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PROSPECTUS
MARCH 30, 1999
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ANCHOR SERIES TRUST
-- Growth Portfolio
-- Capital Appreciation Portfolio
-- Natural Resources Portfolio
-- Government and Quality
Bond Portfolio
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[LOGO]
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THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THESE SECURITIES OR
PASSED UPON THE ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
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<TABLE>
<S> <C>
TRUST HIGHLIGHTS............................................ 3
Q&A....................................................... 3
ACCOUNT INFORMATION......................................... 11
Transaction Policies...................................... 11
Dividend Policies and Taxes............................... 11
OTHER INFORMATION........................................... 12
Year 2000................................................. 12
MORE INFORMATION ABOUT THE PORTFOLIOS....................... 13
Investment Selection...................................... 13
Investment Strategies..................................... 13
GLOSSARY.................................................... 17
Investment Terminology.................................... 17
Risk Terminology.......................................... 19
MANAGEMENT.................................................. 21
Investment Adviser........................................ 21
Subadviser................................................ 21
Portfolio Management...................................... 22
Custodian, Transfer and Dividend Paying Agent............. 22
FINANCIAL HIGHLIGHTS........................................ 23
FOR MORE INFORMATION........................................ 25
</TABLE>
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TRUST HIGHLIGHTS
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Q&A
"CORE EQUITY SECURITIES" are stocks, primarily of well established
companies, diversified by industry and company type that are selected
based on their predictable or anticipated earnings growth and best
relative value.
A "GROWTH" PHILOSOPHY -- that of investing in securities believed to
offer the potential for capital appreciation -- focuses on securities
of companies that are considered to have a historical record of
above-average growth rate, significant growth potential, above-average
earnings growth or value, the ability to sustain earnings growth, or
that offer proven or unusual products or services, or operate in
industries experiencing increasing demand.
A "VALUE" PHILOSOPHY -- that of investing in securities that are
believed to be undervalued in the market -- often reflects a
contrarian approach in that the potential for superior relative
performance is believed to be highest when stocks of fundamentally
solid companies are out of favor. The selection criteria is usually
calculated to identify stocks of companies with solid financial
strength and generous dividend yields that have low price-earnings
ratios and have generally been overlooked by the market; or companies
undervalued within an industry or market capitalization category.
The following questions and answers are designed to give you an overview of
Anchor Series Trust (the "Trust") and to provide you with information about four
of the Trust's separate investment series (Portfolios) and their investment
goals and principal strategies. More complete investment information is provided
in the chart, under "More Information About the Portfolios," which is on page
13, and the glossary that follows on page 17.
Q: WHAT ARE THE PORTFOLIOS' INVESTMENT GOALS AND STRATEGIES?
A: Each Portfolio operates as a separate mutual fund and has its own investment
goal and a strategy for pursuing it. There can be no assurance that any
Portfolio's investment goal will be met or that the net return on an
investment in a Portfolio will exceed what could have been obtained through
other investment or savings vehicles. The investment goal may not be changed
without shareholder vote.
<TABLE>
<CAPTION>
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EQUITY PORTFOLIOS
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PORTFOLIO INVESTMENT GOAL PRINCIPAL INVESTMENT STRATEGY
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<S> <C> <C> <C>
GROWTH PORTFOLIO capital appreciation invests primarily in core
equity securities that are
widely diversified by industry
and company
-----------------------------------------------------------------------------------------
CAPITAL APPRECIATION long-term capital invests primarily in growth
PORTFOLIO appreciation equity securities across a
wide range of industries and
companies, using a
wide-ranging and flexible
stock picking approach; may be
concentrated and will
generally have less
investments in large company
securities than the Growth
Portfolio
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NATURAL RESOURCES total return in excess using a value approach,
PORTFOLIO of the U.S. rate of invests primarily in equity
inflation as represented securities of U.S. or foreign
by the Consumer Price companies that are expected to
Index provide favorable returns in
periods of rising inflation;
at least 65% related to
natural resources, such as
energy, metals, mining and
forest products
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</TABLE>
3
<PAGE> 4
CAPITAL APPRECIATION/GROWTH is an increase in the market value of
securities held.
TOTAL RETURN is a measure of performance which combines all elements
of return including income and capital appreciation; it represents the
change in value of an investment over a given period expressed as a
percentage of the initial investment.
FIXED INCOME PORTFOLIOS typically seek to provide high current income
consistent with the preservation of capital by investing in fixed
income securities.
INCOME is interest payments from bonds or dividends from stocks.
"HIGH-QUALITY" INSTRUMENTS have a very strong capacity to pay interest
and repay principal; they reflect the issuers' high creditworthiness
and low risk of default.
<TABLE>
<CAPTION>
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FIXED INCOME PORTFOLIO
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PORTFOLIO INVESTMENT GOAL PRINCIPAL INVESTMENT STRATEGY
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<S> <C> <C> <C>
GOVERNMENT AND QUALITY relatively high current invests in obligations issued,
BOND PORTFOLIO income, liquidity and guaranteed or insured by the
security of principal U.S. government, its agencies
or instrumentalities and in
high quality corporate fixed
income securities
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</TABLE>
4
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Q: WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIOS?
A: RISKS OF INVESTING IN EQUITY SECURITIES
The GROWTH, CAPITAL APPRECIATION and NATURAL RESOURCES PORTFOLIOS invest
primarily in equities. As with any equity fund, the value of your investment
in any of these Portfolios may fluctuate in response to stock market
movements. In addition, individual stocks selected for any of these
Portfolios may underperform the market generally. To the extent a Portfolio
is also invested in the bond market, movements in the bond market in
addition to the stock market may affect its performance.
RISKS OF INVESTING IN BONDS
The GOVERNMENT AND QUALITY BOND PORTFOLIO invests primarily in bonds. As a
result, as with any bond fund, the value of your investment in these
Portfolios may go up or down in response to changes in interest rates or
defaults (or even the potential for future default) by bond issuers. To an
extent a Portfolio is invested in the bond market, movements in the bond
market generally may affect its performance.
RISKS OF INVESTING IN FOREIGN SECURITIES
All of the Portfolios may, and the NATURAL RESOURCES PORTFOLIO will, invest
to varying degrees in foreign securities. These securities may be
denominated in currencies other than U.S. dollars. Foreign investing
presents special risks, particularly in certain developing countries. While
investing internationally may reduce your risk by increasing the
diversification of your investment, the value of your investment may be
affected by fluctuating currency values, changing local and regional
economic, political and social conditions, and greater market volatility. In
addition, foreign securities may not be as liquid as domestic securities.
RISKS OF INVESTING IN SMALL COMPANY STOCKS
Stocks of smaller companies may be more volatile than and not as liquid as
those of larger companies. This will particularly affect the GROWTH and
CAPITAL APPRECIATION PORTFOLIOS.
RISKS OF INVESTING IN NATURAL RESOURCES
The NATURAL RESOURCES PORTFOLIO will be subject to certain risks specific to
investing in the natural resources industry. Investments in securities
related to precious metals and minerals are considered speculative. Prices
of precious metals may fluctuate sharply over short time periods due to
changes in inflation or expectations regarding inflation in various
countries; metal sales by governments, central banks or international
agencies; investment speculation; changes in industrial and commercial
demand; and governmental prohibitions or restrictions on the private
ownership of certain precious metals or minerals.
In addition, the market price of securities that are tied into the market
price of a natural resource will fluctuate on the basis of the natural
resource. However, there may not be a perfect correlation between the
movements of the asset-based security and the underlying natural resource
asset. Further, these securities typically bear interest or pay dividends at
below market rates, and in certain cases at nominal rates. The Portfolio's
investments in natural resources securities exposes it to greater risk than
a portfolio less concentrated in a group of related industries.
ADDITIONAL PRINCIPAL RISKS
Shares of Portfolios are not bank deposits and are not guaranteed or insured
by any bank, government entity or the Federal Deposit Insurance Corporation.
As with any mutual fund, there is no guarantee that a Portfolio will be able
to achieve its investment goals. If the value of the assets of a Portfolio
goes down, you could lose money.
5
<PAGE> 6
Q: HOW HAVE THE PORTFOLIOS PERFORMED HISTORICALLY?
A: The following Risk/Return Bar Charts and Tables illustrate the risks of
investing in the Portfolios by showing changes in the Portfolios'
performance from calendar year to calendar year and comparing the
Portfolios' average annual returns to those of an appropriate market index.
Fee and expenses incurred at the contract level are not reflected in the bar
charts or tables. If these amounts were reflected, returns would be less
than those shown. Of course, past performance is not necessarily an
indication of how a Portfolio will perform in the future.
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GROWTH PORTFOLIO
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[CHART]
<TABLE>
<CAPTION>
<S> <C>
1989 30.09%
1990 -1.57%
1991 40.82%
1992 5.43%
1993 7.75%
1994 -4.72%
1995 26.32%
1996 25.05%
1997 30.41%
1998 28.96%
</TABLE>
During the 10-year period shown in the bar chart, the highest return for a
quarter was 23.93% (quarter ended 12/31/98) and the lowest return for a quarter
was -17.17% (quarter ended 9/30/90).
<TABLE>
<CAPTION>
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AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE PAST FIVE PAST TEN RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR YEARS YEARS INCEPTION(1)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth Portfolio 28.96% 20.41% 17.89% 17.44%
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S&P 500(R)(2) 28.60% 24.10% 19.20% 18.60%
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Lipper VA-UF Growth Category(3) 24.90% 20.30% 17.80% 17.40%
- --------------------------------------------------------------------------------------------------------
Custom Index(4) 26.20% N/A N/A N/A
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</TABLE>
1 Inception date for the portfolio is September 5, 1984. Except for the Custom
Index, the since inception returns for the comparative indices are as of the
inception date month end.
2 The S&P 500(R) Composite Stock Price Index (S&P 500(R)) is an unmanaged,
weighted index of 500 large company stocks that is widely recognized as
representative of the performance of the U.S. stock market.
6
<PAGE> 7
3 The Lipper Variable Annuity-Underlying Fund (VA-UF) Growth Category includes
funds that normally invest in companies whose long term earnings are expected
to grow significantly faster than the earnings of the stocks represented in
the major unmanaged stock indices.
4 Custom Index consists of 50% Russell 3000 Index and 50% of an index compiled
with the 50 largest Morningstar Growth Mutual Funds. The Russell 3000 Index
represents the top 3,000 stocks traded on the New York Stock Exchange,
American Stock Exchange and National Association of Securities Dealers
Automated Quotations, by market capitalizations.
7
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CAPITAL APPRECIATION PORTFOLIO
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<TABLE>
<CAPTION>
<S> <C>
1989 25.02%
1990 -16.18%
1991 56.14%
1992 25.94%
1993 21.07%
1994 -3.80%
1995 34.57%
1996 25.14%
1997 25.43%
1998 22.20%
</TABLE>
During the 10-year period shown in the bar chart, the highest return for a
quarter was 26.12% (quarter ended 12/31/98) and the lowest return for a quarter
was -26.82% (quarter ended 9/30/90).
<TABLE>
<CAPTION>
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AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE PAST FIVE PAST TEN RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR YEARS YEARS INCEPTION(1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Appreciation Portfolio 22.20% 19.95% 20.01% 16.87%
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Russell 2000 Index(2) -2.60% 11.90% 12.90% 10.10%
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Lipper VA-UF Capital Appreciation Category(3) 22.20% 17.00% 17.10% 13.50%
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Custom Index(4) 12.50% 17.00% 11.30% N/A
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</TABLE>
1 Inception date for the Portfolio is March 23, 1987. Except for the Custom
Index, the since inception returns for the comparative indices are as of the
inception date month end.
2 Russell 2000 Index represents the top 2,000 stocks traded on the New York
Stock Exchange, American Stock Exchange and National Association of
Securities Dealers Automated Quotations, by market capitalizations.
3 The Lipper Variable Annuity-Underlying Fund (VA-UF) Capital Appreciation
Category includes funds that aim at maximum capital appreciation.
4 Custom Index consists of 45% S&P 500(R), 45% Russell 2000 Index (as described
above in footnotes 4 and 2, respectively) and 10% Morgan Stanley Capital
International (MSCI) All Country (AC) World Free (ex-U.S.) Index. The MSCI AC
World Free (Ex-U.S.) Index includes performance of 2,124 securities listed in
45 countries, which includes the countries contained in the MSCI EAFE Index,
as well as North American countries (excluding the U.S.) and other emerging
markets worldwide. The index covers approximately the top 60% of market
capitalization for each of the countries included within the index. The MSCI
EAFE Index consists of foreign companies located in developed markets of 21
different countries in Europe, Australia, Asia and the Far East.
8
<PAGE> 9
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NATURAL RESOURCES PORTFOLIO
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<TABLE>
<CAPTION>
<S> <C>
1989 18.33%
1990 -15.02%
1991 4.87%
1992 2.52%
1993 36.15%
1994 1.01%
1995 17.46%
1996 14.11%
1997 -8.59%
1998 -17.33%
</TABLE>
During the 10-year period shown in the bar chart, the highest return for a
quarter was 14.32% (quarter ended 12/31/93) and the lowest return for a quarter
was -17.46% (quarter ended 12/31/97).
<TABLE>
<CAPTION>
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AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE PAST FIVE PAST TEN RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR YEARS YEARS INCEPTION(1)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Natural Resources Portfolio -17.33% 0.46% 4.18% 4.84%
- --------------------------------------------------------------------------------------------------------
S&P 500(R)(2) 28.60% 24.10% 19.20% 18.70%
- --------------------------------------------------------------------------------------------------------
Lipper VA-UF Natural Resources Category(3) -20.70% -2.00% 2.00% -1.30%
- --------------------------------------------------------------------------------------------------------
MSCI Energy Sources Index(4) 7.10% 16.00% N/A N/A
- --------------------------------------------------------------------------------------------------------
MSCI Gold Mines Index(4) -8.40% -11.80% N/A N/A
- --------------------------------------------------------------------------------------------------------
MSCI Non-Ferrous Metals Index(4) -11.60% -2.20% N/A N/A
- --------------------------------------------------------------------------------------------------------
</TABLE>
1 Inception date for the Portfolio is January 4, 1988. Except for the MSCI
indices, the since inception returns for the comparative indices are as of
the inception date month end.
2 The S&P 500(R) Composite Stock Price Index (S&P 500(R)) is an unmanaged,
weighted index of 500 large company stocks that is widely recognized as
representative of the performance of the U.S. stock market.
3 The Lipper Variable Annuity-Underlying Fund (VA-UF) Natural Resources
Category includes funds that invest more than 65% of its equity commitment in
natural resource stocks.
4 The Morgan Stanley Capital International (MSCI) Energy Sources, Gold Mines
and Non-Ferrous Metals Indices represent specific commodities underlying the
Natural Resources Portfolio.
9
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GOVERNMENT AND QUALITY BOND PORTFOLIO
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<TABLE>
<CAPTION>
<S> <C>
1989 15.62%
1990 7.79%
1991 17.29%
1992 6.90%
1993 8.27%
1994 -3.07%
1995 19.42%
1996 2.89%
1997 9.53%
1998 9.18%
</TABLE>
During the 10-year period shown in the bar chart, the highest return for a
quarter was 9.76% (quarter ended 6/30/98) and the lowest return for a quarter
was -3.09% (quarter ended 3/31/94).
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE PAST FIVE PAST TEN RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1998) YEAR YEARS YEARS INCEPTION(1)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Government and Quality Bond Portfolio 9.18% 7.33% 9.19% 10.60%
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Lehman Brothers Aggregate Index(2) 8.70% 7.30% 9.30% 10.40%
- ----------------------------------------------------------------------------------------------------
Lipper VA-UF General U.S. Government
Category(3) 8.10% 6.40% 8.70% 9.30%
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</TABLE>
1 Inception date for the Portfolio is September 5, 1984. The since inception
returns for the comparative indices are as of the inception date month end.
2 The Lehman Brothers Aggregate Index combines several Lehman Brothers indices
which include the government and corporate markets, agency mortgage
pass-through securities, and asset-backed securities.
3 The Lipper Variable Annuity-Underlying Fund (VA-UF) General U.S. Government
Category includes funds which invest at least 65% of assets in U.S.
government and agency issues.
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ACCOUNT INFORMATION
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Shares of each Portfolio are not offered directly to the public. Instead, shares
are currently issued and redeemed only in connection with investments in and
payments under variable annuity contracts and variable life insurance policies
(Variable Contracts) of Anchor National Life Insurance Company, First SunAmerica
Life Insurance Company and Presidential Life Insurance Company (the "Life
Companies"). All shares of the Trust are owned by "Separate Accounts" of the
Life Companies. So if you would like to invest in a Portfolio, you must purchase
a Variable Contract. You should be aware that the contracts involve fees and
expenses that are not described in this Prospectus, and that the contracts also
may involve certain restrictions and limitations. Certain Portfolios may not be
available in connection with a particular contract. You will find information
about purchasing a Variable Contract and the Portfolios available to you in the
prospectus that offers the contracts, which accompanies this Prospectus.
Anchor National Life Insurance Company and First SunAmerica Life Insurance
Company are under common control with, and therefore are affiliated with the
Trust's investment advisor and manager, SunAmerica Asset Management Corp.
(SAAMCo). Presidential Life Insurance Company is not affiliated with SAAMCo. The
Trust does not foresee a disadvantage to contract owners arising out of the fact
that the Trust offers its shares for Variable Contracts other than those offered
by life insurance companies affiliated with SAAMCo. Nevertheless, the Trust's
Board of Trustees intends to monitor events in order to identify any material
irreconcilable conflicts that may possibly arise and to determine what action,
if any, should be taken in response. If such a conflict were to occur, one or
more insurance company separate accounts might withdraw their investments in the
Trust. This might force the Trust to sell portfolio securities at
disadvantageous prices.
TRANSACTION POLICIES
VALUATION OF SHARES The net asset value per share (NAV) for each Portfolio is
determined each business day at the close of regular trading on the New York
Stock Exchange (generally 4:00 p.m., Eastern time) by dividing its net assets by
the number of its shares outstanding. Investments for which market quotations
are readily available are valued at market. All other securities and assets of
the Portfolios are valued at "fair value" following procedures approved by the
Trustees.
Each Portfolio may invest to an extent in securities that are primarily listed
on foreign exchanges that trade on weekends or other days when the Trust does
not price its shares. As a result, the value of these Portfolios' shares may
change on days when you will not be able to purchase or redeem your shares.
BUY AND SELL PRICES The Separate Accounts buy and sell shares of a Portfolio for
NAV, without any sales or other charges.
EXECUTION OF REQUESTS The Trust is open on those days when the New York Stock
Exchange is open for regular trading. Buy and sell requests are executed at the
next NAV to be calculated after the request is accepted by the Trust. If the
order is received by the Trust before the Trust's close of business, it will
receive that day's closing price. If the order is received after that time, it
will receive the next business day's closing price.
During periods of extreme volatility or market crisis, a Portfolio may
temporarily suspend the processing of sell requests, or may postpone payment of
proceeds for up to seven business days or longer, as allowed by federal
securities laws.
DIVIDEND POLICIES AND TAXES
DIVIDEND REINVESTMENTS The dividends and distributions, if any, will be
automatically reinvested in additional shares of the same Portfolios on which
they were paid.
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TAXABILITY OF A PORTFOLIO Each Portfolio intends to continue to qualify as a
regulated investment company under the Internal Revenue Code of 1986, as
amended. As long as each Portfolio is qualified as a regulated investment
company, it will not be subject to federal income tax on the earnings that it
distributes to its shareholders.
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OTHER INFORMATION
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YEAR 2000
Many computer and computer-based systems cannot distinguish the year 2000 from
the year 1900 because of the way they encode and calculate dates (commonly known
as the "Year 2000 Issue"). The Year 2000 Issue could potentially have an adverse
impact on the handling of security trades, the payment of interest and
dividends, pricing and account services. We recognize the importance of the Year
2000 Issue and are taking appropriate steps necessary in preparation for the
year 2000. The Trust's management fully anticipates that their systems will be
adapted in time for the year 2000, and to further this goal they have
coordinated a plan to repair, adapt or replace their systems as necessary. They
have also obtained representations from their outside service providers that
they are doing the same. The Trust's management completed their plan
significantly by the end of the 1998 calendar year and expects to perform
appropriate systems testing during the 1999 calendar year. If the problem has
not been fully addressed, however, the Trust could be negatively impacted. The
Year 2000 Issue could also have a negative impact on the companies in which the
Trust invests, which could hurt the Trust's investment returns.
12
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MORE INFORMATION ABOUT THE PORTFOLIOS
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INVESTMENT SELECTION
Each Portfolio buys and sells securities based on bottom-up investment analysis
and individual security selection, with an aim to uncover opportunities with
potential for price appreciation. A bottom-up investment approach searches for
outstanding performance of individual stocks before considering the impact of
economic or industry trends. Each Portfolio is managed using a proprietary
fundamental analysis in order to select securities which are deemed to be
consistent with the Portfolio's investment objective and are priced
attractively. Fundamental analysis of a company involves the assessment of such
factors as its business environment, management, balance sheet, income
statement, anticipated earnings, revenues, dividends, and other related measures
of value. Securities are sold when the investment has achieved its intended
purpose, or because it is no longer considered attractive.
INVESTMENT STRATEGIES
Each Portfolio has its own investment goal and a strategy for pursuing it. The
charts provided below summarize information about each Portfolio's investment
approach. We have included a glossary to define the investment and risk
terminology used in the charts and throughout this Prospectus. You should
consider your ability to assume the risks involved before investing in a
Portfolio through one of the variable contracts.
<TABLE>
<CAPTION>
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EQUITY PORTFOLIOS
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CAPITAL NATURAL
GROWTH APPRECIATION RESOURCES
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<S> <C> <C> <C>
What is the Portfolio's capital appreciation long-term capital total return in excess of
investment goal? appreciation the U.S. rate of inflation
as represented by the
Consumer Price Index
- ------------------------------------------------------------------------------------------------------------------
What are the Portfolio's core equity securities that growth equity securities equity securities of U.S.
principal investments are widely diversified by across a wide range of or foreign companies
(under normal market industry and company industries and companies expected to provide
conditions)? favorable returns in
periods of rising
inflation; at least 65%
related to natural
resources such as energy,
metals, mining and forest
products
- ------------------------------------------------------------------------------------------------------------------
What are the Portfolio's - stock market volatility - stock market volatility - foreign exposure
principal risks? - security selection - security selection - emerging markets
- growth stocks - growth stocks - stock market volatility
- small market - small market - small market
capitalization capitalization capitalization
- natural resources sector
- security selection
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
13
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<TABLE>
<CAPTION>
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EQUITY PORTFOLIOS -- (cont'd.)
- ------------------------------------------------------------------------------------------------------------------
CAPITAL NATURAL
GROWTH APPRECIATION RESOURCES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
What other investment
strategies can the
Portfolio use?
- Large company stocks Yes Yes Yes
- Medium sized company Yes Yes Yes
stocks
- Small company stocks Yes Yes Yes
- Warrants Yes Yes Yes
- Types of fixed income
securities:
Investment grade Yes Yes Yes
U.S. government Yes Yes Yes
securities
Asset-backed and Yes Yes Yes
mortgage-backed
securities
Short-term money market Yes Yes Yes
instruments
Non-convertible Yes Yes Yes
preferred stocks
Convertible securities Yes Yes Yes
(up to 20%)
- Borrowing for temporary Yes Yes Yes
or emergency purposes (up to 10%) (up to 10%) (up to 10%)
- Defensive investments Yes Yes Yes
- Foreign securities Yes Yes Yes
(up to 25%) (up to 25%)
- ADRs/EDRs/GDRs Yes Yes Yes
- Currency transactions Yes Yes Yes
- Illiquid securities Yes Yes Yes
(up to 10%) (up to 10%) (up to 10%)
- Options and futures Yes Yes Yes
- Forward commitments Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
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EQUITY PORTFOLIOS -- (cont'd.)
- ------------------------------------------------------------------------------------------------------------------
CAPITAL NATURAL
GROWTH APPRECIATION RESOURCES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
What other investment
strategies can the
Portfolio use?
(continued)
- Zero-coupon bonds Yes Yes Yes
- When-issued/delayed Yes Yes Yes
delivery transactions
- Special situations Yes Yes Yes
- Active trading Yes Yes Yes
- REITs Yes Yes Yes
- Other investment No No Yes
companies
What other potential - foreign exposure - foreign exposure - credit quality
risks can affect the - emerging markets - emerging markets - illiquidity
Portfolio? - credit quality - credit quality - prepayment
- illiquidity illiquidity - derivatives
- prepayment - prepayment - hedging
- derivatives - derivatives
- hedging - hedging
- interest rate - interest rate
fluctuations fluctuations
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
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FIXED INCOME PORTFOLIO
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GOVERNMENT AND QUALITY BOND
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
What is the Portfolio's investment goal? relatively high current income, liquidity and security
of principal
- ------------------------------------------------------------------------------------------------------------------
What are the Portfolio's principal investments (under obligations issued, guaranteed or insured by the U.S.
normal market conditions)? government, its agencies or instrumentalities and high
quality corporate fixed income securities
- ------------------------------------------------------------------------------------------------------------------
What are the Portfolio's principal risks? - bond market volatility
- securities selection
- interest rate fluctuations
- credit quality
- ------------------------------------------------------------------------------------------------------------------
What other investment strategies can the Portfolio
use?
--------------------------------------------------------
- Large company stocks Yes
--------------------------------------------------------
- Medium-sized company stocks Yes
--------------------------------------------------------
- Small company stocks Yes
--------------------------------------------------------
- Warrants Yes
--------------------------------------------------------
- Types of fixed income securities:
--------------------------------------------------------
Investment grade See principal investments section above
--------------------------------------------------------
U.S. government securities See principal investments section above
--------------------------------------------------------
Asset-backed and mortgage-backed securities Yes
--------------------------------------------------------
Short-term money market instruments Yes
--------------------------------------------------------
Non-convertible preferred stocks Yes
--------------------------------------------------------
Convertible securities Yes
--------------------------------------------------------
- Borrowing for temporary or emergency purposes Yes (up to 10%)
--------------------------------------------------------
- Defensive investments Yes
--------------------------------------------------------
- Foreign securities Yes
--------------------------------------------------------
- ADRs/EDRs/GDRs No
--------------------------------------------------------
- Currency transactions Yes
--------------------------------------------------------
- Illiquid securities Yes (up to 15%)
--------------------------------------------------------
- Options and futures Yes
--------------------------------------------------------
- Forward commitments Yes
--------------------------------------------------------
- Zero-coupon bonds Yes
--------------------------------------------------------
- When-issued/delayed delivery transactions Yes
--------------------------------------------------------
- Special situations Yes
--------------------------------------------------------
- Active trading Yes
--------------------------------------------------------
- REITs No
--------------------------------------------------------
- Other investment companies No
- ------------------------------------------------------------------------------------------------------------------
What other potential risks can affect the Portfolio? - foreign exposure
- emerging markets
- illiquidity
- prepayment
- derivatives
- hedging
- small market capitalization
- stock market volatility
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 17
- --------------------------------------------------------------------------------
GLOSSARY
- --------------------------------------------------------------------------------
INVESTMENT TERMINOLOGY
LARGE COMPANIES generally have market capitalizations of over $5 billion,
although there may be some overlap among capitalization categories.
MEDIUM SIZED COMPANIES generally have market capitalizations ranging from $1
billion to $5 billion, although there may be some overlap among capitalization
categories.
SMALL COMPANIES generally have market capitalizations of $1 billion or less,
although there may be some overlap among capitalization categories.
WARRANTS are rights to buy common stock of a company at a specified price during
the life of the warrant.
FIXED INCOME SECURITIES provide consistent interest or dividend payments. They
include corporate bonds, notes, debentures, preferred stocks, convertible
securities, U.S. government securities and mortgage-backed and asset-backed
securities. The issuer of a senior fixed income security is obligated to make
payments on this security ahead of other payments to security holders.
An INVESTMENT GRADE fixed income security is rated in one of the top four
ratings categories by a debt rating agency (or is considered of comparable
quality by the Subadviser). The two best-known debt rating agencies are Standard
& Poor's Rating Services, a Division of The McGraw-Hill Companies, Inc. and
Moody's Investors Service, Inc. "Investment grade" refers to any security rated
"BBB" or above by Standard & Poor's or "Baa" or above by Moody's.
U.S. GOVERNMENT SECURITIES are issued or guaranteed by the U.S. government, its
agencies and instrumentalities. Some U.S. government securities are issued or
unconditionally guaranteed by the U.S. Treasury. They are of the highest
possible credit quality. While these securities are subject to variations in
market value due to fluctuations in interest rates, they will be paid in full if
held to maturity. Other U.S. government securities are neither direct
obligations of, nor guaranteed by, the U.S. Treasury. However, they involve
federal sponsorship in one way or another. For example some are backed by
specific types of collateral; some are supported by the issuer's right to borrow
from the Treasury; some are supported by the discretionary authority of the
Treasury to purchase certain obligations of the issuer; and others are supported
only by the credit of the issuing government agency or instrumentality.
ASSET-BACKED SECURITIES represent an interest in a pool of consumer or other
types of loans. Payments of principal and interest on the underlying loans are
typically passed through to the holders of asset-backed securities over the life
of the securities. MORTGAGE-BACKED SECURITIES represent an undivided ownership
interest in a pool of mortgages.
SHORT-TERM MONEY MARKET SECURITIES include money market securities such as
short-term U.S. government obligations, repurchase agreements, commercial paper,
bankers' acceptances and certificates of deposit. These securities generally
provide a Portfolio with sufficient liquidity to meet redemptions and cover
expenses.
PREFERRED STOCK is a class of capital stock that pays dividends at a specified
rate and that has preference over common stock in the payment of dividends and
the liquidation of assets.
CONVERTIBLE SECURITIES are securities (such as bonds or preferred stocks) that
may be converted into common stock of the same or a different company.
The Trust may BORROW FOR TEMPORARY OR EMERGENCY PURPOSES including to meet
redemptions. Borrowing may exaggerate changes in a Trust's net asset value and
yield. Borrowing will cost the Trust interest expense and other fees. The cost
of borrowing may reduce the Trust's return.
DEFENSIVE INVESTMENTS include high quality fixed income securities and money
market instruments. A Portfolio will make temporary defensive investments in
response to adverse market, economic, political or other conditions. When a
Portfolio takes a defensive position, it may miss out on investment
opportunities
17
<PAGE> 18
that could have resulted from investing in accordance with its principal
investment strategy. As a result, a Portfolio may not achieve its investment
goal.
FOREIGN SECURITIES are issued by companies located outside of the United States,
including emerging markets. Foreign securities may include AMERICAN DEPOSITARY
RECEIPTS (ADRS), EUROPEAN DEPOSITARY RECEIPTS (EDRS) and GLOBAL DEPOSITARY
RECEIPTS (GDRS). ADRs are securities that trade in U.S. markets but represent
ownership interests in a foreign security. EDRs are receipts issued in Europe
that evidence ownership of either foreign or domestic underlying securities.
GDRs are issued globally and evidence a similar ownership arrangement.
CURRENCY TRANSACTIONS include the purchase and sale of currencies to facilitate
securities transactions, and forward currency contracts, which are generally
used to hedge against changes in currency exchange rates.
ILLIQUID SECURITIES are subject to legal or contractual restrictions that may
make them difficult to sell. A security that cannot easily be sold within seven
days will generally be considered illiquid. Certain restricted securities (such
as Rule 144A securities) are not generally considered illiquid because of their
established trading market.
OPTIONS AND FUTURES are contracts involving the right to receive or obligation
to deliver assets or money depending on the performance of one or more
underlying assets or a market or economic index.
FORWARD COMMITMENTS are commitments to purchase or sell securities at a future
date. A Portfolio purchasing a forward commitment assumes the risk of any
decline in value of the securities beginning on the date of the agreement.
ZERO COUPON BONDS are non-interest bearing debt obligations payable in full at
maturity that typically trade at a substantial or deep discount from their value
at maturity. Thus, the return on these instruments is known at the time of
investment. However, the value of zero coupon securities may be subject to
greater market fluctuations from changing interest rates prior to maturity than
the value of debt obligations of comparable maturities that bear interest
currently.
WHEN-ISSUED OR DELAYED-DELIVERY TRANSACTIONS call for the purchase or sale of
securities at an agreed-upon price on a specified future date. At the time of
delivery of the securities, the value may be more or less than the purchase
price.
A SPECIAL SITUATION arises when, in the opinion of the Subadviser, the
securities of a particular issuer will be recognized and appreciated in value
due to a specific development with respect to that issuer. Developments creating
a special situation might include, among others, a new product or process, a
technological breakthrough, a management change or other extraordinary corporate
event, or differences in market supply of and demand for the security.
Investments in special situations may carry an additional risk of loss in the
event that the anticipated development does not occur or does not attract the
expected attention.
ACTIVE TRADING means that a Portfolio may engage in frequent trading of
portfolio securities to achieve its investment goal. In addition, because a
Portfolio may sell a security without regard to how long it has held the
security, active trading may have tax consequences for certain shareholders,
involving a possible increase in short-term capital gains or losses. Active
trading may result in high portfolio turnover and correspondingly greater
brokerage commissions and other transaction costs, which will be borne directly
by a Portfolio. During periods of increased market volatility, active trading
may be more pronounced. At times each Portfolio (other than the Money Market
Portfolio) may engage in short-term trading, which could produce higher
brokerage expenses for a fund and higher taxable distributions to the
Portfolio's shareholders.
REITS (real estate investment trusts) are trusts that invest primarily in
commercial real estate or real estate related loans. The value of an interest in
a REIT may be affected by the value and the cash flows of the properties owned
or the quality of the mortgages held by the trust.
18
<PAGE> 19
A Portfolio may invest in the securities of OTHER INVESTMENT COMPANIES
(including foreign investment companies) that make investments expected to
provide a hedge against anticipated inflation.
RISK TERMINOLOGY
MARKET VOLATILITY: The stock and/or bond markets as a whole could go up or down
(sometimes dramatically). This could affect the value of the securities in a
Portfolio's portfolio.
SECURITY SELECTION: A strategy used by a Portfolio, or securities selected by
its portfolio manager, may fail to produce the intended return.
GROWTH STOCKS: Growth stocks can be volatile for several reasons. Since the
issuers usually reinvest a high portion of earnings in their own businesses,
growth stocks may lack the comfortable dividend yield associated with value
stocks that can cushion total return in a bear market. Also, growth stocks
normally carry a higher price/earnings ratio than many other stocks.
Consequently, if earnings expectations are not met, the market price of growth
stocks will often go down more than other stocks. However, the market frequently
rewards growth stocks with price increases when expectations are met or
exceeded.
INTEREST RATE FLUCTUATIONS: Volatility of the bond market is due principally to
changes in interest rates. As interest rates rise, bond prices typically fall;
and as interest rates fall, bond prices typically rise. Longer-term and lower
coupon bonds tend to be more sensitive to changes in interest rates.
CREDIT QUALITY: The creditworthiness of the issuer is always a factor in
analyzing fixed income securities. An issuer with a lower credit rating will be
more likely than a higher rated issuer to default or otherwise become unable to
honor its financial obligations. This type of issuer will typically issue JUNK
BONDS. In addition to the risk of default, junk bonds may be more volatile, less
liquid, more difficult to value and more susceptible to adverse economic
conditions or investor perceptions than other bonds.
FOREIGN EXPOSURE: Investors in foreign countries are subject to a number of
risks. A principal risk is that fluctuations in the exchange rates between the
U.S. dollar and foreign currencies may negatively affect an investment. In
addition, there may be less publicly available information about a foreign
company and it may not be subject to the same uniform accounting, auditing and
financial reporting standards as U.S. companies. Foreign governments may not
regulate securities markets and companies to the same degree as in the U.S.
Foreign investments will also be affected by local political or economic
developments and governmental actions. Consequently, foreign securities may be
less liquid, more volatile and more difficult to price than U.S. securities.
These risks are heightened when the issuer is in an EMERGING MARKET. An EMERGING
MARKET country is generally a country with low or middle income economy or that
is in the early stages of its industrialization cycle.
ILLIQUIDITY: Certain securities may be difficult or impossible to sell at the
time and price that the seller would like.
PREPAYMENT: Prepayment risk is the possibility that the principal of the loans
underlying pass-through securities such as mortgage-backed or other asset-backed
securities may be prepaid at any time. As a general rule, prepayments increase
during a period of falling interest rates and decrease during a period of rising
interest rates. As a result of prepayments, in periods of declining interest
rates a Portfolio may be required to reinvest its assets in securities with
lower interest rates. In periods of increasing interest rates, prepayments
generally may decline, with the effect that the securities subject to prepayment
risk held by a Portfolio may exhibit price characteristics of longer-term debt
securities.
DERIVATIVES: A derivative is any financial instrument whose value is based on,
and determined by, another security, index or benchmark (i.e., stock options,
futures, caps, floors, etc.). In recent years, derivative securities have become
increasingly important in the field of finance. Futures and options are now
actively traded on many different exchanges. Forward contracts, swaps, and many
different types of options are regularly traded outside of exchanges by
financial institutions in what are termed "over the counter" markets. Other more
specialized derivative securities often form part of a bond or stock issue. To
the extent a contract is used to hedge another position in the portfolio, there
is a risk that changes in the
19
<PAGE> 20
value of the contract will not match those of the hedged position. To the extent
an option or futures contract is used to enhance return, rather than as a hedge,
a Portfolio will be directly exposed to the risks of the contract. Gains or
losses from non-hedging positions may be substantially greater than the cost of
the position.
HEDGING: Hedging is a strategy in which a Portfolio uses a derivative security
to reduce certain risk characteristics of an underlying security or portfolio of
securities. While hedging strategies can be very useful and inexpensive ways of
reducing risk, they are sometimes ineffective due to unexpected changes in the
market. Hedging also involves the risk that changes in the value of the
derivative will not match those of the instruments being hedged as expected, in
which case any losses on the instruments being hedged may not be reduced.
Moreover, while hedging can reduce or eliminate losses, it can also reduce or
eliminate gains. Examples of hedging strategies are:
- Long Hedge -- Strategy in which an investor locks in a future price on a
security/index by buying a futures contract.
- Neutral Hedge -- Strategy that is designed to provide the highest
expected return on a portfolio of securities assuming that the price of a
particular investment in the portfolio remains constant.
- Perfect Hedge -- a hedge whose change in value is equal to the change in
value of the underlying security, positive or negative.
- Short Hedge -- Strategy designed to reduce the risk of a decline in value
of a security/index without requiring ownership of that security.
SMALL MARKET CAPITALIZATION: Companies with smaller market capitalizations
(particularly under $1 billion) tend to be at early stages of development with
limited product lines, market access for products, financial resources, access
to new capital, or depth in management. Consequently, the securities of smaller
companies may not be as readily marketable and may be subject to more abrupt or
erratic market movements.
NATURAL RESOURCES SECTOR: The value of equity investments in the natural
resources sector will fluctuate based on a number of factors, including: market
conditions generally; the market for the particular natural resource in which
the issuer is involved; events of nature; and international politics.
20
<PAGE> 21
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
SunAmerica Asset Management Corp. SAAMCo serves as investment adviser and
manager for all the Portfolios of the Trust. SAAMCo oversees the Subadviser,
provides various administrative services and supervises the daily business
affairs of each Portfolio. SAAMCo, located at The SunAmerica Center, 733 Third
Avenue, New York, New York 10017, is a corporation organized in 1982 under the
laws of the state of Delaware. In addition to serving as investment adviser and
manager to the Trust, SAAMCo serves as adviser, manager and/or administrator for
Anchor Pathway Fund, Seasons Series Trust, Style Select Series, Inc., SunAmerica
Equity Funds, SunAmerica Income Funds, SunAmerica Money Market Funds, Inc.,
SunAmerica Series Trust and SunAmerica Strategic Investment Series, Inc. For the
fiscal year ended December 31, 1998, each Portfolio paid SAAMCo a fee equal to
the following percentage of average daily net assets:
<TABLE>
<CAPTION>
PORTFOLIO FEE
--------- ----
<S> <C>
Growth Portfolio............................................ 0.70%
Capital Appreciation Portfolio.............................. 0.64%
Natural Resources Portfolio................................. 0.75%
Government and Quality Bond Portfolio....................... 0.61%
</TABLE>
SUBADVISER
Wellington Management Company, LLP (Wellington) acts as Subadviser to each
Portfolio of the Trust, pursuant to a Subadvisory Agreement with SAAMCo.
Wellington is independent of SAAMCo and discharges its responsibilities subject
to the policies of the Trustees and the oversight and supervision of SAAMCo
which pays Wellington's fees.
Wellington is a Massachusetts limited liability partnership. The principal
business address of Wellington is 75 State Street, Boston, Massachusetts 02109.
Wellington is a professional investment counseling firm that provides investment
services to investment companies, employee benefit plans, endowments,
foundations, and other institutions and individuals.
21
<PAGE> 22
PORTFOLIO MANAGEMENT
The following individuals or management team is primarily responsible for the
day-to-day management of the Portfolios as indicated in the following chart:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
PORTFOLIO NAME AND TITLE OF EXPERIENCE
PORTFOLIO MANAGER
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
GROWTH PORTFOLIO - Wellington's Growth Wellington's Growth Investment Team has
Investment Team been responsible for managing the
Portfolio since 1995.
-------------------------------------------------------------------------------------------------------
CAPITAL APPRECIATION - Robert D. Rands Mr. Rands has served as the portfolio
PORTFOLIO Senior Vice President manager for the Portfolio since its
inception in 1987. He joined Wellington in
1978 as a special situations analyst and
became a portfolio manager in 1983. Mr.
Rands also manages the Strategic Multi-
Asset Portfolio (see below).
-------------------------------------------------------------------------
- Steven C. Angeli Mr. Angeli has served as the assistant
Vice President portfolio manager for the Portfolio since
1998. He joined Wellington as research
analyst in 1994, after receiving his MBA
from Darden Graduate School of Business
Administration at the University of
Virginia. Prior to joining Wellington, Mr.
Angeli worked at Fidelity Management and
Research Company from 1990-1992.
-------------------------------------------------------------------------------------------------------
NATURAL RESOURCES PORTFOLIO - Ernst H. von Metzsch Mr. von Metzsch has served as the
Senior Vice President portfolio manager for the Portfolio since
1994. He joined Wellington in 1973 as an
analyst. He became a portfolio manager in
1984.
-------------------------------------------------------------------------
- James Bevilacqua Mr. Bevilacqua has served as the assistant
Vice President portfolio manager of the Portfolio since
1998. He joined Wellington as an analyst
in the global industry research group in
1994, after receiving his MBA from
Stanford Graduate School of Business.
-------------------------------------------------------------------------------------------------------
GOVERNMENT AND QUALITY BOND - John C. Keogh Mr. Keogh has served as the portfolio
PORTFOLIO Senior Vice President manager for the Portfolio since 1994. He
joined Wellington Management as a
portfolio manager in 1983. Mr. Keogh also
manages the Multi-Asset Portfolio (see
above).
-------------------------------------------------------------------------------------------------------
</TABLE>
CUSTODIAN, TRANSFER AND DIVIDEND PAYING AGENT
State Street Bank and Trust Company, Boston, Massachusetts, acts as Custodian of
the Trust's assets as well as Transfer and Dividend Paying Agent and in so doing
performs certain bookkeeping, data processing and administrative services.
22
<PAGE> 23
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The Financial Highlights table for each Anchor Series Trust Portfolio is
intended to help you understand the Portfolio's financial performance for the
past 5 years. Certain information reflects financial results for a single
Portfolio share. The total returns in each table represent the rate that an
investor would have earned on an investment in the Portfolio (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with each Portfolio's
financial statements, is included in the Trust's Annual Report to shareholders,
which is available upon request.
<TABLE>
<CAPTION>
NET DIVIDENDS DIVIDENDS
REALIZED TOTAL DECLARED FROM NET NET
NET ASSET NET & UNREALIZED FROM FROM NET REALIZED NET ASSET ASSETS
VALUE INVEST- GAIN (LOSS) INVEST- INVEST- GAIN ON VALUE END OF
PERIOD BEGINNING MENT ON MENT MENT INVEST- END OF TOTAL PERIOD
ENDED OF PERIOD INCOME* INVESTMENTS OPERATIONS INCOME MENTS PERIOD RETURN** (000'S)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Government & Quality Bond Portfolio
12/31/94 $14.22 $0.86 $(1.30) $(0.44) $(0.73) $(0.19) $12.86 (3.1)% $232,530
12/31/95 12.86 0.90 1.55 2.45 (1.08) -- 14.23 19.4 225,579
12/31/96 14.23 0.87 (0.50) 0.37 (0.90) (0.03) 13.67 2.9 221,603
12/31/97 13.67 0.84 0.42 1.26 (0.92) (0.05) 13.96 9.5 234,623
12/31/98 13.96 0.79 0.48 1.27 (0.57) (0.02) 14.64 9.2 375,667
<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
EXPENSES INCOME PORTFOLIO
PERIOD TO AVERAGE TO AVERAGE TURNOVER
ENDED NET ASSETS NET ASSETS RATE
<S> <C> <C> <C>
12/31/94 0.7% 6.4% 117.6%
12/31/95 0.7 6.5 135.2
12/31/96 0.7 6.3 106.7
12/31/97 0.7 6.1 75.7
12/31/98 0.7(1) 5.5 150.2
</TABLE>
- ---------------
* Selected data for a share of beneficial interest outstanding throughout each
period (calculated based upon average shares outstanding)
** Does not reflect expenses that apply to the separate accounts of Anchor
National Life Insurance Company, First SunAmerica Life Insurance Company,
Phoenix Mutual Life Insurance Company and Presidential Life Insurance
Company. If such expenses had been included, total return would have been
lower for each period presented.
(1) The expense ratio reflects the effect of a gross up of custody expense
credits.
23
<PAGE> 24
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET DIVIDENDS DIVIDENDS
REALIZED TOTAL DECLARED FROM NET NET
NET ASSET NET & UNREALIZED FROM FROM NET REALIZED NET ASSET ASSETS
VALUE INVESTMENT GAIN (LOSS) INVEST- INVEST- GAIN ON VALUE END OF
PERIOD BEGINNING INCOME ON MENT MENT INVEST- END OF TOTAL PERIOD
ENDED OF PERIOD (LOSS)* INVESTMENTS OPERATIONS INCOME MENTS PERIOD RETURN** (000'S)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Growth Portfolio
12/31/94 22.32 0.05 (1.03) (0.98) (0.05) (3.11) 18.18 (4.7) 246,149
12/31/95 18.18 0.11 4.62 4.73 (0.05) (3.38) 19.48 26.3 307,857
12/31/96 19.48 0.20 4.57 4.77 (0.11) (0.95) 23.19 25.0 366,602
12/31/97 23.19 0.16 6.76 6.92 (0.20) (2.87) 27.04 30.4 485,528
12/31/98 27.04 0.11 7.19 7.30 (0.14) (1.68) 32.52 29.0 669,330
Capital Appreciation Portfolio
12/31/94 $20.28 $(0.02) $(0.71) $(0.73) $ -- $(2.04) $17.51 (3.8)% $ 229,544
12/31/95 17.51 0.06 6.00 6.06 (0.15) (0.20) 23.22 34.6 356,218
12/31/96 23.22 0.06 5.73 5.79 (0.06) (0.95) 28.00 25.1 567,672
12/31/97 28.00 0.02 7.05 7.07 (0.05) (2.81) 32.21 25.4 814,311
12/31/98 32.21 0.04 6.24 6.28 (0.02) (2.88) 35.59 22.2 1,100,646
Natural Resources Portfolio
12/31/94 13.33 0.23 (0.09) 0.14 (0.09) (0.09) 13.29 1.0 21,230
12/31/95 13.29 0.18 2.15 2.33 (0.21) (0.29) 15.12 17.5 28,941
12/31/96 15.12 0.22 1.89 2.11 (0.13) (0.23) 16.87 14.1 45,329
12/31/97 16.87 0.20 (1.49) (1.29) (0.17) (0.99) 14.42 (8.6) 50,054
12/31/98 14.42 0.21 (2.72) (2.51) (0.19) (0.13) 11.59 (17.3) 39,299
<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
EXPENSES INCOME (LOSS) PORTFOLIO
PERIOD TO AVERAGE TO AVERAGE TURNOVER
ENDED NET ASSETS NET ASSETS RATE
<S> <C> <C> <C>
12/31/94 0.8 0.2 74.8
12/31/95 0.9 0.6 92.1
12/31/96 0.8 0.9 51.7
12/31/97 0.8 0.6 32.2
12/31/98 0.8(1) 0.4 27.1
12/31/94 0.8% (0.1)% 64.0%
12/31/95 0.8 0.3 60.1
12/31/96 0.8 0.2 69.2
12/31/97 0.7 0.1 60.1
12/31/98 0.7(1) 0.1 59.6
12/31/94 1.0 1.7 36.0
12/31/95 1.0 1.3 32.0
12/31/96 0.9 1.3 52.5
12/31/97 0.9 1.2 27.9
12/31/98 0.9(1) 1.6 51.2
</TABLE>
- ---------------
* Selected data for a share of beneficial interest outstanding throughout each
period (calculated based upon average shares outstanding)
** Does not reflect expenses that apply to the separate accounts of Anchor
National Life Insurance Company, First SunAmerica Life Insurance Company,
Phoenix Mutual Life Insurance Company and Presidential Life Insurance
Company. If such expenses had been included, total return would have been
lower for each period presented.
(1) The expense ratio reflects the effect of a gross up of custody expense
credits.
24
<PAGE> 25
- --------------------------------------------------------------------------------
FOR MORE INFORMATION
- --------------------------------------------------------------------------------
The following documents contain more information about the Portfolios and are
available free of charge upon request:
ANNUAL/SEMI-ANNUAL REPORTS. Contain financial statements, performance
data and information on portfolio holdings. The annual report also
contains a written analysis of market conditions and investment
strategies that significantly affected a Portfolio's performance for the
most recently completed fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI). Contains additional
information about the Portfolios' policies, investment restrictions and
business structure. This prospectus incorporates the SAI by reference.
You may obtain copies of these documents or ask questions about the Portfolios
by contacting:
Anchor National Life Insurance Company
Annuity Service Center
P.O. Box 54299
Los Angeles, California 90054-0299
1-800-445-7862
-- or --
First SunAmerica Life Insurance Company
Service Center
P.O. Box 54299
Los Angeles, California 90054-0299
1-800-99-NYSUN (New York Shareholders)
1-800-445-SUN2 (all others)
Information about the Portfolios (including the SAI) can be reviewed and copied
at the Public Reference Room of the Securities and Exchange Commission,
Washington, D.C. Call (800) SEC-0330 for information on the operation of the
Public Reference Room. Information about the Portfolios is also available on the
Securities and Exchange Commission's web-site at http://www.sec.gov and copies
may be obtained upon payment of a duplicating fee by writing the Public
Reference Section of the Securities and Exchange Commission, Washington, D.C.
20549-6009.
You should rely only on the information contained in this prospectus. No one is
authorized to provide you with any different information.
[LOGO]
Anchor National Life Insurance Company
1 SunAmerica Center
Los Angeles, California 90067-6022
First SunAmerica Life Insurance Company
733 Third Avenue
New York, New York 10017
INVESTMENT COMPANY ACT
- - File No. 811-3836
25
