<PAGE> 1
----------------------------------------------
PROSPECTUS
APRIL 20, 2000
----------------------------------------------
ANCHOR SERIES TRUST
-- Growth and Income Portfolio
-- Growth Portfolio
-- Capital Appreciation Portfolio
-- Natural Resources Portfolio
-- Multi-Asset Portfolio
-- Strategic Multi-Asset Portfolio
-- Money Market Portfolio
-- Government and Quality
Bond Portfolio
-- High Yield Portfolio
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.
<PAGE> 2
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TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
TRUST HIGHLIGHTS............................................ 3
Q&A....................................................... 3
ACCOUNT INFORMATION......................................... 17
Transaction Policies...................................... 17
Dividend Policies and Taxes............................... 18
MORE INFORMATION ABOUT THE PORTFOLIOS....................... 18
Investment Selection...................................... 18
Investment Strategies..................................... 18
GLOSSARY.................................................... 22
Investment Terminology.................................... 22
Risk Terminology.......................................... 24
MANAGEMENT.................................................. 26
Investment Adviser........................................ 26
Subadviser................................................ 26
Portfolio Management...................................... 27
Custodian, Transfer and Dividend-Paying Agent............. 29
FINANCIAL HIGHLIGHTS........................................ 29
FOR MORE INFORMATION........................................ 31
</TABLE>
2
<PAGE> 3
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.
- --------------------------------------------------------------------------------
TRUST HIGHLIGHTS
- --------------------------------------------------------------------------------
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 the
Trust's nine separate investment series (Portfolios) and their investment goals
and principal strategies. More complete investment information is provided in
the charts, under "More Information About the Portfolios," beginning on page 19,
and the glossary that follows on page 22.
Q: WHAT ARE THE PORTFOLIOS' INVESTMENT GOALS AND PRINCIPAL INVESTMENT
STRATEGIES?
A: Each Portfolio operates as a separate mutual fund and has its own investment
goal and a principal investment 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
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
GROWTH AND INCOME high current income and invests primarily (at least
PORTFOLIO long-term capital 65%) in core equity securities
appreciation that provide the potential for
growth and offer income, such
as dividend-paying stocks
-----------------------------------------------------------------------------------------
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
-----------------------------------------------------------------------------------------
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
-----------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 4
CAPITAL APPRECIATION/GROWTH is an increase in the market value of
securities held.
ASSET ALLOCATION is a varying combination, depending on market
conditions and risk level, of stocks, bonds, money market instruments
and other assets.
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.
YIELD is the annual dollar income received on an investment expressed as
a percentage of the current or average price.
MARKET CAPITALIZATION represents the total market value of the
outstanding securities of a corporation.
"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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ALLOCATION PORTFOLIOS
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PORTFOLIO INVESTMENT GOAL PRINCIPAL INVESTMENT STRATEGY
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
MULTI-ASSET PORTFOLIO long-term total actively allocates the
investment return Portfolio's assets among
consistent with moderate equity securities, investment
investment risk grade fixed income securities
and cash with less risk than
the Strategic Multi-Asset
Portfolio
-----------------------------------------------------------------------------------------
STRATEGIC MULTI-ASSET high long-term total actively allocates the
PORTFOLIO investment return Portfolio's assets among
equity securities of U.S. and
foreign companies, medium and
small company equity
securities, global fixed
income securities (including
high-yield, high-risk bonds)
and cash with more risk than
the Multi-Asset Portfolio
-----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
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FIXED INCOME PORTFOLIOS
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PORTFOLIO INVESTMENT GOAL PRINCIPAL INVESTMENT STRATEGY
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET PORTFOLIO current income invests in a diversified
consistent with portfolio of money market
stability of principal instruments maturing in 397
days or less and maintains a
dollar-weighted average
portfolio maturity of not more
than 90 days
-----------------------------------------------------------------------------------------
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
-----------------------------------------------------------------------------------------
HIGH YIELD PORTFOLIO high current income and, invests primarily (at least
secondarily, capital 65%) in high-yielding,
appreciation high-risk, income producing
bonds ("junk bonds") and other
fixed income securities
-----------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 5
Q: WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE PORTFOLIOS?
A: The following section describes the principal risks of each Portfolio, while
the charts beginning on page 19 describe various additional risks.
Risks of Investing in Equity Securities
The GROWTH AND INCOME, GROWTH, CAPITAL APPRECIATION AND NATURAL RESOURCES
PORTFOLIOS invest primarily in equities. In addition, the MULTI-ASSET AND
STRATEGIC MULTI-ASSET PORTFOLIOS invest significantly 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. You should be aware that the performance of different types of
equity stocks may perform well under varying market conditions -- for
example "value" stocks may perform well under circumstances in which
"growth" stocks in general have fallen, or vice versa.
Risks of Investing in Bonds
The GOVERNMENT AND QUALITY BOND AND HIGH YIELD PORTFOLIOS invest primarily
in bonds. In addition, the MULTI-ASSET AND STRATEGIC MULTI-ASSET PORTFOLIOS
invest significantly 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, movements in the bond market or defaults (or even
the potential for future default) by bond issuers. To the extent a Portfolio
is invested in the bond market, movements in the bond market may affect its
performance. In addition, individual bonds selected for any of these
Portfolios may underperform the market generally.
Risks of Investing in Junk Bonds
The HIGH YIELD PORTFOLIO invests primarily in high yield, high risk bonds
commonly known as "junk bonds," which are considered speculative. The GROWTH
AND INCOME AND STRATEGIC MULTI-ASSET PORTFOLIOS may also invest in junk
bonds. While the Subadviser tries to diversify each Portfolio and to engage
in a credit analysis of each junk bond issuer in which it invests, junk
bonds carry a substantial risk of default or of changes in the issuer's
creditworthiness, or they may already be in default. A junk bond's market
price may fluctuate more than higher-quality securities and may decline
significantly. In addition, it may be more difficult for the Portfolios to
dispose of junk bonds or to determine their value. Junk bonds may contain
redemption or call provisions that, if exercised during a period of
declining interest rates, may force a Portfolio to replace the security with
a lower yielding security. If this occurs, it will result in a decreased
return for you.
Risks of Investing in Money Market Securities
While an investment in the MONEY MARKET PORTFOLIO should present the least
market risk of any of the Portfolios, since it invests only in high-quality
short-term debt obligations (also known as "money market securities"), you
should be aware that an investment in the MONEY MARKET PORTFOLIO is subject
to the risk that the value of its investments may be subject to changes in
interest rates, changes in the rating of any money market security and in
the ability of an issuer to make payments of interest and principal. You
should also be aware that the return on an investment in the MONEY MARKET
PORTFOLIO should not be the same as a return on an investment in a money
market fund available directly to the public, even where gross yields are
equivalent, due to fees at the contract level. Furthermore, although the
Portfolio seeks to maintain a stable net asset value of $1.00 per share for
purposes of purchases and redemptions, there can be no assurance that the
net asset value will not vary. As a result, it is possible to lose money by
investing in the Portfolio.
Risks of Investing in Foreign Securities
All of the Portfolios except the MONEY MARKET PORTFOLIO may, and the
STRATEGIC MULTI-ASSET AND NATURAL RESOURCES PORTFOLIOS 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,
5
<PAGE> 6
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, CAPITAL
APPRECIATION, STRATEGIC MULTI-ASSET AND NATURAL RESOURCES 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.
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.
6
<PAGE> 7
- --------------------------------------------------------------------------------
GROWTH AND INCOME PORTFOLIO
- --------------------------------------------------------------------------------
[BAR CHART]
<TABLE>
<CAPTION>
GROWTH AND INCOME PORTFOLIO
---------------------------
<S> <C>
1990 -3.84
1991 26.80
1992 20.10
1993 22.02
1994 -9.67
1995 16.59
1996 20.15
1997 28.76
1998 30.16
1999 15.88
</TABLE>
During the 10-year period shown in the bar chart, the highest return for a
quarter was 20.28% (quarter ended 12/31/98) and the lowest return for a quarter
was -9.77% (quarter ended 9/30/90).
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE PAST FIVE PAST TEN RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1999) YEAR YEARS YEARS INCEPTION(1)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Growth and Income Portfolio 15.88% 22.16% 15.95% 13.02%
- -----------------------------------------------------------------------------------------------------
S&P 500(R)(2) 21.01% 11.40% 18.21% 17.00%
- -----------------------------------------------------------------------------------------------------
Lipper VA-UF Growth & Income Category(3) 14.64% 10.27% 15.11% 14.20%
- -----------------------------------------------------------------------------------------------------
</TABLE>
1 Inception date for the Portfolio is March 23, 1987. 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) Growth and Income
Category includes funds that combine a growth of earnings orientation and an
income requirement for level and/or rising dividends.
7
<PAGE> 8
- --------------------------------------------------------------------------------
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
[BAR CHART]
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
----------------
<S> <C>
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
1999 26.94
</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>
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE PAST FIVE PAST TEN RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1999) YEAR YEARS YEARS INCEPTION(1)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Growth Portfolio 26.94% 27.52% 17.60% 16.80%
- --------------------------------------------------------------------------------------------------------
S&P 500(R)(2) 21.01% 11.40% 18.21% 18.70%
- --------------------------------------------------------------------------------------------------------
Lipper VA-UF Growth Category(3) 31.47% 11.18% 17.90% 18.20%
- --------------------------------------------------------------------------------------------------------
Custom Index(4) 23.16% 14.87% N/A N/A
- --------------------------------------------------------------------------------------------------------
</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.
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.
8
<PAGE> 9
- --------------------------------------------------------------------------------
CAPITAL APPRECIATION PORTFOLIO
- --------------------------------------------------------------------------------
[BAR CHART]
<TABLE>
<CAPTION>
CAPITAL APPRECIATION PORTFOLIO
------------------------------
<S> <C>
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
1999 67.58
</TABLE>
During the 10-year period shown in the bar chart, the highest return for a
quarter was 39.01% (quarter ended 12/31/99) and the lowest return for a quarter
was -26.82% (quarter ended 9/30/90).
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE PAST FIVE PAST TEN RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1999) YEAR YEARS YEARS INCEPTION(1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Capital Appreciation Portfolio 67.58% 34.03% 23.57% 20.08%
- ------------------------------------------------------------------------------------------------------------
Russell 2000 Index(2) 21.26% 8.99% 13.40% 10.90%
- ------------------------------------------------------------------------------------------------------------
Lipper VA-UF Capital Appreciation Category(3) 40.06% 11.03% 18.45% 15.10%
- ------------------------------------------------------------------------------------------------------------
Custom Index(4) 22.37% 10.20% 15.16% N/A
- ------------------------------------------------------------------------------------------------------------
</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 footnote 2) 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.
9
<PAGE> 10
- --------------------------------------------------------------------------------
NATURAL RESOURCES PORTFOLIO
- --------------------------------------------------------------------------------
[BAR CHART]
<TABLE>
<CAPTION>
NATURAL RESOURCES PORTFOLIO
---------------------------
<S> <C>
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
1999 41.51
</TABLE>
During the 10-year period shown in the bar chart, the highest return for a
quarter was 21.23% (quarter ended 6/30/99) and the lowest return for a quarter
was -17.46% (quarter ended 12/31/97).
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE PAST FIVE PAST TEN RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1999) YEAR YEARS YEARS INCEPTION(1)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Natural Resources Portfolio 41.51% 7.46% 6.06% 7.50%
- ---------------------------------------------------------------------------------------------------
S&P 500(R)(2) 21.01% 11.40% 18.21% 18.90%
- ---------------------------------------------------------------------------------------------------
Lipper VA-UF Natural Resources Category(3) 24.66% 3.37% 3.63% 3.00%
- ---------------------------------------------------------------------------------------------------
MSCI Energy Sources Index(4) 23.05% 9.56% N/A N/A
- ---------------------------------------------------------------------------------------------------
MSCI Gold Mines Index(4) 1.26% -20.29% N/A N/A
- ---------------------------------------------------------------------------------------------------
MSCI Non-Ferrous Metals Index(4) 80.86% 5.25% 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.
10
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- --------------------------------------------------------------------------------
MULTI-ASSET PORTFOLIO
- --------------------------------------------------------------------------------
[BAR CHART]
<TABLE>
<CAPTION>
MULTI-ASSET PORTFOLIO
---------------------
<S> <C>
1990 1.62
1991 27.28
1992 8.22
1993 7.31
1994 -1.68
1995 24.94
1996 13.87
1997 21.12
1998 24.47
1999 12.45
</TABLE>
During the 10-year period shown in the bar chart, the highest return for a
quarter was 12.98% (quarter ended 12/31/98) and the lowest return for a quarter
was -8.61% (quarter ended 9/30/90).
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE PAST FIVE PAST TEN RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1999) YEAR YEARS YEARS INCEPTION(1)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Multi-Asset Portfolio 12.45% 19.25% 13.54% 11.32%
- --------------------------------------------------------------------------------------------------------
S&P 500(R)(2) 21.01% 11.40% 18.21% 16.60%
- --------------------------------------------------------------------------------------------------------
Lehman Brothers Aggregate Index(3) -0.82% 5.56% 7.70% 7.90%
- --------------------------------------------------------------------------------------------------------
Lipper VA-UF Flexible Category(4) 12.13% 8.94% 12.42% 11.60%
- --------------------------------------------------------------------------------------------------------
Custom Index(5) 12.31% 9.82% 13.97% N/A
- --------------------------------------------------------------------------------------------------------
</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 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 Lehman Brothers Aggregate Index combines several Lehman Brothers indexes
which include the government and corporate markets, agency mortgage
pass-through securities, and asset-backed securities.
4 The Lipper Variable Annuity-Underlying Fund (VA-UF) Flexible Category
includes funds which allocate their investments across various asset classes,
including domestic common stocks, bonds, and money market instruments, with a
focus on total return.
5 Custom Index consists of 60% S&P 500(R), 35% Lehman Brothers Aggregate Index
(as described above in footnotes 2 and 3, respectively) and 5% 3-month
T-bill.
11
<PAGE> 12
- --------------------------------------------------------------------------------
STRATEGIC MULTI-ASSET PORTFOLIO
- --------------------------------------------------------------------------------
[BAR CHART]
<TABLE>
<CAPTION>
STRATEGIC MULTI-ASSET PORTFOLIO
-------------------------------
<S> <C>
1990 -7.57
1991 24.19
1992 3.94
1993 15.31
1994 -2.58
1995 22.77
1996 14.81
1997 14.32
1998 15.21
1999 28.15
</TABLE>
During the 10-year period shown in the bar chart, the highest return for a
quarter was 16.65% (quarter ended 12/31/99) and the lowest return for a quarter
was -15.78% (quarter ended 9/30/90).
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE PAST FIVE PAST TEN RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1999) YEAR YEARS YEARS INCEPTION(1)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Strategic Multi-Asset Portfolio 28.15% 18.93% 12.29% 11.32%
- --------------------------------------------------------------------------------------------------------
Lipper VA-UF Global Flexible Average(3) 13.57% 8.39% 11.29% N/A
- --------------------------------------------------------------------------------------------------------
MSCI AC World Free USD Index(4) 26.81% 9.64% 11.71% N/A
- --------------------------------------------------------------------------------------------------------
Salomon Brothers World Gov't Bond-U.S.$
Hedge Index(5) 1.33% 6.56% 8.37% 8.10%
- --------------------------------------------------------------------------------------------------------
Custom Index(6) 17.77% 8.92% 11.53% N/A
- --------------------------------------------------------------------------------------------------------
</TABLE>
1 Inception date for the Portfolio is March 23, 1987. Except for the MSCI and
Custom 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) Global Flexible Average
includes funds that allocate their investments across various asset classes,
including both domestic and foreign stocks, bonds and money market
instruments, with a focus on total return. At least 25% of its portfolio is
invested in securities traded outside of the U.S., including shares of gold
mines, gold-oriented mining finance houses, gold coins, or bullion.
4 The Morgan Stanley Capital International (MSCI) All Country (AC) World Free
USD Index is a market capitalization weighted benchmark of the listed
securities of Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile,
China, Colombia, Czech Republic, Denmark, Finland, France, Germany,
12
<PAGE> 13
Greece, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan,
Jordan, Korea, Malaysia, Mexico, Netherlands, New Zealand, Norway, Pakistan,
Peru, Philippines, Poland, Portugal, Russia, Singapore, South Africa, Spain,
Sri Lanka, Sweden, Switzerland, Taiwan, Thailand, Turkey, United Kingdom,
United States, and Venezuela, that uses an arbitrary sampling of stocks and
aims to capture 60% of the total market capitalization at both the country
and industry levels.
5 The Salomon Smith Barney World Government Bond -- U.S.$ Hedge Index is a
market capitalization weighted, total return benchmark designed to cover the
government bond markets of Australia, Austria, Belgium, Canada, Denmark,
Finland, France, Germany, Ireland, Italy, Japan, Netherlands, Spain, Sweden,
Switzerland, United Kingdom, the United States and Portugal. For a country to
be added to the Index, its eligible issues must total at least US$20 billion,
DM30 billion, and Y2.5 trillion for three consecutive months.
6 Custom Index consists of 65% MSCI AC World Free USD Index, 20% Salomon Smith
Barney World Gov't Bond -- (U.S. $ Hedge) Index (as described above in
footnotes 4 and 5, respectively), 10% Lehman Brothers High Yield Index, and
5% 3-month T-bill. Custom Index prior to 2/28/98 consisted of 30% MSCI AC
World Free ex-U.S. Index, 20% Lehman Brothers Aggregate Index, 30% S&P 500
Index (as described above in footnote 2) and 10% Russell 2000 Index, and 10%
3-month T-bill. The Lehman Brothers High Yield Index covers the universe of
fixed rate, publicly issued, non-investment grade debt registered with the
SEC. All bonds included in the index must be U.S. dollar-denominated and
non-convertible. The Morgan Stanley Capital International (MSCI) All Country
(AC) World Free (Ex-U.S.) Index is described in footnote 5 on page 9. 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. The 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.
13
<PAGE> 14
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
[BAR CHART]
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
----------------------
<S> <C>
1990 7.40
1991 5.60
1992 3.40
1993 2.00
1994 3.80
1995 5.60
1996 5.00
1997 5.10
1998 5.10
1999 4.69
</TABLE>
During the 10-year period shown in the bar chart, the highest return for a
quarter was 2.35% (quarter ended 6/30/89) and the lowest return for a quarter
was 0.64% (quarter ended 6/30/93).
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE PAST FIVE PAST TEN RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1999) YEAR YEARS YEARS INCEPTION*
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Money Market Portfolio 4.69% 4.89% 5.30% 5.75%
- --------------------------------------------------------------------------------------------------
</TABLE>
* Inception date for the Portfolio is 12/31/84.
14
<PAGE> 15
- --------------------------------------------------------------------------------
GOVERNMENT AND QUALITY BOND PORTFOLIO
- --------------------------------------------------------------------------------
[BAR CHART]
<TABLE>
<CAPTION>
GOVERNMENT AND QUALITY BOND PORTFOLIO
-------------------------------------
<S> <C>
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
1999 -1.65
</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, 1999) YEAR YEARS YEARS INCEPTION(1)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Government and Quality Bond Portfolio -1.65% 7.64% 7.44% 9.04%
- ----------------------------------------------------------------------------------------------------
Lehman Brothers Aggregate Index(2) -0.82% 5.56% 7.70% 9.60%
- ----------------------------------------------------------------------------------------------------
Lipper VA-UF General U.S. Government
Category(3) -2.13% 5.03% 6.90% 8.50%
- ----------------------------------------------------------------------------------------------------
</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.
15
<PAGE> 16
- --------------------------------------------------------------------------------
HIGH YIELD PORTFOLIO
- --------------------------------------------------------------------------------
[BAR CHART]
<TABLE>
<CAPTION>
HIGH YIELD PORTFOLIO
--------------------
<S> <C>
1990 -10.75
1991 33.06
1992 13.91
1993 19.08
1994 -4.48
1995 18.78
1996 11.70
1997 11.38
1998 -4.48
1999 5.72
</TABLE>
During the 10-year period shown in the bar chart, the highest return for a
quarter was 12.92% (quarter ended 3/31/91) and the lowest return for a quarter
was -11.45% (quarter ended 9/30/98).
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS (AS OF THE PAST ONE PAST FIVE PAST TEN RETURN SINCE
CALENDAR YEAR ENDED DECEMBER 31, 1999) YEAR YEARS YEARS INCEPTION(1)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
High Yield Portfolio 5.72% 8.33% 8.67% 8.23%
- ----------------------------------------------------------------------------------------------------
Lehman Brothers High Yield Index(2) 2.39% 6.33% 10.72% 10.20%
- ----------------------------------------------------------------------------------------------------
Lipper VA-UF High Current Yield
Category(3) 3.81% 6.50% 10.34% 9.70%
- ----------------------------------------------------------------------------------------------------
</TABLE>
1 Inception date for the Portfolio is January 2, 1986. The since inception
returns for the comparative indices are as of December 31, 1985.
2 The Lehman Brothers High Yield Index covers the universe of fixed rate,
publicly issued, non-investment grade debt registered with the Securities and
Exchange Commission. All bonds included in the index must be U.S.
dollar-denominated and non-convertible.
3 The Lipper Variable Annuity-Underlying Fund (VA-UF) High Current Yield
Category includes funds which aim at high (relative) current yield from fixed
income securities. There are no quality or maturity restrictions, though
these funds tend to invest in lower grade debt issues.
16
<PAGE> 17
- --------------------------------------------------------------------------------
ACCOUNT INFORMATION
- --------------------------------------------------------------------------------
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
of Anchor National Life Insurance Company, First SunAmerica Life Insurance
Company, AIG Life Insurance Company and American International Life Assurance
Company of New York; and variable annuity contracts issued by Phoenix Home Life
Mutual Insurance Company and Presidential Life Insurance Company (variable
annuity contracts and variable life insurance policies are hereinafter
collectively referred to as "Variable Contracts"). All shares of the Trust are
owned by "Separate Accounts" of the aforementioned life insurance companies. So
if you would like to invest in a Portfolio, you must purchase a Variable
Contract from one of the life insurance companies. 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, First SunAmerica Life Insurance Company,
AIG Life Insurance Company and American International Life Assurance Company of
New York are under common control with, and therefore are affiliated with the
Trust's investment advisor and manager, SunAmerica Asset Management Corp.
(SAAMCo). Phoenix Home Life Mutual Insurance Company and Presidential Life
Insurance Company are 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,
other than the MONEY MARKET 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, except for
the MONEY MARKET PORTFOLIO, are valued at "fair value" following procedures
approved by the Trustees. Securities held by the MONEY MARKET PORTFOLIO are
valued on an amortized cost method.
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.
17
<PAGE> 18
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.
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.
- --------------------------------------------------------------------------------
MORE INFORMATION ABOUT THE PORTFOLIOS
- --------------------------------------------------------------------------------
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 principal strategy for pursuing
it as described in the charts beginning on page 3. The charts provided below
summarize information about each Portfolio's investments. We have included a
glossary to define the investment and risk terminology used in the charts and
throughout this Prospectus. Unless otherwise indicated, investment restrictions,
including percentage limitations, apply at the time of purchase. You should
consider your ability to assume the risks involved before investing in a
Portfolio through one of the variable contracts.
18
<PAGE> 19
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
EQUITY PORTFOLIOS
- -------------------------------------------------------------------------------------------------------------------
GROWTH AND INCOME GROWTH CAPITAL APPRECIATION NATURAL RESOURCES
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
What are the - Equity securities: - Equity securities: - Equity securities: - Equity securities:
Portfolio's - large-cap stocks - large-cap stocks - large-cap stocks - large-cap stocks
principal - mid-cap stocks - mid-cap stocks - mid-cap stocks - mid-cap stocks
investments? - small-cap stocks - small-cap stocks - foreign equity
securities including
ADRs, EDRs, or GDRs
- -------------------------------------------------------------------------------------------------------------------
In what other types - Equity securities: - Equity securities: - Equity securities: - Equity securities:
of investments may - foreign equity - foreign equity - foreign equity - small-cap stocks
the Portfolio securities securities securities - rights
significantly including ADRs, including ADRs, including ADRs, - warrants
invest? EDRs or GDRs (up EDRs or GDRs (up EDRs or GDRs (up - Fixed income
to 20%) to 25%) to 25%) securities:
- convertible - preferred stocks
securities (up to 20%
in below investment
grade convertible
securities)
- small-cap stocks
- Fixed-income
securities:
- U.S. government
securities
- asset backed and
mortgage backed
securities
- high quality foreign
government bonds
- investment grade
corporate bonds (up
to 35% of total
assets)
- Short-term
investments
- -------------------------------------------------------------------------------------------------------------------
What other types of - Currency - Currency - Currency - Borrowing for
investments may the transactions transactions transactions temporary or
Portfolio use as - Borrowing for - Borrowing for - Borrowing for emergency purposes
part of efficient temporary or temporary or temporary or (up to 10%)
portfolio emergency purposes emergency purposes emergency purposes - Currency
management or to (up to 10%) (up to 10%) (up to 10%) transactions
enhance return? - Illiquid securities - Illiquid securities - Illiquid securities - Options and futures
(up to 10%) (up to 10%) (up to 10%) - Forward commitments
- Forward commitments - Forward commitments - Forward commitments - Defensive
- When-issued/delayed - When-issued/delayed - When-issued/delayed investments
delivery delivery delivery - Illiquid securities
transactions transactions transactions (up to 10%)
- Securities lending - Defensive - Defensive - When issued/delayed
(up to 33 1/3%) investments investments delivery transactions
- Defensive - Special situations - Special situations - Special situations
investments - Options and futures - Options and futures - REITs
- Special situations - Rights and warrants - Rights and warrants
- Options and futures - Convertible - Convertible
- Rights and warrants securities (up to 20%) securities
- -------------------------------------------------------------------------------------------------------------------
What risks normally - Market volatility - Market volatility - Market volatility - Foreign exposure
affect the - Securities selection - Securities selection - Security selection - Emerging markets
Portfolio? - Active trading - Active trading - Growth stocks - Market volatility
- Hedging - Hedging - Small companies - Small companies
- Growth stocks - Active trading - Natural resources
- Hedging sector
- Security selection
- Hedging
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 20
<TABLE>
<CAPTION>
<S> <C> <C>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION PORTFOLIOS
- ----------------------------------------------------------------------------------------------------------------
STRATEGIC
MULTI-ASSET MULTI-ASSET
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
What are the Portfolio's principal - Equity securities: - Equity securities:
investments? - large cap stocks - large-cap stocks
- mid-cap stocks - mid-cap stocks
- convertible securities - small-cap stocks
- Fixed-income securities: - foreign equity securities
- U.S. government securities including ADRs, EDRs or GDRs
- asset backed and mortgage backed - Fixed-income securities:
securities - U.S. government securities
- investment grade corporate bonds - foreign fixed income securities
- non-convertible preferred stocks - asset backed and mortgage backed
- Short-term investments securities
- corporate bonds
- junk bonds
- Short-term investments
- ----------------------------------------------------------------------------------------------------------------
In what other types of investments - Equity securities: - Equity securities:
may the Portfolio significantly - foreign equity securities - rights
invest? including ADRs, EDRs, or GDRs - warrants
- rights
- warrants
- small-cap stocks
- Fixed-income securities:
- zero coupon bonds
- ----------------------------------------------------------------------------------------------------------------
What other types of investments may - Borrowing for temporary or - Borrowing for temporary or
the Portfolio use as part of emergency purposes (up to 10%) emergency purposes (up to 10%)
efficient portfolio management or to - Currency transactions - Currency transactions
enhance return? - Options and futures - Options and futures
- Forward commitments - Forward commitments
- Defensive investments - Defensive investments
- Special situations - Special situations
- Illiquid securities (up to 10%) - Illiquid securities (up to 10%)
- When issued/delayed delivery - When issued/delayed delivery
transactions transactions
- ----------------------------------------------------------------------------------------------------------------
What risks normally affect the - Market volatility - Market volatility
Portfolio? - Security selection - Security selection
- Interest rate fluctuations - Growth stocks
- Small and medium sized companies - Small and medium sized companies
- Hedging - Interest rate fluctuations
- Active trading - Hedging
- Active trading
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE> 21
<TABLE>
<CAPTION>
<S> <C> <C> <C>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS
- -------------------------------------------------------------------------------------------------------------------
GOVERNMENT AND
MONEY MARKET QUALITY BOND HIGH YIELD
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
What are the - Short-term investments - Fixed-income securities: - Fixed-income securities:
Portfolio's - U.S. and foreign - U.S. government securities - junk bonds
principal - high quality corporate bonds - foreign bonds
investments? - mortgage backed and asset
backed securities
- -------------------------------------------------------------------------------------------------------------------
In what other types N/A - Fixed-income securities: - Equity securities:
of investments may - corporate bonds rated as - convertible securities
the Portfolio low as "A" (up to 20%) - Fixed-income securities:
significantly - foreign fixed income - zero coupon bonds
invest? securities - discount bonds
- -------------------------------------------------------------------------------------------------------------------
What other types of - Borrowing for temporary or - Borrowing for temporary or - Borrowing for temporary or
investments may the emergency purposes emergency purposes emergency purposes
Portfolio use as (up to 10%) (up to 10%) (up to 10%)
part of efficient - Illiquid securities (up to - Illiquid securities (up to - Illiquid securities (up to
portfolio 10%) 10%) 10%)
management or to - Forward commitments - Forward commitments - Forward commitments
enhance return? - When-issued/delayed delivery - When-issued/delayed delivery - When-issued/delayed delivery
transactions transactions transactions
- Defensive investments - Defensive investments
- Zero coupon bonds - Non-convertible preferred
- Currency transactions stocks
- Options and futures - Currency transactions
- Special situations - Options and futures
- Special situations
- Warrants
- Common stocks
- Investment grade
fixed-income securities
- -------------------------------------------------------------------------------------------------------------------
What risks normally - Securities selection - Market volatility - Interest rate fluctuations
affect the - Interest rate fluctuations - Securities selection - Active trading
Portfolio? - Foreign exposure - Interest rate fluctuations - Hedging
- Active trading - Foreign exposure - Market volatility
- Active trading - Securities selection
- Hedging - Credit quality
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 22
- --------------------------------------------------------------------------------
GLOSSARY
- --------------------------------------------------------------------------------
INVESTMENT TERMINOLOGY
BORROWING FOR TEMPORARY OR EMERGENCY PURPOSES involves the borrowing of cash or
securities by a Portfolio in limited circumstances, including to meet
redemptions. Borrowing will cost a Portfolio interest expense and other fees.
Borrowing may exaggerate changes in a Portfolio's net asset value and the cost
may reduce a Portfolio's return.
CURRENCY TRANSACTIONS include the purchase and sale of currencies to facilitate
the settlement of securities transactions and forward currency contracts, which
are used to hedge against changes in currency exchange rates.
DEFENSIVE INVESTMENTS include high quality fixed income securities, repurchase
agreements and other 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 that could have resulted from investing in
accordance with its principal investment strategy. As a result, a Portfolio may
not achieve its investment goal.
EQUITY SECURITIES, such as COMMON STOCKS, represent shares of equity ownership
in a corporation. Common stocks may or may not receive dividend payments.
Certain securities have common stock characteristics, including certain
convertible securities such as CONVERTIBLE PREFERRED STOCK, CONVERTIBLE BONDS,
WARRANTS and RIGHTS, and may be classified as equity securities. Investments in
equity securities and securities with equity characteristics include:
- LARGE-CAP STOCKS are common stocks of large companies that generally have
market capitalizations of over $9.5 billion, although there may be some
overlap among capitalization categories. Market capitalization categories
may change based on market conditions or changes in market capitalization
classifications as defined by agencies such as Standard & Poor's (S&P),
the Frank Russell Company (Russell), Morningstar, Inc. (Morningstar) or
Lipper, Inc. (Lipper).
- MID-CAP STOCKS are common stocks of medium sized companies that generally
have market capitalizations ranging from $1.5 billion to $9.5 billion,
although there may be some overlap among capitalization categories.
Market capitalization categories may change based on market conditions or
changes in market capitalization classifications as defined by agencies
such as S&P, Russell, Morningstar or Lipper.
- SMALL-CAP STOCKS are common stocks of small companies that generally have
market capitalizations of $1.5 billion or less, although there may be
some overlap among capitalization categories. Market capitalization
categories may change based on market conditions or changes in market
capitalization classifications as defined by agencies such as S&P,
Russell, Morningstar, or Lipper.
- CONVERTIBLE SECURITIES are securities (such as bonds or preferred stocks)
that may be converted into common stock of the same or a different
company.
- WARRANTS are rights to buy common stock of a company at a specified price
during the life of the warrant.
- RIGHTS represent a preemptive right of stockholders to purchase
additional shares of a stock at the time of a new issuance before the
stock is offered to the general public.
FIRM COMMITMENT AGREEMENTS and 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.
22
<PAGE> 23
FIXED INCOME SECURITIES are broadly classified as securities that provide for
periodic payment, typically interest or dividend payments, to the holder of the
security at a stated rate. Most fixed income securities, such as bonds,
represent indebtedness of the issuer and provide for repayment of principal at a
stated time in the future. Others do not provide for repayment of a principal
amount. The issuer of a SENIOR FIXED INCOME SECURITY is obligated to make
payments on this security ahead of other payments to security holders.
Investments in fixed income securities include:
- 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.
- CORPORATE DEBT INSTRUMENTS (BONDS, NOTES AND DEBENTURES) are securities
representing a debt of a corporation. The issuer is obligated to repay a
principal amount of indebtedness at a stated time in the future and in
most cases to make periodic payments of interest at a stated rate.
- An INVESTMENT GRADE FIXED INCOME SECURITY is rated in one of the top four
rating categories by a debt rating agency (or is considered of comparable
quality by the Adviser or Subadviser). The two best-known debt rating
agencies are S&P and Moody's Investors Service, Inc.( Moody's).
INVESTMENT GRADE refers to any security rated "BBB" or above by S&P or
"Baa" or above by Moody's.
- A JUNK BOND is a high yield, high risk bond that does not meet the credit
quality standards of an investment grade security.
- PASS-THROUGH SECURITIES involve various debt obligations that are backed
by a pool of mortgages or other assets. Principal and interest payments
made on the underlying asset pools are typically passed through to
investors. Types of pass-through securities include mortgage-backed
securities, collateralized mortgage obligations, commercial
mortgage-backed securities, and asset-backed securities.
- PREFERRED STOCKS receive dividends at a specified rate and have
preference over common stock in the payment of dividends and the
liquidation of assets.
- ZERO-COUPON BONDS AND DEFERRED INTEREST BONDS. Zero coupon and deferred
interest bonds are debt obligations issued or purchased at a significant
discount from face value.
FOREIGN SECURITIES are issued by companies located outside of the United States,
including emerging markets. Foreign securities may include foreign corporate and
government bonds, foreign equity securities, foreign investment companies,
passive foreign investment companies (PFICs), American Depositary Receipts
(ADRs) or other similar securities that represent interests in foreign equity
securities, such as European Depositary Receipts (EDRs) and Global Depositary
Receipts (GDRs). An EMERGING MARKET country is generally one with a low or
middle income or economy or that is in the early stages of its industrialization
cycle. For fixed income investments, an emerging market includes those where the
sovereign credit rating is below investment grade. Emerging market countries may
change over time depending on market and economic conditions and the list of
emerging market countries may vary by Adviser or Subadviser.
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
23
<PAGE> 24
the date of the agreement. Similarly, a Portfolio selling such securities does
not participate in further gains or losses on the date of the agreement.
ILLIQUID/RESTRICTED 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 the
obligation to deliver assets or money depending on the performance of one or
more underlying assets or a market or economic index. An option gives its owner
the right, but not the obligation, to buy ("call") or sell ("put") a specified
amount of a security at a specified price within in a specified time period. A
futures contract is an exchange-traded legal contract to buy or sell a standard
quantity and quality of a commodity, financial instrument, index, etc. at a
specified future date and price.
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.
SECURITIES LENDING involves a loan of securities by a Portfolio in exchange for
cash or collateral. A Portfolio earns interest on the loan while retaining
ownership of the security.
SHORT-TERM INVESTMENTS include money market securities such as short-term U.S.
government obligations, repurchase agreements, commercial paper, bankers'
acceptances and certificates of deposit. These securities provide a Portfolio
with sufficient liquidity to meet redemptions and cover expenses.
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.
RISK TERMINOLOGY
ACTIVE TRADING: A strategy used whereby the Portfolio may engage in frequent
trading of portfolio securities to achieve its investment goal. 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. 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. During periods of increased market volatility, active trading
may be more pronounced. In the "Financial Highlights" section we provide each
Portfolio's portfolio turnover rate for each of the last five fiscal years.
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
24
<PAGE> 25
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 an issuer is in an EMERGING MARKET. Historically, the markets of
EMERGING MARKET countries have been more volatile than more developed markets;
however, such markets can provide higher rates of return to investors.
GROWTH STOCKS: Growth stocks can be volatile for several reasons. Since the
issuers usually reinvest a high portion of earnings in their own business,
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.
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.
INTEREST RATE FLUCTUATIONS: The volatility of fixed income securities is due
principally to changes in interest rates. The market value of bonds and other
fixed income securities usually tends to vary inversely with the level of
interest rates. As interest rates rise the value of such securities typically
falls, and as interest rates fall, the value of such securities typically rise.
Longer-term and lower coupon bonds tend to be more sensitive to changes in
interest rates.
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.
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.
SECURITIES SELECTION: A strategy used by a Portfolio, or securities selected by
its portfolio manager, may fail to produce the intended return.
SMALL AND MEDIUM SIZED COMPANIES: Companies with smaller market capitalizations
(particularly under $1.5 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. Securities of medium sized companies are also usually
more volatile and entail greater risks than securities of large companies.
25
<PAGE> 26
- --------------------------------------------------------------------------------
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, Brazos Mutual Funds, Seasons Series Trust, SunAmerica 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, 1999,
each Portfolio paid SAAMCo a fee equal to the following percentage of average
daily net assets:
<TABLE>
<CAPTION>
PORTFOLIO FEE
--------- ----
<S> <C>
Growth and Income Portfolio................................. 0.70%
Growth Portfolio............................................ 0.68%
Capital Appreciation Portfolio.............................. 0.62%
Natural Resources Portfolio................................. 0.75%
Multi-Asset Portfolio....................................... 1.00%
Strategic Multi-Asset Portfolio............................. 1.00%
Money Market Portfolio...................................... 0.50%
Government and Quality Bond Portfolio....................... 0.60%
High Yield Portfolio........................................ 0.70%
</TABLE>
SUBADVISER
Wellington Management Company, LLP (Wellington Management) acts as Subadviser to
each Portfolio of the Trust, pursuant to a Subadvisory Agreement with SAAMCo.
Wellington Management 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 Management's fees.
Wellington Management is a Massachusetts limited liability partnership. The
principal business address of Wellington is 75 State Street, Boston,
Massachusetts 02109. Wellington Management is a professional investment
counseling firm that provides investment services to investment companies,
employee benefit plans, endowments, foundations, and other institutions.
26
<PAGE> 27
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 AND INCOME PORTFOLIO - Matthew E. Megargel Mr. Megargel has served as the portfolio
Senior Vice President manager for the Portfolio since 1998. He
joined Wellington Management in 1983 as a
global industry analyst. He also manages
the Multi-Asset Portfolio (see below).
-------------------------------------------------------------------------------------------------------
GROWTH PORTFOLIO - Wellington Management's Wellington Management's Growth Investment
Growth Investment Team Team has 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
Management 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 Management 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
Management.
-------------------------------------------------------------------------------------------------------
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 Management 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 Management as
an analyst in the global industry research
group in 1994, after receiving his MBA
from Stanford Graduate School of Business.
-------------------------------------------------------------------------------------------------------
MULTI-ASSET PORTFOLIO - John C. Keogh Mr. Keogh has served as portfolio manager
Senior Vice President for the Portfolio since 1994. Mr. Keogh
also serves as portfolio manager for the
Government and Quality Board Portfolio
(see below).
-------------------------------------------------------------------------
- Matthew E. Megargel Mr. Megargel has served as portfolio
Senior Vice President manager for the Portfolio since 1998. Mr.
Megargel also serves as portfolio manager
for the Growth and Income Portfolio (see
above).
-------------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE> 28
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
PORTFOLIO NAME AND TITLE OF EXPERIENCE
PORTFOLIO MANAGER
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
STRATEGIC MULTI-ASSET - Trond Skramstad Mr. Skramstad has been responsible for
PORTFOLIO Senior Vice President managing the Portfolio since 1994 and is
Chairman of Wellington Management's Global
Equity Strategy Group, which is a group of
regional equity portfolio managers and
senior investment professionals
responsible for providing investment
research and recommendations. He joined
Wellington Management in 1993 as a
Director of International Equities.
-------------------------------------------------------------------------
- Andrew S. Offit Mr. Offit has served as the associate
Vice President portfolio manager of the Portfolio since
1997. Mr. Offit joined Wellington
Management as an international portfolio
manager in 1997. Mr. Offit was previously
a portfolio manager at Chestnut Hill
Management during 1997, and analyst and
portfolio manager at Fidelity Management
and Research Company from 1987 to 1997.
-------------------------------------------------------------------------
- Robert L. Evans Mr. Evans has served as portfolio manager
Senior Vice President for the Portfolio since 1998. He joined
Wellington Management in 1995 as a
portfolio manager. Prior to joining
Wellington Management, Mr. Evans was an
international fixed income portfolio
manager with Pacific Investment Company
from 1991 to 1995.
-------------------------------------------------------------------------
- Robert D. Rands Mr. Rands has served as portfolio manager
Senior Vice President for the Portfolio since 1994. Mr. Rands
also manages the Capital Appreciation
Portfolio (see above).
-------------------------------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO - Timothy E. Smith Mr. Smith has served as the portfolio
Vice President manager for the Portfolio since 1997. He
joined Wellington Management in 1992 as an
investment professional.
-------------------------------------------------------------------------------------------------------
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).
-------------------------------------------------------------------------------------------------------
HIGH YIELD PORTFOLIO - Catherine A. Smith Ms. Smith has served as the portfolio
Senior Vice President manager for the Portfolio since 1992. She
joined Wellington Management in 1985 as a
high yield analyst and began managing
fixed income portfolios in 1988.
-------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE> 29
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.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The Financial Highlights table for each 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 RATIO OF
VALUE INVEST- GAIN (LOSS) INVEST- INVEST- GAIN ON VALUE END OF EXPENSES
PERIOD BEGINNING MENT ON MENT MENT INVEST- END OF TOTAL PERIOD TO AVERAGE
ENDED OF PERIOD INCOME* INVESTMENTS OPERATIONS INCOME MENTS PERIOD RETURN** (000'S) NET ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Money Market Portfolio
12/31/95 $ 1.00 $0.05 $ -- $ 0.05 $(0.05) $ -- $ 1.00 5.6% $ 93,692 0.6%
12/31/96 1.00 0.05 -- 0.05 (0.05) -- 1.00 5.0 74,001 0.6
12/31/97 1.00 0.05 -- 0.05 (0.05) -- 1.00 5.1 69,804 0.6
12/31/98 1.00 0.05 -- 0.05 (0.05) -- 1.00 5.1 65,553 0.6
12/31/99 1.00 0.05 -- 0.05 (0.05) -- 1.00 4.7 63,222 0.7
Government & Quality Bond Portfolio
12/31/95 12.86 0.90 1.55 2.45 (1.08) -- 14.23 19.4 225,579 0.7
12/31/96 14.23 0.87 (0.50) 0.37 (0.90) (0.03) 13.67 2.9 221,603 0.7
12/31/97 13.67 0.84 0.42 1.26 (0.92) (0.05) 13.96 9.5 234,623 0.7
12/31/98 13.96 0.79 0.48 1.27 (0.57) (0.02) 14.64 9.2 375,667 0.7
12/31/99 14.64 0.78 (1.02) (0.25) (0.51) (0.21) 13.68 (1.7) 480,572 0.7
High Yield Portfolio
12/31/95 7.87 0.77 0.67 1.44 (0.98) -- 8.33 18.8 46,817 0.9
12/31/96 8.33 0.74 0.19 0.93 (0.88) -- 8.38 11.7 45,687 0.9
12/31/97 8.38 0.75 0.18 0.93 (0.93) -- 8.38 11.4 40,193 0.9
12/31/98 8.38 0.71 (1.13) (0.42) (1.16) -- 6.80 (4.5) 26,099 0.9
12/31/99 6.80 0.62 (0.25) 0.37 (1.05) -- 6.12 5.7 20,077 1.2
Growth and Income Portfolio
12/31/95 11.56 0.61 1.29 1.90 (0.83) (0.62) 12.01 16.6 32,008 0.9
12/31/96++ 12.01 0.33 2.02 2.35 (0.77) -- 13.59 20.2 33,465 0.9
12/31/97 13.59 0.15 3.74 3.89 (0.34) -- 17.14 28.8 44,417 0.8
12/31/98 17.14 0.14 4.80 4.94 (0.17) (0.80) 21.11 30.2 52,190 0.8
12/31/99 21.11 0.10 3.06 3.16 (0.15) (3.12) 21.00 15.9 49,710 0.9
<CAPTION>
RATIO OF NET
INVESTMENT
INCOME PORTFOLIO
PERIOD TO AVERAGE TURNOVER
ENDED NET ASSETS RATE
<S> <C> <C>
Money Market Portfolio
12/31/95 5.5% --%
12/31/96 4.9 --
12/31/97 5.0 --
12/31/98 5.0 --
12/31/99 4.6 --
Government & Quality
Bond Portfolio
12/31/95 6.5 135.2
12/31/96 6.3 106.7
12/31/97 6.1 75.7
12/31/98 5.5 150.2
12/31/99 5.5 31.1
High Yield Portfolio
12/31/95 9.2 68.1
12/31/96 8.8 58.0
12/31/97 8.8 101.4
12/31/98 9.0 109.6
12/31/99 9.2 55.0
Growth and Income
Portfolio
12/31/95 5.2 88.8
12/31/96 2.5 108.5
12/31/97 1.0 49.4
12/31/98 0.7 41.0
12/31/99 0.5 20.4
</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 the
insurance companies. If such expenses had been included, total return would
have been lower for each period presented.
++ Prior to March 1, 1996, the portfolio was invested primarily in convertible
debt securities. After that date, the portfolio primarily invests in common
stock.
29
<PAGE> 30
- --------------------------------------------------------------------------------
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
12/31/95 $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
12/31/99 32.52 0.08 8.31 8.39 (0.10) (2.29) 38.52 26.9 868,765
Capital Appreciation Portfolio
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
12/31/99 35.59 0.08 23.40 23.48 (0.03) (2.02) 57.02 67.6 1,986,888
Natural Resources Portfolio
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
12/31/99 11.59 0.14 4.67 4.81 (0.18) -- 16.22 41.5 54,391
Multi-Asset Portfolio
12/31/95 11.71 0.40 2.47 2.87 (0.49) (1.05) 13.04 24.9 168,243
12/31/96 13.04 0.35 1.36 1.71 (0.49) (0.91) 13.35 13.9 150,619
12/31/97 13.35 0.34 2.36 2.70 (0.43) (2.10) 13.52 21.1 145,685
12/31/98 13.52 0.30 2.56 2.86 (0.40) (2.49) 13.49 24.5 146,712
12/31/99 13.49 0.26 1.28 1.54 (0.34) (2.11) 12.58 12.5 129,442
Strategic Multi-Asset Portfolio
12/31/95 11.29 0.32 2.18 2.50 (0.23) (1.78) 11.78 22.8 64,026
12/31/96 11.78 0.25 1.41 1.66 (0.40) (0.84) 12.20 14.8 57,744
12/31/97 12.20 0.23 1.48 1.71 (0.31) (2.32) 11.28 14.3 53,289
12/31/98 11.28 0.23 1.13 1.36 (0.26) (1.92) 10.46 15.2 49,254
12/31/99 10.46 0.24 2.50 2.74 (0.17) (1.26) 11.77 28.2 79,273
<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>
- --------------------------------------------------
Growth Portfolio
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 0.4 27.1
12/31/99 0.7 0.2 39.9
Capital Appreciation Portfolio
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 0.1 59.6
12/31/99 0.7 0.2 63.7
Natural Resources Portfolio
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 1.6 51.2
12/31/99 1.0 1.0 86.7
Multi-Asset Portfolio
12/31/95 1.1 3.2 85.9
12/31/96 1.1 2.6 64.1
12/31/97 1.1 2.4 56.5
12/31/98 1.1 2.2 51.1
12/31/99 1.1 2.0 40.9
Strategic Multi-Asset Portfolio
12/31/95 1.3 2.7 36.9
12/31/96 1.4 2.0 51.3
12/31/97 1.4 1.8 59.7
12/31/98 1.5 2.0 157.1
12/31/99 1.5 2.4 158.9
</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 the
insurance companies. If such expenses had been included, total return would
have been lower for each period presented.
30
<PAGE> 31
- --------------------------------------------------------------------------------
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
at no charge by calling (800) 445-7862 or by writing the Trust at P.O. Box 54299
Los Angeles, California 90054-0299.
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 electronic request at the
following e-mail address: [email protected], or 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.
INVESTMENT COMPANY ACT
- - File No. 811-3836
31
<PAGE> 32
Please forward a copy (without charge) of the Statement of Additional
Information concerning Anchor Series Trust 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 54299,
Los Angeles, California 90054-0299.
