<PAGE> 1
File Nos. 333-25473
811-3859
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 11 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [X]
Amendment No. 12
(Check appropriate box or boxes)
VARIABLE SEPARATE ACCOUNT
(Exact Name of Registrant)
Anchor National Life Insurance Company
(Name of Depositor)
1 SunAmerica Center
Los Angeles, California 90067-6022
(Address of Depositor's Principal Offices) (Zip Code)
Depositor's Telephone Number, including Area Code
(310) 772-6000
Susan L. Harris, Esq.
Anchor National Life Insurance Company
1 SunAmerica Center
Los Angeles, California 90067-6022
(Name and Address of Agent for Service)
<TABLE>
<CAPTION>
Title
of Securities
Being Registered
- ----------------
<S> <C>
Flexible Payment
Deferred Annuity
Contracts
</TABLE>
It is proposed that this filing will become effective:
-- immediately upon filing pursuant to paragraph (b) of Rule 485
X on March 31, 2000 pursuant to paragraph (b) of Rule 485
-- 60 days after filing pursuant to paragraph (a) of Rule 485
-- on [ ] pursuant to paragraph (a) of Rule 485
<PAGE> 2
VARIABLE SEPARATE ACCOUNT
Cross Reference Sheet
PART A - PROSPECTUS
Incorporated herein by reference to Post-Effective Amendment No. 9 under
Securities Act of 1933 (the 33 Act) and No. 10 under the Investment Company Act
of 1940 (the 40 Act) to Registration Statement file No. 333-25473 and 811-3859
on Form N-4 filed on June 23, 1999.
<PAGE> 3
PART B - STATEMENT OF ADDITIONAL INFORMATION
Incorporated herein by reference to Post-Effective Amendment No. 9 under
Securities Act of 1933 (the 33 Act) and No. 10 under the Investment Company Act
of 1940 (the 40 Act) to Registration Statement file No. 333-25473 and 811-3859
on Form N-4 filed on June 23, 1999.
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE> 4
[POLARIS II LOGO]
PROFILE
June 28, 1999
Incorporated herein by reference to Post-Effective Amendment No. 9 under
Securities Act of 1933 (the 33 Act) and No. 10 under the Investment Company Act
of 1940 (the 40 Act) to Registration Statement file No. 333-25473 and 811-3859
on Form N-4 filed on June 23, 1999.
<PAGE> 5
[POLARIS II LOGO]
PROSPECTUS
JUNE 28, 1999
Incorporated herein by reference to Post-Effective Amendment No. 9 under
Securities Act of 1933 (the 33 Act) and No. 10 under the Investment Company Act
of 1940 (the 40 Act) to Registration Statement file No. 333-25473 and 811-3859
on Form N-4 filed on June 23, 1999.
<PAGE> 6
STATEMENT OF ADDITIONAL INFORMATION
FLEXIBLE PAYMENT DEFERRED ANNUITY CONTRACTS
ISSUED BY
ANCHOR NATIONAL LIFE INSURANCE COMPANY
IN CONNECTION WITH
VARIABLE SEPARATE ACCOUNT
This Statement of Additional Information is not a prospectus; it should be read
with the prospectus, dated March 31, 2000, relating to the annuity contracts
described above. A copy of the prospectus may be obtained without charge by
calling (800) 445-SUN2 or writing us at:
ANCHOR NATIONAL LIFE INSURANCE COMPANY
ANNUITY SERVICE CENTER
P.O. BOX 54299
LOS ANGELES, CALIFORNIA 90054-0299
March 31, 2000
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Separate Account 3
General Account 3
Performance Data 4
Income Payments 10
Annuity Unit Values 11
Taxes 14
Distribution of Contracts 17
Financial Statements 18
</TABLE>
<PAGE> 8
SEPARATE ACCOUNT
Variable Separate Account was originally established by Anchor National
Life Insurance Company (the "Company") on June 25, 1981, pursuant to the
provisions of California law, as a segregated asset account of the Company. The
separate account meets the definition of a "separate account" under the federal
securities laws and is registered with the Securities and Exchange Commission
(the "SEC") as a unit investment trust under the Investment Company Act of 1940.
This registration does not involve supervision of the management of the separate
account or the Company by the SEC.
The assets of the separate account are the property of the Company.
However, the assets of the separate account, equal to its reserves and other
contract liabilities, are not chargeable with liabilities arising out of any
other business the Company may conduct. Income, gains, and losses, whether or
not realized, from assets allocated to the separate account are credited to or
charged against the separate account without regard to other income, gains, or
losses of the Company.
The separate account is divided into Variable Portfolios, with the
assets of each Variable Portfolio invested in the shares of one of the
underlying funds. The Company does not guarantee the investment performance of
the separate account, its Variable Portfolios or the underlying funds. Values
allocated to the separate account and the amount of variable Income Payments
will vary with the values of shares of the underlying funds, and are also
reduced by contract charges.
The basic objective of a variable annuity contract is to provide
variable Income Payments which will be to some degree responsive to changes in
the economic environment, including inflationary forces and changes in rates of
return available from various types of investments. The contract is designed to
seek to accomplish this objective by providing that variable Income Payments
will reflect the investment performance of the separate account with respect to
amounts allocated to it both before and after the Annuity Date. Since the
separate account is always fully invested in shares of the underlying funds, its
investment performance reflects the investment performance of those entities.
The values of such shares held by the separate account fluctuate and are subject
to the risks of changing economic conditions as well as the risk inherent in the
ability of the underlying funds' managements to make necessary changes in their
funds to anticipate changes in economic conditions. Therefore, the owner bears
the entire investment risk that the basic objectives of the contract may not be
realized, and that the adverse effects of inflation may not be lessened. There
can be no assurance that the aggregate amount of variable Income Payments will
equal or exceed the Purchase Payments made with respect to a particular account
for the reasons described above, or because of the premature death of an
Annuitant.
Another important feature of the contract related to its basic objective
is the Company's promise that the dollar amount of variable Income Payments made
during the lifetime of the Annuitant will not be adversely affected by the
actual mortality experience of the Company or by the actual expenses incurred by
the Company in excess of expense deductions provided for in the contract
(although the Company does not guarantee the amounts of the variable Income
Payments).
GENERAL ACCOUNT
The general account is made up of all of the general assets of the
Company other than those
<PAGE> 9
allocated to the separate account or any other segregated asset account of the
Company. A Purchase Payment may be allocated to the 1, 3, 5, 7 or 10 year fixed
account options and the DCA accounts for 6-month and 1-year periods available in
connection with the general account, as elected by the owner at the time of
purchasing a contract or when making a subsequent Purchase Payment. Assets
supporting amounts allocated to fixed account options become part of the
Company's general account assets and are available to fund the claims of all
classes of customers of the Company, as well as of its creditors. Accordingly,
all of the Company's assets held in the general account will be available to
fund the Company's obligations under the contracts as well as such other claims.
The Company will invest the assets of the general account in the manner
chosen by the Company and allowed by applicable state laws regarding the nature
and quality of investments that may be made by life insurance companies and the
percentage of their assets that may be committed to any particular type of
investment. In general, these laws permit investments, within specified limits
and subject to certain qualifications, in federal, state and municipal
obligations, corporate bonds, preferred and common stocks, real estate
mortgages, real estate and certain other investments.
PERFORMANCE DATA
From time to time the separate account may advertise the Cash Management
Portfolio's "yield" and "effective yield." Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" of the Cash Management Portfolio refers to the net income generated for
a contract funded by an investment in the Cash Management Portfolio (which
invests in shares of the Cash Management Portfolio of SunAmerica Series Trust)
over a seven-day period (which period will be stated in the advertisement). This
income is then "annualized." That is, the amount of income generated by the
investment during that week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the investment. The "effective yield" is
calculated similarly but, when annualized, the income earned by an investment in
the Cash Management Portfolio is assumed to be reinvested at the end of each
seven day period. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment. Neither the
yield nor the effective yield takes into consideration the effect of any capital
changes that might have occurred during the seven day period, nor do they
reflect the impact of premium taxes or any withdrawal charges. The impact of
other recurring charges (including the mortality and expense risk charge,
distribution expense charge and contract maintenance fee) on both yield figures
is, however, reflected in them to the same extent it would affect the yield (or
effective yield) for a contract of average size.
In addition, the separate account may advertise "total return" data for
its other Variable Portfolios. Like the yield figures described above, total
return figures are based on historical data and are not intended to indicate
future performance. The "total return" is a computed rate of return that, when
compounded annually over a stated period of time and applied to a hypothetical
initial investment in a Variable Portfolio made at the beginning of the period,
will produce the same contract value at the end of the period that the
hypothetical investment would have produced over the same period (assuming a
complete redemption of the contract at the end of the period). Recurring
contract charges are reflected in the total return figures in the same manner as
they are reflected in the yield data for contracts funded through the Cash
Management Portfolio.
For periods starting prior to the date the Variable Portfolios first
became available through the Separate Account, the total return data for the
Variable Portfolios of the Separate Account will be derived from the performance
of the
<PAGE> 10
corresponding underlying funds of Anchor Series Trust and SunAmerica Series
Trust, modified to reflect the charges and expenses as if the Separate Account
Variable Portfolio had been in existence since the inception date of each
respective Anchor Series Trust and SunAmerica Series Trust underlying fund. In
some cases a particular Variable Portfolio may have been available in another
contract funded through this separate account. If the Variable Portfolio was
incepted in this separate account prior to the offering of this contract, we
report standardized contract performance adjusted for the fees and charges on
this contract. Performance figures similarly adjusted but based on underlying
SunAmerica Series Trust or Anchor Series Trust performance (outside of this
separate account) should not be construed to be actual historical performance of
the relevant separate account Variable Portfolio. Rather, they are intended to
indicate the historical performance of the corresponding underlying funds of
Anchor Series Trust and SunAmerica Series Trust, adjusted to provide direct
comparability to the performance of the Variable Portfolios after the date the
contracts were first offered to the public (which will reflect the effect of
fees and charges imposed under the contracts). Anchor Series Trust and
SunAmerica Series Trust have served since their inception as underlying
investment media for separate accounts of other insurance companies in
connection with variable contracts not having the same fee and charge schedules
as those imposed under the contracts.
Performance data for the various Variable Portfolios are computed in the
manner described below.
CASH MANAGEMENT PORTFOLIO
For contracts without the Principal Rewards Program, the annualized
current yield and the effective yield for the Cash Management Portfolio for the
7 day period ending December 31, 1999 were 4.57% and 4.68%, respectively. For
contracts with the Principal Rewards Program, the annualized current yield and
the effective yield for the Cash Management Portfolio for the 7 day period
ending December 31, 1999 were 6.57% and 6.79%, respectively.
Current yield is computed by first determining the Base Period
Return attributable to a hypothetical contract having a balance of one
Accumulation Unit at the beginning of a 7 day period using the formula:
For contracts without the Principal Rewards Program:
Base Period Return = (EV-SV-CMF)/(SV)
For contracts with the Principal Rewards Program:
Base Period Return = (EV-SV-CMF+E)/(SV)
where:
SV = value of one Accumulation Unit at the start of a 7 day
period
EV = value of one Accumulation Unit at the end of the 7 day
period
CMF = an allocated portion of the $35 annual contract
maintenance fee, prorated for 7 days
<PAGE> 11
E = Premium Enhancement Rate, prorated for 7 days.
The change in the value of an Accumulation Unit during the 7 day period
reflects the income received, minus any expenses accrued, during such 7 day
period. The Contract Maintenance Fee (CMF) is first allocated among the Variable
Portfolios and the general account so that each Variable Portfolio's allocated
portion of the charge is proportional to the percentage of the number of
contract owners' accounts that have money allocated to that Variable Portfolio.
The portion of the charge allocable to the Cash Management Portfolio is further
reduced, for purposes of the yield computation, by multiplying it by the ratio
that the value of the hypothetical contract bears to the value of an account of
average size for contracts funded by the Cash Management Portfolio. Finally, the
result is multiplied by the fraction 7/365 to arrive at the portion attributable
to the 7 day period.
The current yield is then obtained by annualizing the Base Period
Return:
Current Yield = (Base Period Return) x (365/7)
The Cash Management Portfolio also quotes an "effective yield" that
differs from the current yield given above in that it takes into account the
effect of dividend reinvestment in the underlying fund. The effective yield,
like the current yield, is derived from the Base Period Return over a 7 day
period. However, the effective yield accounts for dividend reinvestment by
compounding the current yield according to the formula:
Effective Yield = [(Base Period Return + 1)365/7 - 1]
The yield quoted should not be considered a representation of the yield
of the Cash Management Portfolio in the future since the yield is not fixed.
Actual yields will depend on the type, quality and maturities of the investments
held by the underlying fund and changes in interest rates on such investments.
Yield information may be useful in reviewing the performance of the Cash
Management Portfolio and for providing a basis for comparison with other
investment alternatives. However, the Cash Management Portfolio's yield
fluctuates, unlike bank deposits or other investments that typically pay a fixed
yield for a stated period of time.
OTHER VARIABLE PORTFOLIOS
The Variable Portfolios of the separate account other than the Cash
Management Portfolio compute their performance data as "total return."
The total returns since each Variable Portfolio's inception date, for a
1-year period and, if applicable, for a 5-year period, are shown on the
following two pages, both with and without an assumed complete redemption at the
end of the stated period. Total returns for contracts without the Principal
Rewards Program are on page 8 and total returns for contracts with the Principal
Rewards Program are on page 9.
<PAGE> 12
Standardized performance for the Variable Portfolios available in this
contract reflect total returns using the method of computation discussed below:
- - Using the seven year surrender charge schedule available on contracts issued
without the Principal Rewards Program. No enhancement is reflected under the
calculation, as the Payment Enhancement is not available unless the Principal
Rewards Program is elected; AND
- - Using the nine year surrender charge schedule available on contracts issued
with the Principal Rewards Program, including the minimum Initial Payment
Enhancement of 2% of Purchase Payments and calculating the value after
redemption only based on the initial $1,000 Purchase Payment.
- - We may, from time to time, advertise other variations of performance along
with the standardized performance as described above. We may, in sales
literature, show performance only applicable to one surrender charge schedule to
a contract holder who has already purchased the contract with or without the
Principal Rewards Program.
<PAGE> 13
STANDARDIZED PERFORMANCE
CONTRACTS WITHOUT THE PRINCIPAL REWARDS PROGRAM:
TOTAL ANNUAL RETURN (IN PERCENT) FOR
PERIOD ENDING DECEMBER 31, 1999
(WITH/WITHOUT REDEMPTION)
<TABLE>
<CAPTION>
SINCE PRODUCT
SEPARATE ACCOUNT 1 YEAR 5 YEAR INCEPTION DATE
INCEPTION ----------------------- ------------------ ---------------------
VARIABLE PORTFOLIO DATE WITH WITHOUT WITH WITHOUT WITH WITHOUT
------------------ ------------- -------- ------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Capital Appreciation 2/12/93 58.30 65.30 31.80 32.00 23.57 23.62
Growth 2/19/93 17.95 24.95 25.28 25.52 18.67 18.72
Natural Resources 10/31/94 32.28 39.28 5.20 5.69 3.94 4.26
Government & Quality Bond 2/22/93 -10.15 -3.15 5.48 5.96 4.05 4.17
Aggressive Growth 6/3/96 74.80 81.80 N/A N/A 27.53 28.12
MFS Mid-Cap Growth 4/5/99 N/A N/A N/A N/A 56.03 63.03
International Diversified Equities 10/31/94 15.60 22.60 11.44 11.82 10.36 10.62
Global Equities 2/9/93 21.87 28.87 18.10 18.40 15.10 15.16
Putnam Growth 2/9/93 20.69 27.69 26.08 26.32 18.08 18.13
MFS Growth and Income* 2/9/93 -2.72 4.28 18.75 19.05 13.17 13.24
Alliance Growth 2/9/93 24.04 31.04 35.37 35.55 25.68 25.71
"Dogs" of Wall Street 4/1/98 -15.57 -8.57 N/A N/A -9.63 -5.99
Venture Value 10/31/94 7.33 14.33 22.74 23.00 21.73 21.90
Federated Value 6/3/96 -2.47 4.53 N/A N/A 14.96 15.73
Growth-Income 2/9/93 21.03 28.03 28.28 28.50 20.28 20.33
Utility 6/3/96 -6.84 0.16 N/A N/A 11.34 12.18
Asset Allocation 7/1/93 0.76 7.76 13.50 13.85 10.94 11.03
MFS Total Return** 10/31/94 -5.75 1.25 12.89 13.26 12.45 12.68
SunAmerica Balanced 6/3/96 12.49 19.49 N/A N/A 20.12 20.82
Worldwide High Income 10/31/94 10.37 17.37 9.45 9.86 8.75 9.03
High-Yield Bond 2/9/93 -2.15 4.85 6.97 7.42 5.76 5.86
Corporate Bond 7/1/93 -10.38 -3.38 5.09 5.58 3.62 3.74
Global Bond 7/1/93 -9.57 -2.57 7.04 7.49 5.21 5.32
Emerging Markets 6/5/97 67.55 74.55 N/A N/A 0.92 2.80
International Growth and Income 6/4/97 15.29 22.29 N/A N/A 12.53 14.12
Real Estate 6/4/97 -15.98 -8.98 N/A N/A -6.60 -4.48
</TABLE>
* Formerly named Growth/Phoenix and managed by Phoenix Investment Counsel,
Inc.
** Formerly named Balanced/Phoenix and managed by Phoenix Investment Counsel.
Inc.
HYPOTHETICAL ADJUSTED HISTORICAL PERFORMANCE
CONTRACTS WITHOUT THE PRINCIPAL REWARDS PROGRAM:
TOTAL ANNUAL RETURN (IN PERCENT) FOR
PERIOD ENDING DECEMBER 31, 1999
<TABLE>
<CAPTION>
UNDERLYING FUND
INCEPTION SINCE
PORTFOLIO DATE 10 YEAR INCEPTION
--------- --------- -------- ---------
<S> <C> <C> <C>
Capital Appreciation 3/23/87 21.70 18.29
Growth 8/13/84 15.68 14.87
Natural Resources 1/1/88 4.28 5.77
Government and Quality Bond 8/13/84 5.84 7.39
</TABLE>
<PAGE> 14
Total return figures are based on historical data and are not intended to
indicate future performance.
CONTRACTS WITH THE PRINCIPAL REWARDS PROGRAM:
TOTAL ANNUAL RETURN (IN PERCENT) FOR
PERIOD ENDING DECEMBER 31, 1999
(RETURN WITH/WITHOUT REDEMPTION)
<TABLE>
<CAPTION>
SEPARATE ACCOUNT 1 YEAR 5 YEAR SINCE PRODUCT INCEPTION DATE
INCEPTION ---------------- ---------------- ------------- --------------
VARIABLE PORTFOLIO DATE WITH WITHOUT WITH WITHOUT WITH WITHOUT
------------------ --------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Capital Appreciation 2/12/93 59.61 68.61 32.13 32.53 23.81 23.97
Growth 2/19/93 18.46 27.46 25.54 26.02 16.85 19.06
Natural Resources 10/31/94 33.06 42.06 5.15 6.11 3.85 4.67
Government & Quality Bond 2/22/93 -10.21 -1.21 5.43 6.38 4.01 4.47
Aggressive Growth 6/3/96 76.43 85.43 N/A N/A 27.80 28.83
MFS Mid-Cap Growth 4/5/99 N/A N/A N/A N/A 57.29 66.29
International Diversified Equities 10/31/94 16.05 25.05 11.50 12.27 10.41 11.05
Global Equities 2/9/93 22.45 31.45 18.27 18.87 15.24 15.49
Putnam Growth 2/9/93 21.24 30.24 26.35 26.82 18.26 18.48
MFS Growth and Income* 2/9/93 -2.63 6.37 18.93 19.53 13.30 13.57
Alliance Growth 2/9/93 24.66 33.66 35.73 36.08 25.93 26.08
"Dogs" of Wall Street 4/1/98 -15.71 -6.71 N/A N/A -10.37 -4.91
Venture Value 10/31/94 7.61 16.61 22.97 23.49 21.95 22.37
Federated Value 6/3/96 -2.38 6.62 N/A N/A 15.03 16.37
Growth-Income 2/9/93 21.59 30.59 28.57 29.01 20.48 20.66
Utility 6/3/96 -6.84 2.16 N/A N/A 11.34 12.80
Asset Allocation 7/1/93 0.92 9.92 13.60 14.31 11.03 11.37
MFS Total Return** 10/31/94 -5.72 3.28 12.98 13.71 12.53 13.12
SunAmerica Balanced 6/3/96 12.88 21.88 N/A N/A 20.29 21.49
Worldwide High Income 10/31/94 10.72 19.72 9.48 10.3 8.77 9.45
High-Yield Bond 2/9/93 -2.05 6.95 6.95 7.85 5.76 6.17
Corporate Bond 7/1/93 -10.45 -1.45 5.03 6.00 3.56 4.06
Global Bond 7/1/93 -9.62 -0.62 7.02 7.92 5.19 5.65
Emerging Markets 6/2/97 69.04 78.04 N/A N/A 0.59 3.59
International Growth and Income 6/4/97 15.73 24.73 N/A N/A 12.47 15.00
Real Estate 6/4/97 -16.14 -7.14 N/A N/A -7.13 -3.74
</TABLE>
* Formerly named Growth/Phoenix and managed by Phoenix Investment Counsel,
Inc.
** Formerly named Balanced/Phoenix and managed by Phoenix Investment Counsel.
Inc.
HYPOTHETICAL ADJUSTED HISTORICAL PERFORMANCE
CONTRACTS WITH THE PRINCIPAL REWARDS PROGRAM:
TOTAL ANNUAL RETURNS (IN PERCENT) FOR
PERIOD ENDING DECEMBER 31, 1999
<TABLE>
<CAPTION>
UNDERLYING FUND
VARIABLE PORTFOLIO INCEPTION DATE 10 YEAR SINCE INCEPTION
------------------ -------------- --------------- ---------------
<S> <C> <C> <C>
Capital Appreciation Portfolio 3/23/87 21.94 18.48
Growth Portfolio 8/13/84 15.91 15.02
Natural Resources Portfolio 1/1/88 4.50 5.95
Government and Quality Bond Portfolio 8/13/84 6.05 7.53
</TABLE>
<PAGE> 15
Total return figures are based on historical data and are not intended to
indicate future performance.
Total return for a Variable Portfolio represents a single computed
annual rate of return that, when compounded annually over a specified time
period (one, five, and ten years, or since inception) and applied to a
hypothetical initial investment in a contract funded by that Variable Portfolio
made at the beginning of the period, will produce the same contract value at the
end of the period that the hypothetical investment would have produced over the
same period. The total rate of return (T) is computed so that it satisfies the
formula:
For contracts without the Principal Rewards Program:
n
P(1+T) = ERV
For contracts with the Principal Rewards Program:
n
[P(1+E)](1+T) = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
E = Payment Enhancement Rate
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the 1, 5, or 10 year period as of
the end of the period (or fractional portion thereof).
The total return figures reflect the effect of recurring charges, as
discussed herein. Recurring charges are taken into account in a manner similar
to that used for the yield computations for the Cash Management Portfolio,
described above. As with the Cash Management Portfolio yield figures, total
return figures are derived from historical data and are not intended to be a
projection of future performance.
INCOME PAYMENTS
INITIAL MONTHLY INCOME PAYMENTS
The initial Income Payment is determined by applying separately that
portion of the contract value allocated to the fixed account options and the
Variable Portfolio(s), less any premium tax, and then applying it to the annuity
table specified in the contract for fixed and variable Income Payments. Those
tables are based on a set amount per $1,000 of proceeds applied. The appropriate
rate must be determined by the sex (except where, as in the case of certain
Qualified contracts and other employer-sponsored retirement plans, such
classification is not permitted) and age of the Annuitant and designated second
person, if any, and the annuity option selected.
The dollars applied are then divided by 1,000 and the result multiplied
by the appropriate annuity factor appearing in the table to compute the amount
of the first monthly Income Payment. In the case of a variable annuity, that
amount is divided by the value of an Annuity Unit as of the Annuity Date to
establish the number of Annuity Units representing each variable Income Payment.
The number of
<PAGE> 16
Annuity Units determined for the first variable Income Payment remains constant
for the second and subsequent monthly variable Income Payments, assuming that no
reallocation of contract values is made.
SUBSEQUENT MONTHLY PAYMENTS
For fixed Income Payments, the amount of the second and each subsequent
monthly Income Payment is the same as that determined above for the first
monthly payment.
For variable Income Payments, the amount of the second and each
subsequent monthly Income Payment is determined by multiplying the number of
Annuity Units, as determined in connection with the determination of the initial
monthly payment, above, by the Annuity Unit value as of the day preceding the
date on which each Income Payment is due.
INCOME PAYMENTS UNDER THE INCOME PROTECTOR FEATURE
If contract holders elect to begin Income Payments using the Income
Protector feature, the income benefit base is determined as described in the
prospectus. The initial Income Payment is determined by applying the income
benefit base to the annuity table specifically designated for use in conjunction
with the Income Protector feature, either in the contract or in the endorsement
to the contract. Those tables are based on a set amount per $1,000 of income
benefit base applied. The appropriate rate must be determined by the sex (except
where, as in the case of certain Qualified contracts and other
employer-sponsored retirement plans, such classification is not permitted) and
age of the Annuitant and designated second person, if any, and the Income Option
selected.
The income benefit base is applied then divided by 1,000 and the result
multiplied by the appropriate annuity factor appearing in the table to compute
the amount of the first monthly Income Payment. The amount of the second and
each subsequent income payment is the same as that determined above for the
first monthly payment.
ANNUITY UNIT VALUES
The value of an Annuity Unit is determined independently for each
Variable Portfolio.
The annuity tables contained in the contract are based on a 3.5% per
annum assumed investment rate. If the actual net investment rate experienced by
a Variable Portfolio exceeds 3.5%, variable Income Payments derived from
allocations to that Variable Portfolio will increase over time. Conversely, if
the actual rate is less than 3.5%, variable Income Payments will decrease over
time. If the net investment rate equals 3.5%, the variable Income Payments will
remain constant. If a higher assumed investment rate had been used, the initial
monthly payment would be higher, but the actual net investment rate would also
have to be higher in order for Income Payments to increase (or not to decrease).
The payee receives the value of a fixed number of Annuity Units each
month. The value of a fixed number of Annuity Units will reflect the investment
performance of the Variable Portfolios elected, and the amount of each Income
Payment will vary accordingly.
For each Variable Portfolio, the value of an Annuity Unit is determined
by multiplying the Annuity Unit value for the preceding month by the Net
Investment Factor for the month for which the
<PAGE> 17
Annuity Unit value is being calculated. The result is then multiplied by a
second factor which offsets the effect of the assumed net investment rate of
3.5% per annum which is assumed in the annuity tables contained in the contract.
NET INVESTMENT FACTOR
The Net Investment Factor ("NIF") is an index applied to measure the net
investment performance of a Variable Portfolio from one day to the next. The NIF
may be greater or less than or equal to one; therefore, the value of an Annuity
Unit may increase, decrease or remain the same.
The NIF for any Variable Portfolio for a certain month is determined by
dividing (a) by (b) where:
(a) is the Accumulation Unit value of the Variable Portfolio
determined as of the end of that month, and
(b) is the Accumulation Unit value of the Variable Portfolio
determined as of the end of the preceding month.
The NIF for a Variable Portfolio for a given month is a measure of the
net investment performance of the Variable Portfolio from the end of the prior
month to the end of the given month. A NIF of 1.000 results in no change; a NIF
greater than 1.000 results in an increase; and a NIF less than 1.000 results in
a decrease. The NIF is increased (or decreased) in accordance with the increases
(or decreases, respectively) in the value of a share of the underlying fund in
which the Variable Portfolio invests; it is also reduced by separate account
asset charges.
ILLUSTRATIVE EXAMPLE
Assume that one share of a given Variable Portfolio had an Accumulation
Unit value of $11.46 as of the close of the New York Stock Exchange ("NYSE") on
the last business day in September; that its Accumulation Unit value had been
$11.44 at the close of the NYSE on the last business day at the end of the
previous month. The NIF for the month of September is:
NIF = ($11.46/$11.44)
= 1.00174825
The change in Annuity Unit value for a Variable Portfolio from one month
to the next is determined in part by multiplying the Annuity Unit value at the
prior month end by the NIF for that Variable Portfolio for the new month. In
addition, however, the result of that computation must also be multiplied by an
additional factor that takes into account, and neutralizes, the assumed
investment rate of 3.5 percent per annum upon which the Income Payment tables
are based. For example, if the net investment rate for a Variable Portfolio
(reflected in the NIF) were equal to the assumed investment rate, the variable
Income Payments should remain constant (i.e., the Annuity Unit value should not
change). The monthly factor that neutralizes the assumed investment rate of 3.5
percent per annum is:
(1/12)
1/[(1.035) ] = 0.99713732
In the example given above, if the Annuity Unit value for the Variable
Portfolio was $10.103523
<PAGE> 18
on the last business day in August, the Annuity Unit value on the last business
day in September would have been:
$10.103523 x 1.00174825 x 0.99713732 = $10.092213
To determine the initial payment, the initial annuity payment for
variable annuitization is calculated based on our mortality expectations and an
assumed interest rate (AIR) of 3.5%. Thus the initial variable annuity payment
is the same as the initial payment for a fixed interest payout annuity
calculated at an effective rate of 3.5%.
The NIF measures the performance of the funds that are basis for the
amount of future annuity payments. This performance is compared to the AIR, and
if the growth in the NIF is the same as the AIR rate the payment remains the
same as the prior month. If the rate of growth of the NIF is different than the
AIR, then the payment is changed proportionately to the ratio (1+NIF) / (1+AIR),
calculated on a monthly basis. If the NIF is greater than the AIR, then this
proportion is less that one and payments are decreased.
VARIABLE INCOME PAYMENTS
ILLUSTRATIVE EXAMPLE
Assume that a male owner, P, owns a contract in connection with which P
has allocated all of his contract value to a single Variable Portfolio. P is
also the sole Annuitant and, at age 60, has elected to annuitize his contract
under Option 4, a Life Annuity With 120 Monthly Payments Guaranteed. As of the
last valuation preceding the Annuity Date, P's Account was credited with
7543.2456 Accumulation Units each having a value of $15.432655, (i.e., P's
account value is equal to 7543.2456 x $15.432655 = $116,412.31). Assume also
that the Annuity Unit value for the Variable Portfolio on that same date is
$13.256932, and that the Annuity Unit value on the day immediately prior to the
second Income Payment date is $13.327695.
P's first variable Income Payment is determined from the annuity factor
tables in P's contract, using the information assumed above. From these tables,
which supply monthly annuity factors for each $1,000 of applied contract value,
P's first variable Income Payment is determined by multiplying the factor of
$4.92 (Option 4 tables, male Annuitant age 60 at the Annuity Date) by the result
of dividing P's account value by $1,000:
First Payment = $4.92 x ($116,412.31/$1,000) = $572.75
The number of P's Annuity Units (which will be fixed; i.e., it will not
change unless he transfers his Account to another Account) is also determined at
this time and is equal to the amount of the first variable Income Payment
divided by the value of an Annuity Unit on the day immediately prior to
annuitization:
Annuity Units = $572.75/$13.256932 = 43.203812
P's second variable Income Payment is determined by multiplying the
number of Annuity Units by the Annuity Unit value as of the day immediately
prior to the second payment due date:
<PAGE> 19
Second Payment = 43.203812 x $13.327695 = $575.81
The third and subsequent variable Income Payments are computed in a
manner similar to the second variable Income Payment.
Note that the amount of the first variable Income Payment depends on the
contract value in the relevant Variable Portfolio on the Annuity Date and thus
reflects the investment performance of the Variable Portfolio net of fees and
charges during the Accumulation Phase. The amount of that payment determines the
number of Annuity Units, which will remain constant during the Annuity Phase
(assuming no transfers from the Variable Portfolio). The net investment
performance of the Variable Portfolio during the Annuity Phase is reflected in
continuing changes during this phase in the Annuity Unit value, which determines
the amounts of the second and subsequent variable Income Payments.
TAXES
GENERAL
Section 72 of the Internal Revenue Code of 1986, as amended (the "Code")
governs taxation of annuities in general. An owner is not taxed on increases in
the value of a contract until distribution occurs, either in the form of a
non-annuity distribution or as Income Payments under the annuity option elected.
For a lump sum payment received as a total surrender (total redemption), the
recipient is taxed on the portion of the payment that exceeds the cost basis of
the contract. For a payment received as a withdrawal (partial redemption),
federal tax liability is determined on a last-in, first-out basis, meaning
taxable income is withdrawn before the cost basis of the contract is withdrawn.
For contracts issued in connection with Nonqualified plans, the cost basis is
generally the Purchase Payments, while for contracts issued in connection with
Qualified plans there may be no cost basis. The taxable portion of the lump sum
payment is taxed at ordinary income tax rates. Tax penalties may also apply.
For Income Payments, the taxable portion is determined by a formula
which establishes the ratio that the cost basis of the contract bears to the
total value of Income Payments for the term of the annuity contract. The taxable
portion is taxed at ordinary income tax rates. Owners, Annuitants and
Beneficiaries under the contracts should seek competent financial advice about
the tax consequences of distributions under the retirement plan under which the
contracts are purchased.
The Company is taxed as a life insurance company under the Code. For
federal income tax purposes, the separate account is not a separate entity from
the Company and its operations form a part of the Company.
WITHHOLDING TAX ON DISTRIBUTIONS
The Code generally requires the Company (or, in some cases, a plan
administrator) to withhold tax on the taxable portion of any distribution or
withdrawal from a contract. For "eligible rollover distributions" from contracts
issued under certain types of Qualified plans, 20% of the distribution must be
withheld, unless the payee elects to have the distribution "rolled over" to
another eligible plan in a direct "trustee to trustee" transfer. This
requirement is mandatory and cannot be waived by the owner. Withholding on other
types of distributions can be waived.
<PAGE> 20
An "eligible rollover distribution" is the estimated taxable portion of
any amount received by a covered employee from a plan qualified under Section
401(a) or 403(a) of the Code, or from a tax-sheltered annuity qualified under
Section 403(b) of the Code (other than (1) Income Payments for the life (or life
expectancy) of the employee, or joint lives (or joint life expectancies) of the
employee and his or her designated Beneficiary, or for a specified period of ten
years or more; and (2) distributions required to be made under the Code).
Failure to "roll over" the entire amount of an eligible rollover distribution
(including an amount equal to the 20% portion of the distribution that was
withheld) could have adverse tax consequences, including the imposition of a
penalty tax on premature withdrawals, described later in this section.
Withdrawals or distributions from a contract other than eligible
rollover distributions are also subject to withholding on the estimated taxable
portion of the distribution, but the owner may elect in such cases to waive the
withholding requirement. If not waived, withholding is imposed (1) for periodic
payments, at the rate that would be imposed if the payments were wages, or (2)
for other distributions, at the rate of 10%. If no withholding exemption
certificate is in effect for the payee, the rate under (1) above is computed by
treating the payee as a married individual claiming 3 withholding exemptions.
DIVERSIFICATION - SEPARATE ACCOUNT INVESTMENTS
Section 817(h) of the Code imposes certain diversification standards on
the underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not adequately
diversified, in accordance with regulations prescribed by the United States
Treasury Department ("Treasury Department"). Disqualification of the contract as
an annuity contract would result in imposition of federal income tax to the
owner with respect to earnings allocable to the contract prior to the receipt of
any payments under the contract. The Code contains a safe harbor provision which
provides that annuity contracts, such as your contract, meet the diversification
requirements if, as of the close of each calendar quarter, the underlying assets
meet the diversification standards for a regulated investment company, and no
more than 55% of the total assets consist of cash, cash items, U.S. government
securities and securities of other regulated investment companies.
The Treasury Department has issued regulations which establish
diversification requirements for the investment portfolios underlying variable
contracts such as the contracts. The regulations amplify the diversification
requirements for variable contracts set forth in the Code and provide an
alternative to the safe harbor provision described above. Under the regulations
an investment portfolio will be deemed adequately diversified if (1) no more
than 55% of the value of the total assets of the portfolio is represented by any
one investment; (2) no more than 70% of the value of the total assets of the
portfolio is represented by any two investments; (3) no more than 80% of the
value of the total assets of the portfolio is represented by any three
investments; and (4) no more than 90% of the value of the total assets of the
portfolio is represented by any four investments. For purposes of determining
whether or not the diversification standards imposed on the underlying assets of
variable contracts by Section 817(h) of the Code have been met, "each United
States government agency or instrumentality shall be treated as a separate
issuer."
MULTIPLE CONTRACTS
Multiple annuity contracts which are issued within a calendar year to
the same contract owner by one company or its affiliates are treated as one
annuity contract for purposes of determining the tax
<PAGE> 21
consequences of any distribution. Such treatment may result in adverse tax
consequences including more rapid taxation of the distributed amounts from such
multiple contracts. The Company believes that Congress intended to affect the
purchase of multiple deferred annuity contracts which may have been purchased to
avoid withdrawal income tax treatment. Owners should consult a tax adviser prior
to purchasing more than one annuity contract in any calendar year.
TAX TREATMENT OF ASSIGNMENTS
An assignment of a contract may have tax consequences, and may also be
prohibited by ERISA in some circumstances. Owners should therefore consult
competent legal advisers should they wish to assign their contracts.
QUALIFIED PLANS
The contracts offered by this prospectus are designed to be suitable for
use under various types of Qualified plans. Taxation of owners in each Qualified
plan varies with the type of plan and terms and conditions of each specific
plan. Owners, Annuitants and Beneficiaries are cautioned that benefits under a
Qualified plan may be subject to the terms and conditions of the plan,
regardless of the terms and conditions of the contracts issued pursuant to the
plan.
Following are general descriptions of the types of Qualified plans with
which the contracts may be used. Such descriptions are not exhaustive and are
for general information purposes only. The tax rules regarding Qualified plans
are very complex and will have differing applications depending on individual
facts and circumstances. Each purchaser should obtain competent tax advice prior
to purchasing a contract issued under a Qualified plan.
Contracts issued pursuant to Qualified plans include special provisions
restricting contract provisions that may otherwise be available and described in
this prospectus. Generally, contracts issued pursuant to Qualified plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified contracts.
(a) H.R. 10 PLANS
Section 401 of the Code permits self-employed individuals to
establish Qualified plans for themselves and their employees, commonly
referred to as "H.R. 10" or "Keogh" Plans. Contributions made to the
plan for the benefit of the employees will not be included in the gross
income of the employees until distributed from the plan. The tax
consequences to owners may vary depending upon the particular plan
design. However, the Code places limitations and restrictions on all
plans on such items as: amounts of allowable contributions; form, manner
and timing of distributions; vesting and nonforfeitability of interests;
nondiscrimination in eligibility and participation; and the tax
treatment of distributions, withdrawals and surrenders. Purchasers of
contracts for use with an H.R. 10 Plan should obtain competent tax
advice as to the tax treatment and suitability of such an investment.
(b) TAX-SHELTERED ANNUITIES
Section 403(b) of the Code permits the purchase of "tax-sheltered
annuities" by public
<PAGE> 22
schools and certain charitable, education and scientific organizations
described in Section 501(c)(3) of the Code. These qualifying employers
may make contributions to the contracts for the benefit of their
employees. Such contributions are not includible in the gross income of
the employee until the employee receives distributions from the
contract. The amount of contributions to the tax-sheltered annuity is
limited to certain maximums imposed by the Code. Furthermore, the Code
sets forth additional restrictions governing such items as
transferability, distributions, nondiscrimination and withdrawals. Any
employee should obtain competent tax advice as to the tax treatment and
suitability of such an investment.
(c) INDIVIDUAL RETIREMENT ANNUITIES
Section 408(b) of the Code permits eligible individuals to
contribute to an individual retirement program known as an "Individual
Retirement Annuity" ("IRA"). Under applicable limitations, certain
amounts may be contributed to an IRA which will be deductible from the
individual's gross income. These IRAs are subject to limitations on
eligibility, contributions, transferability and distributions. Sales of
contracts for use with IRAs are subject to special requirements imposed
by the Code, including the requirement that certain informational
disclosure be given to persons desiring to establish an IRA. Purchasers
of contracts to be qualified as IRAs should obtain competent tax advice
as to the tax treatment and suitability of such an investment.
(d) ROTH IRAS
Section 408(a) of the Code permits an individual to contribute to
an individual retirement program called a Roth IRA. Unlike contributions
to a regular IRA under Section 408(b) of the Code, contributions to a
Roth IRA are not made on a tax-deferred basis, but distributions are
tax-free if certain requirements are satisfied. Like regular IRAs, Roth
IRAs are subject to limitations on the amount that may be contributed,
those who may be eligible and the time when distributions may commence
without tax penalty. Certain persons may be eligible to convert a
regular IRA into a Roth IRA, and the taxes on the resulting income may
be spread over four years if the conversion occurs before January 1,
1999. If and when the contracts are made available for use with Roth
IRAs, they may be subject to special requirements imposed by the
Internal Revenue Service ("IRS"). Purchasers of the contracts for this
purpose will be provided with such supplementary information as may be
required by the IRS or other appropriate agency.
(e) CORPORATE PENSION AND PROFIT-SHARING PLANS
Sections 401(a) and 401(k) of the Code permit corporate employers
to establish various types of retirement plans for employees. These
retirement plans may permit the purchase of the contracts to provide
benefits under the plan. Contributions to the plan for the benefit of
employees will not be includible in the gross income of the employee
until distributed from the plan. The tax consequences to owners may vary
depending upon the particular plan design. However, the Code places
limitations on all plans on such items as amount of allowable
contributions; form, manner and timing of distributions; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. Purchasers of contracts for use with corporate pension or
profit sharing plans should obtain competent tax advice as to the tax
treatment and suitability of such an investment.
<PAGE> 23
(f) DEFERRED COMPENSATION PLANS - SECTION 457
Under Section 457 of the Code, governmental and certain other
tax-exempt employers may establish, for the benefit of their employees, deferred
compensation plans which may invest in annuity contracts. The Code, as in the
case of Qualified plans, establishes limitations and restrictions on
eligibility, contributions and distributions. Under these plans, contributions
made for the benefit of the employees will not be includible in the employees'
gross income until distributed from the plan. However, under a 457 plan all the
plan assets shall remain solely the property of the employer, subject only to
the claims of the employer's general creditors until such time as made available
to an owner or a Beneficiary. As of January 1, 1999, all 457 plans of state and
local governments must hold assets and income in trust (or custodial accounts or
an annuity contract) for the exclusive benefit of participants and their
Beneficiaries.
DISTRIBUTION OF CONTRACTS
The contracts are offered on a continuous basis through SunAmerica
Capital Services, Inc., located at 733 Third Avenue, 4th Floor, New York, New
York 10017. SunAmerica Capital Services, Inc. is registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended, and is a member of the
National Association of Securities Dealers, Inc. The Company and SunAmerica
Capital Services, Inc. are each an indirect wholly owned subsidiary of
SunAmerica Inc. No underwriting fees are paid in connection with the
distribution of the contracts.
FINANCIAL STATEMENTS
The audited consolidated financial statements of the Company as of
September 30, 1998 and 1997 and for each of the three years in the period ended
September 30, 1998 are incorporated herein by reference to Post Effective
Amendment No. 9 under the Securities Act of 1933 ("the 33 Act") and No. 11 under
the Investment Company Act of 1940 ("the 40 Act") to this registration statement
(file nos: 333-25473 and 811-3859) filed on December 15, 1999. Effective
December 31, 1999, the Company changed its fiscal year end from September 30, to
December 31. Reflecting this change, also incorporated herein by reference (to
the above noted filing) is the Company's audited Transition Report as of and for
the three months ended December 31, 1998. The consolidated financial statements
of the Company should be considered only as bearing on the ability of the
Company to meet its obligation under the contracts for amounts allocated to the
1, 3, 5, 7 or 10 year fixed account options and the DCA accounts for 6-month and
1-year periods.
Effective December 31, 1999, Variable Separate Account changed its
fiscal year end from November 30, to December 31. Reflecting this change,
included in this Statement of Additional Information are the Variable Separate
Account (portion relating to the Polaris II Variable Annuity) audited financial
statements as of and for the one month period ended December 31, 1999 and as of
November 30, 1999 and for each of the two fiscal years in the period ended
November 30, 1999.
PricewaterhouseCoopers LLP, 400 South Hope Street, Los Angeles,
California 90071, serves as the independent accountants for the separate account
and the Company. The financial statements referred to above have been so
included in reliance on the reports of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
<PAGE> 24
VARIABLE SEPARATE ACCOUNT
(PORTION RELATING TO THE POLARIS II VARIABLE ANNUITY)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND NOVEMBER 30, 1999
<PAGE> 25
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Anchor National Life Insurance Company
and the Contractholders of its separate account,
Variable Separate Account (Portion Relating to the POLARIS II Variable Annuity)
In our opinion, the accompanying statement of net assets, including the schedule
of portfolio investments, and the related statements of operations and of
changes in net assets present fairly, in all material respects, the financial
position of the Variable Account constituting Variable Separate Account (Portion
Relating to the POLARIS II Variable Annuity), a separate account of Anchor
National Life Insurance Company (the "Separate Account") at December 31, 1999
and November 30, 1999, the results of their operations for the one month ended
December 31, 1999 and for the fiscal year ended November 30, 1999, and the
changes in their net assets for the one month ended December 31, 1999 and for
the two fiscal years ended November 30, 1999 and November 30, 1998, in
conformity with accounting principles generally accepted in the United States.
These financial statements are the responsibility of the Separate Account's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities owned at December 31, 1999 and
November 30, 1999 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Los Angeles, California
March 3, 2000
<PAGE> 26
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Government International
Capital Natural and Diversified
Appreciation Growth Resources Quality Bond Equities
Portfolio Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $592,391,593 $229,020,717 $ 14,580,032 $158,963,351 $ 0
Investments in SunAmerica Series Trust,
at market value 0 0 0 0 121,451,215
Liabilities 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
Net Assets $592,391,593 $229,020,717 $ 14,580,032 $158,963,351 $121,451,215
============ ============ ============ ============ ============
Accumulation units outstanding 13,721,175 7,022,979 1,166,052 11,975,781 7,176,791
============ ============ ============ ============ ============
Unit value of accumulation units $ 43.17 $ 32.61 $ 12.50 $ 13.28 $ 16.92
============ ============ ============ ============ ============
<CAPTION>
Global Aggressive
Equities Growth
Portfolio Portfolio
------------ ------------
<S> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $ 0 $ 0
Investments in SunAmerica Series Trust,
at market value 142,589,923 178,478,524
Liabilities 0 0
------------ ------------
Net Assets $142,589,923 $178,478,524
============ ============
Accumulation units outstanding 5,366,080 7,344,520
============ ============
Unit value of accumulation units $ 26.57 $ 24.30
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 27
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS
DECEMBER 31, 1999
(Continued)
<TABLE>
<CAPTION>
Venture Federated Putnam MFS Growth Alliance
Value Value Growth & Income Growth
Portfolio Portfolio Portfolio Portfolio Portfolio
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $ 0 $ 0 $ 0 $ 0 $ 0
Investments in SunAmerica Series Trust,
at market value 918,987,624 113,143,395 362,907,786 104,086,066 1,248,910,215
Liabilities 0 0 0 0 0
-------------- -------------- -------------- -------------- --------------
Net Assets $ 918,987,624 $ 113,143,395 $ 362,907,786 $ 104,086,066 $1,248,910,215
============== ============== ============== ============== ==============
Accumulation units outstanding 32,960,877 6,700,126 11,459,476 4,397,413 25,720,432
============== ============== ============== ============== ==============
Unit value of accumulation units $ 27.88 $ 16.89 $ 31.67 $ 23.67 $ 48.56
============== ============== ============== ============== ==============
<CAPTION>
Growth- Asset
Income Allocation
Portfolio Portfolio
-------------- --------------
<S> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $ 0 $ 0
Investments in SunAmerica Series Trust,
at market value 706,346,292 234,426,378
Liabilities 0 0
-------------- --------------
Net Assets $ 706,346,292 $ 234,426,378
============== ==============
Accumulation units outstanding 19,671,134 11,832,744
============== ==============
Unit value of accumulation units $ 35.91 $ 19.81
============== ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 28
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS
DECEMBER 31, 1999
(Continued)
<TABLE>
<CAPTION>
SunAmerica MFS Total Worldwide High-Yield
Balanced Return Utility High Income Bond
Portfolio Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $ 0 $ 0 $ 0 $ 0 $ 0
Investments in SunAmerica Series Trust,
at market value 236,217,673 94,022,931 63,933,292 44,331,004 120,425,390
Liabilities 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
Net Assets $236,217,673 $ 94,022,931 $ 63,933,292 $ 44,331,004 $120,425,390
============ ============ ============ ============ ============
Accumulation units outstanding 11,995,695 5,054,346 4,232,249 2,824,430 8,096,738
============ ============ ============ ============ ============
Unit value of accumulation units $ 19.69 $ 18.60 $ 15.11 $ 15.70 $ 14.87
============ ============ ============ ============ ============
<CAPTION>
Global Corporate
Bond Bond
Portfolio Portfolio
------------ ------------
<S> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $ 0 $ 0
Investments in SunAmerica Series Trust,
at market value 38,740,607 91,835,814
Liabilities 0 0
------------ ------------
Net Assets $ 38,740,607 $ 91,835,814
============ ============
Accumulation units outstanding 2,749,995 7,196,448
============ ============
Unit value of accumulation units $ 14.09 $ 12.76
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 29
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS
DECEMBER 31, 1999
(Continued)
<TABLE>
<CAPTION>
International Emerging Real "Dogs" of MFS Mid-Cap
Growth & Income Markets Estate Wall Street Growth
Portfolio Portfolio Portfolio Portfolio Portfolio
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $ 0 $ 0 $ 0 $ 0 $ 0
Investments in SunAmerica Series Trust,
at market value 172,953,989 57,224,434 35,583,598 80,485,069 44,250,039
Liabilities 0 0 0 0 0
-------------- -------------- -------------- -------------- --------------
Net Assets $ 172,953,989 $ 57,224,434 $ 35,583,598 $ 80,485,069 $ 44,250,039
============== ============== ============== ============== ==============
Accumulation units outstanding 12,288,580 5,310,973 3,993,765 8,952,838 2,713,848
============== ============== ============== ============== ==============
Unit value of accumulation units $ 14.07 $ 10.77 $ 8.91 $ 8.99 $ 16.31
============== ============== ============== ============== ==============
Cash
Management
Portfolio TOTAL
-------------- --------------
<S> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $ 0 $ 994,955,693
Investments in SunAmerica Series Trust,
at market value 173,671,128 5,385,002,386
Liabilities 0 0
-------------- --------------
Net Assets $ 173,671,128 $6,379,958,079
============== ==============
Accumulation units outstanding 14,181,154
============== ==============
Unit value of accumulation units $ 12.25
============== ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 30
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
Government International
Capital Natural and Diversified
Appreciation Growth Resources Quality Bond Equities
Portfolio Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $480,400,313 $201,874,465 $ 13,461,238 $155,667,206 $ 0
Investments in SunAmerica Series Trust,
at market value 0 0 0 0 108,270,790
Liabilities 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
Net Assets $480,400,313 $201,874,465 $ 13,461,238 $155,667,206 $108,270,790
============ ============ ============ ============ ============
Accumulation units outstanding 13,201,318 6,788,755 1,180,750 11,644,751 6,989,492
============ ============ ============ ============ ============
Unit value of accumulation units $ 36.39 $ 29.74 $ 11.40 $ 13.37 $ 15.49
============ ============ ============ ============ ============
<CAPTION>
Global Aggressive
Equities Growth
Portfolio Portfolio
------------ ------------
<S> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $ 0 $ 0
Investments in SunAmerica Series Trust,
at market value 118,942,147 126,037,673
Liabilities 0 0
------------ ------------
Net Assets $118,942,147 $126,037,673
============ ============
Accumulation units outstanding 4,915,631 6,626,618
============ ============
Unit value of accumulation units $ 24.20 $ 19.02
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 31
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS
NOVEMBER 30, 1999
(Continued)
<TABLE>
<CAPTION>
Venture Federated Putnam MFS Growth Alliance
Value Value Growth & Income Growth
Portfolio Portfolio Portfolio Portfolio Portfolio
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $ 0 $ 0 $ 0 $ 0 $ 0
Investments in SunAmerica Series Trust,
at market value 855,880,689 108,715,271 315,070,448 92,681,421 1,100,795,861
Liabilities 0 0 0 0 0
-------------- -------------- -------------- -------------- --------------
Net Assets $ 855,880,689 $ 108,715,271 $ 315,070,448 $ 92,681,421 $1,100,795,861
============== ============== ============== ============== ==============
Accumulation units outstanding 32,218,454 6,616,993 11,111,497 4,109,201 24,844,446
============== ============== ============== ============== ==============
Unit value of accumulation units $ 26.57 $ 16.43 $ 28.36 $ 22.55 $ 44.31
============== ============== ============== ============== ==============
<CAPTION>
Growth- Asset
Income Allocation
Portfolio Portfolio
-------------- --------------
<S> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $ 0 $ 0
Investments in SunAmerica Series Trust,
at market value 631,444,819 225,363,736
Liabilities 0 0
-------------- --------------
Net Assets $ 631,444,819 $ 225,363,736
============== ==============
Accumulation units outstanding 19,070,913 11,800,263
============== ==============
Unit value of accumulation units $ 33.11 $ 19.10
============== ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 32
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS
NOVEMBER 30, 1999
(Continued)
<TABLE>
<CAPTION>
SunAmerica MFS Total Worldwide High-Yield
Balanced Return Utility High Income Bond
Portfolio Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $ 0 $ 0 $ 0 $ 0 $ 0
Investments in SunAmerica Series Trust,
at market value 205,718,611 87,688,865 61,911,394 43,460,618 116,458,898
Liabilities 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
Net Assets $205,718,611 $ 87,688,865 $ 61,911,394 $ 43,460,618 $116,458,898
============ ============ ============ ============ ============
Accumulation units outstanding 11,283,979 4,740,884 4,083,169 2,853,924 7,918,425
============ ============ ============ ============ ============
Unit value of accumulation units $ 18.23 $ 18.50 $ 15.16 $ 15.23 $ 14.71
============ ============ ============ ============ ============
<CAPTION>
Global Corporate
Bond Bond
Portfolio Portfolio
------------ ------------
<S> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $ 0 $ 0
Investments in SunAmerica Series Trust,
at market value 37,993,494 91,081,954
Liabilities 0 0
------------ ------------
Net Assets $ 37,993,494 $ 91,081,954
============ ============
Accumulation units outstanding 2,692,066 7,121,685
============ ============
Unit value of accumulation units $ 14.11 $ 12.78
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 33
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS
NOVEMBER 30, 1999
(Continued)
<TABLE>
<CAPTION>
International Emerging Real "Dogs" of
Growth & Income Markets Estate Wall Street
Portfolio Portfolio Portfolio Portfolio
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $ 0 $ 0 $ 0 $ 0
Investments in SunAmerica Series Trust,
at market value 156,485,672 43,682,791 33,664,724 81,021,429
Liabilities 0 0 0 0
-------------- -------------- -------------- --------------
Net Assets $ 156,485,672 $ 43,682,791 $ 33,664,724 $ 81,021,429
============== ============== ============== ==============
Accumulation units outstanding 11,676,801 4,857,715 3,959,755 8,879,703
============== ============== ============== ==============
Unit value of accumulation units $ 13.40 $ 8.99 $ 8.50 $ 9.12
============== ============== ============== ==============
<CAPTION>
MFS Mid-Cap Cash
Growth Management
Portfolio Portfolio TOTAL
-------------- -------------- --------------
<S> <C> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $ 0 $ 0 $ 851,403,222
Investments in SunAmerica Series Trust,
at market value 31,376,575 164,148,572 4,837,896,452
Liabilities 0 0 0
-------------- -------------- --------------
Net Assets $ 31,376,575 $ 164,148,572 $5,689,299,674
============== ============== ==============
Accumulation units outstanding 2,204,857 13,454,926
============== ==============
Unit value of accumulation units $ 14.23 $ 12.20
============== ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 34
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Market Value Market
Variable Accounts Shares Per Share Value Cost
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ANCHOR SERIES TRUST:
Capital Appreciation Portfolio 10,388,399 $ 57.02 $ 592,391,593 $ 396,999,082
Growth Portfolio 5,945,645 38.52 229,020,717 188,766,418
Natural Resources Portfolio 898,618 16.22 14,580,032 13,092,521
Government and Quality Bond Portfolio 11,617,069 13.68 158,963,351 166,104,728
-------------- --------------
994,955,693 764,962,749
-------------- --------------
SUNAMERICA SERIES TRUST:
International Diversified Equities Portfolio 7,591,788 16.00 121,451,215 104,777,456
Global Equities Portfolio 6,544,447 21.79 142,589,923 117,236,842
Aggressive Growth Portfolio 7,640,856 23.36 178,478,524 118,137,193
Venture Value Portfolio 34,299,649 26.79 918,987,624 803,600,710
Federated Value Portfolio 6,827,811 16.57 113,143,395 109,433,791
Putnam Growth Portfolio 12,875,350 28.19 362,907,786 279,960,964
MFS Growth & Income Portfolio 7,453,500 13.96 104,086,066 110,919,375
Alliance Growth Portfolio 32,548,685 38.37 1,248,910,215 986,671,590
Growth-Income Portfolio 21,684,971 32.57 706,346,292 556,800,067
Asset Allocation Portfolio 15,637,952 14.99 234,426,378 237,293,930
SunAmerica Balanced Portfolio 12,025,736 19.64 236,217,673 199,209,093
MFS Total Return Portfolio 6,570,615 14.31 94,022,931 98,708,398
Utility Portfolio 4,446,168 14.38 63,933,292 63,325,351
Worldwide High Income Portfolio 4,166,563 10.64 44,331,004 48,246,386
High-Yield Bond Portfolio 11,485,596 10.48 120,425,390 128,943,216
Global Bond Portfolio 3,582,789 10.81 38,740,607 40,879,128
Corporate Bond Portfolio 8,255,944 11.12 91,835,814 95,814,250
International Growth & Income Portfolio 13,413,047 12.89 172,953,989 170,100,803
Emerging Markets Portfolio 5,161,974 11.09 57,224,434 41,900,899
Real Estate Portfolio 4,037,994 8.81 35,583,598 41,800,376
"Dogs" of Wall Street Portfolio 8,986,293 8.96 80,485,069 86,797,993
MFS Mid-Cap Growth Portfolio 2,722,168 16.26 44,250,039 35,773,154
Cash Management Portfolio 15,953,279 10.89 173,671,128 172,352,999
-------------- --------------
5,385,002,386 4,648,683,964
-------------- --------------
$6,379,958,079 $5,413,646,713
============== ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 35
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
SCHEDULE OF PORTFOLIO INVESTMENTS
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
Market Value Market
Variable Accounts Shares Per Share Value Cost
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ANCHOR SERIES TRUST:
Capital Appreciation Portfolio 10,007,739 $ 48.00 $ 480,400,313 $ 375,510,172
Growth Portfolio 5,754,774 35.08 201,874,465 181,634,878
Natural Resources Portfolio 911,125 14.77 13,461,238 13,252,590
Government and Quality Bond Portfolio 11,310,388 13.76 155,667,206 161,925,972
--------------- ---------------
851,403,222 732,323,612
--------------- ---------------
SUNAMERICA SERIES TRUST:
International Diversified Equities Portfolio 7,403,429 14.62 108,270,790 100,825,233
Global Equities Portfolio 6,002,852 19.81 118,942,147 105,966,168
Aggressive Growth Portfolio 6,902,939 18.26 126,037,673 102,069,002
Venture Value Portfolio 33,570,345 25.50 855,880,689 784,490,042
Federated Value Portfolio 6,751,821 16.10 108,715,271 108,182,224
Putnam Growth Portfolio 12,500,523 25.20 315,070,448 269,881,355
MFS Growth & Income Portfolio 6,973,994 13.29 92,681,421 104,423,107
Alliance Growth Portfolio 31,480,734 34.97 1,100,795,861 947,389,395
Growth-Income Portfolio 21,050,466 30.00 631,444,819 536,608,087
Asset Allocation Portfolio 15,615,149 14.43 225,363,736 236,994,913
SunAmerica Balanced Portfolio 11,326,874 18.16 205,718,611 185,958,153
MFS Total Return Portfolio 6,171,107 14.21 87,688,865 93,046,797
Utility Portfolio 4,295,096 14.41 61,911,394 61,168,887
Worldwide High Income Portfolio 4,215,525 10.31 43,460,618 48,891,480
High-Yield Bond Portfolio 11,247,102 10.35 116,458,898 126,551,811
Global Bond Portfolio 3,511,864 10.82 37,993,494 40,134,558
Corporate Bond Portfolio 8,180,769 11.13 91,081,954 95,018,220
International Growth & Income Portfolio 11,618,792 13.47 156,485,672 145,775,555
Emerging Markets Portfolio 4,727,547 9.24 43,682,791 37,325,309
Real Estate Portfolio 4,008,769 8.40 33,664,724 41,673,478
"Dogs" of Wall Street Portfolio 8,924,418 9.08 81,021,429 86,376,791
MFS Mid-Cap Growth Portfolio 2,182,799 14.37 31,376,575 27,352,047
Cash Management Portfolio 15,156,138 10.83 164,148,572 163,468,523
--------------- ---------------
4,837,896,452 4,449,571,135
--------------- ---------------
$ 5,689,299,674 $ 5,181,894,747
=============== ===============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 36
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE ONE MONTH ENDED
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Government
Capital Natural and
Appreciation Growth Resources Quality Bond
Portfolio Portfolio Portfolio Portfolio
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 0 $ 0 $ 0 $ 0
------------- ------------- ------------- -------------
Total investment income 0 0 0 0
------------- ------------- ------------- -------------
Expenses:
Mortality risk charge (409,848) (164,810) (10,460) (119,714)
Guarantee death benefit charge (54,646) (21,975) (1,395) (15,962)
Expense risk charge (159,385) (64,093) (4,068) (46,555)
Distribution expense charge (68,309) (27,468) (1,743) (19,952)
------------- ------------- ------------- -------------
Total expenses (692,188) (278,346) (17,666) (202,183)
------------- ------------- ------------- -------------
Net investment income (loss) (692,188) (278,346) (17,666) (202,183)
------------- ------------- ------------- -------------
Net realized gains (losses) from securities
transactions:
Proceeds from shares sold 4,902,412 270,792 641,467 624,820
Cost of shares sold (3,511,221) (238,227) (622,807) (650,038)
------------- ------------- ------------- -------------
Net realized gains (losses) from
securities transactions 1,391,191 32,565 18,660 (25,218)
------------- ------------- ------------- -------------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period 104,890,141 20,239,587 208,648 (6,258,766)
End of period 195,392,511 40,254,299 1,487,511 (7,141,377)
------------- ------------- ------------- -------------
Change in net unrealized appreciation/
depreciation of investments 90,502,370 20,014,712 1,278,863 (882,611)
------------- ------------- ------------- -------------
Increase (decrease) in net assets from operations $ 91,201,373 $ 19,768,931 $ 1,279,857 $ (1,110,012)
============= ============= ============= =============
<CAPTION>
International
Diversified Global Aggressive
Equities Equities Growth
Portfolio Portfolio Portfolio
------------- ------------- -------------
<S> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 0 $ 0 $ 0
------------- ------------- -------------
Total investment income 0 0 0
------------- ------------- -------------
Expenses:
Mortality risk charge (87,566) (99,920) (118,298)
Guarantee death benefit charge (11,676) (13,323) (15,773)
Expense risk charge (34,054) (38,858) (46,005)
Distribution expense charge (14,594) (16,653) (19,716)
------------- ------------- -------------
Total expenses (147,890) (168,754) (199,792)
------------- ------------- -------------
Net investment income (loss) (147,890) (168,754) (199,792)
------------- ------------- -------------
Net realized gains (losses) from securities
transactions:
Proceeds from shares sold 15,411,048 2,481,382 1,434,689
Cost of shares sold (14,095,954) (2,179,681) (966,785)
------------- ------------- -------------
Net realized gains (losses) from
securities transactions 1,315,094 301,701 467,904
------------- ------------- -------------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period 7,445,557 12,975,979 23,968,671
End of period 16,673,759 25,353,081 60,341,331
------------- ------------- -------------
Change in net unrealized appreciation/
depreciation of investments 9,228,202 12,377,102 36,372,660
------------- ------------- -------------
Increase (decrease) in net assets from operations $ 10,395,406 $ 12,510,049 $ 36,640,772
============= ============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 37
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE ONE MONTH ENDED
DECEMBER 31, 1999
(Continued)
<TABLE>
<CAPTION>
Venture Federated Putnam MFS Growth
Value Value Growth & Income
Portfolio Portfolio Portfolio Portfolio
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 0 $ 0 $ 0 $ 0
------------- ------------- ------------- -------------
Total investment income 0 0 0 0
------------- ------------- ------------- -------------
Expenses:
Mortality risk charge (672,293) (83,757) (258,809) (74,558)
Guarantee death benefit charge (89,639) (11,168) (34,508) (9,941)
Expense risk charge (261,447) (32,572) (100,648) (28,995)
Distribution expense charge (112,050) (13,959) (43,134) (12,427)
------------- ------------- ------------- -------------
Total expenses (1,135,429) (141,456) (437,099) (125,921)
------------- ------------- ------------- -------------
Net investment income (loss) (1,135,429) (141,456) (437,099) (125,921)
------------- ------------- ------------- -------------
Net realized gains (losses) from securities
transactions:
Proceeds from shares sold 1,303,007 1,427,402 667,031 121,182
Cost of shares sold (1,164,586) (1,427,585) (519,095) (135,931)
------------- ------------- ------------- -------------
Net realized gains (losses) from
securities transactions 138,421 (183) 147,936 (14,749)
------------- ------------- ------------- -------------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period 71,390,647 533,047 45,189,093 (11,741,686)
End of period 115,386,914 3,709,604 82,946,822 (6,833,309)
------------- ------------- ------------- -------------
Change in net unrealized appreciation/
depreciation of investments 43,996,267 3,176,557 37,757,729 4,908,377
------------- ------------- ------------- -------------
Increase (decrease) in net assets from operations $ 42,999,259 $ 3,034,918 $ 37,468,566 $ 4,767,707
============= ============= ============= =============
<CAPTION>
Alliance Growth- Asset
Growth Income Allocation
Portfolio Portfolio Portfolio
------------- ------------- -------------
<S> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 0 $ 0 $ 0
------------- ------------- -------------
Total investment income 0 0 0
------------- ------------- -------------
Expenses:
Mortality risk charge (891,398) (507,511) (175,914)
Guarantee death benefit charge (118,853) (67,668) (23,455)
Expense risk charge (346,655) (197,365) (68,411)
Distribution expense charge (148,567) (84,586) (29,320)
------------- ------------- -------------
Total expenses (1,505,473) (857,130) (297,100)
------------- ------------- -------------
Net investment income (loss) (1,505,473) (857,130) (297,100)
------------- ------------- -------------
Net realized gains (losses) from securities
transactions:
Proceeds from shares sold 904,912 2,272,536 1,440,517
Cost of shares sold (753,574) (1,918,746) (1,486,742)
------------- ------------- -------------
Net realized gains (losses) from
securities transactions 151,338 353,790 (46,225)
------------- ------------- -------------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period 153,406,466 94,836,732 (11,631,177)
End of period 262,238,625 149,546,225 (2,867,552)
------------- ------------- -------------
Change in net unrealized appreciation/
depreciation of investments 108,832,159 54,709,493 8,763,625
------------- ------------- -------------
Increase (decrease) in net assets from operations $ 107,478,024 $ 54,206,153 $ 8,420,300
============= ============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 38
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE ONE MONTH ENDED
DECEMBER 31, 1999
(Continued)
<TABLE>
<CAPTION>
SunAmerica MFS Total Worldwide
Balanced Return Utility High Income
Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 0 $ 0 $ 0 $ 0
------------ ------------ ------------ ------------
Total investment income 0 0 0 0
------------ ------------ ------------ ------------
Expenses:
Mortality risk charge (169,487) (68,760) (47,567) (33,886)
Guarantee death benefit charge (22,598) (9,168) (6,342) (4,518)
Expense risk charge (65,912) (26,740) (18,498) (13,178)
Distribution expense charge (28,248) (11,460) (7,928) (5,648)
------------ ------------ ------------ ------------
Total expenses (286,245) (116,128) (80,335) (57,230)
------------ ------------ ------------ ------------
Net investment income (loss) (286,245) (116,128) (80,335) (57,230)
------------ ------------ ------------ ------------
Net realized gains (losses) from securities
transactions:
Proceeds from shares sold 0 24,396 76,227 1,350,169
Cost of shares sold 0 (25,876) (76,541) (1,475,519)
------------ ------------ ------------ ------------
Net realized gains (losses) from
securities transactions 0 (1,480) (314) (125,350)
------------ ------------ ------------ ------------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period 19,760,458 (5,357,932) 742,507 (5,430,862)
End of period 37,008,580 (4,685,467) 607,941 (3,915,382)
------------ ------------ ------------ ------------
Change in net unrealized appreciation/
depreciation of investments 17,248,122 672,465 (134,566) 1,515,480
------------ ------------ ------------ ------------
Increase (decrease) in net assets from operations $ 16,961,877 $ 554,857 $ (215,215) $ 1,332,900
============ ============ ============ ============
<CAPTION>
High-Yield Global Corporate
Bond Bond Bond
Portfolio Portfolio Portfolio
------------ ------------ ------------
<S> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 0 $ 0 $ 0
------------ ------------ ------------
Total investment income 0 0 0
------------ ------------ ------------
Expenses:
Mortality risk charge (90,653) (29,220) (69,801)
Guarantee death benefit charge (12,087) (3,896) (9,307)
Expense risk charge (35,254) (11,363) (27,145)
Distribution expense charge (15,109) (4,871) (11,633)
------------ ------------ ------------
Total expenses (153,103) (49,350) (117,886)
------------ ------------ ------------
Net investment income (loss) (153,103) (49,350) (117,886)
------------ ------------ ------------
Net realized gains (losses) from securities
transactions:
Proceeds from shares sold 1,311,705 427,478 1,009,070
Cost of shares sold (1,409,741) (450,269) (1,050,927)
------------ ------------ ------------
Net realized gains (losses) from
securities transactions (98,036) (22,791) (41,857)
------------ ------------ ------------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period (10,092,913) (2,141,064) (3,936,266)
End of period (8,517,826) (2,138,521) (3,978,436)
------------ ------------ ------------
Change in net unrealized appreciation/
depreciation of investments 1,575,087 2,543 (42,170)
------------ ------------ ------------
Increase (decrease) in net assets from operations $ 1,323,948 $ (69,598) $ (201,913)
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 39
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE ONE MONTH ENDED
DECEMBER 31, 1999
(Continued)
<TABLE>
<CAPTION>
International Emerging Real "Dogs" of
Growth & Income Markets Estate Wall Street
Portfolio Portfolio Portfolio Portfolio
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 15,397,560 $ 0 $ 0 $ 0
------------- ------------- ------------- -------------
Total investment income 15,397,560 0 0 0
------------- ------------- ------------- -------------
Expenses:
Mortality risk charge (127,322) (38,508) (25,619) (60,367)
Guarantee death benefit charge (16,976) (5,134) (3,416) (8,049)
Expense risk charge (49,514) (14,975) (9,963) (23,476)
Distribution expense charge (21,221) (6,419) (4,270) (10,061)
------------- ------------- ------------- -------------
Total expenses (215,033) (65,036) (43,268) (101,953)
------------- ------------- ------------- -------------
Net investment income (loss) 15,182,527 (65,036) (43,268) (101,953)
------------- ------------- ------------- -------------
Net realized gains (losses) from securities
transactions:
Proceeds from shares sold 7,350,263 827,847 622,303 1,461,955
Cost of shares sold (6,626,647) (619,939) (771,157) (1,583,069)
------------- ------------- ------------- -------------
Net realized gains (losses) from
securities transactions 723,616 207,908 (148,854) (121,114)
------------- ------------- ------------- -------------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period 10,710,117 6,357,482 (8,008,754) (5,355,362)
End of period 2,853,186 15,323,535 (6,216,778) (6,312,924)
------------- ------------- ------------- -------------
Change in net unrealized appreciation/
depreciation of investments (7,856,931) 8,966,053 1,791,976 (957,562)
------------- ------------- ------------- -------------
Increase (decrease) in net assets from operations $ 8,049,212 $ 9,108,925 $ 1,599,854 $ (1,180,629)
============= ============= ============= =============
<CAPTION>
MFS Mid-Cap Cash
Growth Management
Portfolio Portfolio TOTAL
------------- ------------- -------------
<S> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 608,658 $ 0 $ 16,006,218
------------- ------------- -------------
Total investment income 608,658 0 16,006,218
------------- ------------- -------------
Expenses:
Mortality risk charge (28,448) (131,187) (4,595,681)
Guarantee death benefit charge (3,793) (17,492) (612,758)
Expense risk charge (11,063) (51,017) (1,787,209)
Distribution expense charge (4,742) (21,865) (765,953)
------------- ------------- -------------
Total expenses (48,046) (221,561) (7,761,601)
------------- ------------- -------------
Net investment income (loss) 560,612 (221,561) 8,244,617
------------- ------------- -------------
Net realized gains (losses) from securities
transactions:
Proceeds from shares sold 658,578 44,276,886 93,300,074
Cost of shares sold (555,935) (44,036,124) (88,352,716)
------------- ------------- -------------
Net realized gains (losses) from
securities transactions 102,643 240,762 4,947,358
------------- ------------- -------------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period 4,024,528 680,049 507,404,927
End of period 8,476,885 1,318,129 966,311,366
------------- ------------- -------------
Change in net unrealized appreciation/
depreciation of investments 4,452,357 638,080 458,906,439
------------- ------------- -------------
Increase (decrease) in net assets from operations $ 5,115,612 $ 657,281 $ 472,098,414
============= ============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 40
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
Government
Capital Natural and
Appreciation Growth Resources Quality Bond
Portfolio Portfolio Portfolio Portfolio
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 16,419,928 $ 11,247,203 $ 157,138 $ 6,951,976
------------- ------------- ------------- -------------
Total investment income 16,419,928 11,247,203 157,138 6,951,976
------------- ------------- ------------- -------------
Expenses:
Mortality risk charge (2,670,029) (1,285,168) (91,866) (1,068,231)
Guarantee death benefit charge (356,004) (171,356) (12,249) (142,431)
Expense risk charge (1,038,345) (499,788) (35,726) (415,423)
Distribution expense charge (445,004) (214,194) (15,311) (178,038)
------------- ------------- ------------- -------------
Total expenses (4,509,382) (2,170,506) (155,152) (1,804,123)
------------- ------------- ------------- -------------
Net investment income (loss) 11,910,546 9,076,697 1,986 5,147,853
------------- ------------- ------------- -------------
Net realized gains (losses) from securities
transactions:
Proceeds from shares sold 72,858,783 9,362,928 5,258,327 25,219,551
Cost of shares sold (63,752,901) (8,361,173) (5,112,408) (25,646,811)
------------- ------------- ------------- -------------
Net realized gains (losses) from
securities transactions 9,105,882 1,001,755 145,919 (427,260)
------------- ------------- ------------- -------------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period (2,266,766) 4,884,168 (1,144,012) 713,259
End of period 104,890,141 20,239,587 208,648 (6,258,766)
------------- ------------- ------------- -------------
Change in net unrealized appreciation/
depreciation of investments 107,156,907 15,355,419 1,352,660 (6,972,025)
------------- ------------- ------------- -------------
Increase (decrease) in net assets from operations $ 128,173,335 $ 25,433,871 $ 1,500,565 $ (2,251,432)
============= ============= ============= =============
<CAPTION>
International
Diversified Global Aggressive
Equities Equities Growth
Portfolio Portfolio Portfolio
------------- ------------- -------------
<S> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 2,069,746 $ 7,234,539 $ 6,274,037
------------- ------------- -------------
Total investment income 2,069,746 7,234,539 6,274,037
------------- ------------- -------------
Expenses:
Mortality risk charge (766,560) (713,085) (594,912)
Guarantee death benefit charge (102,208) (95,078) (79,322)
Expense risk charge (298,107) (277,311) (231,355)
Distribution expense charge (127,759) (118,848) (99,152)
------------- ------------- -------------
Total expenses (1,294,634) (1,204,322) (1,004,741)
------------- ------------- -------------
Net investment income (loss) 775,112 6,030,217 5,269,296
------------- ------------- -------------
Net realized gains (losses) from securities
transactions:
Proceeds from shares sold 253,041,090 9,018,820 12,860,801
Cost of shares sold (246,068,174) (8,448,132) (11,018,748)
------------- ------------- -------------
Net realized gains (losses) from
securities transactions 6,972,916 570,688 1,842,053
------------- ------------- -------------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period 1,677,884 565,631 1,064,455
End of period 7,445,557 12,975,979 23,968,671
------------- ------------- -------------
Change in net unrealized appreciation/
depreciation of investments 5,767,673 12,410,348 22,904,216
------------- ------------- -------------
Increase (decrease) in net assets from operations $ 13,515,701 $ 19,011,253 $ 30,015,565
============= ============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 41
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
NOVEMBER 30, 1999
(Continued)
<TABLE>
<CAPTION>
Venture Federated Putnam MFS Growth
Value Value Growth & Income
Portfolio Portfolio Portfolio Portfolio
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 32,411,794 $ 4,583,838 $ 8,064,530 $ 13,764,409
------------- ------------- ------------- -------------
Total investment income 32,411,794 4,583,838 8,064,530 13,764,409
------------- ------------- ------------- -------------
Expenses:
Mortality risk charge (6,213,568) (803,363) (1,919,599) (433,718)
Guarantee death benefit charge (828,476) (107,115) (255,947) (57,829)
Expense risk charge (2,416,388) (312,419) (746,511) (168,668)
Distribution expense charge (1,035,594) (133,893) (319,932) (72,287)
------------- ------------- ------------- -------------
Total expenses (10,494,026) (1,356,790) (3,241,989) (732,502)
------------- ------------- ------------- -------------
Net investment income (loss) 21,917,768 3,227,048 4,822,541 13,031,907
------------- ------------- ------------- -------------
Net realized gains (losses) from securities
transactions:
Proceeds from shares sold 31,057,635 16,095,924 2,558,419 1,364,335
Cost of shares sold (27,956,324) (14,713,789) (2,299,108) (1,313,899)
------------- ------------- ------------- -------------
Net realized gains (losses) from
securities transactions 3,101,311 1,382,135 259,311 50,436
------------- ------------- ------------- -------------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period 20,764,044 4,379,096 4,482,602 316,687
End of period 71,390,647 533,047 45,189,093 (11,741,686)
------------- ------------- ------------- -------------
Change in net unrealized appreciation/
depreciation of investments 50,626,603 (3,846,049) 40,706,491 (12,058,373)
------------- ------------- ------------- -------------
Increase (decrease) in net assets from operations $ 75,645,682 $ 763,134 $ 45,788,343 $ 1,023,970
============= ============= ============= =============
<CAPTION>
Alliance Growth- Asset
Growth Income Allocation
Portfolio Portfolio Portfolio
------------- ------------- -------------
<S> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 73,131,535 $ 26,125,481 $ 17,624,884
------------- ------------- -------------
Total investment income 73,131,535 26,125,481 17,624,884
------------- ------------- -------------
Expenses:
Mortality risk charge (6,692,409) (3,956,812) (1,813,385)
Guarantee death benefit charge (892,321) (527,575) (241,785)
Expense risk charge (2,602,603) (1,538,760) (705,205)
Distribution expense charge (1,115,402) (659,468) (302,230)
------------- ------------- -------------
Total expenses (11,302,735) (6,682,615) (3,062,605)
------------- ------------- -------------
Net investment income (loss) 61,828,800 19,442,866 14,562,279
------------- ------------- -------------
Net realized gains (losses) from securities
transactions:
Proceeds from shares sold 43,457,676 21,422,634 5,985,744
Cost of shares sold (36,427,909) (18,313,760) (6,198,674)
------------- ------------- -------------
Net realized gains (losses) from
securities transactions 7,029,767 3,108,874 (212,930)
------------- ------------- -------------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period 38,472,062 20,109,919 (6,467,628)
End of period 153,406,466 94,836,732 (11,631,177)
------------- ------------- -------------
Change in net unrealized appreciation/
depreciation of investments 114,934,404 74,726,813 (5,163,549)
------------- ------------- -------------
Increase (decrease) in net assets from operations $ 183,792,971 $ 97,278,553 $ 9,185,800
============= ============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 42
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
NOVEMBER 30, 1999
(Continued)
<TABLE>
<CAPTION>
SunAmerica MFS Total Worldwide High-Yield
Balanced Return Utility High Income Bond
Portfolio Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 2,990,284 $ 8,372,761 $ 3,028,472 $ 4,717,470 $ 10,654,356
------------ ------------ ------------ ------------ ------------
Total investment income 2,990,284 8,372,761 3,028,472 4,717,470 10,654,356
------------ ------------ ------------ ------------ ------------
Expenses:
Mortality risk charge (1,155,745) (491,797) (417,066) (341,118) (889,478)
Guarantee death benefit charge (154,099) (65,573) (55,609) (45,482) (118,597)
Expense risk charge (449,456) (191,254) (162,192) (132,657) (345,908)
Distribution expense charge (192,625) (81,966) (69,511) (56,854) (148,247)
------------ ------------ ------------ ------------ ------------
Total expenses (1,951,925) (830,590) (704,378) (576,111) (1,502,230)
------------ ------------ ------------ ------------ ------------
Net investment income (loss) 1,038,359 7,542,171 2,324,094 4,141,359 9,152,126
------------ ------------ ------------ ------------ ------------
Net realized gains (losses) from securities
transactions:
Proceeds from shares sold 1,062 175,910 3,170,945 5,259,484 27,129,016
Cost of shares sold (954) (168,887) (3,049,495) (6,095,281) (27,773,697)
------------ ------------ ------------ ------------ ------------
Net realized gains (losses) from
securities transactions 108 7,023 121,450 (835,797) (644,681)
------------ ------------ ------------ ------------ ------------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period 3,912,921 654,344 1,513,827 (6,648,206) (4,246,455)
End of period 19,760,458 (5,357,932) 742,507 (5,430,862) (10,092,913)
------------ ------------ ------------ ------------ ------------
Change in net unrealized appreciation/
depreciation of investments 15,847,537 (6,012,276) (771,320) 1,217,344 (5,846,458)
------------ ------------ ------------ ------------ ------------
Increase (decrease) in net assets from operations $ 16,886,004 $ 1,536,918 $ 1,674,224 $ 4,522,906 $ 2,660,987
============ ============ ============ ============ ============
<CAPTION>
Global Corporate
Bond Bond
Portfolio Portfolio
------------ ------------
<S> <C> <C>
Investment income:
Dividends and capital gains distributions $ 2,582,165 $ 3,808,676
------------ ------------
Total investment income 2,582,165 3,808,676
------------ ------------
Expenses:
Mortality risk charge (267,662) (659,556)
Guarantee death benefit charge (35,688) (87,941)
Expense risk charge (104,091) (256,494)
Distribution expense charge (44,610) (109,925)
------------ ------------
Total expenses (452,051) (1,113,916)
------------ ------------
Net investment income (loss) 2,130,114 2,694,760
------------ ------------
Net realized gains (losses) from securities
transactions:
Proceeds from shares sold 1,375,121 1,252,158
Cost of shares sold (1,415,145) (1,302,574)
------------ ------------
Net realized gains (losses) from
securities transactions (40,024) (50,416)
------------ ------------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period 603,670 801,699
End of period (2,141,064) (3,936,266)
------------ ------------
Change in net unrealized appreciation/
depreciation of investments (2,744,734) (4,737,965)
------------ ------------
Increase (decrease) in net assets from operations $ (654,644) $ (2,093,621)
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 43
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
NOVEMBER 30, 1999
(Continued)
<TABLE>
<CAPTION>
International Emerging Real "Dogs" of
Growth & Income Markets Estate Wall Street
Portfolio Portfolio Portfolio Portfolio
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 2,309,922 $ 35,323 $ 1,268,769 $ 2,456,301
--------------- --------------- --------------- ---------------
Total investment income 2,309,922 35,323 1,268,769 2,456,301
--------------- --------------- --------------- ---------------
Expenses:
Mortality risk charge (1,043,018) (237,745) (320,216) (630,844)
Guarantee death benefit charge (139,069) (31,699) (42,695) (84,113)
Expense risk charge (405,618) (92,456) (124,528) (245,328)
Distribution expense charge (173,837) (39,625) (53,370) (105,141)
--------------- --------------- --------------- ---------------
Total expenses (1,761,542) (401,525) (540,809) (1,065,426)
--------------- --------------- --------------- ---------------
Net investment income (loss) 548,380 (366,202) 727,960 1,390,875
--------------- --------------- --------------- ---------------
Net realized gains (losses) from securities
transactions:
Proceeds from shares sold 115,952,248 8,808,655 9,034,362 2,142,706
Cost of shares sold (107,156,772) (8,346,538) (9,994,372) (2,109,651)
--------------- --------------- --------------- ---------------
Net realized gains (losses) from
securities transactions 8,795,476 462,117 (960,010) 33,055
--------------- --------------- --------------- ---------------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period 252,067 (3,748,568) (3,138,635) 1,562,918
End of period 10,710,117 6,357,482 (8,008,754) (5,355,362)
--------------- --------------- --------------- ---------------
Change in net unrealized appreciation/
depreciation of investments 10,458,050 10,106,050 (4,870,119) (6,918,280)
--------------- --------------- --------------- ---------------
Increase (decrease) in net assets from operations $ 19,801,906 $ 10,201,965 $ (5,102,169) $ (5,494,350)
=============== =============== =============== ===============
<CAPTION>
MFS Mid-Cap Cash
Growth Management
Portfolio Portfolio TOTAL
--------------- --------------- ---------------
<S> <C> <C> <C>
Investment income:
Dividends and capital gains distributions $ 0 $ 3,864,891 $ 272,150,428
--------------- --------------- ---------------
Total investment income 0 3,864,891 272,150,428
--------------- --------------- ---------------
Expenses:
Mortality risk charge (46,154) (1,179,294) (36,702,398)
Guarantee death benefit charge (6,154) (157,239) (4,893,654)
Expense risk charge (17,949) (458,614) (14,273,154)
Distribution expense charge (7,692) (196,550) (6,117,065)
--------------- --------------- ---------------
Total expenses (77,949) (1,991,697) (61,986,271)
--------------- --------------- ---------------
Net investment income (loss) (77,949) 1,873,194 210,164,157
--------------- --------------- ---------------
Net realized gains (losses) from securities
transactions:
Proceeds from shares sold 4,767,638 635,576,743 1,324,208,715
Cost of shares sold (4,647,745) (633,363,925) (1,281,056,846)
--------------- --------------- ---------------
Net realized gains (losses) from
securities transactions 119,893 2,212,818 43,151,869
--------------- --------------- ---------------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period 0 687,367 79,758,350
End of period 4,024,528 680,049 507,404,927
--------------- --------------- ---------------
Change in net unrealized appreciation/
depreciation of investments 4,024,528 (7,318) 427,646,577
--------------- --------------- ---------------
Increase (decrease) in net assets from operations $ 4,066,472 $ 4,078,694 $ 680,962,603
=============== =============== ===============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 44
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE ONE MONTH ENDED
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Government
Capital Natural and
Appreciation Growth Resources Quality Bond
Portfolio Portfolio Portfolio Portfolio
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ (692,188) $ (278,346) $ (17,666) $ (202,183)
Net realized gains (losses) from
securities transactions 1,391,191 32,565 18,660 (25,218)
Change in net unrealized appreciation/
depreciation of investments 90,502,370 20,014,712 1,278,863 (882,611)
------------- ------------- ------------- -------------
Increase (decrease) in net assets from operations 91,201,373 19,768,931 1,279,857 (1,110,012)
------------- ------------- ------------- -------------
From capital transactions:
Net proceeds from units sold 8,871,203 3,287,277 202,683 1,797,269
Cost of units redeemed (2,372,698) (974,318) (69,946) (909,068)
Net transfers 14,291,402 5,064,362 (293,800) 3,517,956
------------- ------------- ------------- -------------
Increase (decrease) in net assets
from capital transactions 20,789,907 7,377,321 (161,063) 4,406,157
------------- ------------- ------------- -------------
Increase (decrease) in net assets 111,991,280 27,146,252 1,118,794 3,296,145
Net assets at beginning of period 480,400,313 201,874,465 13,461,238 155,667,206
------------- ------------- ------------- -------------
Net assets at end of period $ 592,391,593 $ 229,020,717 $ 14,580,032 $ 158,963,351
============= ============= ============= =============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 221,171 104,342 17,270 134,876
Units redeemed (59,620) (31,226) (5,916) (68,064)
Units transferred 358,306 161,108 (26,052) 264,218
------------- ------------- ------------- -------------
Increase (decrease) in units outstanding 519,857 234,224 (14,698) 331,030
Beginning units 13,201,318 6,788,755 1,180,750 11,644,751
------------- ------------- ------------- -------------
Ending units 13,721,175 7,022,979 1,166,052 11,975,781
============= ============= ============= =============
<CAPTION>
International
Diversified Global Aggressive
Equities Equities Growth
Portfolio Portfolio Portfolio
------------- ------------- -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ (147,890) $ (168,754) $ (199,792)
Net realized gains (losses) from
securities transactions 1,315,094 301,701 467,904
Change in net unrealized appreciation/
depreciation of investments 9,228,202 12,377,102 36,372,660
------------- ------------- -------------
Increase (decrease) in net assets from operations 10,395,406 12,510,049 36,640,772
------------- ------------- -------------
From capital transactions:
Net proceeds from units sold 1,284,655 2,125,576 4,206,604
Cost of units redeemed (407,506) (648,995) (602,988)
Net transfers 1,907,870 9,661,146 12,196,463
------------- ------------- -------------
Increase (decrease) in net assets
from capital transactions 2,785,019 11,137,727 15,800,079
------------- ------------- -------------
Increase (decrease) in net assets 13,180,425 23,647,776 52,440,851
Net assets at beginning of period 108,270,790 118,942,147 126,037,673
------------- ------------- -------------
Net assets at end of period $ 121,451,215 $ 142,589,923 $ 178,478,524
============= ============= =============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 80,154 84,013 187,480
Units redeemed (25,588) (25,677) (27,443)
Units transferred 132,733 392,113 557,865
------------- ------------- -------------
Increase (decrease) in units outstanding 187,299 450,449 717,902
Beginning units 6,989,492 4,915,631 6,626,618
------------- ------------- -------------
Ending units 7,176,791 5,366,080 7,344,520
============= ============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 45
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE ONE MONTH ENDED
DECEMBER 31, 1999
(Continued)
<TABLE>
<CAPTION>
Venture Federated Putnam MFS Growth
Value Value Growth & Income
Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ (1,135,429) $ (141,456) $ (437,099) $ (125,921)
Net realized gains (losses) from
securities transactions 138,421 (183) 147,936 (14,749)
Change in net unrealized appreciation/
depreciation of investments 43,996,267 3,176,557 37,757,729 4,908,377
------------ ------------ ------------ ------------
Increase (decrease) in net assets from operations 42,999,259 3,034,918 37,468,566 4,767,707
------------ ------------ ------------ ------------
From capital transactions:
Net proceeds from units sold 9,115,340 1,124,247 5,653,487 2,990,649
Cost of units redeemed (3,506,341) (547,731) (1,688,270) (439,946)
Net transfers 14,498,677 816,690 6,403,555 4,086,235
------------ ------------ ------------ ------------
Increase (decrease) in net assets
from capital transactions 20,107,676 1,393,206 10,368,772 6,636,938
------------ ------------ ------------ ------------
Increase (decrease) in net assets 63,106,935 4,428,124 47,837,338 11,404,645
Net assets at beginning of period 855,880,689 108,715,271 315,070,448 92,681,421
------------ ------------ ------------ ------------
Net assets at end of period $918,987,624 $113,143,395 $362,907,786 $104,086,066
============ ============ ============ ============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 336,177 68,312 188,645 130,044
Units redeemed (130,007) (33,344) (56,590) (19,056)
Units transferred 536,253 48,165 215,924 177,224
------------ ------------ ------------ ------------
Increase (decrease) in units outstanding 742,423 83,133 347,979 288,212
Beginning units 32,218,454 6,616,993 11,111,497 4,109,201
------------ ------------ ------------ ------------
Ending units 32,960,877 6,700,126 11,459,476 4,397,413
============ ============ ============ ============
<CAPTION>
Alliance Growth- Asset
Growth Income Allocation
Portfolio Portfolio Portfolio
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ (1,505,473) $ (857,130) $ (297,100)
Net realized gains (losses) from
securities transactions 151,338 353,790 (46,225)
Change in net unrealized appreciation/
depreciation of investments 108,832,159 54,709,493 8,763,625
-------------- ------------ ------------
Increase (decrease) in net assets from operations 107,478,024 54,206,153 8,420,300
-------------- ------------ ------------
From capital transactions:
Net proceeds from units sold 20,739,442 10,905,023 1,068,934
Cost of units redeemed (5,449,511) (2,906,451) (1,038,355)
Net transfers 25,346,399 12,696,748 611,763
-------------- ------------ ------------
Increase (decrease) in net assets
from capital transactions 40,636,330 20,695,320 642,342
-------------- ------------ ------------
Increase (decrease) in net assets 148,114,354 74,901,473 9,062,642
Net assets at beginning of period 1,100,795,861 631,444,819 225,363,736
-------------- ------------ ------------
Net assets at end of period $1,248,910,215 $706,346,292 $234,426,378
============== ============ ============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 447,481 317,349 54,973
Units redeemed (118,547) (84,811) (53,377)
Units transferred 547,052 367,683 30,885
------------ ------------ ------------
Increase (decrease) in units outstanding 875,986 600,221 32,481
Beginning units 24,844,446 19,070,913 11,800,263
------------ ------------ ------------
Ending units 25,720,432 19,671,134 11,832,744
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 46
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE ONE MONTH ENDED
DECEMBER 31, 1999
(Continued)
<TABLE>
<CAPTION>
SunAmerica MFS Total Worldwide
Balanced Return Utility High Income
Portfolio Portfolio Portfolio Portfolio
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ (286,245) $ (116,128) $ (80,335) $ (57,230)
Net realized gains (losses) from
securities transactions 0 (1,480) (314) (125,350)
Change in net unrealized appreciation/
depreciation of investments 17,248,122 672,465 (134,566) 1,515,480
------------- ------------ ------------ ------------
Increase (decrease) in net assets
from operations 16,961,877 554,857 (215,215) 1,332,900
------------- ------------ ------------ ------------
From capital transactions:
Net proceeds from units sold 4,616,016 1,643,833 545,836 173,039
Cost of units redeemed (1,274,264) (318,090) (261,218) (288,003)
Net transfers 10,195,433 4,453,466 1,952,495 (347,550)
------------- ------------ ------------ ------------
Increase (decrease) in net assets
from capital transactions 13,537,185 5,779,209 2,237,113 (462,514)
------------- ------------ ------------ ------------
Increase (decrease) in net assets 30,499,062 6,334,066 2,021,898 870,386
Net assets at beginning of period 205,718,611 87,688,865 61,911,394 43,460,618
------------- ------------ ------------ ------------
Net assets at end of period $ 236,217,673 $ 94,022,931 $ 63,933,292 $ 44,331,004
============= ============ ============ ============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 241,772 89,208 36,355 11,093
Units redeemed (66,782) (17,229) (17,421) (18,533)
Units transferred 536,726 241,483 130,146 (22,054)
------------- ------------ ------------ ------------
Increase (decrease) in units outstanding 711,716 313,462 149,080 (29,494)
Beginning units 11,283,979 4,740,884 4,083,169 2,853,924
------------- ------------ ------------ ------------
Ending units 11,995,695 5,054,346 4,232,249 2,824,430
============= ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
High-Yield Global Corporate
Bond Bond Bond
Portfolio Portfolio Portfolio
------------- ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ (153,103) $ (49,350) $ (117,886)
Net realized gains (losses) from
securities transactions (98,036) (22,791) (41,857)
Change in net unrealized appreciation/
depreciation of investments 1,575,087 2,543 (42,170)
------------- ------------ ------------
Increase (decrease) in net assets
from operations 1,323,948 (69,598) (201,913)
------------- ------------ ------------
From capital transactions:
Net proceeds from units sold 1,339,041 406,148 757,699
Cost of units redeemed (564,751) (216,171) (490,413)
Net transfers 1,868,254 626,734 688,487
------------- ------------ ------------
Increase (decrease) in net assets
from capital transactions 2,642,544 816,711 955,773
------------- ------------ ------------
Increase (decrease) in net assets 3,966,492 747,113 753,860
Net assets at beginning of period 116,458,898 37,993,494 91,081,954
------------- ------------ ------------
Net assets at end of period $ 120,425,390 $ 38,740,607 $ 91,835,814
============= ============ ============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 90,225 28,765 59,237
Units redeemed (38,100) (15,303) (38,325)
Units transferred 126,188 44,467 53,851
------------- ------------ ------------
Increase (decrease) in units outstanding 178,313 57,929 74,763
Beginning units 7,918,425 2,692,066 7,121,685
------------- ------------ ------------
Ending units 8,096,738 2,749,995 7,196,448
============= ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 47
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE ONE MONTH ENDED
DECEMBER 31, 1999
(Continued)
<TABLE>
<CAPTION>
International Emerging Real "Dogs" of
Growth & Income Markets Estate Wall Street
Portfolio Portfolio Portfolio Portfolio
--------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 15,182,527 $ (65,036) $ (43,268) $ (101,953)
Net realized gains (losses) from
securities transactions 723,616 207,908 (148,854) (121,114)
Change in net unrealized appreciation/
depreciation of investments (7,856,931) 8,966,053 1,791,976 (957,562)
------------- ------------ ------------ ------------
Increase (decrease) in net assets
from operations 8,049,212 9,108,925 1,599,854 (1,180,629)
------------- ------------ ------------ ------------
From capital transactions:
Net proceeds from units sold 2,535,222 1,171,741 212,637 921,223
Cost of units redeemed (787,781) (198,401) (207,494) (243,158)
Net transfers 6,671,664 3,459,378 313,877 (33,796)
------------- ------------ ------------ ------------
Increase (decrease) in net assets
from capital transactions 8,419,105 4,432,718 319,020 644,269
------------- ------------ ------------ ------------
Increase (decrease) in net assets 16,468,317 13,541,643 1,918,874 (536,360)
Net assets at beginning of period 156,485,672 43,682,791 33,664,724 81,021,429
------------- ------------ ------------ ------------
Net assets at end of period $ 172,953,989 $ 57,224,434 $ 35,583,598 $ 80,485,069
============= ============ ============ ============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 182,111 116,673 25,382 103,201
Units redeemed (56,680) (20,504) (24,260) (27,005)
Units transferred 486,348 357,089 32,888 (3,061)
------------- ------------ ------------ ------------
Increase (decrease) in units outstanding 611,779 453,258 34,010 73,135
Beginning units 11,676,801 4,857,715 3,959,755 8,879,703
------------- ------------ ------------ ------------
Ending units 12,288,580 5,310,973 3,993,765 8,952,838
============= ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
MFS Mid-Cap Cash
Growth Management
Portfolio Portfolio TOTAL
------------ ------------- ---------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 560,612 $ (221,561) $ 8,244,617
Net realized gains (losses) from
securities transactions 102,643 240,762 4,947,358
Change in net unrealized appreciation/
depreciation of investments 4,452,357 638,080 458,906,439
------------ ------------- ---------------
Increase (decrease) in net assets
from operations 5,115,612 657,281 472,098,414
------------ ------------- ---------------
From capital transactions:
Net proceeds from units sold 2,897,330 5,851,518 96,443,672
Cost of units redeemed (134,821) (2,686,485) (29,233,174)
Net transfers 4,995,343 5,700,242 151,349,493
------------ ------------- ---------------
Increase (decrease) in net assets
from capital transactions 7,757,852 8,865,275 218,559,991
------------ ------------- ---------------
Increase (decrease) in net assets 12,873,464 9,522,556 690,658,405
Net assets at beginning of period 31,376,575 164,148,572 5,689,299,674
------------ ------------- ---------------
Net assets at end of period $ 44,250,039 $ 173,671,128 $ 6,379,958,079
============ ============= ===============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 188,935 478,595
Units redeemed (8,997) (219,565)
Units transferred 329,053 467,198
------------ -------------
Increase (decrease) in units outstanding 508,991 726,228
Beginning units 2,204,857 13,454,926
------------ -------------
Ending units 2,713,848 14,181,154
============ =============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 48
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
Government
Capital Natural and
Appreciation Growth Resources Quality Bond
Portfolio Portfolio Portfolio Portfolio
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 11,910,546 $ 9,076,697 $ 1,986 $ 5,147,853
Net realized gains (losses) from
securities transactions 9,105,882 1,001,755 145,919 (427,260)
Change in net unrealized appreciation/
depreciation of investments 107,156,907 15,355,419 1,352,660 (6,972,025)
------------- ------------- ------------ -------------
Increase (decrease) in net assets
from operations 128,173,335 25,433,871 1,500,565 (2,251,432)
------------- ------------- ------------ -------------
From capital transactions:
Net proceeds from units sold 69,305,659 47,146,379 1,816,831 31,284,336
Cost of units redeemed (13,282,552) (6,605,132) (479,685) (5,928,638)
Net transfers 121,677,384 46,109,493 4,655,997 54,720,584
------------- ------------- ------------ -------------
Increase in net assets
from capital transactions 177,700,491 86,650,740 5,993,143 80,076,282
------------- ------------- ------------ -------------
Increase in net assets 305,873,826 112,084,611 7,493,708 77,824,850
Net assets at beginning of period 174,526,487 89,789,854 5,967,530 77,842,356
------------- ------------- ------------ -------------
Net assets at end of period $ 480,400,313 $ 201,874,465 $ 13,461,238 $ 155,667,206
============= ============= ============ =============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 2,352,138 1,708,542 168,874 2,324,847
Units redeemed (441,210) (236,228) (44,221) (441,118)
Units transferred 3,933,528 1,638,333 414,618 4,063,451
------------- ------------- ------------ -------------
Increase in units outstanding 5,844,456 3,110,647 539,271 5,947,180
Beginning units 7,356,862 3,678,108 641,479 5,697,571
------------- ------------- ------------ -------------
Ending units 13,201,318 6,788,755 1,180,750 11,644,751
============= ============= ============ =============
</TABLE>
<TABLE>
<CAPTION>
International
Diversified Global Aggressive
Equities Equities Growth
Portfolio Portfolio Portfolio
------------- ------------- -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 775,112 $ 6,030,217 $ 5,269,296
Net realized gains (losses) from
securities transactions 6,972,916 570,688 1,842,053
Change in net unrealized appreciation/
depreciation of investments 5,767,673 12,410,348 22,904,216
------------- ------------- -------------
Increase (decrease) in net assets
from operations 13,515,701 19,011,253 30,015,565
------------- ------------- -------------
From capital transactions:
Net proceeds from units sold 13,474,668 21,163,425 22,485,712
Cost of units redeemed (3,304,436) (3,174,599) (2,677,820)
Net transfers 23,416,783 32,642,222 43,063,414
------------- ------------- -------------
Increase in net assets
from capital transactions 33,587,015 50,631,048 62,871,306
------------- ------------- -------------
Increase in net assets 47,102,716 69,642,301 92,886,871
Net assets at beginning of period 61,168,074 49,299,846 33,150,802
------------- ------------- -------------
Net assets at end of period $ 108,270,790 $ 118,942,147 $ 126,037,673
============= ============= =============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 950,384 986,539 1,432,227
Units redeemed (232,642) (146,981) (169,014)
Units transferred 1,752,205 1,509,161 2,569,218
------------- ------------- -------------
Increase in units outstanding 2,469,947 2,348,719 3,832,431
Beginning units 4,519,545 2,566,912 2,794,187
------------- ------------- -------------
Ending units 6,989,492 4,915,631 6,626,618
============= ============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 49
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
NOVEMBER 30, 1999
(Continued)
<TABLE>
<CAPTION>
Venture Federated Putnam MFS Growth
Value Value Growth & Income
Portfolio Portfolio Portfolio Portfolio
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 21,917,768 $ 3,227,048 $ 4,822,541 $ 13,031,907
Net realized gains (losses) from
securities transactions 3,101,311 1,382,135 259,311 50,436
Change in net unrealized appreciation/
depreciation of investments 50,626,603 (3,846,049) 40,706,491 (12,058,373)
------------- ------------- ------------- ------------
Increase (decrease) in net assets
from operations 75,645,682 763,134 45,788,343 1,023,970
------------- ------------- ------------- ------------
From capital transactions:
Net proceeds from units sold 129,086,971 19,743,459 80,431,272 36,083,764
Cost of units redeemed (27,710,746) (4,490,393) (9,100,608) (1,799,360)
Net transfers 194,467,200 32,691,119 87,608,460 43,170,189
------------- ------------- ------------- ------------
Increase in net assets
from capital transactions 295,843,425 47,944,185 158,939,124 77,454,593
------------- ------------- ------------- ------------
Increase in net assets 371,489,107 48,707,319 204,727,467 78,478,563
Net assets at beginning of period 484,391,582 60,007,952 110,342,981 14,202,858
------------- ------------- ------------- ------------
Net assets at end of period $ 855,880,689 $ 108,715,271 $ 315,070,448 $ 92,681,421
============= ============= ============= ============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 5,021,122 1,175,234 3,118,051 1,586,052
Units redeemed (1,071,080) (267,288) (349,272) (79,517)
Units transferred 7,534,041 1,925,799 3,393,094 1,908,590
------------- ------------- ------------- ------------
Increase in units outstanding 11,484,083 2,833,745 6,161,873 3,415,125
Beginning units 20,734,371 3,783,248 4,949,624 694,076
------------- ------------- ------------- ------------
Ending units 32,218,454 6,616,993 11,111,497 4,109,201
============= ============= ============= ============
</TABLE>
<TABLE>
<CAPTION>
Alliance Growth- Asset
Growth Income Allocation
Portfolio Portfolio Portfolio
--------------- ------------- -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 61,828,800 $ 19,442,866 $ 14,562,279
Net realized gains (losses) from
securities transactions 7,029,767 3,108,874 (212,930)
Change in net unrealized appreciation/
depreciation of investments 114,934,404 74,726,813 (5,163,549)
--------------- ------------- -------------
Increase (decrease) in net assets
from operations 183,792,971 97,278,553 9,185,800
--------------- ------------- -------------
From capital transactions:
Net proceeds from units sold 242,966,166 127,355,200 21,128,082
Cost of units redeemed (31,653,689) (19,305,894) (9,226,462)
Net transfers 311,928,229 174,525,511 40,366,380
--------------- ------------- -------------
Increase in net assets
from capital transactions 523,240,706 282,574,817 52,268,000
--------------- ------------- -------------
Increase in net assets 707,033,677 379,853,370 61,453,800
Net assets at beginning of period 393,762,184 251,591,449 163,909,936
--------------- ------------- -------------
Net assets at end of period $ 1,100,795,861 $ 631,444,819 $ 225,363,736
=============== ============= =============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 6,019,042 4,193,175 1,131,416
Units redeemed (778,222) (630,061) (492,133)
Units transferred 7,601,975 5,721,597 2,164,458
--------------- ------------- -------------
Increase in units outstanding 12,842,795 9,284,711 2,803,741
Beginning units 12,001,651 9,786,202 8,996,522
--------------- ------------- -------------
Ending units 24,844,446 19,070,913 11,800,263
=============== ============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 50
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
NOVEMBER 30, 1999
(Continued)
<TABLE>
<CAPTION>
SunAmerica MFS Total Worldwide
Balanced Return Utility High Income
Portfolio Portfolio Portfolio Portfolio
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 1,038,359 $ 7,542,171 $ 2,324,094 $ 4,141,359
Net realized gains (losses) from
securities transactions 108 7,023 121,450 (835,797)
Change in net unrealized appreciation/
depreciation of investments 15,847,537 (6,012,276) (771,320) 1,217,344
------------- ------------ ------------ ------------
Increase (decrease) in net assets
from operations 16,886,004 1,536,918 1,674,224 4,522,906
------------- ------------ ------------ ------------
From capital transactions:
Net proceeds from units sold 53,470,616 21,860,070 12,447,951 3,498,929
Cost of units redeemed (6,596,557) (1,995,038) (2,137,570) (1,781,662)
Net transfers 86,675,865 40,508,079 23,613,148 4,235,172
------------- ------------ ------------ ------------
Increase in net assets
from capital transactions 133,549,924 60,373,111 33,923,529 5,952,439
------------- ------------ ------------ ------------
Increase in net assets 150,435,928 61,910,029 35,597,753 10,475,345
Net assets at beginning of period 55,282,683 25,778,836 26,313,641 32,985,273
------------- ------------ ------------ ------------
Net assets at end of period $ 205,718,611 $ 87,688,865 $ 61,911,394 $ 43,460,618
============= ============ ============ ============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 3,095,544 1,175,530 836,231 250,251
Units redeemed (378,819) (107,258) (142,331) (125,840)
Units transferred 5,024,009 2,180,437 1,581,740 299,004
------------- ------------ ------------ ------------
Increase in units outstanding 7,740,734 3,248,709 2,275,640 423,415
Beginning units 3,543,245 1,492,175 1,807,529 2,430,509
------------- ------------ ------------ ------------
Ending units 11,283,979 4,740,884 4,083,169 2,853,924
============= ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
High-Yield Global Corporate
Bond Bond Bond
Portfolio Portfolio Portfolio
------------- ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 9,152,126 $ 2,130,114 $ 2,694,760
Net realized gains (losses) from
securities transactions (644,681) (40,024) (50,416)
Change in net unrealized appreciation/
depreciation of investments (5,846,458) (2,744,734) (4,737,965)
------------- ------------ ------------
Increase (decrease) in net assets
from operations 2,660,987 (654,644) (2,093,621)
------------- ------------ ------------
From capital transactions:
Net proceeds from units sold 16,690,714 7,493,791 14,769,015
Cost of units redeemed (5,524,798) (1,603,734) (3,576,701)
Net transfers 31,272,128 13,428,271 34,199,108
------------- ------------ ------------
Increase in net assets
from capital transactions 42,438,044 19,318,328 45,391,422
------------- ------------ ------------
Increase in net assets 45,099,031 18,663,684 43,297,801
Net assets at beginning of period 71,359,867 19,329,810 47,784,153
------------- ------------ ------------
Net assets at end of period $ 116,458,898 $ 37,993,494 $ 91,081,954
============= ============ ============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 1,141,423 523,697 1,136,617
Units redeemed (377,152) (112,684) (276,352)
Units transferred 2,148,039 938,896 2,628,356
------------- ------------ ------------
Increase in units outstanding 2,912,310 1,349,909 3,488,621
Beginning units 5,006,115 1,342,157 3,633,064
------------- ------------ ------------
Ending units 7,918,425 2,692,066 7,121,685
============= ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 51
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
NOVEMBER 30, 1999
(Continued)
<TABLE>
<CAPTION>
International Emerging Real "Dogs" of
Growth & Income Markets Estate Wall Street
Portfolio Portfolio Portfolio Portfolio
--------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 548,380 $ (366,202) $ 727,960 $ 1,390,875
Net realized gains (losses) from
securities transactions 8,795,476 462,117 (960,010) 33,055
Change in net unrealized appreciation/
depreciation of investments 10,458,050 10,106,050 (4,870,119) (6,918,280)
------------- ------------ ------------ ------------
Increase (decrease) in net assets
from operations 19,801,906 10,201,965 (5,102,169) (5,494,350)
------------- ------------ ------------ ------------
From capital transactions:
Net proceeds from units sold 18,281,360 5,379,448 3,966,703 17,268,910
Cost of units redeemed (4,791,103) (948,361) (1,462,048) (2,960,776)
Net transfers 48,024,228 13,253,871 3,570,410 30,220,688
------------- ------------ ------------ ------------
Increase in net assets
from capital transactions 61,514,485 17,684,958 6,075,065 44,528,822
------------- ------------ ------------ ------------
Increase in net assets 81,316,391 27,886,923 972,896 39,034,472
Net assets at beginning of period 75,169,281 15,795,868 32,691,828 41,986,957
------------- ------------ ------------ ------------
Net assets at end of period $ 156,485,672 $ 43,682,791 $ 33,664,724 $ 81,021,429
============= ============ ============ ============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 1,458,460 719,913 417,566 1,768,746
Units redeemed (378,517) (124,134) (153,462) (302,395)
Units transferred 3,858,595 1,687,620 358,884 3,089,127
------------- ------------ ------------ ------------
Increase in units outstanding 4,938,538 2,283,399 622,988 4,555,478
Beginning units 6,738,263 2,574,316 3,336,767 4,324,225
------------- ------------ ------------ ------------
Ending units 11,676,801 4,857,715 3,959,755 8,879,703
============= ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
MFS Mid-Cap Cash
Growth Management
Portfolio Portfolio TOTAL
------------ ------------- ---------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ (77,949) $ 1,873,194 $ 210,164,157
Net realized gains (losses) from
securities transactions 119,893 2,212,818 43,151,869
Change in net unrealized appreciation/
depreciation of investments 4,024,528 (7,318) 427,646,577
------------ ------------- ---------------
Increase (decrease) in net assets
from operations 4,066,472 4,078,694 680,962,603
------------ ------------- ---------------
From capital transactions:
Net proceeds from units sold 7,415,790 107,614,496 1,153,629,717
Cost of units redeemed (166,957) (22,563,293) (194,848,612)
Net transfers 20,061,270 10,104,667 1,570,209,870
------------ ------------- ---------------
Increase in net assets
from capital transactions 27,310,103 95,155,870 2,528,990,975
------------ ------------- ---------------
Increase in net assets 31,376,575 99,234,564 3,209,953,578
Net assets at beginning of period 0 64,914,008 2,479,346,096
------------ ------------- ---------------
Net assets at end of period $ 31,376,575 $ 164,148,572 $ 5,689,299,674
============ ============= ===============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 615,608 8,960,738
Units redeemed (13,180) (1,874,567)
Units transferred 1,602,429 880,709
------------ -------------
Increase in units outstanding 2,204,857 7,966,880
Beginning units 0 5,488,046
------------ -------------
Ending units 2,204,857 13,454,926
============ =============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 52
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
NOVEMBER 30, 1998
<TABLE>
<CAPTION>
Government
Capital Natural and
Appreciation Growth Resources Quality Bond
Portfolio Portfolio Portfolio Portfolio
------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 9,632,760 $ 3,199,630 $ 68,950 $ 1,474,541
Net realized gains (losses) from
securities transactions (326,913) (201,242) (204,159) 47,241
Change in net unrealized appreciation/
depreciation of investments (1,465,953) 5,142,158 (803,255) 714,247
------------- ------------ ----------- ------------
Increase (decrease) in net assets
from operations 7,839,894 8,140,546 (938,464) 2,236,029
------------- ------------ ----------- ------------
From capital transactions:
Net proceeds from units sold 71,721,210 35,475,742 2,712,488 28,907,989
Cost of units redeemed (2,491,708) (1,447,887) (143,369) (968,073)
Net transfers 67,863,753 31,589,411 2,154,514 42,664,629
------------- ------------ ----------- ------------
Increase in net assets
from capital transactions 137,093,255 65,617,266 4,723,633 70,604,545
------------- ------------ ----------- ------------
Increase in net assets 144,933,149 73,757,812 3,785,169 72,840,574
Net assets at beginning of period 29,593,338 16,032,042 2,182,361 5,001,782
------------- ------------ ----------- ------------
Net assets at end of period $ 174,526,487 $ 89,789,854 $ 5,967,530 $ 77,842,356
============= ============ =========== ============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 3,101,815 1,578,439 257,386 2,175,939
Units redeemed (108,228) (63,877) (14,128) (72,558)
Units transferred 2,971,013 1,374,272 202,275 3,198,932
------------- ------------ ----------- ------------
Increase in units outstanding 5,964,600 2,888,834 445,533 5,302,313
Beginning units 1,392,262 789,274 195,946 395,258
------------- ------------ ----------- ------------
Ending units 7,356,862 3,678,108 641,479 5,697,571
============= ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
International
Diversified Global Aggressive
Equities Equities Growth
Portfolio Portfolio Portfolio
------------- ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 511,389 $ 1,324,274 $ (292,123)
Net realized gains (losses) from
securities transactions 1,386,651 (219,761) (191,856)
Change in net unrealized appreciation/
depreciation of investments 2,059,909 904,533 1,478,610
------------ ------------ ------------
Increase (decrease) in net assets
from operations 3,957,949 2,009,046 994,631
------------ ------------ ------------
From capital transactions:
Net proceeds from units sold 21,091,841 19,315,338 13,649,199
Cost of units redeemed (1,004,862) (640,259) (828,570)
Net transfers 25,033,100 18,470,077 9,885,207
------------ ------------ ------------
Increase in net assets
from capital transactions 45,120,079 37,145,156 22,705,836
------------ ------------ ------------
Increase in net assets 49,078,028 39,154,202 23,700,467
Net assets at beginning of period 12,090,046 10,145,644 9,450,335
------------ ------------ ------------
Net assets at end of period $ 61,168,074 $ 49,299,846 $ 33,150,802
============ ============ ============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 1,598,306 1,033,453 1,177,432
Units redeemed (75,427) (34,289) (72,238)
Units transferred 1,955,854 967,454 867,888
------------ ------------ ------------
Increase in units outstanding 3,478,733 1,966,618 1,973,082
Beginning units 1,040,812 600,294 821,105
------------ ------------ ------------
Ending units 4,519,545 2,566,912 2,794,187
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 53
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
NOVEMBER 30, 1998
(Continued)
<TABLE>
<CAPTION>
Venture Federated Putnam MFS Growth
Value Value Growth & Income
Portfolio Portfolio Portfolio Portfolio
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 2,925,516 $ 48,490 $ 4,712,089 $ 841,929
Net realized gains (losses) from
securities transactions (172,736) 28,529 (107,567) (17,215)
Change in net unrealized appreciation/
depreciation of investments 19,867,377 4,160,013 3,964,873 276,080
------------- ------------ ------------- ------------
Increase (decrease) in net assets
from operations 22,620,157 4,237,032 8,569,395 1,100,794
------------- ------------ ------------- ------------
From capital transactions:
Net proceeds from units sold 208,314,099 26,931,209 49,959,863 5,669,893
Cost of units redeemed (7,851,820) (1,132,439) (1,645,834) (278,400)
Net transfers 170,105,124 19,944,991 38,106,584 4,341,304
------------- ------------ ------------- ------------
Increase in net assets
from capital transactions 370,567,403 45,743,761 86,420,613 9,732,797
------------- ------------ ------------- ------------
Increase in net assets 393,187,560 49,980,793 94,990,008 10,833,591
Net assets at beginning of period 91,204,022 10,027,159 15,352,973 3,369,267
------------- ------------ ------------- ------------
Net assets at end of period $ 484,391,582 $ 60,007,952 $ 110,342,981 $ 14,202,858
============= ============ ============= ============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 9,205,602 1,800,123 2,384,765 294,266
Units redeemed (349,256) (74,877) (78,007) (14,370)
Units transferred 7,596,146 1,321,669 1,811,688 223,079
------------- ------------ ------------- ------------
Increase in units outstanding 16,452,492 3,046,915 4,118,446 502,975
Beginning units 4,281,879 736,333 831,178 191,101
------------- ------------ ------------- ------------
Ending units 20,734,371 3,783,248 4,949,624 694,076
============= ============ ============= ============
</TABLE>
<TABLE>
<CAPTION>
Alliance Growth- Asset
Growth Income Allocation
Portfolio Portfolio Portfolio
------------- ------------- -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 8,226,469 $ 2,384,817 $ 5,744,063
Net realized gains (losses) from
securities transactions 40,331 (105,651) (25,672)
Change in net unrealized appreciation/
depreciation of investments 38,915,613 19,497,796 (6,467,553)
------------- ------------- -------------
Increase (decrease) in net assets
from operations 47,182,413 21,776,962 (749,162)
------------- ------------- -------------
From capital transactions:
Net proceeds from units sold 156,292,588 102,300,459 71,072,209
Cost of units redeemed (7,072,575) (4,333,954) (2,843,383)
Net transfers 146,090,948 90,122,898 69,478,908
------------- ------------- -------------
Increase in net assets
from capital transactions 295,310,961 188,089,403 137,707,734
------------- ------------- -------------
Increase in net assets 342,493,374 209,866,365 136,958,572
Net assets at beginning of period 51,268,810 41,725,084 26,951,364
------------- ------------- -------------
Net assets at end of period $ 393,762,184 $ 251,591,449 $ 163,909,936
============= ============= =============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 5,295,545 4,276,262 3,835,848
Units redeemed (236,519) (178,639) (157,177)
Units transferred 4,850,581 3,739,287 3,819,170
------------- ------------- -------------
Increase in units outstanding 9,909,607 7,836,910 7,497,841
Beginning units 2,092,044 1,949,292 1,498,681
------------- ------------- -------------
Ending units 12,001,651 9,786,202 8,996,522
============= ============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 54
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
NOVEMBER 30, 1998
(Continued)
<TABLE>
<CAPTION>
SunAmerica MFS Total Worldwide
Balanced Return Utility High Income
Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 80,436 $ 752,215 $ 46,948 $ 1,480,150
Net realized gains (losses) from
securities transactions 767 (77,158) 66,229 (344,498)
Change in net unrealized appreciation/
depreciation of investments 3,846,248 624,947 1,363,944 (6,457,714)
------------ ------------ ------------ ------------
Increase (decrease) in net assets
from operations 3,927,451 1,300,004 1,477,121 (5,322,062)
------------ ------------ ------------ ------------
From capital transactions:
Net proceeds from units sold 23,239,334 11,304,259 10,714,120 17,466,056
Cost of units redeemed (821,763) (494,667) (321,498) (766,182)
Net transfers 24,137,415 10,295,638 12,180,126 12,081,287
------------ ------------ ------------ ------------
Increase in net assets
from capital transactions 46,554,986 21,105,230 22,572,748 28,781,161
------------ ------------ ------------ ------------
Increase in net assets 50,482,437 22,405,234 24,049,869 23,459,099
Net assets at beginning of period 4,800,246 3,373,602 2,263,772 9,526,174
------------ ------------ ------------ ------------
Net assets at end of period $ 55,282,683 $ 25,778,836 $ 26,313,641 $ 32,985,273
============ ============ ============ ============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 1,595,594 684,178 777,520 1,095,112
Units redeemed (55,510) (29,447) (23,068) (52,697)
Units transferred 1,640,025 619,053 875,459 791,786
------------ ------------ ------------ ------------
Increase in units outstanding 3,180,109 1,273,784 1,629,911 1,834,201
Beginning units 363,136 218,391 177,618 596,308
------------ ------------ ------------ ------------
Ending units 3,543,245 1,492,175 1,807,529 2,430,509
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
High-Yield Global Corporate
Bond Bond Bond
Portfolio Portfolio Portfolio
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ 1,151,514 $ 317,911 $ 153,322
Net realized gains (losses) from
securities transactions (213,441) 81,256 4,182
Change in net unrealized appreciation/
depreciation of investments (4,404,786) 557,677 735,861
------------ ------------ ------------
Increase (decrease) in net assets
from operations (3,466,713) 956,844 893,365
------------ ------------ ------------
From capital transactions:
Net proceeds from units sold 42,561,001 7,360,275 22,508,270
Cost of units redeemed (1,599,144) (442,454) (965,054)
Net transfers 22,740,488 9,053,497 21,232,066
------------ ------------ ------------
Increase in net assets
from capital transactions 63,702,345 15,971,318 42,775,282
------------ ------------ ------------
Increase in net assets 60,235,632 16,928,162 43,668,647
Net assets at beginning of period 11,124,235 2,401,648 4,115,506
------------ ------------ ------------
Net assets at end of period $ 71,359,867 $ 19,329,810 $ 47,784,153
============ ============ ============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 2,810,972 534,729 1,742,472
Units redeemed (107,339) (31,521) (74,403)
Units transferred 1,543,626 655,386 1,636,695
------------ ------------ ------------
Increase in units outstanding 4,247,259 1,158,594 3,304,764
Beginning units 758,856 183,563 328,300
------------ ------------ ------------
Ending units 5,006,115 1,342,157 3,633,064
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 55
VARIABLE SEPARATE ACCOUNT
(Portion Relating to the POLARIS II Variable Annuity)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
NOVEMBER 30, 1998
(Continued)
<TABLE>
<CAPTION>
International Emerging Real
Growth & Income Markets Estate
Portfolio Portfolio Portfolio
--------------- ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ (476,937) $ (112,661) $ (150,771)
Net realized gains (losses) from
securities transactions 705,318 (232,481) (52,161)
Change in net unrealized appreciation/
depreciation of investments 429,721 (2,824,133) (3,433,118)
------------ ------------ ------------
Increase (decrease) in net assets
from operations 658,102 (3,169,275) (3,636,050)
------------ ------------ ------------
From capital transactions:
Net proceeds from units sold 28,356,252 7,726,541 16,657,991
Cost of units redeemed (1,031,779) (312,814) (680,765)
Net transfers 33,650,652 6,265,150 10,198,411
------------ ------------ ------------
Increase in net assets
from capital transactions 60,975,125 13,678,877 26,175,637
------------ ------------ ------------
Increase in net assets 61,633,227 10,509,602 22,539,587
Net assets at beginning of period 13,536,054 5,286,266 10,152,241
------------ ------------ ------------
Net assets at end of period $ 75,169,281 $ 15,795,868 $ 32,691,828
============ ============ ============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 2,490,709 1,042,154 1,513,224
Units redeemed (92,993) (45,374) (64,997)
Units transferred 3,030,421 914,324 1,001,219
------------ ------------ ------------
Increase in units outstanding 5,428,137 1,911,104 2,449,446
Beginning units 1,310,126 663,212 887,321
------------ ------------ ------------
Ending units 6,738,263 2,574,316 3,336,767
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
"Dogs" of Cash
Wall Street Management
Portfolio Portfolio TOTAL
------------ ------------ ---------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment income (loss) $ (182,697) $ 630,687 $ 44,492,911
Net realized gains (losses) from
securities transactions (2,505) 175,674 41,162
Change in net unrealized appreciation/
depreciation of investments 1,562,918 593,790 80,839,803
------------ ------------ ---------------
Increase (decrease) in net assets
from operations 1,377,716 1,400,151 125,373,876
------------ ------------ ---------------
From capital transactions:
Net proceeds from units sold 21,886,112 97,871,143 1,121,065,481
Cost of units redeemed (263,684) (3,830,114) (44,213,051)
Net transfers 18,986,813 (47,835,079) 868,837,912
------------ ------------ ---------------
Increase in net assets
from capital transactions 40,609,241 46,205,950 1,945,690,342
------------ ------------ ---------------
Increase in net assets 41,986,957 47,606,101 2,071,064,218
Net assets at beginning of period 0 17,307,907 408,281,878
------------ ------------ ---------------
Net assets at end of period $ 41,986,957 $ 64,914,008 $ 2,479,346,096
============ ============ ===============
ANALYSIS OF INCREASE (DECREASE)
IN UNITS OUTSTANDING:
Units sold 2,316,059 8,397,502
Units redeemed (28,630) (327,207)
Units transferred 2,036,796 (4,096,539)
------------ ------------
Increase in units outstanding 4,324,225 3,973,756
Beginning units 0 1,514,290
------------ ------------
Ending units 4,324,225 5,488,046
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 56
VARIABLE SEPARATE ACCOUNT
(PORTION RELATING TO THE POLARIS II VARIABLE ANNUITY)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Variable Separate Account (Portion Relating to the POLARIS II
Variable Annuity) of Anchor National Life Insurance Company (the
"Separate Account") is a segregated investment account of Anchor
National Life Insurance Company (the "Company"). The Company is an
indirect, wholly owned subsidiary of American International Group,
Inc. ("AIG"), an international insurance and financial services
company. At December 31, 1998, the Company was a wholly owned
indirect subsidiary of SunAmerica Inc., a Maryland corporation. On
January 1, 1999, SunAmerica Inc. merged with and into AIG in a
tax-free reorganization that has been treated as a pooling of
interests for accounting purposes. Thus, SunAmerica Inc. ceased to
exist on that date. However, immediately prior to the effectiveness
of the merger, substantially all of the net assets of SunAmerica Inc.
were contributed to a newly formed subsidiary of AIG named SunAmerica
Holdings, Inc., a Delaware corporation. SunAmerica Holdings, Inc.
subsequently changed its name to SunAmerica Inc. The Separate Account
is registered as a segregated unit investment trust pursuant to the
provisions of the Investment Company Act of 1940, as amended.
The Separate Account is composed of twenty-seven variable portfolios
(the "Variable Accounts"). Each of the Variable Accounts is invested
solely in the shares of either (1) one of the four currently
available investment portfolios of Anchor Series Trust ("Anchor
Trust") or (2) one of the twenty-three currently available investment
portfolios of SunAmerica Series Trust ("SunAmerica Trust"). The
Anchor Trust and the SunAmerica Trust (the "Trusts") are each
diversified, open-end, affiliated investment companies, which retain
investment advisors to assist in the investment activities of the
Trusts. The participant may elect to have payments allocated to any
of seven guaranteed-interest funds of the Company (the "General
Account"), which are not a part of the Separate Account. If no
election is made, the payments will be invested according to the
contracholder's last allocation instructions. The financial
statements include balances allocated by the participant to the
twenty-seven Variable Accounts and do not include balances allocated
to the General Account.
The inception date of the Government Bond and Global Bond Portfolios
was June 11, 1997. The inception date of the MFS Total Return
Portfolio was June 10, 1997. The inception date of the Corporate
Bond, High-Yield Bond, and Aggressive Growth Portfolios was June 9,
1997. The inception date of the Utility Portfolio was June 6, 1997.
The inception date of the Cash Management, Worldwide High Income,
SunAmerica Balanced, and Emerging Markets Portfolios was June 5,
1997. The inception date of the Natural Resources, MFS Growth &
Income, Federated Value, International Diversified Equities,
International Growth & Income, and Real Estate Portfolios was June 4,
1997. The inception date of the Venture Value and Alliance Growth
Portfolios was June 2, 1997. The inception date of the "Dogs" of Wall
Street Portfolio was April 1, 1998. The inception date of the MFS
Mid-Cap Growth
1
<PAGE> 57
VARIABLE SEPARATE ACCOUNT
(PORTION RELATING TO THE POLARIS II VARIABLE ANNUITY)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Portfolio was April 5, 1999. The inception date of the remaining
portfolios was June 3, 1997.
The investment objectives and policies of the four portfolios of the
Anchor Trust are summarized below:
The CAPITAL APPRECIATION PORTFOLIO seeks long-term capital
appreciation. This portfolio invests in growth equity securities
which are widely diversified by industry and company 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.
The GROWTH PORTFOLIO seeks capital appreciation. This portfolio
invests in core equity securities that are widely diversified by
industry and company.
The NATURAL RESOURCES PORTFOLIO seeks a total return in excess of the
U.S. rate of inflation as represented by the Consumer Price Index.
This portfolio invests primarily in equity securities of U.S. or
foreign companies that are expected to provide favorable returns in
periods of rising inflation.
The GOVERNMENT AND QUALITY BOND PORTFOLIO seeks relatively high
current income, liquidity and security of principal. This portfolio
invests in obligations issued, guaranteed or insured by the U.S.
Government, its agencies or instrumentalities and in high quality
corporate fixed securities.
Anchor Trust has portfolios in addition to those identified above;
however, none of these other portfolios is currently available for
investment under the Separate Account.
The investment objectives and policies of the twenty-three portfolios
of the SunAmerica Trust are summarized below:
The INTERNATIONAL DIVERSIFIED EQUITIES PORTFOLIO seeks long-term
capital appreciation. This portfolio invests (in accordance with
country weightings as determined by the Subadviser) in common stocks
of foreign issuers which, in the aggregate, replicate broad country
and sector indices.
The GLOBAL EQUITIES PORTFOLIO seeks long-term growth of capital. This
portfolio invests primarily in common stocks or securities of U.S.
and foreign issuers with common stock
2
<PAGE> 58
VARIABLE SEPARATE ACCOUNT
(PORTION RELATING TO THE POLARIS II VARIABLE ANNUITY)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
characteristics which demonstrate the potential for appreciation and
engages in transactions in foreign currencies.
The AGGRESSIVE GROWTH PORTFOLIO seeks capital appreciation. This
portfolio invests primarily in equity securities of high growth
companies including small companies with market capitalizations under
$1 billion.
The VENTURE VALUE PORTFOLIO seeks growth of capital. This portfolio
invests primarily in common stocks of companies with market
capitalizations of at least $5 billion.
The FEDERATED VALUE PORTFOLIO seeks growth of capital and income.
This portfolio invests primarily in the securities of high quality
companies.
The PUTNAM GROWTH PORTFOLIO seeks long-term growth of capital. This
portfolio invests primarily in common stocks or securities with
common stock characteristics that its Subadviser believes have
above-average growth prospects.
The MFS GROWTH AND INCOME PORTFOLIO (PREVIOUSLY KNOWN AS
GROWTH/PHOENIX INVESTMENT COUNSEL PORTFOLIO) seeks reasonable current
income and long-term growth of capital and income. This portfolio
invests primarily in equity securities.
The ALLIANCE GROWTH PORTFOLIO seeks long term growth of capital. This
portfolio invests primarily in common stocks or securities of a
limited number of large, carefully selected, high quality U.S.
companies that are judged likely to achieve superior earnings.
The GROWTH-INCOME PORTFOLIO seeks growth of capital and income. This
portfolio invests primarily in common stocks or securities which
demonstrate the potential for appreciation and/or dividends.
The ASSET ALLOCATION PORTFOLIO seeks high total return (including
income and capital gains) consistent with preservation of capital
over the long term. This portfolio invests in a diversified selection
of common stocks and other securities having common stock
characteristics, bonds and other intermediate and long-term
fixed-income securities and money market instruments (debt securities
maturing in one year or less) in any combination.
The SUNAMERICA BALANCED PORTFOLIO seeks to conserve principal. This
portfolio maintains at all times a balanced portfolio of stocks and
bonds, with at least 25% invested in fixed income securities.
3
<PAGE> 59
VARIABLE SEPARATE ACCOUNT
(PORTION RELATING TO THE POLARIS II VARIABLE ANNUITY)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
The MFS TOTAL RETURN PORTFOLIO (PREVIOUSLY KNOWN AS BALANCED/PHOENIX
INVESTMENT COUNSEL PORTFOLIO) seeks reasonable income, long-term
capital growth and conservation of capital. This portfolio invests
primarily in common stocks and fixed-income securities, with an
emphasis on income-producing securities which appear to have some
potential for capital enhancement.
The UTILITY PORTFOLIO seeks high current income and moderate capital
appreciation. This portfolio invests primarily in the equity and debt
securities of utility companies.
The WORLDWIDE HIGH INCOME PORTFOLIO seeks high current income and,
secondarily, capital appreciation. This portfolio invests primarily
in a selection of high-yielding fixed-income securities of issuers
located throughout the world.
The HIGH-YIELD BOND PORTFOLIO seeks a high level of current income
and, secondarily, capital appreciation. This portfolio invests
primarily in intermediate and long-term corporate obligations, with
emphasis on higher-yielding, higher-risk, lower-rated or unrated
securities with a primary focus on "B" rated high-yield bonds.
The GLOBAL BOND PORTFOLIO seeks a high total return, emphasizing
current income and, to a lesser extent, providing opportunities for
capital appreciation. This portfolio invests in high quality
fixed-income securities of U.S. and foreign issuers and engages in
transactions in foreign currencies.
The CORPORATE BOND PORTFOLIO seeks a high total return with only
moderate price risk. This portfolio invests primarily in investment
grade fixed-income securities.
The INTERNATIONAL GROWTH AND INCOME PORTFOLIO seeks growth of capital
with current income as a secondary objective. This portfolio invests
primarily in common stocks traded on markets outside the United
States.
The EMERGING MARKETS PORTFOLIO seeks long-term capital appreciation.
This portfolio invests mainly in the common stocks and other equity
securities of companies that its Subadviser believes have
above-average growth prospects primarily in emerging markets outside
the United States.
The REAL ESTATE PORTFOLIO seeks to achieve total return through a
combination of growth and income. This portfolio invests primarily in
securities of companies principally engaged
4
<PAGE> 60
VARIABLE SEPARATE ACCOUNT
(PORTION RELATING TO THE POLARIS II VARIABLE ANNUITY)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
in or related to the real estate industry or which own significant
real estate assets or which primarily invest in real estate financial
instruments.
The "DOGS" OF WALL STREET PORTFOLIO seeks total return (including
capital appreciation and current income) primarily through the annual
selection of thirty high dividend yielding common stocks from the Dow
Jones Industrial Average and the broader market.
The MFS MID-CAP GROWTH PORTFOLIO seeks long-term growth of capital.
This portfolio invests primarily in equity securities of medium-sized
companies, generally with market capitalizations between $1 billion
and $5 billion, that its Subadvisor believes have above-average
growth potential.
The CASH MANAGEMENT PORTFOLIO seeks high current yield while
preserving capital. This portfolio invests in a diversified selection
of money market instruments.
The SunAmerica Trust has portfolios in addition to those identified
above; however, none of these other portfolios is currently available
for investment under the Separate Account.
Purchases and sales of shares of the portfolios of the Trusts are
valued at the net asset values of the shares on the date the shares
are purchased or sold. Dividends and capital gains distributions are
recorded when received. Realized gains and losses on the sale of
investments in the Trusts are recognized at the date of sale and are
determined on an average cost basis.
Accumulation unit values are computed daily based on the total net
assets of the Variable Accounts.
INCOME PROTECTOR FEATURE: The Income Protector Feature is a "safety
net" which offers the ability to receive a guaranteed fixed minimum
retirement income during the Income Phase. The Income Protector is a
standard feature of your contract at no additional charge. Other
options were previously available under the Income Protector feature.
Generally, if the contract was purchased between November 2, 1998 and
March 31, 1999 the other provisions continue to apply to the
contract. The minimum guaranteed income is determined upon
calculation of the "income benefit base." The "income benefit base"
calculation is equal to the contract's value on the election date,
plus all subsequent purchase payments, less all withdrawals and
applicable fees and charges in an amount proportionate to the amount
by which such withdrawals decrease the contract's value.
5
<PAGE> 61
VARIABLE SEPARATE ACCOUNT
(PORTION RELATING TO THE POLARIS II VARIABLE ANNUITY)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
PRINCIPAL REWARDS PROGRAM: The Principal Rewards Program adds an
amount to the contract (an "Initial Payment Enhancement") each time a
Purchase Payment is submitted. The Initial Payment Enhancement is
calculated as 2.00% of each Purchase Payment. Additionally, an amount
may be added to the contract at a future date (a "Deferred Payment
Enhancement"). For Purchase Payments received by March 31, 2000, the
Current Deferred Payment Enhancement Percentage is 2.00%. After March
31, 2000, the Current Deferred Payment Enhancement Percentage may be
increased, decreased, or eliminated. Purchase Payments may not be
invested in a 6-month or 1 year Dollar Cost Averaging fixed accounts
if participating in the Principal Rewards Program.
2. CHARGES AND DEDUCTIONS
Charges and deductions are applied against the current value of the
Separate Account and are paid as follows:
WITHDRAWAL CHARGE: The contract value may be withdrawn at any time
during the accumulation period. Purchase payments that are no longer
subject to the withdrawal charge and not previously withdrawn and
earnings in the contract may be withdrawn free of withdrawal charges
at any time. In addition, there is a free withdrawal amount for the
first withdrawal during a contract year after the first contract
year. The free withdrawal amount is the greater of earnings in the
contract or 10% of the purchase payments that have been invested for
at least one year, and not withdrawn, less any withdrawals made
during the year. Should a withdrawal exceed the free withdrawal
amount, a withdrawal charge, in certain circumstances, is imposed and
paid to the Company.
Withdrawal charges vary in amount depending upon the number of years
since the purchase payment being withdrawn was made and also vary
according to participation in the Principal Rewards Program. The
withdrawal charge is deducted from the remaining contract value so
that the actual reduction in contract value as a result of the
withdrawal will be greater than the withdrawal amount requested and
paid. For purposes of determining the withdrawal charge, withdrawals
will be allocated first to investment income, if any (which may
generally be withdrawn free of a withdrawal charge), and then to the
oldest purchase payments first so that all withdrawals are allocated
to purchase payments to which the lowest (if any) withdrawal charge
applies.
6
<PAGE> 62
VARIABLE SEPARATE ACCOUNT
(PORTION RELATING TO THE POLARIS II VARIABLE ANNUITY)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
CHARGES AND DEDUCTIONS (continued)
Any amount withdrawn which exceeds a free withdrawal may be subject
to a withdrawal charge in accordance with the withdrawal charge
tables shown below:
<TABLE>
<CAPTION>
WITHOUT PRINCIPAL REWARDS PROGRAM
<S> <C>
Years Since Purchase Applicable Withdrawal
Payment Charge Percentage
--------------------------------------------------------------------------------
First 7%
Second 6%
Third 5%
Fourth 4%
Fifth 3%
Sixth 2%
Seventh 1%
Eighth and beyond 0%
WITH PRINCIPAL REWARDS PROGRAM
Years Since Purchase Applicable Withdrawal
Payment Charge Percentage
--------------------------------------------------------------------------------
First 9%
Second 9%
Third 8%
Fourth 7%
Fifth 6%
Sixth 5%
Seventh 4%
Eighth 3%
Ninth 2%
Tenth and beyond 0%
</TABLE>
CONTRACT MAINTENANCE FEE: An annual contract maintenance fee of $35
($30 in North Dakota) is charged against each contract, which
reimburses the Company for expenses incurred in establishing and
maintaining records relating to a contract. The contract maintenance
fee will be assessed on each anniversary during the accumulation
phase. In the event that a total surrender of contract value is made,
the entire charge will be assessed as of the date of surrender.
7
<PAGE> 63
VARIABLE SEPARATE ACCOUNT
(PORTION RELATING TO THE POLARIS II VARIABLE ANNUITY)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
CHARGES AND DEDUCTIONS (continued)
TRANSFER FEE: A transfer fee of $25 ($10 in Pennsylvania and Texas) is
assessed on each transfer of funds in excess of fifteen transactions
within a contract year.
PREMIUM TAXES: Premium taxes or other taxes payable to a state or
other governmental entity will be charged against the contract values.
Some states assess premium taxes at the time purchase payments are
made; others assess premium taxes at the time annuity payments begin.
The Company currently intends to deduct premium taxes at the time of
surrender or upon annuitization; however, it reserves the right to
deduct any premium taxes when incurred or upon the payment of the
death benefit.
MORTALITY RISK, GUARANTEE DEATH BENEFIT AND EXPENSE RISK CHARGE: The
Company deducts mortality risk, guarantee death benefit and expense
risk charges, which total to an annual rate of 1.37% of the net asset
value of each portfolio, computed on a daily basis. The mortality risk
charge (0.90%) is compensation for the mortality risks assumed by the
Company from its contractual obligations to make annuity payments
after the contract has annuitized for the life of the annuitant. The
guarantee death benefit and expense risk charges (0.12% and 0.35%,
respectively) are compensation for providing death benefits, and for
assuming the risk that the current charges will be insufficient in the
future to cover the cost of administering the contract.
DISTRIBUTION EXPENSE CHARGE: The Company deducts a distribution
expense charge at an annual rate of 0.15% of the net asset value of
each portfolio, computed on a daily basis. This charge is for all
expenses associated with the distribution of the contract. These
expenses include preparing the contract, confirmations and statements,
providing sales support and maintaining contract records. If this
charge is not enough to cover the costs of distributing the contract,
the Company will bear the loss.
SEPARATE ACCOUNT INCOME TAXES: The Company currently does not maintain
a provision for taxes, but has reserved the right to establish such a
provision for taxes in the future if it determines, in its sole
discretion, that it will incur a tax as a result of the operation of
the Separate Account.
8
<PAGE> 64
VARIABLE SEPARATE ACCOUNT
(PORTION RELATING TO THE POLARIS II VARIABLE ANNUITY)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
3. INVESTMENT IN ANCHOR TRUST AND SUNAMERICA TRUST
The aggregate cost of the shares acquired and the aggregate proceeds
from shares sold during the one month ended December 31, 1999 consist
of the following:
<TABLE>
<CAPTION>
Cost of Shares Proceeds from
Variable Accounts Acquired Shares Sold
--------------------------- -------------------------------------
<S> <C> <C>
ANCHOR TRUST:
Capital Appreciation Portfolio $ 25,000,131 $ 4,902,412
Growth Portfolio 7,369,767 270,792
Natural Resources Portfolio 462,738 641,467
Government and Quality Bond Portfolio 4,828,794 624,820
SUNAMERICA TRUST:
International Diversified Equities Portfolio 18,048,177 15,411,048
Global Equities Portfolio 13,450,355 2,481,382
Aggressive Growth Portfolio 17,034,976 1,434,689
Venture Value Portfolio 20,275,254 1,303,007
Federated Value Portfolio 2,679,152 1,427,402
Putnam Growth Portfolio 10,598,704 667,031
MFS Growth & Income Portfolio 6,632,199 121,182
Alliance Growth Portfolio 40,035,769 904,912
Growth-Income Portfolio 22,110,726 2,272,536
Asset Allocation Portfolio 1,785,759 1,440,517
SunAmerica Balanced Portfolio 13,250,940 0
MFS Total Return Portfolio 5,687,477 24,396
Utility Portfolio 2,233,005 76,227
Worldwide High Income Portfolio 830,425 1,350,169
High-Yield Bond Portfolio 3,801,146 1,311,705
Global Bond Portfolio 1,194,839 427,478
Corporate Bond Portfolio 1,846,957 1,009,070
International Growth & Income Portfolio 30,951,895 7,350,263
Emerging Markets Portfolio 5,195,529 827,847
Real Estate Portfolio 895,055 622,303
"Dogs" of Wall Street Portfolio 2,004,271 1,461,955
MFS Mid Cap Growth Portfolio 8,977,042 658,578
Cash Management Portfolio 52,920,600 44,276,886
</TABLE>
9
<PAGE> 65
VARIABLE SEPARATE ACCOUNT
(PORTION RELATING TO THE POLARIS II VARIABLE ANNUITY)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
INVESTMENT IN ANCHOR TRUST AND SUNAMERICA TRUST (continued)
The aggregate cost of the shares acquired and the aggregate proceeds
from shares sold during the year ended November 30, 1999 consist of
the following:
<TABLE>
<CAPTION>
Cost of Shares Proceeds from
Variable Accounts Acquired Shares Sold
--------------------------- --------------------------------------
<S> <C> <C>
ANCHOR TRUST:
Capital Appreciation Portfolio $ 262,469,820 $ 72,858,783
Growth Portfolio 105,090,365 9,362,928
Natural Resources Portfolio 11,253,456 5,258,327
Government and Quality Bond Portfolio 110,443,687 25,219,551
SUNAMERICA TRUST:
International Diversified Equities Portfolio 287,403,217 253,041,090
Global Equities Portfolio 65,680,086 9,018,820
Aggressive Growth Portfolio 81,001,402 12,860,801
Venture Value Portfolio 348,818,828 31,057,635
Federated Value Portfolio 67,267,157 16,095,924
Putnam Growth Portfolio 166,320,083 2,558,419
MFS Growth & Income Portfolio 91,850,835 1,364,335
Alliance Growth Portfolio 628,527,182 43,457,676
Growth-Income Portfolio 323,440,317 21,422,634
Asset Allocation Portfolio 72,816,022 5,985,744
SunAmerica Balanced Portfolio 134,589,345 1,062
MFS Total Return Portfolio 68,091,192 175,910
Utility Portfolio 39,418,568 3,170,945
Worldwide High Income Portfolio 15,353,282 5,259,484
High-Yield Bond Portfolio 78,719,186 27,129,016
Global Bond Portfolio 22,823,563 1,375,121
Corporate Bond Portfolio 49,338,340 1,252,158
International Growth & Income Portfolio 178,015,113 115,952,248
Emerging Markets Portfolio 26,127,411 8,808,655
Real Estate Portfolio 15,837,388 9,034,362
"Dogs" of Wall Street Portfolio 48,062,403 2,142,706
MFS Mid-Cap Growth Portfolio 31,999,792 4,767,638
Cash Management Portfolio 732,605,807 635,576,743
</TABLE>
10
<PAGE> 66
VARIABLE SEPARATE ACCOUNT
(PORTION RELATING TO THE POLARIS II VARIABLE ANNUITY)
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
4. FEDERAL INCOME TAXES
The Company qualifies for federal income tax treatment granted to
life insurance companies under subchapter L of the Internal Revenue
Service Code (the "Code"). The operations of the Separate Account are
part of the total operations of the Company and are not taxed
separately. The Separate Account is not treated as a regulated
investment company under the Code.
5. FISCAL YEAR CHANGE
Effective December 31, 1999, the Separate Account changed its fiscal
year end from November 30 to December 31. Accordingly, the financial
statements include the results of operations for the transition
period, which are not necessarily indicative of operations for a full
year.
Results for comparable prior period are summarized below.
<TABLE>
<CAPTION>
One month ended
December 31, 1998
-----------------
<S> <C>
Total investment income $ 1,524,757
------------
Net investment loss (1,871,485)
Net realized gains from securities transactions 1,182,799
Change in net unrealized appreciation/depreciation
of investments 159,575,225
------------
Increase in net assets from operations $158,886,539
============
</TABLE>
11
<PAGE> 67
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The following financial statements are included in Part B of the
Registration Statement:
Consolidated financial statements of Anchor National Life
Insurance Company for the fiscal year ended
September 30, 1998 [Incorporated by Reference]
Audited Transition Report of Anchor National Life Insurance
Company as of and for the three months ended December 31, 1998
[Incorporated by Reference]
Audited Financial Statements of Variable Separate Account
(Portion relating to the Polaris II Variable Annuity) for the one
month ended December 31, 1999 and for the fiscal year ended
November 30, 1999.
<TABLE>
<CAPTION>
(b) Exhibits
- ----------------
<S> <C> <C>
(1) Resolution Establishing Separate Account.... ***
(2) Form of Custody Agreements.................. ***
(3) (a) Form of Distribution Contract........... ***
(b) Selling Agreement....................... ***
(4) Variable Annuity Contract
(a) Polaris II Group Annuity Certificate.... ****
(b) Polaris II Individual Annuity Contract.. ****
(c) Polaris II (Principal Rewards) Group
Annuity Certificate..................... *****
(d) Polaris II (Principal Rewards)
Individual Annuity Contract............. *****
(5) Application for Contract
(a) Polaris II Participant Enrollment Form.. *****
(b) Polaris II Annuity Application.......... *****
(6) Depositor - Corporate Documents
(a) Certificate of Incorporation............ ***
(b) By-Laws................................. ***
(7) Reinsurance Contract........................
(8) Form of Fund Participation Agreement
(a) Anchor Series Trust Fund Participation
Agreement............................... ***
(b) SunAmerica Series Trust Fund
Participation Agreement................. ***
(9) Opinion of Counsel.......................... ***
Consent of Counsel.......................... ***
(10) Consent of Independent Accountants.......... *
(11) Financial Statements Omitted from Item 23... **
(12) Initial Capitalization Agreement............ **
(13) Performance Computations.................... **
(14) Diagram and Listing of All Persons Directly
or Indirectly Controlled By or Under Common
Owner Control with Anchor National Life
Insurance Company, the Depositor of
Registrant.................................. *****
(15) Powers of Attorney.......................... ***
</TABLE>
- -------------
* Filed Herewith
** Not Applicable
*** Filed April 18, 1997, as part of the Initial Registration Statement to
this Registration Statement
**** Filed March 20, 1998 as part of Post-Effective Amendment Numbers 2 and 3
to this Registration Statement.
***** Filed April 1, 1999, as part of Post-Effective Amendment Numbers 7 and 8
to this Registration Statement
Item 25. Directors and Officers of the Depositor
- -------------------------------------------------
The officers and directors of Anchor National Life Insurance Company are
listed below. Their principal business address is 1 SunAmerica Center, Los
Angeles, California 90067-6022, unless otherwise noted.
<TABLE>
<CAPTION>
Name Position
<S> <C>
Eli Broad Chairman, President and
Chief Executive Officer
Jay S. Wintrob Director and Executive Vice President
Peter McMillan Director
James R. Belardi Director and Senior Vice President
Susan L. Harris Director, Senior Vice President
and Secretary
Jana W. Greer Director and Senior Vice President
Marc H. Gamsin Director and Senior Vice President
N. Scott Gillis Director and Senior Vice President
Edwin R. Raquel Senior Vice President and Chief Actuary
</TABLE>
<PAGE> 68
<TABLE>
<S> <C>
David R. Bechtel Vice President and Treasurer
J. Franklin Grey Vice President
Edward P. Nolan* Vice President
Gregory M. Outcalt Senior Vice President and Controller
Scott H. Richland Vice President
P. Daniel Demko, Jr. Vice President
Kevin J. Hart Vice President
Stuart R. Polakov Vice President
</TABLE>
- ------------------
* 88 Bradley Road, P.O. Box 4005, Woodbridge, Connecticut 06525
Item 26. Persons Controlled By or Under Common Control With Depositor or
Registrant
The Registrant is a separate account of Anchor National Life Insurance
Company (Depositor). For a complete listing and diagram of all persons directly
or indirectly controlled by or under common control with the Depositor of
Registrant, see Exhibit 14 of the Initial Registration Statement of Variable
Annuity Account Seven and Anchor National Life Insurance Company (File Nos.
333-65965 and 811-09003)(N-4) and (333-65953)(S-1), which is incorporated
herein by reference. As of January 4, 1999, Anchor National became an indirect
wholly-owned subsidiary of American International Group, Inc. ("AIG"). An
organizational chart for AIG can be found in Form 10-K, SEC file number
001-08787 filed March 31, 1999.
Item 27. Number of Contract Owners
As of December 31, 1999, the number of Contracts funded by the
Variable Separate Account of Anchor National Life Insurance Company
(Portion relating to the Polaris II Variable Annuity) was 104,905, of
which 45,228 were Qualified Contracts and 59,677 were Nonqualified
Contracts
Item 28. Indemnification
None.
Item 29. Principal Underwriter
SunAmerica Capital Services, Inc. serves as distributor to the
Registrant, Presidential Variable Account One, FS Variable Separate Account,
Variable Annuity Account One, FS Variable Annuity Account One, Variable Annuity
Account Four, Variable Annuity Account Five and Variable Annuity Account Seven.
SunAmerica Capital Services, Inc. also serves as the underwriter to the
SunAmerica Income Funds, SunAmerica Equity Funds, SunAmerica Money Market Funds,
Inc., Style Select Series, Inc. and the SunAmerica Strategic Investment Series,
Inc., all issued by SunAmerica Asset Management Corp.
Its principal business address is 733 Third Avenue, 4th Floor, New York,
New York 10017. The following are the directors and officers of SunAmerica
Capital Services, Inc.
<TABLE>
<CAPTION>
Name Position with Distributor
---- -------------------------
<S> <C> <C>
J. Steven Neamtz Director and President
Robert M. Zakem Director, Executive Vice
President, General Counsel
and Assistant Secretary
Peter Harbeck Director
Susan L. Harris Secretary
Debbie Potash-Turner Controller
James Nichols Vice President
</TABLE>
<TABLE>
<CAPTION>
Net
Distribution Compensation
Name of Discounts and on Redemption Brokerage
Distributor Commissions Annuitization Commission Commissions*
- ------------ -------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
SunAmerica None None None None
Capital
Services, Inc.
</TABLE>
- ------------------
* Distribution fee is paid by Anchor National Life Insurance Company.
Item 30. Location of Accounts and Records
Anchor National Life Insurance Company, the Depositor for the
Registrant, is located at 1 SunAmerica Center, Los Angeles, California 90067-
6022. SunAmerica Capital Services, Inc., the distributor of the Contracts, is
located at 733 Third Avenue, 4th Floor, New York, New York 10017. Each maintains
those accounts and records required to be maintained by it pursuant
<PAGE> 69
to Section 31(a) of the Investment Company Act and the rules promulgated
thereunder.
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02100, maintains certain accounts and records pursuant to the
instructions of the Registrant.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
Registrant undertakes to (1) file post-effective amendments to this
Registration Statement as frequently as is necessary to ensure that the audited
financial statements in the Registration Statement are never more than 16 months
old for so long as payments under the variable annuity Contracts may be
accepted; (2) include either (A) as part of any application to purchase a
Contract offered by the prospectus forming a part of the Registration Statement,
a space that an applicant can check to request a Statement of Additional
Information, or (B) a postcard or similar written communication affixed to or
included in the Prospectus that the Applicant can remove to send for a Statement
of Additional Information; and (3) deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form N-4 promptly upon written or oral request.
Item 33. Representation
A. The Company hereby represents that it is relying upon a No-Action
Letter issued to the American Council of Life Insurance dated November 28, 1988
(Commission ref. IP-6-88) and that the following provisions have been complied
with:
1. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including
the prospectus, used in connection with the offer of the contract;
2. Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection
with the offer of the contract;
3. Instruct sales representatives who solicit participants to purchase the
contract specifically to bring the redemption restrictions imposed by
Section 403(b)(11) to the attention of the potential participants;
4. Obtain from each plan participant who purchases a Section 403(b) annuity
contract, prior to or at the time of such purchase, a signed statement
acknowledging the participant's understanding of (1) the restrictions on
redemption imposed by Section 403(b)(11), and (2) other investment
alternatives available under the employer's Section 403(b) arrangement
to which the participant may elect to transfer his contract value.
B. REPRESENTATION PURSUANT TO SECTION 26(e) OF THE INVESTMENT COMPANY ACT
OF 1940: The Company represents that the fees and charges to be deducted under
the variable annuity contract described in the prospectus contained in this
registration statement are, in the aggregate, reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
in connection with the contract.
<PAGE> 70
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act
of 1940, the Registrant certifies it meets the requirements of Securities
Act Rule 485 for effectiveness of this Registration Statement and has caused
this Post-Effective Amendment to the Registration Statement to be signed on
its behalf, in the City of Los Angeles, and the State of California, on this
20 day of March, 1999.
VARIABLE SEPARATE ACCOUNT
(Registrant)
By: ANCHOR NATIONAL LIFE INSURANCE COMPANY
(Depositor)
By: /s/ JAY S. WINTROB
----------------------------------------
Jay S. Wintrob
Executive Vice President
By: ANCHOR NATIONAL LIFE INSURANCE COMPANY
(Depositor, on behalf of itself and Registrant)
By: /s/ JAY S. WINTROB
----------------------------------------
Jay S. Wintrob
Executive Vice President
As required by the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
ELI BROAD* President, Chief
- ------------------------ Executive Officer and
Eli Broad Chairman of the Board
(Principal Executive
Officer)
MARC H. GAMSIN* Senior Vice President and
- ------------------------ Director
Marc H. Gamsin
N. SCOTT GILLIS* Senior Vice President
- ------------------------ and Director
N. Scott Gillis
JAMES R. BELARDI* Director
- ------------------------
James R. Belardi
JANA W. GREER* Director
- ------------------------
Jana W. Greer
/s/ SUSAN L. HARRIS Director March 20, 2000
- ------------------------
Susan L. Harris
</TABLE>
<PAGE> 71
<TABLE>
<S> <C> <C>
PETER MCMILLAN* Director
- ------------------------
Peter McMillan
JAY S. WINTROB* Director
- ------------------------
Jay S. Wintrob
* By: /s/ SUSAN L. HARRIS Attorney-in-Fact
----------------------
Susan L. Harris
</TABLE>
Date: March 20, 2000
** KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature appears
below hereby constitutes and appoints SUSAN L. HARRIS AND CHRISTINE A. NIXON or
each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, as fully
to all intents as he might or could do in person, including specifically, but
without limiting the generality of foregoing, to (i) take any action to comply
with any rules, regulations or requirements of the Securities and Exchange
Commission under the federal securities laws; (ii) make application for and
secure any exemptions from the federal securities laws; (iii) register
additional annuity contracts under the federal securities laws, if registration
is deemed necessary. The undersigned hereby ratifies and confirms all that said
attorneys-in-fact and agents or any of them, or their substitutes, shall do or
cause to be done by virtue thereof.
<TABLE>
<S> <C> <C>
**/s/ GREGORY M. OUTCALT Senior Vice President and March 20, 2000
- ------------------------ Controller
Gregory M. Outcalt
</TABLE>
<PAGE> 72
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C> <C>
Ex(10) Consent of Independent Accountants
</TABLE>
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Statement of
Additional Information constituting part of this Registration Statement
on Form N-4 for Variable Separate Account (Portion Relating to the
POLARIS II Variable Annuity) of Anchor National Life Insurance Company
of our report dated November 19, 1999 and November 9, 1998, relating to
the financial statements of Anchor National Life Insurance Company, and
the use of our report dated March 3, 2000, relating to the financial
statements of Variable Separate Account (Portion Relating to the POLARIS
II Variable Annuity), which appear in such Statement of Additional
Information. We also consent to the incorporation by reference of our
report dated November 9, 1998, relating to the financial statements of
Anchor National Life Insurance Company, into the Prospectus which
constitutes part of this Registration Statement. We also consent to the
incorporation by reference in such Prospectus of our report dated March
11, 1999, relating to the statement of assets acquired and liabilities
assumed in the MBL Life Assurance Corporation transaction at December
31, 1998, appearing on page 8 of Anchor National Life Insurance
Company's Current Report on Form 8-K/A dated March 12, 1999. We also
consent to the reference to us under the heading "Financial Statements"
in such Statement of Additional Information and to the reference to us
under the heading "Independent Accountants" in such Prospectus.
PricewaterhouseCoopers LLP
Los Angeles, California
March 20, 2000
