<PAGE>
PROSPECTUS
[LOGO]
SEASONS
SELECT II
featuring the Select Rewards Program
A new way to
look at money
COMBINATION VARIABLE
AND FIXED ANNUITY
[LOGO]
SUNAMERICA
THE RETIREMENT SPECIALIST
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[LOGO]
PROFILE
October 16, 2000
THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT POINTS YOU SHOULD KNOW
AND CONSIDER BEFORE PURCHASING THE SEASONS SELECT(II) VARIABLE ANNUITY. THIS
VARIABLE ANNUITY PROVIDES AN OPTIONAL BONUS FEATURE CALLED "SEASONS REWARDS." IF
YOU ELECT THIS FEATURE, IN EXCHANGE FOR ANY BONUS CREDITED TO YOUR CONTRACT,
YOUR SURRENDER CHARGE SCHEDULE WILL BE LONGER AND GREATER THAN IF YOU CHOSE NOT
TO ELECT THIS FEATURE. THESE WITHDRAWAL CHARGES MAY OFFSET THE VALUE OF THE
BONUS, IF YOU MAKE AN EARLY WITHDRAWAL. THE ANNUITY IS MORE FULLY DESCRIBED IN
THE PROSPECTUS. PLEASE READ THE PROSPECTUS CAREFULLY.
1. THE SEASONS SELECT(II) VARIABLE ANNUITY
The Seasons Select(II) Variable Annuity contract is a contract between you and
Anchor National Life Insurance Company. We designed Seasons Select(II) to help
you save on a tax-deferred basis. Seasons Select(II) provides a means to
diversify your investments among asset classes and managers as well as a variety
of investment styles to meet long-term financial goals, such as retirement
funding. Tax deferral means all your money, including the amount you would
otherwise pay in current income taxes, remains in your contract to generate more
earnings. Your money could grow faster than it would in a comparable taxable
investment. Of course, certain Qualified contracts automatically provide tax
deferral regardless of whether they are funded with an annuity.
The Seasons Select(II) Variable Annuity is designed as a long term retirement
investment and helps you meet these goals by offering variable investment
options. There are nine multimanaged portfolios called SELECT PORTFOLIOS and one
multi-managed FOCUSED PORTFOLIO representing a spectrum of investment styles. In
addition, there are four STRATEGIES each managed by five professional investment
managers. The value of any portion of your contract allocated to the SELECT
PORTFOLIOS, FOCUSED PORTFOLIOS and/or STRATEGIES will fluctuate up or down based
on the performance of the PORTFOLIOS and STRATEGIES you select. You may
experience a loss of both principal and earnings. Five fixed investment options,
each for a different length of time and offering different interest rates
guaranteed by Anchor National, are also available. In addition, if you do not
elect to participate in the Seasons Rewards Program, the two DCA fixed accounts
are available. They offer fixed interest rates guaranteed by Anchor National and
are available under the contract strictly as source accounts for the Dollar Cost
Averaging program.
The SELECT PORTFOLIOS, FOCUSED PORTFOLIOS, STRATEGIES and fixed investment
options are designed to be used in order to achieve your desired investment
goals. You may put money into any of the SELECT PORTFOLIOS, FOCUSED PORTFOLIOS,
STRATEGIES and/or fixed investment options. You may make transfers between the
SELECT PORTFOLIOS, FOCUSED PORTFOLIOS, STRATEGIES and/or the fixed investment
options without incurring a transfer charge.
Like most annuities, the contract has an Accumulation Phase and an Income Phase.
During the Accumulation Phase, you invest money in your contract. Your earnings
are based on the investment performance of the SELECT PORTFOLIOS, FOCUSED
PORTFOLIOS or STRATEGIES to which your money is allocated and/or the interest
rate earned on the fixed investment options. You may withdraw money from your
contract during the Accumulation Phase. However, as with other tax-deferred
investments, you will pay taxes on earnings and untaxed contributions when you
withdraw them. An IRS tax penalty may apply if you make withdrawals before age
59 1/2. During the Income Phase, you will receive payments from your annuity.
Your payments may be fixed in dollar amount, vary with investment performance or
be a combination of both, depending on where your money is allocated. Among
other factors, the amount of money you are able to accumulate in your contract
during the Accumulation Phase will determine the amount of your payments during
the Income Phase.
The Seasons Select(II) Variable Annuity and/or Seasons Rewards Program may not
be available in all states.
<PAGE>
2. INCOME OPTIONS
You can select from one of five income options:
(1) payments for your lifetime;
(2) payments for your lifetime and your survivor's lifetime;
(3) payments for your lifetime and your survivor's lifetime, but for not
less than 10 years;
(4) payments for your lifetime, but for not less than 10 or 20 years; and
(5) payments for a specified period of 5 to 30 years.
Other options may be available.
You will also need to decide if you want your payments to fluctuate with
investment performance or remain constant, and the date on which your payments
will begin. Once you begin receiving payments, you cannot change your income
option. If your contract is Non-qualified, payments during the Income Phase are
considered partly a return of your original investment. The "original
investment" part of each payment is not taxable but any gain on your original
investment is currently taxable as ordinary income upon distribution. For
Qualified contracts, the entire payment is currently taxable as ordinary income.
If elected, you may also elect to take income payments under the Income
Protector program subject to the provisions thereof.
3. PURCHASING A SEASONS SELECT(II) VARIABLE ANNUITY
You can buy a contract through your financial advisor, who can also help you
complete the proper forms. For Non-qualified contracts the minimum initial
investment is $5,000. For Qualified contracts the minimum initial investment is
$2,000. You can add $500 or more to your contract at any time during the
Accumulation Phase. You may also add $50 or more to your contract at any time
during the Accumulation Phase through the Automatic Payment Plan.
You may elect to participate in the Seasons Rewards Program when you apply for
your contract. Under this program, we add an amount to your contract (an
"Upfront Payment Enhancement") each time you make a Purchase Payment.
Additionally, we may also pay an amount to your contract at a future date (a
"Deferred Payment Enhancement"). Payment Enhancements are calculated as a
percentage of each Purchase Payment. The Seasons Rewards Program is not
available to you if you are over the age of 80 at the time you purchase your
contract. Additionally, it may not be approved for sale in your state or through
the broker-dealer with which your financial advisor is affiliated. Please check
with your financial advisor regarding the availability of this Program.
4. INVESTMENT OPTIONS
You can put your money into any one or more of the distinct SELECT PORTFOLIOS,
FOCUSED PORTFOLIOS, STRATEGIES and/or the fixed investment options; however, the
6-month and 1-year DCA fixed accounts are not available if you elect to
participate in the Seasons Rewards Program. The fixed investment options offer
fixed rates of interest for specified lengths of time.
Each SELECT PORTFOLIO and FOCUSED PORTFOLIO has a distinct investment objective
utilizing a disciplined investing style to achieve its objective and each
invests in an underlying investment portfolio. Except for the Cash Management
portfolio, each underlying portfolio is multi-managed by a team of three money
managers specializing in a distinct investment style.
The nine SELECT PORTFOLIOS and the respective managers are:
<TABLE>
<S> <C>
LARGE CAP GROWTH LARGE CAP COMPOSITE
BANKERS TRUST COMPANY BANKERS TRUST
("BANKERS TRUST") SUNAMERICA ASSET
GOLDMAN SACHS ASSET MANAGEMENT CORPORATION
MANAGEMENT ("GOLDMAN ("SAAMCO")
SACHS") T. ROWE PRICE ASSOCIATES, INC.
JANUS CAPITAL CORPORATION("JANUS") ("T. ROWE PRICE")
LARGE CAP VALUE MID CAP GROWTH
BANKERS TRUST BANKERS TRUST
T. ROWE PRICE T. ROWE PRICE
WELLINGTON MANAGEMENT WELLINGTON
COMPANY LLP ("WELLINGTON")
MID CAP VALUE SMALL CAP
BANKERS TRUST BANKERS TRUST
GOLDMAN SACHS LORD ABBETT
LORD ABBETT & CO. ("LORD ABBETT") SAAMCO
INTERNATIONAL EQUITY DIVERSIFIED FIXED INCOME
BANKERS TRUST BANKERS TRUST
GOLDMAN SACHS ASSET SAAMCO
MANAGEMENT WELLINGTON
INTERNATIONAL ("GOLDMAN
SACHS INT'L")
LORD ABBETT
CASH MANAGEMENT
SAAMCO
</TABLE>
The FOCUSED PORTFOLIO and its managers are:
FOCUS GROWTH
FRED ALGER MANAGEMENT ("FRED ALGER")
JENNISON ASSOCIATES ("JENNISON")
MARSICO CAPITAL MANAGEMENT ("MARSICO CAPITAL")
Each STRATEGY has a different investment objective. The STRATEGIES use an asset
allocation investment approach. Each STRATEGY invests in a combination of
underlying investment portfolios which in turn invest in a combination of
stocks, bonds and cash, to achieve its investment objective. The four investment
STRATEGIES and their underlying investment portfolios are:
<PAGE>
GROWTH STRATEGY
- ASSET ALLOCATION: DIVERSIFIED GROWTH PORTFOLIO
PUTNAM INVESTMENT MANAGEMENT, INC. ("PUTNAM")
- STOCK PORTFOLIO
T. ROWE PRICE
- MULTI-MANAGED GROWTH PORTFOLIO
JANUS
SAAMCO
WELLINGTON
MODERATE GROWTH STRATEGY
- ASSET ALLOCATION: DIVERSIFIED GROWTH PORTFOLIO
PUTNAM INVESTMENT MANAGEMENT, INC.
- STOCK PORTFOLIO
T. ROWE PRICE
- MULTI-MANAGED MODERATE GROWTH PORTFOLIO
JANUS
SAAMCO
WELLINGTON
BALANCED GROWTH STRATEGY
- ASSET ALLOCATION: DIVERSIFIED GROWTH PORTFOLIO
PUTNAM
- STOCK PORTFOLIO
T. ROWE PRICE
- MULTI-MANAGED INCOME/EQUITY PORTFOLIO
JANUS
SAAMCO
WELLINGTON
CONSERVATIVE GROWTH STRATEGY
- ASSET ALLOCATION: DIVERSIFIED GROWTH PORTFOLIO
PUTNAM
- STOCK PORTFOLIO
T. ROWE PRICE
- MULTI-MANAGED INCOME PORTFOLIO
JANUS
SAAMCO
WELLINGTON
The percentage allocation of the underlying portfolios in which each STRATEGY
invests is depicted in the Prospectus.
5. EXPENSES
Each year we deduct a $35 ($30 in North Dakota) contract administration fee on
your contract anniversary. We currently waive this fee if your contract value is
at least $50,000 on your contract anniversary.
We also deduct insurance charges. The insurance charge amounts to 1.40% annually
of the average daily value of your contract allocated to the SELECT PORTFOLIOS,
FOCUSED PORTFOLIOS and/or STRATEGIES. There are also investment charges and
other expenses if you put money into the SELECT PORTFOLIOS, FOCUSED PORTFOLIOS
or STRATEGIES, which are estimated to range from 0.85% to 1.30% and 12b-1 fees
of 0.15% annually. Investment charges may be more or less than the percentages
reflected here.
If you take your money out in excess of the "free withdrawal" amount allowed for
in your contract, we may assess a withdrawal charge that is a percentage of the
money you withdraw. The withdrawal charge schedule also varies depending on
whether you elect to participate in the Seasons Rewards Program when you
purchase your contract. The percentage declines with each year the Purchase
Payment is in the contract as follows:
WITHDRAWAL CHARGE WITHOUT THE SEASONS REWARDS PROGRAM (SCHEDULE A)
<TABLE>
<S> <C> <C> <C>
Year 1........ 7% Year 5........ 4%
Year 2........ 6% Year 6........ 3%
Year 3........ 6% Year 7........ 2%
Year 4........ 5% Year 8........ 0%
</TABLE>
WITHDRAWAL CHARGE WITH THE SEASONS REWARDS PROGRAM (SCHEDULE B)
<TABLE>
<S> <C> <C> <C>
Year 1........ 9% Year 6........ 5%
Year 2........ 8% Year 7........ 4%
Year 3........ 7% Year 8........ 3%
Year 4........ 6% Year 9........ 2%
Year 5........ 6% Year 10........ 0%
</TABLE>
The higher potential withdrawal charges may compensate us for the expenses
associated with the Seasons Rewards Program.
Additionally, if you take money out of a multi-year fixed investment option
before the end of the selected period, we may assess a market value adjustment
which could increase or decrease the value of your money.
In some states you may also be assessed a state premium tax of up to 3.5%,
depending upon the state in which you reside.
You may make transfers among the SELECT PORTFOLIOS, FOCUSED PORTFOLIOS,
STRATEGIES and/or fixed investment options without incurring a transfer charge.
However, we reserve the right to charge a fee for such transfers in the future.
If you elect Seasons Estate Advantage, the optional enhanced death benefit, we
charge 0.25% of your daily net asset value. The Seasons Estate Advantage Fee is
an annualized charge that is deducted daily. If you elect to enroll in the
Income Protector program, we charge 0.10% of your Income Benefit Base (as
described in the Prospectus) from your contract value on each contract
anniversary.
The following charts are designed to help you understand the charges in your
contract. THE COLUMN "TOTAL ANNUAL CHARGES" SHOWS THE TOTAL OF THE $35 CONTRACT
ADMINISTRATION CHARGE, THE 1.40% INSURANCE CHARGE, THE 0.15% 12B-1 FEE, AND THE
INVESTMENT CHARGES FOR EACH SELECT PORTFOLIO, FOCUSED PORTFOLIO AND STRATEGY. WE
CONVERTED THE CONTRACT ADMINISTRATION CHARGE TO A PERCENTAGE (0.09%) USING AN
ASSUMED CONTRACT SIZE OF $40,000. The actual impact of the administration charge
on your contract may differ from this percentage and may be waived for contract
values over $50,000.
<PAGE>
If you do not elect the optional Income Protector Program or Seasons Estate
Advantage:
<TABLE>
<CAPTION>
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EXAMPLES(3)
Total Total
Expenses Expenses
at end of at end of
1 YEAR 10 YEARS
Total Without/ Without/
Annual Total Annual With With
Insurance Investment Total Seasons Seasons
Related Related Annual Rewards Rewards
Charges Charges Charges Program Program
SELECT
PORTFOLIOS
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------
Large Cap
Growth 1.49% (1.40% + .09%) 1.25% (1.10% + .15%) 2.74% $97/117 $303/303
Large Cap
Composite 1.49% (1.40% + .09%) 1.25% (1.10% + .15%) 2.74% $97/117 $303/303
Large Cap
Value 1.49% (1.40% + .09%) 1.25% (1.10% + .15%) 2.74% $97/117 $303/303
Mid Cap
Growth 1.49% (1.40% + .09%) 1.30% (1.15% + .15%) 2.79% $98/118 $308/308
Mid Cap Value 1.49% (1.40% + .09%) 1.30% (1.15% + .15%) 2.79% $98/118 $308/308
Small Cap 1.49% (1.40% + .09%) 1.30% (1.15% + .15%) 2.79% $98/118 $308/308
International
Equity 1.49% (1.40% + .09%) 1.45% (1.30% + .15%) 2.94% $99/119 $323/323
Diversified
Fixed Income 1.49% (1.40% + .09%) 1.15% (1.00% + .15%) 2.64% $96/116 $294/294
Cash
Management 1.49% (1.40% + .09%) 1.00% (0.85% + .15%) 2.49% $95/115 $279/279
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FOCUSED
PORTFOLIOS
-------------------------------------------------------------------------------------------------------------------
Focus
Growth(2) 1.49% (1.40% + .09%) 1.45% (1.30% + .15%) 2.79% $99/119 $323/323
-------------------------------------------------------------------------------------------------------------------
<CAPTION>
EXAMPLES(3)
Total Total
Expenses Expenses
at end of at end of
1 YEAR 10 YEARS
Total Without/ Without/
Annual Total Annual With With
Insurance Investment Total Seasons Seasons
Related Related Annual Rewards Rewards
Charges Charges(1) Charges Program Program
STRATEGIES
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------
Growth 1.49% (1.40% + .09%) 1.29% (1.14% + .15%) 2.78% $98/118 $307/307
Moderate
Growth 1.49% (1.40% + .09%) 1.27% (1.12% + .15%) 2.76% $98/118 $305/305
Balanced
Growth 1.49% (1.40% + .09%) 1.27% (1.12% + .15%) 2.76% $98/118 $305/305
Conservative
Growth 1.49% (1.40% + .09%) 1.25% (1.10% + .15%) 2.74% $97/117 $303/303
-------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Investment related charges for each STRATEGY are based upon the allocation
to the underlying investment portfolio after the quarterly rebalancing
described in the prospectus.
(2) This portfolio was not available for sale during fiscal year 2000. The Total
Annual Investment Related Charges are based on estimated amounts for the
current fiscal year.
(3) The total expenses at the end of each period do not take into account any
Upfront or Deferred Payment Enhancement which may be added to your contract
if you elected the Seasons Rewards Program. If you elect the Seasons Rewards
Program, your expenses may differ from the information shown here.
<PAGE>
If you elect the optional Income Protector Program (0.10%) and Seasons Estate
Advantage (0.25%)(3):
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
EXAMPLES(4)
Total Total
Expenses Expenses
at end of at end of
1 YEAR 10 YEARS
Total Without/ Without/
Annual Total Annual With With
Insurance Investment Total Seasons Seasons
Related Related Annual Rewards Rewards
Charges Charges Charges Program Program
SELECT
PORTFOLIOS
<S> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------
Large Cap
Growth 1.84% (1.40% + .09% + .10% + .25%) 1.25% (1.10% + .15%) 3.09% $101/121 $337/337
Large Cap
Composite 1.84% (1.40% + .09% + .10% + .25%) 1.25% (1.10% + .15%) 3.09% $101/121 $337/337
Large Cap
Value 1.84% (1.40% + .09% + .10% + .25%) 1.25% (1.10% + .15%) 3.09% $101/121 $337/337
Mid Cap
Growth 1.84% (1.40% + .09% + .10% + .25%) 1.30% (1.15% + .15%) 3.14% $101/121 $341/341
Mid Cap Value 1.84% (1.40% + .09% + .10% + .25%) 1.30% (1.15% + .15%) 3.14% $101/121 $341/341
Small Cap
Portfolio 1.84% (1.40% + .09% + .10% + .25%) 1.30% (1.15% + .15%) 3.14% $101/121 $341/341
International
Equity 1.84% (1.40% + .09% + .10% + .25%) 1.45% (1.30% + .15%) 3.29% $103/123 $355/355
Diversified
Fixed Income 1.84% (1.40% + .09% + .10% + .25%) 1.15% (1.00% + .15%) 2.99% $100/120 $327/327
Cash
Management 1.84% (1.40% + .09% + .10% + .25%) 1.00% (0.85% + .15%) 2.84% $ 98/118 $313/313
------------------------------------------------------------------------------------------------------------
FOCUSED
PORTFOLIOS
------------------------------------------------------------------------------------------------------------
Focus
Growth(2) 1.84% (1.40% + .09% + .10% + .25%) 1.45% (1.30% + .15%) 3.29% $103/123 $355/355
------------------------------------------------------------------------------------------------------------
<CAPTION>
EXAMPLES(4)
Total Total
Expenses Expenses
at end of at end of
1 YEAR 10 YEARS
Total Without/ Without/
Annual Total Annual With With
Insurance Investment Total Seasons Seasons
Related Related Annual Rewards Rewards
Charges Charges(1) Charges Program Program
STRATEGIES
<S> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------
Growth 1.84% (1.40% + .09% + .10% + .25%) 1.29% (1.14% + .15%) 3.13% $101/121 $340/340
Moderate
Growth 1.84% (1.40% + .09% + .10% + .25%) 1.27% (1.12% + .15%) 3.11% $101/121 $339/339
Balanced
Growth 1.84% (1.40% + .09% + .10% + .25%) 1.27% (1.12% + .15%) 3.11% $101/121 $339/339
Conservative
Growth 1.84% (1.40% + .09% + .10% + .25%) 1.25% (1.10% + .15%) 3.09% $101/121 $337/337
------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Investment related charges for each STRATEGY are based upon the allocation
to the underlying investment portfolio after the quarterly rebalancing
described in the prospectus.
(2) This portfolio was not available for sale during fiscal year 2000. The Total
Annual Investment Related Charges are based on estimated amounts for the
current fiscal year.
(3) Once elected at the time of contract application, the Income Protector
Program and Seasons Estate Advantage cannot be terminated.
(4) The total expenses at the end of each period do not take into account any
Upfront or Deferred Payment Enhancement which may be added to your Contract
if you elected the Seasons Rewards feature. If you elect the Seasons Rewards
feature, your expenses may differ from the information shown here.
The examples assume that you invested $1,000 in a SELECT PORTFOLIO, FOCUSED
PORTFOLIO or STRATEGY which earns 5% annually and that you withdrew your money
at the end of a 1 year period and at the end of a 10 year period. For year 1,
the total annual charges are assessed as well as the withdrawal charge. For
year 10, the example reflects the total annual charges but there is no
withdrawal charge applicable. The Annual Investment Related charges may vary.
The amounts shown here are estimates and reflect the waiver or reimbursement of
expenses by the investment adviser. No premium taxes are reflected. Please see
the Fee Tables in the Prospectus for more detailed information regarding the
fees and expenses incurred under the contract.
<PAGE>
6. TAXES
Unlike taxable investments where earnings are taxed in the year they are earned,
taxes on amounts earned in a Non-qualified contract (one that is established
with after tax dollars) are deferred until they are withdrawn. In a Qualified
contract (one that is established with before tax dollars) all amounts are
taxable when they are withdrawn.
When you begin taking distributions or withdrawals from your contract, earnings
are considered to be taken out first and will be taxed at your ordinary income
tax rate. You may be subject to a 10% IRS tax penalty for distributions or
withdrawals before age 59 1/2.
7. ACCESS TO YOUR MONEY
Withdrawals may be made from your contract in the amount of $1,000 or more.
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 any previous free withdrawals would be subject to a surrender
charge, if any is applicable at the time of the full surrender.
A separate withdrawal charge schedule applies to each Purchase Payment. After a
Purchase Payment has been in the contract for seven full years, or nine years if
you participate in the Seasons Rewards Program, withdrawal charges no longer
apply to that portion of the money. Of course, upon withdrawal you may also have
to pay income taxes and a 10% IRS tax penalty may apply. Neither withdrawal
charges nor the 10% IRS tax penalty are assessed when a death benefit is paid.
8. PERFORMANCE
The value of your annuity will fluctuate depending upon the investment
performance of the SELECT PORTFOLIOS, FOCUSED PORTFOLIOS and/or STRATEGIES you
select. From time to time we may advertise a SELECT PORTFOLIO'S, FOCUSED
PORTFOLIO'S or STRATEGY'S total return. The following chart shows total returns
for the time period shown. These numbers reflect the insurance charges, the
contract maintenance fee and investment charges. Withdrawal charges are not
reflected in the chart. The total returns here do not take into account the
effect of a Payment Enhancement made under the Seasons Rewards Program. The
total return figures are based on historical data and are not intended to
indicate future performance.
<TABLE>
<CAPTION>
<S> <C>
-----------------------------------------------
Strategy 1999
-----------------------------------------------
Growth............................ 35.17%
Moderate Growth................... 29.46%
Balanced Growth................... 16.75%
Conservative Growth............... 10.42%
-----------------------------------------------
</TABLE>
The other investment options were not available for sale for the full calendar
year 1999.
9. DEATH BENEFIT
If you should die during the Accumulation Phase, your Beneficiary will receive a
death benefit.
The standard death benefit is an automatic feature of your contract. We also
offer Seasons Estate Advantage which provides a choice of two optional enhanced
death benefits, along with an Earnings Advantage, which you may elect as an
alternative to the standard death benefit if you are not over the age of 80 at
time of contract issue.
10. OTHER INFORMATION
OWNERSHIP: The contract is an allocated fixed and variable group annuity
contract. A group contract is issued to a contractholder, for the benefit of the
participants in the group. You, as an owner of a Seasons Select(II) Variable
Annuity, are a participant in the group and will receive a certificate
evidencing your ownership. You, as the owner of a certificate, are entitled to
all the rights and privileges of ownership. As used in this Profile and the
Prospectus, the term contract refers to your certificate. In some states an
individual fixed and variable annuity contract may be available instead, which
is identical to the group contract described in this Profile and Prospectus
except that it is issued directly to the individual owner.
FREE LOOK: You may cancel your contract within 10 days of receiving it (or
whatever period is required by your state) by mailing it to our Annuity Service
Center. Your contract will be treated as void on the date we receive it. We will
refund to you the value of your contract on the day we receive your request
minus the Free Look Payment Enhancement Deduction if you had elected the Seasons
Rewards Program. Thus, you receive any gain and we bear any loss on any Payment
Enhancement(s) if you decide to cancel your contract during the free look
period.
<PAGE>
SEASONS REWARDS PROGRAM: If elected by you, we add an amount to your contract
(an "Upfront Payment Enhancement") each time you make a Purchase Payment.
Additionally, we may also add an amount to your contract at a future date (a
"Deferred Payment Enhancement"). Payment Enhancements are calculated as a
percentage of your Purchase Payment amount and are treated as earnings under
your contract. The program may not be available to you. Please check with your
financial advisor regarding the availability of this program.
SYSTEMATIC WITHDRAWAL PROGRAM: If selected by you, this program allows you to
receive either monthly, quarterly, semi-annual or annual checks during the
Accumulation Phase. Systematic withdrawals may also be electronically
transferred to your bank account. Of course, withdrawals during the Accumulation
Phase may be taxable and a 10% IRS tax penalty may apply if you are under age
59 1/2.
DOLLAR COST AVERAGING: If selected by you, this program allows you to invest
gradually into one or more of the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S)
and/or STRATEGY(IES) from a SELECT PORTFOLIO, FOCUSED PORTFOLIO, STRATEGY or
1-year fixed account option. If you do not participate in the Seasons Rewards
Program you may also invest in the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S)
and/or STRATEGY(IES) from the 6-month DCA fixed account option or the 1-year DCA
fixed account option.
PRINCIPAL ADVANTAGE PROGRAM: If selected by you, this program allows you to put
money in a fixed investment option and one or more SELECT PORTFOLIO(S), FOCUSED
PORTFOLIO(S) or STRATEGY(IES) and we will guarantee that the portion allocated
to the fixed investment option assuming that it remains invested in that option,
will grow to equal your principal investment at the end of the guarantee period
you have selected.
AUTOMATIC PAYMENT PLAN: You can add to your contract directly from your bank
account with as little as $50 per month.
CONFIRMATIONS AND QUARTERLY STATEMENTS: During the Accumulation Phase, you will
receive confirmation of transactions within your contract. Transactions made
pursuant to contractual or systematic agreements, such as the deduction of the
annual maintenance fee and dollar cost averaging, may be confirmed quarterly.
Purchase payments received through the Automatic Payment Plan or a salary
reduction arrangement, may also be confirmed quarterly. All other transactions
are confirmed immediately.
During the Accumulation and Income Phases, you will receive a statement of your
transactions over the past quarter and a summary of your account values.
11. INQUIRIES:
If you have questions about your contract or need to make changes, call your
financial representative or contact us at:
Anchor National Life Insurance Company
Annuity Service Center
P.O. Box 54299
Los Angeles, California 90054-0299
800/445-SUN2
If money accompanies your correspondence, you should direct it to:
Anchor National Life Insurance Company
P.O. Box 100330
Pasadena, California 91189-0001
<PAGE>
[LOGO]
PROSPECTUS
October 16, 2000
ALLOCATED FIXED AND VARIABLE GROUP ANNUITY
issued by
VARIABLE ANNUITY ACCOUNT FIVE
and
ANCHOR NATIONAL LIFE INSURANCE COMPANY
The annuity contract has 21 investment choices - 7 fixed investment options (5
fixed investment options if the Seasons Rewards Program is elected) which offer
interest rates guaranteed by Anchor National for different periods of time, 9
variable investment SELECT PORTFOLIOS, 1 variable investment FOCUSED PORTFOLIO
and 4 variable investment STRATEGIES:
<TABLE>
<CAPTION>
SELECT PORTFOLIOS FOCUSED PORTFOLIOS STRATEGIES
<S> <C> <C>
LARGE CAP GROWTH FOCUS GROWTH GROWTH
LARGE CAP COMPOSITE MODERATE GROWTH
LARGE CAP VALUE BALANCED GROWTH
MID CAP GROWTH CONSERVATIVE GROWTH
MID CAP VALUE
SMALL CAP
INTERNATIONAL EQUITY
DIVERSIFIED FIXED INCOME
CASH MANAGEMENT
</TABLE>
all of which invest in the underlying portfolios of
SEASONS SERIES TRUST
which is managed by:
<TABLE>
<CAPTION>
SELECT PORTFOLIOS FOCUSED PORTFOLIOS STRATEGIES
<S> <C> <C>
BANKERS TRUST COMPANY FRED ALGER MANAGEMENT PUTNAM INVESTMENT MANAGEMENT, INC.
GOLDMAN SACHS ASSET MANAGEMENT JENNISON ASSOCIATES T. ROWE PRICE ASSOCIATES, INC.
JANUS CAPITAL CORPORATION MARSICO CAPITAL MANAGEMENT JANUS CAPITAL CORPORATION
LORD, ABBETT & COMPANY SUNAMERICA ASSET MANAGEMENT CORPORATION
SUNAMERICA ASSET MANAGEMENT CORPORATION WELLINGTON MANAGEMENT COMPANY, LLP
T. ROWE PRICE ASSOCIATES, INC.
GOLDMAN SACHS ASSET MANAGEMENT/
GOLDMAN SACHS ASSET MANAGEMENT
INTERNATIONAL
WELLINGTON MANAGEMENT COMPANY, LLP
</TABLE>
You can put your money into any one or all of the SELECT PORTFOLIOS, FOCUSED
PORTFOLIOS, STRATEGIES and/or fixed investment options.
Please read this prospectus carefully before investing and keep it for your
future reference. It contains important information you should know about the
Seasons Select(II) Variable Annuity. This variable annuity provides an optional
bonus feature called "Seasons Rewards." If you elect this feature, in exchange
for bonuses credited to your contract, your surrender charge schedule will be
longer and greater than if you chose not to elect this feature. These withdrawal
charges may offset the value of any bonus, if you make an early withdrawal.
To learn more about the annuity offered by this prospectus, you can obtain a
copy of the Statement of Additional Information ("SAI") dated October 16,
2000. The SAI has been filed with the Securities and Exchange Commission
("SEC") and can be considered part of this prospectus.
The table of contents of the SAI appears on page 41 of this prospectus. For a
free copy of the SAI, call us at 800/445-SUN2 or write our Annuity Service
Center at, P.O. Box 54299, Los Angeles, California 90054-0299.
A registration statement has been filed with the SEC under the Securities Act of
1933 relating to the contract. This prospectus does not contain all the
information in the registration statement as permitted by SEC regulations. The
omitted information can be obtained from the SEC's principal office in
Washington, D.C., upon payment of a prescribed fee.
In addition, the SEC maintains a website (http://www.sec.gov) that contains the
SAI, materials incorporated by reference and other information filed
electronically with the SEC.
ANNUITIES INVOLVE RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL, AND ARE NOT A
DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY, ANY BANK. THEY ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE
Anchor National's Annual Report on Form 10-K for the year ended
December 31, 1999 is incorporated herein by reference.
All documents or reports filed by Anchor National under Section 13(a), 13(c),
14, or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") after the effective date of this prospectus are also incorporated by
reference. Statements contained in this prospectus and subsequently filed
documents which are incorporated by reference or deemed to be incorporated by
reference are deemed to modify or supersede documents incorporated herein by
reference.
Anchor National files its Exchange Act documents and reports, including its
annual and quarterly reports on Form 10-K and Form 10-Q, electronically pursuant
to EDGAR under CIK No. 0000006342.
Anchor National is subject to the informational requirements of the Securities
and Exchange Act of 1934 (as amended). We file reports and other information
with the SEC to meet those requirements. You can inspect and copy this
information at SEC public facilities at the following locations:
WASHINGTON, DISTRICT OF COLUMBIA
450 Fifth Street, N.W., Room 1024
Washington, D.C. 20549
CHICAGO, ILLINOIS
500 West Madison Street
Chicago, IL 60661
NEW YORK, NEW YORK
7 World Trade Center, 13th Fl.
New York, NY 10048
To obtain copies by mail 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 registration
statements and exhibits. For further information regarding the separate account,
Anchor National and its general account, the Variable Portfolios and the
contract, please refer to the registration statements and exhibits.
The SEC also maintains a website (http://www.sec.gov) that contains the SAI,
materials incorporated by reference and other information filed electronically
with the SEC by Anchor National.
Anchor National will provide without charge to each person to whom this
prospectus is delivered, upon written or oral request, a copy of the documents
incorporated by reference. Requests for these documents should be directed to
Anchor National's Annuity Service Center, as follows:
Anchor National Life Insurance Company
Annuity Service Center
P.O. Box 54299
Los Angeles, California 90054-0299
Telephone Number: (800) 445-SUN2
SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION
Indemnification for liabilities arising under the Securities Act of 1933 (the
"Act") is provided to Anchor National's officers, directors and controlling
persons. The SEC has advised that it believes such indemnification is against
public policy under the Act and unenforceable. If a claim for indemnification
against such liabilities (other than for Anchor National's payment of expenses
incurred or paid by its directors, officers or controlling persons in the
successful defense of any legal action) is asserted by a director, officer or
controlling person of Anchor National in connection with the securities
registered under this prospectus, Anchor National will submit to a court with
jurisdiction to determine whether the indemnification is against public policy
under the Act. Anchor National will be governed by final judgment of the issue.
However, if in the opinion of Anchor National's counsel this issue has been
determined by controlling precedent, Anchor National will not submit the issue
to a court for determination.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY.................................................... 4
FEE TABLES.................................................. 5
Owner Transaction Expenses.............................. 5
Annual Separate Account Expenses........................ 5
The Optional Income Protector Fee....................... 5
The Optional Seasons Estate Advantage Fee............... 5
Investment Portfolio Expenses of Portfolios............. 6
Investment Portfolio Expenses by Strategy............... 6
Investment Portfolio Expenses for Strategy Underlying
Portfolios............................................. 6
EXAMPLES.................................................... 7
THE SEASONS SELECT(II) VARIABLE ANNUITY..................... 10
PURCHASING A SEASONS SELECT VARIABLE ANNUITY................ 11
Allocation of Purchase Payments......................... 11
Seasons Rewards Program................................. 11
Accumulation Units...................................... 13
Free Look............................................... 14
INVESTMENT OPTIONS.......................................... 14
Variable Investment Options............................. 15
THE PORTFOLIOS........................................ 15
THE STRATEGIES........................................ 16
Market Value Adjustment................................. 18
Transfers During the Accumulation Phase................. 19
Dollar Cost Averaging................................... 20
Asset Allocation Rebalancing Program.................... 21
Principal Advantage Program............................. 22
Voting Rights........................................... 22
Substitution............................................ 22
ACCESS TO YOUR MONEY........................................ 22
Free Withdrawal Provision............................... 23
Systematic Withdrawal Program........................... 24
Minimum Contract Value.................................. 25
Qualified Contract Owners............................... 25
DEATH BENEFIT............................................... 25
Standard Death Benefit.................................. 26
Seasons Estate Advantage................................ 26
Spousal Continuation.................................... 27
EXPENSES.................................................... 28
Insurance Charges....................................... 28
Withdrawal Charges...................................... 29
Investment Charges...................................... 29
Contract Maintenance Fee................................ 30
Transfer Fee............................................ 30
Seasons Estate Advantage Fee............................ 30
Optional Income Protector Fee........................... 30
Premium Tax............................................. 30
Income Taxes............................................ 30
Reduction or Elimination of Charges and Expenses, and
Additional Amounts Credited............................ 30
INCOME OPTIONS.............................................. 31
Annuity Date............................................ 31
Income Options.......................................... 31
Allocation of Annuity Payments.......................... 32
Transfers During the Income Phase....................... 33
Deferment of Payments................................... 33
The Income Protector.................................... 33
TAXES....................................................... 36
Annuity Contracts in General............................ 36
Tax Treatment of Distributions--Non-qualified
Contracts.............................................. 36
Tax Treatment of Distributions--Qualified Contracts..... 36
Minimum Distributions................................... 37
Diversification......................................... 37
PERFORMANCE................................................. 37
OTHER INFORMATION........................................... 38
Anchor National......................................... 38
The Separate Account.................................... 38
Custodian............................................... 38
The General Account..................................... 39
Distribution of the Contract............................ 39
Administration.......................................... 39
Legal Proceedings....................................... 39
INDEPENDENT ACCOUNTANTS..................................... 40
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.... 41
APPENDIX A--CONDENSED FINANCIAL INFORMATION................. A-1
APPENDIX B--SEASONS REWARDS PROGRAM EXAMPLES................ B-1
APPENDIX C--MARKET VALUE ADJUSTMENT......................... C-1
APPENDIX D--PREMIUM TAXES................................... D-1
</TABLE>
3
<PAGE>
GLOSSARY
We have capitalized some of the technical terms used in this prospectus. To help
you understand these terms, we define them in this glossary.
ACCUMULATION PHASE--The period during which you invest money in your contract.
ACCUMULATION UNITS--A measurement we use to calculate the value of the variable
portion of your contract during the Accumulation Phase.
ANNUITANT(S)--The person(s) on whose life (lives) we base annuity payments.
ANNUITY DATE--The date on which annuity payments are to begin, as selected by
you.
ANNUITY UNITS--A measurement we use to calculate the amount of annuity payments
you receive from the variable portion of your contract during the Income Phase.
BENEFICIARY(IES)--The person(s) designated to receive any benefits under the
contract if you or the Annuitant dies.
COMPANY--Anchor National Life Insurance Company ("Anchor National"), We, Us, the
issuer of this annuity contract.
INCOME PHASE--The period during which we make annuity payments to you.
IRS--The Internal Revenue Service.
NON-QUALIFIED (CONTRACT)--A contract purchased with after-tax dollars. In
general, these contracts are not under any pension plan, specially sponsored
program or individual retirement account ("IRA").
PAYMENT ENHANCEMENT(S)--The amount(s) allocated to your contract by Us under the
Seasons Rewards Program. Payment enhancements are calculated as a percentage of
your Purchase Payments and are considered earnings.
PORTFOLIO(S)--A sub-account of Variable Annuity Account Five which provides for
the variable investment options available under the contract. Each SELECT and
FOCUSED PORTFOLIO has a distinct investment objective and is invested in the
underlying investment portfolios of the Seasons Series Trust. This investment
option allocates assets to an underlying fund in which a portion of the assets
is managed by three different advisors.
PURCHASE PAYMENTS--The money you give us to buy the contract, as well as any
additional money you give us to invest in the contract after you own it.
QUALIFIED (CONTRACT)--A contract purchased with pretax dollars. These contracts
are generally purchased under a pension plan, specially sponsored program or
individual retirement account ("IRA").
STRATEGY(IES)--A sub-account of Variable Annuity Account Five which provides for
the variable investment options available under the contract. Each STRATEGY has
its own investment objective and is invested in the underlying investment
portfolios of the Seasons Series Trust. This investment option allocates assets
to three out of six available portfolios, each of which is managed by a
different investment advisor.
4
<PAGE>
SEASONS SELECT(II) VARIABLE ANNUITY FEE TABLES
------------------------------------------------------------
OWNER TRANSACTION EXPENSES
Withdrawal Charge as a percentage of Purchase Payments:
<TABLE>
<CAPTION>
YEARS: 1 2 3 4 5 6 7 8 9 10
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Schedule A*.......... 7% 6% 6% 5% 4% 3% 2% 0% 0% 0%
Schedule B**......... 9% 8% 7% 6% 6% 5% 4% 3% 2% 0%
</TABLE>
* This schedule applies to each Purchase Payment if you are NOT participating
in the Seasons Rewards Program.
** This schedule applies to each Purchase Payment if you are participating in
the Seasons Rewards Program.
<TABLE>
<S> <C>
Contract Maintenance Charge........ $35 each year ($30 in North Dakota)
(waived for contracts over $50,000)
</TABLE>
ANNUAL SEPARATE ACCOUNT EXPENSES
(as a percentage of daily net asset value)
<TABLE>
<S> <C>
Mortality Risk Charge........................ 0.90%
Expense Risk Charge.......................... 0.35%
Distribution Expense Charge.................. 0.15%
----
Total Separate Account Expenses........ 1.40%
</TABLE>
THE OPTIONAL INCOME PROTECTOR FEE
(The Income Protector Program is optional and
if elected the fee is deducted annually from your contract value.)
<TABLE>
<S> <C>
Fee as a percentage of
your Income Benefit
Base*.................. 0.10%
</TABLE>
* The Income Benefit Base is calculated by using your contract value on the date
of your effective enrollment in the program and then each subsequent contract
anniversary, adding purchase payments made since the prior contract anniversary,
less proportional withdrawals since the prior contract anniversary and fees and
charges applicable to those withdrawals.
THE OPTIONAL SEASONS ESTATE ADVANTAGE FEE
(Seasons Estate Advantage, which offers a choice of two enhanced death benefits,
is optional and, if elected, the fee is an annualized charge that is deducted
daily from your contract value.)
<TABLE>
<S> <C>
Fee as a percentage of
your daily net asset
value.................. 0.25%
</TABLE>
5
<PAGE>
INVESTMENT PORTFOLIO EXPENSES OF PORTFOLIOS
(as a percentage of daily net asset value after any applicable reinbursement or
waiver of expenses, as of the fiscal year end of the Trust ending March 31,
2000)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
FEE 12b-1 FEES+ EXPENSES EXPENSES
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
SELECT PORTFOLIOS(1)
------------------------------------------------
Large Cap Growth 0.80% 0.15% 0.30% 1.25%
Large Cap Composite 0.80% 0.15% 0.30% 1.25%
Large Cap Value 0.80% 0.15% 0.30% 1.25%
Mid Cap Growth 0.85% 0.15% 0.30% 1.30%
Mid Cap Value 0.85% 0.15% 0.30% 1.30%
Small Cap 0.85% 0.15% 0.30% 1.30%
International Equity 1.00% 0.15% 0.30% 1.45%
Diversified Fixed Income 0.70% 0.15% 0.30% 1.15%
Cash Management 0.55% 0.15% 0.30% 1.00%
-------------------------------------------------------------------------------------------------------------
FOCUSED PORTFOLIOS
------------------------------------------------
Focus Growth* 1.00% 0.15% 0.30% 1.45%
-------------------------------------------------------------------------------------------------------------
</TABLE>
* This portfolio was not available for sale during fiscal year 2000. The
percentages are based on estimated amounts for the current fiscal year.
INVESTMENT PORTFOLIO EXPENSES BY STRATEGY
(based on the total annual expenses of the underlying investment portfolios
reflected below after any applicable reimbursement or waiver of expenses, as of
the fiscal year end of the Trust ending March 31, 2000)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
FEE 12b-1 FEES+ EXPENSES EXPENSES
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
STRATEGY(2)
------------------------------------------------
Growth 0.87% 0.15% 0.27% 1.29%
Moderate Growth 0.85% 0.15% 0.27% 1.27%
Balanced Growth 0.83% 0.15% 0.29% 1.27%
Conservative Growth 0.80% 0.15% 0.30% 1.25%
-------------------------------------------------------------------------------------------------------------
</TABLE>
IMPORTANT INFORMATION ABOUT PORTFOLIO EXPENSES IF INVESTED IN STRATEGIES:
The Investment Portfolio Expenses table set forth below identifies the total
investment expenses charged by the underlying investment portfolios of Seasons
Series Trust. Each contractholder invested in a STRATEGY will incur only a
portion of the investment expense of those portfolios in which the STRATEGY
invests. The table above entitled "Investment Portfolio Expenses by STRATEGY"
shows an approximation of the total investment expenses a contractholder may
incur if invested in each respective STRATEGY, after the automatic quarterly
rebalancing of such STRATEGY as described on page 16. The actual investment
expenses incurred by contractholders within a STRATEGY will vary depending upon
the daily net asset value of each investment portfolio in which such STRATEGY is
invested.
INVESTMENT PORTFOLIO EXPENSES
FOR STRATEGY UNDERLYING PORTFOLIOS
(as a percentage of daily net asset value of each investment portfolio as of the
fiscal year end of the
Trust ending March 31, 2000)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
FEE 12b-1 FEES+ EXPENSES EXPENSES
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
STRATEGY UNDERLYING PORTFOLIOS
------------------------------------------------
Stock 0.85% 0.15% 0.21% 1.21%
Asset Allocation: Diversified Growth(3) 0.85% 0.15% 0.36% 1.36%
Multi-Managed Growth 0.89% 0.15% 0.26% 1.30%
Multi-Managed Moderate Growth 0.85% 0.15% 0.25% 1.25%
Multi-Managed Income/Equity(3) 0.81% 0.15% 0.29% 1.25%
Multi-Managed Income(1) 0.77% 0.15% 0.29% 1.21%
-------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Absent fee waivers or reimbursement of expenses by SAAMCo, you would have
incurred the following expenses during the last fiscal year: Large Cap
Growth (1.30%), Large Cap Composite (1.48%), Large Cap Value (1.39%), Mid
Cap Growth (1.45%), Mid Cap Value (1.47%), Small Cap (1.45%), International
Equity (1.91%), Diversified Fixed Income (1.31%), Cash Management (2.95%)
and Multi-Managed Income (1.08%).
(2) Absent recoupment of expenses by SAAMCo for the underlying investment
portfolios, you would have incurred the following expenses for the
strategies during the last fiscal year: Growth (1.28%), Moderate Growth
(1.26%), Balanced Growth (1.25%) and Conservative Growth (1.24%).
(3) Absent recoupment of expenses by SAAMCo, you would have incurred the
following expenses during the last fiscal year: Asset Allocation:
Diversified Growth (1.16%), and Multi-Managed Income/Equity (1.09%).
+ The 12b-1 plan will become effective on the commencement of sales of the
Season Select(II) contract, and thus, the 12b-1 fee was not in effect on March
31, 2000 although it is reflected in the numbers shown here.
THE ABOVE INVESTMENT PORTFOLIO EXPENSES WERE PROVIDED BY SEASONS SERIES TRUST.
WE HAVE NOT INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION.
6
<PAGE>
EXAMPLES
You will pay the following expenses on a $1,000 investment, assuming a 5% annual
return on assets, Investment Portfolio Expenses after any waiver, reimbursement
or recoupment, if applicable, and you did NOT participate in the Seasons Rewards
Program:
(a) If the contract is surrendered at the end of the stated time period.
(b) If the contract is surrendered and you elect Estate Advantage and the
Income Protection Program.
(c) If the contract is not surrendered or is annuitized.*
(d) If the contract is not surrendered and you elect Seasons Estate Advantage
and the Income Protector Program.
<TABLE>
<CAPTION>
TIME PERIODS
-----------------------------------------------------------------------------------------------
SELECT PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Large Cap Growth (a) $ 97 (a) $144 (a) $183 (a) $303
(b) $101 (b) $154 (b) $200 (b) $337
(c) $ 27 (c) $ 84 (c) $143 (c) $303
(d) $ 31 (d) $ 94 (d) $160 (d) $337
Large Cap Composite (a) $ 97 (a) $144 (a) $183 (a) $303
(b) $101 (b) $154 (b) $200 (b) $337
(c) $ 27 (c) $ 84 (c) $143 (c) $303
(d) $ 31 (d) $ 94 (d) $160 (d) $337
Large Cap Value (a) $ 97 (a) $144 (a) $183 (a) $303
(b) $101 (b) $154 (b) $200 (b) $337
(c) $ 27 (c) $ 84 (c) $143 (c) $303
(d) $ 31 (d) $ 94 (d) $160 (d) $337
Mid Cap Growth (a) $ 98 (a) $145 (a) $186 (a) $308
(b) $101 (b) $156 (b) $203 (b) $341
(c) $ 28 (c) $ 85 (c) $146 (c) $308
(d) $ 31 (d) $ 96 (d) $163 (d) $341
Mid Cap Value (a) $ 98 (a) $145 (a) $186 (a) $308
(b) $101 (b) $156 (b) $203 (b) $341
(c) $ 28 (c) $ 85 (c) $146 (c) $308
(d) $ 31 (d) $ 96 (d) $163 (d) $341
Small Cap (a) $ 98 (a) $145 (a) $186 (a) $308
(b) $101 (b) $156 (b) $203 (b) $341
(c) $ 28 (c) $ 85 (c) $146 (c) $308
(d) $ 31 (d) $ 96 (d) $163 (d) $341
International Equity (a) $ 99 (a) $150 (a) $193 (a) $323
(b) $103 (b) $160 (b) $210 (b) $355
(c) $ 29 (c) $ 90 (c) $153 (c) $323
(d) $ 33 (d) $100 (d) $170 (d) $355
Diversified Fixed Income (a) $ 96 (a) $141 (a) $178 (a) $294
(b) $100 (b) $151 (b) $196 (b) $327
(c) $ 26 (c) $ 81 (c) $138 (c) $294
(d) $ 30 (d) $ 91 (d) $156 (d) $327
Cash Management (a) $ 95 (a) $137 (a) $171 (a) $279
(b) $ 98 (b) $147 (b) $188 (b) $313
(c) $ 25 (c) $ 77 (c) $131 (c) $279
(d) $ 28 (d) $ 87 (d) $148 (d) $313
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
<CAPTION>
FOCUSED PORTFOLIOS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Focus Growth (a) $ 99 (a) $150 (a) $193 (a) $323
(b) $103 (b) $160 (b) $210 (b) $355
(c) $ 29 (c) $ 90 (c) $153 (c) $323
(d) $ 33 (d) $100 (d) $170 (d) $355
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
<CAPTION>
STRATEGY 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Growth (a) $ 98 (a) $145 (a) $185 (a) $307
(b) $101 (b) $156 (b) $202 (b) $340
(c) $ 28 (c) $ 85 (c) $145 (c) $307
(d) $ 31 (d) $ 96 (d) $152 (d) $340
Moderate Growth (a) $ 98 (a) $145 (a) $184 (a) $305
(b) $101 (b) $155 (b) $201 (b) $339
(c) $ 28 (c) $ 85 (c) $144 (c) $305
(d) $ 31 (d) $ 95 (d) $161 (d) $339
Balanced Growth (a) $ 98 (a) $145 (a) $184 (a) $305
(b) $101 (b) $155 (b) $201 (b) $339
(c) $ 28 (c) $ 85 (c) $144 (c) $305
(d) $ 31 (d) $ 95 (d) $161 (d) $339
Conservative Growth (a) $ 97 (a) $144 (a) $183 (a) $303
(b) $101 (b) $154 (b) $200 (b) $337
(c) $ 27 (c) $ 84 (c) $143 (c) $303
(d) $ 31 (d) $ 94 (d) $160 (d) $337
-----------------------------------------------------------------------------------------------
</TABLE>
* We do not currently charge a surrender charge upon annuitization, unless the
contract is annuitized under the Income Protector Program. We will assess any
applicable surrender charges upon annuitizations effected using the Income
Protector Program as if you had fully surrendered your contract.
7
<PAGE>
You will pay the following expenses on a $1,000 investment, assuming a 5% annual
return on assets, Investment Portfolio Expenses after any waiver, reimbursement
or recoupment, if applicable, and you elected to participate in the Seasons
Rewards Program:
(a) If the contract is surrendered at the end of the stated time period.
(b) If the contract is surrendered at the end of the stated time period and
you elect Seasons Estate Advantage and Income Protector.
(c) If the contract is not surrendered or is annuitized at the end of the
stated time period.
(d) If the contract is not surrendered at the end of the stated time period
and you elect Seasons Estate Advantage and the Income Protector Program.
<TABLE>
<CAPTION>
TIME PERIODS
-----------------------------------------------------------------------------------------------
SELECT PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Large Cap Growth (a) $117 (a) $154 (a) $203 (a) $303
(b) $121 (b) $164 (b) $220 (b) $337
(c) $ 27 (c) $ 84 (c) $143 (c) $303
(d) $ 31 (d) $ 94 (d) $160 (d) $337
Large Cap Composite (a) $117 (a) $154 (a) $203 (a) $308
(b) $121 (b) $164 (b) $220 (b) $337
(c) $ 27 (c) $ 84 (c) $143 (c) $303
(d) $ 31 (d) $ 94 (d) $160 (d) $337
Large Cap Value (a) $117 (a) $154 (a) $203 (a) $303
(b) $121 (b) $164 (b) $220 (b) $337
(c) $ 27 (c) $ 84 (c) $143 (c) $303
(d) $ 31 (d) $ 94 (d) $160 (d) $337
Mid Cap Growth (a) $118 (a) $155 (a) $206 (a) $308
(b) $121 (b) $166 (b) $223 (b) $341
(c) $ 28 (c) $ 85 (c) $146 (c) $308
(d) $ 31 (d) $ 96 (d) $163 (d) $341
Mid Cap Value (a) $118 (a) $155 (a) $206 (a) $308
(b) $121 (b) $166 (b) $223 (b) $341
(c) $ 28 (c) $ 85 (c) $146 (c) $308
(d) $ 31 (d) $ 96 (d) $163 (d) $341
Small Cap (a) $118 (a) $155 (a) $206 (a) $308
(b) $121 (b) $166 (b) $223 (b) $341
(c) $ 28 (c) $ 85 (c) $146 (c) $308
(d) $ 31 (d) $ 96 (d) $163 (d) $341
International Equity (a) $119 (a) $160 (a) $213 (a) $323
(b) $123 (b) $170 (b) $230 (b) $355
(c) $ 29 (c) $ 90 (c) $153 (c) $323
(d) $ 33 (d) $100 (d) $170 (d) $355
Diversified Fixed Income (a) $116 (a) $151 (a) $198 (a) $294
(b) $120 (b) $161 (b) $216 (b) $327
(c) $ 26 (c) $ 81 (c) $138 (c) $294
(d) $ 30 (d) $ 91 (d) $156 (d) $327
Cash Management (a) $115 (a) $147 (a) $191 (a) $279
(b) $118 (b) $157 (b) $208 (b) $313
(c) $ 25 (c) $ 77 (c) $131 (c) $279
(d) $ 28 (d) $ 87 (d) $148 (d) $313
-----------------------------------------------------------------------------------------------
<CAPTION>
-----------------------------------------------------------------------------------------------
FOCUSED PORTFOLIOS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Focus Growth** (a) $119 (a) $160 (a) $213 (a) $323
(b) $123 (b) $170 (b) $230 (b) $355
(c) $ 29 (c) $ 90 (c) $153 (c) $323
(d) $ 33 (d) $100 (d) $170 (d) $355
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
<CAPTION>
STRATEGY 1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Growth (a) $118 (a) $155 (a) $205 (a) $307
(b) $121 (b) $166 (b) $222 (b) $340
(c) $ 28 (c) $ 85 (c) $145 (c) $307
(d) $ 31 (d) $ 96 (d) $162 (d) $340
Moderate Growth (a) $118 (a) $155 (a) $204 (a) $305
(b) $121 (b) $165 (b) $221 (b) $339
(c) $ 28 (c) $ 85 (c) $144 (c) $305
(d) $ 31 (d) $ 95 (d) $161 (d) $339
Balanced Growth (a) $118 (a) $155 (a) $204 (a) $305
(b) $121 (b) $165 (b) $221 (b) $339
(c) $ 28 (c) $ 85 (c) $144 (c) $305
(d) $ 31 (d) $ 95 (d) $161 (d) $339
Conservative Growth (a) $117 (a) $154 (a) $203 (a) $303
(b) $121 (b) $164 (b) $220 (b) $337
(c) $ 27 (c) $ 84 (c) $143 (c) $303
(d) $ 31 (d) $ 94 (d) $160 (d) $337
-----------------------------------------------------------------------------------------------
</TABLE>
** This portfolio was not available for sale during fiscal year 2000. The
figures are based on estimated total investment charges for the current fiscal
year.
8
<PAGE>
EXPLANATION OF FEE TABLES AND EXAMPLES
1. The purpose of the Fee Tables is to show you the various expenses you will
incur directly and indirectly by investing in the contract. The example
reflects owner transaction expenses, separate account expenses including
optional benefit fees in some examples and investment portfolio expenses
by SELECT PORTFOLIO, FOCUSED PORTFOLIO and STRATEGY.
2. The Examples assume that no transfer fees were imposed. Premium taxes are
not reflected but may be applicable.
3. For certain underlying investment portfolios in which the SELECT
PORTFOLIOS, FOCUSED PORTFOLIOS and STRATEGIES invest, SAAMCo has
voluntarily agreed to waive fees or reimburse expenses, if necessary, to
keep annual operating expenses at or below the following percentages of
each of the following Portfolios' average net assets: Multi-Managed Growth
Portfolio 1.44%, Multi-Managed Moderate Growth Portfolio 1.36%,
Multi-Managed Income/Equity Portfolio 1.29%, Multi-Managed Income
Portfolio 1.21%, Asset Allocation: Diversified Growth Portfolio 1.36%,
Stock Portfolio 1.36%, Large Cap Growth Portfolio 1.25%, Large Cap
Composite Portfolio 1.25%, Large Cap Value Portfolio 1.25%, Mid Cap Growth
Portfolio 1.30%, Mid Cap Value Portfolio 1.30%, Small Cap Portfolio 1.30%,
International Equity Portfolio 1.45%, Diversified Fixed Income Portfolio
1.15%, Focus Growth 1.45% and Cash Management Portfolio 1.00%. SAAMCo also
may voluntarily waive or reimburse additional amounts to increase the
investment return to a Portfolio's investors. SAAMCo may terminate all
such waivers and/ or reimbursements at any time. Further, any waivers or
reimbursements made by SAAMCo with respect to a Portfolio are subject to
recoupment from that Portfolio within the following two years, provided
that the Portfolio is able to effect such payment to SAAMCo and remain in
compliance with the foregoing expense limitations.
4. Examples reflecting participation in the Seasons Rewards program reflect
surrender charge Schedule B. The total expenses at the end of each period
do not take into account any Upfront Deferred Payment Enhancement which
may be added to your contract if you elect the Seasons Rewards Program. If
you elect the Seasons Rewards Program, your expenses may differ from the
information shown here.
5. THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The historical accumulation unit values for the SELECT PORTFOLIOS, FOCUSED
PORTFOLIOS and STRATEGIES are contained in Appendix A--Condensed Financial
Information.
9
<PAGE>
THE SEASONS SELECT(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: You do not pay taxes on your earnings from the annuity until
you withdraw them.
- Death Benefit: If you die during the Accumulation Phase, the insurance
company pays a death benefit to your Beneficiary.
- Guaranteed Income: If elected, you receive a stream of income for your
lifetime, or another available period you select.
Tax-qualified retirement plans (e.g., IRAs, 401(k) or 403(b) plans) defer
payment of taxes on earnings until withdrawn. If you are considering funding a
tax-qualified retirement plan with an annuity, you should know that an annuity
does not provide any additional tax deferral treatment of earnings beyond the
treatment provided by the tax-qualified retirement plan itself. However,
annuities do provide other features and benefits which may be valuable to you.
You should fully discuss this decision with your financial advisor.
This annuity was developed to help you contribute to your retirement savings.
This annuity works in two stages, the Accumulation Phase and the Income Phase.
Your contract is in the Accumulation Phase during the period when you make
payments into the contract. The Income Phase begins when you request us to start
making payments to you out of the money accumulated in your contract.
The Contract is called a "variable" annuity because it allows you to invest in
variable investment portfolios which we call SELECT PORTFOLIOS, FOCUSED
PORTFOLIOS and STRATEGIES. The SELECT PORTFOLIOS, FOCUSED PORTFOLIOS and
STRATEGIES, are similar to mutual funds, in that they have specific investment
objectives and their performance varies. You can gain or lose money if you
invest in these SELECT PORTFOLIOS, FOCUSED PORTFOLIOS or STRATEGIES. The amount
of money you accumulate in your contract depends on the performance of the
SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) or STRATEGY(IES) in which you invest.
The Contract also offers several fixed account options for varying time periods.
Fixed account options earn interest at a rate set and guaranteed by Anchor
National. If you allocate money to the fixed account options, the amount of
money that accumulates in your Contract depends on the total interest credited
to the particular fixed account option(s) in which you are invested.
For more information on SELECT PORTFOLIOS, FOCUSED PORTFOLIOS, STRATEGIES and
fixed account options available under this contract, SEE INVESTMENT OPTIONS
PAGE 14.
Anchor National issues the Seasons Select(II) Variable Annuity. When you
purchase a Seasons Select(II) Variable Annuity, a contract exists between you
and Anchor National. The Company is a stock life insurance company organized
under the laws of the state of Arizona. Its principal place of business is 1
SunAmerica Center, Los Angeles, California 90067. The Company conducts life
insurance and annuity business in the District of Columbia and all states except
New York. Anchor National is an indirect, wholly owned subsidiary of American
International Group, Inc., a Delaware corporation. Seasons Select(II) may not
currently be available in all states. Please check with your financial advisor
regarding availability in your state.
This annuity is designed for investors whose personal circumstances allow for a
long-term investment time horizon, to assist in contributing to retirement
savings. As a function of the federal tax code you may be assessed a 10% federal
tax penalty on any withdrawal made prior to your reaching age 59 1/2.
Additionally, this contract provides that you will be charged a withdrawal
charge on each Purchase Payment withdrawn if that Purchase Payment has not been
invested in this contract for at least 7 years, or 9 years if you elect to
participate in the Seasons Rewards Program. Because of these potential
penalties, you should fully discuss all of the benefits and risks of this
contract with your financial adviser prior to purchase.
10
<PAGE>
PURCHASING A SEASONS SELECT(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.
<TABLE>
<CAPTION>
MINIMUM MINIMUM SUBSEQUENT
MINIMUM INITIAL SUBSEQUENT PURCHASE PAYMENT--
PURCHASE PAYMENT PURCHASE PAYMENT AUTOMATIC PAYMENT PLAN
---------------- ---------------- ----------------------
<S> <C> <C> <C>
Qualified $2,000 $500 $50
Non-qualified $5,000 $500 $50
</TABLE>
Prior Company approval is required to accept Purchase Payments greater than
$1,500,000. The Company reserves the right to refuse any Purchase Payment
including one which would cause the contract value or Purchase Payments to
exceed $1,500,000 at the time of the Purchase Payment. Also, the optional
Automatic Payment Plan allows you to make subsequent payments as small as
$50.00.
In general, we will not issue a Qualified contract to anyone who is age 70 1/2
or older, unless they certify to us that the minimum distribution required by
the federal tax code is being made. In addition, we may not issue a contract to
anyone over age 90. You may not elect Seasons Estate Advantage, or participate
in the Seasons Rewards Program if you are over age 80 at the time of contract
issue.
ALLOCATION OF PURCHASE PAYMENTS
We invest your Purchase Payments in the fixed accounts, SELECT PORTFOLIO(S),
FOCUSED PORTFOLIO(S) and/or STRATEGY(IES) according to your instructions. If we
receive a Purchase Payment without allocation instructions, we will invest the
money according to your last allocation instructions. Purchase Payments are
applied to your contract based upon the value of the variable investment option
next determined after receipt of your money. SEE INVESTMENT OPTIONS PAGE 14.
In order to issue your contract, we must receive your completed application,
Purchase Payment allocation instructions and any other required paper work at
our Annuity Service Center. We allocate your initial Purchase Payment within two
days of receiving it. If we do not have complete information necessary to issue
your contract, we will contact you. If we do not have the information necessary
to issue your contract within 5 business days we will:
- Send your money back to you; or
- Ask your permission to keep your money until we get the information
necessary to issue the contract.
SEASONS REWARDS PROGRAM
If you elect to participate in the Seasons Rewards Program at contract issue, we
contribute an Upfront Payment Enhancement and, if applicable, a Deferred Payment
Enhancement to your contract in conjunction with each Purchase Payment you
invest during the life of your contract. If you elect to participate in this
program, all Purchase Payments are subject to a nine year withdrawal charge
schedule. SEE WITHDRAWAL CHARGES ON PAGE 29. If you make an early withdrawal of
Purchase Payments, we may recoup a portion of any bonuses applicable to any
payment withdrawn. SEE EXPENSES, PAGE 28. The Seasons Rewards program is not
available to you if you are over age 80 at the time of contract issue.
Additionally, it may not be approved for sale in your state or through the
broker-dealer with which your financial advisor is affiliated. Amounts we
contribute to your contract under this program are considered earnings and are
allocated to your contract as described below.
11
<PAGE>
Purchase Payments may not be invested in the 6-month or the 1-year Dollar Cost
Averaging fixed accounts if you participate in the Seasons Rewards Program.
However, you may use the 1-year fixed account option as a Dollar Cost Averaging
source account.
There may be scenarios in which due to negative market conditions and your
inability to remain invested over the long-term, a contract with the Seasons
Rewards Program may not perform as well as the contract without the feature.
ENHANCEMENT LEVELS
The Upfront Payment Enhancement Rate, Deferred Payment Enhancement Rate and
Deferred Payment Enhancement Date may be determined based on stated Enhancement
Levels. Each Enhancement Level is a range of dollar amounts which may correspond
to different enhancement rates and dates. Enhancement Levels may change from
time to time, at our sole discretion. The Enhancement Level applicable to your
initial Purchase Payment is determined by the amount of that initial Purchase
Payment. With respect to any subsequent Purchase Payments we determine your
Enhancement Level by adding to your contract value on the date we receive each
subsequent Purchase Payment the amount of that subsequent Purchase Payment.
UPFRONT PAYMENT ENHANCEMENT
An Upfront Payment Enhancement is an amount we add to your contract on the day
we receive a Purchase Payment. We calculate an Upfront Payment Enhancement
amount as a percentage (the "Upfront Payment Enhancement Rate") of each Purchase
Payment. We periodically review and establish the Upfront Payment Enhancement
Rate, which may increase or decrease at any time, but will never be less than
2%. The applicable Upfront Payment Enhancement Rate is that which is in effect
for any applicable Enhancement Level, when we receive each Purchase Payment
under your contract. The Upfront Payment Enhancement amounts are allocated among
the fixed and variable investment options according to the current allocation
instructions in effect when we receive each Purchase Payment.
DEFERRED PAYMENT ENHANCEMENT
A Deferred Payment Enhancement is an amount we may add to your contract on a
future date (the "Deferred Payment Enhancement Date"). We calculate the Deferred
Payment Enhancement amount, if any, as a percentage of each Purchase Payment
(the "Deferred Payment Enhancement Rate"). We periodically review and establish
the Deferred Payment Enhancement Rates and Deferred Payment Enhancement Dates.
The Deferred Payment Enhancement Rate being offered may increase, decrease or be
eliminated by us, at any time. The Deferred Payment Enhancement Date, if
applicable, may change at any time. The applicable Deferred Payment Enhancement
Date and Deferred Payment Enhancement Rate are those which may be in effect for
any applicable Enhancement Level, when we receive each Purchase Payment under
your contract. Any applicable Deferred Payment Enhancement, when credited, is
allocated to the Cash Management portfolio.
If you withdraw any portion of a Purchase Payment, to which a Deferred Payment
Enhancement applies, prior to the Deferred Payment Enhancement Date, we reduce
the amount of the corresponding Deferred Payment Enhancement in the same
proportion that your withdrawal (and any fees and charges associated with such
withdrawals) reduces that Purchase Payment. For purposes of the Deferred Payment
Enhancement, 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 any applicable Deferred Payment Enhancement
amount.
12
<PAGE>
CURRENT ENHANCEMENT LEVELS
The Enhancement Levels, Upfront Payment Enhancement Rate, Deferred Payment
Enhancement Rate and Deferred Payment Enhancement Date are as follows:
<TABLE>
<CAPTION>
ENHANCEMENT UPFRONT PAYMENT DEFERRED PAYMENT DEFERRED PAYMENT
LEVEL ENHANCEMENT RATE ENHANCEMENT RATE ENHANCEMENT DATE
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------------
Under $500,000 4% 0% N/A
--------------------------------------------------------------------------------------------------
$500,000 -- more 5% 0% N/A
--------------------------------------------------------------------------------------------------
</TABLE>
90 DAY WINDOW
Contracts issued with the Seasons Rewards feature may be eligible for a
"Look-Back Adjustment." As of the 90th day after your contract was issued, we
will total your Purchase Payments made over those 90 days, without considering
any investment gain or loss in contract value on those Purchase Payments. If
your total Purchase Payments bring you to an Enhancement Level which, as of the
date we issued your contract, would have provided for a higher Upfront and/or
any applicable Deferred Payment Enhancement Rate on each Purchase Payment, you
will get the benefit of the Enhancement Rate(s) that were applicable to that
higher Enhancement Level at the time your contract was issued. We will add any
applicable Upfront Look Back Adjustment to your contract on the 90th day
following the date of contract issue. We will send you a confirmation indicating
any applicable Upfront and/or Deferred Look Back Adjustment, on or about the
90th day following the date of contract issuance. We will allocate any
applicable Upfront Look Back Adjustment according to your then-current
allocation instructions on file for subsequent Purchase Payments at the time we
make the contribution. If applicable, any Deferred Look Back Adjustment will be
allocated to the Cash Management portfolio.
We will not allocate any applicable 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 it paid on your contract;
- You switch to the Income Phase of your contract; or
- You fully withdraw the corresponding Purchase Payment.
APPENDIX B provides an example of the 90 Day Window Provision.
WE RESERVE THE RIGHT TO MODIFY, SUSPEND OR TERMINATE THE SEASONS REWARDS PROGRAM
(IN ITS ENTIRETY OR ANY COMPONENT) AT ANY TIME.
ACCUMULATION UNITS
The value of the variable portion of your contract will go up or down depending
upon the investment performance of the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S)
or STRATEGY(IES) you select. In order to keep track of the value of your
contract, we use a unit of measure called an Accumulation Unit which works like
a share of a mutual fund. During the Income Phase, we call them Annuity Units.
An Accumulation Unit value is determined each day that the New York Stock
Exchange ("NYSE") is open. We calculate an Accumulation Unit for each STRATEGY,
SELECT PORTFOLIO or FOCUSED PORTFOLIO after the NYSE closes each day. We do this
by:
1. determining the total value of money invested in a particular STRATEGY,
SELECT PORTFOLIO or FOCUSED PORTFOLIO;
2. subtracting from that amount any asset-based charges and any other
charges such as taxes we have deducted; and
13
<PAGE>
3. dividing this amount by the number of outstanding Accumulation Units.
EXAMPLE (CONTRACTS WITHOUT SEASONS REWARDS):
We receive a $25,000 Purchase Payment from you on Wednesday. You allocate
the money to the Focus Growth Portfolio. We determine that the value of an
Accumulation Unit for the Focus Growth 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 2,252.2523 Accumulation Units for the Focus
Growth Portfolio.
EXAMPLE (CONTRACTS WITH SEASONS REWARDS):
We receive a $25,000 Purchase Payment from you on Wednesday. You allocate
the money to the Focus Growth Portfolio. If the Upfront Payment Enhancement
is 2.00% of your Purchase Payment, we would add an Upfront Payment
Enhancement of $500 to your contract. We determine that the value of an
Accumulation Unit for the Focus Growth 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 Focus
Growth Portfolio.
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. We will refund to you the value of your contract on the day we receive
your request MINUS any applicable Free Look Payment Enhancement Deduction, if
you had elected the Seasons Reward program. The Free Look Payment Enhancement
Deduction is equal of the lesser of (1) the value of any Payment Enhancement(s)
on the day we receive your free look request; or (2) the Payment Enhancement
amount(s), if any, which we allocated to your contract. Thus, you receive any
gain and we bear any loss on any Payment Enhancement(s) if you decide to cancel
your contract during the free look period.
Certain states require us to return your Purchase Payments upon a free look
request. Additionally, all contracts issued as an IRA require the full return of
Purchase Payments upon a free look. With respect to those contracts, we reserve
the right to put your money in the Cash Management investment option during the
free look period and will allocate your money according to your instructions at
the end of the applicable free look period. Currently, we do not put your money
in the Cash Management investment option during the free look period unless you
allocate your money to it. If your contract was issued in a state requiring
return of Purchase Payments or as an IRA and you cancel your contract during the
free look period, we return the greater of (1) your Purchase Payments; or
(2) the value of your contract MINUS the Free Look Payment Enhancement
Deduction, if applicable. At the end of the free look period, we allocate your
money according to your instructions.
INVESTMENT OPTIONS
--------------------------------------------------------------------------------
The contract offers variable investment options which we call SELECT PORTFOLIOS,
FOCUSED PORTFOLIOS and STRATEGIES, and fixed investment options. We designed the
contract to meet your varying investment needs over time. You can achieve this
by using the SELECT PORTFOLIOS, FOCUSED PORTFOLIOS and/or STRATEGIES alone or in
concert with the fixed investment options. The SELECT PORTFOLIOS, FOCUSED
PORTFOLIOS and STRATEGIES operate similar to a mutual fund but are only
available through the purchase of certain variable annuities. A mixture of your
investment in the SELECT PORTFOLIOS, FOCUSED PORTFOLIOS and/or STRATEGIES and
fixed account options may lower the risk associated with investing only in a
variable investment option.
14
<PAGE>
VARIABLE INVESTMENT OPTIONS
Each of the variable investment options of the contract invests in underlying
portfolios of Seasons Series Trust. SAAMCo, an affiliate of Anchor National,
manages Seasons Series Trust. SAAMCo has engaged sub-advisers to provide
investment advice for certain of the underlying investment portfolios.
YOU SHOULD READ THE PROSPECTUS FOR THE SEASONS SERIES TRUST CAREFULLY BEFORE
INVESTING. THE TRUST PROSPECTUS WHICH IS ATTACHED HERETO CONTAINS DETAILED
INFORMATION ABOUT THE UNDERLYING INVESTMENT PORTFOLIOS INCLUDING INVESTMENT
OBJECTIVE AND RISK FACTORS.
THE PORTFOLIOS
The contract offers nine SELECT PORTFOLIOS, each with a distinct investment
objective, utilizing a disciplined investing style to achieve its objective.
Each SELECT PORTFOLIO invests in an underlying investment portfolio of the
Seasons Series Trust. Except for the Cash Management portfolio, each underlying
portfolio is multi-managed by a team of three money managers, one component of
the underlying portfolios is an unmanaged component that tracks a particular
target index or subset of an index. The other two components are actively
managed. The unmanaged component of each underlying portfolio is intended to
balance some of the risks associated with an actively traded portfolio.
The contract also currently offers one FOCUSED PORTFOLIO. Each multi-managed
FOCUSED PORTFOLIO offers you at least two different professional managers, one
of which may be SAAMCo, and each of which advises a separate portion of the
FOCUSED PORTFOLIO. Each manager actively selects a limited number of stocks that
represent their best stock selections. This approach to investing results in a
more concentrated portfolio, which will be less diversified than the SELECT
PORTFOLIOS, and may be subject to greater market risks.
Each underlying PORTFOLIO and the respective managers are:
<TABLE>
<S> <C> <C> <C>
SELECT PORTFOLIOS FOCUSED PORTFOLIO
LARGE CAP GROWTH MID CAP GROWTH INTERNATIONAL EQUITY FOCUS GROWTH
Bankers Trust Bankers Trust Bankers Trust Fred Alger
Goldman Sachs T. Rowe Price Goldman Sachs Int'l Jennison
Janus Wellington Lord Abbett Marsico Capital
LARGE CAP COMPOSITE MID CAP VALUE DIVERSIFIED FIXED INCOME
Bankers Trust Bankers Trust Bankers Trust
SAAMCo Goldman Sachs SAAMCo
T. Rowe Price Lord Abbett Wellington
LARGE CAP VALUE SMALL CAP CASH MANAGEMENT
Bankers Trust Bankers Trust SAAMCo
T. Rowe Price Lord Abbett
Wellington SAAMCo
</TABLE>
PORTFOLIO OPERATION
Each PORTFOLIO is designed to meet a distinct investment objective facilitated
by the management philosophy of three different money managers. Generally, an
equal portion of the Purchase Payments received for allocation to each PORTFOLIO
will be allocated among the three managers for that PORTFOLIO. Each quarter
SAAMCo will evaluate the asset allocation between the three managers of each
PORTFOLIO. If SAAMCo determines that the assets have become significantly
unequal in allocation among the managers, then the incoming cash flows may be
redirected in an attempt to stabilize the allocations. Generally, existing
PORTFOLIO assets will not be rebalanced. However, we reserve the right to do so
in the event that it is deemed necessary and not adverse to the interests of
contract owners invested in the PORTFOLIO.
15
<PAGE>
THE STRATEGIES
The contract offers four multi-manager variable investment STRATEGIES, each with
a different investment objective. We designed the STRATEGIES utilizing an asset
allocation approach to meet your investment needs over time, considering factors
such as your age, goals and risk tolerance. However, each STRATEGY is designed
to achieve different levels of growth over time.
Each STRATEGY invests in three underlying investment portfolios of the Seasons
Series Trust. The allocation of money among these investment portfolios varies
depending on the objective of the STRATEGY.
The underlying investment portfolios of Seasons Series Trust in which the
STRATEGIES invest include the Asset Allocation: Diversified Growth Portfolio,
the Stock Portfolio and the Multi-Managed Growth, Multi-Managed Moderate Growth,
Multi-Managed Income/Equity and Multi-Managed Income Portfolios (the
"Multi-Managed Portfolios").
The Asset Allocation: Diversified Growth Portfolio is managed by Putnam. The
Stock Portfolio is managed by T. Rowe Price. All of the Multi-Managed Portfolios
include the same three basic investment components: a growth component managed
by Janus, a balanced component managed by SAAMCo and a fixed income component
managed by Wellington, LLP. The Growth STRATEGY and the Moderate Growth STRATEGY
also have an aggressive growth component which SAAMCo manages. The percentage
that any one of these components represents in each Multi-Managed Portfolio
varies in accordance with the investment objective.
Each STRATEGY uses an investment approach based on asset allocation. This
approach is achieved by each STRATEGY investing in distinct percentages in three
specific underlying funds of the Seasons Series Trust. In turn, the underlying
funds invest in a combination of domestic and international stocks, bonds and
cash. Based on the percentage allocation to each specific underlying fund and
each underlying fund's investment approach, each STRATEGY initially has a
neutral asset allocation mix of stocks, bonds and cash.
STRATEGY REBALANCING
Each STRATEGY is designed to meet its investment objective by allocating a
portion of your money to three different investment portfolios. At the beginning
of each quarter a rebalancing occurs among the underlying funds to realign each
STRATEGY with its distinct percentage investment in the three underlying funds.
This rebalancing is designed to help maintain the neutral asset allocation mix
for each STRATEGY. The pie charts on the following pages demonstrate:
- the neutral asset allocation mix for each STRATEGY; and
- the percentage allocation in which each STRATEGY invests.
On the first business day of each quarter (or as close to such date as is
administratively practicable) your money will be allocated among the various
investment portfolios according to the percentages set forth on the prior pages.
Additionally, within each Multi-Managed Portfolio, your money will be rebalanced
among the various components. We also reserve the right to rebalance any
STRATEGY more frequently if rebalancing is, deemed necessary and not adverse to
the interests of contract owners invested in such STRATEGY. Rebalancing a
STRATEGY may involve shifting a portion of assets out of underlying investment
portfolios with higher returns into underlying investment portfolios with
relatively lower returns.
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GROWTH
GOAL: Long-term growth of capital, allocating its assets primarily to
stocks. This STRATEGY may be best suited for those with longer periods to
invest.
<TABLE>
<S> <C>
Stocks....................................... 80%
Bonds........................................ 15%
Cash......................................... 5%
</TABLE>
UNDERLYING INVESTMENT
PORTFOLIOS & MANAGERS
<TABLE>
<S> <C>
MULTI-MANAGED GROWTH PORTFOLIO 50%
Managed by:
Janus Capital Corporation
SunAmerica Asset Management Corp.
Wellington Management Company, LLP
STOCK PORTFOLIO 25%
Managed by T. Rowe Price Associates, Inc.
ASSET ALLOCATION: DIVERSIFIED GROWTH PORTFOLIO 25%
Managed by Putnam Investment Management, Inc.
</TABLE>
MODERATE GROWTH
GOAL: Growth of capital through investments in equities, with a secondary
objective of conservation of principal by allocating more of its assets to bonds
than the Growth STRATEGY. This STRATEGY may be best suited for those nearing
retirement years but still earning income.
<TABLE>
<S> <C>
Stocks....................................... 70%
Bonds........................................ 25%
Cash......................................... 5%
</TABLE>
UNDERLYING INVESTMENT
PORTFOLIOS & MANAGERS
<TABLE>
<S> <C>
MULTI-MANAGED MODERATE GROWTH PORTFOLIO 55%
Managed by:
Janus Capital Corporation
SunAmerica Asset Management Corp.
Wellington Management Company, LLP
STOCK PORTFOLIO 20%
Managed by T. Rowe Price Associates, Inc.
ASSET ALLOCATION: DIVERSIFIED GROWTH PORTFOLIO 25%
Managed by Putnam Investment Management, Inc.
</TABLE>
BALANCED GROWTH
GOAL: Focuses on conservation of principal by investing in a more balanced
weighting of stocks and bonds, with a secondary objective of seeking a high
total return. This STRATEGY may be best suited for those approaching retirement
and with less tolerance for investment risk.
<TABLE>
<S> <C>
Stocks....................................... 55%
Bonds........................................ 40%
Cash......................................... 5%
</TABLE>
UNDERLYING INVESTMENT
PORTFOLIOS & MANAGERS
<TABLE>
<S> <C>
MULTI-MANAGED INCOME/EQUITY PORTFOLIO 55%
Managed by:
Janus Capital Corporation
SunAmerica Asset Management Corp.
Wellington Management Company, LLP
STOCK PORTFOLIO 20%
Managed by T. Rowe Price Associates, Inc.
ASSET ALLOCATION: DIVERSIFIED GROWTH PORTFOLIO 25%
Managed by Putnam Investment Management, Inc.
</TABLE>
CONSERVATIVE GROWTH
GOAL: Capital preservation while maintaining some potential for growth over
the long term. This STRATEGY may be best suited for those with lower investment
risk tolerance.
<TABLE>
<S> <C>
Stocks....................................... 42%
Bonds........................................ 53%
Cash......................................... 5%
</TABLE>
UNDERLYING INVESTMENT
PORTFOLIOS & MANAGERS
<TABLE>
<S> <C>
MULTI-MANAGED INCOME PORTFOLIO 60%
Managed by:
Janus Capital Corporation
SunAmerica Asset Management Corp.
Wellington Management Company, LLP
STOCK PORTFOLIO 15%
Managed by T. Rowe Price Associates, Inc.
ASSET ALLOCATION: DIVERSIFIED GROWTH PORTFOLIO 25%
Managed by Putnam Investment Management, Inc.
</TABLE>
17
<PAGE>
FIXED INVESTMENT OPTIONS
The contract also offers seven fixed investment options if you do not enroll in
the Seasons Rewards Program and five fixed investment options if you do enroll
in the program. Anchor National will guarantee the interest rate earned on money
you allocate to any of these fixed investment options. We currently offer fixed
investment options for periods of one, three, five, seven and ten years, which
we call guarantee periods. In Maryland, Oregon and Washington only the one year
fixed account option is available. Additionally, if you do not elect to enroll
in the Seasons Rewards Program, you have the option of allocating your money to
the 6-month and/or 1-year DCA fixed account. We guarantee the interest rate for
money allocated to the 6-month DCA fixed account and/or the 1-year DCA fixed
account (the "DCA fixed accounts") which are available only in conjunction with
the Dollar Cost Averaging Program. The 6-month and 1-year DCA fixed account
options are not available if you participate in the Seasons Rewards Program.
Please see the section on the Dollar Cost Averaging Program on page 20 for
additional information about, including limitations on, the availability and
operation of the DCA fixed accounts. The DCA fixed accounts are only available
for new Purchase Payments.
All of these fixed account options pay interest at rates set and guaranteed by
Anchor National. Interest rates may differ from time to time and are set at our
sole discretion. We will never credit less than a 3% annual effective rate to
any of the fixed account options. The interest rate offered for new Purchase
Payments may differ from that offered for subsequent Purchase Payments and money
already in the fixed account options. In addition, different guarantee periods
offer different interest rates. Rates for specified payments are declared at the
beginning of the guarantee period and do not change during the specified period.
There are three scenarios in which you may put money into the fixed account
options. In each scenario your money may be credited a different rate of
interest as follows:
- INITIAL RATE: Rate credited to new Purchase Payments allocated to the
fixed account when you purchase your contract.
- CURRENT RATE: Rate credited to subsequent Purchase Payments allocated to
the fixed account.
- RENEWAL RATE: Rate credited to money remaining in a fixed account after
expiration of a guarantee period and money transferred from a fixed
account or one of the STRATEGIES, SELECT PORTFOLIOS or FOCUSED PORTFOLIOS
into a fixed account.
Each of these rates may differ from one another. Although once declared the
applicable rate is guaranteed until your guarantee period expires.
The DCA fixed accounts also credit a fixed rate of interest. Interest is
credited to amounts allocated to the 6-month or 1-year DCA fixed account while
your investment is systematically transferred to the SELECT PORTFOLIO(S),
FOCUSED PORTFOLIOS and/or STRATEGY(IES). The rates applicable to the DCA fixed
accounts may differ from each other and/or the other fixed account options but
will never be less than an effective rate of 3%. SEE DOLLAR COST AVERAGING ON
PAGE 20 for more information.
When a guarantee period ends, you may leave your money in the same guarantee
period. You may also reallocate money to another fixed investment option (other
than the DCA fixed accounts) or to any of the SELECT PORTFOLIO(S), FOCUSED
PORTFOLIO(S) or STRATEGY(IES). If you want to reallocate your money, you must
contact us within 30 days after the end of the current guarantee period and
instruct us how to reallocate your money. If we do not hear from you, we will
keep your money in the same guarantee period where it will earn the renewal
interest rate applicable at that time.
MARKET VALUE ADJUSTMENT
NOTE: THE FOLLOWING DISCUSSION APPLIES TO THE 3, 5, 7 OR 10 YEAR FIXED
INVESTMENT OPTIONS ONLY. THESE OPTIONS ARE NOT AVAILABLE IN MARYLAND, OREGON AND
WASHINGTON AND MAY NOT BE AVAILABLE IN OTHER STATES. PLEASE CONTACT YOUR
FINANCIAL ADVISOR FOR MORE INFORMATION. THIS DISCUSSION DOES NOT APPLY TO
WITHDRAWALS TO PAY A DEATH BENEFIT OR CONTRACT FEES AND CHARGES.
18
<PAGE>
If you take money out of the 3, 5, 7 or 10 year fixed investment options before
the end of the guarantee period, we make an adjustment to your contract (the
"market value adjustment" or "MVA"). This market value adjustment reflects any
difference in the interest rate environment between the time you place your
money in the fixed investment option and the time when you withdraw 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 a market value adjustment.
We will not assess a market value adjustment against withdrawals made (1) to pay
a death benefit; (2) to pay contract fees and charges; or (3) to begin the
Income Phase of your contract on the latest annuity date.
We calculate the market value adjustment by doing a comparison between current
rates and the rate being credited to you in the fixed investment option. For the
current rate we use a rate being offered by us for a guarantee period that is
equal to the time remaining in the guarantee period from which you seek
withdrawal or transfer. If we are not currently offering a guarantee period for
that period of time, we determine an applicable rate by using a formula to
arrive at a number between the interest rates currently offered for the two
closest periods available.
Generally, if interest rates drop between the time you put your money into the
fixed investment options and the time you take it out, we credit a positive
adjustment to your contract. On the other hand, if interest rates increase
during the same period, we post a negative adjustment to your contract.
Where the market value adjustment is negative, we first deduct the adjustment
from any money remaining in the fixed investment option. If there is not enough
money in the fixed investment option to meet the negative deduction, we deduct
the remainder from your withdrawal or transfer amount. Where the market value
adjustments is positive, we add the adjustment to your withdrawal amount or
transfer amount. For withdrawals under the systematic withdrawal program that
result in a negative market value adjustment, the MVA amount will be deducted
from your withdrawal.
The 1-year fixed investment option and the DCA fixed accounts do not impose a
market value adjustment. These fixed investment options are not registered under
the Securities Act of 1933 and are not subject to the provisions of the
Investment Company Act of 1940.
Please see APPENDIX C for more information on how we calculate the market value
adjustment.
TRANSFERS DURING THE ACCUMULATION PHASE
During the Accumulation Phase, you may transfer money among the SELECT
PORTFOLIO(S), FOCUSED PORTFOLIO(S), STRATEGY(IES) and the fixed investment
options by written request or by telephone. Additionally, you may access your
account and request transfers through our website, www.sunamerica.com. Funds
already in your contract cannot be transferred into the DCA fixed accounts. You
may make transfers among the investment options without incurring a transfer
charge. Transfers out of a 3, 5, 7 or 10 year fixed investment option may be
subject to a market value adjustment.
The minimum amount you can transfer is $100, or a lesser amount if you transfer
the entire balance from a SELECT PORTFOLIO, FOCUSED PORTFOLIO, STRATEGY or a
fixed investment option. Any money remaining in a SELECT PORTFOLIO, FOCUSED
PORTFOLIO, STRATEGY or fixed investment option after making a transfer must
equal at least $100. Your request for transfer must clearly state which
investment option(s) are involved and the amount you want to transfer. Please
see the section on Dollar Cost Averaging on page 20 for specific rules regarding
the DCA fixed accounts.
19
<PAGE>
We will accept transfers by telephone unless you specify otherwise on your
contract application. 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.
We will accept transfers over the internet unless you specify otherwise on your
contract application. When receiving internet account transfers, 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 internet.
If we fail to follow our procedures we may be liable for any losses due to
unauthorized or fraudulent transactions.
For information regarding transfers during the Income Phase, SEE INCOME OPTIONS
ON PAGE 31.
We may limit the number of transfers in any contract year or refuse any transfer
request for you or others invested in the contract if we believe that excessive
trading or a specific transfer request or group transfer requests may have a
detrimental effect on unit values or the share prices of the underlying
portfolios.
Where permitted by law, we may accept your authorization for a third party to
make transfers for you subject to our rules. We reserve the right to suspend or
cancel such acceptance at any time and will notify you accordingly.
Additionally, we may restrict the investment options available for transfers
during any period in which such third party acts for you. We notify such third
party beforehand regarding any restrictions. However, we will not enforce these
restrictions if we are satisfied that:
- such third party has been appointed by a court of competent jurisdiction
to act on your behalf; or
- such third party is a trustee/fiduciary appointed, by you or for you, to
act on your behalf for all your financial affairs.
We may provide administrative or other support services to independent third
parties you authorize to make transfers on your behalf. We do not currently
charge you extra for providing these support services. This includes, but is not
limited to, transfers between investment options in accordance with market
timing strategies. Such independent third parties may or may not be appointed
with us for the sale of annuities. However, WE DO NOT ENGAGE ANY THIRD PARTIES
TO OFFER INVESTMENT ALLOCATION SERVICES OF ANY TYPE. WE TAKE NO RESPONSIBILITY
FOR THE INVESTMENT ALLOCATION AND TRANSFERS TRANSACTED ON YOUR BEHALF BY SUCH
THIRD PARTIES OR FOR ANY INVESTMENT ALLOCATION RECOMMENDATIONS MADE BY SUCH
PARTIES.
We reserve the right to modify, suspend or terminate the transfer privileges at
any time.
DOLLAR COST AVERAGING
The Dollar Cost Averaging ("DCA") program allows you to invest gradually in the
variable investment options. Under the program you systematically transfer a set
dollar amount or percentage from any SELECT PORTFOLIO, FOCUSED PORTFOLIO and/or
STRATEGY or the 1-year fixed account option (source accounts) to any other
SELECT PORTFOLIO, FOCUSED PORTFOLIO or STRATEGY. Transfers may be monthly or
quarterly. You may change the frequency at any time by notifying us in writing.
We also offer the 6-month and a 1-year DCA fixed accounts exclusively to
facilitate this program. If you elect to participate in the Seasons 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 can not
transfer money already in your contract into these options. If you allocate a
Purchase Payment into a DCA fixed account, we transfer all your money allocated
to that account into the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) or
20
<PAGE>
STRATEGY(IES) you select over the selected 6-month or 1-year period. You cannot
change the option or the frequency of transfers once selected. The minimum
transfer amount if you use the 6-month or 1-year DCA fixed accounts to provide
dollar cost averaging is $100.
If allocated to the 6-month DCA fixed account, we transfer your money over a
maximum of 6 monthly transfers. We base the actual number of transfers on the
total amount allocated to the account. For example, if you allocate $500 to the
6-month DCA fixed account, we transfer your money over a period of five months,
so that each payment complies with the $100 per transfer minimum.
We determine the amount of the transfers from the 1-year DCA fixed account based
on:
- the total amount of money allocated to the account, and
- the frequency of transfers selected.
For example, let's say you allocate $1,000 to the 1-year DCA account. You select
monthly transfers. We completely transfer all of your money to the selected
investment options over a period of ten months. You may terminate your DCA
program at any time. If money remains in the DCA fixed account, we transfer the
remaining money to the 1-year fixed investment option, unless we receive
different instructions from you.
The DCA program is designed to lessen the impact of market fluctuations on your
investment. However, we cannot ensure that you will make a profit. When you
elect the DCA Program, you are continuously investing in securities regardless
of fluctuating price levels. You should consider your tolerance for investing
through periods of fluctuating price levels.
We reserve the right to modify, suspend or terminate this program at any time.
EXAMPLE:
Assume that you want to gradually move $750 each quarter from the Cash
Management Portfolio to the Mid-Cap Value SELECT PORTFOLIO over six
quarters. You set up dollar cost averaging and purchase Accumulation Units
at the following values:
<TABLE>
<CAPTION>
QUARTER ACCUMULATION UNIT UNITS PURCHASED
------- ----------------- ---------------
<S> <C> <C>
1 $ 7.50 100
2 $ 5.00 150
3 $10.00 75
4 $ 7.50 100
5 $ 5.00 150
6 $ 7.50 100
</TABLE>
You paid an average price of only $6.67 per Accumulation Unit over six
quarters, while the average market price actually was $7.08. By investing an
equal amount of money each month, you automatically buy more Accumulation
Units when the market price is low and fewer Accumulation Units when the
market price is high. This example is for illustrative purposes only.
ASSET ALLOCATION REBALANCING PROGRAM
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 STRATEGIES, SELECT PORTFOLIOS and/or FOCUSED
PORTFOLIO to return your allocations to their original percentages. Asset
rebalancing typically involves shifting a
21
<PAGE>
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, semi-annual or annual basis. We reserve the right to modify, suspend
or terminate this program at any time.
PRINCIPAL ADVANTAGE PROGRAM
The Principal Advantage Program allows you to invest in one or more of the
SELECT PORTFOLIOS, FOCUSED PORTFOLIOS or STRATEGIES without putting your
principal at direct risk. The program accomplishes this by allocating your
investment strategically between the fixed investment options (other than the
DCA fixed accounts) and the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) or
STRATEGY(IES) you select. 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 needs to be allocated to the particular fixed investment option
to ensure that it grows to an amount equal to your total principal invested
under this program.
EXAMPLE:
Assume that you want to allocate a portion of your initial Purchase Payment
of $100,000 to the fixed investment option. You want the amount allocated to
the fixed investment option to grow to $100,000 in 7 years. If the 7-year
fixed investment option is offering a 5% interest rate, we will allocate
$71,069 to the 7-year fixed investment option to ensure that this amount
will grow to $100,000 at the end of the 7-year period. The remaining $28,931
may be allocated among the SELECT PORTFOLIOS, FOCUSED PORTFOLIOS or
STRATEGIES, as determined by you, to provide opportunity for greater growth.
We reserve the right to modify, suspend or terminate this program at any time.
VOTING RIGHTS
Anchor National is the legal owner of the Seasons Series Trust shares. However,
when an underlying portfolio solicits proxies in conjunction with a vote of
shareholders, we must obtain your instructions on how to vote those shares. We
vote all of the shares we own in proportion to your instructions. This includes
any shares we own on our own behalf. Should we determine that we are no longer
required to comply with these rules, we will vote the shares in our own right.
SUBSTITUTION
If any of the underlying portfolios become unavailable for investment, we may be
required to substitute shares of another investment portfolio. We will seek
prior approval of the SEC and give you notice before substituting shares.
ACCESS TO YOUR MONEY
--------------------------------------------------------------------------------
You can access money in your contract in two ways:
- by making a partial or total withdrawal, and/or;
- by receiving income payments during the Income Phase. SEE INCOME OPTIONS
ON PAGE 31.
Generally, we deduct a withdrawal charge applicable to any partial or total
withdrawal and a market value adjustment if a withdrawal comes from the 3, 5, 7
or 10 year fixed investment options prior to the end of a guarantee period. If
you withdraw your entire contract value, we also deduct any applicable premium
taxes and a
22
<PAGE>
contract maintenance fee. SEE EXPENSES ON PAGE 28. We calculate charges due on a
total withdrawal on the day after we receive your request and other required
paper work. We return your contract value less any applicable fees and charges.
The minimum partial withdrawal amount is $1,000. We require that the value left
in any SELECT PORTFOLIO, FOCUSED PORTFOLIO, STRATEGY or fixed account be at
least $500 after the withdrawal. You must send a written withdrawal request.
Unless you provide us with different instructions, partial withdrawals will be
made in equal amounts from each SELECT PORTFOLIO, FOCUSED PORTFOLIO, STRATEGY
and the fixed investment option in which your contract is invested. Withdrawals
from fixed investment options prior to the end of the guarantee period may
result in a market value adjustment.
We may be required to suspend or postpone the payment of a withdrawal for any
period of time when: (1) the NYSE is closed (other than a customary weekend and
holiday closings); (2) trading with the NYSE is restricted; (3) an emergency
exists such that disposal of or determination of the value of shares of the
Portfolios is not reasonably practicable; (4) the SEC, by order, so permits for
the protection of contract owners.
Additionally, we reserve the right to defer payments for a withdrawal from a
fixed investment option. Such deferrals are limited to no longer than six
months.
FREE WITHDRAWAL PROVISION
Your contract provides for a free withdrawal amount each year. A free withdrawal
amount is the portion of your account that we allow you to take out each year
without being charged a surrender penalty. However, upon a future full surrender
of your contract, any previous free withdrawals would be subject to a surrender
charge, if any is applicable at the time of the full surrender.
If you participate in the Seasons Rewards Program, you will not receive any
applicable Deferred Payment Enhancement, if you fully withdraw a Purchase
Payment or your contract value prior to the corresponding Deferred Payment
Enhancement Date. SEE SEASONS REWARDS PROGRAM ON PAGE 11.
To determine your free withdrawal amount and the amount, if any, on which we
assess a 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 your account value less
your Total Invested Amount. The Total Invested Amount is the total of all
Purchase Payments you have made into the contract less portions of some prior
withdrawals you made. The portions of prior withdrawals that reduce your Total
Invested Amount are as follows:
1. Any prior withdrawals on which you previously paid a withdrawal charge,
plus the amount of the withdrawal charge.
2. Any prior free withdrawals in any year that were in excess of your
penalty-free earnings and were free because the Purchase Payment
withdrawn is no longer subject to surrender charges at the time of the
withdrawal.
When you make a withdrawal, we assume that it is taken from penalty-free
earnings first, then from the Total Invested Amount on a first-in, first-out
basis. This means that you can also access your Purchase Payments which are no
longer subject to a surrender charge before those Purchase Payments which are
still subject to the surrender charge.
23
<PAGE>
During your first contract year your free withdrawal amount is the greater of:
1. Your penalty-free earnings, or;
2. If you are participating in the Systematic Withdrawal program, a total
of 10% of your Total Invested Amount less any prior withdrawals taken
during the contract year.
After the first contract year, you can take out the greater of the following
amounts each year:
1. Your penalty free earnings and any portion of your Total Invested Amount
no longer subject to surrender charges, or;
2. 10% of the portion of your Total Invested Amount that has been in your
contract for at least one year less any withdrawals taken during the
contract year.
Purchase Payments withdrawn, above and beyond the amount of your free withdrawal
amount, which have been invested for less than 7 years, or 9 years if you elect
to participate in the Seasons Rewards Program, will result in your paying a
withdrawal charge. The amount of the charge and how it applies are discussed
more fully below. You should consider, before purchasing this contract, the
effect this charge will have on your investment if you need to withdraw more
money than the free withdrawal amount. You should fully discuss this decision
with your financial advisor.
The withdrawal charge percentage applicable is determined by the age of the
Purchase Payment being withdrawn. For purposes of calculating the surrender
charge in the event of a full surrender, the charge is calculated based on the
remaining Total Invested Amount still subject to surrender charge.
For example, you make an initial Purchase Payment of $100,000. For purposes of
this example, we will assume a 0% growth rate over the life of the contract, no
election of the Seasons Rewards Program, Income Protector Program or Seasons
Estate Advantage and no subsequent Purchase Payments. In contract year 2 and
year 3, you take out your maximum free withdrawal of $10,000 for each year.
After those free withdrawals your contract value is $80,000. In contract year 5
you request a full surrender of your contract. We will apply the following
calculation, A - (B X C) = D, where:
A = Your contract value at the time of your request for surrender ($80,000)
B = The amount of your Total Invested Amount still subject to surrender charge
($100,000)
C = The withdrawal charge percentage applicable to the age of each Purchase
Payment at the time of full surrender (4%) [B X C = $4,000]
D = Your full surrender value ($76,000)
SYSTEMATIC WITHDRAWAL PROGRAM
If you elect, we use money in your contract to pay you monthly, quarterly,
semi-annual or annual payments during the Accumulation Phase. Electronic
transfer of these funds to your bank account is also available. The minimum
amount of each withdrawal is $250. There must be at least $500 remaining in your
contract at all times. Withdrawals may be taxable and a 10% IRS tax penalty may
apply if you are under age 59 1/2. Any withdrawals you make using this program
count against your free withdrawal amount as described above. Withdrawals in
excess of that amount may incur a withdrawal charge. There is no additional
charge for participating in this program.
The program is not available to everyone. Please check with our Annuity Service
Center, which can provide the necessary enrollment forms. We reserve the right
to modify, suspend or terminate this program at any time.
24
<PAGE>
MINIMUM CONTRACT VALUE
Where permitted by state law, we may terminate your contract if both of the
following occur: (1) your contract is less than $500 as a result of withdrawals;
and (2) you have not made any Purchase Payments during the past three years. We
will provide you with sixty days written notice. At the end of the notice
period, we will distribute the contract's remaining value to you.
QUALIFIED CONTRACT OWNERS
Certain Qualified plans restrict and/or prohibit your ability to withdraw money
from your contract. SEE TAXES ON PAGE 36 for a more detailed explanation.
DEATH BENEFIT
--------------------------------------------------------------------------------
If you should die during the Accumulation Phase, your Beneficiary will receive a
death benefit. The death benefit options are discussed in detail below.
The death benefit is not paid after you switch to the Income Phase. If you die
during the Income Phase, your Beneficiary will receive any remaining guaranteed
income payments in accordance with the income option you choose. SEE INCOME
OPTIONS ON PAGE 31.
You select the Beneficiary to receive any amounts payable on death. You may
change the Beneficiary at any time, unless you previously made an irrevocable
Beneficiary designation. A new Beneficiary designation is not effective until we
record the change.
The death benefit will be paid out when we receive adequate proof of death:
(1) a certified copy of a death certificate; (2) a certified copy of a decree of
court of competent jurisdiction as to the finding of death; (3) a written
statement by a medical doctor who attended the deceased at the time of death; or
(4) any other proof satisfactory to us. We may also require additional
documentation or proof in order for the death benefit to be paid.
Generally, the death benefit payment must begin immediately upon receipt of all
necessary documents and, in any event, must be paid within 5 years of the date
of death. The Beneficiary may, in the alternative, elect to have the death
benefit payable in the form of an annuity. If the Beneficiary elects an income
option, it must be paid over the Beneficiary's lifetime or for a period not
extending beyond the Beneficiary's life expectancy. Income payments must begin
within one year of the owner's death. If the Beneficiary is the spouse of the
owner, he or she can elect to continue the contract, rather than receive a death
benefit. SEE SPOUSAL CONTINUATION ON PAGE 27. If the Beneficiary does not make a
specific election as to how they want the death benefit distributed within sixty
days of our receipt of adequate proof of death, it will be paid in a lump sum.
If the Annuitant dies before annuity payments begin, you can name a new
Annuitant. If no Annuitant is named within 30 days, you will become the
Annuitant. However, if the owner is a non-natural person (for example, a trust),
then the death of the Annuitant will be treated as the death of the owner, no
new Annuitant may be named and the death benefit will be paid.
This contract provides three death benefit options: the standard death benefit
which is automatically included in your contract for no additional fee, and
Seasons Estate Advantage which offers a choice between two optional enhanced
death benefits, along with an Earnings Advantage, for an additional fee. If you
choose Seasons Estate Advantage, you must do so at the time of contract
application and the election cannot be terminated.
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<PAGE>
The term, "Net Purchase Payment" is used frequently in explaining the death
benefit options below. We define Net Purchase Payment as total Purchase Payments
reduced by any partial withdrawals (and any fees or charges applicable to such
withdrawals) in the same proportion that the contract value was reduced on the
date of such withdrawal.
STANDARD DEATH BENEFIT
The standard death benefit on your contract, if you (or in the case of joint
ownership, the younger owner) are age 74 or younger at the time of death, is the
greater of:
1. Net Purchase Payments compounded at a 3% annual growth rate from the
date of issue until the date of death, plus any subsequent Net Purchase
Payments recorded after the date of death; or
2. the value of your contract at the time we receive satisfactory proof of
death.
If you (or in the case of joint ownership, the younger owner) are age 75 or
older at the time of death, the death benefit is the greater of (1) Net Purchase
Payments compounded at a 3% annual growth rate from date of issue until your
75th birthday plus any Net Purchase Payments recorded after age 75 until date of
death, or (2) the value of your contract at the time we receive satisfactory
proof of death.
SEASONS ESTATE ADVANTAGE
The Seasons Estate Advantage is an optional feature that offers a choice between
two enhanced death benefits, each of which includes an Earnings Advantage
component. You must elect Seasons Estate Advantage at the time we issue your
contract and once elected it cannot be terminated.
If you elect Seasons Estate Advantage, we will pay your Beneficiary the sum of A
plus B, where:
A. is the amount payable under the selected enhanced death benefit (see
option 1 or 2 below); and
B. is the amount payable, if any, under the Earnings Advantage feature.
A. Seasons Estate Advantage Options:
1. 5% Accumulation Option -- the death benefit is the greater of:
a. the value of your contract at the time we receive satisfactory proof of
death; or
b. Net Purchase Payments compounded to the earlier of age 80 or the date of
death, at a 5% annual growth rate, plus any subsequent Net Purchase
Payments received after the date of death up to a maximum benefit of two
times the Net Purchase Payments made over the life of your contract.
2. Maximum Anniversary Value Option -- the death benefit is the greater of:
a. Net Purchase Payments; or
b. the value of your contract at the time we receive satisfactory proof of
death; or
c. 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 subsequent Net Purchase Payments made
since that anniversary.
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<PAGE>
B. Earnings Advantage Feature:
The Earnings Advantage feature may increase the death benefit amount. The
Earnings Advantage is only available if you elect one of the Seasons Estate
Advantage death benefits described above at the time of contract application.
The Earnings Advantage amount, if applicable, is added to the death benefit
payable under the 5% Accumulation Option or the Maximum Anniversary Value
option.
The following chart identifies the factors we use in determining the percentage
of earnings, if any, that will be contributed to your death benefit under the
Earnings Advantage feature.
WHAT IS THE CONTRACT YEAR OF DEATH?
Contract Year of Death is the number of full 12 month periods beginning with the
date your contract is issued and ending on the date of death.
WHAT IS THE EARNINGS ADVANTAGE PERCENTAGE AMOUNT?
We determine the amount of the Earnings Advantage, based on the earnings in your
contract at the time of your death. For the purpose of this calculation,
earnings equals contract value minus Net Purchase Payments as of the date of
death. If you have earnings in your contract at the time we receive satisfactory
proof of death, we will add a stated percentage of those earnings to your death
benefit based on the number of years you have held your contract. If the
earnings amount is negative, then no Earnings Advantage will be added.
WHAT IS THE MAXIMUM EARNINGS ADVANTAGE?
There is a maximum Earnings Advantage amount. The maximum Earnings Advantage
amount is equal to a percentage of your Net Purchase Payments. The applicable
percentage is determined by a schedule based on the number of years you have
held your contract prior to the date of death, which is set forth below.
<TABLE>
<CAPTION>
EARNINGS ADVANTAGE MAXIMUM
CONTRACT YEAR OF DEATH PERCENTAGE EARNINGS ADVANTAGE
<S> <C> <C>
----------------------------------------------------------------------------------------------------
Years 0-4 25% of earnings 25% of Net Purchase Payments
----------------------------------------------------------------------------------------------------
Years 5-9 40% of earnings 40% of Net Purchase Payments
----------------------------------------------------------------------------------------------------
Years 10+ 50% of earnings 50% of Net Purchase Payments
----------------------------------------------------------------------------------------------------
</TABLE>
You must elect Seasons Estate Advantage at the time of contract application.
Once elected, you may not terminate or change the death benefit option you have
selected.
We assess a fee for Seasons Estate Advantage. We deduct daily the annual charge
of 0.25% of your average daily ending value of the assets you have allocated to
the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) and/ or STRATEGY(IES).
WE RESERVE THE RIGHT TO MODIFY, SUSPEND OR TERMINATE THE SEASONS ESTATE
ADVANTAGE FEATURE (IN ITS ENTIRETY OR ANY COMPONENT AT ANY TIME).
SPOUSAL CONTINUATION
If you are the original owner of the contract and the Beneficiary is your
spouse, your Spouse may elect to continue the contract after your death. The
spouse becomes the new owner ("Continuing Spouse"). No death benefit is paid at
the time of the original owner's death, if the Continuing Spouse elects to
continue the contract. However, we will contribute to the contract any amount by
which the death benefit that would have been payable exceeds the contract value
at the original owner's death ("Continuation Contribution"). This Continuation
Contribution is only available one time, upon the death of the original owner.
The Continuation Contribution is not considered a Purchase Payment.
27
<PAGE>
After we receive both the Continuing Spouse's written request to continue the
contract and satisfactory proof of death of the original owner, we calculate the
Continuation Contribution using the contract value and any applicable death
benefit as of the original owner's date of death. This amount, if any, will be
added to the contract value as of the date we receive these two documents in a
form satisfactory to us. (If Seasons Estate Advantage was elected by the
original owner, any Earnings Advantage due, will be added to the death benefit
as well.) The age of the Continuing Spouse at the time of continuation
("Continuation Date") will be used in determining any future death benefits on
this Contract.
For purposes of determining any Earnings Advantage payable upon the death of the
Continuing Spouse, the following items in the Earnings Advantage table on the
previous page are modified as follows:
CONTRACT YEAR OF DEATH is the number of full 12 month periods starting on
the contract Continuation Date and ending on the date of death of the Continuing
Spouse.
EARNINGS ADVANTAGE PERCENTAGE is a percentage applied to the earnings in
your contract since the contract Continuation Date up to the date of death of
the Continuing Spouse. For the purpose of this calculation, earnings is defined
as the contract value on the Continuing Spouse's date of death reduced by the
sum of the contract value on the contract Continuation Date (including any
Continuation Contribution) plus Net Purchase Payments received after the
Continuation Date.
MAXIMUM EARNINGS PERCENTAGE is the maximum Earnings Advantage amount you may
receive. That amount is calculated as a percentage of the sum of (1) and (2)
reduced by (3), where
(1) is the contract value on the Continuation Date (including any Continuation
Contribution); and
(2) is Purchase Payments made on or subsequent to the Continuation Date until
the Continuing Spouse's date of death; and
(3) is any withdrawals, in the same proportion that the contract value was
reduced on the date of such withdrawal.
The Continuing Spouse may elect to continue the contract only upon the death of
the original owner. The Continuing Spouse cannot change any contract provisions
as the new owner. Upon the Continuing Spouse's death, the entire interest of the
contract must be distributed immediately under the provisions of the death
benefit previously selected by the original owner.
WE RESERVE THE RIGHT TO MODIFY, SUSPEND OR TERMINATE THE SPOUSAL CONTINUATION
PROVISION (IN ITS ENTIRETY OR ANY COMPONENT) AT ANY TIME.
EXPENSES
--------------------------------------------------------------------------------
There are charges and expenses associated with your contract. These charges and
expenses reduce your investment return. We will not increase the contract
maintenance fee or withdrawal charges under your contract. However the
investment charges under your contract may increase or decrease. Some states may
require that we charge less than the amounts described below.
INSURANCE CHARGES
The amount of this charge is 1.40% annually of the value of your contract
invested in the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) and/or STRATEGY(IES).
We deduct the charge daily, on a pro-rata basis, from the value of your contract
allocated to the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) and/or STRATEGY(IES).
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.
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<PAGE>
WITHDRAWAL CHARGES
During the Accumulation Phase you may make withdrawals from your contract.
However, a withdrawal charge may apply. We apply a withdrawal charge upon an
early withdrawal against each Purchase Payment you put into the contract. The
withdrawal charge equals a percentage of the Purchase Payment you take out of
the contract. The contract does provide a free withdrawal amount every year. SEE
ACCESS TO YOUR MONEY ON PAGE 22. The withdrawal charge percentage declines each
year a Purchase Payment is in the contract, as follows:
WITHDRAWAL CHARGE WITHOUT THE SEASONS 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% 6% 5% 4% 3% 2% 0%
</TABLE>
WITHDRAWAL CHARGE WITH THE SEASONS 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% 8% 7% 6% 6% 5% 4% 3% 2% 0%
</TABLE>
After a Purchase Payment has been in the contract for seven complete years, or
nine complete years if you elect to participate in the Seasons Rewards Program,
the withdrawal charge no longer applies to that Purchase Payment. When
calculating the withdrawal charge, we treat withdrawals as coming first from the
Purchase Payments that have been in your contract the longest. However, for tax
purposes, your withdrawals are considered earnings first, then Purchase
Payments.
The Seasons Rewards Program is designed to reward long term investing. We expect
that if you remain committed to this investment over the long term, we will
profit as a result of fees charged over the life of your contract. However,
neither the mortality and expense fees, distribution expenses, contract
administration fee nor investment management fees are higher on the Seasons
Rewards Program than the contract without election of the Seasons Rewards
Program.
Whenever possible, we deduct the withdrawal charge from the money remaining in
your contract from each of your investment options on a pro-rata basis. If you
withdraw all of your contract value, we deduct any applicable withdrawal charges
from the amount withdrawn. We will not assess a withdrawal charge for money
withdrawn to pay a death benefit. We do not currently assess a withdrawal charge
upon election to receive income payments from your contract. Withdrawals made
prior to age 59 1/2 may result in tax penalties. SEE TAXES ON PAGE 36.
INVESTMENT CHARGES
INVESTMENT MANAGEMENT FEES
Charges are deducted from the assets of the investment portfolios underlying the
SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) or STRATEGY(IES) for the advisory and
other expenses of the portfolios. SEE FEE TABLES ON PAGE 5.
SERVICE FEES
Portfolio shares are all subject to fees imposed under a servicing plan adopted
by the Seasons Series Trust pursuant to Rule 12b-1 under the Investment Company
Act of 1940. This service fee of 0.15%, which is also known as a 12b-1 fee, will
not increase for the life of the contract.
29
<PAGE>
FOR MORE DETAILED INFORMATION ON THESE INVESTMENT CHARGES, REFER TO THE
PROSPECTUS FOR THE SEASONS SERIES TRUST, ATTACHED.
CONTRACT MAINTENANCE FEE
During the Accumulation Phase, we subtract a contract maintenance fee from your
account once per year. This charge compensates us for the cost of contract
administration. 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. We will deduct the $35 ($30 in North Dakota) contract
maintenance fee on a pro-rata basis from your account value on your contract
anniversary. In the states of Pennsylvania, Texas and Washington a contract
maintenance fee will be deducted pro-rata from the SELECT PORTFOLIO(S), FOCUSED
PORTFOLIO(S) and/or STRATEGY(IES) in which you are invested, only. If you
withdraw your entire contract value, we deduct the fee from that withdrawal.
TRANSFER FEE
You may make transfers between investment options, without incurring a transfer
charge. However, we reserve the right to charge a fee for such transfers in the
future.
SEASONS ESTATE ADVANTAGE FEE
Please see page 26 of this prospectus for additional information regarding the
Seasons Estate Advantage fee.
OPTIONAL INCOME PROTECTOR FEE
Please see page 33 of this prospectus for additional information regarding the
Income Protector fee.
PREMIUM TAX
Certain states charge the Company a tax on the premiums you pay into the
contract. We deduct from your contract these premium tax charges. Currently we
deduct the charge for premium taxes when you fully surrender or annuitize the
contract. In the future, we may assess this deduction at the time you put
Purchase Payment(s) into the contract or upon payment of a death benefit.
APPENDIX D 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.
30
<PAGE>
Anchor National may make such a determination regarding sales to its employees,
it affiliates' employees and employees of currently contracted broker-dealers;
its registered representatives and immediate family members of all of those
described.
We reserve the right to change or modify any such determination or the treatment
applied to a particular group, at any time.
INCOME OPTIONS
--------------------------------------------------------------------------------
ANNUITY DATE
During the Income Phase, the money in your Contract is used to make regular
income payments to you. You may switch to the Income Phase any time after your
second contract anniversary. You select the month and year in which you want
income payments to begin. The first day of that month is the Annuity Date. You
may change your Annuity Date, so long as you do so at least seven days before
the income payments are scheduled to begin. Once you begin receiving income
payments, you cannot change your Income Option. Except as discussed under Option
5, once you begin receiving income payments, you cannot otherwise access your
money through a withdrawal or surrender.
If you participate in the Seasons Rewards Program and switch to the Income Phase
prior to a Deferred Payment Enhancement Date, if applicable, we will not
allocate any corresponding Deferred Payment Enhancement to your contract. SEE
SEASONS REWARDS PROGRAM ON PAGE 11.
Income payments must begin on or before your 90th birthday or on your tenth
contract anniversary, whichever occurs later. If you do not choose an Annuity
Date, your income payments will automatically begin on this date. Certain states
may require your income payments to start earlier.
If the Annuity Date is past your 85th birthday, your contract could lose its
status as an annuity under Federal tax laws. This may cause you to incur adverse
tax consequences. In addition, certain Qualified contracts require you to take
minimum distributions after you reach age 70 1/2. SEE TAXES ON PAGE 36.
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
selected for joint lives, we pay according to Option 3.
We base our calculation of income payments on the life of the Annuitant and the
annuity rates set forth in your contract. As the contract owner, you may change
the Annuitant at any time prior to the Annuity Date. You must notify us if the
Annuitant dies before the Annuity Date and then designate a new Annuitant.
OPTION 1 - LIFE INCOME ANNUITY
This option provides income payments for the life of the Annuitant. Income
payments stop when the Annuitant dies.
OPTION 2 - JOINT AND SURVIVOR LIFE ANNUITY
This option provides income payments for the life of the Annuitant and for the
life of another designated person. Upon the death of either person, we will
continue to make income payments during the lifetime of the survivor. Income
payments stop whenever the survivor dies.
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<PAGE>
OPTION 3 - JOINT AND 100% SURVIVOR LIFE ANNUITY WITH 10 YEAR PERIOD CERTAIN
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 payments have been made, the remaining payments are made to the
Beneficiary under your Contract.
OPTION 4 - LIFE ANNUITY WITH 10 OR 20 YEAR PERIOD CERTAIN
This option is similar to Option 1 above. In addition, this option provides a
guarantee that income payments will be made for at least 10 or 20 years. You
select the number of years. If the Annuitant dies before all guaranteed income
payments are made, the remaining income payments go to the Beneficiary under
your Contract.
OPTION 5 - INCOME FOR A SPECIFIED PERIOD
This option provides income payments for a guaranteed period ranging from 5 to
30 years. If the Annuitant dies before all the guaranteed income payments are
made, the remaining income payments are made to the Beneficiary under your
contract. Additionally, if variable income payments are elected under this
option, you (or the Beneficiary under the contract if the Annuitant dies prior
to all guaranteed payments being made) may redeem the contract value (in full or
in part) after the Annuity Date. The amount available upon such redemption would
be the discounted present value of any remaining guaranteed payments. The value
of an Annuity Unit, regardless of the option chosen, takes into account the
mortality and expense risk charge. Since Option 5 does not contain an element of
mortality risk, no benefit is derived from this charge.
We make income payments on a monthly, quarterly, semi-annual or annual basis.
You instruct us to send you a check or to have the payments direct deposited
into your bank account. If state law allows, we distribute annuities with a
contract value of $5,000 or less in a lump sum. Also, if the selected income
option results in annuity payments of less than $50 per payment, we may decrease
the frequency of the payments, state law allowing.
ALLOCATION OF ANNUITY PAYMENTS
You can choose income payments that are fixed, variable or both. If payments are
fixed, Anchor National guarantees the amounts of each payment. If the payments
are variable, the amounts are not guaranteed. They will go up and/or down based
upon the performance of the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) or
STRATEGY(IES) in which you invest.
FIXED OR VARIABLE INCOME PAYMENTS
If at the date when income payments begin you are invested in the SELECT
PORTFOLIO(S), FOCUSED PORTFOLIO(S) and/or STRATEGY(IES) only, your income
payments will be variable. If your money is only in fixed accounts at that time,
your income payments will be fixed in amount. If you are invested in both fixed
and variable options at the time you begin the Income Phase, a portion of your
income payments will be fixed and a portion will be variable.
INCOME PAYMENTS
Your income payments will vary if you are invested in the SELECT PORTFOLIO(S),
FOCUSED PORTFOLIO(S) and/or STRATEGY(IES) after the Annuity date depending on
four factors:
- for life options, your age when payments begin,
- the value of your contract in the SELECT PORTFOLIO(S), FOCUSED
PORTFOLIO(S) and/or STRATEGY(IES) on the Annuity Date,
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<PAGE>
- the 3.5% assumed investment rate for variable income payments used in the
annuity table for the contract, and;
- the performance of the SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) and/or
STRATEGY(IES) in which you are invested during the time you receive income
payments.
If you are invested in both the fixed account options and the SELECT
PORTFOLIO(S), FOCUSED PORTFOLIO(S) and/or STRATEGY(IES) after the Annuity Date,
the allocation of funds between the fixed accounts and SELECT PORTFOLIO(S),
FOCUSED PORTFOLIO(S) and/or STRATEGY(IES) also impacts the amount of your
annuity payments.
TRANSFERS DURING THE INCOME PHASE
During the Income Phase, one (1) transfer per month is permitted between the
SELECT PORTFOLIO(S), FOCUSED PORTFOLIO(S) and STRATEGY(IES). No other transfers
are allowed during the Income Phase.
DEFERMENT OF PAYMENTS
We may defer making fixed payments for up to six months, or less if required by
law. Interest is credited to you during the deferral period.
Please read the Statement of Additional Information, available upon request, for
a more detailed discussion of the income options.
INCOME PROTECTOR
You may elect to enroll in the Income Protector Program. The Income Protector
Program can provide a future "safety net" which offers you the ability to
receive a guaranteed fixed minimum retirement income when you choose to begin
receiving income payments. With the Income Protector you can know the level of
minimum income that will be available to you upon annuitization, regardless of
fluctuating market conditions. In order to utilize the program, you must follow
the provisions discussed below.
You are not required to use the Income Protector to receive income payments. The
general provisions of your contract provide other income options. However, we
will not refund fees paid for the Income Protector if you begin taking income
payments under the general provisions of your contract. YOU MAY NEVER NEED TO
RELY UPON INCOME PROTECTOR IF YOUR CONTRACT PERFORMS WITHIN A HISTORICALLY
ANTICIPATED RANGE. HOWEVER, PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
Certain federal tax code restrictions on the income options available to
qualified retirement investors may have an impact on your ability to benefit
from this feature. Qualified investors should read NOTE TO QUALIFIED CONTRACT
HOLDERS, below.
HOW DO WE DETERMINE THE AMOUNT OF YOUR MINIMUM GUARANTEED INCOME?
We base the amount of minimum retirement income available to you if you take
income payments using the Income Protector upon a calculation we call the Income
Benefit Base. At the time your enrollment in the Income Protector program
becomes effective, your Initial Income Benefit Base is equal to your contract
value. Your participation becomes effective on either the date of issue of the
contract (if the feature is elected at the time of application) or on the
contract anniversary following your enrollment in the program.
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<PAGE>
The Income Benefit Base is only a calculation. It does not represent a contract
value, nor does it guarantee performance of the SELECT PORTFOLIO(S), FOCUSED
PORTFOLIO(S) or STRATEGY(IES) in which you invest.
Your Income Benefit Base increases if you make subsequent Purchase Payments and
decreases if you withdraw money from your contract. The exact Income Benefit
Base calculation is equal to (a) plus (b) minus (c) where:
(a) is equal to, for the first year of calculation, your contract value on
the date your participation became effective, and for each subsequent
year of calculation, the Income Benefit Base of your prior contract
anniversary, and;
(b) is equal to the sum of all subsequent Purchase Payments made into the
contract since the prior contract anniversary, and;
(c) is equal to all withdrawals and applicable fees, charges and any
negative MVA (but excluding administration fees, mortality and expense
charges and the fee for enrollment into the program) since the prior
contract anniversary, including premium taxes, in an amount proportionate
to the amount by which such withdrawals decreased your contract value.
ENROLLING IN THE PROGRAM
If you decide that you want the protection offered by the Income Protector
program, you must elect the Program by completing the Income Protector Election
Form. You can not terminate your enrollment once elected.
ELECTING TO RECEIVE INCOME
In order to exercise your rights under the Income Protector feature, you may not
begin the Income Phase for at least nine years following the date your
enrollment in the program became effective. Further, you may begin taking income
payments using the Income Protector feature only within 30 days after the ninth
or later contract anniversary following the effective date of your enrollment in
the Income Protector program.
The contract anniversary prior to your election to begin receiving income
payments is your Income Benefit Date. We calculate your Income Benefit Base as
of that date to use in determining your guaranteed minimum fixed retirement
income. To determine the minimum guaranteed retirement income available to you,
we apply your final Income Benefit Base to the annuity rates stated in your
Income Protector endorsement for the income option you select. You then choose
if you would like to receive the income annually, semi-annually, quarterly or
monthly for the time guaranteed under your selected income option. Your final
Income Benefit Base is equal to (a) minus (b) where:
(a) is your Income Benefit Base as of your Income Benefit Date, and;
(b) is any partial withdrawals of contract value and any charges applicable
to those withdrawals (including any negative MVA) and any withdrawal
charges otherwise applicable, calculated as if you fully surrender your
contract as of the Income Benefit Date, and any applicable premium taxes.
The income options available when using the Income Protector feature to receive
your retirement income are:
- Life Annuity with 10 years guaranteed, or
- Joint and 100% Survivor Life Annuity with 20 years guaranteed
At the time you elect to begin receiving income payments, we will calculate your
income payments using both your Income Benefit Base and your contract value. We
will use the same income option for each calculation; however,
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<PAGE>
the annuity factors used to calculate your income under the Income Protector
feature will be different. You will receive whichever provides a greater stream
of income. If you elect to receive income payments using the Income Protector
feature your income payments will be fixed in amount.
NOTE TO QUALIFIED CONTRACT HOLDERS
Qualified contracts generally require that you select an income option that does
not exceed your life expectancy. That restriction, if it applies to you, may
limit the benefit of the Income Protector program. To utilize the Income
Protector feature, you must take income payments under one of the two income
options described above. If those income options exceed your life expectancy,
you may be prohibited from receiving your guaranteed fixed income under the
program. If you own a Qualified contract to which this restriction applies and
you elect the Income Protector program, you may pay for this minimum guarantee
and not be able to realize the benefit.
Generally, for Qualified contracts:
- for the Life Annuity with 10 years guaranteed, you must annuitize before
age 79, and;
- for the Joint and 100% Survivor Annuity with 20 years guaranteed, both
annuitants must be 70 or younger or one of the annuitants must be 65 or
younger upon annuitization. Other age combinations may be available.
You may wish to consult your tax advisor for information concerning your
particular circumstances.
FEES ASSOCIATED WITH THE INCOME PROTECTOR PROGRAM
If you elect to participate in the Income Protector program we deduct a fee
equal to 0.10% of your Income Benefit Base from your contract value on each
contract anniversary beginning with the contract anniversary following the
anniversary on which your enrollment in the program becomes effective. We will
deduct this charge from your contract value on every contract anniversary up to
and including your Income Benefit Date. Additionally, if you fully surrender
your contract prior to your contract anniversary, we will deduct the fee at the
time of surrender based on your Income Benefit Base as of the surrender date.
Once elected, the Income Protector Program and its corresponding charges may not
be terminated until full surrender or annuitization of the contract occurs.
HYPOTHETICAL EXAMPLE OF THE OPERATION OF THE INCOME PROTECTOR PROGRAM:
This table assumes a $100,000 initial investment in a Non-qualified contract
with no further premiums, no withdrawals, and no premium taxes, no election of
Seasons Rewards or Seasons Estate Advantage and the election of the Income
Protector program at contract issue.
<TABLE>
<CAPTION>
ANNUAL INCOME IF YOU ANNUITIZE ON THE FOLLOWING CONTRACT ANNIVERSARIES:
IF AT ISSUE YOU ARE... 1-8 9 10 15 20
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------
Male (M), Age 60* N/A 6,480 6,672 7,716 8,832
----------------------------------------------------------------------------------------------------
Female (F), Age 60* N/A 5,700 5,880 6,900 8,112
----------------------------------------------------------------------------------------------------
M and F, Age 60** N/A 4,920 5,028 5,544 5,928
----------------------------------------------------------------------------------------------------
</TABLE>
* Life Annuity with 10 Year Period Certain
** Joint and 100% Survivor Annuity with 20 Year Period Certain
The Income Protector program may not be available in all states. Check with your
financial advisor for availability in your state.
We reserve the right to modify, suspend or terminate the program at any time.
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<PAGE>
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 ("federal tax code") 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 federal tax code
treats such a withdrawal as first coming from the earnings and then as coming
from your Purchase Payments. For annuity payments, any portion of each payment
that is considered a return of your Purchase Payment will not be taxed.
Withdrawn earnings are treated as income to you and are taxable. The federal tax
code 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 federal tax code); (4) in a series of substantially
equal installments made for your life or for the joint lives of you and you
Beneficiary; (5) under an immediate annuity; or (6) which come from Purchase
Payments made prior to August 14, 1982.
TAX TREATMENT OF DISTRIBUTIONS--QUALIFIED CONTRACTS
Generally, you have not paid any taxes on the Purchase Payments used to buy a
Qualified contract. Any amount of money you take out as a withdrawal or as
income payments is taxable income. The federal tax code 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 federal tax code); (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 federal tax code for amounts paid during the taxable year for medical care;
(6) to fund higher
36
<PAGE>
education expenses (as defined in federal tax code); (7) to fund certain
first-time home purchase expenses; and, except in the case of an IRA; (8) when
you separate from service after attaining age 55; and (9) when paid to an
alternate payee pursuant to a qualified domestic relations order.
The federal tax code 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 federal tax code); or (5) in the case of hardship.
In the case of hardship, the owner can only withdraw Purchase Payments.
MINIMUM DISTRIBUTIONS
If you have a Qualified contract, distributions must begin by April 1 of the
calendar year following the later of (1) the calendar year in which you attain
age 70 1/2 or (2) the calendar year in which you retire. Failure to satisfy the
minimum distribution requirements may result in a tax penalty. You should
contact your tax advisor for more information.
We currently waive surrender charges and MVA on withdrawals taken to meet
minimum distribution requirements. Current operational practice is to provide a
free withdrawal of the greater of the contract's maximum penalty free amount or
the required minimum distribution amount for a particular contract (but not
both).
You may elect to have the required minimum distribution amount on your contract
calculated and withdrawn each year under the automatic withdrawal option. You
may select either monthly, quarterly, semi-annual or annual withdrawals for this
purpose. This service is provided as a courtesy and we do not guarantee the
accuracy of our calculations. Accordingly, we recommend you consult your tax
advisor concerning your required minimum distribution. You may terminate your
election for automated minimum distribution at any time by sending a written
request to our Annuity Service Center. We reserve the right to change or
discontinue the service at any time.
DIVERSIFICATION
The federal tax code imposes certain diversification requirements on the
underlying investments for a variable annuity. We believe that the underlying
Portfolios' management monitors the variable Portfolios so as to comply with
these requirements. To be treated as a variable annuity for tax purposes, the
underlying investments must meet these requirements.
The diversification regulations do not provide guidance as to the circumstances
under which you, because of the degree of control you exercise over the
underlying investments, and not Anchor National, would be considered the owner
of the shares of the Portfolios. It is unknown to what extent owners are
permitted to select investments, to make transfers among Portfolios or the
number and type of Portfolios owners may select from. If any guidance is
provided which is considered a new position, then the guidance would generally
be applied prospectively. However, if such guidance is considered not to be a
new position, it may be applied retroactively. This would mean you, as the owner
of the contract, could be treated as the owner of the underlying variable
investment Portfolios. Due to the uncertainty in this area, we reserve the right
to modify the contract in an attempt to maintain favorable tax treatment.
PERFORMANCE
--------------------------------------------------------------------------------
From time to time we will advertise the performance of the SELECT PORTFOLIOS,
FOCUSED PORTFOLIOS and/or STRATEGIES. Any such performance results are based on
historical earnings and are not intended to indicate future performance.
37
<PAGE>
We advertise the Cash Management Portfolio's yield and effective yield. In
addition, the other SELECT PORTFOLIOS, FOCUSED PORTFOLIOS and STRATEGIES
advertise total return, gross yield and yield-to-maturity. These figures
represent past performance of the SELECT PORTFOLIOS, FOCUSED PORTFOLIOS and
STRATEGIES. These performance numbers do not indicate future results.
We may show performance of each SELECT PORTFOLIO, FOCUSED PORTFOLIO and/or
STRATEGY in comparison to various appropriate indices and the performance of
other similar variable annuity products with similar objectives as reported by
such independent reporting services as Morningstar, Inc., Lipper Analytical
Services, Inc. and the Variable Annuity Research Data Service ("VARDS").
Please see the Statement of Additional Information, available upon request, for
more information regarding the methods used to calculate performance data.
Anchor National may also advertise the rating and other information assigned to
it by independent industry ratings organizations. Some of those organizations
are A.M. Best Company ("A.M. Best"), Moody's Investor's Service ("Moody's"),
Standard & Poor's Insurance Rating Services ("S&P"), and Duff & Phelps. A.M.
Best's and Moody's ratings reflect their current opinion of our financial
strength and performance in comparison to others in the life and health
insurance industry. S&P's and Duff & Phelps' ratings measure the ability of an
insurance company to meet its obligations under insurance policies it issues.
These two ratings do not measure the insurer's ability to meet non-policy
obligations. Ratings in general do not relate to the performance of the variable
Portfolios.
OTHER INFORMATION
--------------------------------------------------------------------------------
ANCHOR NATIONAL
Anchor National is a stock life insurance company originally organized under the
laws of the state of California in April, 1965. On January 1, 1996, Anchor
National redomesticated under the laws of the state of Arizona.
Anchor National and its affiliates, SunAmerica Life Insurance Company, First
SunAmerica Life Insurance Company, SunAmerica Asset Management, SunAmerica Trust
Company, and the SunAmerica Financial Network, Inc. (comprising six wholly owned
broker-dealers), specialize in retirement savings and investment products and
services. Business focuses include fixed and variable annuities, mutual funds,
broker-dealer services and trust administration services.
THE SEPARATE ACCOUNT
Anchor National originally established a separate account, Variable Annuity
Account Five (the "Separate Account"), under Arizona law on July 8, 1996. The
Separate Account is registered with the SEC as a unit investment trust under the
Investment Company Act of 1940, as amended.
Anchor National owns the assets in the Separate Account. However, the assets in
the Separate Account are not chargeable with liabilities arising out of any
other business conducted by Anchor National. Income gains and losses (realized
and unrealized) resulting from assets in the Separate Account are credited to or
charged against the Separate Account without regard to other income, gains or
losses of Anchor National.
CUSTODIAN
State Street Bank and Trust Company, 255 Franklin Street, Boston, Massachusetts
02110, serves as the custodian of the assets of the Separate Account. Anchor
National pays State Street Bank for services provided, based on a schedule of
fees.
38
<PAGE>
THE GENERAL ACCOUNT
Money allocated to the fixed account options goes into Anchor National's general
account. The general account consists of all of Anchor National's assets other
than assets attributable to a separate account. All of the assets in the general
account are chargeable with the claims of any Anchor National contract holders
as well as all of its creditors. The general account funds are invested as
permitted under state insurance laws.
DISTRIBUTION OF THE CONTRACT
Registered representatives of broker-dealers sell the contract. We pay
commissions to these representatives for the sale of the contracts. We do not
expect the total commissions to exceed 7.5% of your Purchase Payments. Contracts
sold with the Seasons Rewards Program may result in our paying a lower
commission. We may also pay a bonus to representatives for contracts which stay
active for a particular period of time, in addition to standard commissions. We
do not deduct commissions paid to registered representatives directly from your
Purchase Payments.
From time to time, we may pay or allow additional promotional incentives in the
form of cash or other compensation. We reserve the right to offer these
additional incentives only to certain broker-dealers that sell or are expected
to sell, certain minimum amounts of the contract, or other contracts offered by
us. Promotional incentives may change at any time.
SunAmerica Capital Services, Inc., 733 Third Avenue, 4th Floor, New York, New
York 10017 distributes the contracts. SunAmerica Capital Services is an
affiliate of Anchor National, and is a registered as a broker-dealer under the
Exchange Act of 1934 and a member of the National Association of Securities
Dealers, Inc.
No underwriting fees are paid in connection with the distribution of the
contracts.
ADMINISTRATION
We are responsible for the administrative servicing of your contract. During the
Accumulation Phase, you will receive confirmation of transactions within your
contract. Transactions made pursuant to contractual or systematic agreements,
such as deduction of the annual maintenance fee and dollar cost averaging, may
be confirmed quarterly. Purchase payments received through the Automatic Payment
Plan or a salary reduction arrangement, may also be confirmed quarterly. For all
other transactions, we send confirmations immediately.
During the Accumulation and Income Phases, you will receive a statement of your
transactions over the past quarter and a summary of your account values. Please
contact our Annuity Service Center at 1-800-445-SUN2, if you have any comment,
question or service request.
We send out transaction confirmations and quarterly statements. It is your
responsibility to review these documents carefully and notify us of any
inaccuracies immediately. We investigate all inquiries. To the extent that we
believe we made an error, we retroactively adjust your contract, provided you
notify us within 30 days of receiving the transaction confirmation or quarterly
statement. Any other adjustments we deem warranted are made as of the time we
receive notice of the error.
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.
39
<PAGE>
INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
The consolidated financial statements of Anchor National Life Insurance Company
as of December 31, 1999, December 31, 1998, and September 30, 1998 and for the
year ended December 31, 1999, for the three months ended December 31, 1998, and
for each of the two fiscal years in the period ended September 30, 1998, are
incorporated by reference in this prospectus and have been so included in
reliance on the reports of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting. As of
the date of this Prospectus, sale of these contracts had not yet begun.
Therefore, financial statements for Variable Annuity Account Five (portion
related to the Seasons Select(II) Variable Annuity) are not contained herein.
40
<PAGE>
TABLE OF CONTENTS OF
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<S> <C>
Separate Account............................................ 3
General Account............................................. 4
Performance Data............................................ 4
Income Payments............................................. 9
Annuity Unit Values......................................... 10
Taxes....................................................... 13
Distribution of Contracts................................... 18
Financial Statements........................................ 18
</TABLE>
41
<PAGE>
APPENDIX A - CONDENSED FINANCIAL INFORMATION
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FISCAL 3/31/00
YEAR TO
STRATEGIES INCEPTION TO 3/31/99 3/31/00 4/30/00
------------------------------------------------- ---------------------- ----------- -----------
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------
Growth (Inception Date: 3/4/99)
Beginning AUV.................................. 15.05 15.89 21.30
End AUV........................................ 15.89 21.30 20.24
Ending Number of AUs........................... 31,169 1,653,495 1,871,300
---------------------------------------------------------------------------------------------------------
Moderate Growth (Inception Date: 3/3/99)
Beginning AUV.................................. 14.25 15.09 19.48
End AUV........................................ 15.09 19.48 18.62
Ending Number of AUs........................... 93,136 1,559,019 1,760,865
---------------------------------------------------------------------------------------------------------
Balanced Growth (Inception Date: 3/5/99)
Beginning AUV.................................. 13.80 14.05 16.68
End AUV........................................ 14.05 16.68 16.11
Ending Number of AUs........................... 85,553 991,695 1,061,795
---------------------------------------------------------------------------------------------------------
Conservative Growth (Inception Date: 3/5/99)
Beginning AUV.................................. 13.03 13.21 14.89
End AUV........................................ 13.21 14.89 14.50
Ending Number of AUs........................... 33,892 623,175 629,067
---------------------------------------------------------------------------------------------------------
<CAPTION>
FISCAL 3/31/00
YEAR TO
SELECT PORTFOLIOS
----------------------------------------------------- INCEPTION TO 3/31/99 ---- 3/31/00 ---- 4/30/00
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Large Cap Growth (Inception Date: 3/1/99)
Beginning AUV.................................. 10.00 10.68 14.94
End AUV........................................ 10.68 14.94 13.99
Ending Number of AUs........................... 85,647 1,058,317 1,158,071
---------------------------------------------------------------------------------------------------------
Large Cap Composite (Inception Date: 3/1/99)
Beginning AUV.................................. 10.00 10.41 12.88
End AUV........................................ 10.41 12.88 12.30
Ending Number of AUs........................... 33,347 316,855 361,941
---------------------------------------------------------------------------------------------------------
Large Cap Value (Inception Date: 3/1/99)
Beginning AUV.................................. 10.00 10.32 10.75
End AUV........................................ 10.32 10.75 10.79
Ending Number of AUs........................... 34,004 531,732 571,490
---------------------------------------------------------------------------------------------------------
Mid Cap Growth (Inception Date: 3/1/99)
Beginning AUV.................................. 10.00 10.62 18.41
End AUV........................................ 10.62 18.41 16.85
Ending Number of AUs........................... 27,096 529,844 612,249
---------------------------------------------------------------------------------------------------------
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
FISCAL 3/31/00
YEAR TO
SELECT PORTFOLIOS
----------------------------------------------------- INCEPTION TO 3/31/99 ---- 3/31/00 ---- 4/30/00
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mid Cap Value (Inception Date: 3/1/99)
Beginning AUV.................................. 10.00 10.10 10.93
End AUV........................................ 10.10 10.93 11.14
Ending Number of AUs........................... 11,278 297,306 318,151
---------------------------------------------------------------------------------------------------------
Small Cap (Inception Date: 3/1/99)
Beginning AUV.................................. 10.00 10.35 15.00
End AUV........................................ 10.35 15.00 13.56
Ending Number of AUs........................... 22,807 432,850 481,239
---------------------------------------------------------------------------------------------------------
International Equity (Inception Date: 3/1/99)
Beginning AUV.................................. 10.00 10.51 13.61
End AUV........................................ 10.51 13.61 12.46
Ending Number of AUs........................... 23,961 314,634 384,946
---------------------------------------------------------------------------------------------------------
Diversified Fixed Income (Inception Date: 3/10/99)
Beginning AUV.................................. 10.00 10.02 10.00
End AUV........................................ 10.02 10.00 9.96
Ending Number of AUs........................... 31,762 474,014 513,721
---------------------------------------------------------------------------------------------------------
Cash Management (Inception Date: 3/26/99)
Beginning AUV.................................. 10.00 10.00 10.32
End AUV........................................ 10.00 10.32 10.35
Ending Number of AUs........................... 970 380,169 235,608
---------------------------------------------------------------------------------------------------------
<CAPTION>
FOCUSED PORTFOLIOS
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Focus Growth*
Beginning AUV.................................. 0 0 0
End AUV........................................ 0 0 0
Ending Number of AUs........................... 0 0 0
* This portfolio was not available for sale until July 5, 2000.
---------------------------------------------------------------------------------------------------------
</TABLE>
AUV-Accumulation Unit Value
AU-Accumulation Units
A-2
<PAGE>
APPENDIX B - SEASONS REWARDS PROGRAM EXAMPLES
--------------------------------------------------------------------------------
The following examples assume an initial $125,000 Purchase Payment is made and
that the Company is offering Upfront and Deferred Payment Enhancements in
accordance with this chart:
<TABLE>
<CAPTION>
UPFRONT PAYMENT DEFERRED PAYMENT DEFERRED PAYMENT
ENHANCEMENT LEVEL ENHANCEMENT RATE ENHANCEMENT RATE ENHANCEMENT DATE
------------------- ---------------- ---------------- ------------------------------------
<S> <C> <C> <C>
-----------------------------------------------------------------------------------------------
Under $100,000 2% 0% N/A
$100,000 - $499,999 2% 1% Nine years from the date we receive
each Purchase Payment.
$500,000 - more 2% 2% Nine years from the date we receive
each Purchase Payment.
-----------------------------------------------------------------------------------------------
</TABLE>
I. DEFERRED PAYMENT ENHANCEMENT
If you elect to participate in the Seasons Rewards Program at contract issue, we
contribute at least 2% of each Purchase Payment to your contract for each
Purchase Payment we receive, as an Upfront Payment Enhancement. 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 Deferred Payment Enhancement Rate may
increase, decrease or be eliminated at any time.
EXAMPLE 1 - NO WITHDRAWALS ARE MADE
The Upfront Payment Enhancement allocated to your contract is $2,500 (2% of
$125,000).
On your 9th contract anniversary, the Deferred Payment Enhancement Date, your
Deferred Payment Enhancement of $1,250 (1% of your remaining Purchase Payment or
$125,000) will be allocated to your contract.
EXAMPLE 2 - WITHDRAWAL MADE PRIOR TO DEFERRED PAYMENT ENHANCEMENT DATE
As in Example 1, your Upfront Payment Enhancement is $2,500.
This example also assumes the following:
(1) Your contract value on your 5th contract anniversary is $190,000.
(2) You request a withdrawal of $75,000 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
$65,000 ($190,000 contract value less your $125,000 investment in the contract).
Therefore, you are withdrawing $10,000 of your initial Purchase Payment. Your
contract value will also be reduced by a $500 withdrawal charge on the $10,000
Purchase Payment (5% of $10,000). Your gross withdrawal is $75,500 of which
$10,500 constitutes part of your Purchase Payment.
B-1
<PAGE>
The withdrawal of $10,500 of your $125,000 Purchase Payment is a withdrawal of
8.4% of your Purchase Payment. Therefore, only 91.6% or $114,500 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 $1,145 (1% of your remaining Purchase
Payment, $114,500) to your contract.
II. 90 DAY WINDOW
Contracts issued with the Seasons Rewards feature may be eligible for a
"Look-Back Adjustment." As of the 90th day after your contract was issued, we
will total your Purchase Payments remaining in your contract at that time,
without considering any investment gain or loss in contract value on those
Purchase Payments. If your total Purchase Payments bring you to an Enhancement
Level which, as of the date we issued your contract, would have provided for a
higher Upfront and/or Deferred Payment Enhancement Rate on each Purchase
Payment, you will get the benefit of the Enhancement Rate(s) that were
applicable to that higher Enhancement Level at the time your contract was
issued.
This example assumes the following:
(1) No withdrawal in the first 90 days.
(2) Initial Purchase Payment of $50,000 on November 1, 2000.
(3) Subsequent Purchase Payment of $50,000 on January 15, 2001.
(4) Subsequent Purchase Payment of $25,000 on January 28, 2001.
<TABLE>
<CAPTION>
DEFERRED
PURCHASE UPFRONT DEFERRED PAYMENT
PAYMENT PAYMENT PAYMENT ENHANCEMENT
DATE AMOUNT ENHANCEMENT ENHANCEMENT DATE
----------------------------------- -------- ----------- ----------- ------------------
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------
November 1, 2000 $ 50,000 2% 0% N/A
January 15, 2001 $ 50,000 2% 1% January 15, 2010
January 28, 2001 $ 25,000 2% 1% January 28, 2010
----------------------------------------------------------------------------------------------
</TABLE>
ENHANCEMENT ADJUSTMENTS ON THE 90TH DAY FOLLOWING CONTRACT ISSUE
The sum of all Purchase Payments made in the first 90 days of the contract
equals $125,000. According to the Enhancement Levels in effect at the time this
contract was issued, a $125,000 Purchase Payment would have received a 2%
Upfront Payment Enhancement and a 1% Deferred Payment Enhancement. Under the 90
Day Window provision all Purchase Payments made within those first 90 days would
receive the benefit of the parameters in place at the time the contract was
issued, as if all of the Purchase Payments were received on the date of issue.
Thus, the first two payment enhancements would be adjusted at the end of the
90 days as follows:
<TABLE>
<CAPTION>
DEFERRED
PURCHASE UPFRONT DEFERRED PAYMENT
PAYMENT PAYMENT PAYMENT ENHANCEMENT
DATE AMOUNT ENHANCEMENT ENHANCEMENT DATE
----------------------------------- -------- ----------- ----------- ------------------
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------
November 1, 2000 $ 50,000 2% 1% November 1, 2009
January 15, 2001 $ 50,000 2% 1% January 15, 2010
January 28, 2001 $ 25,000 2% 1% January 28, 2010
----------------------------------------------------------------------------------------------
</TABLE>
B-2
<PAGE>
APPENDIX C - MARKET VALUE ADJUSTMENT
--------------------------------------------------------------------------------
The market value adjustment reflects the impact that changing interest rates
have on the value of money invested at a fixed interest rate. The longer the
period of time remaining in the term you initially agreed to leave your money in
the fixed investment option, the greater the impact of changing interest rates.
The impact of the market value adjustment can be either positive or negative,
and is computed by multiplying the amount withdrawn, transferred or annuitized
by the following factor:
[(1+I/(1+J+L)](to the power of N/12) - 1
THE MARKET VALUE ADJUSTMENT FORMULA
MAY DIFFER IN CERTAIN STATES
where:
I is the interest rate you are earning on the money invested in
the fixed investment option;
J is the interest rate then currently available for the period
of time equal to the number of years remaining in the term you initially agreed
to leave your money in the fixed investment option; and
L is equal to 0.005, except in Florida where it is equal to
.0025.
N is the number of full months remaining in the term you
initially agreed to leave your money in the fixed investment option.
EXAMPLES OF THE MARKET VALUE ADJUSTMENT
The examples below assume the following:
(1) You made an initial Purchase Payment of $10,000 and allocated it to the
10-year fixed investment option at a rate of 5%;
(2) You make a partial withdrawal of $4,000 when 1 year (12 months) remain
in the 10-year term you initially agreed to leave your money in the fixed
investment option (N=12); and
(3) You have not made any other transfers, additional Purchase Payments, or
withdrawals.
No withdrawal charges are reflected because your Purchase Payment has been in
the contract for nine full years. If a withdrawal charge applies, it is deducted
before the market value adjustment. The market value adjustment is assessed on
the amount withdrawn less any withdrawal charges.
POSITIVE ADJUSTMENT
Assume that on the date of withdrawal, the interest rate in effect for a new
Purchase Payments in the 1-year fixed investment option is 4%.
The market value adjustment factor is
= [(1+I/(1+J+0.005)](to the power of N/12) - 1
= [(1.05)/(1.04+0.005)](to the power of 12/12) - 1
= (1.004785)(to the power of 1) - 1
= 1.004785 - 1
= +0.004785
The requested withdrawal amount is multiplied by the market value adjustment
factor to determine the market value adjustment:
$4,000 X (+0.004785) = +$19.14
$19.14 represents the market value adjustment that would be added to your
withdrawal.
C-1
<PAGE>
NEGATIVE ADJUSTMENT
Assume that on the date of withdrawal, the interest rate in effect for new
Purchase Payments in the 1-year fixed investment option is 6%.
The market value adjustment factor is
= [(1+I)/(1+J+0.005)](to the power of N/12) - 1
= [(1.05)/(1.06+0.005)](to the power of 12/12) - 1
= (0.985915)(to the power of 1) - 1
= 0.985915 - 1
= -0.014085
The requested withdrawal amount is multiplied by the market value adjustment
factor to determine the market value adjustment:
$4,000 X (-0.014085) = -$56.34
$56.34 represents the market value adjustment that will be deducted from the
money remaining in the 10-year fixed investment option.
C-2
<PAGE>
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.................................................. 0.50% 2.35%
Maine....................................................... 0% 2.00%
Nevada...................................................... 0% 3.50%
South Dakota................................................ 0% 1.25%
West Virginia............................................... 1.00% 1.00%
Wyoming..................................................... 0% 1.00%
</TABLE>
D-1
<PAGE>
Please forward a copy (without charge) of the Seasons Select(II) Variable
Annuity Statement of Additional Information to:
(Please print or type and fill in all information.)
--------------------------------------------------------------------------------
Name
--------------------------------------------------------------------------------
Address
--------------------------------------------------------------------------------
City/State/Zip
--------------------------------------------------------------------------------
Date: ___________________ Signed: _____________________________________________
Return to: Anchor National Life Insurance Company, Annuity Service Center,
P.O. Box 52499, Los Angeles, California 90054-0299
<PAGE>
ANCHOR NATIONAL LIFE INSURANCE COMPANY
------------------------------------------------------------------------
VARIABLE ANNUITY ACCOUNT FIVE
(PORTION RELATING TO THE SEASONS VARIABLE ANNUITY)
------------------------------------------------------------------------
SUPPLEMENT TO THE SEASONS PROSPECTUS
DATED AUGUST 1, 2000
------------------------------------------------------------------------
The date of the Prospectus has been changed to October 16, 2000.
All references in the Prospectus to the date of the Statement of
Additional Information are hereby changed to October 16, 2000.
Date: October 18, 2000
PLEASE KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS.
<PAGE>
[LOGO]
SUNAMERICA
THE RETIREMENT SPECIALIST
ANCHOR NATIONAL LIFE INSURANCE COMPANY
1 SUNAMERICA CENTER
LOS ANGELES, CA 90067-6022
1-800-445-SUN2
WWW.SUNAMERICA.COM
J-2004-PRO (R 7/00)
[LOGO] AIG MEMBER of AMERICAN INTERNATIONAL GROUP, INC.
[LOGO]
RETIRE ON YOUR TERMS -TM-
VARIABLE ANNUITIES
[LOGO] SUNAMERICA Presorted
THE RETIREMENT SPECIALIST Standard
1 SunAmerica Center U.S. Postage Paid
Los Angeles, CA 90067-6022 Towne, Inc.
ADDRESS SERVICE REQUESTED
<PAGE>
PROSPECTUS
[LOGO]
SEASONS
[LOGO] ANCHOR NATIONAL
A SUNAMERICA COMPANY
<PAGE>
[LOGO]
PROFILE
August 1, 2000
This Profile is a summary of some of the more important points you should know
before purchasing the Seasons Variable Annuity. The annuity is more fully
described in the prospectus. Please read the prospectus carefully.
1. THE SEASONS VARIABLE ANNUITY
The Seasons Variable Annuity Contract is a contract between you and Anchor
National Life Insurance Company. We designed Seasons to help you save on a
tax-deferred basis and diversify your investments among asset classes and
managers to meet long-term financial goals, such as retirement funding. Tax
deferral means all your money, including the amount you would otherwise pay in
current income taxes, remains in your contract to generate more earnings. Your
money could grow faster than it would in a comparable taxable investment. Of
course, certain qualified contracts automatically provide tax deferral
regardless of whether they are funded with an annuity.
The Seasons Variable Annuity is designed as a long term retirement investment
and helps you meet these goals by offering four variable investment STRATEGIES
which are managed by five different professional investment managers. The value
of any portion of your contract allocated to the STRATEGIES will fluctuate up or
down based on the performance of the STRATEGIES you select. You may experience a
loss. Five fixed account options, each for a different length of time and
offering different interest rates guaranteed by Anchor National, are available.
In addition, the DCA fixed accounts also offer fixed interest rates guaranteed
by Anchor National and are available under the contract as source accounts for
the Dollar Cost Averaging program.
The STRATEGIES and fixed account options are designed to be used in concert in
order to achieve your desired investment goals. You may put money into any of
the STRATEGIES and/or fixed account options. You may transfer between STRATEGIES
and/or the fixed account options four times per year without charge.
Like most annuities, the contract has an Accumulation Phase and an Income Phase.
During the Accumulation Phase, you invest money in your contract. Your earnings
are based on the investment performance of the STRATEGY or STRATEGIES to which
your money is allocated and/or the interest rate earned on the fixed account
options. You may withdraw money from your contract during the Accumulation
Phase. However, as with other tax-deferred investments, you will pay taxes on
earnings and untaxed contributions when you withdraw them. A federal tax penalty
may apply if you make withdrawals before age 59 1/2. During the Income Phase,
you will receive payments from your annuity. Your payments may be fixed in
dollar amount, vary with investment performance or be a combination of both,
depending on where your money is allocated. Among other factors, the amount of
money you are able to accumulate in your contract during the Accumulation Phase
will determine the amount of your payments during the Income Phase.
<PAGE>
2. INCOME OPTIONS
You can select from one of five income options:
(1) payments for your lifetime;
(2) payments for your lifetime and your survivor's lifetime;
(3) payments for your lifetime and your survivor's lifetime, but for not
less than 10 or 20 years;
(4) payments for your lifetime, but for not less than 10 or 20 years; and
(5) payments for a specified period of 5 to 30 years.
You will also need to decide if you want your payments to fluctuate with
investment performance or remain constant, and the date on which your payments
will begin. Once you begin receiving payments, you cannot change your income
option. If your contract is Non-qualified, payments during the Income Phase are
considered partly a return of your original investment. The "original
investment" part of each payment is not taxable but any gain to your original
investment is currently taxable as ordinary income upon distribution. For
Qualified contracts, the entire payment is currently taxable as ordinary income.
3. PURCHASING A SEASONS VARIABLE ANNUITY
You can buy a contract through your financial representative, who can also help
you complete the proper forms. For Non-qualified contracts the minimum initial
investment is $5,000. For Qualified contracts the minimum initial investment is
$2,000. You can add $500 or more to your contract at any time during the
Accumulation Phase.
4. INVESTMENT OPTIONS
You can put your money into any one or more of the four multi-manager variable
investment STRATEGIES and/or one or more of the seven fixed account options. The
fixed investment options offer fixed rates of interest for specified lengths of
time.
Each STRATEGY has a different investment objective. The STRATEGIES use an asset
allocation investment approach. The STRATEGIES invest in a combination of
underlying investment portfolios which in turn invest in a combination of
stocks, bonds and cash, to achieve their investment objective. The four
investment STRATEGIES are:
GROWTH
MODERATE GROWTH
BALANCED GROWTH
CONSERVATIVE GROWTH
Each STRATEGY invests in three out of six underlying investment portfolios. The
underlying investment portfolios are managed by the following five investment
managers:
PUTNAM INVESTMENT MANAGEMENT, INC.
T. ROWE PRICE ASSOCIATES, INC.
JANUS CAPITAL CORPORATION
SUNAMERICA ASSET MANAGEMENT CORPORATION
WELLINGTON MANAGEMENT COMPANY, LLP
5. EXPENSES
Each year we deduct a $35 ($30 in North Dakota) contract administration fee on
your contract anniversary. We currently waive this fee if your contract value is
at least $50,000 on your contract anniversary.
We also deduct insurance charges which amount to 1.40% annually of the average
daily value of your contract allocated to the STRATEGIES. There are also
investment charges and other expenses if you put money into the STRATEGIES,
which are estimated to range from 1.06% to 1.21%. Investment charges may be more
or less than the percentages reflected here.
If you take your money out in excess of the "free withdrawal" amount allowed for
in your contract, we may assess a withdrawal charge that is a percentage of the
money you withdraw. The percentage declines with each year the purchase payment
is in the contract as follows:
<TABLE>
<S> <C> <C> <C>
Year 1......... 7% Year 5......... 4%
Year 2......... 6% Year 6......... 3%
Year 3......... 6% Year 7......... 2%
Year 4......... 5% Year 8......... 0%
</TABLE>
Additionally, if you take money out of a multi-year fixed account option before
the end of the selected period, we may assess an adjustment which could increase
or decrease the value of your money.
In some states you may also be assessed a state premium tax of up to 3.5%,
depending upon the state in which you reside.
If you transfer among the STRATEGIES and/or fixed account options more than four
times per year, we may charge a $25 dollar transfer fee for each subsequent
transfer ($10 in Pennsylvania and Texas).
<PAGE>
The following chart is designed to help you understand the charges in your
contract. THE COLUMN "TOTAL ANNUAL CHARGES" SHOWS THE TOTAL OF THE $35 CONTRACT
ADMINISTRATION CHARGE, THE 1.40% INSURANCE CHARGES AND THE INVESTMENT CHARGES
FOR EACH STRATEGY. WE CONVERTED THE CONTRACT ADMINISTRATION CHARGE TO A
PERCENTAGE (.09%) USING AN ASSUMED CONTRACT SIZE OF $40,000. The actual impact
of this charge on your contract may differ from this percentage.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
EXAMPLES
Total Annual Total Annual Total Total
Insurance Investment Total Expenses Expenses
Related Related Annual at end of at end of
Charges Charges Charges 1 YEAR 10 YEARS
STRATEGY
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Growth 1.49% (1.40% + .09%) 1.14% 2.63% $97 $296
Moderate Growth 1.49% (1.40% + .09%) 1.12% 2.61% $96 $294
Balanced Growth 1.49% (1.40% + .09%) 1.12% 2.61% $96 $294
Conservative Growth 1.49% (1.40% + .09%) 1.10% 2.59% $96 $292
---------------------------------------------------------------------------------------------------------------
</TABLE>
The examples assume that you invested $1,000 in a STRATEGY which earns 5%
annually and that you withdrew your money at the end of a 1 year period and at
the end of a 10 year period. For year 1, the total annual charges are assessed
as well as the withdrawal charge. For year 10, the example reflects the total
annual charges but there is no withdrawal charge applicable. The annual
investment-related expenses may vary. The amounts shown here are estimates and
reflect the waiver or reimbursement of expenses by the investment adviser. No
premium taxes are reflected. Please see the Fee Tables in the prospectus for
more detailed information regarding the fees and expenses incurred under the
contract.
6. TAXES
Unlike taxable investments where earnings are taxed in the year they are earned,
taxes on amounts earned in a Non-qualified contract (one that is established
with after tax dollars) are deferred until they are withdrawn. In a Qualified
contract (one that is established with before tax dollars) all amounts are
taxable when they are withdrawn.
When you begin taking distributions or withdrawals from your contract, earnings
are considered to be taken out first and will be taxed at your ordinary income
tax rate. You may be subject to a 10% federal tax penalty for distributions or
withdrawals before age 59 1/2.
7. ACCESS TO YOUR MONEY
Withdrawals may be made from your contract in the amount of $1,000 or more. Each
year, you can take out up to 10% of the total amount you invested without
charge. Withdrawals in excess of the 10% will be assessed a withdrawal charge.
If you withdraw your entire contract value and you have Purchase Payments still
subject to a withdrawal charge, you will not receive the benefit of any free
withdrawal amount. A separate withdrawal charge schedule applies to each
purchase payment. After a Purchase Payment has been in the contract for seven
full years, withdrawal charges no longer apply to that portion of the money. Of
course, you may also have to pay income tax and a 10% IRS tax penalty may apply.
Neither withdrawal charges nor the 10% federal tax penalty are assessed when a
death benefit is paid.
8. PERFORMANCE
The value of your annuity will fluctuate depending upon the investment
performance of the STRATEGY or STRATEGIES you select. From time to time we may
advertise a STRATEGY'S total return. The total return figures are based on
historical data and are not intended to indicate future performance.
The following chart shows total return for each STRATEGY for calendar year 1999.
These numbers reflect the insurance charges, the contract maintenance fee and
investment charges. Withdrawal charges are not reflected in the chart. Past
performance is not a guarantee of future results.
<TABLE>
<CAPTION>
-----------------------------------------
STRATEGY 1999
-----------------------------------------
<S> <C>
GROWTH 35.32%
MODERATE GROWTH 29.60%
BALANCED GROWTH 16.90%
CONSERVATIVE GROWTH 10.56%
-----------------------------------------
</TABLE>
9. DEATH BENEFIT
If you, or, if there is a joint owner, either of the two of you, should die
during the Accumulation Phase, your Beneficiary will receive a death benefit.
If you die before age 75, the death benefit will be the greater of: (1) the
money you put into the contract less any withdrawals, applicable charges and
market value adjustments on those withdrawals, accumulated at 3%; or (2) the
current value of your contract.
If you die after age 75, the death benefit will be the greater of: (1) the money
you put into the contract less any withdrawals, charges and market value
adjustments, accumulated at 3% until your 75th birthday plus any subsequent
Purchase Payments and less any withdrawals made after your 75th birthday; or
(2) the current value of your contract.
<PAGE>
In the instance of joint owners, the amount of the death benefit is calculated
based upon the age of the youngest joint owner.
10. OTHER INFORMATION
OWNERSHIP: The contract is an allocated fixed and variable group annuity
contract. A group contract is issued to a contractholder, for the benefit of the
participants in the group. You, as an owner of a Seasons Variable Annuity, are a
participant in the group and will receive a certificate evidencing your
ownership. You, as the owner of a certificate, are entitled to all the rights
and privileges of ownership. As used in this Profile and the prospectus, the
term contract refers to your certificate. In some states an individual fixed and
variable annuity contract may be available instead, which is identical to the
group contract described in this Profile and the prospectus except that it is
issued directly to the individual owner.
FREE LOOK: You may cancel your contract within 10 days of receiving it (or
whatever period is required by your state) by mailing it to our Annuity Service
Center. Your contract will be treated as void on the date we receive it and we
will pay you an amount equal to the value of the money in the STRATEGIES plus
any money you put into the fixed account options. Its value may be more or less
than the money you initially invested. Thus, the investment risk is borne by you
during the free look period.
SYSTEMATIC WITHDRAWAL PROGRAM: If selected by you, this program allows you to
receive either monthly, quarterly, semi-annual or annual checks during the
Accumulation Phase. Systematic withdrawals may also be electronically
transferred to your bank account. Of course, withdrawals during the Accumulation
Phase may be taxable and a 10% IRS tax penalty may apply if you are under age
59 1/2.
DOLLAR COST AVERAGING: If selected by you, this program allows you to invest
gradually into one or more of the STRATEGIES.
PRINCIPAL ADVANTAGE PROGRAM: If selected by you, this program allows you to put
money in a fixed account option and one or more STRATEGIES and we will guarantee
that the portion allocated to the fixed account option, assuming that it remains
invested in that option, will grow to equal your principal investment.
AUTOMATIC PAYMENT PLAN: You can add to your contract directly from your bank
account with as little as $50 per month.
CONFIRMATIONS AND QUARTERLY STATEMENTS: During the Accumulation Phase, you will
receive confirmation of transactions within your contract. Transactions made
pursuant to contractual or systematic agreements, such as deduction of the
annual maintenance fee and dollar cost averaging, may be confirmed quarterly.
Purchase Payments received through the automatic payment plan or a salary
reduction arrangement, may also be confirmed quarterly. For all other
transactions, we send confirmations immediately.
During the Accumulation and Income Phases, you will receive a statement of your
transactions over the past quarter and a summary of your account values.
11. INQUIRIES:
If you have questions about your contract or need to make changes, call your
financial representative or contact us at:
Anchor National Life Insurance Company
Annuity Service Center
P.O. Box 54299
Los Angeles, California 90054-0299
800/445-SUN2
If money accompanies your correspondence, you should direct it to:
Anchor National Life Insurance Company
P.O. Box 100330
Pasadena, California 91189-0001
<PAGE>
[LOGO]
ALLOCATED FIXED AND VARIABLE GROUP ANNUITY
issued by
VARIABLE ANNUITY ACCOUNT FIVE
and
ANCHOR NATIONAL LIFE INSURANCE COMPANY
The annuity contract has 11 investment choices - 7 fixed account options which
offer interest rates guaranteed by Anchor National for different periods of time
and 4 variable investment STRATEGIES:
GROWTH
MODERATE GROWTH
BALANCED GROWTH
CONSERVATIVE GROWTH
which invest in the underlying portfolios of
SEASONS SERIES TRUST
which is managed by:
PUTNAM INVESTMENT MANAGEMENT, INC.
T. ROWE PRICE ASSOCIATES, INC.
JANUS CAPITAL CORPORATION
SUNAMERICA ASSET MANAGEMENT CORPORATION
WELLINGTON MANAGEMENT COMPANY, LLP
You can put your money into any one or all of the STRATEGIES and/or fixed
account options.
Please read this prospectus carefully before investing and keep it for your
future reference. It contains important information you should know about the
Seasons Variable Annuity.
To learn more about the annuity offered by this prospectus, you can obtain a
copy of the Statement of Additional Information ("SAI") dated August 1, 2000.
The SAI has been filed with the Securities and Exchange Commission ("SEC") and
can be considered part of this prospectus.
The table of contents of the SAI appears on page 32 of this prospectus. For a
free copy of the SAI, call us at 800/445-SUN2 or write our Annuity Service
Center at, P.O. Box 54299, Los Angeles, California 90054-0299.
A registration statement has been filed with the SEC under the Securities Act of
1933 relating to the contract. This prospectus does not contain all the
information in the registration statement as permitted by SEC regulations. The
omitted information can be obtained from the SEC's principal office in
Washington, D.C., upon payment of a prescribed fee.
In addition, the SEC maintains a website (http://www.sec.gov) that contains the
SAI, materials incorporated by reference and other information filed
electronically with the SEC.
ANNUITIES INVOLVE RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL, AND ARE NOT A
DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY, ANY BANK. THEY ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE
Anchor National's Annual Report on Form 10-K for the year ended December 31,
1999 are incorporated herein by reference.
All documents or reports filed by Anchor National under Section 13(a), 13(c),
14, or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") after the effective date of this prospectus are also incorporated by
reference. Statements contained in this prospectus and subsequently filed
documents which are incorporated by reference or deemed to be incorporated by
reference are deemed to modify or supersede documents incorporated herein by
reference.
Anchor National files its Exchange Act documents and reports, including its
annual and quarterly reports on Form 10-K and Form 10-Q, electronically pursuant
to EDGAR under CIK No. 0000006342.
Anchor National is subject to the informational requirements of the Securities
and Exchange Act of 1934 (as amended). We file reports and other information
with the SEC to meet those requirements. You can inspect and copy this
information at SEC public facilities at the following locations:
WASHINGTON, DISTRICT OF COLUMBIA
450 Fifth Street, N.W., Room 1024
Washington, D.C. 20549
CHICAGO, ILLINOIS
500 West Madison Street
Chicago, IL 60661
NEW YORK, NEW YORK
7 World Trade Center, 13th Fl.
New York, NY 10048
To obtain copies by mail 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 registration
statements and exhibits. For further information regarding the Separate Account,
Anchor National and its general account, the Portfolios and the contract, please
refer to the registration statements and exhibits.
The SEC also maintains a website (http://www.sec.gov) that contains the SAI,
materials incorporated by reference and other information filed electronically
with the SEC by Anchor National.
Anchor National will provide without charge to each person to whom this
prospectus is delivered, upon written or oral request, a copy of the above
documents incorporated by reference. Requests for these documents should be
directed to Anchor National's Annuity Service Center, as follows:
Anchor National Life Insurance Company
Annuity Service Center
P.O. Box 54299
Los Angeles, California 90054-0299
Telephone Number: (800) 445-SUN2
SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION
Indemnification for liabilities arising under the Securities Act of 1933 (the
"Act") is provided to Anchor National's officers, directors and controlling
persons. The SEC has advised that it believes such indemnification is against
public policy under the Act and unenforceable. If a claim for indemnification
against such liabilities (other than for Anchor National's payment of expenses
incurred or paid by its directors, officers or controlling persons in the
successful defense of any legal action) is asserted by a director, officer or
controlling person of Anchor National in connection with the securities
registered under this prospectus, Anchor National will submit to a court with
jurisdiction to determine whether the indemnification is against public policy
under the Act. Anchor National will be governed by final judgment of the issue.
However, if in the opinion of Anchor National's counsel this issue has been
determined by controlling precedent, Anchor National will not submit the issue
to a court for determination.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY.................................................... 4
FEE TABLES.................................................. 5
Owner Transaction Expenses.............................. 5
Annual Separate Account Expenses........................ 5
Investment Portfolio Expenses........................... 6
EXAMPLES.................................................... 7
THE SEASONS VARIABLE ANNUITY................................ 8
PURCHASING A SEASONS VARIABLE ANNUITY....................... 9
Allocation of Purchase Payments......................... 9
Accumulation Units...................................... 9
Free Look............................................... 10
INVESTMENT OPTIONS.......................................... 10
Variable Investment Options............................. 10
THE STRATEGIES........................................ 10
STRATEGY Rebalancing.................................. 14
Fixed Account Options................................... 14
Market Value Adjustment................................. 15
Transfers During the Accumulation Phase................. 15
Dollar Cost Averaging................................... 16
Principal Advantage Program............................. 17
Voting Rights........................................... 18
Substitution............................................ 18
ACCESS TO YOUR MONEY........................................ 18
Systematic Withdrawal Program........................... 19
Minimum Contract Value.................................. 19
Qualified Contract Owners............................... 20
DEATH BENEFIT............................................... 20
Death of the Annuitant.................................. 21
EXPENSES.................................................... 21
Insurance Charges....................................... 21
Withdrawal Charges...................................... 21
Investment Charges...................................... 22
Contract Maintenance Fee................................ 22
Transfer Fee............................................ 22
Premium Tax............................................. 22
Income Taxes............................................ 22
Reduction or Elimination of Charges and Expenses, and
Additional Amounts Credited............................ 22
INCOME OPTIONS.............................................. 23
Annuity Date............................................ 23
Income Options.......................................... 23
Allocation of Income Payments........................... 24
Fixed or Variable Income Payments....................... 24
Income Payments......................................... 24
Transfers During the Income Phase....................... 25
Deferment of Payments................................... 25
TAXES....................................................... 25
Annuity Contracts in General............................ 25
Tax Treatment of Distributions--Non-qualified
Contracts.............................................. 26
Tax Treatment of Distributions--Qualified Contracts..... 26
Minimum Distributions................................... 26
Diversification......................................... 26
PERFORMANCE................................................. 27
OTHER INFORMATION........................................... 27
The Separate Account.................................... 27
The General Account..................................... 28
Distribution of the Contract............................ 28
Administration.......................................... 28
Year 2000...............................................
Legal Proceedings....................................... 29
Custodian............................................... 29
INDEPENDENT ACCOUNTANTS..................................... 29
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.... 30
APPENDIX A--CONDENSED FINANCIAL INFORMATION................. A-1
APPENDIX B--MARKET VALUE ADJUSTMENT......................... B-1
APPENDIX C--PREMIUM TAXES................................... C-1
</TABLE>
3
<PAGE>
GLOSSARY
We have capitalized some of the technical terms used in this prospectus. To help
you understand these terms, we define them in this glossary.
ACCUMULATION PHASE--The period during which you invest money in your contract.
ACCUMULATION UNITS--A measurement we use to calculate the value of the variable
portion of your contract during the Accumulation Phase.
ANNUITANT(S)--The person(s) on whose life (lives) we base annuity payments.
ANNUITY DATE--The date on which annuity payments are to begin, as selected by
you.
ANNUITY UNITS--A measurement we use to calculate the amount of annuity payments
you receive from the variable portion of your contract during the Income Phase.
BENEFICIARY (IES)--The person(s) designated to receive any benefits under the
contract if you or the Annuitant dies.
COMPANY--Anchor National Life Insurance Company, Anchor National, We, Us, the
insurer which issues this policy.
INCOME PHASE--The period during which we make annuity payments to you.
IRS--The Internal Revenue Service.
NON-QUALIFIED (CONTRACT)--A contract purchased with after-tax dollars. In
general, these contracts are not under any pension plan, specially sponsored
program or individual retirement account ("IRA").
PURCHASE PAYMENTS--The money you give us to buy the contract, as well as any
additional money you give us to invest in the contract after you own it.
QUALIFIED (CONTRACT)--A contract purchased with pretax dollars. These contracts
are generally purchased under a pension plan, specially sponsored program or
individual retirement account ("IRA").
STRATEGY(IES)--A sub-account of Variable Annuity Account Five which provides for
the variable investment options available under the contract. Each STRATEGY has
its own investment objective and is invested in the underlying investment
portfolios of the Seasons Series Trust.
4
<PAGE>
SEASONS VARIABLE ANNUITY FEE TABLES
--------------------------------------------------------------------------------
OWNER TRANSACTION EXPENSES
Withdrawal Charge as a percentage of Purchase Payments:
<TABLE>
<S> <C> <C> <C>
Year 1.............. 7% Year 5.............. 4%
Year 2.............. 6% Year 6.............. 3%
Year 3.............. 6% Year 7.............. 2%
Year 4.............. 5% Year 8.............. 0%
</TABLE>
<TABLE>
<S> <C>
Contract Maintenance Charge........ $35 each year ($30 in North Dakota)
Transfer Fee....................... No charge for first 4 transfers each
year; thereafter, the fee is $25 per
transfer ($10 in
Pennsylvania and Texas)
</TABLE>
ANNUAL SEPARATE ACCOUNT EXPENSES
(as a percentage of daily net asset value)
<TABLE>
<S> <C>
Mortality Risk Charge........................ 0.90%
Expense Risk Charge.......................... 0.35%
Distribution Expense Charge.................. 0.15%
----
Total Separate Account Expenses........ 1.40%
</TABLE>
5
<PAGE>
INVESTMENT PORTFOLIO EXPENSES
FOR STRATEGY UNDERLYING PORTFOLIOS
(as a percentage of daily net asset value of each investment portfolio as of the
fiscal year end of the Trust ending March 31, 2000)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
FEE EXPENSES EXPENSES
<S> <C> <C> <C>
---------------------------------------------------------------------------------
Stock 0.85% 0.21% 1.06%
Asset Allocation: Diversified
Growth 0.85% 0.36% 1.21%
Multi-Managed Growth 0.89% 0.26% 1.15%
Multi-Managed Moderate Growth 0.85% 0.25% 1.10%
Multi-Managed Income/Equity 0.81% 0.29% 1.10%
Multi-Managed Income 0.77% 0.29% 1.06%
---------------------------------------------------------------------------------
</TABLE>
The Investment Portfolio Expenses table set forth above identifies the total
investment expenses charged by the underlying investment portfolios of Seasons
Series Trust. As explained in this prospectus, each variable investment option
(STRATEGY) under this contract invests in a combination of three of these
underlying portfolios. The total investment charge depending on the particular
STRATEGY, will be a proportion of the investment charges of the underlying
portfolio in which each STRATEGY invests. Accordingly, the actual investment
portfolio expenses incurred by contract holders within a STRATEGY will vary
depending upon the daily net asset value of each investment portfolio in which
each STRATEGY is invested. You can get a better understanding of the practical
ramifications of this blended investment charge by looking at the next table
Investment Portfolio Expenses by STRATEGY. That table sets forth an estimate of
the annual investment charge you may incur as a result of the ratio of the
STRATEGY(IES) investment in the underlying portfolios.
The total investment expenses for each contract owner will be based upon the
STRATEGY in which they are invested. Each STRATEGY invests in different
proportions of these underlying portfolios. The proportion of each portfolio in
each particular STRATEGY determines the amounts of investment charge borne by
each contractholder.
THE ABOVE INVESTMENT PORTFOLIO EXPENSES WERE PROVIDED BY SEASONS SERIES TRUST.
WE HAVE NOT INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION.
INVESTMENT PORTFOLIO EXPENSES BY STRATEGY
(based on the total annual expenses of the underlying investment portfolios
reflected above as of the fiscal year end of the Trust ending March 31, 2000)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
FEE EXPENSES EXPENSES
<S> <C> <C> <C>
----------------------------------------------------------------------------------
STRATEGY
Growth 0.87% 0.27% 1.14%
Moderate Growth 0.85% 0.27% 1.12%
Balanced Growth 0.83% 0.29% 1.12%
Conservative Growth 0.80% 0.30% 1.10%
----------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
EXAMPLES
You will pay the following expenses on a $1,000 investment in each STRATEGY,
assuming a 5% annual return on assets and:
(a) that you surrender the contract at the end of the stated time period;
(b) that the contract is annuitized or not surrendered.*
<TABLE>
<CAPTION>
TIME PERIODS
----------------------------------------------------------------------------------------------
STRATEGY 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Growth (a) $97 (a) $142 (a) $179 (a) $296
(b) $27 (b) $ 82 (b) $139 (b) $296
Moderate Growth (a) $96 (a) $141 (a) $178 (a) $294
(b) $26 (b) $ 81 (b) $138 (b) $294
Balanced Growth (a) $96 (a) $141 (a) $178 (a) $294
(b) $26 (b) $ 81 (b) $138 (b) $294
Conservative Growth (a) $96 (a) $140 (a) $177 (a) $292
(b) $26 (b) $ 80 (b) $137 (b) $292
----------------------------------------------------------------------------------------------
</TABLE>
EXPLANATION OF FEE TABLES AND EXAMPLES
1. The purpose of the Fee Tables is to show you the various expenses you will
incur directly and indirectly by investing in the contract. The example
reflects owner transaction expenses, separate account expenses and
investment portfolio expenses by STRATEGY.
2. For certain investment portfolios in which the STRATEGIES invest, the
adviser, SunAmerica Asset Management Corp. (SAAMCo), has voluntarily
agreed to waive fees or reimburse certain expenses, if necessary, to keep
annual operating expenses at or below the following percentages of each
investment portfolio's average net assets: Stock and Asset Allocation:
Diversified Growth Portfolios: 1.21%; Multi-Managed Growth: 1.29%;
Multi-Managed Moderate Growth: 1.21%; Multi-Managed Income/Equity: 1.14%,
Multi-Managed Income: 1.06%. SAAMCo also may voluntarily waive or
reimburse additional amounts to increase an investment portfolios'
investment return. All waivers and/or reimbursements may be terminated at
any time. Furthermore, SAAMCo may recoup any waivers or reimbursements
within two years after such waivers or reimbursements are granted,
provided that the investment portfolio is able to make such payment and
remain in compliance with the foregoing expense limitations. To date, none
of the investment portfolio expenses have exceeded the stated caps.
Therefore no waiver of fees or reimbursements were implemented.
3. The Examples assume that no transfer fees were imposed. Premium taxes are
not reflected but may be applicable.
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
7
<PAGE>
THE SEASONS 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: You do not pay taxes on your earnings from the annuity until
you withdraw them.
- Death Benefit: If you die during the Accumulation Phase, the insurance
company pays a death benefit to your Beneficiary.
- Guaranteed Income: If elected, you receive a stream of income for your
lifetime, or another available period you select.
Tax-qualified retirement plans (e.g., IRAs, 401(k) or 403(b) plans) defer
payment of taxes on earnings until withdrawal. If you are considering funding a
tax-qualified retirement plan with an annuity, you should know that an annuity
does not provide any additional tax deferral treatment of earnings beyond the
treatment provided by the tax-qualified retirement plan itself. However,
annuities do provide other features and benefits which may be valuable to you.
You should fully discuss this decision with your financial advisor.
This annuity was developed to help you contribute to your retirement savings.
The flexibility and diversification offered by this annuity can help you reach
your retirement savings goals. This annuity works in two stages, the
Accumulation Phase and the Income Phase. Your contract is in the Accumulation
Phase during the period when you make payments into the contract. The Income
Phase begins when you request us to start making payments to you out of the
money accumulated in your contract.
The Contract is called a "variable" annuity because it allows you to invest in
STRATEGIES which, like mutual funds, vary with market conditions. You can gain
or lose money if you invest in these STRATEGIES. If you allocate money to the
STRATEGY(IES), the amount of money you accumulate in your contract depends on
the performance of the STRATEGY(IES) in which you invest.
The Contract also offers several fixed account options for varying time periods.
Fixed account options earn interest at a rate set and guaranteed by Anchor
National. If you allocate money to the fixed account options, the amount of
money that accumulates in the Contract depends on the total interest credited to
the particular fixed account option(s) in which you are invested.
For more information on STRATEGIES and fixed account options available under
this contract, SEE INVESTMENT OPTIONS ON PAGE 10.
Anchor National Life Insurance Company (Anchor National, The Company, Us, We)
issues the Seasons Variable Annuity. When you purchase a Seasons Variable
Annuity, a contract exists between you and Anchor National. The Company is a
stock life insurance company organized under the laws of the state of Arizona.
Its principal place of business is 1 SunAmerica Center, Los Angeles, California
90067. The Company conducts life insurance and annuity business in the District
of Columbia and all states except New York. Anchor National is an indirect,
wholly owned subsidiary of American International Group, Inc., a Delaware
corporation.
This annuity is designed for investors whose personal circumstances allow for a
long-term investment time horizon, to assist in contributing to retirement
savings. As a function of the federal tax code you may be assessed a 10% federal
tax penalty on any withdrawal made prior to your reaching age 59 1/2.
Additionally, this contract provides that you will be charged a withdrawal
charge on each Purchase Payment withdrawn if that Purchase Payment has not been
invested in this contract for at least 7 years. Because of these potential
penalties, you should fully discuss all of the benefits and risks of this
contract with your financial adviser prior to purchase.
8
<PAGE>
PURCHASING A SEASONS VARIABLE ANNUITY
--------------------------------------------------------------------------------
A Purchase Payment is the money you give us to buy a contract. Any additional
money you give us to invest in the contract after purchase is a subsequent
Purchase Payment.
This chart shows the minimum initial and subsequent Purchase Payments permitted
under your contract. These amounts depend upon whether a contract is Qualified
or Non-qualified for tax purposes.
<TABLE>
<CAPTION>
MINIMUM
MINIMUM INITIAL SUBSEQUENT
PURCHASE PAYMENT PURCHASE PAYMENT
---------------- ----------------
<S> <C> <C>
Qualified $2,000 $500
Non-qualified $5,000 $500
</TABLE>
Prior Company approval is required to make Purchase Payments greater than
$1,500,000. The Company reserves the right to refuse any Purchase Payment
including one which would cause the contract value or Purchase Payments to
exceed $1,500,000 at the time of the Purchase Payment. Also, the optional
Automatic Payment Plan allows you to make subsequent payments as small as
$50.00.
We may refuse any Purchase Payment. In general, we will not issue a contract to
anyone who is age 70 1/2 or older, unless they certify to us that the minimum
distribution required by the IRS is being made. In addition, we may not issue a
contract to anyone over age 90.
ALLOCATION OF PURCHASE PAYMENTS
We invest your Purchase Payments in the fixed accounts and STRATEGIES according
to your instructions. If we receive a Purchase Payment without allocation
instructions, we will invest the money according to your last allocation
instructions. Purchase Payments are credited based upon the Accumulation Unit
Value (AUV) next determined after receipt. SEE INVESTMENT OPTIONS PAGE 10.
In order to issue your contract, we must receive your completed application,
Purchase Payment allocation instructions and any other required paper work at
our Annuity Service Center. We allocate your initial Purchase Payment within two
days of receiving it. If we do not have complete information necessary to issue
your contract, we will contact you. If we do not have the information necessary
to issue your contract within 5 business days, we will:
- Send your money back to you, or;
- Ask your permission to keep your money until we get the information
necessary to issue the contract.
ACCUMULATION UNITS
The value of the variable portion of your contract will go up or down depending
upon the investment performance of the STRATEGY(IES) you select. In order to
keep track of the value of your contract, we use a unit of measure called an
Accumulation Unit which works like a share of a mutual fund. During the Income
Phase, we call them Annuity Units.
An Accumulation Unit value is determined each day that the New York Stock
Exchange ("NYSE") is open. We calculate an Accumulation Unit for each STRATEGY
after the NYSE closes each day. We do this by:
1. determining the total value of money invested in a particular STRATEGY;
9
<PAGE>
2. subtracting from that amount any asset-based charges and any other
charges such as taxes we have deducted; and
3. dividing this amount by the number of outstanding Accumulation Units.
The value of an Accumulation Unit may go up or down from day to day. When you
make a Purchase Payment, we credit your contract with Accumulation Units. The
number of Accumulation Units credited is determined by dividing the amount of
the Purchase Payment allocated to a STRATEGY by the value of the Accumulation
Unit for that STRATEGY.
EXAMPLE:
We receive a $25,000 Purchase Payment from you on Wednesday. You want your
money to be invested in the Moderate Growth STRATEGY. We determine that the
value of an Accumulation Unit for the Moderate Growth STRATEGY 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 2,252.252 Accumulation Units
for the Moderate Growth STRATEGY.
FREE LOOK
You may cancel your contract within ten days after receiving it (or longer if
required by state law). We call this a "free look." To cancel, you must mail the
contract along with your free look request to our Annuity Service Center at
P.O. Box 54299, Los Angeles, California 90054-0299. Unless otherwise required by
state law, you will receive back the value of the money allocated to the
STRATEGIES on the day we receive your request plus any Purchase Payment in the
fixed account options. This value may be more or less than the money you
initially invested. Thus, the investment risk is borne by you during the free
look period.
Certain states (and under all contracts issued as IRAs) require us to return
your Purchase Payments upon a free look request. With respect to those
contracts, we reserve the right to put your money in the 1-year fixed account
option during the free look period. If you cancel your contract during the free
look period, we return the greater of (1) your Purchase Payments, or (2) the
value of your contract. At the end of the free look period, we reallocate your
money according to your instructions.
INVESTMENT OPTIONS
--------------------------------------------------------------------------------
The contract offers variable investment options which we call STRATEGIES and
fixed account options. We designed the contract to meet your varying investment
needs over time. You can achieve this by using the STRATEGIES alone or in
concert with the fixed account options. A mixture of your investment in the
STRATEGY(IES) and fixed account options may lower the risk associated with
investing only in a variable investment option.
VARIABLE INVESTMENT OPTIONS:
THE STRATEGIES
The contract offers four multi-manager variable investment STRATEGIES, each with
a different investment objective. We designed the STRATEGIES to meet your
investment needs over time, considering factors such as your age, goals and risk
tolerance. However, each STRATEGY is designed to achieve different levels of
growth over time.
Each STRATEGY invests in three of the six underlying investment portfolios of
the Seasons Series Trust. The allocation of money among these investment
portfolios varies depending on the objective of the STRATEGY.
10
<PAGE>
SunAmerica Asset Management Corp. ("SAAMCo"), which is affiliated with Anchor
National manages Seasons Series Trust. SAAMCo engaged sub-advisers to provide
investment advice for certain investment portfolios.
The underlying investment portfolios of Seasons Series Trust include the Asset
Allocation: Diversified Growth Portfolio, the Stock Portfolio and the
Multi-Managed Growth, Multi-Managed Moderate Growth, Multi-Managed Income/Equity
and Multi-Managed Income Portfolios (the "Multi-Managed Portfolios"). Seasons
Series Trust contains other underlying investment portfolios in addition to
those listed here which are not available for investment under this contract.
The Asset Allocation: Diversified Growth Portfolio is managed by Putnam
Investment Management, Inc. The Stock Portfolio is managed by T. Rowe Price
Associates, Inc. All of the Multi-Managed Portfolios include the same three
basic investment components: a growth component managed by Janus Capital
Corporation, a balanced component managed by SAAMCo and a fixed income component
managed by Wellington Management Company, LLP. The Growth STRATEGY and the
Moderate Growth STRATEGY also have an aggressive growth component which SAAMCo
manages. The percentage that any one of these components represents in the
Multi-Managed Portfolio varies in accordance with the investment objective.
YOU SHOULD READ THE PROSPECTUS FOR SEASONS SERIES TRUST CAREFULLY BEFORE
INVESTING. THE TRUST PROSPECTUS CONTAINS DETAILED INFORMATION ABOUT THE
INVESTMENT PORTFOLIOS AND IS ATTACHED TO THIS PROSPECTUS.
Each STRATEGY uses an investment approach based on asset allocation. This
approach is achieved by each STRATEGY investing in distinct percentages in three
specific underlying funds of the Seasons Series Trust. In turn, the underlying
funds invest in a combination of domestic and international stocks, bonds and
cash. Based on the percentage allocation to each specific underlying fund and
each underlying fund's investment approach, each STRATEGY has a neutral asset
allocation mix of stocks, bonds and cash. At the beginning of each quarter a
rebalancing occurs among the underlying funds to realign each STRATEGY with its
distinct percentage investment in the three underlying funds. This rebalancing
is designed to help maintain the neutral asset allocation mix for each STRATEGY.
The pie charts on the following pages demonstrate:
- the neutral asset allocation mix for each STRATEGY; and
- the percentage allocation in which each STRATEGY invests.
11
<PAGE>
GROWTH
GOAL: Long-term growth of capital, allocating its assets primarily to
stocks. This STRATEGY may be best suited for those with longer periods to
invest.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Stocks 80%
Bonds 15%
Cash 5%
</TABLE>
UNDERLYING INVESTMENT
PORTFOLIOS & MANAGERS
<TABLE>
<S> <C>
MULTI-MANAGED GROWTH PORTFOLIO 50%
Managed by:
Janus Capital Corporation
SunAmerica Asset Management Corp.
Wellington Management Company, LLP
STOCK PORTFOLIO 25%
Managed by T. Rowe Price
Associates, Inc.
ASSET ALLOCATION: DIVERSIFIED GROWTH
PORTFOLIO 25%
Managed by Putnam Investment
Management, Inc.
</TABLE>
MODERATE GROWTH
GOAL: Growth of capital through investments in equities, with a secondary
objective of conservation of principal by allocating more of its assets to bonds
than the Growth STRATEGY. This STRATEGY may be best suited for those nearing
retirement years but still earning income.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Stocks 70%
Bonds 25%
Cash 5%
</TABLE>
UNDERLYING INVESTMENT
PORTFOLIOS & MANAGERS
<TABLE>
<S> <C>
MULTI-MANAGED MODERATE GROWTH PORTFOLIO 55%
Managed by:
Janus Capital Corporation
SunAmerica Asset Management Corp.
Wellington Management Company, LLP
STOCK PORTFOLIO 20%
Managed by T. Rowe Price
Associates, Inc.
ASSET ALLOCATION: DIVERSIFIED GROWTH
PORTFOLIO 25%
Managed by Putnam Investment
Management, Inc.
</TABLE>
12
<PAGE>
BALANCED GROWTH
Goal: Focuses on conservation of principal by investing in a more balanced
weighting of stocks and bonds, with a secondary objective of seeking a high
total return. This STRATEGY may be best suited for those approaching retirement
and with less tolerance for investment risk.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Stocks 55%
Bonds 40%
Cash 5%
</TABLE>
UNDERLYING INVESTMENT
PORTFOLIOS & MANAGERS
<TABLE>
<S> <C>
MULTI-MANAGED INCOME/EQUITY PORTFOLIO 55%
Managed by:
Janus Capital Corporation
SunAmerica Asset Management Corp.
Wellington Management Company, LLP
STOCK PORTFOLIO 20%
Managed by T. Rowe Price
Associates, Inc.
ASSET ALLOCATION: DIVERSIFIED GROWTH
PORTFOLIO 25%
Managed by Putnam Investment
Management, Inc.
</TABLE>
CONSERVATIVE GROWTH
Goal: Capital preservation while maintaining some potential for growth over
the long term. This STRATEGY may be best suited for those with lower investment
risk tolerance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Stocks 42%
Bonds 53%
Cash 5%
</TABLE>
UNDERLYING INVESTMENT
PORTFOLIOS & MANAGERS
<TABLE>
<S> <C>
MULTI-MANAGED INCOME PORTFOLIO 60%
Managed by:
Janus Capital Corporation
SunAmerica Asset Management Corp.
Wellington Management Company, LLP
STOCK PORTFOLIO 15%
Managed by T. Rowe Price
Associates, Inc.
ASSET ALLOCATION: DIVERSIFIED GROWTH
PORTFOLIO 25%
Managed by Putnam Investment
Management, Inc.
</TABLE>
13
<PAGE>
STRATEGY REBALANCING
Each STRATEGY is designed to meet its investment objective by allocating a
portion of your money to three different investment portfolios. In order to
maintain the mix of investment portfolios consistent with each STRATEGY's
objective, each STRATEGY within your contract will be rebalanced each quarter.
On the first business day of each quarter (or as close to such date as is
administratively practicable) your money will be allocated among the various
investment portfolios according to the percentages set forth on the prior pages.
Additionally, within each Multi-Managed Portfolio, your money will be rebalanced
among the various components. We also reserve the right to rebalance any
STRATEGY more frequently if rebalancing is, deemed necessary and not adverse to
the interests of contract owners invested in such STRATEGY. Rebalancing a
STRATEGY may involve shifting a portion of assets out of underlying investment
portfolios with higher returns into underlying investment portfolios with
relatively lower returns. Transfers made as a result of rebalancing a STRATEGY
are not counted against your four free transfers per year.
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. In Maryland
and Washington only the one year fixed account option is available. The seven
and ten year guarantee periods are not available in Oregon. Additionally, we
guarantee the interest rate for money allocated to the six-month DCA fixed
account and/or the one year DCA fixed account (the "DCA fixed accounts") which
are available only in conjunction with the Dollar Cost Averaging Program. Please
see the section on the Dollar Cost Averaging Program on page 16 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 a fixed account or
one of the STRATEGIES into a fixed account and to money remaining in a
fixed account after expiration of a guarantee period.
Each of these rates may differ from one and other. Although once declared the
applicable rate is guaranteed until the guarantee period expires.
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 or to the STRATEGIES. If you want to reallocate your money to
a different fixed account option or STRATEGY, 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.
14
<PAGE>
The DCA fixed accounts also credit a fixed rate of interest. Interest is
credited to amounts allocated to the 1-year or 6-month DCA fixed account while
your investment is systematically transferred to the variable Portfolios. The
rates applicable to the DCA fixed accounts may differ from each other and/or the
other fixed account options but will never be less than an effective rate of 3%.
SEE DOLLAR COST AVERAGING PAGE 16 for more information.
You may reallocate money to a fixed account option (other than the DCA fixed
accounts) or to any of the STRATEGIES after the end of the Guarantee Period.
However, if you do not give us different instructions within 30 days after the
end of your Guarantee Period, we will keep your money in the fixed account for
the same Guarantee Period you previously selected. You will receive the renewal
interest rate then in effect for that Guarantee Period.
MARKET VALUE ADJUSTMENT
NOTE: THE FOLLOWING DISCUSSION APPLIES TO THE 3, 5, 7 OR 10 YEAR FIXED ACCOUNT
OPTIONS, ONLY. THESE OPTIONS ARE NOT AVAILABLE IN ALL STATES. PLEASE CONTACT
YOUR FINANCIAL REPRESENTATIVE FOR MORE INFORMATION. THIS DISCUSSION DOES NOT
APPLY TO WITHDRAWALS TO PAY A DEATH BENEFIT OR CONTRACT FEES AND CHARGES.
If you take money out of the three, five, seven or ten year fixed account
options before the end of the guarantee period, we make an adjustment to your
contract (the "Market Value Adjustment"). This Market Value Adjustment 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 market value adjustment.
We calculate the market value adjustment 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 rate
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 market value adjustment 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 or transfer. Where the market value adjustment is
positive, we add the adjustment to your withdrawal or transfer from the fixed
account option.
The one year fixed account option and the DCA fixed accounts do not impose a
market value adjustment. These fixed account options are not registered under
the Securities Act of 1933 and are not subject to the provisions of the
Investment Company Act of 1940.
Please see Appendix B for more information on how we calculate the Market Value
Adjustment.
TRANSFERS DURING THE ACCUMULATION PHASE
Except as provided in the next sentence with respect to the DCA Account, you can
transfer money among the STRATEGIES and the fixed account options by written
request or by telephone. Although you may transfer money out of the DCA Account,
you may not transfer money into the DCA Account from any STRATEGY or any fixed
account option. You can make four transfers every year without incurring a
transfer fee. We measure a year from
15
<PAGE>
the anniversary of the date we issued your contract. If you make more than four
transfers in a year, there is a $25 transfer fee per transfer ($10 in
Pennsylvania and Texas). Additionally, transfers out of a multi-year fixed
account option may be subject to a market value adjustment.
The minimum amount you can transfer is $500 or a lesser amount if you transfer
the entire balance from a STRATEGY or a fixed account option. If any money will
remain in a STRATEGY or fixed account option after making a transfer, it must be
at least $500. Your request for transfer must clearly state which STRATEGY(IES)
and/or fixed account option(s) are involved and the amount you want to transfer.
Please see the section below on Dollar Cost Averaging for specific
rules regarding the DCA Account.
We will accept transfers by telephone unless you specify otherwise on your
contract application. We have in place procedures to provide reasonable
assurance that instructions given to us by telephone are genuine. Thus, we
disclaim all liability for any claim, loss or expense from any error. If we fail
to use such procedures, we may be liable for any losses due to unauthorized or
fraudulent instructions.
We will also accept internet account transfers unless you specify otherwise on
your contract application. We have appropriate procedures in place to provide
reasonable assurance that the transactions executed are genuine. Thus, we
disclaim all liability for any claim, loss or expense from any error resulting
from instructions received over the internet. If we fail to follow our
procedures we may be liable for any losses due to unauthorized or fraudulent
transactions.
We reserve the right to modify, suspend or terminate the transfer privileges at
any time.
DOLLAR COST AVERAGING
The Dollar Cost Averaging ("DCA") Program allows you to systematically transfer
a set percentage or amount from any STRATEGY or the one year fixed account
option (we call these source accounts) to another STRATEGY. You can also select
to transfer the entire value in a STRATEGY or the one year fixed investment
option in a stated number of transfers. Transfers may be monthly or quarterly.
You can change the amount or frequency at any time by notifying us in writing.
The minimum transfer amount is $500, unless you use the DCA fixed accounts (see
below).
When you make either your initial Purchase Payment or a subsequent Purchase
Payment and want to participate in the Dollar Cost Averaging Program with that
money, you may also use a DCA fixed account as a source account. You cannot
transfer money from a STRATEGY or other fixed investment option into a DCA fixed
account.
When the one-year DCA fixed account is used for the DCA Program, all of your
money in the one-year DCA fixed account will be transferred to the STRATEGY(IES)
you select in either monthly or quarterly transfers (as selected by you) by the
end of the one year period for which the interest rate is guaranteed (one year
from the date of your deposit). Once selected, you cannot change the frequency.
When the six-month DCA fixed account is used, all of the money you allocate to
the six-month DCA fixed account is transferred to the STRATEGY(IES) you select
in monthly transfers by the end of the six month period for which the interest
rate is guaranteed.
The minimum amount that may be allocated to a DCA fixed account is $500 and the
minimum amount that may be transferred from a DCA fixed account to the
STRATEGY(IES) you select is $100. Therefore, if the amount allocated to a DCA
fixed account is such that the transfer amount under the frequency selected
would fail to meet the $100 minimum transfer requirement, the number of
transfers under the program would be reduced to comply with the minimum transfer
requirement. For example, if you allocate $500 to the six-month DCA fixed
account, your money will be transferred out over a period of five months.
16
<PAGE>
If you want to stop participation in the Dollar Cost Averaging Program and you
are using a DCA fixed account as your source account, we will either transfer
your money to the STRATEGY(IES) or fixed investment option(s) you select, or, in
the absence of express instructions, we will transfer your money to the one year
fixed investment option which will earn interest at the rate then being offered
for new Purchase Payments for a period of one year.
By allocating amounts to the STRATEGIES on a regular schedule as opposed to
allocating the total amount at one particular time, you may be less susceptible
to the impact of market fluctuations. However, there is no assurance that you
will earn a greater profit. You are still subject to loss in a declining market.
Dollar cost averaging involves continuous investment in securities regardless of
fluctuating price levels. You should consider your financial ability to continue
to invest through periods of low prices.
Transfers under this program are not counted against your four free transfers
per year. In addition, any transfer to the one-year fixed investment option upon
termination of this program will not be counted against your four free
transfers.
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
Conservative Growth STRATEGY to the Growth STRATEGY over six quarters. You
set up dollar cost averaging and purchase Accumulation Units at the
following values:
<TABLE>
<CAPTION>
QUARTER ACCUMULATION UNIT UNITS PURCHASED
------- ----------------- ---------------
<S> <C> <C>
1 $ 7.50 100
2 $ 5.00 150
3 $10.00 75
4 $ 7.50 100
5 $ 5.00 150
6 $ 7.50 100
</TABLE>
You paid an average price of only $6.67 per Accumulation Unit over six quarters,
while the average market price actually was $7.08. By investing an equal amount
of money each month, you automatically buy more Accumulation Units when the
market price is low and fewer Accumulation Units when the market price is high.
This example is for illustrative purposes only.
PRINCIPAL ADVANTAGE PROGRAM
The Principal Advantage Program allows you to invest in one or more
STRATEGY(IES) without putting the amount of your principal at direct risk. The
program accomplishes this by allocating your investment strategically between
the fixed account options and STRATEGY(IES). 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 needs to be allocated 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 STRATEGY(IES) 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
17
<PAGE>
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 STRATEGY(IES), as determined by you, to provide
opportunity for greater growth.
VOTING RIGHTS
Anchor National is the legal owner of the Seasons Series Trust shares. However,
when the underlying investment portfolios of the Seasons Series Trust solicit
proxies in conjunction with a vote of shareholders, we must obtain your
instructions on how to vote those shares. We vote all of the shares we own in
proportion to your instructions. This includes any shares we own on our own
behalf. Should we determine that we are no longer required to comply with these
rules, we will vote the shares in our own right.
SUBSTITUTION
If any of the STRATEGY(IES) become unavailable for investment, we may be
required to substitute shares of another STRATEGY. We will seek prior approval
of the SEC and give you notice before doing this.
ACCESS TO YOUR MONEY
--------------------------------------------------------------------------------
You can access money in your contract in two ways:
- by making a partial or total withdrawal, and/or;
- by receiving income payments during the Income Phase. SEE INCOME OPTIONS
PAGE 23.
Generally, we deduct a withdrawal charge applicable to any total or partial
withdrawal and a market value adjustment if a withdrawal comes from the 3, 5, 7
or 10 year fixed account options. If you withdraw your entire contract value, we
also deduct any applicable premium taxes and a contract maintenance fee. SEE
EXPENSES PAGE 21.
Your contract provides for a free withdrawal amount each year. A free withdrawal
amount is the portion of your account that we allow you to take out each year
without being charged a surrender penalty. However, upon a future full surrender
of your contract we will recoup any surrender charges which would have been due
at the time the free withdrawals were taken if your free withdrawal had not been
free.
Generally, each contract year you may withdraw up to 10% of your Purchase
Payments which are subject to a withdrawal charge free of any withdrawal charge.
This is the free withdrawal amount.
Purchase payments, above and beyond the amount of your free withdrawal amount,
that are invested for less than 7 years and withdrawn will result in your paying
a penalty in the form of a surrender charge. The amount of the charge and how it
applies are discussed more fully below. You should consider, before purchasing
this contrac1, the effect this charge will have on your investment if you need
to withdraw more money than the free withdrawal amount. You should fully discuss
this decision with your financial advisor.
The withdrawal charge percentage is determined by the age of the Purchase
Payment remaining in the contract at the time of the withdrawal. For the purpose
of calculating the withdrawal charge, any prior Free Withdrawal is not
subtracted from the total Purchase Payments still subject to withdrawal charges.
For example, you make an initial Purchase Payment of $100,000. For purposes of
this example we will assume a 0% growth rate over the life of the contract and
no subsequent Purchase Payments. In contract year 2 and year 3, you
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take out your maximum free withdrawal of $10,000 for each year. After that free
withdrawal your contract value is $80,000. In contract year 5 you request a full
surrender of your contract. We will apply the following calculation,
A - (B X C) = D, where:
A = Your contract value at the time of your request for surrender ($80,000)
B = The amount of your Purchase Payments still subject to withdrawal charge
($100,000)
C = The withdrawal charge percentage applicable to the age of each Purchase
Payment (6%) [B X C = $6,000]
D = Your full surrender value ($74,000)
We calculate charges due on a total withdrawal on the day after we receive your
request and your contract. We return your contract value less any applicable
fees and charges.
Under most circumstances, the minimum partial withdrawals amount is $1,000. We
require that the value left in any STRATEGY or fixed account be at least $500,
after the withdrawal. You must send a written withdrawal request. Unless you
provide us with different instructions, partial withdrawals will be made in
equal amounts from each STRATEGY and fixed account option in which your contract
is invested.
Washington residents should consult their financial adviser for additional
information.
We may be required to suspend or postpone the payment of a withdrawal for any
period of time when: (1) the NYSE is closed (other than a customary weekend and
holiday closings); (2) trading with the NYSE is restricted; (3) an emergency
exists such that disposal of or determination of the value of shares of the
Portfolios is not reasonably practicable; (4) the SEC, by order, so permits for
the protection of contract owners.
Additionally, we reserve the right to defer payments for a withdrawal from a
fixed account option. Such deferrals are limited to six months.
SYSTEMATIC WITHDRAWAL PROGRAM
If you elect, we use money in your contract to pay you monthly, quarterly,
semi-annual or annual payments during the Accumulation Phase. Electronic
transfer of these funds to your bank account is also available. The minimum
amount of each withdrawal is $250. There must be at least $500 remaining in your
contract at all times. Withdrawals may be taxable and a 10% IRS tax penalty may
apply if you are under age 59 1/2. Any withdrawals you make using this program
count against your free withdrawal amount as described above. Withdrawals in
excess of the free withdrawal amount may incur a withdrawal charge. There is no
additional charge for participating in this program.
The program is not available to everyone. Please check with our Annuity Service
Center, which can provide the necessary enrollment forms. We reserve the right
to modify, suspend or terminate this program at any time.
WITHDRAWAL CHARGES, MARKET VALUE ADJUSTMENTS, INCOME TAXES, TAX PENALTIES AND
CERTAIN RESTRICTIONS MAY APPLY TO ANY WITHDRAWAL YOU MAKE, INCLUDING SYSTEMATIC
WITHDRAWALS.
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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<PAGE>
QUALIFIED CONTRACT OWNERS
Certain qualified plans restrict and/or prohibit your ability to withdraw money
from your contract. PLEASE SEE TAXES ON PAGE 25 for a more detailed explanation.
DEATH BENEFIT
--------------------------------------------------------------------------------
If you should die before beginning the Income Phase of your contract, we will
pay a death benefit to your Beneficiary.
If you should die prior to reaching age 75 or, in the case of joint owners, if
an owner should die prior to the youngest owner reaching age 75, the death
benefit will be equal to the greater of:
1. The value of your contract at the time we receive adequate proof of
death and the Beneficiary's election as to how the benefit should be
paid; or
2. Total Purchase Payments less withdrawals, applicable charges, market
value adjustments and taxes, accumulated at 3% from the date your
contract was issued until the date of death, plus any Purchase Payments
received, less any withdrawals, applicable charges, market value
adjustments and taxes made or charged, after the date of death.
If the contract was issued after your 75th birthday or if you should die after
you reach age 75, or, in the case of joint owners, if the contract was issued
after both owners' 75th birthday or if an owner dies after the youngest owner
reaches age 75, the death benefit will be the greater of:
1. The value of your contract at the time we receive adequate proof of
death and the Beneficiary's election as to how the death benefit will be
paid; or
2. Total Purchase Payments received by us before age 75 (in the case of
joint owners, before the younger owner reaches age 75) less any
withdrawals, applicable charges, market value adjustments and taxes,
accumulated at 3% from the date your contract was issued until your 75th
birthday (or, if there is a joint owner, the 75th Birthday of the
youngest owner), plus any subsequent Purchase Payments received, less any
withdrawals, applicable charges, market value adjustments and taxes made
or charged, after your 75th birthday.
The death benefit is not paid after you switch to the Income Phase. If you die
during the Income Phase, your Beneficiary will receive any remaining guaranteed
income payments in accordance with the income option you choose.
You select the Beneficiary to receive any amounts payable on death. You may
change the Beneficiary at any time, unless you previously made an irrevocable
Beneficiary designation. A new Beneficiary designation is not effective until we
record the change.
The death benefit must begin payment immediately upon receipt of all necessary
documents and, in any event, must be paid within 5 years of the date of death.
The Beneficiary may elect to have the death benefit payable in the form of an
annuity. If the Beneficiary elects an income option, it must be paid over the
Beneficiary's lifetime or for a period not extending beyond the Beneficiary's
life expectancy. Income payments must begin within one year of your death. If
the Beneficiary is the spouse of the owner, he or she can elect to continue the
contract at the then current value.
The death benefit will be paid out when we receive adequate proof of death: (1)
a certified copy of a death certificate; (2) a certified copy of a decree of
court of competent jurisdiction as to the finding of death; (3) a written
statement by a medical doctor who attended the deceased at the time of death; or
(4) any other proof satisfactory
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<PAGE>
to us. We may also require additional documentation or proof in order for the
death benefit to be paid. If the Beneficiary does not make a specific election
as to how they want the death benefit distributed within sixty days of our
receipt of adequate proof of death, it will be paid in a lump sum.
DEATH OF THE ANNUITANT
If the Annuitant dies before annuity payments begin, you can name a new
Annuitant. If no Annuitant is named within 30 days, you will become the
Annuitant. However, if the owner is a non-natural person (for example, a
corporation), then the death of the Annuitant will be treated as the death of
the owner, no new Annuitant may be named and the death benefit will be paid.
EXPENSES
--------------------------------------------------------------------------------
There are charges and expenses associated with your contract. These charges and
expenses reduce your investment return. We will not increase the contract
maintainance fee and withdrawal charges. 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 1.40% annually, of the value of your contract
invested in the STRATEGIES. 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 18). If you take money out in excess of the Free Withdrawal Amount,
you may incur a withdrawal charge.
We apply a withdrawal charge against each Purchase Payment you put into the
contract. After a Purchase Payment has been in the contract for seven complete
years, no withdrawal charge applies. The withdrawal charge equals a percentage
of the Purchase Payment you take out of the contract. The withdrawal charge
percentage declines each year a Purchase Payment is in the contract, as follows
<TABLE>
<CAPTION>
YEAR 1 2 3 4 5 6 7 8
--------------------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WITHDRAWAL CHARGE 7% 6% 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. We will not assess a withdrawal charge upon election to receive income
payments from your contract.
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<PAGE>
Withdrawals made prior to age 59 1/2 may result in tax penalties (SEE TAXES
PAGE 25).
INVESTMENT CHARGES
Charges are deducted from the assets of the investment portfolios underlying the
STRATEGIES for the advisory and other expenses of the portfolios. THE FEE TABLES
BEGINNING ON PAGE 5 ILLUSTRATE THESE CHARGES AND EXPENSES. FOR MORE DETAILED
INFORMATION ON THESE INVESTMENT CHARGES, REFER TO THE TRUST PROSPECTUS WHICH IS
ATTACHED TO THIS PROSPECTUS.
CONTRACT MAINTENANCE FEE
During the Accumulation Phase, we subtract a contract maintenance fee from your
account once per year. This charge compensates us for the cost of contract
administration. We will deduct the $35 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 four free transfers between investment options, every
contract year. We charge you $25 for each transfer over four in any one year
($10 in Pennsylvania and Texas). We deduct the transfer fee from the STRATEGY
and/or fixed account option from which you request the transfer (SEE INVESTMENT
OPTIONS PAGE 10).
PREMIUM TAX
Certain states charge the Company a tax on the premiums you pay into the
contract. We deduct from your contract these premium tax charges. Currently we
deduct the charge for premium taxes when you take a full withdrawal or annuitize
the contract. In the future, we may assess this deduction at the time you put
Purchase Payment(s) into the contract or upon payment of a death benefit.
APPENDIX C provides more information about premium taxes.
INCOME TAXES
We do not currently deduct income taxes from your contract. We reserve the right
to do so in the future.
REDUCTION OR ELIMINATION OF CHARGES AND EXPENSES AND ADDITIONAL AMOUNTS CREDITED
Sometimes sales of the contracts to groups of similarly situated individuals may
lower our administrative and/or sales expenses. We reserve the right to reduce
or waive certain charges and expenses when this type of sale occurs. In
addition, we may also credit additional interest to policies sold to such
groups. We determine which groups are eligible for such treatment. Some of the
criteria we evaluate to make a determination are: size of the group; amount of
expected Purchase Payments; relationship existing between us and prospective
purchaser; nature of the purchase; length of time a group of contracts is
expected to remain active; purpose of the purchase and whether that purpose
increases the likelihood that our expenses will be reduced; and/or any other
factors that we believe indicate that administrative and/or sales expenses may
be reduced.
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Anchor National may make such a determination regarding sales to its employees,
its affiliates' employees and employees of currently contracted broker-dealers;
its registered representatives and immediate family members of all of those
described.
We reserve the right to change or modify any such determination or the treatment
applied to a particular group, at any time.
INCOME OPTIONS
--------------------------------------------------------------------------------
ANNUITY DATE
During the Income Phase, the money in your Contract is used to make regular
income payments to you. You may switch to the Income Phase any time after your
second contract anniversary. You select the month and year in which you want
income payments to begin. The first day of that month is the Annuity Date. You
may change your Annuity Date, so long as you do so at least seven days before
the income payments are scheduled to begin. Once you begin receiving income
payments, you cannot change your Income Option. Except to the extent discussed
under Option 5, once you begin receiving income payments you cannot otherwise
access your money through a withdrawal or surrender.
Income payments must begin on or before your 90th birthday or on your tenth
contract anniversary, whichever occurs later. If you do not choose an Annuity
Date, your income payments will automatically begin on this date. Certain states
may require your income payments to start earlier.
If the Annuity Date is past your 85th birthday, your contract could lose its
status as an annuity under Federal tax laws. This may cause you to incur adverse
tax consequences. In addition, certain Qualified contracts require you to take
minimum distributions after you reach age 70 1/2. SEE TAXES PAGE 25.
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
selected for joint lives, we pay according to option 3.
We base our calculation of income payments on the life of the Annuitant and the
annuity factors set forth in your contract. As the contract owner, you may
change the Annuitant at any time prior to the Annuity Date. You must notify us
if the Annuitant dies before the Annuity Date and then designate a new
Annuitant.
OPTION 1 - LIFE INCOME ANNUITY
This option provides income payments for the life of the Annuitant. Income
payments stop when the Annuitant dies.
OPTION 2 - JOINT AND SURVIVOR LIFE ANNUITY
This option provides income payments for the life of the Annuitant and for the
life of another designated person. Upon the death of either person, we will
continue to make income payments during the lifetime of the survivor. Income
payments stop whenever the survivor dies.
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<PAGE>
OPTION 3 - JOINT AND SURVIVOR LIFE ANNUITY WITH 10 OR 20 YEAR PERIOD CERTAIN
This option is similar to option 2 above, with an additional guarantee of
payments for at least 10 years. If the Annuitant and the Survivor die before all
of the guaranteed payments have been made, the remaining payments are made to
the Beneficiary under your Contract.
OPTION 4 - LIFE ANNUITY WITH 10 OR 20 YEAR PERIOD CERTAIN
This option is similar to option 1 above. In addition, this option provides a
guarantee that income payments will be made for at least 10 or 20 years. You
select the number of years. If the Annuitant dies before all guaranteed income
payments are made, the remaining income payments go to the Beneficiary under
your Contract.
OPTION 5 - INCOME FOR A SPECIFIED PERIOD
This option provides income payments for a guaranteed period ranging from 5 to
30 years. If the Annuitant dies before all of 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.
ALLOCATION OF INCOME PAYMENTS
You can choose income payments that are fixed, variable or both. If payments are
fixed, Anchor National guarantees the amounts of each payment. If the payments
are variable, the amounts are not guaranteed. They will go up and/or down based
upon the performance of your STRATEGIES.
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 STRATEGIES 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.
INCOME PAYMENTS
If you are invested in the STRATEGIES after the Annuity date, your income
payments will vary depending on four things:
- for life options, your age when payments begin, and;
- the value of your contract in the STRATEGIES on the Annuity Date, and;
- the 3.5% assumed investment rate used in the annuity table for the
contract, and;
- the performance of the STRATEGIES in which you are invested during the
time you receive income payments.
If you are invested in both the fixed account options and the STRATEGIES after
the Annuity Date, the allocation of funds between the fixed accounts and
STRATEGIES also impacts the amount of your annuity payments.
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<PAGE>
We make income payments on a monthly, quarterly, semi-annual or annual basis.
You instruct us to send you a check or to have the payments 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 the payments, state law allowing.
TRANSFERS DURING THE INCOME PHASE
You may transfer money among the STRATEGIES during the Income Phase. Transfers
are subject to the same limitations as transfers during the Accumulation Phase.
However, you may not transfer money from the fixed account into the STRATEGIES
or from the STRATEGIES into the fixed accounts during the Income Phase. SEE
EXPENSES PAGE 21.
DEFERMENT OF PAYMENTS
We may defer making fixed payments for up to six months, or less if required by
law. Interest is credited to you during the deferral period.
Please read the Statement of Additional Information ("SAI") for a more detailed
discussion of the income payments.
TAXES
--------------------------------------------------------------------------------
NOTE: WE PREPARED THE FOLLOWING INFORMATION ON TAXES AS A GENERAL DISCUSSION OF
THE SUBJECT. IT IS NOT TAX ADVICE. WE CAUTION YOU TO SEEK COMPETENT TAX ADVICE
ABOUT YOUR OWN CIRCUMSTANCES. WE DO NOT GUARANTEE THE TAX STATUS OF YOUR
ANNUITY. TAX LAWS CONSTANTLY CHANGE, THEREFORE WE CANNOT GUARANTEE THAT THE
INFORMATION CONTAINED HEREIN IS COMPLETE AND/OR ACCURATE.
ANNUITY CONTRACTS IN GENERAL
The Internal Revenue Code ("IRC") provides for special rules regarding the tax
treatment of annuity contracts. Generally, taxes on the earnings in your annuity
contract are deferred until you take the money out. Different rules apply
depending on how you take the money out and whether your contract is Qualified
or Non-qualified.
If you do not purchase your contract under a pension plan, a specially sponsored
employer program or an 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.
Qualified retirement investments automatically provide the deferral regardless
of whether the underlying contract is an annuity.
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 Federal tax code
treats such a withdrawal as first coming from the earnings and then as coming
from your Purchase Payments. For annuity payments, any portion of each payment
that is considered a return of your Purchase Payment will not be taxed.
Withdrawn earnings are treated as income to you and are taxable. The Federal tax
code 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 Federal tax code); (4) in a series of substantially
equal installments made for your life or for the joint lives of you and you
Beneficiary; (5) under an immediate annuity; or (6) which come from Purchase
Payments made prior to August 14, 1982.
TAX TREATMENT OF DISTRIBUTIONS--QUALIFIED CONTRACTS
Generally, you have not paid any taxes on the Purchase Payments used to buy a
Qualified contract. Any amount of money you take out as a withdrawal or as
income payments is taxable income. The Federal tax code 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 Federal tax code); (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 Federal tax code for amounts paid during the taxable year for medical care;
(6) to fund higher education expenses (as defined in Federal tax code); (7) to
fund certain first-time home purchase expenses; and, except in the case of an
IRA; (8) when you separate from service after attaining age 55; and (9) when
paid to an alternate payee pursuant to a qualified domestic relations order.
The Federal tax code limits the withdrawal of Purchase Payments from certain
Tax-Sheltered Annuities. Withdrawals can only be made when you: (1) reach age
59 1/2; (2) leave your job; (3) die; (4) becomes disabled (as defined in the
Federal tax code); or (5) in the case of hardship. In the case of hardship, you
can only withdraw Purchase Payments.
MINIMUM DISTRIBUTIONS
If you have a Qualified contract, distributions must begin by April 1 of the
calendar year following the later of (1) the calendar year in which you attain
age 70 1/2 or (2) the calendar year in which you retire. Failure to satisfy the
minimum distribution requirements may result in a tax penalty. You should
contact your tax advisor for more information.
We currently waive surrender charges and MVA on withdrawals taken to meet
minimum distribution requirements. Current operational practice is to provide a
free withdrawal of the greater of the contract's maximum penalty free amount or
the required minimum distribution amount for a particular contract (but not
both).
DIVERSIFICATION
The Federal tax code imposes certain diversification requirements on the
underlying investments for a variable annuity. We believe that the underlying
Portfolios' management monitors the variable Portfolios so as to comply with
these requirements. To be treated as a variable annuity for tax purposes, the
underlying investments must meet these requirements.
The diversification regulations do not provide guidance as to the circumstances
under which you, because of the degree of control you exercise over the
underlying investments, and not Anchor National, would be considered the owner
of the shares of the Portfolios. It is unknown to what extent owners are
permitted to select investments, to make transfers among Portfolios or the
number and type of Portfolios owners may select from. If any guidance is
provided which is considered a new position, then the guidance would generally
be applied prospectively. However,
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if such guidance is considered not to be a new position, it may be applied
retroactively. This would mean you, as the owner of the contract, could be
treated as the owner of the underlying variable investment Portfolios. Due to
the uncertainty in this area, we reserve the right to modify the contract in an
attempt to maintain favorable tax treatment.
PERFORMANCE
--------------------------------------------------------------------------------
From time to time we will advertise the performance of the STRATEGIES. Any such
performance results are based on historical earnings and are not intended to
indicate future performance.
For each STRATEGY we will show performance against a comparison index which is
made up of the S&P 500 Index, the Lehman Brothers Corporate/Government Index and
the Lipper Money Market Index. The comparison index will blend the referenced
indices in proportion to the neutral allocation of stocks, bonds and cash within
each STRATEGY as indicated on pages 9 and 10 of this prospectus.
Additionally, we may show performance of each STRATEGY in comparison to various
appropriate indices and the performance of other similar variable annuity
products with similar objectives as reported by such independent reporting
services as Morningstar, Inc., Lipper Analytical Services, Inc. and the Variable
Annuity Research Data Service ("VARDS").
Please see the Statement of Additional Information for additional information
regarding the methods used to calculate performance data.
Anchor National may also advertise the rating and other information assigned to
it by independent industry ratings organizations. Some of those organizations
are A.M. Best Company ("A.M. Best"), Moody's Investor's Service ("Moody's"),
Standard & Poor's Insurance Rating Services ("S&P"), and Duff & Phelps. A.M.
Best's and Moody's ratings reflect their current opinion of our financial
strength and performance in comparison to others in the life and health
insurance industry. S&P's and Duff & Phelps' ratings measure the ability of an
insurance company to meet its obligations under insurance policies it issues.
These two ratings do not measure the insurer's ability to meet non-policy
obligations. Ratings in general do not relate to the performance of the
STRATEGIES.
OTHER INFORMATION
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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, SunAmerica Asset Management Corporation,
SunAmerica Trust Company, and the SunAmerica Financial Network, Inc. (comprising
six wholly owned broker-dealers), specialize in retirement savings and
investment products and services. Business focuses include, fixed and variable
annuities, mutual funds, broker-dealer services and trust administration
services.
THE SEPARATE ACCOUNT
Anchor National originally established a separate account, Variable Annuity
Account Five (the "Separate Account"), under Arizona law on July 8, 1996. The
Separate Account is registered with the SEC as a unit investment trust under the
Investment Company Act of 1940, as amended.
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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 7.25% of your Purchase Payments. We may
also pay a bonus to representatives for contracts which stay active for a
particular period of time, in addition to standard commissions. We do not deduct
commissions paid to registered representatives directly from your Purchase
Payments.
From time to time, we may pay or allow additional promotional incentives in the
form of cash or other compensation. We reserve the right to offer these
additional incentives only to certain broker-dealers that sell or are expected
to sell, certain minimum amounts of the contract, or other contracts offered by
us. Promotional incentives may change at any time.
SunAmerica Capital Services, Inc., 733 Third Avenue, 4th Floor, New York, New
York 10017 distributes the contracts. SunAmerica Capital Services is an
affiliate of Anchor National, and is a registered as a broker-dealer under the
Exchange Act of 1934 and a member of the National Association of Securities
Dealers, Inc.
No underwriting fees are paid in connection with the distribution of the
contracts.
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. During the
accumulation phase, you will receive confirmation of transactions within your
contract. Transactions made pursuant to contractual or systematic agreements,
such as deduction of the annual maintenance fee and dollar cost averaging, may
be confirmed quarterly. Purchase payments received through the automatic payment
plan or a salary reduction arrangement, may also be confirmed quarterly. For all
other transactions, we send confirmations immediately.
During the accumulation and income phases, you will receive a statement of your
transactions over the past quarter and a summary of your account values. 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.
28
<PAGE>
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.
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
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The consolidated financial statements of Anchor National Life Insurance Company
as of December 31, 1999, December 31, 1998 and September 30, 1998 and for the
year ended December 31, 1999, and for the three months ended December 31, 1998,
and for each of the two fiscal years in the period ended September 30, 1998 and
the financial statements of Variable Annuity Account Five (Portion Relating to
the SEASONS Variable Annuity) as of April 30, 2000 and March 31, 2000, and for
the one month ended April 30, 2000, and for each of the two fiscal years in the
period ended March 31, 2000, are included in the Statement of Additional
Information and incorporated by reference in this prospectus and have been so
included in reliance on the reports of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
29
<PAGE>
TABLE OF CONTENTS OF
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<S> <C>
Separate Account............................................ 3
General Account............................................. 4
Performance Data............................................ 4
Income Payments............................................. 4
Annuity Unit Values......................................... 5
Taxes....................................................... 8
Distribution of Contracts................................... 13
Financial Statements........................................ 13
</TABLE>
30
<PAGE>
APPENDIX A - CONDENSED FINANCIAL INFORMATION
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3/31/00
INCEPTION TO FISCAL YEAR FISCAL YEAR TO
STRATEGIES 3/31/98 3/31/99 3/31/00 4/30/00
----------------------------------------- ------------ ----------- ----------- ----------
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------
Growth (Inception Date 4/15/97)
Beginning AUV.......................... 10.00 13.09 15.89 21.30
End AUV................................ 13.09 15.89 21.30 20.24
Ending Number of AUs................... 3,950,133 7,643,378 8,130,517 8,249,540
------------------------------------------------------------------------------------------------
Moderate Growth (Inception Date 4/15/97)
Beginning AUV.......................... 10.00 12.76 15.09 19.48
End AUV................................ 12.76 15.09 19.48 18.61
Ending Number of AUs................... 3,639,458 7,968,543 8,508,732 8,649,412
------------------------------------------------------------------------------------------------
Balanced Growth (Inception Date 4/15/97)
Beginning AUV.......................... 10.00 12.44 14.05 16.68
End AUV................................ 12.44 14.05 16.68 16.11
Ending Number of AUs................... 2,789,702 6,957,319 7,049,356 7,030,568
------------------------------------------------------------------------------------------------
Conservative Growth (Inception Date
4/15/97)
Beginning AUV.......................... 10.00 12.06 13.21 14.89
End AUV................................ 12.06 13.21 14.89 14.50
Ending Number of AUs................... 1,536,220 5,313,501 5,332,213 5,350,653
------------------------------------------------------------------------------------------------
</TABLE>
AUV--Accumulation Unit Value
AU--Accumulation Units
A-1
<PAGE>
APPENDIX B - MARKET VALUE ADJUSTMENT
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The market value adjustment reflects the impact that changing interest rates
have on the value of money invested at a fixed interest rate. The longer the
period of time remaining in the term you initially agreed to leave your money in
the fixed investment option, the greater the impact of changing interest rates.
The impact of the market value adjustment can be either positive or negative,
and is computed by multiplying the amount withdrawn, transferred or annuitized
by the following factor:
[(1+I/(1+J+0.005*)](to the power of N/12) - 1
THE MARKET VALUE ADJUSTMENT FORMULA
MAY DIFFER IN CERTAIN STATES
where:
I is the interest rate you are earning on the money invested in
the fixed investment option;
J is the Initial interest rate then currently available for the
period of time equal to the number of years remaining in the term you initially
agreed to leave your money in the fixed investment option; and
N is the number of full months remaining in the term you
initially agreed to leave your money in the fixed investment option.
* In Pennsylvania this number will be zero.
EXAMPLES OF THE MARKET VALUE ADJUSTMENT
The examples below assume the following:
(1) You made an initial Purchase Payment of $10,000 and allocated it to the
10-year fixed investment option at a rate of 5%;
(2) You make a partial withdrawal of $4,000 when 2 1/2 years (30 months)
remain in the 10-year term you initially agreed to leave your money in the fixed
investment option (N=30); 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 market value adjustment. The market value adjustment is
assessed on the amount withdrawn less any withdrawal charges.
NEGATIVE ADJUSTMENT
Assume that on the date of withdrawal, the Initial interest rate in effect for
new Purchase Payments in the 3-year fixed investment option (2 1/2 years rounded
up to the next full year) is 6%.
The market value adjustment factor is
= [(1+I)/(1+J+0.005)](to the power of N/12) - 1
= [(1.05)/(1.06+.005)](to the power of 30/12) - 1
= (0.985915)(2.5) - 1
= 0.965160 - 1
= -0.034840
The requested withdrawal amount is multiplied by the market value adjustment
factor to determine the market value adjustment:
$4,000 X (-0.034840) = -$139.36
$139.36 represents the market value adjustment that will be deducted from the
money remaining in the 10-year fixed investment option.
B-1
<PAGE>
POSITIVE ADJUSTMENT
Assume that on the date of withdrawal, the Initial interest rate in effect for a
new Purchase Payments in the 3-year fixed investment option (2 1/2 years rounded
up to the next full year) is 4%.
The market value adjustment factor is:
= [(1+I/(1+J+0.005)](N/12)(N/12) - 1
= [(1.05)/(1.04+.005)](to the power of 30/12) - 1
= (1.004785)(2.5) - 1
= 1.012005-1
= +0.012005
The requested withdrawal amount is multiplied by the market value adjustment
factor to determine the market value adjustment:
$4,000 x (+0.012005) = +$48.02
$48.02 represents the market value adjustment that would be added to your
withdrawal.
B-2
<PAGE>
APPENDIX C - PREMIUM TAXES
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Premium taxes vary according to the state and are subject to change without
notice. In many states, there is no tax at all. Listed below are the current
premium tax rates in those states that assess a premium tax. For current
information, you should consult your tax adviser.
<TABLE>
<CAPTION>
QUALIFIED NON-QUALIFIED
STATE CONTRACT CONTRACT
----- --------- -------------
<S> <C> <C>
California.................................................. 0.50% 2.35%
Maine....................................................... 0% 2.00%
Nevada...................................................... 0% 3.50%
South Dakota................................................ 0% 1.25%
West Virginia............................................... 1.00% 1.00%
Wyoming..................................................... 0% 1.00%
</TABLE>
C-1
<PAGE>
Please forward a copy (without charge) of the Seasons Variable Annuity Statement
of Additional Information to:
(Please print or type and fill in all information.)
--------------------------------------------------------------------------------
Name
--------------------------------------------------------------------------------
Address
--------------------------------------------------------------------------------
City/State/Zip
--------------------------------------------------------------------------------
Date: ___________________ Signed: _____________________________________________
Return to: Anchor National Life Insurance Company, Annuity Service Center,
P.O. Box 52499, Los Angeles, California 90054-0299
<PAGE>
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1-800-445-SUN2
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