE INITIAL
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STREET ADDRESS
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CITY STATE ZIP CODE
JOINT OWNER (IF ANY, MUST BE SPOUSE)
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LAST NAME FIRST NAME MIDDLE INITIAL
MO. DAY YR. [ ] M [ ] F ( )
-------------------- --------------------------- ---- ----------------
DATE OF BIRTH SEX SOC. SEC. OR TAX ID NUMBER TELEPHONE NUMBER
B. ANNUITANT
(Complete only ----------------------------------------------------------------------------------------------------------
if different from LAST NAME FIRST NAME MIDDLE INITIAL
owner)
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STREET ADDRESS
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CITY STATE ZIP CODE
MO. DAY YR. [ ] M [ ] F ( )
-------------------- --------------------------- ---- ----------------
DATE OF BIRTH SEX SOC. SEC. OR TAX ID NUMBER TELEPHONE NUMBER
JOINT ANNUITANT (IF ANY)
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LAST NAME FIRST NAME MIDDLE INITIAL
MO. DAY YR. [ ] M [ ] F ( )
-------------------- --------------------------- ---- ----------------
DATE OF BIRTH SEX SOC. SEC. OR TAX ID NUMBER TELEPHONE NUMBER
C. WITHDRAWAL [ ] Option 1: 7 Years (with DCA Fixed Account Options)
CHARGE PERIOD [ ] Option 2: 9 Years (with Payment Enhancement Provisions)
(Owner must (See your financial representative and the prospectus for information about these options.)
choose one option)
D. DEATH BENEFIT [ ] Purchase Payment Accumulation Death Benefit Option
(Owner must [ ] Maximum Anniversary Value Death Benefit Option
choose one) (See your financial representative and the prospectus for information about these options.)
E. BENEFICIARY ----------------------------------------------------------------------------- PRIMARY [ ] CONTINGENT [ ]
LAST NAME FIRST NAME MIDDLE INITIAL RELATIONSHIP
----------------------------------------------------------------------------- PRIMARY [ ] CONTINGENT [ ]
LAST NAME FIRST NAME MIDDLE INITIAL RELATIONSHIP
F. TYPE OF [ ] NON-QUALIFIED. If non-qualified, is this a 1035 Exchange? [ ] YES [ ] NO
CONTRACT If yes, please complete a "Request for Transfer or 1035 Exchange" form (SA-2500RL).
[ ] QUALIFIED, as indicated below. Is this a direct transfer? [ ] YES [ ] NO
If yes, please complete a "Request for Transfer or 1035 Exchange" form (SA-2500RL).
Please select an appropriate plan for qualified monies.
[ ] SEP [ ] 403(b) [ ] Terminal funding [ ] 457 [ ] 401 retirement plan [ ] IRA Tax Year_______
[ ] IRA rollover [ ] IRA transfer [ ] Roth IRA Roth IRA origination date__________ [ ] Other_____
G. ANNUITY DATE MO. DAY YR. Date annuity payments ("income payments") begin. (Must be at least 2 years
------------------------ after the Contract ANNUITY DATE Date. Maximum age is the later of the Owner's
Age 90 or 10 years after Contract Date. NOTE: If left blank, the Annuity Date
will default to maximum for non-qualified and to 70 1/2 for qualified
contracts.)
ANA-513 (3/99) OVER
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DEFERRED ANNUITY APPLICATION ANA-513 (3/99) SIDE 2
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H. PURCHASE [ ] INITIAL PURCHASE PAYMENT: $_____________________
PAYMENT(S) Minimum initial payment is [$5,000] for nonqualified contracts; [$2,000] for qualified contracts.
Payments may be wired or mailed. Make check payable to: Anchor National Life Insurance Company and
Include Social Security Number on the check.
[ ] AUTOMATIC PAYMENTS: $_____________________
To establish automatic bank drafts for future Purchase Payments, include a completed "Automatic
Payment Authorization" ( Form SA-2233POS), and a voided check.
I. SPECIAL [ ] SYSTEMATIC WITHDRAWAL: Check the box at left and include a "Systematic Withdrawal
FEATURES Application" ( Form R-5550SW).
[ ] DOLLAR COST AVERAGING: Check the box at left and include a completed "Dollar Cost Averaging
Application" (Form R2-5551DCA).
[ ] PRINCIPAL ADVANTAGE: Check the box at left. Under Investment Instructions, indicate the fixed account
desired and specify other allocations as percentages.
J. TELEPHONE/ Do you wish to authorize telephone TRANSFERS, subject to the conditions set forth below? [ ] YES [ ] NO
INTERNET Do you wish to authorize Internet TRANSFERS, subject to the conditions set forth below? [ ] YES [ ] NO
TRANSFERS (If no election is indicated the Company will default to yes for transfers via the telephone or Internet.)
AUTHORIZATION I authorize the Company to accept telephone and/or Internet instructions for transfers in any amount among
investment options from anyone providing proper identification subject to restrictions and limitations
contained in the contract and related prospectus, if any. I understand that I bear the risk of loss in the
event of a telephone or Internet instruction not authorized by me. The Company will not be responsible for
any losses resulting from unauthorized transactions if it follows reasonable procedures designed to verify
the identity of the requestor and therefore, the Company will record telephone conversations containing
transaction instructions, request personal identification information before acting upon telephone
instructions and send written confirmation statements of transactions to the address of record. For
Internet transfers the Company will require proper password or Internet authentication, keep records of
all such transactions and send confirmations to the address of record.
Do you authorize the delivery of the prospectus and other required documentation to your personal Internet
Address in lieu of receipt by mail? [ ] YES [ ] NO
If YES, You MUST indicate Your Internet Address in the space provided.
-----------------------------------
Internet Address
K. SPECIAL
INSTRUCTIONS ----------------------------------------------------------------------------------------------------------
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L. STATEMENT OF This Contract [ ] WILL [ ] WILL NOT replace an existing life insurance or annuity contract. (If this
OWNER will replace an existing policy, please indicate name of issuing company and contract number below.)
COMPANY NAME CONTRACT NUMBER
------------------------------------ ------------------------------------
I hereby represent my answers to the above questions to be correct and true to the best of my knowledge
and belief and agree that this Enrollment Form shall be a part of any Contract issued by the Company. I
VERIFY MY UNDERSTANDING THAT ALL PURCHASE PAYMENTS AND VALUES PROVIDED BY THE CONTRACT, WHEN BASED ON
INVESTMENT EXPERIENCE OF THE VARIABLE PORTFOLIOS, ARE VARIABLE AND NOT GUARANTEED AS TO DOLLAR AMOUNT. IF
THE RETURN OF PURCHASE PAYMENTS IS REQUIRED UNDER THE RIGHT TO EXAMINE PROVISION OF THE CONTRACT, I
UNDERSTAND THAT THE COMPANY RESERVES THE RIGHT TO ALLOCATE MY PURCHASE PAYMENT(S) AND ANY INITIAL PAYMENT
ENHANCEMENT(S), IF APPLICABLE, TO THE CASH MANAGEMENT PORTFOLIO UNTIL THE END OF THE RIGHT TO EXAMINE
PERIOD. I FURTHER UNDERSTAND THAT AT THE END OF THE RIGHT TO EXAMINE PERIOD, THE COMPANY WILL ALLOCATE MY
FUNDS ACCORDING TO MY INVESTMENT INSTRUCTIONS. I UNDERSTAND THAT ALL PAYMENTS AND VALUES BASED ON THE
MULTI-YEAR FIXED ACCOUNT OPTIONS ARE SUBJECT TO A MARKET VALUE ADJUSTMENT FORMULA, WHICH MAY RESULT IN
UPWARD AND DOWNWARD ADJUSTMENTS IN AMOUNTS AVAILABLE FOR WITHDRAWAL. I UNDERSTAND THE TERMS OF THE
WITHDRAWAL CHARGE PERIOD THAT I SELECTED. I ACKNOWLEDGE RECEIPT OF THE CURRENT PROSPECTUSES FOR
[POLARIS II] INCLUDING THE SUNAMERICA SERIES TRUST AND ANCHOR SERIES TRUST PROSPECTUSES. I HAVE READ THEM
CAREFULLY AND UNDERSTAND THEIR CONTENTS.
Signed at
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CITY STATE DATE
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OWNER'S SIGNATURE REGISTERED REPRESENTATIVE'S SIGNATURE
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JOINT OWNER'S SIGNATURE (IF APPLICABLE)
M. LICENSED/ Will this Contract replace in whole or in part any existing life insurance or annuity contract?
REGISTERED [ ] YES [ ] NO
REPRESENTATIVE
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REPRESENTATIVE'S LAST NAME FIRST NAME MIDDLE INITIAL SOC. SEC. NUMBER
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INFORMATION
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REPRESENTATIVE'S STREET ADDRESS CITY STATE ZIP CODE
( )
------------------------ --------------------------------------------------- ------------------------
BROKER/DEALER FIRM NAME REPRESENTATIVE'S TELEPHONE NO. LICENSED AGENT ID NUMBER
ANA-513 (3/99)
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INVESTMENT INSTRUCTIONS FOR FIXED ACCOUNT OPTIONS AND VARIABLE PORTFOLIOS ANA-513 (3/99) SIDE 3
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Choose from the Variable Portfolios and the applicable Fixed Account Options listed below. If Dollar Cost Averaging was selected
in Section I, then [Form R2-5551DCA] must accompany this Deferred Annuity Application. Allocations must be expressed in whole
percentages and total allocation must equal 100%.
VARIABLE PORTFOLIOS
____ PORTFOLIO ____ ____ MANAGER ____ ____ PORTFOLIO ____ ____ MANAGER ____
__% Cash Management SunAmerica Asset Mgmt. Corp. __% "Dogs" of Wall Street SunAmerica Asset Mgmt. Corp.
__% Government & Quality Wellington Mgmt. Co., LLP __% Alliance Growth Alliance Capital Mgmt. L.P.
Bond
__% Corporate Bond Federated Investors __% Growth Wellington Mgmt. Co., LLP
__% Global Bond Goldman Sachs Asset Mgmt. __% Putnam Growth Putnam Investment Mgmt., Inc.
__% High-Yield Bond SunAmerica Asset Mgmt. Corp. __% Real Estate Davis Selected Advisers, L.P.
__% Worldwide High Income Morgan Stanley Asset Mgmt. __% Natural Resources Wellington Mgmt. Co., LLP
__% SunAmerica Balanced SunAmerica Asset Mgmt. Corp. __% MFS Mid-Cap Growth Massachusetts Financial
Services Co.
__% MFS Total Return Massachusetts Financial __% Capital Appreciation Wellington Mgmt. Co., LLP
Services Co.
__% Asset Allocation Goldman Sachs Asset Mgmt. __% Aggressive Growth SunAmerica Asset Mgmt. Corp.
__% Utility Federated Investors __% Int'l. Growth and Putnam Investment Mgmt., Inc.
Income
__% Growth-Income Alliance Capital Mgmt. L.P. __% Global Equities Alliance Capital Mgmt. L.P.
__% MFS Growth and Income Massachusetts Financial __% Int'l. Diversified Morgan Stanley Asset Mgmt.
Services Co. Equities
__% Federated Value Federated Investors __% Emerging Markets Putnam Investment Mgmt., Inc.
__% Venture Value Davis Selected Advisers, L.P.
FIXED ACCOUNT OPTION GUARANTEE PERIODS
_____% 1 yr. _____ % 3 yr. ______% 5 yr. ______% 7 yr. _____%10 yr.
DCA FIXED ACCOUNT OPTION GUARANTEE PERIODS
IMPORTANT: THE DCA FIXED ACCOUNT OPTIONS ARE AVAILABLE ONLY IF OPTION 1 (THE 7 YEAR WITHDRAWAL CHARGE PERIOD) IN
SECTION C WAS SELECTED. [Form R2-5551DCA] must accompany this Deferred Annuity Application.
_____% 6 Month DCA _____% 1 yr. DCA
FRAUD WARNING: ANY PERSON WHO WITH INTENT TO DEFRAUD OR KNOWING THAT HE IS FACILITATING A FRAUD AGAINST AN INSURER, SUBMITS AN
APPLICATION OR FILES A CLAIM CONTAINING A FALSE OR DECEPTIVE STATEMENT MAY BE GUILTY OF INSURANCE FRAUD.
- ------------------------------------------- ------------------------------------------ --------------------
OWNER'S SIGNATURE REGISTERED REPRESENTATIVE'S SIGNATURE DATE
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JOINT OWNER'S SIGNATURE
REGISTERED/LICENSED REPRESENTATIVE INFORMATION
( )
- ------------------------------------------- ------------------------------------- ----------------------------
REPRESENTATIVE'S TELEPHONE NO. LICENSED AGENT ID NUMBER BROKER/DEALER FIRM NAME
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FOR OFFICE USE ONLY
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ANA-513 (3/99)
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CONSENT OF INDEPENDENT ACCOUNTANTS
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We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our
report dated November 9, 1998 appearing on page F-2 of Anchor National
Life Insurance Company's Annual Report on Form 10-K for the year ended
September 30, 1998. We also consent to the reference to us under the
heading "Independent Accountants" in such Prospectus.
PricewaterhouseCoopers LLP
Los Angeles, California
March 31, 1999
