<PAGE> 1
File Nos. 33-86642
811-8874
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. 3 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [X]
Amendment No. 4
(Check appropriate box or boxes)
VARIABLE ANNUITY ACCOUNT FOUR
(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 and Amount
of Securities Amount of
Being Registered Registration Fee
- ---------------- ---------------
<S> <C> <C>
Flexible Payment Pursuant to Rule 24f-2, the $
Deferred Annuity Registrant has filed an election
Contracts to register an indefinite
number of securities
under the Securities Act of 1933
</TABLE>
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on February 2, 1998 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] on [date] pursuant to paragraph (a) of Rule 485
The registrant has elected pursuant to Rule 24f-2 under the Investment Company
Act of 1940 to register an indefinite amount of securities. The Registrant filed
its Rule 24f-2 Notice for the fiscal year ended September 30, 1997 on or about
November 26, 1997.
<PAGE> 2
VARIABLE ANNUITY ACCOUNT FOUR
<TABLE>
<CAPTION>
Item Number in Form N-4 Caption
- ----------------------- -------
<S> <C>
1. Cover Page................................... Cover Page
2. Definitions ................................. Glossary
3. Synopsis..................................... Profile; Fee Tables;
Examples
4. Condensed Financial Information.............. Appendix A - Condensed
Financial Information
5. General Description of Registrant,
Depositor and Portfolio Companies............ Investment Options; Other
Information
6. Deductions and Expenses...................... Expenses
7. General Description of
Variable Annuity Contracts................... The Anchor Advisor
Variable Annuity; Annuity
Options
8. Annuity Period............................... Annuity Options
9. Death Benefit................................ Death Benefit
10. Purchases and Contract Value ................ Purchasing An Anchor
Advisor Variable Annuity
Contract
11. Redemptions ................................. Withdrawals
12. Taxes ....................................... Taxes
13. Legal Proceedings ........................... Other Information
14 Table of Contents of Statement
of Additional Information.................... Additional Information
About the Separate Account
</TABLE>
<PAGE> 3
PART B - STATEMENT OF ADDITIONAL INFORMATION
--------------------------------------------
Certain information required in Part B of the Registration Statement has
been included within the Prospectus forming part of this Registration Statement;
the following cross-references suffixed with a "P" are made by reference to the
captions in the Prospectus.
<TABLE>
<CAPTION>
Item Number in Form N-4 Caption
- ----------------------- ---------
<S> <C>
15. Cover Page ........................... Cover Page
16. Table of Contents .................... Table of Contents
17. General Information and History....... The Anchor Advisor
Variable Annuity(P);
Investment Options(P);
Other Information(P)
18. Services ............................. Other Information(P)
19. Purchase of Securities Being Offered . Purchasing An Anchor
Advisor Variable Annuity
Contract(P)
20. Underwriters ......................... Distribution of Contracts
21. Calculation of Performance Data ...... Performance Data
22. Annuity Payments ..................... Annuity Options(P);
Annuity Unit Values;
Annuity Payments
23. Financial Statement .................. Financial Statements
</TABLE>
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
[ANCHOR ADVISOR LOGO]
P R O F I L E This profile is a summary of some of the
more important points
that you should know and consider before purchasing the
Anchor Advisor Variable Annuity. The sections in this
profile correspond to sections in the accompanying
prospectus which discuss the topics in more detail. The
February 2, 1998 annuity is more fully described in the prospectus. Please
read the prospectus carefully.
================================================================================
1. THE ANCHOR ADVISOR
VARIABLE ANNUITY CONTRACT
================================================================================
The Anchor Advisor Variable Annuity Contract is a contract between you and
Anchor National Life Insurance Company. It is designed to help you invest on a
tax-deferred basis and meet long-term financial goals, such as retirement
funding. Tax deferral means all your money, including the amount you would
otherwise pay in current income taxes, remains in your contract to generate more
earnings. Your money could grow faster than it would in a comparable taxable
investment.
Anchor Advisor offers a diverse selection of money managers and investment
options. You may divide your money among any or all of our 19 variable
investment portfolios and the one-year fixed investment option. Your contract
may also provide for a one-year DCA account option specifically for dollar cost
averaging, subject to certain restrictions. Your investment is not guaranteed.
The value of your contract can fluctuate up or down, based on the performance of
the underlying investments you select, and you may experience a loss.
The variable investment portfolios offer professionally managed investment
choices with goals ranging from capital preservation to aggressive growth. Your
choices for the various investment options are found on the next page.
Like most annuities, the contract has an Accumulation Phase and an Income Phase.
During the Accumulation Phase, you invest money in your contract. Your earnings
are based on the investment performance of the variable investment portfolios to
which your money is allocated and/or the interest rate earned on the fixed
investment options. You may withdraw money from your contract during the
Accumulation Phase. However, as with other tax-deferred investments, you will
pay taxes on earnings and untaxed contributions when you withdraw them. An IRS
tax penalty may apply if you make withdrawals before age 59 1/2. During the
Income Phase, you will receive monthly payments from your annuity. Your monthly
payments may be fixed in dollar amount, vary with investment performance or a
combination of both, depending on where your money is allocated. Among other
factors, the amount of money you are able to accumulate in your contract during
the Accumulation Phase will determine the amount of your payments during the
Income Phase.
================================================================================
2. ANNUITY OPTIONS
================================================================================
You can select from one of five annuity options:
(1) payments for your lifetime;
(2) payments for your lifetime and your survivor's lifetime;
(3) payments for your lifetime and your survivor's lifetime, but for not less
than 120 months;
(4) payments for your lifetime, but for not less than 120 or 240 months; and
(5) payments for a specified period of 5 to 30 years.
You will also need to decide if you want your payments to fluctuate with
investment performance or remain constant, and the date on which your payments
will begin. Once you begin receiving payments, you cannot change your annuity
option. If your contract is part of a nonqualified retirement plan (one that is
established with after tax dollars), payments during the Income Phase are
considered partly a return of your original investment. The "original
investment" part of each payment is not taxable as income. For contracts which
are part of a qualified retirement plan using before tax dollars, the entire
payment is taxable as income.
===============================================================================
3. PURCHASING AN ANCHOR ADVISOR
VARIABLE ANNUITY CONTRACT
===============================================================================
You can buy a contract through your financial representative, who can also help
you complete the proper forms. The minimum initial investment is $20,000 and
subsequent amounts of $500 or more may be added to your contract at any time
during the Accumulation Phase.
<PAGE> 5
================================================================================
4. INVESTMENT OPTIONS
================================================================================
You may allocate money to the following variable investment portfolios of Anchor
Series Trust and/or SunAmerica Series Trust:
ANCHOR SERIES TRUST
MANAGED BY WELLINGTON MANAGEMENT COMPANY, LLP
- Capital Appreciation Portfolio
- Growth Portfolio
- Natural Resources Portfolio
- Government and Quality Bond Portfolio
SUNAMERICA SERIES TRUST
MANAGED BY ALLIANCE CAPITAL MANAGEMENT L.P.
- Global Equities Portfolio
- Alliance Growth Portfolio
- Growth-Income Portfolio
MANAGED BY DAVIS SELECTED ADVISERS, L.P.
- Venture Value Portfolio
MANAGED BY FEDERATED INVESTORS
- Federated Value Portfolio
- Utility Portfolio
- Corporate Bond Portfolio
MANAGED BY GOLDMAN SACHS ASSET MANAGEMENT/
GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL
- Asset Allocation Portfolio
- Global Bond Portfolio
MANAGED BY MORGAN STANLEY ASSET MANAGEMENT INC.
- International Diversified Equities Portfolio
- Worldwide High Income Portfolio
MANAGED BY SUNAMERICA ASSET MANAGEMENT CORP.
- Aggressive Growth Portfolio
- SunAmerica Balanced Portfolio
- High-Yield Bond Portfolio
- Cash Management Portfolio
You may also allocate money to the one-year fixed investment option and the
one-year DCA account option, if provided for by your contract. The interest rate
may differ from time to time but will never be less than 3%. Once established,
the rate will not change during the one-year period.
================================================================================
5. EXPENSES
================================================================================
We deduct insurance charges which amount to 1.52% annually of the average daily
value of your contract allocated to the variable portfolios. The insurance
charges include: Mortality and Expense Risk, 1.25%; Enhanced Death Benefit,
.12%; and Distribution Expense, .15%.
As with other professionally managed investments, there are also investment
charges imposed on contracts with money allocated to the variable portfolios
which are estimated to range from .63% to 1.35%. In a limited number of states,
you may also be assessed a state premium tax of up to 3.5% depending upon the
state.
Each year, you are allowed to make 15 transfers without charge. After your first
15 free transfers, a $25 transfer fee ($10 in Pennsylvania and Texas) will apply
to each subsequent transfer. There are no charges under the contract for
withdrawals.
In a limited number of states, you may also be assessed a state premium tax of
up to 3.5% depending upon the state.
The following chart is designed to help you understand the charges in your
contract. The column "Total Annual Charges" shows the total of the 1.52%
insurance charges and the investment charges for each variable portfolio. The
next two columns show two examples of the charges you would pay under the
contract. The examples assume that you invested $1,000 in a portfolio which
earns 5% annually and that you withdraw your money: (1) at the end of year 1,
and (2) at the end of year 10. The premium tax is assumed to be 0% in both
examples.
<PAGE> 6
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
EXAMPLES:
TOTAL ANNUAL TOTAL ANNUAL TOTAL EXPENSES TOTAL EXPENSES
INSURANCE INVESTMENT TOTAL ANNUAL AT END OF AT END OF
ANCHOR SERIES TRUST PORTFOLIO CHARGES CHARGES CHARGES 1 YEAR 10 YEARS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Capital Appreciation 1.52% .71% 2.23% $ 23 $256
Growth 1.52% .78% 2.30% $ 23 $264
Natural Resources 1.52% .89% 2.41% $ 24 $275
Government and Quality Bond 1.52% .71% 2.23% $ 23 $256
- -----------------------------------------------------------------------------------------------------------------------
SUNAMERICA SERIES TRUST PORTFOLIO
Aggressive Growth 1.52% .90% 2.42% $ 25 $276
International Diversified Equities 1.52% 1.35% 2.87% $ 29 $319
Global Equities 1.52% .95% 2.47% $ 25 $281
Alliance Growth 1.52% .65% 2.17% $ 22 $250
Venture Value 1.52% .79% 2.31% $ 23 $265
Federated Value 1.52% 1.03% 2.55% $ 26 $289
Growth-Income 1.52% .65% 2.17% $ 22 $250
Utility 1.52% 1.05% 2.57% $ 26 $290
Asset Allocation 1.52% .68% 2.20% $ 22 $253
SunAmerica Balanced 1.52% 1.00% 2.52% $ 26 $286
Worldwide High Income 1.52% 1.10% 2.62% $ 27 $295
High-Yield Bond 1.52% .75% 2.27% $ 23 $261
Corporate Bond 1.52% .91% 2.43% $ 25 $277
Global Bond 1.52% .90% 2.42% $ 25 $276
Cash Management 1.52% .63% 2.15% $ 22 $248
-
-
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
For more detailed information, see the Fee Tables and Examples in the
prospectus.
================================================================================
6. TAXES
================================================================================
Unlike taxable investments where earnings are taxed in the year they are earned,
taxes on amounts earned in a Nonqualified contract (one that is established with
after tax dollars) are deferred until they are withdrawn. In a Qualified
contract (one that is established with before after tax dollars like an IRA),
all amounts are taxable when they are withdrawn.
When you begin taking distributions or withdrawals from your contract, earnings
are considered to be taken out first and will be taxed at your ordinary income
rate. You may be subject to a 10% IRS tax penalty for distributions or
withdrawals before age 59 1/2.
===============================================================================
7. WITHDRAWALS
===============================================================================
Withdrawals may be made from your contract in the amount of $1,000 or more. You
may request a withdrawal in writing or by establishing systematic withdrawals.
Under systematic withdrawals, the minimum withdrawal amount is $250. There are
no withdrawal charges.
===============================================================================
8. PERFORMANCE
===============================================================================
The value of your annuity will fluctuate depending upon the investment
performance of the portfolio(s) you choose.
The following chart shows total returns for each portfolio for the time periods
shown. These numbers reflect the insurance charges and the investment charges of
the portfolio. Past performance is not a guarantee of future results.
<TABLE>
<CAPTION>
- ------------------------------------------------------
ANCHOR SERIES CALENDAR YEAR
TRUST PORTFOLIO 1997 1996
- ------------------------------------------------------
<S> <C> <C>
Capital Appreciation 23.56% 5.33%
Growth 28.43% 11.74%
Natural Resources (9.94)% 5.76%
Government and Quality Bond 7.90% 3.04%
- ------------------------------------------------------
SUNAMERICA SERIES
TRUST PORTFOLIO
Aggressive Growth 10.64% 12.67%
International Diversified
Equities 4.80% 6.25%
Global Equities 13.33% 6.40%
Alliance Growth 29.46% 16.46%
Venture Value 32.25% 14.01%
Federated Value 29.46% 11.51%
Growth-Income 31.90% 15.67%
Utility 23.87% 7.44%
Asset Allocation 19.98% 9.49%
SunAmerica Balanced 22.60% 8.09%
Worldwide High Income 13.81% 9.74%
High-Yield Bond 12.74% 5.60%
Corporate Bond 9.24% 3.94%
Global Bond 8.41% 5.18%
Cash Management 3.58% 1.07%
- ---
- ------------------------------------------------------
</TABLE>
Inception date for each portfolio varies.
<PAGE> 7
================================================================================
9. DEATH BENEFIT
================================================================================
If you should die during the Accumulation Phase, your beneficiary will receive a
death benefit. Unless your contract states otherwise, you must select from the
two death benefit options described below at the time you purchase your
contract. Once selected, your death benefit may not be changed. You should
discuss with your financial representative the options available to you and
which option is best for you.
OPTION 1 - PURCHASE PAYMENT ACCUMULATION OPTION:
The death benefit is the greater of:
(1) the value of your contract,
(2) the money you put in less any withdrawals, all compounded at 4%
annually (3% if age 70 or older at time of issue), or
(3) the value of your contract on the seventh contract anniversary less
any withdrawals plus any additional money you put in since the seventh
anniversary, all compounded at 4% annually (3% if age 70 or older at
time of issue).
OPTION 2 - MAXIMUM ANNIVERSARY VALUE OPTION:
The death benefit is the greater of:
(1) the value of your contract,
(2) the money you put in less any
withdrawals, or
(3) the maximum of the anniversary values up to your 81st birthday. The
anniversary value is equal to the value of your contract on the
contract anniversary less any withdrawals plus any additional money
you put in since that anniversary.
If you are age 90 or older at the time of death, the death benefit under option
2 is the value of your contract.
================================================================================
10. OTHER INFORMATION
================================================================================
FREE LOOK: You may cancel your contract within ten days (or longer if required
by state law) by mailing it to our Annuity Service Center. Your contract will be
treated as void on the date we receive it and we will pay you an amount equal to
the value of your contract (unless otherwise required by state law). Its value
may be more or less than the money you initially invested. If state law requires
us to return your original investment, we may put your money in the Cash
Management Portfolio during the free look period.
ASSET ALLOCATION REBALANCING: If selected by you, this program seeks to keep
your investment in line with your goals. We will maintain your specified
allocation mix in the variable investment portfolios and the one-year fixed
investment option by readjusting your money on a calendar quarter, semiannual or
annual basis.
SYSTEMATIC WITHDRAWAL PROGRAM: If selected by you, this program allows you to
receive either monthly, quarterly, semiannual or annual checks during the
Accumulation Phase. Systematic withdrawals may also be electronically wired to
your bank account. Of course, withdrawals may be taxable and a 10% federal tax
penalty may apply if you are under age 59 1/2.
DOLLAR COST AVERAGING: If selected by you, this program allows you to invest
gradually in the equity and bond portfolios from any of the variable investment
portfolios or the one-year fixed investment option. Your contract may also
provide for a one-year DCA account option for dollar cost averaging.
AUTOMATIC PAYMENT PLAN: You can add to your contract directly from your bank
account with as little as $100 per month.
CONFIRMATIONS AND QUARTERLY STATEMENTS: You will receive a confirmation of each
transaction within your contract. On a quarterly basis, you will receive a
complete statement of your transactions over the past quarter and a summary of
your account values.
================================================================================
11. INQUIRIES
================================================================================
If you have questions about your contract or need to make changes, call your
financial representative or contact us at:
Anchor National Life Insurance Company
Annuity Service Center
P.O. Box 54299
Los Angeles, California 90054-0299
Telephone Number: (800) 445-SUN2
If money accompanies your correspondence, you should direct it to:
Anchor National Life Insurance Company
P.O. Box 100330
Pasadena, California 91189-0001
<PAGE> 8
[ANCHOR ADVISOR LOGO]
PROSPECTUS
FEBRUARY 2, 1998
<TABLE>
<S> <C>
Please read this prospectus FLEXIBLE PAYMENT DEFERRED ANNUITY CONTRACTS
carefully before investing and issued by
keep it for future reference. ANCHOR NATIONAL LIFE INSURANCE COMPANY
It contains important in connection with
information about the Anchor VARIABLE ANNUITY ACCOUNT FOUR
Advisor Variable Annuity. The annuity has 20 investment choices - a one-year fixed
investment option and 19 variable investment portfolios listed
To learn more about the annuity below. Your contract may also provide for a one-year DCA
offered by this prospectus, you account option. The 19 variable investment portfolios are part
can obtain a copy of the of Anchor Series Trust or SunAmerica Series Trust.
Statement of Additional
Information ("SAI") dated ANCHOR SERIES TRUST:
February 2, 1998. The SAI has MANAGED BY WELLINGTON MANAGEMENT COMPANY, LLP
been filed with the Securities - Capital Appreciation Portfolio
and Exchange Commission ("SEC") - Growth Portfolio
and is incorporated by - Natural Resources Portfolio
reference into this prospectus. - Government and Quality Bond Portfolio
The Table of Contents of the
SAI appears on page 16 of this SUNAMERICA SERIES TRUST:
prospectus. For a free copy of MANAGED BY ALLIANCE CAPITAL MANAGEMENT L.P.
the SAI, call us at (800) - Global Equities Portfolio
445-SUN2 or write to us at our - Alliance Growth Portfolio
Annuity Service Center, P.O. - Growth-Income Portfolio
Box 54299, Los Angeles, MANAGED BY DAVIS SELECTED ADVISERS, L.P.
California 90054-0299. - Venture Value Portfolio
MANAGED BY FEDERATED INVESTORS
ANNUITIES INVOLVE RISKS, - Federated Value Portfolio
INCLUDING POSSIBLE LOSS OF - Utility Portfolio
PRINCIPAL, AND ARE NOT A - Corporate Bond Portfolio
DEPOSIT OR OBLIGATION OF, OR MANAGED BY GOLDMAN SACHS ASSET MANAGEMENT/
GUARANTEED OR ENDORSED BY, ANY GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL
BANK. THEY ARE NOT FEDERALLY - Asset Allocation Portfolio
INSURED BY THE FEDERAL DEPOSIT - Global Bond Portfolio
INSURANCE CORPORATION, THE MANAGED BY MORGAN STANLEY ASSET MANAGEMENT INC.
FEDERAL RESERVE BOARD OR ANY - International Diversified Equities Portfolio
OTHER AGENCY. - Worldwide High Income Portfolio
MANAGED BY SUNAMERICA ASSET MANAGEMENT CORP.
- Aggressive Growth Portfolio
- SunAmerica Balanced Portfolio
- High-Yield Bond Portfolio
- Cash Management Portfolio
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 9
================================================================================
TABLE OF CONTENTS
================================================================================
<TABLE>
<S> <C> <C>
GLOSSARY............................................. 2
FEE TABLES........................................... 3
Owner Transaction Expenses..................... 3
Annual Separate Account Expenses............... 3
Portfolio Expenses............................. 3
EXAMPLES............................................. 4
1. THE ANCHOR ADVISOR VARIABLE ANNUITY............ 5
2. ANNUITY INCOME OPTIONS......................... 5
Allocation of Annuity Payments................. 6
Annuity Payments............................... 6
Transfers During the Income Phase.............. 6
Deferment of Payments.......................... 7
3. PURCHASING AN ANCHOR ADVISOR VARIABLE ANNUITY
CONTRACT....................................... 7
Allocation of Purchase Payments................ 7
Accumulation Units............................. 7
Free Look...................................... 7
4. INVESTMENT OPTIONS............................. 8
Anchor Series Trust............................ 8
SunAmerica Series Trust........................ 8
Fixed Investment Option........................ 8
Transfers During the Accumulation Phase........ 9
Dollar Cost Averaging Program.................. 9
Asset Allocation Rebalancing Program........... 10
Voting Rights.................................. 10
Substitution................................... 10
5. EXPENSES....................................... 10
Insurance Charges.............................. 10
Mortality and Expense Risk Charge.......... 11
Distribution Expense Charge................ 11
Investment Charges............................. 11
Transfer Fee................................... 11
Premium Taxes.................................. 11
Income Taxes................................... 11
Reduction or Elimination of Certain Charges.... 11
6. TAXES.......................................... 11
Annuity Contracts in General................... 11
Tax Treatment of Distributions - Nonqualified
Contracts...................................... 12
Tax Treatment of Distributions - Qualified
Contracts...................................... 12
Diversification................................ 12
7. WITHDRAWALS.................................... 13
Systematic Withdrawal Program.................. 13
Minimum Contract Value......................... 13
8. PERFORMANCE.................................... 13
9. DEATH BENEFIT.................................. 14
10. OTHER INFORMATION.............................. 15
Anchor National................................ 15
The Separate Account........................... 15
The General Account............................ 15
Distribution................................... 15
Administration................................. 15
Legal Proceedings.............................. 15
Ownership...................................... 16
Custodian...................................... 16
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL
INFORMATION.......................................... 16
APPENDIX A - CONDENSED FINANCIAL INFORMATION.........
A-1
APPENDIX B - PREMIUM TAXES........................... B-1
</TABLE>
================================================================================
GLOSSARY
================================================================================
We have capitalized some of the technical terms used in this prospectus. To help
you understand these terms, we have defined them in this glossary.
ACCUMULATION PHASE - The period during which you invest money in your contract.
ACCUMULATION UNITS - A measurement we use to calculate the value of the variable
portion of your contract during the Accumulation Phase.
ANNUITANT - The person on whose life we base annuity payments.
ANNUITY DATE - The date on which annuity payments are to begin, as selected by
you.
ANNUITY UNITS - A measurement we use to calculate the amount of annuity payments
you receive from the variable portion of your contract during the Income Phase.
BENEFICIARY (IES) - The person(s) designated to receive any benefits under the
contract if you or the Annuitant dies.
INCOME PHASE - The period during which we make annuity payments to you.
IRS - The Internal Revenue Service.
NONQUALIFIED (CONTRACT) - A contract purchased with after-tax dollars. In
general, these contracts are not under any pension plan, specially sponsored
program or individual retirement annuity ("IRA").
PORTFOLIO(S) - The variable investment options available under the contract.
Each Portfolio has its own investment objective and is invested in the
underlying investments of Anchor Series Trust or SunAmerica Series Trust.
PURCHASE PAYMENTS - The money you give us to buy the contract, as well as any
additional money you give us to invest in the contract after you own it.
QUALIFIED (CONTRACT) - A contract purchased with pretax dollars. These contracts
are generally purchased under a pension plan, specially sponsored program or
individual retirement annuity ("IRA").
TRUSTS - Refers to Anchor Series Trust and SunAmerica Series Trust,
collectively.
2
<PAGE> 10
================================================================================
FEE TABLES
================================================================================
OWNER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Withdrawal Charge............. None
Contract Maintenance Charge... None
Transfer Fee.................. No charge for first 15
transfers each year;
thereafter, fee is $25
($10 in Pennsylvania
and Texas)
</TABLE>
ANNUAL SEPARATE ACCOUNT EXPENSES
(AS A PERCENTAGE OF DAILY NET ASSET VALUE)
<TABLE>
<S> <C>
Mortality and Expense Risk Charge.......... 1.37%
Distribution Expense Charge................ 0.15%
-----
TOTAL SEPARATE ACCOUNT EXPENSES 1.52%
=====
</TABLE>
PORTFOLIO EXPENSES
ANCHOR SERIES TRUST
(AS A PERCENTAGE OF AVERAGE NET ASSETS FOR THE TRUST'S TWELVE-MONTH PERIOD ENDED
NOVEMBER 30, 1997)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
PORTFOLIO FEE EXPENSES EXPENSES
<S> <C> <C> <C>
======================================================================================
Capital Appreciation .65% .06% .71%
--------------------------------------------------------------------------------------
Growth .72% .06% .78%
--------------------------------------------------------------------------------------
Natural Resources .75% .14% .89%
--------------------------------------------------------------------------------------
Government and Quality Bond .62% .09% .71%
======================================================================================
</TABLE>
SUNAMERICA SERIES TRUST
(AS A PERCENTAGE OF AVERAGE NET ASSETS FOR THE TRUST'S FISCAL YEAR ENDED
NOVEMBER 30, 1997)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
PORTFOLIO FEE EXPENSES EXPENSES
<S> <C> <C> <C>
======================================================================================
Aggressive Growth .76% .14% .90%
--------------------------------------------------------------------------------------
International Diversified Equities 1.00% .35% 1.35%
--------------------------------------------------------------------------------------
Global Equities .76% .19% .95%
--------------------------------------------------------------------------------------
Alliance Growth .59% .06% .65%
--------------------------------------------------------------------------------------
Venture Value .74% .05% .79%
--------------------------------------------------------------------------------------
Federated Value .80% .23% 1.03%
--------------------------------------------------------------------------------------
Growth-Income .60% .05% .65%
--------------------------------------------------------------------------------------
Utility .75% .30% 1.05%
--------------------------------------------------------------------------------------
Asset Allocation .61% .07% .68%
--------------------------------------------------------------------------------------
SunAmerica Balanced .74% .26% 1.00%
--------------------------------------------------------------------------------------
Worldwide High Income 1.00% .10% 1.10%
--------------------------------------------------------------------------------------
High-Yield Bond .66% .09% .75%
--------------------------------------------------------------------------------------
Corporate Bond .70% .21% .91%
--------------------------------------------------------------------------------------
Global Bond .72% .18% .90%
--------------------------------------------------------------------------------------
Cash Management .54% .09% .63%
======================================================================================
</TABLE>
THE ABOVE PORTFOLIO EXPENSES WERE PROVIDED BY THE TRUSTS. WE HAVE NOT
INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION.
3
<PAGE> 11
================================================================================
EXAMPLES
================================================================================
You would pay the following expenses on a $1,000 investment in each Portfolio,
assuming (1) a 5% annual return on assets and (2) surrender of the contract at
the end of the stated time period. As noted in the Fee Tables, we do not impose
any withdrawal charges. Your expenses are identical whether you continue the
contract or surrender your contract at the end of the applicable period as a
lump sum or under one of the annuity options.
<TABLE>
<CAPTION>
TIME PERIODS
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
====================================================================================
Capital Appreciation $ 23 $70 $ 119 $256
------------------------------------------------------------------------------------
Growth $ 23 $72 $ 123 $264
------------------------------------------------------------------------------------
Natural Resources $ 24 $75 $ 129 $275
------------------------------------------------------------------------------------
Government and Quality Bond $ 23 $70 $ 119 $256
------------------------------------------------------------------------------------
Aggressive Growth $ 25 $75 $ 129 $276
------------------------------------------------------------------------------------
International Diversified Equities $ 29 $89 $ 151 $319
------------------------------------------------------------------------------------
Global Equities $ 25 $77 $ 132 $281
------------------------------------------------------------------------------------
Alliance Growth $ 22 $68 $ 116 $250
------------------------------------------------------------------------------------
Venture Value $ 23 $72 $ 124 $265
------------------------------------------------------------------------------------
Federated Value $ 26 $79 $ 136 $289
------------------------------------------------------------------------------------
Growth-Income $ 22 $68 $ 116 $250
------------------------------------------------------------------------------------
Utility $ 26 $80 $ 137 $290
------------------------------------------------------------------------------------
Asset Allocation $ 22 $69 $ 118 $253
------------------------------------------------------------------------------------
SunAmerica Balanced $ 26 $78 $ 134 $286
------------------------------------------------------------------------------------
Worldwide High Income $ 27 $81 $ 139 $295
------------------------------------------------------------------------------------
High-Yield Bond $ 23 $71 $ 122 $261
------------------------------------------------------------------------------------
Corporate Bond $ 25 $76 $ 130 $277
------------------------------------------------------------------------------------
Global Bond $ 25 $75 $ 129 $276
------------------------------------------------------------------------------------
Cash Management $ 22 $67 $ 115 $248
====================================================================================
</TABLE>
EXPLANATION OF FEE TABLES AND EXAMPLES
1. The purpose of the Fee Tables is to show you the various expenses you would
incur directly and indirectly by investing in the contract.
2. For certain Portfolios, the adviser, SunAmerica Asset Management Corp., has
voluntarily agreed to waive fees or reimburse certain expenses, if
necessary, to keep annual operating expenses at or below the lesser of the
maximum allowed by any applicable state expense limitations or the following
percentages of each Portfolio's average net assets: Aggressive Growth
(.90%); Federated Value (1.03%); SunAmerica Balanced (1.00%); and Utility
(1.05%). The adviser also may voluntarily waive or reimburse additional
amounts to increase a Portfolio's investment return. All waivers and/or
reimbursements may be terminated at any time. Furthermore, the adviser may
recoup any waivers or reimbursements within two years after such waivers or
reimbursements are granted, provided that the Portfolio is able to make such
payment and remain in compliance with the foregoing expense limitations.
3. The Examples assume that no transfer fees were imposed. Although premium
taxes may apply in certain states, they are not reflected.
4. THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
THE HISTORICAL ACCUMULATION UNIT VALUES ARE CONTAINED IN
APPENDIX A - CONDENSED FINANCIAL INFORMATION
4
<PAGE> 12
================================================================================
1. THE ANCHOR ADVISOR VARIABLE ANNUITY
================================================================================
An annuity is a contract between you, as the owner, and an insurance company.
The contract provides tax deferral for your earnings, as well as a death benefit
and a guaranteed income in the form of annuity payments beginning on a date you
select. Until you decide to begin receiving annuity payments, your annuity is in
the Accumulation Phase. Once you begin receiving annuity payments, your contract
switches to the Income Phase. If you die during the Accumulation Phase, the
insurance company guarantees a death benefit to your Beneficiary.
The Anchor Advisor Variable Annuity Contract is issued by Anchor National Life
Insurance Company ("Anchor National"), a stock life insurance company organized
under the laws of the state of Arizona. Its principal business address is 1
SunAmerica Center, Los Angeles, California 90067-6022. Anchor National conducts
life insurance and annuity business in the District of Columbia and in all
states except New York. Anchor National is an indirect wholly owned subsidiary
of SunAmerica Inc., a Maryland corporation.
During the Accumulation Phase, the value of your annuity benefits from tax
deferral. This means your earnings accumulate on a tax-deferred basis until you
take money out of your contract. The Income Phase occurs if you decide to
receive annuity payments. You select the date on which annuity payments are to
begin.
The contract is called a variable annuity because you can choose among 19
variable investment Portfolios. Depending upon market conditions, you can make
or lose money in any of these Portfolios. If you allocate money to the
Portfolios, the amount of money you are able to accumulate in the variable
portion of your contract during the Accumulation Phase depends upon the
investment performance of the Portfolio(s) you select. The amount of the annuity
payments you receive during the Income Phase from the variable portion of your
contract also depends upon the investment performance of the Portfolios you
select for the Income Phase.
The contract also contains a one-year fixed investment option and if provided
for by your contract, a one-year DCA account option. Your money will earn
interest at the rate set by Anchor National. The interest rate is guaranteed by
Anchor National for the time you agree to leave your money in the fixed
investment option or the DCA account. If you allocate money to the fixed
investment option, the amount of money you are able to accumulate in the fixed
portion of your contract during the Accumulation Phase depends upon the total
interest credited to your fixed investment option. The amount of annuity
payments you receive during the Income Phase from the fixed portion of your
contract will remain level for the entire Income Phase.
================================================================================
2. ANNUITY INCOME OPTIONS
================================================================================
When you switch to the Income Phase, you will receive regular income payments
under the contract. You can choose to have your annuity payments sent to you by
check or electronically wired to your bank.
You select the date on which annuity payments are to begin, which must be the
first day of a month and must be at least two years after the date your contract
is issued. We call this the Annuity Date. You may change your Annuity Date at
least seven days prior to the date that your payments are to begin. However,
annuity payments must begin by the later of your 90th birthday or ten years
after the date your contract is issued. If no Annuity Date is selected, annuity
payments will begin on the later of your 90th birthday or ten years after the
date your contract is issued. Certain states may require you to receive annuity
payments prior to such date. If the Annuity Date is past your 85th birthday, it
is possible that the contract would not be treated as an annuity and you may
incur adverse tax consequences.
The Annuitant is the person on whose life annuity payments are based. You may
change the Annuitant at any time prior to the Annuity Date if you are an
individual designated as the owner of the contract. You may also designate a
second person on whose life annuity payments are based. If the Annuitant dies
before the Annuity Date, you must notify us and designate a new Annuitant.
If you do not choose an annuity option, annuity payments will be made in
accordance with option 4 (below) for 120 months. If the annuity payments are for
joint lives, then we will make payments in accordance with option 3. We may pay
the annuity in one lump sum if your contract is less than $5,000, where
permitted by state law. Likewise, if your annuity payments
5
<PAGE> 13
would be less than $50 a month, we have the right to change the frequency of
your payment to be on a quarterly, semiannual or annual basis so that your
annuity payments are at least $50. Annuity payments will be made to you unless
you designate another person to receive them. In that case, you must notify us
in writing at least thirty days before the Annuity Date. You will remain fully
responsible for any taxes related to the annuity payments.
The contract offers 5 annuity options. Other annuity options may be available in
the future.
OPTION 1 - LIFE INCOME
Under this option, we will make monthly annuity payments as long as the
Annuitant is alive. Annuity payments stop when the Annuitant dies.
OPTION 2 - JOINT AND SURVIVOR ANNUITY
Under this option, we will make monthly annuity payments as long as the
Annuitant and a designated second person are alive. Upon the death of either
person, we will continue to make annuity payments so long as the survivor is
alive. You choose the amount of the annuity payments to the survivor, which can
be equal to 100%, 66.66% or 50% of the full amount. Annuity payments stop upon
the death of the survivor.
OPTION 3 - JOINT AND SURVIVOR LIFE
ANNUITY - 120 MONTHLY PAYMENTS GUARANTEED
This option is similar to option 2 above, with the additional guarantee that
payments will be made for at least 120 months. If the Annuitant and designated
second person die before all payments have been made, the rest will be made to
the Beneficiary.
OPTION 4 - LIFE ANNUITY WITH 120 OR 240 MONTHLY PAYMENTS GUARANTEED
This option is similar to option 1 above, with the additional guarantee that
payments will be made for at least 120 or 240 months, as selected by you. Under
this option, if the Annuitant dies before all guaranteed payments have been
made, the rest will be made to the Beneficiary.
OPTION 5 - INCOME FOR A SPECIFIED PERIOD
Under this option, we will make monthly annuity payments for any period of time
from 5 to 30 years, as selected by you. However, the period must be for full 12
month periods. Under this option, if the Annuitant dies before all guaranteed
payments have been made, the rest will be made to the Beneficiary. This option
does not contain an element of mortality risk. Therefore, you will not get the
benefit of the mortality component of the mortality and expense risk change if
this option is selected.
ALLOCATION OF ANNUITY PAYMENTS
On the Annuity Date, if your money is invested in the fixed investment option,
your annuity payments will be fixed in amount. If your money is invested in the
variable Portfolios, your annuity payments will vary depending on the investment
performance of the Portfolios. If you have money in the fixed and variable
investment options, your annuity payments will be based on the investment
allocations. Unless your contract states otherwise, you may not convert between
fixed and variable payments once annuity payments begin.
ANNUITY PAYMENTS
If you choose to have any portion of your annuity payments come from the
variable Portfolios, the dollar amount of your payment will depend upon three
things: (1) the value of your contract in the Portfolios on the Annuity Date,
(2) the 3.5% assumed investment rate used in the annuity table for the contract
and (3) the performance of the Portfolios you selected. If the actual
performance exceeds the 3.5% assumed rate, your annuity payments will increase.
Similarly, if the actual rate is less than 3.5%, your annuity payments will
decrease. The SAI contains detailed information and sample calculations.
TRANSFERS DURING THE INCOME PHASE
Transfers are subject to the same limitations as transfers during the
Accumulation Phase. However, you can only make one transfer each month without
charge. You may not transfer money from the fixed investment option to the
variable Portfolios or from the variable Portfolios to the fixed investment
option during the Income Phase, unless your contract states otherwise. You may
transfer money among the variable Portfolios.
6
<PAGE> 14
DEFERMENT OF PAYMENTS
We may defer making fixed payments for up to six months, or less if required by
state law. Interest will be credited to you during the deferral period.
================================================================================
3. PURCHASING AN ANCHOR ADVISOR
VARIABLE ANNUITY
================================================================================
A Purchase Payment is the money you give to us to buy the contract, as well as
any additional money you give us to invest in the contract after you own it. You
can purchase a contract with a minimum initial investment of $20,000. The
maximum we accept is $1,000,000 without prior approval. Payments in amounts of
$500 or more may be added to your contract at any time during the Accumulation
Phase. You can make scheduled subsequent Purchase Payments of $100 or more per
month by enrolling in the Automatic Payment Plan. We reserve the right to waive
the minimum initial investment amount for certain groups of individuals.
We may refuse any Purchase Payment. In general, we will not issue a Nonqualified
contract to anyone who is over age 90 or a Qualified contract to anyone who is
age 70 1/2 or older unless you can show that the minimum distributions required
by the IRS are being made. You should also consider the appropriateness of this
annuity for Qualified contracts given the minimum initial investment amount.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, you will allocate your Purchase Payment to the
variable investment Portfolios and/or the fixed investment option. If you make
additional Purchase Payments, we will allocate them in the same way unless you
tell us otherwise.
Once we receive your Purchase Payment and a complete application at our
principal place of business, we will issue your contract and allocate your first
Purchase Payment within two business days. If you do not give us all the
necessary information, we will contact you to obtain it. If we are unable to
complete this process within five business days, we will either send back your
money or get your permission to keep it until we get all the necessary
information.
ACCUMULATION UNITS
The value of the variable portion of your contract will go up or down depending
upon the investment performance of the Portfolio(s) you choose. In order to keep
track of the value of your contract, we use a unit of measure called an
Accumulation Unit, which works like a share of a mutual fund. During the Income
Phase, we call them Annuity Units.
The value of an Accumulation Unit is determined each day that the New York Stock
Exchange ("NYSE") is open. We calculate an Accumulation Unit value for each
Portfolio after the NYSE closes each day. We do this by:
(1) determining the total value of money invested in the particular
Portfolio;
(2) subtracting from that amount any insurance charges and any other
charges such as taxes; and
(3) dividing this amount by the number of outstanding Accumulation Units.
The value of an Accumulation Unit may go up or down from day to day. When you
make a Purchase Payment, we credit your contract with Accumulation Units. The
number of Accumulation Units credited is determined by dividing the amount of
the Purchase Payment allocated to a Portfolio by the value of the Accumulation
Unit for that Portfolio.
EXAMPLE:
We receive a $25,000 Purchase Payment from you on Wednesday. You want the
money to go to the Global Bond Portfolio. We determine that the value of an
Accumulation Unit for the Global Bond Portfolio is $11.10 when the NYSE
closes on Wednesday. We then divide $25,000 by $11.10 and credit your
contract on Wednesday night with 2252.252 Accumulation Units for the Global
Bond Portfolio.
FREE LOOK
If you change your mind about owning this contract, you can cancel it within ten
days after receiving it (or longer if required by state law) by mailing it back
to our Annuity Service Center at P.O. Box 54299, Los Angeles, California
90054-0299. You will receive back whatever your contract is worth on the day we
receive your request. Its value may be more or less than the money you initially
invested. Thus, the investment risk is borne by you during the free look period.
7
<PAGE> 15
In certain states or if you purchase your contract as an IRA, we may be required
to return your Purchase Payment. If that is the case, we reserve the right to
put your money in the Cash Management Portfolio during the free look period. At
the end of the period, we will reallocate your money as you selected. If you
cancel your contract during the free look period, we will return to you the
greater of your Purchase Payments or the value of your contract.
================================================================================
4. INVESTMENT OPTIONS
================================================================================
The contract offers 19 variable investment Portfolios which invest in shares of
the Anchor Series Trust or the SunAmerica Series Trust. These Portfolios are
listed below. Additional Portfolios may be available in the future. SunAmerica
Asset Management Corp., an indirect wholly owned subsidiary of SunAmerica Inc.,
is the investment adviser for both Trusts. The Trusts serve as underlying
investments for other variable contracts sold by Anchor National, its affiliate,
First SunAmerica Life Insurance Company, and other unaffiliated insurance
companies. Neither Anchor National nor the Trusts believes offering shares of
the Trusts in this manner will be disadvantageous to you. We will monitor the
Trusts for any conflicts that may arise between contract owners. Additional
information is contained in the prospectus for the Trusts.
ANCHOR SERIES TRUST
Wellington Management Company, LLP serves as subadviser to the Anchor Series
Trust Portfolios. Anchor Series Trust has Portfolios in addition to those listed
below which are not available for investment under the contract. The 4 available
Portfolios are:
MANAGED BY WELLINGTON MANAGEMENT COMPANY, LLP
- Capital Appreciation Portfolio
- Growth Portfolio
- Natural Resources Portfolio
- Government and Quality Bond Portfolio
SUNAMERICA SERIES TRUST
Various subadvisers provide investment advice for the SunAmerica Series Trust
Portfolios. SunAmerica Series Trust also has Portfolios in addition to those
listed below which are not available for investment under the contract. The 15
available Portfolios and the subadvisers are:
MANAGED BY ALLIANCE CAPITAL MANAGEMENT L.P.
- Global Equities Portfolio
- Alliance Growth Portfolio
- Growth-Income Portfolio
MANAGED BY DAVIS SELECTED ADVISERS, L.P.
- Venture Value Portfolio
MANAGED BY FEDERATED INVESTORS
- Federated Value Portfolio
- Utility Portfolio
- Corporate Bond Portfolio
MANAGED BY GOLDMAN SACHS ASSET MANAGEMENT/ GOLDMAN SACHS ASSET MANAGEMENT
INTERNATIONAL
- Asset Allocation Portfolio
- Global Bond Portfolio
MANAGED BY MORGAN STANLEY ASSET MANAGEMENT INC.
- International Diversified Equities Portfolio
- Worldwide High Income Portfolio
MANAGED BY SUNAMERICA ASSET MANAGEMENT CORP.
- Aggressive Growth Portfolio
- SunAmerica Balanced Portfolio
- High-Yield Bond Portfolio
- Cash Management Portfolio
YOU SHOULD READ THE PROSPECTUSES FOR ANCHOR SERIES TRUST AND SUNAMERICA SERIES
TRUST CAREFULLY BEFORE INVESTING. THESE PROSPECTUSES CONTAIN DETAILED
INFORMATION ABOUT THE PORTFOLIOS AND ARE ATTACHED TO THIS PROSPECTUS.
FIXED INVESTMENT OPTION
The contract also offers a one-year fixed investment option and if provided for
by your contract, a one-year DCA account option for contract owners
participating in the Dollar Cost Averaging Program. Anchor National will
guarantee the interest rate on money you allocate to the fixed investment
option. We will also guarantee the interest rate on money you allocate to the
DCA account, which is available only if you are participating in the Dollar Cost
Averaging Program. Interest rates may differ from time to time due to changes in
market conditions but will not be less than 3%. The interest rates offered for
new Purchase Payments may differ from the interest rates offered for money
already in the contract. Once an interest rate is established for your contract,
it will not change during the one-year period. The interest rates are set at
Anchor National's sole discretion.
8
<PAGE> 16
After the one-year period, you can reallocate your money to the one-year fixed
investment option or put your money into one or more of the variable Portfolios.
Unless you specify otherwise before the end of the one-year period, we will keep
your money in the fixed investment option. You will receive the interest rate
then in effect, which may be more or less than the rate you initially received.
The one-year fixed investment option and the one-year DCA account are not
registered under the Securities Act of 1933 and are not subject to other
provisions of the Investment Company Act of 1940.
TRANSFERS DURING THE ACCUMULATION PHASE
You can transfer money among the Portfolios and the one-year fixed investment
option by written request or by telephone. You can make fifteen transfers every
year without charge. We measure a year from the anniversary of the day we issued
your contract. If you make more than fifteen transfers in a year, there is a $25
transfer fee for each transfer thereafter ($10 in Pennsylvania and Texas).
Transfers under Dollar Cost Averaging are included as part of your 15 free
transfers each year. However, transfers under Asset Allocation Rebalancing are
not counted against your 15 free transfers each year.
The minimum amount you can transfer is $100. You cannot make a partial transfer
if the value of the Portfolio from which the transfer is being made would be
less than $100 after the transfer. Your request for transfer must clearly state
which investment options are involved and the amount. We will accept transfers
by telephone unless you specify otherwise on your contract application. We have
in place procedures to provide reasonable assurance that instructions given to
us by telephone are genuine. Thus, we disclaim all liability for any claim, loss
or expense from any error. If we fail to use such procedures, we may be liable
for any losses due to unauthorized or fraudulent instructions.
We reserve the right to modify, suspend or terminate the transfer provisions at
any time. We also reserve the right to waive the $100 minimum amount for Dollar
Cost Averaging and Asset Allocation Rebalancing.
DOLLAR COST AVERAGING PROGRAM
The Dollar Cost Averaging Program allows you to systematically transfer a set
amount or percentage from one variable Portfolio or the one-year fixed
investment option to any other variable Portfolio(s). You can also select to
transfer the entire value in a Portfolio or the one-year fixed investment option
in a stated number of transfers. Transfers may be on a monthly or quarterly
basis. You can change the amount or frequency at any time by notifying us in
writing. The minimum amount that can be transferred is $100.
If available under your contract, you may also set up dollar cost averaging
using the one-year DCA account when you make either your initial Purchase
Payment or a subsequent Purchase Payment. When the one-year DCA account is used,
all your money in that account will be transferred to the variable Portfolio(s)
in either 12 or 4 transfers by the end of the one-year period, depending on the
option and frequency you selected. Once selected, you cannot change the option
or frequency. The minimum amount that can be transferred from the one-year DCA
account is also $100. We reserve the right to adjust the number of transfers in
order to meet the minimum transfer amount. You cannot transfer money from the
variable Portfolio(s) or the one-year fixed investment option into the one-year
DCA account.
The interest rate offered for the one-year DCA account may be different from the
interest rate offered to contract owners using the one-year fixed investment
option for this program. If you terminate this program and are dollar cost
averaging from the one-year DCA account, any money remaining in the one-year DCA
account will be automatically transferred to the one-year fixed investment
option and earn the interest rate then in effect for that investment options
unless you specify a transfer to any of the variable Portfolios.
By allocating amounts on a regular schedule as opposed to allocating the total
amount at one particular time, you may be less susceptible to the impact of
market fluctuations. However, there is no assurance that you will make a greater
profit. You are still subject to loss in a declining market. Dollar cost
averaging involves continuous investment in securities regardless of fluctuating
price levels. You should consider your financial ability to continue to invest
through periods of low prices.
Transfers under the program are included as part of your 15 free transfers each
year. However, any transfer from the one-year DCA account upon termination of
this program will
9
<PAGE> 17
not be counted against your 15 free transfers. We reserve the right to modify,
suspend or terminate this program at any time.
EXAMPLE:
Assume that you want to move $750 each quarter from the Cash Management
Portfolio to the Aggressive Growth Portfolio over six quarters. You set up
dollar cost averaging and purchase Accumulation Units at the following
values:
<TABLE>
<S> <C> <C>
- -----------------------------------------
ACCUMULATION UNITS
QUARTER UNIT PURCHASED
- -----------------------------------------
1 $ 7.50 100
2 $ 5.00 150
3 $10.00 75
4 $ 7.50 100
5 $ 5.00 150
6 $ 7.50 100
- -----------------------------------------
</TABLE>
You paid an average price of only $6.67 per Accumulation Unit over the six
quarters, while the average market price actually was $7.08. By investing
an equal amount of money each month, you automatically buy more
Accumulation Units when the market price is low and fewer Accumulation
Units when the market price is high.
ASSET ALLOCATION REBALANCING PROGRAM
Once your money has been allocated among the investment options, the earnings
may cause the percentage invested in each investment option may cause the
percentage invested in each investment option to differ from your original
percentage allocations. You can direct us to automatically rebalance your
contract to return to your original percentage allocations by selecting our
Asset Allocation Rebalancing Program. Rebalancing may be on a calendar quarter,
semiannual or annual basis. Rebalancing will occur on the last business day of
the month for the period you selected.
Transfers under the program are not counted against your 15 free transfers each
year. We reserve the right to modify, suspend or terminate this program at any
time.
EXAMPLE:
Assume that you want your initial Purchase Payment split between two
Portfolios. You want 50% in the Corporate Bond Portfolio and 50% in the
Growth Portfolio. Over the next calendar quarter, the bond market does very
well while the stock market performs poorly. At the end of the calendar
quarter, the Corporate Bond Portfolio now represents 60% of your holdings
because it has increased in value and the Growth Portfolio represents 40%
of your holdings. If you had chosen quarterly rebalancing, on the last day
of that quarter, we would sell some of your units in the Corporate Bond
Portfolio to bring its holdings back to 50% and use the money to buy more
units in the Growth Portfolio to increase those holdings to 50%.
VOTING RIGHTS
Anchor National is the legal owner of the Trusts' shares. However, when a
Portfolio solicits proxies in conjunction with a vote of shareholders, we are
required to obtain from you instructions as to how to vote those shares. When we
receive those instructions, we will vote all of the shares we own in proportion
to those instructions. This will also include any shares that we own on our
behalf. Should we determine that we are no longer required to comply with the
above, we will vote the shares in our own right.
SUBSTITUTION
If any of the Portfolios you selected are no longer available, we may be
required to substitute shares of another Portfolio. We will seek prior approval
of the SEC and give you notice before doing this.
================================================================================
5. EXPENSES
================================================================================
There are charges and other expenses associated with the contract that will
reduce your investment return. These charges and expenses are described below.
There are no withdrawal charges and no contract maintenance charges under the
contract.
INSURANCE CHARGES
Each day, we make a deduction for our insurance charges. This is done as part of
our calculation of the value of the Accumulation Units during the Accumulation
Phase and the Annuity Units during the Income Phase. The insurance charges
consist of the mortality and expense risk charge and the distribution expense
charge.
10
<PAGE> 18
MORTALITY AND EXPENSE RISK CHARGE
This charge is equal, on an annual basis, to 1.37% of the daily value of the
contract invested in a Portfolio. This charge is for our obligation to make
annuity payments, to provide the 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.
If the charges under the contract are not sufficient, we will bear the loss. We
will not increase this charge. We may use any profits from this charge to pay
for the costs of distributing the contract.
DISTRIBUTION EXPENSE CHARGE
This charge is equal, on an annual basis, to .15% of the daily value of the
contract invested in a Portfolio. 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, we will bear the loss.
INVESTMENT CHARGES
If you have money allocated to the variable Portfolios, there are deductions
from and expenses paid out of the assets of the various Portfolios. These
investment charges are summarized in the Fee Tables. For more detailed
information, you should refer to the prospectuses for the Anchor Series Trust
and the SunAmerica Series Trust.
TRANSFER FEE
You can make 15 free transfers every year. We measure a year from the day we
issue your contract. If you make more than 15 transfers a year, we will deduct a
$25 transfer fee ($10 in Pennsylvania and Texas).
PREMIUM TAXES
We are responsible for the payment of premium taxes, if any, charged by some
states and will make a deduction from your contract for them. These taxes are
due either when the contract is issued or when annuity payments begin. It is our
current practice not to charge you for these taxes until annuity payments begin
or a full surrender is made. In the future, we may discontinue this practice and
assess the tax when it is due or upon the payment of the death benefit.
Appendix B provides more information about the premium taxes assessed in each
state.
INCOME TAXES
Although we do not currently deduct any income taxes borne under your contract,
we reserve the right to do so in the future.
REDUCTION OR ELIMINATION OF CERTAIN CHARGES
We will reduce or eliminate the amount of certain insurance charges when the
contract is sold to groups of individuals under circumstances which reduce its
sales expenses. We will determine the eligibility of such groups by considering
the following factors: (1) the size of the group; (2) the total amount of
Purchase Payments we expect to receive from the group; (3) the nature of the
purchase and the persistency we expect in that group; (4) the purpose of the
purchase and whether that purpose makes it likely that expenses will be reduced;
and (5) any other circumstances which we believe to be relevant in determining
whether reduced sales expenses may be expected.
================================================================================
6. TAXES
================================================================================
NOTE: WE HAVE PREPARED THE FOLLOWING INFORMATION ON TAXES AS A GENERAL
DISCUSSION OF THE SUBJECT. IT IS NOT INTENDED AS TAX ADVICE. YOU ARE CAUTIONED
TO SEEK COMPETENT TAX ADVICE ABOUT YOUR OWN CIRCUMSTANCES. WE DO NOT GUARANTEE
THE TAX STATUS OF THE ANNUITY.
ANNUITY CONTRACTS IN GENERAL
The Internal Revenue Code ("IRC") provides for special rules regarding the tax
treatment of annuity contracts. Generally, you will not be taxed on the earnings
in your annuity contract until you take the money out. Different rules apply
depending on how you take the money out and whether your contract is Qualified
or Nonqualified.
If you do not purchase your contract under a pension plan, specially sponsored
program or an individual retirement account, your contract is referred to as a
Nonqualified contract and receives different tax treatment than a Qualified
contract.
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<PAGE> 19
In general, your cost basis in a Nonqualified contract is equal to the Purchase
Payments you put into the contract. You have already been taxed on the cost
basis in your contract.
If you purchase your contract under a pension plan, specially sponsored program
or as an individual retirement account, your contract is referred to as a
Qualified contract. Examples of qualified plans are: Individual Retirement
Annuities, Tax-sheltered Annuities (referred to as 403(b) contracts), H.R. 10
Plans (referred to as Keogh Plans) and pension and profit sharing plans,
including 401(k) plans. Typically you have not paid any tax on the Purchase
Payments used to buy your contract and therefore, you have no cost basis in your
contract.
TAX TREATMENT OF DISTRIBUTIONS - NONQUALIFIED CONTRACTS
If you make a withdrawal from a Nonqualified contract, the IRC treats such a
withdrawal as first coming from the earnings and then as coming from your
Purchase Payments. For annuity payments, any portion of each payment that is
considered a return of your Purchase Payment will not be taxed. Withdrawn
earnings are treated as income to you and are taxable. The IRC further provides
for a 10% tax penalty on any earnings that are withdrawn other than in
conjunction with the following circumstances: (1) after reaching age 59 1/2; (2)
by your Beneficiary after you die; (3) after you become disabled (as defined in
the IRC); (4) in a series of substantially equal installments made for your life
or for the joint lives of you and your Beneficiary; (5) under an immediate
annuity; or (6) which come from Purchase Payments made prior to August 14, 1982.
TAX TREATMENT OF DISTRIBUTIONS - QUALIFIED CONTRACTS
Generally, you have not paid any taxes on the Purchase Payments used to buy a
Qualified contract or on any earnings and therefore, any amount you take out as
a withdrawal or as annuity payments will be taxable income. The IRC further
provides for a 10% tax penalty on any withdrawal or annuitization paid to you
other than in conjunction with the following circumstances: (1) after reaching
age 59 1/2; (2) by your Beneficiary after you die; (3) after you become disabled
(as defined in the IRC); (4) in a series of substantially equal installments
made for your life or for the joint lives of you and your Beneficiary; and,
except in the case of an IRA as to the following: (5) after you separate from
service after attaining age 55; (6) to the extent such withdrawals do not exceed
limitations set by the IRC for amounts paid during the taxable year for medical
care; and (7) to an alternate payee pursuant to a qualified domestic relations
order.
The IRC limits the withdrawal of Purchase Payments from certain Tax-sheltered
Annuities. Withdrawals can only be made when an owner: (1) reaches age 59 1/2;
(2) leaves his or her job; (3) dies; (4) becomes disabled (as defined in the
IRC); or (5) in the case of hardship. In the case of hardship, the owner can
only withdraw an amount equal to Purchase Payments and not any earnings.
DIVERSIFICATION
The IRC imposes certain diversification requirements on the underlying
investments for a variable annuity in order to be treated as a variable annuity
for tax purposes. We believe that the variable Portfolios are being managed so
as to comply with these requirements.
The diversification regulations do not provide guidance as to the circumstances
under which you, because of the degree of control you exercise over the
underlying investments, and not Anchor National, would be considered the owner
of the shares of the Portfolios. It is unknown to what extent owners are
permitted to select investments, to make transfers among portfolios or the
number and type of portfolios owners may select from. If any guidance is
provided which is considered a new position, then the guidance would generally
be applied prospectively. However, if such guidance is considered not to be a
new position, it may be applied retroactively. This would mean you, as the owner
of the contract, could be treated as the owner of the variable investment
Portfolios.
Due to the uncertainty in this area, we reserve the right to modify the contract
in an attempt to maintain favorable tax treatment.
12
<PAGE> 20
================================================================================
7. WITHDRAWALS
================================================================================
Under your contract, money can be accessed in the following ways: (1) by making
a withdrawal, either for a part of the value of your contract or for the entire
value of your contract during the Accumulation Phase; (2) by receiving annuity
payments during the Income Phase; and (3) when a death benefit is paid to your
Beneficiary. There are no withdrawal charges under the contract.
If you make a complete withdrawal, you will receive the value of your contract,
less any applicable fees and charges, as calculated on the day following receipt
by us at our principal place of business of a complete request to make such a
withdrawal. Your contract must be submitted as well.
Under most circumstances, partial withdrawals must be for a minimum of $1,000.
We require that the value left in any Portfolio or the fixed investment option
be at least $500 after the withdrawal. Unless you provide us with different
instructions, partial withdrawals will be made pro rata from each Portfolio and
the fixed investment option in which your contract is invested. You must send a
written withdrawal request to us prior to any withdrawal being made.
We may be required to suspend or postpone the payment of a withdrawal for any
period of time when: (1) the NYSE is closed (other than a customary weekend and
holiday closings); (2) trading on the NYSE is restricted; (3) an emergency
exists such that disposal of or determination of the value of shares of the
portfolios is not reasonably practicable; (4) the SEC, by order, so permits for
the protection of contract owners.
Additionally, we reserve the right to defer payments for a withdrawal from the
fixed investment option for the period permitted by law but not for more than
six months.
SYSTEMATIC WITHDRAWAL PROGRAM
This program allows you to receive either monthly, quarterly, semiannual or
annual checks during the Accumulation Phase. You can also choose to have
systematic withdrawals electronically wired to your bank account. The minimum
amount of each withdrawal is $250. Withdrawals may be taxable and a 10% IRS tax
penalty may apply if you are under age 59 1/2. There is no charge for
participating in this program.
This program is not available to everyone. Please check with our Annuity Service
Center, which can provide the necessary enrollment forms. We reserve the right
to modify, suspend or terminate this program at any time.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY WITHDRAWAL
YOU MAKE.
MINIMUM CONTRACT VALUE
Where permitted by state law, we may terminate your contract if both of the
following occur: (1) your contract is less than $500 as a result of withdrawals
and (2) no Purchase Payments have been made during the past three years. We will
provide you with sixty days written notice and distribute the contract's
remaining value to you.
================================================================================
8. PERFORMANCE
================================================================================
From time to time we may advertise the Cash Management Portfolio's yield and
effective yield. In addition, the other variable investment Portfolios may also
advertise total return, gross yield and yield to maturity information. These
figures are based on historical data and are not intended to indicate future
performance.
For periods starting prior to the date the contracts were first offered, the
performance will be derived from the performance of the corresponding portfolios
of the Trusts, modified to reflect Anchor Advisor's charges and expenses as if
the contracts had been in existence during the period stated in the
advertisement. Thus, these figures should not be construed to reflect actual
historic performance.
More detailed information on the method used to calculate performance for the
Portfolios is contained in the SAI.
The performance of each Portfolio may also be measured against unmanaged market
indices, including but not limited to the Dow Jones Industrial Average, the
Standard & Poor's 500, the Russell 1000 Growth Index, the Morgan Stanley Capital
International Europe, Australia, and Far East Index (EAFE) and the Morgan
Stanley Capital International World Index, and may be compared to that of other
variable annuities with similar objectives and policies as reported by
independent ranking agencies such
13
<PAGE> 21
as Morningstar, Inc., Lipper Analytical Services, Inc. or the Variable Annuity
Research & Data Service ("VARDS").
At times Anchor National may also advertise the ratings and other information
assigned to it by independent rating organizations such as A.M. Best Company
("A.M. Best"), Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Insurance Rating Services ("S&P"), and Duff & Phelps. A.M. Best's and Moody's
ratings reflect their current opinion of our financial strength and performance
in comparison to others in the life/health insurance industry. S&P's and Duff &
Phelps' ratings measure the ability of an insurance company to meet its
obligations under insurance policies it issues and do not measure the ability of
such companies to meet other non-policy obligations. The ratings also do not
relate to the performance of the Portfolios.
================================================================================
9. DEATH BENEFIT
================================================================================
If you should die during the Accumulation Phase of your contract, we will pay a
death benefit to your Beneficiary. Unless your contract states otherwise, you
must select from the two death benefit options described below at the time you
purchase your contract. Once selected, your death benefit may not be changed.
You should discuss with your financial representative the options available to
you and which option is best for you.
These death benefit options may not be available under certain contracts. In
that case, the death benefit under such contracts is option 1 only.
OPTION 1 - PURCHASE PAYMENT ACCUMULATION OPTION:
The death benefit is the greater of:
(1) the value of your contract at the time we receive adequate proof of death,
(2) total Purchase Payments less any withdrawals, all compounded at 4% annually
until the date of death (3% if age 70 or older at time of issue), or
(3) the value of your contract on the seventh contract anniversary less any
withdrawals plus any additional Purchase Payments since the seventh
anniversary, all compounded at 4% annually until the date of death (3% if
age 70 or older at time of issue).
OPTION 2 - MAXIMUM ANNIVERSARY VALUE OPTION:
The death benefit is the greater of:
(1) the value of your contract at the time we receive adequate proof of death,
(2) total Purchase Payments less any withdrawals, or
(3) the maximum of the anniversary values up to your 81st birthday. The
anniversary value is equal to the value of your contract on the contract
anniversary less any withdrawals plus any additional Purchase Payments since
that anniversary.
If you are age 90 or older at the time of death, the death benefit under option
2 is the value of your contract at the time we receive adequate proof of death.
In general, you would not get the advantage of the second option if you are over
age 80 at the time your contract is issued or age 90 or older at the time of
death.
The death benefit is not paid after you switch to the Income Phase. During the
Income Phase, your Beneficiary(ies) will receive any remaining annuity payments
in accordance with the annuity option you choose.
You may select the Beneficiary(ies) to receive any amounts payable on death. You
may change the Beneficiary at any time, unless you previously made an
irrevocable Beneficiary designation. A new Beneficiary designation is not
effective until we record the change.
The death benefit is immediately payable under the contract. If the Beneficiary
elects an annuity option, it must be paid over the Beneficiary's lifetime or for
a period not extending beyond the Beneficiary's life expectancy. If the
Beneficiary is the spouse of the owner, he or she can elect to continue the
contract at the then current value, in which case he or she will not receive the
death benefit.
The death benefit will be paid out when we receive adequate proof of death: (1)
a certified copy of a death certificate; (2) a certified copy of a decree of
court of competent jurisdiction as to the finding of death; (3) a written
statement by a medical doctor who attended the deceased at the time of death; or
(4) any other proof satisfactory to us. We may also require additional
documentation as proof in order for the death benefit to be paid. If the
Beneficiary does not make a specific election within sixty days of our
14
<PAGE> 22
receipt of such proof of death, the death benefit will be paid in a lump sum.
================================================================================
10. OTHER INFORMATION
================================================================================
ANCHOR NATIONAL
Anchor National and its affiliates, SunAmerica Life Insurance Company, First
SunAmerica Life Insurance Company, CalAmerica Life Insurance Company, SunAmerica
National Life Insurance Company, SunAmerica Asset Management Corp., Imperial
Premium Finance, Inc., Resources Trust Company and four broker-dealers,
specializes in retirement savings and investment products and services,
including fixed and variable annuities, mutual funds, premium finance,
broker-dealer and trust administration services. Anchor National is an indirect
wholly owned subsidiary of SunAmerica Inc. Anchor National is licensed to do
business in the District of Columbia and all states except New York.
THE SEPARATE ACCOUNT
Anchor National originally established a separate account, Variable Annuity
Account Four, under California law on November 8, 1994. The separate account is
registered with the SEC as a unit investment trust under the Investment Company
Act of 1940.
Anchor National owns the assets in the separate account. However, the assets in
the separate account are not chargeable with liabilities arising out of any
other business Anchor National may conduct. Income, gains and losses (realized
and unrealized) resulting from the assets in the separate account are credited
to or charged against the separate account without regard to other income, gains
or losses of Anchor National.
THE GENERAL ACCOUNT
If you put your money into the fixed investment option, it goes into Anchor
National's general account. The general account is made up of all of Anchor
National's assets other than assets attributable to a separate account. All of
the assets in the general account are chargeable with the claims of any Anchor
National contract owners as well as all creditors. The general account is
invested in assets permitted by state insurance law.
DISTRIBUTION
The contract is sold through registered representatives of broker-dealers.
Commissions are paid to registered representatives for the sale of contracts.
Commissions are not expected to exceed 2% of your Purchase Payment. Under some
circumstances, we may pay a persistency bonus in addition to standard
commissions. Usually the standard commission is lower when we pay a persistency
bonus, which is not anticipated to exceed 1% annually. Commissions paid to
registered representatives are not directly deducted from your Purchase Payment.
SunAmerica Capital Services, Inc., 733 Third Avenue, 4th Floor, New York, New
York 10017 acts as the distributor of the contracts. SunAmerica Capital
Services, Inc., an affiliate of Anchor National, is registered as a
broker-dealer under the Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc.
ADMINISTRATION
We are responsible for all the administrative servicing of your contract. Please
contact Anchor National's Annuity Service Center at the telephone number and
address provided in the profile section of this prospectus if you have any
comment, question or service request.
We will send out transaction confirmations and quarterly statements. Please
review these documents carefully and notify us of any inaccuracies immediately.
We will investigate all questions and, to the extent we have made an error, we
will retroactively adjust your contract provided you have notified us within
thirty days of receiving the transaction confirmation or quarterly statement, as
applicable. All other adjustments will be made as of the time we receive notice
of the error.
LEGAL PROCEEDINGS
There are no pending legal proceedings affecting the separate account. Anchor
National and its subsidiaries are engaged in various kinds of routine litigation
which, in management's judgment, is not of material importance to their
respective total assets or material with respect to the separate account.
15
<PAGE> 23
OWNERSHIP
The Anchor Advisor Variable Annuity is a Flexible Payment Group Deferred Annuity
Contract. A group contract is issued to a contractholder, for the benefits of
the participants in the group. You are a participant in the group and will
receive a certificate evidencing your ownership. You, as the owner of a
certificate, are entitled to all the rights and privileges of ownership. As used
in this prospectus, the term contract refers to your certificate. In some states
a Flexible Payment Individual Modified Guaranteed and Variable Deferred Annuity
Contract may be available instead, which is identical to the group contract
described in this prospectus except that it is issued directly to the owner.
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110, serves as the custodian of the assets of the separate account. Anchor
National pays State Street Bank for services based on a schedule of fees.
================================================================================
TABLE OF CONTENTS OF
STATEMENT OF ADDITIONAL INFORMATION
================================================================================
<TABLE>
<S> <C>
Separate Account......................... 3
General Account.......................... 4
Performance Data......................... 4
Annuity Payments......................... 8
Annuity Unit Values...................... 8
Taxes.................................... 11
Distribution of Contracts................ 15
Financial Statements..................... 16
</TABLE>
16
<PAGE> 24
================================================================================
APPENDIX A - CONDENSED FINANCIAL INFORMATION
================================================================================
<TABLE>
<CAPTION>
INCEPTION TO FISCAL YEAR
PORTFOLIOS 9/30/96 9/30/97
=========================================================================================
<S> <C> <C>
Capital Appreciation (Inception Date - 8/27/96)
Beginning AUV $16.67 $ 17.61
End AUV $17.61 22.13
End #AUs 11,922 463,440
-----------------------------------------------------------------------------------------
Growth (Inception Date - 9/6/96)
Beginning AUV $14.31 $ 15.06
End AUV $15.06 20.33
End #AUs 5,060 258,234
-----------------------------------------------------------------------------------------
Natural Resources (Inception Date - 9/12/96)
Beginning AUV $11.56 $ 11.57
End AUV $11.57 13.39
End #AUs 1,157 120,153
-----------------------------------------------------------------------------------------
Government and Quality Bond (Inception Date - 9/16/96)
Beginning AUV $11.47 $ 11.50
End AUV $11.50 12.44
End #AUs 1,151 160,820
-----------------------------------------------------------------------------------------
Aggressive Growth (Inception Date - 8/29/96)
Beginning AUV $ 9.26 $ 9.93
End AUV $ 9.93 12.59
End #AUs 4,313 331,531
-----------------------------------------------------------------------------------------
International Diversified Equities (Inception Date - 9/12/96)
Beginning AUV $10.61 $ 11.10
End AUV $11.10 12.48
End #AUs 3,352 664,200
-----------------------------------------------------------------------------------------
Global Equities (Inception Date - 8/27/96)
Beginning AUV $14.13 $ 14.38
End AUV $14.38 18.04
End #AUs 6,223 266,074
-----------------------------------------------------------------------------------------
Alliance Growth (Inception Date - 9/12/96)
Beginning AUV $16.39 $ 17.14
End AUV $17.14 25.45
End #AUs 3,827 541,482
-----------------------------------------------------------------------------------------
Venture Value (Inception Date - 8/27/96)
Beginning AUV $14.43 $ 14.85
End AUV $14.85 21.75
End #AUs 24,362 1,144,284
-----------------------------------------------------------------------------------------
Federated Value (Inception Date - 9/6/96)
Beginning AUV $ 9.63 $ 10.07
End AUV $10.07 13.67
End #AUs 7,752 215,531
-----------------------------------------------------------------------------------------
Growth-Income (Inception Date - 9/6/96)
Beginning AUV $14.27 $ 15.03
End AUV $15.03 21.56
End #AUs 3,515 717,459
-----------------------------------------------------------------------------------------
Utility (Inception Date - 9/16/96)
Beginning AUV $10.08 $ 9.92
End AUV $ 9.92 11.93
End #AUs 1,310 94,759
-----------------------------------------------------------------------------------------
</TABLE>
A-1
<PAGE> 25
<TABLE>
<CAPTION>
INCEPTION TO FISCAL YEAR
PORTFOLIOS 9/30/96 9/30/97
=========================================================================================
<S> <C> <C>
Asset Allocation (Inception Date - 9/16/96)
Beginning AUV $13.75 $ 13.84
End AUV $13.84 18.38
End #AUs 1,310 649,819
-----------------------------------------------------------------------------------------
SunAmerica Balanced (Inception Date - 9/16/96)
Beginning AUV $10.12 $ 10.34
End AUV $10.34 13.26
End #AUs 3,534 233,752
-----------------------------------------------------------------------------------------
Worldwide High Income (Inception Date - 8/27/96)
Beginning AUV $13.10 $ 13.60
End AUV $13.60 16.77
End #AUs 9,345 279,672
-----------------------------------------------------------------------------------------
High-Yield Bond (Inception Date - 9/23/96)
Beginning AUV $12.46 $ 12.62
End AUV $12.62 14.66
End #AUs 1,440 341,232
-----------------------------------------------------------------------------------------
Corporate Bond (Inception Date - 9/23/96)
Beginning AUV $11.13 $ 11.21
End AUV $11.21 12.35
End #AUs 3,525 119,358
-----------------------------------------------------------------------------------------
Global Bond (Inception Date - 9/4/96)
Beginning AUV $11.61 $ 11.85
End AUV $11.85 12.95
End #AUs 2,148 163,409
-----------------------------------------------------------------------------------------
Cash Management (Inception Date - 9/5/96)
Beginning AUV $10.95 $ 10.98
End AUV $10.98 11.37
End #AUs 12,143 520,152
=========================================================================================
</TABLE>
AUV - Accumulation Unit Value
AU - Accumulation Units
A-2
<PAGE> 26
================================================================================
APPENDIX B - PREMIUM TAXES
================================================================================
Premium taxes vary according to the state and are subject to change without
notice. In many states, there is no tax at all. Listed below are the current
premium tax rates in those states that assess a premium tax. For current
information, you should consult your tax adviser.
<TABLE>
<CAPTION>
QUALIFIED NON-QUALIFIED
STATE CONTRACT CONTRACT
===================================================================
<S> <C> <C>
California .50% 2.35%
-------------------------------------------------------------------
District of Columbia 2.25% 2.25%
-------------------------------------------------------------------
Kansas 0% 2%
-------------------------------------------------------------------
Kentucky 2% 2%
-------------------------------------------------------------------
Maine 0% 2%
-------------------------------------------------------------------
Michigan .00075% .00075%
-------------------------------------------------------------------
Nevada 0% 3.5%
-------------------------------------------------------------------
South Dakota 0% 1.25%
-------------------------------------------------------------------
West Virginia 1% 1%
-------------------------------------------------------------------
Wyoming 0% 1%
===================================================================
</TABLE>
B-1
<PAGE> 27
- --------------------------------------------------------------------------------
Please forward a copy (without charge) of the Anchor Advisor Variable Annuity
Statement of Additional Information to:
(Please print or type and fill in all information.)
----------------------------------------------------------------
Name
----------------------------------------------------------------
Address
----------------------------------------------------------------
City/State/Zip
Date: Signed:
--------------------- ---------------------------
Return to: Anchor National Life Insurance Company, Annuity Service Center,
P.O. Box 54299, Los Angeles, California 90054-0299.
- --------------------------------------------------------------------------------
<PAGE> 28
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
FIXED AND VARIABLE GROUP DEFERRED
ANNUITY CONTRACTS ISSUED BY
VARIABLE ANNUITY ACCOUNT FOUR
DEPOSITOR: ANCHOR NATIONAL LIFE INSURANCE COMPANY
This Statement of Additional Information is not a prospectus; it should be read
with the prospectus relating to the annuity contracts described above, a copy of
which may be obtained without charge by written request addressed to:
ANCHOR NATIONAL LIFE INSURANCE COMPANY
ANNUITY SERVICE CENTER
P.O. BOX 54299
LOS ANGELES, CALIFORNIA 90054-0299
THE DATE OF THIS STATEMENT OF ADDITIONAL INFORMATION IS
FEBRUARY 2, 1998
<PAGE> 29
TABLE OF CONTENTS
PAGE
Separate Account....................................................... 3
General Account........................................................ 4
Performance Data ...................................................... 4
Annuity Payments....................................................... 8
Annuity Unit Values.................................................... 8
Taxes . . . . . . . . ................................................. 11
Distribution of Contracts.............................................. 15
Financial Statements................................................... 16
<PAGE> 30
SEPARATE ACCOUNT
Variable Annuity Account Four was originally established by the Anchor
National Life Insurance Company (the "Company") on November 8, 1994, 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 Portfolios, with the assets of each
Portfolio invested in the shares of one of the underlying funds. The Company
does not guarantee the investment performance of the separate account, its
Portfolios or the underlying funds. Values allocated to the separate account and
the amount of variable annuity 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 annuity 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 annuity 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
Portfolios 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 annuity 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 annuity 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 annuity
payments).
-3-
<PAGE> 31
GENERAL ACCOUNT
The General Account is made up of all of the general assets of the
Company other than those allocated to the separate account or any other
segregated asset account of the Company. A Purchase Payment may be allocated to
the one-year fixed investment option available in connection with the general
account, as elected by the owner at the time of purchasing a contract. Assets
supporting amounts allocated to the fixed investment options and/or the one-year
DCA account 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 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
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. The impact of other recurring charges 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" date for
its other 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 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
-4-
<PAGE> 32
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 contracts were first offered
to the public, the total return data for the Portfolios of the separate account
will be derived from the performance of the corresponding Portfolios of Anchor
Series Trust and SunAmerica Series Trust, modified to reflect the charges and
expenses as if the separate account Portfolio had been in existence since the
inception date of each respective Anchor Series Trust and SunAmerica Series
Trust Portfolio. Thus, such performance figures should not be construed to be
actual historic performance of the relevant separate account Portfolio. Rather,
they are intended to indicate the historical performance of the corresponding
Portfolios of Anchor Series Trust and SunAmerica Series Trust, adjusted to
provide direct comparability to the performance of the 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 Portfolios are computed in the manner
described below.
CASH MANAGEMENT PORTFOLIO
The annualized current yield and the effective yield for the Cash
Management Portfolio for the 7 day period ending September 30, 1997 were 3.15%
and 3.19%, 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:
Base Period Return = (EV-SV)/(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
The value of the Accumulation Unit at the end of the period (EV) is
determined by (1) adding, to the value of the Accumulation Unit at the beginning
of the period (SV), the investment income from the underlying fund attributed to
the Accumulation Unit over the period, and (2) subtracting, from the result, the
portion of the annual mortality and expense risk and distribution expense
charges allocable to the 7 day period (obtained by multiplying the
annually-based charges by the fraction 7/365).
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<PAGE> 33
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:
365/7
Effective Yield = [(Base Period Return + 1) - 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 PORTFOLIOS
The Portfolios of the separate account other than the Cash Management
Portfolio compute their performance data as "total return".
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<PAGE> 34
The total returns of the various Portfolios for 1 year and since each
Portfolio's inception date inception are shown below.
TOTAL ANNUAL RETURN (IN PERCENT) FOR
PERIOD ENDING SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
INCEPTION SINCE
PORTFOLIO DATE 1 YEAR INCEPTION
--------- ------- ------- -------
<S> <C> <C> <C>
Anchor Series Trust
- -------------------
Capital Appreciation 8/27/96 25.69% 29.63%
Growth 9/6/96 34.99% 39.02%
Natural Resources 9/12/96 15.79% 15.04%
Gov't & Quality Bond 9/16/96 8.14% 8.14%
SunAmerica Series Trust
- -----------------------
Aggressive Growth 8/29/96 26.74% 32.54%
International Diversified 9/12/96 12.47% 16.72%
Equities
Global Equities 8/27/96 25.45% 25.05%
Alliance Growth 9/12/96 48.50% 52.10%
Venture Value 8/27/96 46.43% 45.51%
Federated Value 9/6/96 35.70% 38.92%
Growth-Income 9/6/96 43.48% 47.33%
Utility 9/16/96 20.35% 17.65%
Asset Allocation 9/16/96 32.78% 32.28%
SunAmerica Balanced 9/16/96 28.18% 29.64%
Worldwide High Income 8/27/96 23.30% 25.38%
High-Yield Bond 9/23/96 16.20% 17.31%
Corporate Bond 9/23/96 10.16% 10.74%
Global Bond 9/4/96 9.29% 10.75%
</TABLE>
- -----------------
Total return figures are based on historical data and are not intended
to indicate future performance.
Total return for a 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 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:
n
P(1+T) = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
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
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<PAGE> 35
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.
ANNUITY PAYMENTS
INITIAL MONTHLY ANNUITY PAYMENTS
The initial annuity payment is determined by applying separately that
portion of the contract value allocated to the fixed investment option 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 annuity 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.
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 annuity 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 annuity
payment. The number of Annuity Units determined for the first variable annuity
payment remains constant for the second and subsequent monthly variable annuity
payments, assuming that no reallocation of contract values is made.
SUBSEQUENT MONTHLY PAYMENTS
For fixed annuity payments, the amount of the second and each subsequent
monthly annuity payment is the same as that determined above for the first
monthly payment.
For variable annuity payments, the amount of the second and each
subsequent monthly annuity 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 annuity payment is due.
ANNUITY UNIT VALUES
The value of an Annuity Unit is determined independently for each
Portfolio.
The annuity tables contained in the contract are based on a 3.5% per
annum assumed
-8-
<PAGE> 36
investment rate. If the actual net investment rate experienced by a Portfolio
exceed 3.5%, variable annuity payments derived from allocations to that
Portfolio will increase over time. Conversely, if the actual rate is less than
3.5%, variable annuity payments will decrease over time. If the net investment
rate equals 3.5%, the variable annuity 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 annuity 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 Portfolios elected, and the amount of each annuity payment
will vary accordingly.
For each 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 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 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 Portfolio for a certain month is determined by dividing
(a) by (b) where:
(a) is the Accumulation Unit value of the Portfolio determined
as of the end of that month, and
(b) is the Accumulation Unit value of the Portfolio determined as of
the end of the preceding month.
The NIF for a Portfolio for a given month is a measure of the net
investment performance of the Portfolio from the end of the prior month to the
end of the given month. A NIF of 1.000 results from no change in the value of
the Portfolio; a NIF greater than 1.000 results in from increase in the value of
the Portfolio; and a NIF less than 1.000 results from a decrease in the value of
the Portfolio. 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 Portfolio invests; it is also reduced by separate account
asset charges.
-9-
<PAGE> 37
ILLUSTRATIVE EXAMPLE
Assume that one share of a given 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
ILLUSTRATIVE EXAMPLE
The change in Annuity Unit value for a 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 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 annuity payment tables are based. For example,
if the net investment rate for a Portfolio (reflected in the NIF) were equal to
the assumed investment rate, the variable annuity 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 Portfolio
was $10.103523 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
VARIABLE ANNUITY 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 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 Portfolio on that same date is $13.256932, and that the
Annuity Unit value on the day immediately prior to the second annuity payment
date is $13.327695.
P's first variable annuity payment is determined from the annuity rate
tables in P's contract, using the information assumed above. From the tables,
which supply monthly annuity payments for
-10-
<PAGE> 38
each $1,000 of applied contract value, P's first variable annuity payment is
determined by multiplying the monthly installment of $5.42 (Option 4v table,
male Annuitant age 60 at the Annuity Date) by the result of dividing P's account
value by $1,000:
First Payment = $5.42 x ($116,412.31/$1,000) = $630.95
The number of P's Annuity Units (which will be fixed; i.e., it will not
change unless he transfers his Annuity Units to Annuity Units of another
Portfolio) is also determined at this time and is equal to the amount of the
first variable annuity payment divided by the value of an Annuity Unit on the
day immediately prior to annuitization:
Annuity Units = $630.95/$13.256932 = 47.593968
P's second variable annuity 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:
Second Payment = 47.593968 x $13.327695 = $634.32
The third and subsequent variable annuity payments are computed in a
manner similar to the second variable annuity payment.
Note that the amount of the first variable annuity payment depends on
the contract value in the relevant Portfolio on the Annuity Date and thus
reflects the investment performance of the 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 Portfolio). The net investment performance of the
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 annuity 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 annuity 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 annuity 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 annuity payments for the term of the
-11-
<PAGE> 39
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.
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) annuity 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
payments under the contract. The Code contains a safe harbor provision which
provides that annuity contracts such as the contracts meet the diversification
requirements if, as of the
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<PAGE> 40
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 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
-13-
<PAGE> 41
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 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,
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<PAGE> 42
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) 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.
(e) 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.
DISTRIBUTION OF CONTRACTS
The contracts are offered 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.
For the period ended September 30, 1997, the aggregate amount of
underwriting commissions paid by the Company to SunAmerica Capital Services,
Inc. was $202,414, of which $23,398 was retained by it. For the period from
inception to September 30, 1996, the aggregate amount of
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<PAGE> 43
underwriting commissions paid by the Company to SunAmerica Capital Services,
Inc. was $12,448.33, of which $1,231.12 was retained by it.
Contracts are offered on a continuous basis.
FINANCIAL STATEMENTS
The consolidated financial statements of the Company as of September 30,
1997 and 1996 and for each of the three years in the period ended September 30,
1997 are presented in this Statement of Additional Information. 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. The financial
statements of Variable Annuity Account Four as of September 30, 1997 and for the
year then ended and for the period from inception (August 19, 1996) to
September 30, 1996 are included in this Statement of Additional Information.
Price Waterhouse 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 Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
-16-
<PAGE> 44
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder of
Anchor National Life Insurance Company
In our opinion, the accompanying consolidated balance sheet and the related
consolidated income statement and statement of cash flows present fairly, in all
material respects, the financial position of Anchor National Life Insurance
Company and its subsidiaries at September 30, 1997 and 1996, and the results of
their operations and their cash flows for each of the three years in the period
ended September 30, 1997, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards 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 provide a reasonable basis for the opinion expressed
above.
Price Waterhouse LLP
Los Angeles, California
November 7, 1997
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<PAGE> 45
ANCHOR NATIONAL LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------------------
1997 1996
--------------- --------------
<S> <C> <C>
ASSETS
INVESTMENTS:
Cash and short-term investments......................... $ 113,580,000 $ 122,058,000
Bonds, notes and redeemable preferred stocks:
Available for sale, at fair value (amortized cost:
1997, $1,942,485,000; 1996, $2,001,024,000)........ 1,986,194,000 1,987,271,000
Mortgage loans.......................................... 339,530,000 98,284,000
Common stocks, at fair value (cost: 1997, $271,000;
1996, $2,911,000).................................... 1,275,000 3,970,000
Real estate............................................. 24,000,000 39,724,000
Other invested assets................................... 143,722,000 77,925,000
-------------- -------------
Total investments....................................... 2,608,301,000 2,329,232,000
Variable annuity assets................................... 9,343,200,000 6,311,557,000
Receivable from brokers for sales of securities........... -- 52,348,000
Accrued investment income................................. 21,759,000 19,675,000
Deferred acquisition costs................................ 536,155,000 443,610,000
Other assets.............................................. 61,524,000 48,113,000
-------------- -------------
TOTAL ASSETS.............................................. $12,570,939,000 $9,204,535,000
============== =============
</TABLE>
See accompanying notes.
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<PAGE> 46
ANCHOR NATIONAL LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------------------
1997 1996
--------------- --------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDER'S EQUITY
Reserves, payables and accrued liabilities:
Reserves for fixed annuity contracts.................... $ 2,098,803,000 $1,789,962,000
Reserves for guaranteed investment contracts............ 295,175,000 415,544,000
Payable to brokers for purchases of securities.......... 263,000 --
Income taxes currently payable.......................... 32,265,000 21,486,000
Other liabilities....................................... 122,728,000 74,710,000
-------------- -------------
Total reserves, payables and accrued liabilities........ 2,549,234,000 2,301,702,000
-------------- -------------
Variable annuity liabilities.............................. 9,343,200,000 6,311,557,000
-------------- -------------
Subordinated notes payable to Parent...................... 36,240,000 35,832,000
-------------- -------------
Deferred income taxes..................................... 67,047,000 70,189,000
-------------- -------------
Shareholder's equity:
Common Stock............................................ 3,511,000 3,511,000
Additional paid-in capital.............................. 308,674,000 280,263,000
Retained earnings....................................... 244,628,000 207,002,000
Net unrealized gains (losses) on debt and equity
securities available for sale........................ 18,405,000 (5,521,000)
-------------- -------------
Total shareholder's equity.............................. 575,218,000 485,255,000
-------------- -------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY................ $12,570,939,000 $9,204,535,000
============== =============
</TABLE>
See accompanying notes.
-19-
<PAGE> 47
ANCHOR NATIONAL LIFE INSURANCE COMPANY
CONSOLIDATED INCOME STATEMENT
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
--------------------------------------------------
1997 1996 1995
------------- ------------- ------------
<S> <C> <C> <C>
Investment income.......................... $ 210,759,000 $ 164,631,000 $129,466,000
------------- ------------- ------------
Interest expense on:
Fixed annuity contracts.................. (109,217,000) (82,690,000) (72,975,000)
Guaranteed investment contracts.......... (22,650,000) (19,974,000) (3,733,000)
Senior indebtedness...................... (2,549,000) (2,568,000) (227,000)
Subordinated notes payable to Parent..... (3,142,000) (2,556,000) (2,448,000)
------------- ------------- ------------
Total interest expense................... (137,558,000) (107,788,000) (79,383,000)
------------- ------------- ------------
NET INVESTMENT INCOME...................... 73,201,000 56,843,000 50,083,000
------------- ------------- ------------
NET REALIZED INVESTMENT LOSSES............. (17,394,000) (13,355,000) (4,363,000)
------------- ------------- ------------
Fee income:
Variable annuity fees.................... 139,492,000 103,970,000 84,171,000
Net retained commissions................. 39,143,000 31,548,000 24,108,000
Surrender charges........................ 5,529,000 5,184,000 5,889,000
Asset management fees.................... 25,764,000 25,413,000 26,935,000
Other fees............................... 3,218,000 3,390,000 4,002,000
------------- ------------- ------------
TOTAL FEE INCOME........................... 213,146,000 169,505,000 145,105,000
------------- ------------- ------------
GENERAL AND ADMINISTRATIVE EXPENSES........ (98,802,000) (81,552,000) (64,457,000)
------------- ------------- ------------
AMORTIZATION OF DEFERRED ACQUISITION
COSTS.................................... (66,879,000) (57,520,000) (58,713,000)
------------- ------------- ------------
ANNUAL COMMISSIONS......................... (8,977,000) (4,613,000) (2,658,000)
------------- ------------- ------------
PRETAX INCOME.............................. 94,295,000 69,308,000 64,997,000
Income tax expense......................... (31,169,000) (24,252,000) (25,739,000)
------------- ------------- ------------
NET INCOME................................. $ 63,126,000 $ 45,056,000 $ 39,258,000
============= ============= ============
</TABLE>
See accompanying notes
-20-
<PAGE> 48
ANCHOR NATIONAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-----------------------------------------------------
1997 1996 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................. $ 63,126,000 $ 45,056,000 $ 39,258,000
Adjustments to reconcile net income to net cash provided by
operating activities:
Interest credited to:
Fixed annuity contracts.............................. 109,217,000 82,690,000 72,975,000
Guaranteed investment contracts...................... 22,650,000 19,974,000 3,733,000
Net realized investment losses....................... 17,394,000 13,355,000 4,363,000
Accretion of net discounts on investments............ (18,576,000) (8,976,000) (6,865,000)
Amortization of goodwill............................. 1,187,000 1,169,000 1,168,000
Provision for deferred income taxes.................. (16,024,000) (3,351,000) (1,489,000)
Change in:
Accrued investment income................................. (2,084,000) (5,483,000) 3,373,000
Deferred acquisition costs................................ (113,145,000) (60,941,000) (7,180,000)
Other assets.............................................. (14,598,000) (8,000,000) 7,047,000
Income taxes currently payable............................ 10,779,000 5,766,000 3,389,000
Other liabilities......................................... 14,187,000 5,474,000 4,063,000
Other, net.................................................. 418,000 (129,000) 7,000
------------- ------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES..................... 74,531,000 86,604,000 123,842,000
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Premium receipts on:
Fixed annuity contracts................................... 1,097,937,000 651,649,000 245,320,000
Guaranteed investment contracts........................... 55,000,000 134,967,000 275,000,000
Net exchanges to (from) the fixed accounts of variable
annuity contracts......................................... (620,367,000) (236,705,000) 10,475,000
Withdrawal payments on:
Fixed annuity contracts................................... (242,589,000) (173,489,000) (237,977,000)
Guaranteed investment contracts........................... (198,062,000) (16,492,000) (1,638,000)
Claims and annuity payments on fixed annuity contracts...... (35,731,000) (31,107,000) (31,237,000)
Net receipts from (repayments of) other short-term
financings................................................ 34,239,000 (119,712,000) 3,202,000
Capital contribution received............................... 28,411,000 27,387,000 --
Dividends paid.............................................. (25,500,000) (29,400,000) --
------------- ------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES..................... 93,338,000 207,098,000 263,145,000
------------- ------------- -------------
</TABLE>
See accompanying notes.
-21-
<PAGE> 49
ANCHOR NATIONAL LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-----------------------------------------------------
1997 1996 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of:
Bonds, notes and redeemable preferred stocks.............. $(2,566,211,000) $(1,937,890,000) $(1,556,586,000)
Mortgage loans............................................ (266,771,000) (15,000,000) --
Other investments, excluding short-term investments....... (75,556,000) (36,770,000) (13,028,000)
Sales of:
Bonds, notes and redeemable preferred stocks.............. 2,299,063,000 1,241,928,000 1,026,078,000
Real estate............................................... -- 900,000 36,813,000
Other investments, excluding short-term investments....... 6,421,000 4,937,000 5,130,000
Redemptions and maturities of:
Bonds, notes and redeemable preferred stocks.............. 376,847,000 288,969,000 178,688,000
Mortgage loans............................................ 25,920,000 11,324,000 14,403,000
Other investments, excluding short-term investments....... 23,940,000 20,749,000 13,286,000
------------- ------------- -------------
NET CASH USED BY INVESTING ACTIVITIES......................... (176,347,000) (420,853,000) (295,216,000)
------------- ------------- -------------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS.... (8,478,000) (127,151,000) 91,771,000
CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF PERIOD........ 122,058,000 249,209,000 157,438,000
------------- ------------- -------------
CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD.............. $ 113,580,000 $ 122,058,000 $ 249,209,000
============= ============= =============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid on indebtedness............................... $ 7,032,000 $ 5,982,000 $ 3,235,000
============= ============= =============
Net income taxes paid....................................... $ 36,420,000 $ 22,031,000 $ 23,656,000
============= ============= =============
</TABLE>
See accompanying notes.
-22-
<PAGE> 50
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS
Anchor National Life Insurance Company (the "Company") is a wholly owned
indirect subsidiary of SunAmerica, Inc. (the "Parent"). The Company is an
Arizona-domiciled life insurance company and conducts its business through three
segments: annuity operations, asset management and broker-dealer operations.
Annuity operations include the sale and administration of fixed and variable
annuities and guaranteed investment contracts. Asset management, which includes
the sale and management of mutual funds, is conducted by SunAmerica Asset
Management Corp. Broker-dealer operations include the sale of securities and
financial services products, and are conducted by Royal Alliance Associates,
Inc.
The operations of the Company are influenced by many factors, including
general economic conditions, monetary and fiscal policies of the federal
government, and policies of state and other regulatory authorities. The level of
sales of the Company's financial products is influenced by many factors,
including general market rates of interest; strength, weakness and volatility of
equity markets; and terms and conditions of competing financial products. The
Company is exposed to the typical risks normally associated with a portfolio of
fixed-income securities, namely interest rate, option, liquidity and credit
risk. The Company controls its exposure to these risks by, among other things,
closely monitoring and matching the duration of its assets and liabilities,
monitoring and limiting prepayment and extension risk in its portfolio,
maintaining a large percentage of its portfolio in highly liquid securities, and
engaging in a disciplined process of underwriting, reviewing and monitoring
credit risk. The Company also is exposed to market risk, as market volatility
may result in reduced fee income in the case of assets managed in mutual funds
and held in separate accounts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION: The accompanying consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
and include the accounts of the Company and all of its wholly owned
subsidiaries. All significant intercompany accounts and transactions are
eliminated in consolidation. Certain prior period amounts have been reclassified
to conform with the 1997 presentation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
that affect the amounts reported in the financial statements and the
accompanying notes. Actual results could differ from those estimates.
-23-
<PAGE> 51
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVESTMENTS: Cash and short-term investments primarily include cash,
commercial paper, money market investments, repurchase agreements and short-term
bank participations. All such investments are carried at cost plus accrued
interest, which approximates fair value, have maturities of three months or less
and are considered cash equivalents for purposes of reporting cash flows.
Bonds, notes and redeemable preferred stocks available for sale and common
stocks are carried at aggregate fair value and changes in unrealized gains or
losses, net of tax, are credited or charged directly to shareholder's equity.
Bonds, notes and redeemable preferred stocks are reduced to estimated net
realizable value when necessary for declines in value considered to be other
than temporary. Estimates of net realizable value are subjective and actual
realization will be dependent upon future events.
Mortgage loans are carried at amortized unpaid balances, net of provisions
for estimated losses. Real estate is carried at the lower of cost or fair value.
Other invested assets include investments in limited partnerships, which are
accounted for by using the cost method of accounting; separate account
investments; leveraged leases; policy loans, which are carried at unpaid
balances; and collateralized mortgage obligation residuals.
Realized gains and losses on the sale of investments are recognized in
operations at the date of sale and are determined using the specific cost
identification method. Premiums and discounts on investments are amortized to
investment income using the interest method over the contractual lives of the
investments.
INTEREST RATE SWAP AGREEMENTS: The net differential to be paid or received
on interest rate swap agreements ("Swap Agreements") entered into to reduce the
impact of changes in interest rates is recognized over the lives of the
agreements, and such differential is classified as Interest Expense in the
income statement. All outstanding Swap Agreements are designated as hedges and,
therefore, are not marked to market. However, in the event that a hedged
asset/liability were to be sold or repaid before the related Swap Agreement
matures, the Swap Agreement would be marked to market and any gain/loss
classified with any gain/loss realized on the disposition of the hedged
asset/liability. Subsequently, the Swap Agreement would be marked to market and
the resulting change in fair value would be included in Investment Income in the
income statement. In the event that a Swap Agreement that is designated as a
hedge were to be terminated before its contractual maturity, any resulting
gain/loss would be credited/charged to the carrying value of the asset/liability
that it hedged.
DEFERRED ACQUISITION COSTS: Policy acquisition costs are deferred and
amortized, with interest, in relation to the incidence of estimated gross
profits to be realized over the estimated lives of the annuity contracts.
Estimated gross profits are composed of net interest income, net realized
-24-
<PAGE> 52
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
investment gains and losses, variable annuity fees, surrender charges and direct
administrative expenses. Costs incurred to sell mutual funds are also deferred
and amortized over the estimated lives of the funds obtained. Deferred
acquisition costs consist of commissions and other costs that vary with, and are
primarily related to, the production or acquisition of new business.
As debt and equity securities available for sale are carried at aggregate
fair value, an adjustment is made to deferred acquisition costs equal to the
change in amortization that would have been recorded if such securities had been
sold at their stated aggregate fair value and the proceeds reinvested at current
yields. The change in this adjustment, net of tax, is included with the change
in net unrealized gains or losses on debt and equity securities available for
sale that is credited or charged directly to shareholder's equity. Deferred
Acquisition Costs have been decreased by $16,400,000 at September 30, 1997 and
increased by $4,200,000 at September 30, 1996 for this adjustment.
VARIABLE ANNUITY ASSETS AND LIABILITIES: The assets and liabilities
resulting from the receipt of variable annuity premiums are segregated in
separate accounts. The Company receives administrative fees for managing the
funds and other fees for assuming mortality and certain expense risks. Such fees
are included in Variable Annuity Fees in the income statement.
GOODWILL: Goodwill, amounting to $18,311,000 at September 30, 1997, is
amortized by using the straight-line method over periods averaging 25 years and
is included in Other Assets in the balance sheet. Goodwill is evaluated for
impairment when events or changes in economic conditions indicate that the
carrying amount may not be recoverable.
CONTRACTHOLDER RESERVES: Contractholder reserves for fixed annuity
contracts and guaranteed investment contracts are accounted for as
investment-type contracts in accordance with Statement of Financial Accounting
Standards No. 97, "Accounting and Reporting by Insurance Enterprises for Certain
Long-Duration Contracts and for Realized Gains and Losses from the Sale of
Investments," and are recorded at accumulated value (premiums received, plus
accrued interest, less withdrawals and assessed fees).
FEE INCOME: Variable annuity fees, asset management fees and surrender
charges are recorded in income as earned. Net retained commissions are
recognized as income on a trade-date basis.
INCOME TAXES: The Company is included in the consolidated federal income
tax return of the Parent and files as a "life insurance company" under the
provisions of the Internal Revenue Code of 1986. Income taxes have been
calculated as if the Company filed a separate return. Deferred
-25-
<PAGE> 53
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
income tax assets and liabilities are recognized based on the difference
between financial statement carrying amounts and income tax bases of assets
and liabilities using enacted income tax rates and laws.
3. INVESTMENTS
The amortized cost and estimated fair value of bonds, notes and redeemable
preferred stocks available for sale by major category follow:
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
COST VALUE
-------------- --------------
<S> <C> <C>
AT SEPTEMBER 30, 1997:
Securities of the United States
Government.............................. $ 18,496,000 $ 18,962,000
Mortgage-backed securities................. 636,018,000 649,196,000
Securities of public utilities............. 22,792,000 22,893,000
Corporate bonds and notes.................. 984,573,000 1,012,559,000
Redeemable preferred stocks................ 6,125,000 6,681,000
Other debt securities...................... 274,481,000 275,903,000
-------------- --------------
Total available for sale................... $1,942,485,000 $1,986,194,000
============== ==============
AT SEPTEMBER 30, 1996:
Securities of the United States
Government.............................. $ 311,458,000 $ 304,538,000
Mortgage-backed securities................. 747,653,000 741,876,000
Securities of public utilities............. 3,684,000 3,672,000
Corporate bonds and notes.................. 590,071,000 591,148,000
Redeemable preferred stocks................ 9,064,000 8,664,000
Other debt securities...................... 339,094,000 337,373,000
-------------- --------------
Total available for sale................... $2,001,024,000 $1,987,271,000
============== ==============
</TABLE>
-26-
<PAGE> 54
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. INVESTMENTS (CONTINUED)
The amortized cost and estimated fair value of bonds, notes and redeemable
preferred stocks available for sale by contractual maturity, as of September 30,
1997, follow:
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
COST VALUE
-------------- --------------
<S> <C> <C>
Due in one year or less...................... $ 19,067,000 $ 20,575,000
Due after one year through five years........ 277,350,000 281,296,000
Due after five years through ten years....... 631,083,000 650,242,000
Due after ten years.......................... 378,967,000 384,885,000
Mortgage-backed securities................... 636,018,000 649,196,000
-------------- --------------
Total available for sale..................... $1,942,485,000 $1,986,194,000
============== ==============
</TABLE>
Actual maturities of bonds, notes and redeemable preferred stocks will
differ from those shown above due to prepayments and redemptions.
-27-
<PAGE> 55
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. INVESTMENTS (CONTINUED)
Gross unrealized gains and losses on bonds, notes and redeemable preferred
stocks available for sale by major category follow:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED
GAINS LOSSES
----------- ------------
<S> <C> <C>
AT SEPTEMBER 30, 1997:
Securities of the United States Government..... $ 498,000 $ (32,000)
Mortgage-backed securities..................... 14,998,000 (1,820,000)
Securities of public utilities................. 141,000 (40,000)
Corporate bonds and notes...................... 28,691,000 (705,000)
Redeemable preferred stocks.................... 556,000 --
Other debt securities.......................... 1,569,000 (147,000)
----------- ------------
Total available for sale....................... $46,453,000 $ (2,744,000)
=========== ============
AT SEPTEMBER 30, 1996:
Securities of the United States Government..... $ 284,000 $ (7,204,000)
Mortgage-backed securities..................... 7,734,000 (13,511,000)
Securities of public utilities................. 1,000 (13,000)
Corporate bonds and notes...................... 11,709,000 (10,632,000)
Redeemable preferred stocks.................... 16,000 (416,000)
Other debt securities.......................... 431,000 (2,152,000)
----------- ------------
Total available for sale....................... $20,175,000 $(33,928,000)
=========== ============
</TABLE>
At September 30, 1997, gross unrealized gains on equity securities
available for sale aggregated $1,004,000 and there were no unrealized losses. At
September 30, 1996, gross unrealized gains on equity securities available for
sale aggregated $1,368,000 and gross unrealized losses aggregated $309,000.
-28-
<PAGE> 56
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. INVESTMENTS (CONTINUED)
Gross realized investment gains and losses on sales of investments are as
follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
--------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
BONDS, NOTES AND REDEEMABLE
PREFERRED STOCKS:
Available for sale:
Realized gains............................... $ 22,179,000 $ 14,532,000 $ 15,983,000
Realized losses.............................. (25,310,000) (10,432,000) (21,842,000)
Held for investment:
Realized gains............................... -- -- 2,413,000
Realized losses.............................. -- -- (586,000)
COMMON STOCKS:
Realized gains.................................. 4,002,000 511,000 994,000
Realized losses................................. (312,000) (3,151,000) (114,000)
OTHER INVESTMENTS:
Realized gains.................................. 2,450,000 1,135,000 3,561,000
Realized losses................................. -- -- (12,000)
IMPAIRMENT WRITEDOWNS............................. (20,403,000) (15,950,000) (4,760,000)
------------ ------------ ------------
Total net realized investment losses.............. $(17,394,000) $(13,355,000) $ (4,363,000)
============ ============ ============
</TABLE>
-29-
<PAGE> 57
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. INVESTMENTS (CONTINUED)
The sources and related amounts of investment income are as follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
--------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Short-term investments............................ $ 11,780,000 $ 10,647,000 $ 8,308,000
Bonds, notes and redeemable preferred stocks...... 163,038,000 140,387,000 107,643,000
Mortgage loans.................................... 17,632,000 8,701,000 7,419,000
Common stocks..................................... 16,000 8,000 3,000
Real estate....................................... (296,000) (196,000) (51,000)
Limited partnerships.............................. 6,725,000 4,073,000 5,128,000
Other invested assets............................. 11,864,000 1,011,000 1,016,000
------------ ------------ ------------
Total investment income......................... $210,759,000 $164,631,000 $129,466,000
============ ============ ============
</TABLE>
Expenses incurred to manage the investment portfolio amounted to $2,050,000
for the year ended September 30, 1997, $1,737,000 for the year ended September
30, 1996, and $1,983,000 for the year ended September 30, 1995 and are included
in General and Administrative Expenses in the income statement.
At September 30, 1997, no investment exceeded 10% of the Company's
consolidated shareholder's equity.
At September 30, 1997, mortgage loans were collateralized by properties
located in 21 states, with loans totaling approximately 13% of the aggregate
carrying value of the portfolio secured by properties located in New York and
approximately 12% by properties located in California. No more than 10% of the
portfolio was secured by properties in any other single state.
At September 30, 1997, bonds, notes and redeemable preferred stocks
included $216,877,000 (fair value of $227,169,000) of bonds and notes not rated
investment grade. The Company had no material concentrations of
noninvestment-grade assets at September 30, 1997.
At September 30, 1997, the amortized cost of investments in default as to
the payment of principal or interest was $1,378,000, consisting of $500,000 of
non-investment-grade bonds and $878,000 of mortgage loans. Such nonperforming
investments had an estimated fair value of $1,378,000.
-30-
<PAGE> 58
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. INVESTMENTS (CONTINUED)
As a component of its asset and liability management strategy, the Company
utilizes Swap Agreements to match assets more closely to liabilities. Swap
Agreements are agreements to exchange with a counterparty interest rate payments
of differing character (for example, variable-rate payments exchanged for
fixed-rate payments) based on an underlying principal balance (notional
principal) to hedge against interest rate changes. The Company typically
utilizes Swap Agreements to create a hedge that effectively converts
floating-rate assets and liabilities to fixed-rate instruments. At September 30,
1997, the Company had one outstanding Swap Agreement with a notional principal
amount of $15.9 million, which matures in December, 2024. The net interest paid
amounted to $0.1 million for the year ended September 30, 1997, and is included
in Interest Expense on Guaranteed Investment Contracts in the income statement.
At September 30, 1997, $5,276,000 of bonds, at amortized cost, were on
deposit with regulatory authorities in accordance with statutory requirements.
4. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following estimated fair value disclosures are limited to reasonable
estimates of the fair value of only the Company's financial instruments. The
disclosures do not address the value of the Company's recognized and
unrecognized nonfinancial assets (including its real estate investments and
other invested assets except for cost-method partnerships) and liabilities or
the value of anticipated future business. The Company does not plan to sell most
of its assets or settle most of its liabilities at these estimated fair values.
The fair value of a financial instrument is the amount at which the
instrument could be exchanged in a current transaction between willing parties,
other than in a forced or liquidation sale. Selling expenses and potential taxes
are not included. The estimated fair value amounts were determined using
available market information, current pricing information and various valuation
methodologies. If quoted market prices were not readily available for a
financial instrument, management determined an estimated fair value.
Accordingly, the estimates may not be indicative of the amounts the financial
instruments could be exchanged for in a current or future market transaction.
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:
CASH AND SHORT TERM INVESTMENTS: Carrying value is considered to be a
reasonable estimate of fair value.
BONDS, NOTES AND REDEEMABLE PREFERRED STOCKS: Fair value is based
principally on independent pricing services, broker quotes and other independent
information.
MORTGAGE LOANS: Fair values are primarily determined by discounting future
cash flows to the present at current market rates, using expected prepayment
rates.
COMMON STOCKS: Fair value is based principally on independent pricing
services, broker quotes and other independent information.
-31-
<PAGE> 59
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
COST-METHOD PARTNERSHIPS: Fair value of limited partnerships accounted for
by using the cost method is based upon the fair value of the net assets of the
partnerships as determined by the general partners.
VARIABLE ANNUITY ASSETS: Variable annuity assets are carried at the market
value of the underlying securities.
RECEIVABLE FROM (PAYABLE TO) BROKERS FOR SALES (PURCHASES) OF
SECURITIES: Such obligations represent net transactions of a short-term nature
for which the carrying value is considered a reasonable estimate of fair value.
RESERVES FOR FIXED ANNUITY CONTRACTS: Deferred annuity contracts and single
premium life contracts are assigned a fair value equal to current net surrender
value. Annuitized contracts are valued based on the present value of future cash
flows at current pricing rates.
RESERVES FOR GUARANTEED INVESTMENT CONTRACTS: Fair value is based on the
present value of future cash flows at current pricing rates and is net of the
estimated fair value of hedging Swap Agreements, determined from independent
broker quotes.
VARIABLE ANNUITY LIABILITIES: Fair values of contracts in the accumulation
phase are based on net surrender values. Fair values of contracts in the payout
phase are based on the present value of future cash flows at assumed investment
rates.
SUBORDINATED NOTES PAYABLE TO PARENT: Fair value is estimated based on the
quoted market prices for similar issues.
-32-
<PAGE> 60
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The estimated fair values of the Company's financial instruments at
September 30, 1997 and 1996, compared with their respective carrying values, are
as follows:
<TABLE>
<CAPTION>
CARRYING
VALUE FAIR VALUE
-------------- --------------
<S> <C> <C>
1997:
ASSETS:
Cash and short-term investments........ $ 113,580,000 $ 113,580,000
Bonds, notes and redeemable preferred
stocks.............................. 1,986,194,000 1,986,194,000
Mortgage loans......................... 339,530,000 354,495,000
Common stocks.......................... 1,275,000 1,275,000
Cost-method partnerships............... 46,880,000 84,186,000
Variable annuity assets................ 9,343,200,000 9,343,200,000
LIABILITIES:
Reserves for fixed annuity contracts... 2,098,803,000 2,026,258,000
Reserves for guaranteed investment
contracts........................... 295,175,000 295,175,000
Payable to brokers for purchases of
securities.......................... 263,000 263,000
Variable annuity liabilities........... 9,343,200,000 9,077,200,000
Subordinated notes payable to Parent... 36,240,000 37,393,000
============== ==============
1996:
ASSETS:
Cash and short-term investments........ $ 122,058,000 $ 122,058,000
Bonds, notes and redeemable preferred
stocks.............................. 1,987,271,000 1,987,271,000
Mortgage loans......................... 98,284,000 102,112,000
Common stocks.......................... 3,970,000 3,970,000
Cost-method partnerships............... 45,070,000 70,553,000
Receivable from brokers for sales of
securities.......................... 52,348,000 52,348,000
Variable annuity assets................ 6,311,557,000 6,311,557,000
LIABILITIES:
Reserves for fixed annuity contracts... 1,789,962,000 1,738,784,000
Reserves for guaranteed investment
contracts........................... 415,544,000 416,695,000
Variable annuity liabilities........... 6,311,557,000 6,117,508,000
Subordinated notes payable to Parent... 35,832,000 37,339,000
============== ==============
</TABLE>
-33-
<PAGE> 61
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. SUBORDINATED NOTES PAYABLE TO PARENT
Subordinated notes payable to Parent equalled $36,240,000 at an interest
rate of 9% at September 30, 1997 and require principal payments of $7,500,000
in 1998, $23,060,000 in 1999 and $5,400,000 in 2000.
6. CONTINGENT LIABILITIES
The Company has entered into three agreements in which it has provided
liquidity support for certain short-term securities of three municipalities by
agreeing to purchase such securities in the event there is no other buyer in the
short-term marketplace. In return the Company receives a fee. The maximum
liability under these guarantees is $242,600,000. Management does not anticipate
any material future losses with respect to these liquidity support facilities.
The Company is involved in various kinds of litigation common to its
businesses. These cases are in various stages of development and, based on
reports of counsel, management believes that provisions made for potential
losses relating to such litigation are adequate and any further liabilities and
costs will not have a material adverse impact upon the Company's financial
position or results of operations.
7. SHAREHOLDER'S EQUITY
The Company is authorized to issue 4,000 shares of its $1,000 par value
Common Stock. At September 30, 1997 and 1996, 3,511 shares were outstanding.
Changes in shareholder's equity are as follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
----------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
ADDITIONAL PAID-IN CAPITAL:
Beginning balance......... $280,263,000 $252,876,000 $252,876,000
Capital contributions
received............... 28,411,000 27,387,000 --
----------- ----------- -----------
Ending balance............ $308,674,000 $280,263,000 $252,876,000
=========== =========== ===========
RETAINED EARNINGS:
Beginning balance......... 207,002,000 191,346,000 152,088,000
Net income................ 63,126,000 45,056,000 39,258,000
Dividend paid............. (25,500,000) (29,400,000) --
----------- ----------- -----------
Ending balance............ $244,628,000 $207,002,000 $191,346,000
=========== =========== ===========
</TABLE>
-34-
<PAGE> 62
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. SHAREHOLDER'S EQUITY (CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
----------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
NET UNREALIZED GAINS/LOSSES
ON DEBT AND EQUITY
SECURITIES AVAILABLE FOR
SALE:
Beginning balance......... $ (5,521,000) $ (5,673,000) $(24,953,000)
Change in net unrealized
gains/losses on debt
securities available
for sale............... 57,463,000 (2,904,000) 71,302,000
Change in net unrealized
gains/losses on equity
securities available
for sale............... (55,000) 3,538,000 (1,240,000)
Change in adjustment to
deferred acquisition
costs.................. (20,600,000) (400,000) (40,400,000)
Tax effects of net
changes................ (12,882,000) (82,000) (10,382,000)
----------- ----------- -----------
Ending balance............ $ 18,405,000 $ (5,521,000) $ (5,673,000)
=========== =========== ===========
</TABLE>
Dividends that the Company may pay to its shareholder in any year without
prior approval of the Arizona Department of Insurance are limited by statute.
The maximum amount of dividends which can be paid to shareholders of insurance
companies domiciled in the state of Arizona without obtaining the prior approval
of the Insurance Commissioner is limited to the lesser of either 10% of the
preceding year's statutory surplus or the preceding year's statutory net gain
from operations. Dividends in the amounts of $25,500,000 and $29,400,000 were
paid on April 1, 1997 and March 18, 1996, respectively. No dividends were paid
in fiscal year 1995.
Under statutory accounting principles utilized in filings with insurance
regulatory authorities, the Company's net income for the nine months ended
September 30, 1997 was $45,743,000. The statutory net income for the year ended
December 31, 1996 was $27,928,000 and for the year ended December 31, 1995 was
$30,673,000. The Company's statutory capital and surplus was $325,712,000 at
September 30, 1997, $311,176,000 at December 31, 1996 and $294,767,000 at
December 31, 1995.
-35-
<PAGE> 63
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. INCOME TAXES
The components of the provisions for federal income taxes on pretax income
consist of the following:
<TABLE>
<CAPTION>
NET REALIZED
INVESTMENT
GAINS (LOSSES) OPERATIONS TOTAL
-------------- ------------ ------------
<S> <C> <C> <C>
1997:
Currently payable................. $ (3,635,000) $ 50,828,000 $ 47,193,000
Deferred.......................... (2,258,000) (13,766,000) (16,024,000)
------------ ------------ ------------
Total income tax
expense............... $ (5,893,000) $ 37,062,000 $ 31,169,000
============ ============ ============
1996:
Currently payable................. $ 5,754,000 $ 21,849,000 $ 27,603,000
Deferred.......................... (10,347,000) 6,996,000 (3,351,000)
------------ ------------ ------------
Total income tax
expense............... $ (4,593,000) $ 28,845,000 $ 24,252,000
============ ============ ============
1995:
Currently payable................. $ 4,248,000 $ 22,980,000 $ 27,228,000
Deferred.......................... (6,113,000) 4,624,000 (1,489,000)
------------ ------------ ------------
Total income tax
expense............... $ (1,865,000) $ 27,604,000 $ 25,739,000
============ ============ ============
</TABLE>
-36-
<PAGE> 64
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. INCOME TAXES (CONTINUED)
Income taxes computed at the United States federal income tax rate of 35%
and income taxes provided differ as follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30
-------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Amount computed at statutory
rate........................... $33,003,000 $24,258,000 $22,749,000
Increases (decreases) resulting
from:
Amortization of differences
between book and tax bases
of net assets acquired...... 666,000 464,000 3,049,000
State income taxes, net of
federal tax benefit......... 1,950,000 2,070,000 437,000
Dividends-received deduction... (4,270,000) (2,357,000) --
Tax credits.................... (318,000) (257,000) (168,000)
Other, net..................... 138,000 74,000 (328,000)
----------- ----------- -----------
Total income tax
expense.............. $31,169,000 $24,252,000 $25,739,000
=========== =========== ===========
</TABLE>
For United States federal income tax purposes, certain amounts from life
insurance operations are accumulated in a memorandum policyholders' surplus
account and are taxed only when distributed to shareholders or when such account
exceeds prescribed limits. The accumulated policyholders' surplus was
$14,300,000 at September 30, 1997. The Company does not anticipate any
transactions which would cause any part of this surplus to be taxable.
-37-
<PAGE> 65
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. INCOME TAXES (CONTINUED)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax reporting purposes. The significant
components of the liability for Deferred Income Taxes are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
-----------------------------
1997 1996
------------- ------------
<S> <C> <C>
DEFERRED TAX LIABILITIES:
Investments.................................... $ 13,160,000 $ 15,036,000
Deferred acquisition costs..................... 154,949,000 136,747,000
State income taxes............................. 1,777,000 1,466,000
Net unrealized gains on debt and equity
securities available for sale................ 9,910,000 --
------------- ------------
Total deferred tax liabilities....... 179,796,000 153,249,000
------------- ------------
DEFERRED TAX ASSETS:
Contractholder reserves........................ (108,090,000) (77,522,000)
Guaranty fund assessments...................... (2,707,000) (1,031,000)
Other assets................................... (1,952,000) (1,534,000)
Net unrealized losses on debt and equity
securities available for sale................ -- (2,973,000)
------------- ------------
Total deferred tax assets............ (112,749,000) (83,060,000)
------------- ------------
Deferred income taxes.......................... $ 67,047,000 $ 70,189,000
============= ============
</TABLE>
-38-
<PAGE> 66
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. RELATED PARTY MATTERS
The Company pays commissions to two affiliated companies, SunAmerica
Securities, Inc. and Advantage Capital Corp. Commissions paid to these
broker-dealers totaled $25,492,000 in 1997, $16,906,000 in 1996, and $9,435,000
in 1995. These broker-dealers, when combined with the Company's wholly owned
broker-dealer, represent a significant portion of the Company's business,
amounting to approximately 36.1%, 38.3%, and 40.6% of premiums in 1997, 1996,
and 1995, respectively. The Company also sells its products through unaffiliated
broker-dealers, the largest two of which represented approximately 19.2% and
10.1% of premiums in 1997, 19.7% and 10.2% in 1996, and 18.8% and 4.3% in 1995,
respectively.
The Company purchases administrative, investment management, accounting,
marketing and data processing services from SunAmerica Financial, Inc., whose
purpose is to provide services to the SunAmerica companies. Amounts paid for
such services totaled $86,116,000 for the year ended September 30, 1997,
$65,351,000 for the year ended September 30, 1996 and $42,083,000 for the year
ended September 30, 1995. Such amounts are included in General and
Administrative Expenses in the income statement.
The Parent made capital contributions of $28,411,000 in December, 1996 and
$27,387,000 in December 1995 to the Company, through the Company's direct
parent, in exchange for the termination of its guaranty with respect to certain
real estate owned in Arizona. Accordingly, the Company reduced the carrying
value of this real estate to estimated fair value to reflect the termination of
the guaranty.
During the year ended September 30, 1995, the Company sold to the Parent
real estate for cash equal to its carrying value of $29,761,000.
During the year ended September 30, 1997, the Company sold various invested
assets to SunAmerica Life Insurance Company and to CalAmerica Life Insurance
Company for cash equal to their current market values of $15,776,000 and
$15,000, respectively. The Company recorded net gains aggregating $276,000 on
such transactions.
During the year ended September 30, 1997, the Company also purchased
certain invested assets from SunAmerica Life Insurance Company and from
CalAmerica Life Insurance Company for cash equal to their current market values
of $8,717,000 and $284,000, respectively.
During the year ended September 30, 1996, the Company sold various invested
assets to the Parent and to SunAmerica Life Insurance Company for cash equal to
their current market values of $274,000 and $47,321,000, respectively. The
Company recorded net losses aggregating $3,000 on such transactions.
During the year ended September 30, 1996, the Company also purchased
certain invested assets from SunAmerica Life Insurance Company for cash equal to
their current market values, which aggregated $28,379,000.
-39-
<PAGE> 67
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. BUSINESS SEGMENTS
Summarized data for the Company's business segments follow:
<TABLE>
<CAPTION>
TOTAL
DEPRECIATION
AND
TOTAL AMORTIZATION PRETAX TOTAL
REVENUES EXPENSE INCOME ASSETS
------------ ------------ ----------- ---------------
<S> <C> <C> <C> <C>
1997:
Annuity operations................ $332,845,000 $55,675,000 $74,792,000 $12,438,021,000
Broker-dealer operations.......... 38,005,000 689,000 16,705,000 51,400,000
Asset management.................. 35,661,000 16,357,000 2,798,000 81,518,000
------------ ----------- ----------- ---------------
Total................... $406,511,000 $72,721,000 $94,295,000 $12,570,939,000
============ =========== =========== ===============
1996:
Annuity operations................ $256,681,000 $43,974,000 $53,827,000 $ 9,092,770,000
Broker-dealer operations.......... 31,053,000 449,000 13,033,000 37,355,000
Asset management.................. 33,047,000 18,295,000 2,448,000 74,410,000
------------ ----------- ----------- ---------------
Total................... $320,781,000 $62,718,000 $69,308,000 $ 9,204,535,000
============ =========== =========== ===============
1995:
Annuity operations................ $211,587,000 $38,350,000 $55,462,000 $ 7,667,946,000
Broker-dealer operations.......... 24,194,000 411,000 9,025,000 29,241,000
Asset management.................. 34,427,000 24,069,000 510,000 86,510,000
------------ ----------- ----------- ---------------
Total................... $270,208,000 $62,830,000 $64,997,000 $ 7,783,697,000
============ =========== =========== ===============
</TABLE>
-40-
<PAGE> 68
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
-41-
<PAGE> 69
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
January 16, 1998
To the Board of Directors of Anchor National Life Insurance Company
and the Participants of its separate account, Variable Annuity Account Four
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 each of the Variable Accounts constituting Variable Annuity Account
Four, a separate account of Anchor National Life Insurance Company (the
"Separate Account") at September 30, 1997, and the results of their operations
and the changes in their net assets for the year then ended and the changes in
their net assets for the period from inception to September 30, 1996, in
conformity with generally accepted accounting principles. 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 generally accepted auditing standards 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
September 30, 1997 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
-42-
<PAGE> 70
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS
September 30, 1997
<TABLE>
<CAPTION>
Government International
Capital Natural and Diversified Global Aggressive
Appreciation Growth Resources Quality Bond Equities Equities Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $10,257,446 $ 5,250,519 $ 1,609,244 $ 2,000,368 $ 0 $ 0 $ 0
Investments in SunAmerica Series
Trust, at market value 0 0 0 0 8,291,157 4,799,254 4,173,103
Liabilities 0 0 0 0 0 0 0
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Assets $10,257,446 $ 5,250,519 $ 1,609,244 $ 2,000,368 $ 8,291,157 $ 4,799,254 $ 4,173,103
=========== =========== =========== =========== =========== =========== ===========
Accumulation units outstanding 463,440 258,234 120,153 160,820 664,200 266,074 331,531
----------- ----------- ----------- ----------- ----------- ----------- -----------
Unit value of accumulation units $ 22.13 $ 20.33 $ 13.39 $ 12.44 $ 12.48 $ 18.04 $ 12.59
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
-43-
<PAGE> 71
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS
September 30, 1997
(Continued)
<TABLE>
<CAPTION>
Venture Federated Alliance Growth- Asset SunAmerica
Value Value Growth Income Allocation Balanced Utility
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Investments in SunAmerica Series Trust,
at market value 24,884,843 2,946,003 13,780,609 15,468,196 11,945,046 3,098,717 1,130,828
Liabilities 0 0 0 0 0 0 0
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Assets $24,884,843 $ 2,946,003 $13,780,609 $15,468,196 $11,945,046 $ 3,098,717 $ 1,130,828
=========== =========== =========== =========== =========== =========== ===========
Accumulation units outstanding 1,144,284 215,531 541,482 717,459 649,819 233,752 94,759
=========== =========== =========== =========== =========== =========== ===========
Unit value of accumulation units $ 21.75 $ 13.67 $ 25.45 $ 21.56 $ 18.38 $ 13.26 $ 11.93
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
-44-
<PAGE> 72
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS
September 30, 1997
(Continued)
<TABLE>
<CAPTION>
Worldwide High-Yield Global Corporate Cash
High Income Bond Bond Bond Management
Portfolio Portfolio Portfolio Portfolio Portfolio TOTAL
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments in Anchor Series Trust,
at market value $ 0 $ 0 $ 0 $ 0 $ 0 $ 19,117,577
Investments in SunAmerica Series Trust,
at market value 4,690,503 5,002,273 2,116,487 1,474,409 5,912,439 109,713,867
Liabilities 0 0 0 0 0 0
------------ ------------ ------------ ------------ ------------ ------------
Net Assets $ 4,690,503 $ 5,002,273 $ 2,116,487 $ 1,474,409 $ 5,912,439 $128,831,444
============ ============ ============ ============ ============ ============
Accumulation units outstanding 279,672 341,232 163,409 119,358 520,152
============ ============ ============ ============ ============
Unit value of accumulation units $ 16.77 $ 14.66 $ 12.95 $ 12.35 $ 11.37
============ ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
-45-
<PAGE> 73
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
SCHEDULE OF PORTFOLIO INVESTMENTS
September 30, 1997
<TABLE>
<CAPTION>
Market Value Market
Variable Accounts Shares Per Share Value Cost
- ----------------- ------- --------------- ------------ ------------
<S> <C> <C> <C> <C>
ANCHOR SERIES TRUST:
Capital Appreciation Portfolio 313,240 $ 32.75 $ 10,257,446 $ 9,399,176
Growth Portfolio 196,879 26.67 5,250,519 5,051,897
Natural Resources Portfolio 92,104 17.47 1,609,244 1,569,975
Government and Quality Bond Portfolio 147,405 13.57 2,000,368 2,033,913
------------ ------------
19,117,577 18,054,961
SUNAMERICA SERIES TRUST:
International Diversified Equities Portfolio 682,650 12.15 8,291,157 7,831,131
Global Equities Portfolio 282,161 17.01 4,799,254 4,392,758
Aggressive Growth Portfolio 325,300 12.83 4,173,103 3,431,779
Venture Value Portfolio 1,138,390 21.86 24,884,843 21,038,926
Federated Value Portfolio 211,741 13.91 2,946,003 2,563,485
Alliance Growth Portfolio 589,601 23.37 13,780,609 11,957,500
Growth-Income Portfolio 739,617 20.91 15,468,196 13,628,781
Asset Allocation Portfolio 722,811 16.53 11,945,046 10,914,213
SunAmerica Balanced Portfolio 230,322 13.45 3,098,717 2,759,233
Utility Portfolio 93,771 12.06 1,130,828 1,042,630
Worldwide High Income Portfolio 339,326 13.82 4,690,503 4,277,904
High-Yield Bond Portfolio 424,253 11.79 5,002,273 4,707,671
Global Bond Portfolio 186,196 11.37 2,116,487 2,081,406
Corporate Bond Portfolio 129,955 11.35 1,474,409 1,424,376
Cash Management Portfolio 555,426 10.64 5,912,439 5,876,873
------------ ------------
109,713,867 97,928,666
------------ ------------
$128,831,444 $115,983,627
============ ============
</TABLE>
See accompanying notes to financial statements.
-46-
<PAGE> 74
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
September 30, 1997
<TABLE>
<CAPTION>
Government International
Capital Natural and Diversified Global Aggressive
Appreciation Growth Resources Quality Bond Equities Equities Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends and capital gains
distributions $ 774,779 $ 521,402 $ 94,078 $ 128,627 $ 125,021 $ 83,466 $ 1,139
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total investment income 774,779 521,402 94,078 128,627 125,021 83,466 1,139
----------- ----------- ----------- ----------- ----------- ----------- -----------
Expenses:
Mortality risk charge (42,429) (22,630) (7,757) (9,753) (39,140) (19,428) (17,194)
Expense risk charge (14,559) (7,765) (2,662) (3,347) (13,431) (6,666) (5,900)
Distribution expense charge (6,240) (3,328) (1,141) (1,434) (5,756) (2,857) (2,528)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total expenses (63,228) (33,723) (11,560) (14,534) (58,327) (28,951) (25,622)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net investment income (loss) 711,551 487,679 82,518 114,093 66,694 54,515 (24,483)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net realized gains (losses) from
securities transactions:
Proceeds from shares sold 1,211,611 596,861 112,232 335,161 427,767 220,179 298,611
Cost of shares sold (1,187,728) (573,985) (109,631) (328,882) (404,943) (221,044) (283,826)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net realized gains (losses) from
securities transactions 23,883 22,876 2,601 6,279 22,824 (865) 14,785
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net unrealized appreciation/
depreciation of investments:
Beginning of period 4,391 603 (15) 47 521 1,290 943
End of period 858,270 198,622 39,269 (33,545) 460,026 406,496 741,324
----------- ----------- ----------- ----------- ----------- ----------- -----------
Change in net unrealized
appreciation/depreciation
of investments 853,879 198,019 39,284 (33,592) 459,505 405,206 740,381
----------- ----------- ----------- ----------- ----------- ----------- -----------
Increase in net assets from
operations $ 1,589,313 $ 708,574 $ 124,403 $ 86,780 $ 549,023 $ 458,856 $ 730,683
----------- ----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to financial statements.
-47-
<PAGE> 75
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
September 30, 1997
(Continued)
<TABLE>
<CAPTION>
Venture Federated Alliance Growth- Asset SunAmerica
Value Value Growth Income Allocation Balanced Utility
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends and capital
gains distributions $ 151,903 $ 2,206 $ 218,361 $ 220,544 $ 343,166 $ 5,232 $ 5,585
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total investment income 151,903 2,206 218,361 220,544 343,166 5,232 5,585
----------- ----------- ----------- ----------- ----------- ----------- -----------
Expenses:
Mortality risk charge (103,040) (12,189) (54,290) (58,945) (47,941) (13,127) (5,821)
Expense risk charge (35,357) (4,183) (18,629) (20,226) (16,450) (4,504) (1,997)
Distribution expense charge (15,153) (1,792) (7,983) (8,668) (7,051) (1,931) (856)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total expenses (153,550) (18,164) (80,902) (87,839) (71,442) (19,562) (8,674)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net investment income (loss) (1,647) (15,958) 137,459 132,705 271,724 (14,330) (3,089)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net realized gains (losses)
from securities transactions:
Proceeds from shares sold 662,803 180,422 1,175,628 1,175,448 688,155 131,146 87,321
Cost of shares sold (594,503) (166,378) (1,134,873) (1,151,542) (694,269) (121,801) (83,208)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net realized gains (losses)
from securities transactions 68,300 14,044 40,755 23,906 (6,114) 9,345 4,113
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net unrealized appreciation/
depreciation of investments:
Beginning of period 8,705 2,252 821 1,034 128 629 (202)
End of period 3,845,917 382,518 1,823,109 1,839,415 1,030,833 339,484 88,198
---------- ---------- ---------- ---------- ---------- ---------- ----------
Change in net unrealized
appreciation/ depreciation
of investments 3,837,212 380,266 1,822,288 1,838,381 1,030,705 338,855 88,400
---------- ---------- ---------- ---------- ---------- ---------- ----------
Increase in net assets
from operations $3,903,865 $ 378,352 $2,000,502 $1,994,992 $1,296,315 $ 333,870 $ 89,424
---------- ---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to financial statements.
-48-
<PAGE> 76
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
September 30, 1997
(Continued)
<TABLE>
<CAPTION>
Worldwide High-Yield Global Corporate Cash
High Income Bond Bond Bond Management
Portfolio Portfolio Portfolio Portfolio Portfolio TOTAL
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends and capital
gains distributions $ 113,419 $ 111,299 $ 84,719 $ 27,001 $ 150,537 $ 3,162,484
------------ ------------ ------------ ------------ ------------ ------------
Total investment income 113,419 111,299 84,719 27,001 150,537 3,162,484
------------ ------------ ------------ ------------ ------------ ------------
Expenses:
Mortality risk charge (23,188) (20,390) (11,592) (6,423) (33,062) (548,339)
Expense risk charge (7,957) (6,997) (3,978) (2,204) (11,345) (188,157)
Distribution expense charge (3,410) (2,998) (1,704) (944) (4,862) (80,636)
------------ ------------ ------------ ------------ ------------ ------------
Total expenses (34,555) (30,385) (17,274) (9,571) (49,269) (817,132)
------------ ------------ ------------ ------------ ------------ ------------
Net investment income 78,864 80,914 67,445 17,430 101,268 2,345,352
------------ ------------ ------------ ------------ ------------ ------------
Net realized gains (losses)
from securities transactions:
Proceeds from shares sold 312,384 506,436 185,147 126,453 8,249,049 16,682,814
Cost of shares sold (301,848) (499,784) (186,251) (125,393) (8,270,230) (16,440,119)
------------ ------------ ------------ ------------ ------------ ------------
Net realized gains (losses)
from securities transactions 10,536 6,652 (1,104) 1,060 (21,181) 242,695
------------ ------------ ------------ ------------ ------------ ------------
Net unrealized appreciation/
depreciation of investments:
Beginning of period 3,454 238 383 233 189 25,644
End of period 412,599 294,602 35,081 50,033 35,566 12,847,817
------------ ------------ ------------ ------------ ------------ ------------
Change in net unrealized
appreciation/depreciation
of investments 409,145 294,364 34,698 49,800 35,377 12,822,173
------------ ------------ ------------ ------------ ------------ ------------
Increase in net assets
from operations $ 498,545 $ 381,930 $ 101,039 $ 68,290 $ 115,464 $ 15,410,220
============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
-49-
<PAGE> 77
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
September 30, 1997
<TABLE>
<CAPTION>
Government International
Capital Natural and Diversified Global Aggressive
Appreciation Growth Resources Quality Bond Equities Equities Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE)
IN NET ASSETS:
From operations:
Net investment
income (loss) $ 711,551 $ 487,679 $ 82,518 $ 114,093 $ 66,694 $ 54,515 $ (24,483)
Net realized gains
(losses) from securities
transactions 23,883 22,876 2,601 6,279 22,824 (865) 14,785
Change in net unrealized
appreciation/depreciation
of investments 853,879 198,019 39,284 (33,592) 459,505 405,206 740,381
------------ ------------ ------------ ------------ ------------ ------------ ------------
Increase in net assets
from operations 1,589,313 708,574 124,403 86,780 549,023 458,856 730,683
------------ ------------ ------------ ------------ ------------ ------------ ------------
From capital transactions:
Net proceeds from units
sold 7,027,360 4,377,400 1,356,261 1,770,713 6,822,655 3,904,269 3,053,564
Cost of units redeemed (232,031) (107,745) (86,485) (32,440) (151,178) (184,417) (103,579)
Net transfers 1,662,856 196,072 201,683 162,076 1,033,461 531,078 449,604
------------ ------------ ------------ ------------ ------------ ------------ ------------
Increase in net assets
from capital transactions 8,458,185 4,465,727 1,471,459 1,900,349 7,704,938 4,250,930 3,399,589
------------ ------------ ------------ ------------ ------------ ------------ ------------
Increase in net assets 10,047,498 5,174,301 1,595,862 1,987,129 8,253,961 4,709,786 4,130,272
Net assets at
beginning of period 209,948 76,218 13,382 13,239 37,196 89,468 42,831
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net assets at end of period $ 10,257,446 $ 5,250,519 $ 1,609,244 $ 2,000,368 $ 8,291,157 $ 4,799,254 $ 4,173,103
============ ============ ============ ============ ============ ============ ============
ANALYSIS OF INCREASE
(DECREASE)IN UNITS
OUTSTANDING:
Units sold 382,875 250,825 109,778 148,827 586,540 238,970 297,312
Units redeemed (12,483) (5,821) (6,972) (2,736) (13,090) (11,061) (9,689)
Units transferred 81,126 8,170 16,190 13,578 87,398 31,942 39,595
------------ ------------ ------------ ------------ ------------ ------------ ------------
Increase in units
outstanding 451,518 253,174 118,996 159,669 660,848 259,851 327,218
Beginning units 11,922 5,060 1,157 1,151 3,352 6,223 4,313
------------ ------------ ------------ ------------ ------------ ------------ ------------
Ending units 463,440 258,234 120,153 160,820 664,200 266,074 331,531
============ ============ =========== ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
-50-
<PAGE> 78
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
September 30, 1997
(Continued)
<TABLE>
<CAPTION>
Venture Federated Alliance Growth- Asset SunAmerica
Value Value Growth Income Allocation Balanced Utility
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment
income (loss) $ (1,647) $ (15,958) $ 137,459 $ 132,705 $ 271,724 $ (14,330) $ (3,089)
Net realized gains
(losses) from securities
transactions 68,300 14,044 40,755 23,906 (6,114) 9,345 4,113
Change in net unrealized
appreciation/depreciation
of investments 3,837,212 380,266 1,822,288 1,838,381 1,030,705 338,855 88,400
------------ ------------ ------------ ------------ ------------ ------------ ------------
Increase in net
assets from operations 3,903,865 378,352 2,000,502 1,994,992 1,296,315 333,870 89,424
------------ ------------ ------------ ------------ ------------ ------------ ------------
From capital transactions:
Net proceeds from
units sold 18,370,104 1,977,247 10,243,172 11,509,347 9,752,942 2,497,631 830,951
Cost of units redeemed (765,662) (73,545) (264,926) (305,882) (273,390) (102,332) (53,039)
Net transfers 3,014,741 585,873 1,736,280 2,216,924 1,151,044 333,001 250,501
------------ ------------ ------------ ------------ ------------ ------------ ------------
Increase in net assets
from capital transactions 20,619,183 2,489,575 11,714,526 13,420,389 10,630,596 2,728,300 1,028,413
------------ ------------ ------------ ------------ ------------ ------------ ------------
Increase in net assets 24,523,048 2,867,927 13,715,028 15,415,381 11,926,911 3,062,170 1,117,837
Net assets at
beginning of period 361,795 78,076 65,581 52,815 18,135 36,547 12,991
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net assets at end of period $ 24,884,843 $ 2,946,003 $ 13,780,609 $ 15,468,196 $ 11,945,046 $ 3,098,717 $ 1,130,828
============ ============ ============ ============ ============ ============ ============
ANALYSIS OF INCREASE
(DECREASE) IN UNITS
OUTSTANDING:
Units sold 1,000,913 166,367 474,207 622,585 593,296 210,925 75,924
Units redeemed (39,966) (6,149) (11,977) (15,769) (15,932) (8,411) (4,655)
Units transferred 158,975 47,561 75,425 107,128 71,145 27,704 22,180
------------ ------------ ------------ ------------ ------------ ------------ ------------
Increase in units
outstanding 1,119,922 207,779 537,655 713,944 648,509 230,218 93,449
Beginning units 24,362 7,752 3,827 3,515 1,310 3,534 1,310
------------ ------------ ------------ ------------ ------------ ------------ ------------
Ending units 1,144,284 215,531 541,482 717,459 649,819 233,752 94,759
============ ============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
-51-
<PAGE> 79
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
September 30, 1997
(Continued)
<TABLE>
<CAPTION>
Worldwide High-Yield Global Corporate Cash
High Income Bond Bond Bond Management
Portfolio Portfolio Portfolio Portfolio Portfolio TOTAL
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations:
Net investment
income (loss) $ 78,864 $ 80,914 $ 67,445 $ 17,430 $ 101,268 $ 2,345,352
Net realized gains
(losses) from
securities transactions 10,536 6,652 (1,104) 1,060 (21,181) 242,695
Change in net unrealized
appreciation/depreciation
of investments 409,145 294,364 34,698 49,800 35,377 12,822,173
------------- ------------- ------------- ------------- ------------- -------------
Increase in net
assets from operations 498,545 381,930 101,039 68,290 115,464 15,410,220
------------- ------------- ------------- ------------- ------------- -------------
From capital transactions:
Net proceeds from units sold 3,660,170 4,526,083 1,751,422 1,270,998 15,025,668 109,727,957
Cost of units redeemed (177,166) (118,488) (31,827) (15,968) (603,744) (3,683,844)
Net transfers 581,847 194,575 270,417 111,561 (8,758,198) 5,925,396
------------- ------------- ------------- ------------- ------------- -------------
Increase in net assets
from capital transactions 4,064,851 4,602,170 1,990,012 1,366,591 5,663,726 111,969,509
------------- ------------- ------------- ------------- ------------- -------------
Increase in net assets 4,563,396 4,984,100 2,091,051 1,434,881 5,779,190 127,379,729
Net assets at
beginning of period 127,107 18,173 25,436 39,528 133,249 1,451,715
------------- ------------- ------------- ------------- ------------- -------------
Net assets at end of period $ 4,690,503 $ 5,002,273 $ 2,116,487 $ 1,474,409 $ 5,912,439 $ 128,831,444
============= ============= ============= ============= ============= =============
ANALYSIS OF INCREASE
(DECREASE) IN UNITS
OUTSTANDING:
Units sold 243,868 334,678 141,881 107,792 1,342,457
Units redeemed (11,396) (8,682) (2,529) (1,348) (53,984)
Units transferred 37,855 13,796 21,909 9,389 (780,464)
------------- ------------- ------------- ------------- -------------
Increase in units
outstanding 270,327 339,792 161,261 115,833 508,009
Beginning units 9,345 1,440 2,148 3,525 12,143
------------- ------------- ------------- ------------- -------------
Ending units 279,672 341,232 163,409 119,358 520,152
============= ============= ============= ============= =============
</TABLE>
See accompanying notes to financial statements.
-52-
<PAGE> 80
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
For the period from inception to September 30, 1996
<TABLE>
<CAPTION>
Government International
Capital Natural and Diversified Global Aggressive
Appreciation Growth Resources Quality Bond Equities Equities Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE)
IN NET ASSETS:
From operations:
Net investment
income (loss) $ 5,013 $ 2,124 $ (3) $ (8) $ (9) $ (92) $ (21)
Net realized gains
(losses) from
securities transactions 0 1 0 0 0 0 0
Change in net unrealized
appreciation/depreciation
of investments 4,391 603 (15) 47 521 1,290 943
--------- --------- --------- --------- --------- --------- ---------
Increase (decrease)
in net assets
from operations 9,404 2,728 (18) 39 512 1,198 922
--------- --------- --------- --------- --------- --------- ---------
From capital transactions:
Net proceeds from
units sold 199,749 73,565 13,250 13,200 35,484 88,000 41,909
Cost of units redeemed (75) (75) 0 0 0 0 0
Net transfers 870 0 150 0 1,200 270 0
--------- --------- --------- --------- --------- --------- ---------
Increase in net assets
from capital transactions 200,544 73,490 13,400 13,200 36,684 88,270 41,909
--------- --------- --------- --------- --------- --------- ---------
Increase in net assets 209,948 76,218 13,382 13,239 37,196 89,468 42,831
Net assets at
beginning of period 0 0 0 0 0 0 0
--------- --------- --------- --------- --------- --------- ---------
Net assets at end of period $ 209,948 $ 76,218 $ 13,382 $ 13,239 $ 37,196 $ 89,468 $ 42,831
========= ========= ========= ========= ========= ========= =========
ANALYSIS OF INCREASE
(DECREASE) IN UNITS
OUTSTANDING:
Units sold 11,876 5,065 1,144 1,151 3,243 6,204 4,313
Units redeemed (4) (5) 0 0 0 0 0
Units transferred 50 0 13 0 109 19 0
--------- --------- --------- --------- --------- --------- ---------
Increase in units outstanding 11,922 5,060 1,157 1,151 3,352 6,223 4,313
Beginning units 0 0 0 0 0 0 0
--------- --------- --------- --------- --------- --------- ---------
Ending units 11,922 5,060 1,157 1,151 3,352 6,223 4,313
========= ========= ========= ========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
-53-
<PAGE> 81
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
For the period from inception to September 30, 1996
(Continued)
<TABLE>
<CAPTION>
Venture Federated Alliance Growth- Asset SunAmerica
Value Value Growth Income Allocation Balanced Utility
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE)
IN NET ASSETS:
From operations:
Net investment
income (loss) $ (300) $ (54) $ (27) $ (30) $ (9) $ (16) $ (7)
Net realized gains
(losses) from securities
transactions 1 1 0 (24) 0 0 0
Change in net unrealized
appreciation/depreciation
of investments 8,705 2,252 821 1,034 128 629 (202)
--------- --------- --------- --------- --------- --------- ---------
Increase (decrease)
in net assets from operations 8,406 2,199 794 980 119 613 (209)
--------- --------- --------- --------- --------- --------- ---------
From capital transactions:
Net proceeds from units sold 351,994 75,952 63,317 51,835 18,016 35,334 13,200
Cost of units redeemed (75) (75) 0 0 0 0 0
Net transfers 1,470 0 1,470 0 0 600 0
--------- --------- --------- --------- --------- --------- ---------
Increase in net assets
from capital transactions 353,389 75,877 64,787 51,835 18,016 35,934 13,200
--------- --------- --------- --------- --------- --------- ---------
Increase in net assets 361,795 78,076 65,581 52,815 18,135 36,547 12,991
Net assets at beginning of period 0 0 0 0 0 0 0
--------- --------- --------- --------- --------- --------- ---------
Net assets at end of period $ 361,795 $ 78,076 $ 65,581 $ 52,815 $ 18,135 $ 36,547 $ 12,991
========= ========= ========= ========= ========= ========= =========
ANALYSIS OF INCREASE
(DECREASE) IN UNITS
OUTSTANDING:
Units sold 24,267 7,759 3,740 3,515 1,310 3,476 1,310
Units redeemed (5) (7) 0 0 0 0 0
Units transferred 100 0 87 0 0 58 0
--------- --------- --------- --------- --------- --------- ---------
Increase in units outstanding 24,362 7,752 3,827 3,515 1,310 3,534 1,310
Beginning units 0 0 0 0 0 0 0
--------- --------- --------- --------- --------- --------- ---------
Ending units 24,362 7,752 3,827 3,515 1,310 3,534 1,310
========= ========= ========= ========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
-54-
<PAGE> 82
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
For the period from inception to September 30, 1996
(Continued)
<TABLE>
<CAPTION>
Worldwide High-Yield Global Corporate Cash
High Income Bond Bond Bond Management
Portfolio Portfolio Portfolio Portfolio Portfolio TOTAL
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE)
IN NET ASSETS:
From operations:
Net investment
income (loss) $ (117) $ (5) $ (18) $ (10) $ (77) $ 6,334
Net realized gains
(losses) from
securities transactions 2 0 0 0 10 (9)
Change in net unrealized
appreciation/depreciation
of investments 3,454 238 383 233 189 25,644
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease)
in net assets from operations 3,339 233 365 223 122 31,969
----------- ----------- ----------- ----------- ----------- -----------
From capital transactions:
Net proceeds from units sold 123,168 17,940 24,801 38,705 134,627 1,414,046
Cost of units redeemed 0 0 0 0 0 (300)
Net transfers 600 0 270 600 (1,500) 6000
----------- ----------- ----------- ----------- ----------- -----------
Increase in net assets
from capital transactions 123,768 17,940 25,071 39,305 133,127 1,419,746
----------- ----------- ----------- ----------- ----------- -----------
Increase in net assets 127,107 18,173 25,436 39,528 133,249 1,451,715
Net assets at beginning of period 0 0 0 0 0 0
----------- ----------- ----------- ----------- ----------- -----------
Net assets at end of period $ 127,107 $ 18,173 $ 25,436 $ 39,528 $ 133,249 $ 1,451,715
=========== =========== =========== =========== =========== ===========
ANALYSIS OF INCREASE
(DECREASE) IN UNITS
OUTSTANDING:
Units sold 9,301 1,440 2,125 3,471 12,280
Units redeemed 0 0 0 0 0
Units transferred 44 0 23 54 (137)
----------- ----------- ----------- ----------- -----------
Increase in units outstanding 9,345 1,440 2,148 3,525 12,143
Beginning units 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Ending units 9,345 1,440 2,148 3,525 12,143
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
-55-
<PAGE> 83
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Variable Annuity Account Four 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 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 nineteen variable portfolios (the
"Variable Accounts"). Each of the Variable Accounts is invested 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 fifteen 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 a guaranteed-interest fund of
the Company (the "General Account"), which is not a part of the
Separate Account. The financial statements include balances allocated
by the participant to the nineteen Variable Accounts and do not
include balances allocated to the General Account.
The Variable Accounts became initially available for sale on August
19, 1996. The inception dates for the nineteen individual Portfolios
were as follows: August 27, 1996 for the Capital Appreciation, Global
Equities, Venture Value and Worldwide High Income Portfolios; August
29, 1996 for the Aggressive Growth Portfolio; September 4, 1996 for
the Global Bond Portfolio; September 5, 1996 for the Cash Management
Portfolio; September 6, 1996 for the Growth, Federated Value and
Growth-Income Portfolios; September 12, 1996 for the Natural
Resources, International Diversified Equities and Alliance Growth
Portfolios; September 16, 1996 for the Government and Quality Bond,
Asset Allocation, SunAmerica Balanced and Utility Portfolios; and
September 23, 1996 for the High-Yield Bond and Corporate Bond
Portfolios.
-56-
<PAGE> 84
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
------------------------------------------------------
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 and may engage
in transactions involving stock index futures and options thereon as
a hedge against changes in market conditions.
The GROWTH PORTFOLIO seeks capital appreciation. This portfolio
invests in growth equity securities and may engage in transactions
involving stock index futures and options thereon as a hedge against
changes in market conditions.
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 which 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 corporate debt
securities rated Aa or better by Moody's Investors Service, Inc. or
AA or better by Standard & Poor's Corporation.
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 fifteen 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 subadvisor in common stocks
of foreign issuers which, in the aggregate, replicate broad country
indices.
-57-
<PAGE> 85
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
------------------------------------------------------
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 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 small
capitalization growth companies.
The VENTURE VALUE PORTFOLIO seeks growth of capital. This portfolio
invests primarily in common stocks.
The FEDERATED VALUE PORTFOLIO seeks growth of capital and income.
This portfolio invests primarily in the securities of high quality
companies.
The ALLIANCE GROWTH PORTFOLIO seeks long-term growth of capital. This
portfolio invests primarily in common stocks or securities with
common stock characteristics which demonstrate the potential for
appreciation.
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 the 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.
The UTILITY PORTFOLIO seeks high current income and moderate capital
appreciation. This portfolio invests primarily in the equity and debt
securities of utility companies.
-58-
<PAGE> 86
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
------------------------------------------------------
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, seeks 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.
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 CASH MANAGEMENT PORTFOLIO seeks high current yield while
preserving capital. This portfolio invests in a diversified selection
of money market instruments.
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.
-59-
<PAGE> 87
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
2. CHARGES AND DEDUCTIONS
----------------------
There are no withdrawal charges and no contract maintenance charges.
Other charges and deductions are applied against the current value of
the Separate Account and are paid as follows:
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 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, upon death of the participant or upon annuitization;
however, it reserves the right to deduct premium taxes when incurred.
Premium taxes generally range from 0% to 3.5%.
MORTALITY AND EXPENSE RISK CHARGE: The Company deducts mortality 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 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, to waive the withdrawal charge in the event of the death
of the participant and to provide both a standard and an enhanced
death benefit if the participant dies prior to the date annuity
payments begin. The expense risk charge is compensation for the risk
assumed by the Company that the cost of administering the contracts
will exceed the current charges.
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. The distribution expense
charge is for all expenses associated with the distribution of the
contract.
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.
-60-
<PAGE> 88
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
3. INVESTMENT IN ANCHOR TRUST AND SUNAMERICA TRUST
-----------------------------------------------
The aggregate cost of the Trusts' shares acquired and the aggregate
proceeds from shares sold during the period ending September 30, 1997
consist of the following:
<TABLE>
<CAPTION>
Cost of Shares Proceeds from
Variable Accounts Acquired Shares Sold
- ----------------- ----------- -----------
<S> <C> <C>
ANCHOR TRUST:
Capital Appreciation Portfolio $10,381,347 $ 1,211,611
Growth Portfolio 5,550,266 596,861
Natural Resources Portfolio 1,666,209 112,232
Government and Quality Bond
Portfolio 2,349,603 335,161
SUNAMERICA TRUST:
International Diversified
Equities Portfolio 8,199,399 427,767
Global Equities Portfolio 4,525,623 220,179
Aggressive Growth Portfolio 3,673,717 298,611
Venture Value Portfolio 21,280,339 662,803
Federated Value Portfolio 2,654,040 180,422
Alliance Growth Portfolio 13,027,613 1,175,628
Growth-Income Portfolio 14,728,543 1,175,448
Asset Allocation Portfolio 11,590,475 688,155
SunAmerica Balanced Portfolio 2,845,115 131,146
Utility Portfolio 1,112,645 87,321
Worldwide High Income
Portfolio 4,456,099 312,384
High-Yield Bond Portfolio 5,189,519 506,436
Global Bond Portfolio 2,242,603 185,147
Corporate Bond Portfolio 1,510,474 126,453
Cash Management Portfolio 14,014,043 8,249,049
=========== ===========
</TABLE>
-61-
<PAGE> 89
VARIABLE ANNUITY ACCOUNT FOUR
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.
-62-
<PAGE> 90
PART C - OTHER INFORMATION
--------------------------
Item 24. Financial Statements and Exhibits
- -------- ---------------------------------
(a) Financial Statements
--------------------
The following financial statements are included in Part A of the
Registration Statement:
None.
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, 1997
Financial Statements of Variable Annuity Account Four for the fiscal
year ended September 30, 1997
(b) Exhibits
--------
(1) Resolutions Establishing Separate Account .. Filed Herewith
(2) Custody Agreement .......................... Not Applicable
(3) (a) Form of Distribution Contract .......... Filed Herewith
(b) Form of Selling Agreement .............. Filed Herewith
(4) Variable Annuity Contract .................. Filed Herewith
(5) Application for Contract ................... Filed Herewith
(6) Depositor - Corporate Documents
(a) Certificate of Incorporation ........... Filed Herewith
(b) By-Laws................................. Filed Herewith
(7) Reinsurance Contract ....................... Not Applicable
(8) Form of Fund Participation Agreement ....... Filed Herewith
(9) Opinion of Counsel ......................... Filed Herewith
Consent of Counsel.......................... Filed Herewith
(10) Consent of Accountants...................... Filed Herewith
(11) Financial Statements Omitted from Item 23 .. None
(12) Initial Capitalization Agreement ........... Not Applicable
(13) Performance Computations ................... Not Applicable
(14) Diagram and Listing of All Persons Directly
or Indirectly Controlled By or Under Common
Control with Anchor National Life Insurance
Company, the Depositor of Registrant ...... Filed Herewith
(15) Powers of Attorney.......................... Filed Herewith
(27) Financial Data Schedules ................... Not Applicable
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
Peter McMillan Director
Jay S. Wintrob Director and Executive Vice President
James R. Belardi Director and Senior Vice President
Scott L. Robinson Director and Senior Vice President
Jana W. Greer Director and Senior Vice President
James W. Rowan Director and Senior Vice President
Lorin M. Fife Director, Senior Vice President, General
Counsel and Assistant Secretary
Susan L. Harris Director, Senior Vice President and
Secretary
N. Scott Gillis Senior Vice President and Controller
Edwin R. Reoliquio Senior Vice President and Chief Actuary
Victor E. Akin Senior Vice President
J. Franklin Grey Vice President
Keith B. Jones Vice President
Michael L. Lindquist Vice President
Edward P. Nolan(1) Vice President
Gregory M. Outcalt Vice President
Scott H. Richland Vice President and Treasurer
</TABLE>
<PAGE> 91
- ------------
(1) 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 or Registrant, see Exhibit 14 which is incorporated herein by
reference.
Item 27. Number of Contract Owners
- -----------------------------------
As of December 31, 1997, the number of Contracts funded by Variable
Annuity Account Four of Anchor National Life Insurance Company was
2,534, of which 707 were Qualified Contracts and 1,827 were
Nonqualified Contracts.
Item 28. Indemnification
- -------------------------
None.
Item 29. Principal Underwriter
- -------------------------------
SunAmerica Capital Services, Inc. serves as distributor to the
Registrant.
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>
J. Steven Neamtz Director & President
Robert M. Zakem Director, Executive Vice President,
General Counsel & Assistant Secretary
Peter Harbeck Director
Gary W. Krat Director
Enrique Lopez-Balboa Vice President
Steven Rothstein Treasurer
Susan L. Harris Secretary
Lorin M. Fife Assistant Secretary
</TABLE>
<TABLE>
Net Distribution Compensation on
Name of Discounts and Redemption or Brokerage
Distributor Commissions Annuitization Commissions Commissions*
- ----------- ---------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C>
SunAmerica Capital None None None None
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,
<PAGE> 92
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 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.
<PAGE> 93
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.
Further, Registrant undertakes to deduct mortality and expense risk
charges, distribution expense charges, withdrawal charges (contingent
deferred sales charges), contract maintenance fees and transfer fees
that are in the aggregate (1) reasonable in relation to the risks
assumed by the Company and (2) reasonable in amount as compared with
other variable annuity products. Those determinations are based on the
Company's analysis of publicly available information about similar
industry practices, and by taking into consideration factors such as
current contract levels and benefits provided, the existence of expense
charges guarantees and guaranteed annuity rates.
Item 33. Representation
- ------------------------
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.
<PAGE> 94
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant certifies that 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
29th day of January, 1998.
VARIABLE ANNUITY ACCOUNT FOUR
(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)
SCOTT L. ROBINSON* Senior Vice President
- -------------------- and Director
Scott L. Robinson (Principal Financial
Officer)
N. SCOTT GILLIS* Senior Vice President
- -------------------- and Controller
N. Scott Gillis (Principal Accounting
Officer)
JAMES R. BELARDI* Director
- --------------------
James R. Belardi
LORIN M. FIFE* Director
- --------------------
Lorin M. Fife
JANA W. GREER* Director
- --------------------
Jana W. Greer
/s/ SUSAN L. HARRIS Director January 29, 1998
- --------------------
Susan L. Harris
PETER MCMILLAN* Director
- --------------------
Peter McMillan
JAY S. WINTROB* Director
- --------------------
Jay S. Wintrob
</TABLE>
<PAGE> 95
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
JAMES W. ROWAN* Director
- ---------------------
James W. Rowan
</TABLE>
* By: /s/ SUSAN L. HARRIS Attorney-in-Fact
----------------------
Susan L. Harris
Date: January 29, 1998
<PAGE> 96
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
(1) Resolution Establishing Separate Account
(3)(a) Distribution Agreements
(3)(b) Selling Agreement
(4) Variable Annuity Contract
(5) Application For Contract
(6)(a) Certificate of Incorporation
(6)(b) By-Laws
(8) Fund Participation Agreement
(9) Opinion/Consent of Counsel
(10) Consent of Accountants
(14) Diagram and Listing of All Persons Directly or
Indirectly Controlled By or Under Common Control
With Anchor National Life Insurance Company,
the Depositor of Registrant
(15) Powers of Attorney
</TABLE>
<PAGE> 1
Exhibit 1
UNANIMOUS WRITTEN CONSENT
OF THE EXECUTIVE COMMITTEE OF THE BOARD OF DIRECTORS OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
Pursuant to the Bylaws of this corporation, the undersigned,
constituting all of the members of the Executive Committee of the Board of
Directors of ANCHOR NATIONAL LIFE INSURANCE COMPANY, a California corporation
(this "Corporation"), hereby unanimously consent in writing to and hereby adopt
the following resolutions, effective this 8th day of November 1994:
NOW, THEREFORE, BE IT RESOLVED, that the officers of
this Corporation be, and they hereby are authorized to establish for
the account of this corporation Variable Annuity Account Four
("Variable annuity Account Four") in accordance with the insurance laws
of the State of California, to provide the investment medium for
certain annuity contracts to be issued by this Corporation
("Contracts") as may be designated as participating therein. The
Variable annuity Account Four shall receive, hold, invest and reinvest
only the monies arising from" (1) premiums, contributions or payments
made pursuant to Contracts participating therein; and (2) such assets
of this Corporation as may be deemed necessary for the orderly
operation of such Variable Annuity Account Four; and (3) the dividends,
interest and gains produced by the foregoing; and
RESOLVED FURTHER, that the Variable Annuity Account
Four shall be administered and accounted for as part of the general
business of this Corporation; and
RESOLVED FURTHER, that the officers of this
Corporation be, and they hereby are, authorized:
i) to take whatever actions are necessary to see to
it that the Contracts are registered under the provisions of
the Securities Act of 1993 to the extent that they shall
determine that such registration is necessary;
ii) to take whatever actions are necessary to assure
that such Variable Annuity Account Four is properly registered
with the Securities and Exchange Commission under the
provisions of the Investment Company Act of 1940, if any;
<PAGE> 2
iii) to prepare, execute and file such amendments to
any registration statements filed under the aforementioned
Acts (including such pre-effective and post-effective
amendments), supplements and exhibits thereto as they may deem
necessary or desirable;
iv) to apply for exemption from those provisions of
the aforementioned Acts and the rules promulgated thereunder
as they may deem necessary or desirable and to take any and
all other actions which they may deem necessary, desirable or
appropriate in connection with such Acts;
v) to take whatever actions are necessary to assure
that the Contracts are filed with the appropriate state
insurance regulatory authorities and to prepare and execute
all necessary documents to obtain approval of the insurance
regulatory authorities;
vi) to prepare or have prepared and executed all
necessary documents to obtain approval of, or clearance with,
or other appropriate actions required by, any other regulatory
authority that may be necessary in connection with the
foregoing matters;
vii) to enter into fund participation agreements with
trusts which will be advised by SunAmerica Asset Management
Corp.; and
RESOLVED FURTHER, that the form of any resolutions required by
any state authority to be filed in connection with any of the documents
or instruments referred to in any of the preceding resolutions be, and
the same hereby are, adopted as fully set forth herein if (i) in the
opinion of the officers of this Corporation the adoption of the
resolutions is advisable; and (ii) the Corporate Secretary or Assistant
Secretary of this Corporation evidences such adoption by inserting into
these minutes copies of such resolutions; and
RESOLVED FURTHER, that the officers of this Corporation, and
each of them are hereby authorized to prepare and to execute the
necessary documents; and
RESOLVED FURTHER, that the officer of this Corporation, and
each of them, acting individually, are hereby authorized to execute and
deliver on behalf of this Corporation any fund participation agreements
<PAGE> 3
and any such other agreements, certificates, documents or instruments
as may appropriate or required in connection therewith, all to be in
such form and with such changes or revisions as may be approved by the
officer executing and delivering the same, such execution and delivery
being conclusive evidence of such approval; and
RESOLVED FURTHER, that this Corporation hereby ratifies any
and all actions that may have previously been taken by the officers of
this Corporation in connection with the foregoing resolutions and
authorizes the officers of this Corporation to take any and all such
further actions as may be appropriate to reflect these resolutions and
to carry out their tenor effect and intent.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
the date stated above.
/s/ELI BROAD
-------------------------------
Eli Broad
/s/SCOTT L. ROBINSON
-------------------------------
Scott L. Robinson
/s/JAY S. WINTROB
-------------------------------
Jay Wintrob
<PAGE> 1
EXHIBIT 3A
DISTRIBUTION AGREEMENT
THIS AGREEMENT, entered into on this 12th day of August, 1996, by and
between ANCHOR NATIONAL LIFE INSURANCE COMPANY ("Anchor"), a life insurance
company organized under the laws of the State of Arizona, on behalf of itself
and VARIABLE ANNUITY ACCOUNT FOUR ("Separate Account"), a Separate Account
established by Anchor pursuant to the insurance laws of the State of Arizona,
and SUNAMERICA CAPITAL SERVICES, INC. ("Distributor"), a corporation organized
under the laws of the state of Delaware.
WITNESSETH:
WHEREAS, Anchor proposes to issue to the public certain variable annuity
contracts identified on the contract specification sheet attached hereto as
Attachment A ("Contracts"); and
WHEREAS, Anchor, by resolution adopted on November 8, 1994, established
the Separate Account on its books of account, for the purpose of issuing the
Contracts; and
WHEREAS, the Separate Account is registered with the Securities and
Exchange Commission ("Commission") as a unit investment trust under the
Investment Company Act of 1940 (File No. 811-8874); and
WHEREAS, the Contracts to be issued by Anchor are registered with the
Commission under the Securities Act of 1933 (File No. 33-86642) for offer and
sale to the public, and otherwise are in compliance with all applicable laws;
and
WHEREAS, Distributor, a broker-dealer registered under the Securities
Exchange Act of 1934 and a member of the National Association of Securities
Dealers, Inc., proposes to act as distributor on an agency basis in the
marketing and distribution of said Contracts; and
WHEREAS, Anchor desires to obtain the services of Distributor as
distributor of said Contracts issued by Anchor through the Separate Account;
NOW THEREFORE, in consideration of the foregoing, and of the mutual
covenants and conditions set forth herein, and for other good and valuable
consideration, Anchor, the Separate Account, and Distributor hereby agree as
follows:
1. Distributor will serve as distributor on an agency basis for the
Contracts which will be issued by Anchor through the Separate Account.
2. Distributor, will use its best efforts to provide information and
marketing assistance to licensed insurance agents and broker-dealers on a
continuing basis. However, Distributor shall be responsible for compliance
with the requirements of state broker-dealer regulations and the
Securities Exchange Act of 1934 as each applies to Distributor in
connection with its duties as distributor of said Contracts. Moreover,
Distributor shall conduct its affairs in accordance with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
3. Subject to the agreement of Anchor, Distributor may enter into
dealer agreements with broker-dealers registered under the Securities
Exchange Act of 1934 and authorized by applicable law to sell variable
annuity contracts issued by Anchor through the Separate Account. Any such
contractual arrangement is expressly made subject to this Agreement, and
Distributor will at all times be responsible to Anchor for purposes of the
federal securities laws for the distribution of Contracts issued through
the Separate Account. Distributor will use its respective best efforts to
provide information and marketing assistance to such broker-dealers on a
continuing basis.
4. Warranties
(a) Anchor represents and warrants to Distributor that:
(i) Registration Statements on Form N-4 for each of the
contracts
<PAGE> 2
identified on Attachment A have been filed with the Commission
in the form previously delivered to Distributor and that
copies of any and all amendments thereto will be forwarded to
Distributor at the time that they are filed with the
Commission;
(ii) The Registration Statement and any further amendments or
supplements thereto will, when they become effective, conform
in all material respects to the requirements of the Securities
Act of 1933 and the Investment Company Act of 1940, and the
rules and regulations of the Commission under such Acts, and
will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall
not apply to any statement or omission made in reliance upon
and in conformity with information furnished in writing to
Anchor by Distributor expressly for use therein;
(iii) Anchor is validly existing as a stock life insurance
company in good standing under the laws of the State of
Arizona, with power (corporate or other) to own its properties
and conduct its business as described in the Prospectus, and
has been duly qualified for the transaction of business and is
in good standing under the laws of each other jurisdiction in
which it owns or leases properties, or conducts any business,
so as to require such qualification;
(iv) The Contracts to be issued through the Separate Account
and offered for sale by Distributor on behalf of Anchor
hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor as provided
herein, will be duly and validly issued and will conform to
the description of such Contracts contained in the
Prospectuses relating thereto;
(v) Those persons who offer and sell the Contracts are to be
appropriately licensed in a manner as to comply with the state
insurance laws;
(vi) The performance of this Agreement and the consummation
of the transactions contemplated by this Agreement will not
result in a breach or violation of any of the terms or
provisions of, or constitute a default under any statute, any
indenture, mortgage, deed of trust, note agreement or other
agreement or instrument to which Anchor is a party or by which
Anchor is bound, Anchor's Charter as a stock life insurance
company or By-laws, or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over
Anchor or any of its properties; and no consent, approval,
<PAGE> 3
authorization or order of any court or governmental agency or
body is required for the consummation by Anchor of the
transactions contemplated by this Agreement, except such as
may be required under the Securities Exchange Act of 1934 or
state insurance or securities laws in connection with the
distribution of the Contracts by Distributor; and
(vii) There are no material legal or governmental proceedings
pending to which Anchor or the Separate Account is a party or
of which any property of Anchor or the Separate Account is the
subject, other than as set forth in the Prospectus relating to
the Contracts, and other than litigation incident to the kind
of business conducted by Anchor, if determined adversely to
Anchor, would individually or in the aggregate have a material
adverse effect on the financial position, surplus or
operations of Anchor.
(b) Distributor, jointly and severally, represent and warrant to
Anchor that:
(i) It is a broker-dealer duly registered with the
Commission pursuant to the Securities Exchange Act of 1934 and
a member in good standing of the National Association of
Securities Dealers, Inc., and is in compliance with the
securities laws in those states in which it conducts business
as a broker-dealer;
(ii) It shall permit the offer and sale of Contracts to the
public only by and through persons who are appropriately
licensed under both the securities laws and state insurance
laws and who are appointed in writing by Anchor to be
authorized insurance agents;
(iii) The performance of this Agreement and the consummation
of the transactions herein contemplated will not result in a
breach or violation of any of the terms or provisions of or
constitute a default under any statute, any indenture,
mortgage, deed of trust, note agreement or other agreement or
instrument to which either Distributor is a party or by which
either Distributor is bound, the Certificate of Incorporation
or By-laws of either Distributor, or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over either Distributor or its property; and
(iv) To the extent that any statements or omissions made in
the Registration Statement, or any amendment or supplement
thereto are made in reliance upon and in conformity with
written information furnished to Anchor by Distributor
expressly for use therein, such Registration Statement and any
amendments or supplements thereto will, when they become
effective or are filed with the Commission, as the
<PAGE> 4
case may be, conform in all material respects to the
requirements of the Securities Act of 1933 and the rules and
regulations of the Commission thereunder and will not contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading.
5. Distributor shall keep, in a manner and form prescribed or approved
by Anchor and in accordance with Rules 17a-3 and 17a-4 under the
Securities Exchange Act of 1934, correct records and books of account as
required to be maintained by a registered broker-dealer, acting as
distributor, of all transactions entered into on behalf of Anchor and with
respect to its activities under this Agreement for Anchor. Distributor
shall make such records and books of account available for inspection by
the Commission, and Anchor shall have the right to inspect, make copies of
or take possession of such records and books of account at any time on
demand.
6. Subsequent to having been authorized to commence the activities
contemplated herein, Distributor shall utilize the currently effective
Prospectus relating to the subject Contracts in connection with their
marketing and distribution efforts. As to the other types of sales
material, Distributor agree that they will use only sales materials as
have been authorized for use by Anchor and which conform to the
requirements of federal and state laws and regulations, and which have
been filed where necessary with the appropriate regulatory authorities,
including the National Association of Securities Dealers, Inc.
7. Distributor shall not distribute any Prospectus, sales literature,
or any other printed matter or material in the marketing and distribution
of any Contract if, to the knowledge of Distributor, any of the foregoing
misstates the duties, obligation or liabilities of Anchor or Distributor.
8. Distributor shall bear all expenses of providing services pursuant
to this Agreement including the cost of sales presentations, mailings,
advertising and any other marketing efforts they conduct in connection
with the distribution or sale of the Contracts.
9. Distributor, as distributor of the Contracts, shall not be entitled
to remuneration for its services.
10. Distributor shall ensure that all premium payments collected on the
sale of the Contracts are properly transmitted to Anchor for immediate
allocation to the Separate Account in accordance with the directions
furnished by the purchasers of such Contracts at the time of purchase.
11. If any purchase payment premiums shall be required to be returned by
Anchor or should Anchor become liable for the return thereof for any cause
other than surrenders or withdrawals by Contract Owners pursuant to the
terms of the Contracts either before or after termination of this
Agreement, Distributor agrees to pay Anchor the amount of remuneration
previously paid over to it by Anchor with respect to such premiums.
12. Distributor makes no representations or warranties regarding the
number of Contracts to be sold by licensed broker-dealers and insurance
agents or the amount to be paid thereunder. Distributor do, however,
represent that they will actively engage in their duties under this
Agreement on a continuous basis while there is an effective registration
statement with the Commission.
13. It is understood and agreed that Distributor may render similar
services or act as a distributor or
<PAGE> 5
dealer in the distribution of other variable contracts.
14. Distributor shall use its best efforts to ensure that the Contracts
will be offered for sale by licensed broker-dealers and insurance agents
on the terms described in the currently effective Prospectus describing
such Contracts.
15. Anchor shall use its best efforts to assure that the Contracts are
continuously registered under the Securities Act of 1933 and, should it
ever be required, under state Blue Sky Laws and to file for approval under
state insurance laws when necessary.
16. Anchor reserves the right at any time to suspend or limit the public
offering of the subject Contracts upon one day's written notice to
Distributor.
17. Anchor agrees to advise Distributor immediately of:
(a) any request by the Commission (i) for amendment of the
Registration Statement relating to the Contracts, or (ii) for
additional information;
(b) the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement relating to the
Contracts or the initiation of any proceedings for that purpose; and
(c) the happening of any material event, if known, which makes
untrue any statement made in the Registration Statement relating to
the Contracts or which requires the making of a change therein in
order to make any statement made therein not misleading.
18. Anchor shall furnish to Distributor such information with respect to
the Separate Account and the Contracts in such form and signed by such of
its officers as Distributor may reasonably request; and shall warrant that
the statements therein contained when so signed will be true and correct.
19. Each of the undersigned parties agrees to notify the other in
writing upon being apprised of the institution of any proceeding,
investigation or hearing involving the offer or sale of the subject
Contracts.
20. This Agreement shall terminate automatically upon its assignment.
This Agreement shall terminate, without the payment of any penalty by
either party:
(a) at the option of Anchor, upon sixty days' advance written
notice to Distributor; or
(b) at the option of Distributor upon 90 days' written notice to
Anchor; or
(c) at the option of Anchor upon institution of formal proceedings
against Distributor by the National Association of Securities
Dealers, Inc. or by the Commission; or
(d) at the option of Anchor, if Distributor or any representative
thereof at any time (i) employs any device, scheme, or artifice to
defraud; makes any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not
misleading; or engages in any act, practice, or course of business
which operates or would operate as a fraud or deceit upon any
person; (ii) fails to
<PAGE> 6
account and pay over promptly to Anchor money due it according to
its records; or (iii) violates the conditions of this Agreement; or
21. Each notice required by this Agreement may be given by telephone or
telefax and confirmed in writing.
22. Anchor agrees to indemnify Distributor for any liability that it may
incur to a Contract Owner or party-in-interest under a Contract (i)
arising out of any act or omission in the course of, or in connection
with, rendering services under this Agreement, or (ii) arising out of the
purchase, retention or surrender of a contract; provided however that
Anchor will not indemnify Distributor for any such liability that results
from the willful misfeasance, bad faith or gross negligence of such
Distributor, or from the reckless disregard, by such Distributor, of its
duties and obligations arising under this Agreement.
23. This Agreement shall be subject to the laws of the State of
California and construed so as to interpret the Contracts and insurance
contracts written within the business operation of Anchor.
24. This Agreement covers and includes all agreements, verbal and
written, between Anchor and Distributor with regard to the marketing and
distribution of the Contracts, and supersedes and annuls any and all
agreements between the parties with regard to the distribution of the
Contracts; except that this Agreement shall not affect the operation of
previous or future agreements entered into between Anchor and Distributor
unrelated to the sale of the Contracts.
THIS AGREEMENT, along with any Schedules of Remuneration attached hereto
and incorporated herein by reference, may be amended from time to time by the
mutual agreement and consent of the undersigned parties; provided that such
amendment shall not affect the rights of existing Contract Owners, and that such
amendment be in writing and duly executed.
<PAGE> 7
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested on the date first stated above.
ANCHOR NATIONAL LIFE INSURANCE COMPANY
By: ___________________________________
Susan L. Harris
Senior Vice President
VARIABLE ANNUITY ACCOUNT FOUR
BY: ANCHOR NATIONAL LIFE
INSURANCE COMPANY
By: ___________________________________
Susan L. Harris
Senior Vice President
SUNAMERICA CAPITAL SERVICES, INC.
By: ___________________________________
J. Steven Neamtz
President
<PAGE> 8
Attachment A
CONTRACT SPECIFICATION SHEET
The following variable annuity contracts are the subject of the Distribution
Agreement between Anchor National Life Insurance Company and SunAmerica Capital
Services, Inc. dated August 12, 1996 regarding the sale of contracts funded in
Variable Annuity Account Four:
1. Anchor Advisor
<PAGE> 1
EXHIBIT 3B
ANCHOR NATIONAL LIFE INSURANCE COMPANY
1 SunAmerica Center
Los Angeles, CA 90067-6022
Mailing Address:
P. O. Box 54299
Los Angeles, CA 90054-0299
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SELLING
AGREEMENT
<PAGE> 2
SELLING AGREEMENT
This SELLING AGREEMENT ("Agreement"), dated _____________________, is by and
among ANCHOR NATIONAL LIFE INSURANCE COMPANY ("Insurer"), SUNAMERICA CAPITAL
SERVICES, INC. ("Distributor") and ___________________________________________,
together with its duly licensed insurance affiliates indicated on the attached
Annex I (the "Affiliates" and collectively, "Broker/Dealer").
Where permitted by state law, Broker/Dealer is acting as general agent hereunder
and shall be responsible for the duties of broker/dealer and general agent
hereunder. If state law does not permit Broker/Dealer to hold a corporate
insurance license, the appropriate duly licensed insurance affiliate identified
on Annex I shall act as general agent hereunder. Upon execution of Annex I, such
entity or entities agree to be bound by the terms hereof as if it were included
in the definition of Broker/Dealer.
1. Appointment. This Agreement is for the purpose of arranging for the
distribution of certain variable and fixed annuity contracts and any other
life insurance products identified on Exhibit 1 (the "Contracts"), issued
by the Insurer and, in the case of variable contracts, for which
Distributor is distributor, through sales people who are licensed agents
of the Insurer for insurance purposes, are associated with and registered
representatives of Broker/Dealer (each, a "Subagent"). In consideration of
the mutual promises and covenants contained in this Agreement, the Insurer
and Distributor each appoint Broker/Dealer and, as provided in Section 3,
its Subagents, to solicit and procure applications for the Contracts. This
appointment is not deemed to be exclusive in any manner and only extends
to those jurisdictions where the Contracts have been approved for sale and
in which Insurer and Broker/Dealer are both licensed as required by
prevailing regulatory requirements.
2. Representations and Warranties.
A. Each party hereto represents and warrants to each other party, as
follows:
(i) It is duly organized, validly existing and in good standing
under the laws of the state of its incorporation or other
corresponding applicable law and has all requisite power, corporate
or otherwise to carry on its business as now being conducted and to
perform its obligations as contemplated by this Agreement.
(ii) It has all licenses, approvals, permits and authorizations of,
and registrations with, all authorities and agencies, including
non-governmental self-regulatory agencies, required under all
federal, state, and local laws and regulations to enable it to
perform its oligations as contemplated by this Agreement.
(iii) The execution, delivery and performance of this Agreement have
been duly and validly authorized by all necessary corporate action,
if applicable, and this Agreement constitutes the legal, valid and
binding agreement of such party, enforceable against it in acordance
with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to editors' rights generally and
general principles of equity.
B. Broker/Dealer additionally represents and warrants as follows:
(i) It is registered as a broker and dealer under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and is a member
in good standing of the National Association of Securities Dealers,
Inc. ("NASD").
(ii) It will comply with all applicable laws, rules and regulations
of, as well as any and all directives and guidelines issued by any
agency or other regulatory body with authority over Broker/Dealer or
over the premises on which Broker/Dealer and its Subagents are
soliciting the sale of Contracts.
<PAGE> 3
(iii) It is duly licensed as a corporate insurance agent, or it has
identified on Annex I hereto its Affiliates which hold such licenses
and are permitted to do so under applicable laws.
3. Subagents. Broker/Dealer is authorized to recommend Subagents for
appointment to solicit sales of the Contracts. Broker/Dealer is
responsible for investigating the character, work experience and
background of any proposed Subagent prior to recommending appointment by
Insurer. No Subagent shall act on behalf of Insurer until properly
appointed by Insurer. To the extent that Exhibit 1 does not include all
annuity Contracts of Insurer which are registered as securities under the
Federal Securities laws, Broker/Dealer is responsible for ensuring that
its Subagents, unless otherwise agreed to with Insurer in writing, do not
offer to sell any other variable annuity contracts issued by Insurer,
other than the Contracts, unless a selling agreement with respect thereto
has been executed by the parties. Broker/Dealer is responsible for
supervising the activities of its Subagents and for ensuring that
Subagents are properly licensed and in compliance with all applicable
federal, state and local laws and regulations and all rules and procedures
of Insurer. Broker/Dealer shall notify Insurer promptly, in writing, of
any giving or receiving of notice of termination of any subagent. Insurer
reserves the right to refuse to appoint any proposed Subagent and to
terminate any relationship with any Subagent, with or without cause, at
any time. By submitting a Subagent for appointment, Broker/Dealer warrants
that: (1) such Subagent is recommended for appointment; (2) such Subagent
is fully licensed under applicable laws to transact business with Insurer
and is a duly registered representative of Broker/Dealer; and (3) all
background investigations required by state and federal laws have been
made with respect to such Subagent.
4. Sales Material.
A. Broker/Dealer shall not use any written or audiovisual sales
material (including prepared scripts for oral presentations) in
connection with the sales of the Contracts or solicitations hereof,
unless such material has been provided by, or approved in writing in
advance of uch use by, the Insurer and Distributor.
B. In accordance with the requirements of federal and certain state
laws, Broker/Dealer shall, to the extent required by such laws,
maintain complete records indicating the manner and extent of
distribution of any such sales material. This material shall be made
available to appropriate federal and state regulatory agencies as
required by law or regulation and to Distributor and Insurer upon
written request.
5. Prospectuses. For any Contract which is a registered security,
Broker/Dealer warrants that solicitation will be made by use of currently
effective prospectuses for the Contract and the underlying funds; and if
required by state law, the Statement of Additional Information for the
Contract; that the prospectuses will be delivered concurrently with each
sales presentation and that no statements shall be made to a client
superseding or controverting or otherwise inconsistent with any statement
made in the prospectus. The Insurer and Distributor shall furnish
Broker/Dealer, at no cost to such party, reasonable quantities of
currently effective prospectuses.
6. Conduct of Business.
A. Broker/Dealer will fully comply with the requirements of all
applicable laws, rules and regulations of regulatory authorities
(including self-regulatory organizations) having jurisdiction over
the activities of Broker/Dealer or over the activities contemplated
by this Agreement to be conducted by Broker/Dealer.
B. Neither Broker/Dealer nor any Subagent shall solicit an application
from, or recommend the purchase of a Contract to, an applicant
without having reasonable grounds to believe, in accordance with,
among other things, applicable regulations of any state insurance
commission, the Securities and Exchange Commission ("SEC") and the
NASD, that such purchase is suitable for the applicant. While not
limited to the following, a determination of suitability shall be
based on information supplied after a reasonable inquiry concerning
the applicant's insurance and investment objectives and
<PAGE> 4
financial situation and needs.
C. Broker/Dealer has or will have established, prior to its
commencement of any solicitation of sales of Contracts pursuant to
the terms of this Agreement, such rules, procedures, supervisory and
inspection techniques as necessary to diligently supervise the
activities of its Subagents pursuant to this Agreement and to ensure
compliance with the terms of this Agreement necessary to establish
diligent supervision. Broker/Dealer shall be responsible for
securities training, supervision and control of its Subagents in
connection with their solicitation activities with respect to the
Contracts and shall supervise compliance with applicable federal and
state securities laws and NASD requirements in connection with such
solicitation activities. Broker/Dealer will observe, and will comply
with, all requirements of any bank on whose premises Broker/Dealer
engages in sales activities pursuant to this Agreement. Upon request
by Insurer or Distributor, Broker/Dealer will furnish appropriate
records as are necessary to establish diligent supervision.
D. Broker/Dealer will fully comply with the requirements of applicable
state insurance laws and regulations and will maintain all books and
records and file all reports required thereunder to be maintained or
filed by a licensed insurance agent. Broker/Dealer shall comply with
the terms and conditions of any letter issued by the Staff of the
SEC with respect to the non-registration as a broker-dealer under
the 1934 Act of a corporation licensed as an insurance agent and
associated with a registered broker-dealer. Broker/Dealer shall
notify Distributor immediately in writing if Broker/Dealer fails to
comply with any such terms and conditions and shall take such
measures as may be necessary to comply with any such terms and
conditions.
E. Broker/Dealer shall promptly notify Insurer and Distributor of any
written customer complaint or notice of any regulatory investigation
or proceeding received by Broker/Dealer or any Subagent relating to
a Contract or any activities undertaken in connection with this
Agreement. Insurer and Broker/Dealer shall each cooperate fully in
any investigation or proceeding including but not limited to any
securities or insurance regulatory investigation or proceeding or
judicial proceeding arising in connection with the Contracts.
F. Broker/Dealer shall pay all expenses incurred by it in the
performance of this Agreement unless otherwise specifically provided
for in this Agreement or in a writing signed by Insurer and/or
Distributor and Broker/Dealer.
G. Applications shall be taken only on preprinted application forms
supplied by the Insurer. The Contract forms and applications are the
sole property of the Insurer. No person other than the Insurer has
the authority to make, alter or discharge any policy, Contract
application, Contract certificate, supplemental contract or form
issued by the Insurer. No person other than the Insurer has the
right to waive any provision with respect to any Contract or policy.
No person other than the Insurer has the authority to enter into any
proceeding in a court of law or before a regulatory agency in the
name of or on behalf of the Insurer.
H. Broker/Dealer and Subagent shall accept premiums in the form of a
check or money order made payable to Insurer. Broker/Dealer shall
ensure that all checks and money orders and applications for the
Contracts received by it or any Subagent are remitted promptly to
Insurer. In the event that any other premiums are sent to a Subagent
or Broker/Dealer rather than to Insurer, they shall promptly remit
such premiums to Insurer. Broker/Dealer acknowledges that if any
premium is held at any time by it, such premium shall be held on
behalf of Insurer, and Broker/Dealer shall segregate such premium
from its own funds and promptly remit such premium to Insurer. All
such premiums, whether by check, money order or wire, shall at all
times be the property of Insurer.
I. Upon issuance of a Contract by Insurer and delivery of such Contract
to Broker/Dealer, Broker/Dealer shall promptly deliver such Contract
to its purchaser. For purposes of this provision, "promptly" shall
be deemed to mean not later than five calendar days, or such
<PAGE> 5
shorter period as is reasonable under the circumstances.
Broker/Dealer shall return promptly to Insurer all receipts for
delivered Contracts, all undelivered Contracts and all receipts for
cancellation, in accordance with the instructions from Insurer.
J. Unless required by a determination of suitability, during the term
of this Agreement and after termination hereof, Broker/Dealer
covenants on behalf of itself and any Subagent appointed hereunder,
that they shall not solicit, induce or attempt to solicit or induce
Contract owners to terminate, surrender, cancel, replace or exchange
such Contract. Broker/Dealer acknowledges and agrees that the
provisions contained in this Section 6 may be enforced by an action
for an injunction, as well as or in addition to any action for
damages.
7. Commission Payments.
A. Broker/Dealer shall be entitled to receive a commission based upon
premiums received and accepted by the Insurer for Contracts issued
pursuant to this Agreement, based on the applicable rate of
commission set forth in the Commission Schedule attached hereto as
Exhibit 1 which is incorporated herein by reference. Broker/Dealer
shall be solely responsible for the payment of any commission or
consideration of any kind to Subagents.
B. In no event shall the Insurer be liable for the payment of any
commissions with respect to any solicitation made, in whole or in
part, by any person not appropriately licensed and registered prior
to the commencement of such solicitation.
C. If a Contract is returned to the Insurer pursuant to the "Free Look"
provision or any other right to examine provision of the Contract,
the full commission paid by the Insurer will be unearned and shall
be returned to the Insurer upon demand or, in the absence of such
demand, charged back to the recipient of the commission.
Broker/Dealer covenants and agrees to promptly deliver Contracts and
to hold the Insurer harmless from and against any claim arising from
market loss resulting from their breach of this covenant.
D. In no event shall Insurer incur obligations under this Agreement to
issue any Contracts or pay any commission in connection therewith if
the Contract owner is over the maximum issue age with respect to
that product when the Contract application was accepted. With
respect to such Contracts, the full commission paid by the Insurer
will be unearned and shall be returned to the Insurer upon demand
or, in the absence of such demand, charged back to the recipient of
the commission.
E. With respect to any Contract that is rescinded, as determined by the
Insurer in its sole discretion (other than a rescission with respect
to which a surrender charge applies), or if the Insurer otherwise
determines that a commission has not been earned (but such
determination may not contravene any other provision of this
Agreement), 100% of such unearned commission will be returned to the
Insurer upon demand or, in the absence of such demand, charged back
to the recipient of the commission.
F. Compensation for the sale of any Contract which is renewed, changed,
exchanged or otherwise converted from any other contract issued by
the Company shall be paid according to the Insurer's guidelines and
practices.
G. With respect to any Contract, or group of Contracts which the
Insurer in its sole discretion deems to be a single case, and which
at the time of application submission the initial purchase payment
is greater than $500,000, the Insurer may determine in its sole
discretion that the commissions set forth on Exhibit 1 not apply. In
the event the Insurer determines that the commission(s) do not
apply, the Insurer may establish an alternate commission for such
Contract or Contracts.
8. Indemnification
A. Broker/Dealer shall indemnify, defend and hold harmless Insurer and
Distributor and
<PAGE> 6
each person who controls or is associated with Insurer or
Distributor within the meaning of the federal securities laws and
any director, officer, corporate agent, employee, attorney and any
representative thereof, from and against all losses, expenses,
claims, damages and liabilities (including any costs of
investigation and legal expenses and any amounts paid in settlement
of any action, suit or proceeding of any claim asserted) which
result from, arise out of or are based upon:
(i) any breach by Broker/Dealer or its Affiliates of any
representation, warranty or other provision of this Agreement,
including any acts or omissions of Broker/Dealer, Affiliates,
Subagents and other associated persons; or
(ii) any violation by Broker/Dealer, any Affiliate or any Subagent
of any federal or state securities law or regulation, insurance law
or regulation or any rule or requirement of the NASD;
(iii) the use by Broker/Dealer, any Affiliate or any Subagent of any
sales or promotional material which has not received specific
written approval of Insurer and Distributor as provided in Section 4
of this Agreement, any oral or written misrepresentations or any
unlawful sales practices concerning the Contracts by Broker/Dealer,
any Affiliate or any Subagent; or
(iv) Claims by Subagents or other agents or representatives of
Broker/Dealer for commissions or other compensation or remuneration
of any type.
B. The indemnification provided for herein shall survive termination of
this Agreement.
9. Fidelity Bond. Broker/Dealer represents that all directors, officers,
employees, representatives and/or Subagents who are appointed pursuant to
this Agreement or who have access to funds of the Insurer are and will
continue to be covered by a blanket fidelity bond including coverage for
larceny, embezzlement or any other defalcation, issued by a reputable
bonding company. This bond shall be maintained at Broker/Dealer's expense.
Such bond shall be at least equivalent to the minimal coverage required
under the NASD Rules of Fair Practice, endorsed to extend coverage to life
insurance and annuity transactions. Broker/Dealer acknowledges that the
Insurer may require evidence that such coverage is in force and
Broker/Dealer shall promptly give notice to the Insurer of any notice of
cancellation or change of coverage. Broker/Dealer assigns any proceeds
received from the fidelity bond company to the Insurer to the extent of
the Insurer's loss due to activities covered by the bond. If there is any
deficiency, Broker/Dealer will promptly pay the Insurer that amount on
demand, and Broker/Dealer shall indemnify and hold harmless the Insurer
from any deficiency and from the cost of collection.
10. Market Timer Program. Insurer has available a Market Timer Program which
allows a market timer service to effect multiple transfers or other
transactions. Parties may use this program at the discretion of Insurer
and upon execution of a Market Timer Agreement. Among other provisions,
the Market Timer Agreement specifies that if the impact of processing
exchange transactions received from all outside sources is deemed to be
injurious to one of the separate accounts or a subaccount thereof, then
Insurer in its sole discretion may elect not to process the exchanges and
that Insurer will notify the Market Timer Service of the inability to
process the requested exchange. Insurer reserves the right to terminate
participation in or the entire Market Timer Program at any time and for
any reason.
11. RapidApp Program. If applications are transmitted to the Insurer pursuant
to the Insurer's RapidApp Program, the following provisions shall apply to
such applications and Contracts issued pursuant to the RapidApp Program.
A. Broker/Dealer agrees to communicate with owners of the Contracts
issued through the RapidApp Program in order to obtain and deliver
to the Insurer the signed confirmation for the Contract.
Broker/Dealer further agrees to provide any assistance or
cooperation required to enforce a Contract issued under the RapidApp
Program which shall include, but not be limited to, providing the
Insurer access to recordings of telephone conversations with
customers containing their consent to the purchase of Contracts, or
<PAGE> 7
providing statements or affidavits from such Subagents as to the
customer's consent to the making of the Contract.
B. In the event the owner of a Contract repudiates or rescinds the
Contract and the Insurer, in its sole discretion, waives any
surrender charges, the full commission paid by the Insurer will be
returned to the Insurer upon demand or, in the absence of such
demand, charged back to the recipient of the commission. In
addition, all amounts equal to any market loss arising from such
rescission or repudiation will be paid by Broker/Dealer on demand,
or in the absence of such demand, charged back to Broker/Dealer.
C. Broker/Dealer agrees that it will be solely responsible for the
transmission or failure of transmission of application information
to the Insurer. Broker/Dealer warrants that all application
information will be accurate and can be relied upon by the Insurer.
D. Broker/Dealer agrees to pay the Insurer all amounts equal to any
market loss resulting from the misallocation of the initial purchase
payment into the subaccounts, which misallocation was the result of
Insurer relying on Broker/Dealer's or their Subagents' application
information. In the absence of a demand for payment, such amounts
shall be charged back to Broker/Dealer.
E. Broker/Dealer agrees that its Subagents who are resident and
licensed in those jurisdictions approved by the Insurer may submit
applications to the Insurer pursuant to the RapidApp Program and
agree to the provisions of this Section 11. Broker/Dealer
acknowledges that agreeing to the provisions of this Section 11 does
not require its Subagents to submit all applications to the Insurer
pursuant to the RapidApp Program.
12. Termination.
A. Normal Termination. This Agreement shall continue for an indefinite
term, subject to the termination by either party upon written notice
to the other parties hereto, which shall be effective upon receipt
thereof. In addition, Insurer may terminate this Agreement without
notice if Broker/Dealer fails to satisfy the Insurer's production
requirements, as determined in the sole discretion of the Insurer.
B. Automatic Termination for Cause. This Agreement shall automatically
terminate upon: (1) a material breach of this Agreement, including
without limitation the failure to comply with the laws or
regulations of any state or other governmental agency or body having
jurisdiction over the sale of insurance; and (2) the suspension,
revocation or non-renewal of any then required insurance or
securities license of Broker/Dealer or any of its Affiliates, or the
deregistration of the Broker/Dealer or its termination of membership
with the NASD.
C. Rights and Obligations. Upon termination of this Agreement, except
as otherwise provided herein, all authorizations, rights and
obligations shall cease. If this Agreement is terminated for cause
as described above, Broker/Dealer's right to receive compensation
shall immediately terminate.
13. General Provisions.
A. Waiver. Waiver by any of the parties to promptly insist upon strict
compliance with any of the obligations of any other party under this
Agreement will not be deemed to constitute a waiver of the right to
enforce strict compliance.
B. Independent Contractor. Broker/Dealer is an independent contractor
and its Subagents who are appointed as insurance agents of Insurer
are agents of Broker/Dealer and not employees, agents or
representatives of Insurer or Distributor.
C. Independent Assignment. No assignment of this Agreement or of
commissions or other payments under this Agreement shall be valid
without the prior written consent of the Insurer.
<PAGE> 8
D. Notice. Any notice pursuant to this Agreement shall be mailed,
postage paid, to the last address communicated by the receiving
party to the other parties to this Agreement.
E. Severability. To the extent this Agreement may be in conflict with
any applicable law or regulation, this Agreement shall be construed
in a manner not inconsistent with such law or regulation. The
invalidity or illegality of any provision of this Agreement shall
not be deemed to affect the validity or legality of any other
provision of this Agreement.
F. Amendment. No Amendment to this Agreement shall be effective unless
in writing and signed by all the parties hereto.
G California Law. This Agreement shall be construed in accordance with
the laws of the State of California.
H. Effectiveness. This Agreement shall be effective as of the date set
forth above.
IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
representatives of the parties to this Agreement as of the date set forth above.
"INSURER":
ANCHOR NATIONAL LIFE INSURANCE COMPANY
By: __________________________________
Name:
Title:
"DISTRIBUTOR":
SUNAMERICA CAPITAL SERVICES, INC.
By: __________________________________
Peter Harbeck, President
"BROKER/DEALER":
_______________________________________
By: ___________________________________
<PAGE> 9
ANNEX I
This Annex I appends that certain Selling Agreement dated
_______________________ (the "Agreement") between Anchor National Life Insurance
Company, SunAmerica Capital Services, Inc. and _______________________________
("Broker/Dealer"). Each of the undersigned is affiliated with Broker/Dealer and
represents that it holds the necessary corporate insurance license to act as
general agent in connection with the sale of Contracts, as defined in the
Agreement, in those states so identified next to its name. By executing this
Annex I each of the undersigned agrees to be bound by the terms and conditions
of the Agreement as if it were a party thereto.
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<PAGE> 11
BANK RIDER
This rider is appended to that certain Selling Agreement date
____________________________between Anchor National Life Insurance Company
("Insurer"), SunAmerica Capital Services, Inc. ("Distributor") and
_____________________________, together with its duly licensed insurance
affiliates indicated on Annex I of the Selling Agreement ("Broker/Dealer"). This
Rider is to be executed by any Broker/Dealer which is selling, or intends to
sell, Contracts on the premises of any federal or state chartered bank, thrift
or savings and loan institution (collectively, "Bank"). Pursuant hereto,
Broker/Dealer represents and warrants that it will comply with the requirements
of applicable laws, regulations and guidelines of any regulatory authority
having jurisdiction over the activities of Bank or occurring on Bank premises,
including without limitation, the Interagency Statement on Retail Sales of
Nondeposit Investment Products (Board of Governors of the Federal Reserve
System, Federal Deposit Insurance Corporation, Office of the Comptroller of the
Currency, and Office of Thrift Supervision, February 14, 1994) and any
subsequent release designed to provide governance to banks in connection with
the sale of nondeposit investment products ("applicable banking laws").
Broker/Dealer agrees that it shall be responsible for ensuring that applicable
banking laws are complied with in connection with the activities undertaken
pursuant to the Selling Agreement, including without limitation, ensuring that
all advertisements and sales literature used by Broker/Dealer comply with
applicable banking laws. Broker/Dealer further agrees that it shall inform the
Insurer in writing of any legends and other disclosures that are required by
applicable banking laws to be contained in advertisements or sales literature
for policies issued by the Insurer.
"Broker/Dealer"
By: _______________________________
_______________________________
Printed Name & Title
<PAGE> 12
EXHIBIT 1
Commission Schedule
This Commission Schedule is hereby incorporated in and made a part of the
Selling Agreement dated as of _________________________ ("Agreement") by and
between Anchor National Life Insurance Company ("Insurer"), SunAmerica Capital
Services, Inc. and __________________________________ together with its duly
licensed insurance affiliates indicated on Annex I to the Agreement
(collectively, "Broker/Dealer").
1. In no event shall the Insurer be liable for the payment of any commissions
with respect to any solicitation made, in whole or in part, by any person not
appropriately licensed and registered prior to the commencement of such
solicitation.
2. If a Contract is returned to the Insurer pursuant to the "Free Look"
provision or any other right to examine provision of the Contract, the full
commission paid by the Insurer will be unearned and shall be returned to the
Insurer upon demand or, in the absence of such demand, charged back to the
recipient of the commission.
3. With respect to any Contract that is rescinded, as determined by the
Insurer in its sole discretion (other than a rescission with respect to which a
surrender charge applies), or if the Insurer otherwise determines that a
commission has not been earned (but such determination may not contravene any
other provision of this Agreement), 100% of such unearned commission will be
returned to the Insurer upon demand or, in the absence of such demand, charged
back to the recipient of the commission.
4. The following commission rates shall apply to Contracts issued by Insurer.
Commissions are paid in respect of the aggregate purchase payments received and
accepted by the Insurer with complete application information and documentation
as required by the Insurer or as a subsequent purchase payment under a Contract
after the Contract is in force. In addition, if an annual trail commission is
applicable, it will be payable in quarterly installments. The trail commission
installment for each calendar quarter will be calculated based on the Contract
Value as of the end of such quarter. Trail commissions are not payable on any
Contract that has been surrendered, annuitized or under which a death benefit
has been paid.
AMERICAN PATHWAY II CONTRACTS. Commissions will be paid in the amount of
five-and-one-half percent (5.5%). Commissions are paid only on the subsequent
purchase payments received and accepted by the Insurer under a contract which is
in force.
ICAP II CONTRACTS. Commissions will be paid in the amount of five percent (5%).
ICAP II GROUP CONTRACTS. Commissions will be paid in the amount of five percent
(5%).
With respect to any ICAP II Group Contracts, the following commission
chargebacks will apply:
(1) Upon termination of the Contract, all commissions paid on premiums
received in the 12 months prior to termination of the Contract will
be deemed unearned and shall be returned to the Insurer upon demand
or, in the absence of such demand, charged back to the recipient of
the commission; and
(2) If, within the first four years of the Contract, any participant
under the Contract retires or terminates employment resulting in a
withdrawal of the participant's funds from the Contract, all
commissions paid on behalf of such participant's contributions will
be deemed unearned and shall be returned to the Insurer upon demand
or, in the absence of such demand, charged back to the recipient of
the commission; if no premium information is available with respect
to that participant, the charge back will be calculated based upon
the amount of the withdrawal of funds.
<PAGE> 13
POLARIS/POLARIS II CONTRACTS (OTHER THAN POLARIS UNALLOCATED GROUP CONTRACTS).
With respect to Polaris/Polaris II Contracts issued to persons age 80 or younger
(at date of issue), commissions will be paid pursuant to one or more of the
options set forth below, as selected by Broker/Dealer or General Agent. If more
than one commission option is chosen, Broker/Dealer agrees that Subagents may
select from the specified commission options at the time a Contract is sold,
which selection may not be changed at a later time. If more than one commission
option is selected, Broker/Dealer must also specify a "default" commission
option, which will apply in the event the Subagent does not select a commission
option at the time of the sale of a Contract. If Broker/Dealer does not specify
a "default" commission option, the "default" commission option shall be Option
2.
- --------------------------------------------------------------------------------
Options Commission Rate Annual
Trail Commission
- --------------------------------------------------------------------------------
Option 1 6.00% None
- --------------------------------------------------------------------------------
Option 2 5.25% For Contracts in force from 15 through 84 months,
.25% annually, payable in .0625% quarterly
installments.
For Contracts in force from 87 months or longer,
.40% annually, payable in .10% quarterly
installments.
- --------------------------------------------------------------------------------
Option 3 2.50% For Contracts in force 15 months or longer,
1.00% annually, payable in .25% quarterly
installments.
- --------------------------------------------------------------------------------
The following commission option(s) is(are) selected: [ ] Option 1
[ ] Option 2
[ ] Option 3
If more than one commission option has been selected, a "default" commission
option must be selected (choose one only): [ ] Option 1
[ ] Option 2
[ ] Option 3
With respect to Polaris/Polaris II Contracts (other than Polaris Unallocated
Group Contracts) sold to persons age 81 through 90 (at date of issue),
commissions will be paid as set forth below, including the applicable annual
trail commission.
- ------------------------------------------------------------------------------
Issue Commission Rate Annual
Age Trail Commission
- ------------------------------------------------------------------------------
81-85 1.50% For Contracts in force 15 months or longer,
.80% annually, payable in .20% quarterly
installments.
- ------------------------------------------------------------------------------
86-90 1.25% For Contracts in force 15 months or longer,
.80% annually, payable in .20% quarterly
installments.
- ------------------------------------------------------------------------------
With respect to any Polaris/Polaris II Contract sold with a Nursing Home
Endorsement to an owner who is, at the time of sale, confined to a nursing home
as such term is defined in the endorsement and the owner exercises his or her
rights under the endorsement to surrender the Contract within two years of the
date of issuance, the full commission paid by the Insurer will be unearned and
shall be returned to the Insurer upon demand or, in the absence of such demand,
charged back to the recipient of the commission.
<PAGE> 14
ANCHOR ADVISOR CONTRACTS. Commissions will be paid pursuant to the one or more
of the options set forth below, as selected by Broker/Dealer or General Agent.
If more than one commission option is chosen, Broker/Dealer agrees that
Subagents may select from the specified commission options at the time a
Contract is sold, which selection may be changed at a later time. If more than
one commission option is selected, Broker/Dealer must also specify a "default"
commission option, which will apply in the event the Subagent does not select a
commission option at the time of the sale of a Contract. If Broker/Dealer does
not specify a "default" commission option, the "default" commission option shall
be Option 1.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Options Commission Rate Annual Trail Commission Commission Chargeback
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Option 1 1.00% on purchase payments For Contracts in force 15 Upon termination of the
received during first 6 months or longer, annual Contract during first six
months after issuance; trail commissions will be months after issuance, all
.50% on purchase payments paid in the amount of 1.00% commissions paid on purchase
received during the second of account value, payable in payments received will be
6 months after issuance. .25% quarterly installments. deemed unearned and shall be
returned to the Insurer upon
demand or, in the absence of
such demand charged back to the
recipient of the commission.
Upon termination of the
Contract during second six
months after issuance, 50% of
all commissions paid on
purchase payments received will
be deemed unearned and shall be
returned to the Insurer upon
demand or, in the absence of
such demand charged back to the
recipient of the commission.
If, on the first Contract
anniversary, withdrawals exceed
50% of the aggregate purchase
payments, .50% of the amount
withdrawn will be deemed
unearned and shall return to
the Insurer upon demand or, in
the absence of such demand,
charged back to the recipient
of the commission.
- -------------------------------------------------------------------------------------------------------
Option 2 None For Contracts in force 3 None
months or longer, annual
trail commissions will be
paid in the amount of 1.00%
of account value, payable in
.25% quarterly installments.
- -------------------------------------------------------------------------------------------------------
</TABLE>
The following commission option(s) is(are) selected: [ ] Option 1
[ ] Option 2
If more than one commission option has been selected, a "default" commission
option must be selected (choose only one): [ ] Option 1
[ ] Option 2
<PAGE> 15
POLARIS UNALLOCATED GROUP. Commissions will be paid pursuant to one or more of
the options set forth below, as selected by Broker/Dealer or General Agent. If
more than one commission option is chosen, Broker/Dealer and General Agent agree
that their Subagents may select from the specified commission options at the
time a Contract is sold, which selection may not be changed at a later time. If
more than one commission option is selected, Broker/Dealer or General Agent must
also specify a "default" commission option, which will apply in the event the
Subagent does not select a commission option at the time of the sale of a
Contract. If Broker/Dealer or General Agent do not specify a "default"
commission option, the "default" commission option shall be Option 2.
- --------------------------------------------------------------------------------
Options Commission Rate Annual
Trail Commission
- --------------------------------------------------------------------------------
Option 1 4.50% None
- --------------------------------------------------------------------------------
Option 2 4.00% For Contracts in force from 15 months or longer,
.20% annually, payable in .05% quarterly
installments.
- --------------------------------------------------------------------------------
Option 3 .80% For Contracts in force 15 months or longer,
.80% annually, payable in .20% quarterly
installments.
- --------------------------------------------------------------------------------
The following commission option(s) is(are) selected: [ ] Option 1
[ ] Option 2
[ ] Option 3
If more than one commission option has been selected, a "default" commission
option must be selected (choose one only): [ ] Option 1
[ ] Option 2
[ ] Option 3
POLARIS UNALLOCATED GROUP TAKEOVER VERSION. Commissions will be paid in the
amount of one percent (1%) on the initial purchase payment. Annual trail
commissions for Contracts in force 3 months or longer will be in the amount of
one percent (1%) annually, payable in .25% quarterly installments. No
commissions will be paid on subsequent purchase payments.
SEASONS CONTRACTS. With respect to Seasons Contracts issued to persons age 80 or
younger (at date of issue), commissions will be paid pursuant to one or more of
the options set forth below, as selected by Broker/Dealer or General Agent. If
more than one commission option is chosen, Broker/Dealer agrees that Subagents
may select from the specified commission options at the time a Contract is sold,
which selection may not be changed at a later time. If more than one commission
option is selected, Broker/Dealer must also specify a "default" commission
option, which will apply in the event the Subagent does not select a commission
option at the time of the sale of a Contract. If Broker/Dealer does not specify
a "default" commission option, the "default" commission option shall be Option
2.
- --------------------------------------------------------------------------------
Options Commission Rate Annual
Trail Commission
- --------------------------------------------------------------------------------
Option 1 6.00% None
- --------------------------------------------------------------------------------
Option 2 5.25% For Contracts in force from 15 through 84 months,
.25% annually, payable in .0625% quarterly
installments.
For Contracts in force from 87 months or longer,
.40% annually, payable in .10% quarterly
installments.
- --------------------------------------------------------------------------------
Option 3 2.50% For Contracts in force 15 months or longer,
1.00% annually, payable in .25% quarterly
installments.
- --------------------------------------------------------------------------------
The following commission option(s) is(are) selected: [ ] Option 1
[ ] Option 2
[ ] Option 3
<PAGE> 16
If more than one commission option has been selected, a "default" commission
option must be selected (choose one only): [ ] Option 1
[ ] Option 2
[ ] Option 3
With respect to Seasons Contracts sold to persons age 81 through 90 (at date of
issue), commissions will be paid as set forth below, including the applicable
annual trail commission.
- ------------------------------------------------------------------------------
Issue Commission Rate Annual
Age Trail Commission
- ------------------------------------------------------------------------------
81-85 1.50% For Contracts in force 15 months or longer,
.80% annually, payable in .20% quarterly
installments.
- ------------------------------------------------------------------------------
86-90 1.25% For Contracts in force 15 months or longer,
.80% annually, payable in .20% quarterly
installments.
- ------------------------------------------------------------------------------
Broker/Dealer, on behalf of itself and its Affiliates, acknowledges and agrees:
(1) to Insurer's policies with respect to commission chargebacks which are
provided for in the Agreement and herein; and (2) that it has selected the above
commission options, which can not be modified without providing Insurer a newly
executed commission schedule.
"BROKER/DEALER":
_______________________________________
By: ___________________________________
Name:
Its:
<PAGE> 1
Exhibit 4
ANCHOR NATIONAL LIFE INSURANCE COMPANY
A STOCK COMPANY LOS ANGELES, CALIFORNIA
CERTIFICATE NUMBER P9999999999
PARTICIPANT JOHN DOE
<TABLE>
<S> <C> <C>
STATUTORY HOME OFFICE EXECUTIVE OFFICE ANNUITY SERVICE CENTER
2999 NORTH 44TH ST., SUITE 250 1 SUNAMERICA CENTER P.O. BOX 54299
PHOENIX, AZ 85018 LOS ANGELES, CA 90067-6022 LOS ANGELES, CA 90054-0299
</TABLE>
ANCHOR NATIONAL LIFE INSURANCE COMPANY ("We", "Us", the "Company", or "Anchor
National") agrees to provide benefits to the Participant under the Group
Contract, in accordance with the provisions set forth in this Certificate and in
consideration of the Participant's Enrollment Form and Purchase Payments We
received.
THIS CERTIFICATE IS EVIDENCE OF COVERAGE UNDER THE GROUP CONTRACT IF A
PARTICIPANT ENROLLMENT FORM IS ATTACHED. THE COVERAGE WILL BEGIN AS OF THE
CERTIFICATE DATE, SHOWN ON THE CERTIFICATE DATA PAGE.
THE VALUE OF AMOUNTS ALLOCATED TO THE SEPARATE ACCOUNT DURING THE ACCUMULATION
AND ANNUITY PERIODS IS NOT GUARANTEED, AND WILL INCREASE OR DECREASE BASED UPON
THE INVESTMENT EXPERIENCE OF THE SUBACCOUNTS YOU CHOOSE.
RIGHT TO EXAMINE - YOU MAY RETURN THIS CERTIFICATE TO OUR ANNUITY SERVICE CENTER
OR TO THE AGENT THROUGH WHOM THE CERTIFICATE WAS PURCHASED WITHIN 10 DAYS AFTER
YOU RECEIVE IT, IF YOU ARE NOT SATISFIED WITH IT. THE COMPANY WILL REFUND THE
CERTIFICATE VALUE ON THE BUSINESS DAY DURING WHICH THE CERTIFICATE IS RECEIVED.
UPON SUCH REFUND, THE CERTIFICATE SHALL BE VOID.
For Individual Retirement Annuities, a refund of the Purchase Payment(s) may be
required. Therefore, We reserve the right to allocate your Purchase Payment(s)
to the Cash Management Subaccount until the end of the Right To Examine period.
Thereafter, allocations will be made as shown on the Certificate Data Page.
THIS IS A LEGAL DOCUMENT. READ IT CAREFULLY.
-------------------- ------------------
Susan L. Harris Eli Broad
Secretary President
ALLOCATED FIXED AND
VARIABLE GROUP ANNUITY CERTIFICATE
Nonparticipating
1
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
CERTIFICATE DATA PAGE...................................................................PAGE 3
PURCHASE PAYMENT ALLOCATION.............................................................PAGE 4
DEFINITIONS.............................................................................PAGE 5
PURCHASE PAYMENT PROVISIONS.............................................................PAGE 8
Purchase Payments; Deferment of Payments; Suspension of Payments; Substitution of Portfolio
ACCUMULATION PROVISIONS.................................................................PAGE 8
Separate Account Accumulation Value; Number of Accumulation Units; Accumulation Unit Value
(AUV); Fixed Account Accumulation Value; Fixed Account Guarantee Period Options And Interest
Crediting
CHARGES AND DEDUCTIONS.................................................................PAGE 10
Expense Risk Charge; Distribution Expense Charge; Mortality Risk Charge; Guaranteed Death
Benefit Risk Charge
TRANSFER PROVISIONS....................................................................PAGE 10
Transfers of Accumulation Units and Annuity Units Between Subaccounts; Transfers of
Accumulation Units To and From the Fixed Account
WITHDRAWAL PROVISIONS..................................................................PAGE 11
GENERAL PROVISIONS.....................................................................PAGE 11
Entire Contract; Change of Annuitant; Death of Annuitant; Misstatement of Age or Sex; Proof
of Age, Sex or Survival; Conformity With State Laws; Changes in Law; Assignment; Claims of
Creditors; Premium Taxes or Other Taxes; Written Notice; Periodic Reports; Incontestability;
Nonparticipating
DEATH PROVISIONS.......................................................................PAGE 13
Death of Participant Before the Annuity Date; Due Proof of Death; Amount of Death Benefit;
Death of Participant or Annuitant on or After the Annuity Date; Beneficiary
ANNUITY PROVISIONS.....................................................................PAGE 16
Annuity Date; Payments to Participant; Fixed Annuity Payments; Amount of Fixed Annuity
Payments; Amount of Variable Annuity Payments
ANNUITY PAYMENT OPTIONS................................................................PAGE 18
FIXED ANNUITY PAYMENT OPTIONS TABLE....................................................PAGE 19
VARIABLE ANNUITY PAYMENT OPTIONS TABLE.................................................PAGE 21
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
CERTIFICATE DATA PAGE
<S> <C>
CERTIFICATE NUMBER: ANNUITY SERVICE CENTER:
P9999999999 P.O. BOX 54299
LOS ANGELES, CA 90054-0299
PARTICIPANT: AGE AT ISSUE:
JOHN DOE 35
ANNUITANT: FIRST PURCHASE PAYMENT:
JOHN DOE $20,000.00
ANNUITY DATE: CERTIFICATE DATE:
June 1, 2026 June 1, 1996
LATEST ANNUITY DATE: FIXED ACCOUNT OPTIONS -
June 1, 2051 Minimum Guarantee Rate:
3.0%
DEATH BENEFIT OPTION:
Purchase Payment Accumulation
BENEFICIARY:
As Stated On Participant Enrollment Form
SEPARATE ACCOUNT:
VARIABLE ANNUITY ACCOUNT FOUR
</TABLE>
FOR INQUIRIES
CALL 1-800-445-SUN2
3
<PAGE> 4
PURCHASE PAYMENT ALLOCATION
<TABLE>
<CAPTION>
Subaccounts
<S> <C>
50.00% Cash Management 25.00% Government & Quality Bond
0.00% Corporate Bond 0.00% Growth
0.00% Global Bond 0.00% Natural Resources
0.00% High-Yield Bond 0.00% Capital Appreciation
0.00% Worldwide High Income
0.00% Utility
0.00% SunAmerica Balanced
0.00% Asset Allocation
0.00% Growth-Income
0.00% Alliance Growth
0.00% Federated Value
0.00% Venture Value
0.00% Aggressive Growth
0.00% Global Equities
0.00% Intl Diversified Equities
</TABLE>
Fixed Account Options
<TABLE>
<CAPTION>
Guarantee Initial
Period Interest Rate
----------------- -------------
<S> <C> <C>
25.00% 1 Year Fixed 3.00%
0.00% 1 Year DCA Fixed
</TABLE>
4
<PAGE> 5
DEFINITIONS
Defined in this section are some of the words and phrases used in this
Certificate. These terms are capitalized when used in the Certificate. Other
capitalized terms in the Certificate refer to the captioned paragraph explaining
that particular concept in the Certificate.
ACCUMULATION UNIT
A unit of measurement used to compute the Certificate Value in a Subaccount
prior to the Annuity Date.
AGE
Age as of last birthday.
ANNUITANT
The natural person on whose life the annuity benefits under the Certificate are
based. The Annuitant is as named on the Certificate Data Page. If the
Certificate is in force and the Annuitant is alive on the Annuity Date, We will
begin payments to the Payee.
ANNUITY DATE
The date on which annuity payments to the Payee are to start. The Participant
must specify the Annuity Date, which must be at least two years after the
Certificate Date.
ANNUITY SERVICE CENTER
As specified on the Certificate Data Page.
ANNUITY UNIT
A unit of measurement used to compute annuity payments from the Subaccounts.
AUTOMATIC DOLLAR COST AVERAGING (DCA)
You may authorize the automatic transfer of amounts at regular intervals from a
source account to one or more Subaccounts (other than the source account). The
source account may be either the One Year DCA Fixed Account Option or any of the
Subaccounts. The unit values are determined on the dates of transfers. You may
terminate DCA at any time. However, upon termination or annuitization, any
amounts remaining in the One Year DCA Fixed Account Option will be transferred
to the One Year Fixed Account Option. We reserve the right to change the terms
and conditions of the DCA program at any time.
BENEFICIARY
The Beneficiary is as designated on the Participant Enrollment Form unless later
changed by the Participant.
CERTIFICATE
This Certificate describes Your interest as a Participant under the group
annuity contract.
CERTIFICATE DATE
5
<PAGE> 6
The date Your Certificate is issued, as shown on the Certificate Data Page. It
is the date from which Certificate Years and anniversaries are measured.
CERTIFICATE VALUE
The sum of: (1) Your share of the Subaccounts' Accumulation Unit values and (2)
the value of amounts allocated to the Fixed Account Options.
CERTIFICATE YEAR
A year starting from the Certificate Date in one calendar year and ending on the
day preceding the anniversary of such date in the succeeding calendar year.
CURRENT INTEREST RATE
The rate of interest declared by Us applicable to allocations of Subsequent
Purchase Payments to the Fixed Account Options. The Current Interest Rate will
not be less than the Minimum Guarantee Rate as shown on the Certificate Data
Page.
DEATH BENEFIT OPTION
As specified on the Certificate Data Page.
FIXED ACCOUNT OPTIONS
The investment options under this Certificate that are credited with a fixed
rate of interest declared by the Company. All Purchase Payments allocated to the
Fixed Account Options become part of the Company's general asset account. The
general asset account contains all the assets of the Company except for the
Separate Account and other segregated asset accounts. The Fixed Account Options
for this Certificate are shown on page 4.
FIXED ANNUITY
A series of periodic annuity payments of predetermined amounts that do not vary
with investment experience. Such payments are made from the Company's general
asset account.
GUARANTEE PERIOD
The one-year period for which either the Initial Interest Rate, the Current
Interest Rate or the Renewal Interest Rate is credited to amounts allocated to
the Fixed Account Options.
INITIAL INTEREST RATE
The rate of interest credited to the first Purchase Payment as described in the
Accumulation Provisions section. The Initial Interest Rate for this
Certificate's first Purchase Payment is listed on page 4. The Initial Interest
Rate may not be less than the Minimum Guarantee Rate as shown on the Certificate
Data Page.
IRC
The Internal Revenue Code of 1986, as amended, or as it may be amended or
superseded.
NYSE
New York Stock Exchange.
PARTICIPANT
6
<PAGE> 7
The person or entity named in the Certificate who is entitled to exercise all
rights and privileges of ownership under the Certificate.
PAYEE
The person receiving payment of annuity benefits under this Certificate.
PORTFOLIO
The variable investment options available under the Certificate in which the
corresponding Subaccount(s) invest.
PURCHASE PAYMENTS
Payments in U.S. currency made by or on behalf of the Participant to the Company
for the Certificate.
RENEWAL INTEREST RATE
The rate(s) of interest declared by Us applicable to transfers from the
Subaccounts into the Fixed Account Options and to amounts previously allocated
to a Fixed Account Option wherein the Guarantee Period has expired. The Renewal
Interest Rate may not be less than the Minimum Guarantee Rate as shown on the
Certificate Data Page.
SEPARATE ACCOUNT
A segregated asset account named on the Certificate Data Page. The Separate
Account consists of the Subaccounts, each investing in the shares of the
corresponding Portfolio. The assets of the Separate Account are not commingled
with the general assets and liabilities of the Company. Each Subaccount is not
chargeable with liabilities arising out of any other Subaccount. The value of
amounts allocated to the Subaccounts of the Separate Account is not guaranteed.
SUBACCOUNT
One or more divisions of the Separate Account which invests in shares of the
corresponding Portfolios. The available Subaccounts are shown on page 4.
SUBSEQUENT PURCHASE PAYMENTS
Purchase Payments made subsequent to the first Purchase Payment.
VARIABLE ANNUITY
A series of periodic annuity payments which vary in amount according to the
investment experience of one or more Subaccounts, as selected by You.
WE, OUR, US, THE COMPANY
Anchor National Life Insurance Company.
YOU, YOUR
The Participant.
7
<PAGE> 8
PURCHASE PAYMENT PROVISIONS
PURCHASE PAYMENTS
Purchase Payments are flexible. This means that, subject to Company declared
minimums and maximums, You may change the amounts, frequency or timing of
Purchase Payments. Purchase Payments will be allocated to the Fixed Account
Options and one or more Subaccounts in accordance with instructions from You. We
reserve the right to specify the minimum Purchase Payment that may be allocated
to a Subaccount under the Certificate.
DEFERMENT OF PAYMENTS
We may defer making payments from the Fixed Account Options for up to six (6)
months. Interest, subject to state requirements, will be credited during the
deferral period.
SUSPENSION OF PAYMENTS
We may suspend or postpone any payments from the Subaccounts if any of the
following occur:
(a) the NYSE is closed;
(b) trading on the NYSE is restricted;
(c) an emergency exists such that it is not reasonably practical to dispose
of securities in the Portfolios or to determine the value of its assets;
or
(d) the Securities and Exchange Commission, by order, so permits for the
protection of Participants.
Conditions in (b) and (c) will be decided by or in accordance with rules of the
Securities and Exchange Commission.
SUBSTITUTION OF PORTFOLIO
If: (a) the shares of the Portfolios should no longer be available for
investment by the Separate Account; or (b) in the judgment of the Fund's Board
of Trustees, further investment in the shares of a Portfolio is no longer
appropriate in view of the purpose of the Certificate, then We may substitute
shares of another underlying investment series or portfolio, for shares already
purchased, or to be purchased in the future by Purchase Payments under the
Certificate. No substitution of securities may take place without prior approval
of the Securities and Exchange Commission and under such requirements as it may
impose.
ACCUMULATION PROVISIONS
SEPARATE ACCOUNT ACCUMULATION VALUE
8
<PAGE> 9
The Separate Account Accumulation value under the Certificate shall be the sum
of the values of the Accumulation Units held in the Subaccounts for the
Participant.
NUMBER OF ACCUMULATION UNITS
For each Subaccount, the number of Accumulation Units is the sum of each
Purchase Payment and transfer amount allocated to the Subaccount, reduced by
premium taxes, if any:
Divided by
The Accumulation Unit value for that Subaccount as of the NYSE business day in
which the Purchase Payment or transfer amount is received.
The number of Accumulation Units will be similarly adjusted for withdrawals,
annuitizations and transfers. Adjustments will be made as of the end of the NYSE
business day in which We receive all requirements for the transaction, as
appropriate.
ACCUMULATION UNIT VALUE (AUV)
The AUV of a Subaccount for any NYSE business day is calculated by subtracting
(2) from (1) and dividing the result by (3) where:
(1) is the total value at the end of the given NYSE business day of the
assets attributable to the Accumulation Units of the Subaccount minus
the total liabilities;
(2) is the cumulative unpaid charge for assumption of Expense Risk,
Distribution Expense, Mortality Risk and Guaranteed Death Benefit Risk
charges (See CHARGES AND DEDUCTIONS);
(3) is the number of Accumulation Units outstanding at the end of the given
NYSE business day.
FIXED ACCOUNT ACCUMULATION VALUE
Under the Certificate, the Fixed Account Accumulation Value shall be the sum of
all monies allocated or transferred to the Fixed Account Option(s), reduced by
any applicable premium taxes, plus all interest credited on the Fixed Account
Option(s) during the period that the Certificate has been in effect. This amount
shall be adjusted for withdrawals, annuitizations and transfers. The Fixed
Account Accumulation Value shall not be less than the minimum value required by
law in the state where this Certificate is issued.
FIXED ACCOUNT GUARANTEE PERIOD OPTIONS AND INTEREST CREDITING
Any amounts allocated to the Fixed Account Option(s) from the first Purchase
Payment will earn interest at the Initial Interest Rate for the Fixed Account
Option(s) selected for a one-year Guarantee Period.
Subsequent Purchase Payments allocated to the Fixed Account Option(s) will earn
interest at the Current Interest Rate for the Fixed Account Option(s) selected
for a one-year Guarantee Period.
9
<PAGE> 10
Transfers to the Fixed Account Option(s) from the Subaccounts and amounts
renewed into the Fixed Account Option(s) will earn interest at the Renewal
Interest Rate for the Fixed Account Option(s) selected for a one-year Guarantee
Period.
If You are participating in the DCA program, Purchase Payments designated for
DCA will be allocated to the One Year DCA Fixed Account Option. Upon termination
of the DCA program, any amounts remaining in the One Year DCA Fixed Account
Option will be transferred to the One Year Fixed Account Option. Such amounts
will earn interest at the Renewal Interest Rate for a one-year Guarantee Period.
CHARGES AND DEDUCTIONS
We will deduct the following charges from Your Certificate:
EXPENSE RISK CHARGE
On an annual basis this charge equals 0.35% of the average daily total net asset
value of the Subaccounts to which Your Purchase Payments are allocated. This
charge is to compensate Us for assuming the expense risks under the Certificate.
DISTRIBUTION EXPENSE CHARGE
On an annual basis this charge equals 0.15% of the average daily total net asset
value of the Subaccounts to which Your Purchase Payments are allocated. This
charge is to compensate Us for all distribution expenses associated with the
Certificate.
MORTALITY RISK CHARGE
On an annual basis this charge equals 0.90% of the average daily total net asset
value of the Subaccounts to which Your Purchase Payments are allocated. This
charge is to compensate Us for assuming the mortality risks under the
Certificate.
GUARANTEED DEATH BENEFIT RISK CHARGE
On an annual basis this charge equals 0.12% of the average daily total net asset
value of the Subaccounts to which Your Purchase Payments are allocated. This
charge is to compensate Us for the risk assumed as a result of contractual
obligations to provide an enhanced minimum guaranteed Death Benefit prior to the
Annuity Date.
TRANSFER PROVISIONS
Prior to the Annuity Date, You may transfer all or part of Your Certificate
Value to any of the Subaccounts or Fixed Account Options subject to certain
restrictions. We reserve the right to charge a fee for transfers if the number
of transfers exceeds the limit specified by Us. The minimum amount that can be
transferred and the amount that can remain in a Subaccount or Fixed Account
Option are subject to Company limits.
10
<PAGE> 11
TRANSFERS OF ACCUMULATION AND ANNUITY UNITS BETWEEN SUBACCOUNTS
Prior to the Annuity Date, You may transfer all or a portion of Your Certificate
Value from one Subaccount to another Subaccount. A transfer will result in the
purchase of Accumulation Units in a Subaccount and the redemption of
Accumulation Units in the other Subaccount. Transfers will be effected at the
end of the NYSE business day in which We receive Your request for the transfer.
After the Annuity Date, You may transfer all or a portion of Your Certificate
Value from one Subaccount to another Subaccount. A transfer will result in the
purchase of Annuity Units in a Subaccount and the redemption of Annuity Units in
the other Subaccount. Transfers will be effected at the end of last NYSE
business day of the month in which We receive Your request for the transfer.
TRANSFERS OF ACCUMULATION UNITS TO AND FROM THE FIXED ACCOUNT
Prior to the Annuity Date, You may transfer all or any part of Your Certificate
Value from the Subaccount(s) to the Fixed Account Option(s) or from the Fixed
Account Option(s) to the Subaccount(s) of the Certificate. However, You may only
transfer to the One Year DCA Fixed Account Option if You are participating in
the DCA program.
After the Annuity Date, transfers into or out of the Fixed Account Option(s) are
not allowed.
WITHDRAWAL PROVISIONS
On or before the Annuity Date and while You are living, You may withdraw all or
part of Your Certificate Value under this Certificate by informing Us at Our
Annuity Service Center. For a full withdrawal, this Certificate must be returned
to Our Annuity Service Center. The minimum amount that can be withdrawn and the
amount remaining after a withdrawal are subject to Company limits.
Without written notice to the contrary, withdrawals will be deducted from the
Certificate Value in proportion to their allocation among the Fixed Account
Options and the Subaccounts. Withdrawals will be based on values at the end of
the NYSE business day in which the request for withdrawal and the Certificate
(in the case of a full withdrawal), are received at the Executive Office. Unless
the SUSPENSION OF PAYMENTS or DEFERMENT OF PAYMENTS sections are in effect,
payment of withdrawals will be made within seven calendar days.
GENERAL PROVISIONS
ENTIRE CONTRACT
The entire contract between You and Us consists of the group annuity contract,
the application, the Participant Enrollment Form as completed by You at the time
of purchase, this Certificate and any attached endorsement(s). An agent cannot
change the terms or conditions of this
11
<PAGE> 12
contract. Any change must be in writing and approved by Us. Only Our President,
Secretary, or one of Our Vice-Presidents can give Our approval.
CHANGE OF ANNUITANT
If the Participant is an individual, the Participant may change the Annuitant at
any time prior to the Annuity Date. To make a change, the Participant must send
a written notice to Us at least 30 days before the Annuity Date. If the
Participant is not an individual, the Participant may not change the Annuitant.
DEATH OF ANNUITANT
If the Participant and Annuitant are different and the Annuitant dies before the
Annuity Date, the Participant becomes the Annuitant until such time as the
Participant elects a new Annuitant. The preceding sentence shall not apply if
the Participant is not an individual.
MISSTATEMENT OF AGE OR SEX
If the Age or sex of any Annuitant has been misstated, future annuity payments
will be adjusted using the correct Age and sex, according to Our rates in effect
on the date that annuity payments were determined. Any overpayment from the One
Year Fixed Account Option, plus interest at the rate of 4% per year, will be
deducted from the next payment(s) due. Any underpayment from the One Year Fixed
Account Option, plus interest at the rate of 4% per year, will be paid in full
with the next payment due. Any overpayment from the Subaccounts will be deducted
from the next payment(s) due. Any underpayment from the Subaccounts will be paid
in full with the next payment due.
PROOF OF AGE, SEX, OR SURVIVAL
The Company may require satisfactory proof of correct Age or sex at any time. If
any payment under this Certificate depends on the Annuitant being alive, the
Company may require satisfactory proof of survival.
CONFORMITY WITH STATE LAWS
The provisions of this Certificate will be interpreted by the laws of the state
in which the enrollment form was signed or such other state as is required by
law. Any provision which, on the Certificate Date, is in conflict with the law
of such state is amended to conform to the minimum requirements of such law.
CHANGES IN LAW
If the laws governing this Certificate or the taxation of benefits under the
Certificate change, We reserve the right to amend this Certificate to comply
with these changes.
ASSIGNMENT
You may assign this Certificate before the Annuity Date, but We will not be
bound by an assignment unless it is received by Us in writing. Your rights and
those of any other person referred to in this Certificate will be subject to the
assignment. Certain assignments may be
12
<PAGE> 13
taxable. We do not assume any responsibility for the validity or tax
consequences of any assignment.
CLAIMS OF CREDITORS
To the extent permitted by law, no right or proceeds payable under this
Certificate will be subject to claims of creditors or legal process.
PREMIUM TAXES OR OTHER TAXES
The Company may deduct from Your Certificate Value any premium tax or other
taxes payable to a state or other government entity, if applicable. Should We
advance any amount so due, We are not waiving any right to collect such amount
at a later date. The Company will deduct any withholding taxes required by
applicable law.
WRITTEN NOTICE
Any notice We send to You will be sent to Your address shown in the Participant
Enrollment Form unless You request otherwise. Any written request or notice to
Us must be sent to Our Annuity Service Center, as specified on the Certificate
Data Page.
PERIODIC REPORTS
At least once during each Certificate Year, We will send You a statement of the
account activity of the Certificate. The statement will include all transactions
which have occurred during the accounting period shown on the statement.
Statements of Your Certificate Value will cease to be provided to You after the
Annuity Date.
INCONTESTABILITY
This Certificate will be incontestable from the Certificate Date.
NONPARTICIPATING
This Certificate does not share in Our surplus.
DEATH PROVISIONS
Notwithstanding any provision of this Certificate to the contrary, all payments
of benefits under this Certificate will be made in a manner that satisfies the
requirements of IRC Section 72(s), as amended from time to time. If the
Certificate is owned by a trust or other non-natural person, We will treat the
death of any Annuitant as the death of the "Primary Annuitant" and as the death
of any Participant.
DEATH OF PARTICIPANT BEFORE THE ANNUITY DATE. We will pay a death benefit to the
Beneficiary upon Our receiving all required documentation including: (a) due
proof that any Participant died before the Annuity Date; and (b) an election
form selecting the death benefit option. If no election is received within 60
days of our receipt of due proof of death, the death benefit will be paid in
accordance with option 1 below. The Beneficiary must select one of the following
options:
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<PAGE> 14
1. Immediately collect the death benefit in a lump sum
payment. If a lump sum payment is elected, payment will be
in accordance with any applicable laws and regulations
governing payments and death; or
2. Collect the death benefit in the form of one of the
Annuity Payment Options. The payments must be over the
life of the Beneficiary or over a period not extending
beyond the life expectancy of the Beneficiary. Payments
under this death benefit option must commence within one
year after the Participant's death, otherwise, the death
benefit will be paid in accordance with option 1 above; or
3. If the Beneficiary is the Participant's spouse, the
Beneficiary may elect to become the Participant and
continue the Certificate in force. If this option is
elected, no death benefit is paid. Upon the new
Participant's subsequent death, the entire interest must
be distributed immediately under option 1 or 2 above.
In any event, the entire interest in the Certificate will be distributed within
five years from the date of death of the Participant.
DUE PROOF OF DEATH
Due Proof of Death means:
1. a certified copy of a death certificate; or
2. a certified copy of a decree of a court of competent
jurisdiction as to the finding of death; or
3. a written statement by a medical doctor who attended the
deceased Participant at the time of death; or
4. any other proof satisfactory to Us.
AMOUNT OF DEATH BENEFIT
The amount of the death benefit will be determined based upon your selection on
the Participant Enrollment Form. Once selected, the death benefit option cannot
be changed. The death benefit options are as described below.
A. PURCHASE PAYMENT ACCUMULATION DEATH BENEFIT OPTION
Prior to the Annuity Date and upon death of the Participant, the
Beneficiary will receive the greatest of:
1. the Certificate Value at the end of the NYSE business day during
which We receive at Our Annuity Service Center all required
documentation including due proof of death of the Participant
and an election of the type of payment to be made; or
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<PAGE> 15
2. Purchase Payments less any partial withdrawals, compounded until
the date of death at 4% interest, plus any Purchase Payments and
less any withdrawals recorded after the date of death; or
3. the Certificate Value at the seventh Certificate anniversary,
plus any subsequent Purchase Payments and less any subsequent
partial withdrawals compounded until the date of death at 4%
interest, plus any Purchase Payments and less any partial
withdrawals recorded after the date of death.
If the Participant was age 70 or older on the Certificate Date, both (2) and (3)
above will be compounded at 3%, rather than 4%. If the death benefit is paid on
the death of a Participant who was not originally named in the application and
was age 70 or older on the Certificate Date, both (2) and (3) above will be
compounded at 3%, rather than 4%.
B. MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT OPTION
If, upon the death of the Participant and prior to the Annuity Date, the
Participant had not attained his or her 90th birthday, the Beneficiary
will receive the greatest of:
1. the Certificate Value at the end of the NYSE business day during
which We receive at Our Annuity Service Center all required
documentation including due proof of death of the Participant
and an election of the type of payment to be made; or
2. Purchase Payments less any partial withdrawals; or
3. the maximum anniversary value preceding the date of death. The
maximum anniversary value is equal to the greatest anniversary
value attained from the following:
As of the date of receipt of due proof of death and an election
of the type of payment to be made, at our Annuity Service
Center, We will calculate an anniversary value for each
Certificate anniversary prior to the Participant's 81st
birthday. The anniversary value is equal to the Certificate
Value on a Certificate anniversary, increased by the dollar
amount of any Purchase Payments made since that anniversary and
reduced by the dollar amount of any partial withdrawals since
that anniversary.
If the deceased Participant had attained age 90, then the death benefit will be
the Certificate Value as defined in (1) above.
DEATH OF PARTICIPANT OR ANNUITANT ON OR AFTER THE ANNUITY DATE.
If any Participant or Annuitant dies on or after the Annuity Date and before the
entire interest in the Certificate has been distributed, We will pay the
remaining portion of the interest of the
15
<PAGE> 16
Certificate as under the annuity payment option being used on the date of death.
For further information pertaining to death of the Annuitant, see ANNUITY
PAYMENT OPTIONS.
BENEFICIARY
The Beneficiary is as designated on the Participant Enrollment Form unless later
changed by the Participant. While: (a) the Participant is living; and (b) before
the Annuity Date, the Participant may change the Beneficiary by written notice
in a form satisfactory to Us. The change will take effect on the date We record
the proper notice subject to any payments We have made. If two or more persons
are named: (a) those surviving the Participant will share equally unless
otherwise stated; and (b) the Beneficiaries must elect to receive their
respective portions of the death benefit according to the death benefit options.
If the Annuitant survives the Participant, and there are no surviving
Beneficiaries, the Annuitant will be deemed the Beneficiary. If the Participant
is also the Annuitant and there are no surviving Beneficiaries at the death of
the Participant, the death benefit will be paid to the estate of the Participant
in accordance with option 1, under DEATH OF PARTICIPANT BEFORE THE ANNUITY DATE.
ANNUITY PROVISIONS
ANNUITY DATE
The Participant selects an Annuity Date (the date on which annuity payments are
to begin) at the time of application. The Participant may change the Annuity
Date at any time, at least seven days prior to the Annuity Date, by written
notice to the Company at its Annuity Service Center. The Annuity Date must
always be the first day of the calendar month and must be at least two years
after the Certificate Date, but not beyond the later of the Participant's 90th
birthday or ten years after the Certificate Date. If the Participant is a
non-natural person, the latest Annuity Date is the later of the Annuitant's 90th
birthday or ten years after the Certificate Date. If no Annuity Date is
selected, the Annuity Date will be the latest Annuity Date, as set by the
Company.
PAYMENTS TO PARTICIPANT
Unless You request otherwise, We will make annuity payments to You. If You want
the annuity payments to be made to some other Payee, We will make such payments
subject to receipt of a written request filed at the Annuity Service Center no
later than thirty (30) days before the due date of the first annuity payment.
Any such request is subject to the rights of any assignee. No payments available
to or being paid to the Payee while the Annuitant is alive can be transferred,
commuted, anticipated or encumbered.
FIXED ANNUITY PAYMENTS
If a Fixed Annuity payment option has been elected, the proceeds payable under
this Certificate less any applicable premium taxes, shall be applied to the
payment of the Fixed Annuity payment option elected at rates which are at least
equal to the annuity rates based upon the applicable
16
<PAGE> 17
tables in the Certificate. In no event will the Fixed Annuity payments be
changed once they begin.
AMOUNT OF FIXED ANNUITY PAYMENTS
The amount of each Fixed Annuity payment will be determined by applying the
portion of the Certificate Value allocated to Fixed Annuity payments less any
applicable premium taxes to the annuity table applicable to the Fixed Annuity
payment option chosen.
AMOUNT OF VARIABLE ANNUITY PAYMENTS
(a) FIRST VARIABLE ANNUITY PAYMENT: The dollar amount of the first Variable
Annuity payment will be determined by applying the portion of the
Certificate Value allocated to the Subaccount, less any applicable
premium taxes, to the annuity table applicable to the Variable Annuity
payment option chosen. If the Certificate Value is allocated to more
than one Subaccount, the value of Your interest in each Subaccount is
applied separately to the Variable Annuity payment option table to
determine the amount of the first annuity payment attributable to each
Subaccount.
(b) NUMBER OF VARIABLE ANNUITY UNITS: The number of Annuity Units for each
applicable Subaccount is the amount of the first annuity payment
attributable to that Subaccount divided by the value of the applicable
Annuity Unit for that Subaccount as of the Annuity Date. The number will
not change as a result of investment experience.
(c) VALUE OF EACH VARIABLE ANNUITY UNIT: The initial value of an Annuity
Unit of each Subaccount was arbitrarily set at $10 when the Subaccounts
were established. The value may increase or decrease from one month to
the next. For any month, the value of an Annuity Unit of a particular
Subaccount is the value of that Annuity Unit as of the last NYSE
business day of the preceding month, multiplied by the Net Investment
Factor for that Subaccount for the last NYSE business day of the current
month.
The Net Investment Factor for any Subaccount for a certain month is determined
by dividing (1) by (2) where:
(1) is the Accumulation Unit Value of the Subaccount
determined as of the last business day at the end of
that month, and
(2) is the Accumulation Unit Value of the Subaccount
determined as of the last business day at the end of the
preceding month.
The result is then multiplied by a factor that neutralizes the assumed
investment rate of 3.5%.
(d) SUBSEQUENT VARIABLE ANNUITY PAYMENTS: After the first Variable Annuity
payment, payments will vary in amount according to the investment
performance of the applicable Subaccount(s) to which Your Purchase
Payments are allocated. The amount may change from month to month. The
amount of each subsequent payment for each Subaccount is :
The number of Annuity Units for each Subaccount as determined for the first
annuity payment
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<PAGE> 18
Multiplied by
The value of an Annuity Unit for that Subaccount at the end of the month
immediately preceding the month in which payment is due.
We guarantee that the amount of each Variable Annuity payment will not be
affected by variations in expenses or mortality experience.
ANNUITY PAYMENT OPTIONS
During the Annuitant's life, upon written election and the return of this
Certificate to the Company at its Annuity Service Center, the Certificate Value
may be applied to provide one of the following options or any annuity payment
option that is mutually agreeable. After two years from the Certificate Date,
and prior to the Annuity Date, You can choose one of the options described
below. If no option has been selected by the Annuity Date, You will
automatically receive option 4, below, with 120 monthly payments guaranteed.
OPTIONS 1 & 1V - LIFE ANNUITY, LIFETIME PAYMENTS GUARANTEED
Payments payable to a Payee during the lifetime of the Annuitant. No further
payments are payable after the death of the Annuitant.
OPTIONS 2 & 2V - JOINT AND SURVIVOR LIFE ANNUITY
Payments payable to the Payee during the lifetime of the Annuitant and during
the lifetime of a designated second person. No further payments are payable
after the deaths of both the Annuitant and the designated second person.
OPTIONS 3 & 3V - JOINT AND SURVIVOR LIFE ANNUITY - 120 MONTHLY PAYMENTS
GUARANTEED
Payments are payable to the Payee during the lifetime of the
Annuitant and during the lifetime of a designated second person. If, at the
death of the survivor, payments have been made for less than 120 monthly
periods, the remaining guaranteed annuity payments will be continued to the
Beneficiary.
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<PAGE> 19
OPTIONS 4 & 4V - LIFE ANNUITY WITH 120 OR 240 MONTHLY PAYMENTS GUARANTEED
Payments payable to the Payee during the lifetime of the Annuitant. If, at the
death of the Annuitant, payments have been made for less than the 120 or 240
monthly periods, as selected at the time of annuitization, the remaining
guaranteed annuity payments will be continued to the Beneficiary.
OPTIONS 5 & 5V - FIXED PAYMENTS FOR A SPECIFIED PERIOD CERTAIN
Payments payable to the Payee for any specified period of time for five (5)
years or more, but not exceeding thirty (30) years, as selected at the time of
annuitization. The selection must be made for full twelve month periods. In the
event of death of the Annuitant, any remaining annuity payments will be
continued to the Beneficiary.
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<PAGE> 20
FIXED ANNUITY PAYMENT OPTIONS TABLE
BASIS OF COMPUTATION
The actuarial basis for the Fixed Annuity Payment Options Table is the 1983a
Annuitant Mortality Table, without projection with a guaranteed interest rate of
3%. The Fixed Annuity Payment Options Table does not include any applicable
premium tax.
OPTIONS 1 & 4 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
(Monthly installments for ages not shown will be furnished upon request.)
<TABLE>
<CAPTION>
OPTION 4 OPTION 4
AGE OF OPTION 1 LIFE ANNUITY LIFE ANNUITY
ANNUITANT LIFE ANNUITY (W/120 PAYMENTS GUARANTEED) (W/240 PAYMENTS GUARANTEED)
MALE FEMALE MALE FEMALE MALE FEMALE
<S> <C> <C> <C> <C> <C> <C>
55 4.70 4.25 4.62 4.22 4.39 4.11
56 4.80 4.34 4.72 4.30 4.45 4.17
57 4.91 4.42 4.82 4.38 4.51 4.23
58 5.03 4.52 4.92 4.47 4.58 4.30
59 5.15 4.61 5.03 4.56 4.64 4.37
60 5.28 4.72 5.14 4.66 4.71 4.44
61 5.42 4.83 5.26 4.76 4.78 4.51
62 5.57 4.95 5.39 4.86 4.84 4.58
63 5.74 5.07 5.52 4.98 4.90 4.65
64 5.91 5.21 5.66 5.10 4.96 4.72
65 6.10 5.35 5.81 5.22 5.02 4.79
66 6.29 5.51 5.96 5.36 5.08 4.86
67 6.50 5.67 6.11 5.50 5.13 4.93
68 6.73 5.85 6.28 5.65 5.18 5.00
69 6.97 6.04 6.44 5.80 5.23 5.06
70 7.23 6.25 6.61 5.96 5.27 5.12
71 7.51 6.47 6.78 6.14 5.31 5.18
72 7.80 6.71 6.96 6.31 5.34 5.23
73 8.12 6.97 7.14 6.50 5.37 5.28
74 8.45 7.26 7.32 6.69 5.40 5.32
75 8.82 7.56 7.49 6.89 5.42 5.35
76 9.21 7.90 7.67 7.09 5.44 5.39
77 9.62 8.26 7.84 7.29 5.45 5.41
78 10.07 8.65 8.01 7.49 5.47 5.43
79 10.55 9.07 8.17 7.69 5.48 5.45
80 11.06 9.53 8.33 7.89 5.49 5.47
81 11.61 10.03 8.48 8.08 5.49 5.48
82 12.19 10.57 8.61 8.26 5.50 5.49
83 12.81 11.16 8.74 8.43 5.50 5.49
84 13.46 11.79 8.86 8.59 5.51 5.50
</TABLE>
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<PAGE> 21
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
85 14.16 12.48 8.97 8.74 5.51 5.50
</TABLE>
OPTION 2 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.)
JOINT & 100% SURVIVOR LIFE ANNUITY
<TABLE>
<CAPTION>
AGE OF
MALE
ANNUITANT AGE OF FEMALE ANNUITANT
--------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 60 65 70 75 80 85
55 3.88 4.06 4.23 4.38 4.50 4.58 4.63
60 3.99 4.24 4.49 4.72 4.91 5.06 5.16
65 4.07 4.38 4.72 5.07 5.39 5.65 5.84
70 4.14 4.50 4.93 5.40 5.89 6.34 6.68
75 4.18 4.58 5.08 5.68 6.37 7.07 7.68
80 4.21 4.64 5.19 5.90 6.78 7.77 8.76
85 4.23 4.67 5.26 6.04 7.07 8.36 9.78
</TABLE>
OPTION 3 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST)
JOINT AND 100% SURVIVOR LIFE ANNUITY (W/120 PAYMENTS GUARANTEED)
<TABLE>
<CAPTION>
AGE OF
MALE
ANNUITANT AGE OF FEMALE ANNUITANT
--------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 60 65 70 75 80 85
55 3.87 4.06 4.23 4.37 4.48 4.56 4.60
60 3.98 4.23 4.48 4.71 4.89 5.02 5.09
65 4.07 4.38 4.71 5.05 5.35 5.57 5.71
70 4.13 4.49 4.91 5.36 5.81 6.18 6.42
75 4.17 4.57 5.05 5.62 6.23 6.78 7.17
80 4.20 4.61 5.14 5.79 6.54 7.27 7.82
85 4.21 4.64 5.19 5.89 6.73 7.60 8.30
</TABLE>
OPTION 5 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
FIXED PAYMENT FOR SPECIFIED PERIOD
<TABLE>
<CAPTION>
NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY
OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT
-------- ------- -------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
10 9.61 17 6.23 24 4.84
11 8.86 18 5.96 25 4.71
5 17.91 12 8.24 19 5.73 26 4.59
6 15.14 13 7.71 20 5.51 27 4.47
7 13.16 14 7.26 21 5.32 28 4.37
8 11.68 15 6.87 22 5.15 29 4.27
9 10.53 16 6.53 23 4.99 30 4.18
</TABLE>
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<PAGE> 22
VARIABLE ANNUITY PAYMENT OPTIONS TABLE
BASIS OF COMPUTATION
The actuarial basis for the Variable Annuity Payment Options Table is the 1983a
Annuitant Mortality Table, without projection with an effective annual Assumed
Investment Rate of 3.5%. Variable Annuity Payment Options Table does not include
any applicable premium tax.
OPTIONS 1V & 4V - TABLE OF MONTHLY INSTALLMENTS PER $1,000
(Monthly installments for ages not shown will be furnished upon request.)
<TABLE>
<CAPTION>
OPTION 4V OPTION 4V
AGE OF OPTION 1V LIFE ANNUITY LIFE ANNUITY
ANNUITANT LIFE ANNUITY (W/120 PAYMENTS GUARANTEED) (W/240 PAYMENTS GUARANTEED)
MALE FEMALE MALE FEMALE MALE FEMALE
<S> <C> <C> <C> <C> <C> <C>
55 4.99 4.54 4.91 4.51 4.66 4.38
56 5.09 4.62 5.00 4.58 4.72 4.44
57 5.20 4.71 5.10 4.66 4.78 4.51
58 5.32 4.80 5.20 4.75 4.85 4.57
59 5.44 4.90 5.31 4.84 4.91 4.64
60 5.57 5.00 5.42 4.93 4.97 4.70
61 5.71 5.11 5.54 5.03 5.04 4.77
62 5.86 5.23 5.67 5.14 5.10 4.84
63 6.02 5.36 5.80 5.25 5.16 4.91
64 6.20 5.49 5.94 5.37 5.22 4.98
65 6.38 5.64 6.08 5.50 5.28 5.05
66 6.58 5.79 6.23 5.63 5.33 5.12
67 6.79 5.95 6.38 5.77 5.38 5.19
68 7.02 6.13 6.54 5.91 5.43 5.25
69 7.26 6.32 6.71 6.07 5.48 5.32
70 7.52 6.53 6.87 6.23 5.52 5.37
71 7.80 6.75 7.05 6.40 5.55 5.43
72 8.09 6.99 7.22 6.58 5.59 5.48
73 8.41 7.26 7.40 6.76 5.62 5.52
74 8.75 7.54 7.57 6.95 5.64 5.57
75 9.12 7.85 7.75 7.14 5.66 5.60
76 9.51 8.18 7.92 7.34 5.68 5.63
77 9.92 8.54 8.09 7.54 5.70 5.66
78 10.37 8.94 8.26 7.74 5.71 5.68
79 10.85 9.36 8.42 7.94 5.72 5.70
80 11.37 9.82 8.57 8.13 5.73 5.71
81 11.92 10.32 8.71 8.32 5.74 5.72
82 12.50 10.87 8.85 8.50 5.74 5.73
83 13.12 11.46 8.97 8.67 5.75 5.74
84 13.78 12.09 9.09 8.83 5.75 5.74
85 14.47 12.78 9.20 8.97 5.75 5.75
</TABLE>
22
<PAGE> 23
OPTION 2V - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.)
JOINT & 100% SURVIVOR LIFE ANNUITY
<TABLE>
<CAPTION>
AGE OF
MALE
ANNUITANT AGE OF FEMALE ANNUITANT
--------- -----------------------
55 60 65 70 75 80 85
<S> <C> <C> <C> <C> <C> <C> <C>
55 4.16 4.34 4.51 4.66 4.78 4.86 4.92
60 4.27 4.51 4.76 4.99 5.19 5.33 5.44
65 4.35 4.66 4.99 5.34 5.66 5.92 6.11
70 4.42 4.78 5.20 5.67 6.16 6.60 6.96
75 4.47 4.86 5.35 5.95 6.63 7.33 7.95
80 4.50 4.92 5.46 6.17 7.04 8.04 9.02
85 4.52 4.95 5.53 6.31 7.34 8.63 10.05
</TABLE>
OPTION 3V - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
(MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST)
JOINT AND 100% SURVIVOR LIFE ANNUITY (W/120 PAYMENTS GUARANTEED)
<TABLE>
<CAPTION>
AGE OF
MALE
ANNUITANT AGE OF FEMALE ANNUITANT
<S> <C> <C> <C> <C> <C> <C> <C>
55 60 65 70 75 80 85
55 4.16 4.34 4.51 4.65 4.76 4.84 4.88
60 4.26 4.51 4.75 4.98 5.16 5.29 5.37
65 4.35 4.65 4.98 5.31 5.61 5.84 5.98
70 4.41 4.76 5.17 5.62 6.07 6.44 6.68
75 4.46 4.84 5.32 5.88 6.48 7.03 7.42
80 4.48 4.89 5.41 6.05 6.79 7.52 8.07
85 4.50 4.92 5.46 6.15 6.99 7.85 8.53
</TABLE>
OPTION 5V - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
PAYMENTS FOR A SPECIFIED PERIOD
<TABLE>
<CAPTION>
NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY
OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT
-------- ------- -------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
10 9.83 17 6.47 24 5.09
11 9.09 18 6.20 25 4.96
5 18.12 12 8.46 19 5.97 26 4.84
6 15.35 13 7.94 20 5.75 27 4.73
7 13.38 14 7.49 21 5.56 28 4.63
8 11.90 15 7.10 22 5.39 29 4.53
9 10.75 16 6.76 23 5.24 30 4.45
</TABLE>
23
<PAGE> 24
ANCHOR NATIONAL LIFE INSURANCE COMPANY
A STOCK COMPANY LOS ANGELES, CALIFORNIA
ALLOCATED FIXED AND
VARIABLE GROUP ANNUITY CERTIFICATE
Nonparticipating
24
<PAGE> 1
EXHIBIT 5
[GRAPHIC OMITTED]
Anchor National Life New Business Documents New Business Documents
Insurance Company with checks: without checks:
1 Sun America Center P. O. Box 100330 P. O. Box 54299
Los Angeles, CA 90067-6022 Pasadena, CA 91189-0001 Los Angeles, CA 90054-0299
- --------------------------------------------------------------------------------
PARTICIPANT ENROLLMENT FORM
DO NOT USE HIGHLIGHTERS. Please print or type.
A. PARTICIPANT
[ ]Mr. [ ]Mrs. [ ]Ms. [ ]Miss [ ]Dr. [ ]Sr. [ ]Jr.
- --------------------------------------------------------------------------------
LAST NAME/CUSTODIAN/TRUST/PLAN NAME FIRST NAME MIDDLE INITIAL
- --------------------------------------------------------------------------------
STREET ADDRESS CITY STATE ZIP CODE
MO. DAY YR. [ ]M [ ]F ( )
- ------------------- ----------- -------------------------- ---- -----------
DATE OF BIRTH SEX SOC. SEC. OR TAX ID NUMBER TELEPHONE NUMBER
JOINT
PARTICIPANT
(If any, must be spouse of Participant)
- --------------------------------------------------------------------------------
LAST NAME FIRST NAME MIDDLE INITIAL
MO. DAY YR. [ ]M [ ]F
- ------------------- ---------- --------------------------------
DATE OF BIRTH SEX SOCIAL SECURITY OR TAX ID NUMBER
B. ANNUITANT
(Complete only if different from Participant)
[ ]Mr. [ ]Mrs. [ ]Ms. [ ]Miss [ ]Dr. [ ]Sr. [ ]Jr.
- --------------------------------------------------------------------------------
LAST NAME FIRST NAME MIDDLE INITIAL
- --------------------------------------------------------------------------------
STREET ADDRESS CITY STATE ZIP CODE
MO. DAY YR. [ ]M [ ]F
- ------------------- ---------- --------------------------------
DATE OF BIRTH SEX SOCIAL SECURITY OR TAX ID NUMBER
C. DEATH BENEFIT
(Participant must choose one)
[ ] Purchase Payment Accumulation Death Benefit Option
[ ] Maximum Anniversary Value Death Benefit Option
(See your investment representative or the prospectus for information about
these options.)
D. BENEFICIARY
PRIMARY/CONTINGENT
- --------------------------------------------------------------------------------
LAST NAME FIRST NAME MIDDLE INITIAL CIRCLE ONE
PRIMARY/CONTINGENT
- --------------------------------------------------------------------------------
LAST NAME FIRST NAME MIDDLE INITIAL CIRCLE ONE
E. TYPE OF CONTRACT
[ ] NONQUALIFIED. If nonqualified, is this a 1035 Exchange? [ ] YES [ ] NO
Is this a Transfer of Assets (funds to be transferred from a mutual fund,
CD, etc.)? [ ] YES [ ] NO
If either of the above is yes, please complete a "Request for Transfer or
1035 Exchange" (V-2500NB).
[ ] QUALIFIED, as indicated below. Is this a direct transfer? [ ] YES [ ] NO
If yes, please complete a "Request for Transfer or 1035 Exchange" (form
V-2500NB).
An appropriate retirement plan/prototype must be established for purposes of
qualified monies.
<TABLE>
<S> <C> <C> <C>
[ ] SEP [ ] 403(b) [ ] Terminal funding [ ] 457 plan [ ] 401K retirement plan
[ ] IRA rollover [ ] IRA transfer [ ] Other
-----------------
PLEASE SPECIFY
</TABLE>
F. ANNUITY DATE
MO. DAY YR.
- -------------------
ANNUITY DATE
Date annuity payments begin. (Must be at least 2 years after the Certificate
Date. Maximum age is the later of the Participant's Age 90 or 10 years after
Certificate Date. NOTE: If left blank that date will default to maximum for
nonqualified and to 70 1/2 for qualified contracts.)
G. PURCHASE PAYMENT(S)
[ ] INITIAL PAYMENT: $_____________________ (Minimum initial payment is $20,000)
Payments may be wired or mailed. Make check payable to Anchor National Life
Insurance Company
[ ] AUTOMATIC PAYMENTS: $_____________________ (Minimum automatic payment is
$100) To establish automatic bank drafts for future payments, include a
completed "Automatic Payment Authorization" form (G-2233POS), a voided check
and the initial premium for the policy.
H. SPECIAL FEATURES
[ ] SYSTEMATIC WITHDRAWAL: Check the box at left and include a "Systematic
Withdrawal Application" form (V-5550SW).
[ ] AUTOMATIC DOLLAR COST AVERAGING: Check the box at left and include a
completed "Dollar Cost Averaging Application" form (V-5551DCA).
OVER Group Allocated
<PAGE> 2
- --------------------------------------------------------------------------------
PARTICIPANT ENROLLMENT FORM ANG-502 (9/96) SIDE 2
- --------------------------------------------------------------------------------
I. INVESTMENT INSTRUCTIONS
(Allocations must be expressed in whole percentages and total allocation
must equal 100%)
<TABLE>
<CAPTION>
______ SUNAMERICA SERIES TRUST ______ ______ ANCHOR SERIES TRUST ______
<S> <C> <C> <C> <C>
_____ Portfolio _____ _____ Manager ______ _____ Portfolio _____ ___ Manager ___
__% Cash Management SunAmerica Asset Management Corp. __% Government & Quality Bond Wellington Mgmt. Co.
__% Corporate Bond Federated Investors __% Growth Wellington Mgmt. Co.
__% Global Bond Goldman Sachs Asset Management Int'l. __% Natural Resources Wellington Mgmt. Co.
__% High-Yield Bond SunAmerica Asset Management Corp. __% Capital Appreciation Wellington Mgmt. Co.
__% Worldwide High Income Morgan Stanley Asset Management Inc.
__% Utility Federated Investors
__% SunAmerica Balanced SunAmerica Asset Management Corp.
__% Asset Allocation Goldman Sachs Asset Management ______ FIXED ACCOUNT OPTIONS ______
__% Growth-Income Alliance Capital Management L.P.
__% Alliance Growth Alliance Capital Management L.P. ____% 1 yr.
__% Federated Value Federated Investors
__% Venture Value Davis Selected Advisers, L.P. ____% 1 yr. DCA (Available only with Automatic
__% Aggressive Growth SunAmerica Asset Management Corp. Dollar Cost Averaging Program)
__% Global Equities Alliance Capital Management L.P.
__% International Morgan Stanley Asset Management Inc.
Diversified Equities
</TABLE>
J. TELEPHONE TRANSFERS AUTHORIZATION
Do you wish to authorize telephone TRANSFERS, subject to the conditions set
forth below? [ ] YES [ ] NO
(If no election is indicated the Company will default to yes for transfers.
If indicated above, I authorize the Company to accept telephone instructions for
transfers in any amount among portfolios from anyone providing proper
identification subject to restrictions and limitations contained in the
Certificate and related prospectus, if any. I understand that I bear the risk of
loss in the event of a telephone instruction not authorized by me. The Company
will not be responsible for any losses resulting from unauthorized transactions
if it follows reasonable procedures designed to verify the identity of the
caller and therefore, the Company will record telephone conversations containing
transaction instructions, request personal identification information before
acting upon telephone instructions and send written confirmation statements of
transactions to the address of record.
K. SPECIAL INSTRUCTIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
L. STATEMENT OF PARTICIPANT
This Certificate [ ] WILL [ ] WILL NOT replace in whole or in part an existing
life insurance or annuity contract.
(If replacing an existing policy, indicate name of issuing company and contract
number below.)
- ---------------------------------- ----------------------------------
COMPANY NAME CONTRACT NUMBER
I hereby represent my answers to the above questions to be correct and true to
the best of my knowledge and belief and agree that this Enrollment Form shall be
a part of any Certificate issued by the Company. I VERIFY MY UNDERSTANDING THAT
ALL PAYMENTS AND VALUES PROVIDED BY THE CERTIFICATE, WHEN BASED ON INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNT(S), ARE VARIABLE AND NOT GUARANTEED AS TO
DOLLAR AMOUNT. I ACKNOWLEDGE RECEIPT OF THE CURRENT PROSPECTUSES FOR ANCHOR
ADVISOR VARIABLE ANNUITY, THE SUNAMERICA SERIES TRUST AND ANCHOR SERIES TRUST. I
HAVE READ THEM CAREFULLY AND UNDERSTAND THEIR CONTENTS.
Signed at
------------------------------------------- -----------------------
CITY STATE DATE
- ---------------------------- -----------------------------------------
PARTICIPANT'S SIGNATURE REGISTERED REPRESENTATIVE'S SIGNATURE
- ---------------------------------------------
JOINT PARTICIPANT'S SIGNATURE (IF APPLICABLE)
M. LICENSED / REGISTERED REPRESENTATIVE INFORMATION
Will this Certificate replace in whole or in part any existing life insurance or
annuity contract? [ ] YES [ ] NO
- ------------------------------------------------------------ ----------------
REPRESENTATIVE'S LAST NAME FIRST NAME MIDDLE INITIAL SOC. SEC. NUMBER
- ------------------------------------------------------------ ----------------
REPRESENTATIVE'S STREET ADDRESS CITY STATE ZIP CODE
( )
- ------------------- ----------------------------- ------------------------
BROKER/DEALER REPRESENTATIVE'S TELEPHONE NO. LICENSED AGENT ID NUMBER
FRAUD WARNING: ANY PERSON WHO WITH INTENT TO DEFRAUD OR KNOWING THAT HE IS
FACILITATING A FRAUD AGAINST AN INSURER, SUBMITS AN APPLICATION OR FILES A CLAIM
CONTAINING A FALSE OR DECEPTIVE STATEMENT MAY BE GUILTY OF INSURANCE FRAUD.
================================================================================
OFFICE USE ONLY BOX
================================================================================
<PAGE> 1
EXHIBIT 6A
AMENDED AND RESTATED ARTICLES OF INCORPORATION
AND ARTICLES OF REDOMESTICATION
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
We, the undersigned, acting as incorporators for the purpose of
redomesticating Anchor National Life Insurance Company, a California
corporation, which intends to continue its existence, without interruption, as a
corporation organized under the laws of the State of Arizona pursuant to Arizona
Revised Statutes Section 20-231.A, do hereby adopt the following Amended and
Restated Articles of Incorporation and Articles of Redomestication for said
corporation.
ARTICLE I
The name of the corporation shall be Anchor National Life Insurance
Company.
ARTICLE II
The corporation was incorporated in the State of California on April 12,
1965.
ARTICLE III
The existence of the corporation shall be perpetual.
ARTICLE IV
Upon the approval of these Amended and Restated Articles of Incorporation
and Articles of Redomestication by the necessary regulatory authorities, Anchor
National Life Insurance Company shall be and continue to be possessed of all
privileges, franchises and powers to the same extent as if it had been
originally incorporated under the laws of the State of Arizona; and all
privileges, franchises and powers belonging to said corporation, and all
property, real, personal and mixed, and all debts due on whatever account, all
Certificates of Authority, agent appointments, and all chooses in action, shall
be and the same are hereby ratified, approved, confirmed and assured to Anchor
National Life Insurance Company with like effect and to all intents and purposes
as if it had been originally incorporated under the laws of the State of
Arizona. Said corporation shall be given recognition as a domestic corporation
of the State of Arizona from and after April 12, 1965, and as a domestic insurer
of the State of Arizona from and after December 2, 1966, the dates of its
initial incorporation and authorization to transact insurance business under the
laws of the State of California, effective the latter of January 1, 1996 or the
date of filing with the Arizona Corporation Commission.
ARTICLE V
The nature of the business to be transacted and the objects and purposes
for which this corporation is organized include the transaction of any and all
lawful business for which insurance corporations may be incorporated under the
laws of the State of Arizona without limitation, and as said laws may be amended
from time to time, and specifically said corporation shall be authorized to
transact life insurance, disability insurance and annuities, as defined under
Arizona Revised Statutes, Section 20-254, 20-253 and 20-254.01 respectively,
together with such other kinds of insurance as the corporation may from time to
time be authorized to transact, and to act as a reinsurer of business for which
it is duly authorized. Consistent with the applicable federal and state
requirements, the Company may issue funding agreements and guaranteed investment
contracts as defined under Arizona Revised Statutes, Section 20-208.
ARTICLE VI
The authorized capital of the corporation shall be $4,000,000, and shall
consist of 4,000 shares of voting common stock with a par value of $1,000.00 per
share. No holders of stock of the corporation shall have any
<PAGE> 2
preferential right to subscription to any shares or securities convertible into
shares of stock of the corporation, nor any right of subscription to any thereof
other than such, if any, as the Board of Directors in its discretion may
determine, and at such price as the Board of Directors in its discretion may
fix; and any shares or convertible securities which the Board of Directors may
determine to offer for subscription to the holders of stock at the time
existing.
Nothing herein contained shall be construed as prohibiting the corporation
from issuing any shares of authorized but unissued common stock for such
consideration as the Board of Directors may determine, provided such issuance is
approved by the shareholders of the corporation by a majority of the votes
entitled to be cast at any annual or special meeting of shareholders called for
that purpose. No such authorized but unissued stock may, however, be issued to
the shareholders of the corporation by way of a stock dividend, split-up or in
any other manner of distribution unless the same ratable stock dividend, stock
split-up or other distribution be declared or made in voting common stock to the
holder of such voting common stock at the time outstanding. Each holder of
common stock shall be entitled to participate share for share in any cash
dividends which may be declared from time to time on the common stock of the
corporation by the Board of Directors and to receive pro rata the net assets of
the corporation on liquidation.
ARTICLE VII
The affairs of the corporation shall be conducted by a Board of Directors
consisting of not less than five (5) nor more than fifteen (15) directors as
fixed by the bylaws, and such officers as said directors may at any time elect
or appoint. No officer or director need be a shareholder of this corporation.
Ten (10) directors shall constitute the initial Board of Directors. The names
and addresses of the persons who are to serve as directors until the next annual
meeting of shareholders or until their successors are elected and qualified, and
of the persons who are to serve as officers until the next annual meeting of the
directors or until their successors are elected and qualify, are:
Board of Directors
Eli Broad, Chairman
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
James Richard Belardi, Director
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
Lorin Merrill Fife, III, Director
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
Jana Waring Greer, Director
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
Susan Louis Harris, Director
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
Gary Walden Krat, Director
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
, Director (Vacant)
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
Peter McMillian, Director
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
Scott Lawrence Robinson, Director
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
Jay Steven Wintrob, Director
1 SunAmerica Center, Century City
Los Angeles, California 90067-6022
<PAGE> 3
Officers
Victor Edward Akin, Vice President
Eli Broad, President and Chief Executive Officer
James Richard Belardi, Senior Vice President
Lorin Merrill Fife, III, Senior Vice President, General Counsel
and Assistant Secretary
Michael Lee Fowler, Vice President
Nelson Scott Gillis, Vice President and Controller
Jana Waring Greer, Senior Vice President
J. Franklin Grey, Vice President
Susan Louise Harris, Senior Vice President and Secretary
Keith Bernard Jones, Vice President
Gary Walden Krat, Senior Vice President
Michael Lee Lindquist, Vice President
Edward Poli Nolan, Jr., Vice President
Gregory Mark Outcalt, Vice President
Edwin Raquel Reoliquio, Senior Vice President and Actuary
Scott Harris Richland, Vice President and Treasurer
Scott Lawrence Robinson, Senior Vice President
James Warren Rowan, Vice President
Jay Steven Wintrob, Executive Vice President
The directors shall have the power to adopt, amend, alter and repeal the
Bylaws, to manage the corporate affairs and make all rules and regulations
expedient for the management of the affairs of the corporation, to remove any
officer and to fill all vacancies occurring in the Board of Directors and
offices for any cause, and to appoint from their own number an executive
committee and other committees and vest said committees with all the powers
permitted by the Bylaws.
ARTICLE VIII
Subject to the further provisions hereof, the corporation shall indemnify
any and all of its existing and former directors and officers and their spouses
against all expenses incurred by them and each of them, including but not
confined to legal fees, judgments and penalties which may be incurred, rendered
or levied in any legal or administrative action brought against any of them, for
or on account of any action or omission alleged to have been committed while
acting within the scope of employment as a director or officer of the
corporation to the fullest extent allowable pursuant to A.R.S. Section 10-005,
et al. as my be amended from time to time. Whenever any such person has grounds
to believe that he may incur any such aforementioned expense, he shall promptly
make a full report of the matter to the President and the Secretary of the
Corporation. Thereafter, the Board of Directors of the corporation shall, within
a reasonable time, determine if such person acted, or failed to act, in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interest of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. If the
Board of Directors determines that such person acted, or failed to act, in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful, then
indemnification shall be mandatory and shall be automatically extended as
specified herein, provided, however, that the corporation shall have the right
to refuse indemnification, wholly or partially, in any instance in which the
person to whom indemnification would otherwise have been applicable shall have
unreasonably refused to permit the corporation, at its own expense and through
counsel of its own choosing, to defend him in the action, or shall have
unreasonable refused to cooperate in the defense of such action.
ARTICLE IX
All directors of the corporation shall be elected at the annual meeting of
the shareholders, which shall be held on the third Thursday of March of each
year or such other date and time as may be determined by the Board of Directors,
unless such day falls on a holiday, in which event the regular annual meeting
shall be held on the next succeeding business day.
ARTICLE X
The principal place of business of the corporation shall be located in the
City of Phoenix, Maricopa County, Arizona, but it may have other places of
business and transact business, and its Board of Directors or shareholders may
meet for the transaction of business, at such other place or places within or
<PAGE> 4
without the State of Arizona which its Board of Directors may designate.
ARTICLE XI
The fiscal year of the corporation shall be the calendar year.
ARTICLE XII
In no event shall the corporation incur indebtedness in excess of the
amount authorized by law.
ARTICLE XIII
The shares of the corporation, when issued, shall be non-assessable,
except to the extent required by the Constitution, specifically, but not in
limitation thereof, as provided by Article XIV, Section 11 of the Constitution
of the State of Arizona and the laws of the State of Arizona.
ARTICLE XIV
The private property of the shareholders, directors and officers of the
corporation shall be forever exempt from debts and obligations of the
corporation.
ARTICLE XV
The Bylaws of the corporation may be repealed, altered amended, or
substitute Bylaws may be adopted, by the directors or the shareholders, in
accordance with the provisions contained in said Bylaws.
ARTICLE XVI
J. Michael Low of 2999 North 44th Street, Suite 250, Phoenix, Arizona,
85018, having been a bona fide resident of Arizona for at least three (3) years,
is hereby appointed the statutory agent of this corporation in the State of
Arizona, upon whom notices and processes, including service of summons, may be
served, and which, when so served shall have lawful personal service on the
corporation. The Board of Directors may revoke this appointment at any time, and
shall fill the vacancy in such position whenever one exists.
ARTICLE XVII
The names and addresses of the incorporators of the corporation are:
J. Michael Low
Low & Childers, P.C.
2999 North 44th Street, Suite 250
Phoenix, Arizona 85018
S. David Childers
Low & Childers, P.C.
2999 North 44th Street, Suite 250
Phoenix, Arizona 85018
Steven R. Henry
Low & Childers, P.C.
2999 North 44th Street, Suite 250
Phoenix, Arizona 85018
Carrie M. McDonald
Low & Childers, P.C.
2999 North 44th Street, Suite 250
Phoenix, Arizona 85018
Kathy A. Steadman
Low & Childers, P.C.
2999 North 44th Street, Suite 250
Phoenix, Arizona 85018
All individual incorporators are eighteen (18) years of age or older.
All powers, duties and responsibilities of the incorporators shall cease
at the time of delivery of these Amended and Restated Articles of
<PAGE> 5
Incorporation and Articles of Redomestication to the Arizona Corporation
Commission for filing.
IN WITNESS WHEREOF, we hereunto affix our signatures as of the 14th day of
December, 1995.
/s/ J. Michael Low /s/ S. David Childers
- ------------------------------ ---------------------------
J. Michael Low S. David Childers
/s/ Steven R. Henry /s/ Carrie M. McDonald
- ------------------------------ --------------------------
Steven R. Henry Carrie M. McDonald
/s/ Kathy A. Steadman
- ------------------------------
Kathy A. Steadman
Subscribed, sworn to and acknowledged before me this 14th day of December,
1995.
/s/ Lori Marlow
--------------------------
Notary Public
My Commission Expires:
August 15, 1999
- ----------------------
<PAGE> 6
APPOINTMENT OF STATUTORY AGENT
I, J. Michael Low, being a resident of the State of Arizona for at least
three (3) years preceding this appointment, do hereby accept appointment as
Statutory Agent for Anchor National Life Insurance Company in accordance with
the Arizona Revised Statutes until appointment of a successor Statutory Agent
and removal.
DATED, this 14th day of December, 1995.
/s/ J. Michael Low
------------------------------
J. Michael Low, Esq.
Low & Childers, P.C.
<PAGE> 1
EXHIBIT 6B
AMENDED AND RESTATED
BYLAWS
of
ANCHOR NATIONAL LIFE INSURANCE COMPANY
ARTICLE I.
Shareholders.
Section 1. Annual Meetings. The annual meeting of the shareholders of the
Corporation shall be held on the fourth Thursday in April of each year or such
other dates and times as may be determined. Not less than ten (10) nor more than
fifty (50) days' written or printed notice stating the place, day and hour of
each annual meeting shall be given in the manner provided in Section 1 of
Article IX hereof. The business to be transacted at the annual meeting shall
include the election of directors, consideration and action upon the reports of
officers and directors and any other business within the power of the
Corporation. All annual meetings shall be general meetings.
Section 2. Special Meetings Called by President or Board of Directors. At
any time in the interval between annual meetings, special meetings of
shareholders may be called by the President, the Secretary or by two (2) or more
directors, upon ten (10) days' written or printed notice, stating the place, day
and hour of such meeting and the business proposed to be transacted thereat.
Such notice shall be given in the manner provided in Section 1 of Article IX. No
business shall be transacted at any special meeting except that named in the
notice.
Section 3. Special Meeting Called by Shareholders. Upon the request in
writing delivered to the President or Secretary of the Corporation by the
holders of ten percent (10%) or more of all shares outstanding and entitled to
vote, it shall be the duty of the President or Secretary of the Corporation to
call forthwith a special meeting of the shareholders. Such request shall state
the purpose or purposes of such meeting and the matters proposed to be acted on
thereat. The Secretary of the Corporation shall inform such shareholders of the
reasonably estimated cost of preparing and mailing the notice of the meeting. If
upon payment of such costs to the corporation, the person to whom such request
in writing shall have been delivered shall fail to issue a call for such meeting
within ten (10) days after the receipt of such request and payment of costs,
then the shareholders owning ten percent (10%) or more of the voting shares may
do so upon giving fifteen (15) days' notice of the time, place and object of the
meeting in the manner provided in Section 1 of Article IX.
Section 4. Removal of Directors. At any special meeting of the
shareholders called in the manner provided for by this Article, the
shareholders, by a vote of a majority of all shares of stock outstanding and
entitled to vote, may remove any director or the entire Board of Directors from
office and may elect a successor or successors to fill any resulting vacancies
for the remainder of his or their terms.
Section 5. Voting; Proxies; Record Date. At all meetings of shareholders
any shareholder entitled to vote may vote by proxy. Such proxy shall be in
writing and signed by the shareholder or by his duly authorized attorney in
fact. It shall be dated, but need not be sealed, witnessed or acknowledged. The
Board of Directors may fix the record date for the determination of shareholders
entitled to vote in the manner provided in Section 4 of Article IX hereof.
Section 6. Quorum. The presence in person or by proxy of the persons
entitled to vote a majority of the voting shares of any meeting shall constitute
a quorum for the transaction of business. If at any annual or special meeting of
shareholders a quorum shall fail to attend in person or by proxy, a majority in
interest attending in person or by proxy may adjourn the meeting from time to
time, not exceeding thirty (30) days in all, and thereupon any business may be
transacted which might have been transacted at the meeting originally called had
the same been held at the time so called.
Section 7. Filing Proxies. At all meetings of shareholders, the proxies
shall be filed with and be verified by the Secretary
<PAGE> 2
of the Corporation or, if the meeting shall so decide, by the Secretary of the
meeting.
Section 8. Place of Meetings. All meetings of shareholders shall be held
at such place, either within or without the State of Arizona, on such date and
at such time as may be determined from time to time by the Board of Directors
(or the Chairman in the absence of a designation by the Board of Directors).
Section 9. Order of Business. The order of business at all meetings of
shareholders shall be as determined by the Chairman of the meeting.
Section 10. Action Without Meeting. Directors may be elected without a
shareholders' meeting by a consent in writing, setting forth the action so
taken, signed by all persons entitled to vote for the election of directors;
provided, however, that the foregoing shall not limit the power of directors to
fill vacancies in the Board of Directors, and that a director may be elected to
fill a vacancy not filled by the directors by written consent in the manner
provided by the General Corporation Law.
Any other action, which under any provision of the General Corporation
Law, may be taken at a meeting of the shareholders, may be taken without a
meeting, and without notice except as hereinafter set forth, if a consent in
writing, setting forth the action so taken, is signed by the holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
All written consents shall be filed with the Secretary of the Corporation.
Any shareholder giving a written consent, or the shareholder's proxyholders, or
a transferee of the shares of a personal representative of the shareholder or
their respective proxyholders, may revoke the consent by a writing receiving by
the Corporation prior to the time that written consents of the number of shares
required to authorize the proposed action have been filed with the Secretary of
the Corporation, but may not do so thereafter. Such revocation is effective upon
its receipt by the Secretary of the Corporation.
<PAGE> 3
ARTICLE II.
Directors.
Section 1. Powers. The Board of Directors shall have the control and
management of the affairs, business and properties of the Corporation. They
shall have and exercise in the name of the Corporation and on behalf of the
Corporation all the rights and privileges legally exercisable by the
Corporation, except as otherwise provided by law, by the Charter or by these
Bylaws. A director need not be a shareholder or a resident of Arizona.
Section 2. Number; Term of Office; Removal. The number of directors of the
Corporation shall be not less than five (5) nor more than fifteen (15). The
number to be elected at each annual meeting shall be fixed by resolution of the
directors and stated in the notice of the meeting, subject, however, to approval
by the shareholders voting at the meeting. The directors shall hold office for
the term of one year, or until their successors are elected and qualify. A
director may be removed from office as provided in Section 4 of Article I
hereof.
Section 3. Vacancies. If the office of a director becomes vacant, or if
the number of directors is increased, such vacancy may be filled by the Board by
a vote of a majority of directors then in office though not less than a quorum.
The shareholders may, however, at any time during the term of such director,
elect some other person to fill said vacancy and thereupon the election by the
Board shall be superseded and such election by the shareholders shall be deemed
a filling of the vacancy and not a removal and may be made at any special
meeting called for that purpose.
Section 4. Organization Meetings; Regular Meetings. The Board of Directors
shall meet for the election of officers and any other business as soon as
practicable after the adjournment of the annual meeting of the shareholders. No
notice of the organization meeting shall be required if it is held at the same
place and immediately following the annual meeting of the shareholders. Other
regular meetings of the Board of Directors may be held at such intervals as the
Board may from time to time prescribe.
Any action required or permitted to be taken at a meeting of the Board of
Directors or of a committee of the Board may be taken without a meeting, if a
unanimous written consent which sets forth the action is signed by each member
of the Board or committee and filed with the minutes of proceedings of the Board
or committee.
Unless otherwise restricted by the Articles of Incorporation or these
Bylaws, members of the Board of Directors, or any committee designated by the
Board of Directors, may participate in a meeting of the Board of Directors, or
such committee, as the case may be, by means of telephone conference or similar
communications equipment by means of which are persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
Section 5. Special Meetings. Special meetings of the Board may be called
by the President or by a majority of the directors. At least twenty-four (24)
hours' notice shall be given of all special meetings; with the consent of the
majority of the directors, a shorter notice may be given.
Section 6. Quorum. A majority of the Board of Directors shall constitute a
quorum for the transaction of business, but such number may be decreased and/or
increased at any time or from time to time by vote of a majority of the entire
Board to any number not less than two (2) directors or not less than one-third
of the directors, whichever is greater.
Section 7. Place of Meetings. The Board of Directors shall hold its
meetings at such place, either within or without the State of Arizona, and at
such time as may be determined from time to time by the Board of Directors (or
the Chairman in the absence of a determination by the Board of Directors).
Section 8. Rules and Regulations. The Board of Directors may adopt such
rules and regulations for the conduct of its meetings and the management of the
affairs of the Corporation as the Board may deem proper and not inconsistent
with the laws of the State of Arizona or these Bylaws or the Charter.
Section 9. Compensation. The directors, as such, may
<PAGE> 4
receive a stated salary for their services and/or a fixed sum and expenses of
attendance may be allowed for attendance at each regular or special meeting of
the Board of Directors. Such stated salary and/or attendance fee shall be
determined by resolution of the Board unless the shareholders have adopted a
resolution relating thereto, provided that nothing herein contained shall be
construed to preclude a director from serving in any other capacity and
receiving compensation therefor.
Section 10. Chairman of the Board. The Board of Directors shall provide
for a Chairman of the Board from among its members. So long as there shall be a
person so active, he shall preside at all meetings of the Board and at all joint
meetings of officers and directors. In the absence of the Chairman, the Vice
Chairman, if any, or in his absence, the President, shall preside at all
meetings of the Board and all joint meetings of officers and directors.
Section 11. Investment Committee. There shall be an Investment Committee
consisting of the President of the Corporation ex officio and such members of
the Board of Directors and/or officers and employees as the Board may by
resolution prescribe. No investments or loans (other than policy loans or
annuity contract loans) shall be made unless the same be authorized or approved
by the Board of Directors or the Investment Committee. The Investment Committee
shall maintain minutes of its meetings and shall submit regular reports to the
Board of Directors.
Section 12. Executive Committee. The Board of Directors may appoint from
among its members an Executive Committee composed of three (3) or more
directors, and may delegate to such Committee, in the interval between the
meetings of the Board of Directors, any and all of the powers of the Board of
Directors in the management of the business and affairs of the Corporation,
except the power to declare dividends, issue stock, select directors to fill
vacancies in the membership of the Executive Committee or recommend to
shareholders any action requiring shareholders' approval. The members of such
Committee shall constitute a quorum for the transaction of business at any
meeting and the act of a majority of the members present at any meeting at which
the quorum requirement is satisfied shall be the act of the Board of Directors.
In the absence of any member of the Executive Committee necessary to constitute
a quorum, the members thereof present at any meeting, whether or not they
constitute a quorum, may, with telephonic approval of one of the absent members
of the Executive Committee, appoint a member of the Board of Directors to act in
place of such absent member.
Section 13. Other Committees. The Board of Directors may appoint from its
own members and, where permitted by law, from the Corporation's officers and/or
employees, such standing, temporary, special or ad hoc committees as the Board
may determine, investing such committees with such powers, duties and functions
as the Board may prescribe. All such committees shall include the President, ex
officio.
Section 14. Advisory Board. The Board of Directors may elect an Advisory
Board to serve until the next annual meeting of the Board of Directors or until
their successors are elected and qualify. Such Board shall consist of a number
as determined from time to time by the Board of Directors, and they shall be
advised of the meetings of the Board of Directors and authorized to attend the
meetings and counsel with them, but shall have no vote. The Board of Directors
(and between meeting of the Board of Directors, the Executive Committee) shall
have the authority to increase or decrease the number of members to the Advisory
Board and to elect one or more members to the Advisory Board to serve until the
next meeting of the Board of Directors and until their successors are elected
and qualify, and may provide for the compensation and other rules and
regulations with respect to such Board.
Section 15. Procedures; Meetings. The Committees shall keep minutes of
their proceedings and shall report the same to the Board of Directors at the
meeting next succeeding, and any action by the Committees shall be subject to
revision and alteration by the Board of Directors, provided that no rights of
third persons shall be affected by any such revision or alteration.
ARTICLE III.
Officers.
Section 1. In General. The officers of the Corporation shall consist of a
President, one or more Vice Presidents, a Secretary, a Treasurer, and one or
more Assistant Secretaries and Assistant Treasurers, and
<PAGE> 5
such other officers bearing such titles as may be fixed pursuant to these
Bylaws. The President, Vice Presidents, Secretary, and Treasurer shall be chosen
by the Board of Directors and, except those persons holding contracts for fixed
terms, shall hold office only during the pleasure of the Board or until their
successors are chosen and qualify. The President may from time to time appoint
Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers, and
other officers bearing such titles and exercising such authority as he may from
time to time deem appropriate, and except those persons holding contracts for
fixed terms, those officers appointed by the President shall hold office only
during his pleasure or until their successors are appointed and qualify. Any two
(2) officers, except those of President, Executive Vice President and Secretary,
may be held by the same persons, but no officer shall execute, acknowledge or
verify any instrument in more than one capacity when such instrument is required
to be executed, acknowledged, or verified by any two (2) or more officers. The
Board of Directors or the President may from time to time appoint other agents
and employees, with such powers and duties as they may deem proper.
Section 2. President. The President shall be Chief Executive Officer of
the Corporation and shall have the general management of the Corporation's
business in all departments. In the absence of the Chairman of the Board, the
President shall preside at all meetings of the Board of Directors and shall call
to order all meetings of shareholders. The President shall perform such other
duties as the Board of Directors may direct.
Section 3. Vice Presidents. In the absence or disability of the President,
the Vice Presidents, if any, in order of their rank as designated by the Board
of Directors or, if not ranked, the Vice President designated by the Board of
Directors, shall perform all the duties of the President, and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
President. The Vice Presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
Board of Directors or the Bylaws.
Section 4. Treasurer. Unless there shall be a financial Vice President
designated by the Board of Directors as the chief financial officer of the
Corporation, having general supervision over its finances, the Treasurer shall
be the chief financial officer with such authority. He shall also have authority
to attest to the seal of the Corporation and shall perform such other duties as
may be assigned to him by the Board of Directors.
Section 5. Secretary of the Corporation. The Secretary of the Corporation
shall keep the minutes of the meetings of the shareholders and of the Board of
Directors, and shall attend to the giving and serving of all notices of the
Corporation required by law or these Bylaws. The Secretary shall maintain at all
times in the principal office of the Corporation at least one copy of the Bylaws
with all amendments to date, and shall make the same, together with the minutes
of the meetings of the shareholders, the annual statement of the affairs of the
Corporation and any voting trust agreement on file at the office of the
Corporation, available for inspection by any officer, director, or shareholder
during reasonable business hours. The Secretary shall have authority to attest
to the seal of the Corporation and shall perform such other duties as may be
assigned to the Secretary by the Board of Directors.
Section 6. Other Secretaries, Assistant Treasurers and Assistant
Secretaries. Secretaries other than the Secretary of the Corporation, the
Assistant Treasurers and the Assistant Secretaries shall have authority to
attest to the seal of the Corporation and shall perform such other duties as may
from time to time be assigned to them by the Board of Directors or the
President.
Section 7. Substitutes. The Board of Directors may from time to time in
the absence of any one of said officers or, at any other time, designate any
other person or persons on behalf of the Corporation, to sign any contracts,
deeds, notes, or other instruments in the place or stead of any of said
officers, and designate any person to fill any one of said offices, temporarily
or for any particular purpose; and any instruments so signed in accordance with
a resolution of the Board shall be the valid act of this Corporation as fully as
if executed by any regular officer.
ARTICLE IV.
Resignation.
Any director or officer may resign his office at any time.
<PAGE> 6
Such resignation shall be made in writing and shall take effect from the time of
its receipt by the Corporation, unless some time be fixed in the resignation,
and then from that date. The acceptance of a resignation shall not be required
to make it effective.
ARTICLE V.
Indemnification of Directors and Officers.
The Corporation shall indemnify any and all of its existing and former
directors and officers and their spouses against all expenses incurred by them
and each of them, including but not confined to legal fees, judgments and
penalties which may be incurred, rendered or levied in any legal or
administrative action brought against any of then, for or on account of any
action or omission alleged to have been committed while acting within the scope
of employment as director of officer of the Corporation to the fullest extent
allowable pursuant to the Arizona General Corporation Law as may be amended from
time to time. Whenever any such person has grounds to believe that he may incur
any such aforementioned expense, he shall promptly make a full report of the
matter to the President and the Secretary of the Corporation. Thereafter, the
Board of Directors of the Corporation shall, within a reasonable time, determine
if such person acted, or failed to act, in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. If the Board of Directors
determines that such person acted, or failed to act, in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful, then indemnification shall
be mandatory and shall be automatically extended as specified herein, provided,
however, that the Corporation shall have the right to refuse indemnification,
wholly or partially, in any instance in which the person to whom indemnification
would otherwise have been applicable shall have unreasonably refused to permit
the Corporation, at its own expense and through counsel of its own choosing, to
defend him in the action, or shall have unreasonably refused to cooperate in the
defense of such action.
ARTICLE VI.
Fiscal Year.
The fiscal year of the Corporation shall be the calendar year.
ARTICLE VII.
Seal.
The seal of the Corporation shall be a circular disc inscribed with the
name of the Corporation, "Anchor National Life Insurance Company" and the word
"Incorporated".
ARTICLE VIII.
Miscellaneous Provisions - Stock.
Section 1. Issue. All certificates of shares of the Corporation shall be
signed by the manual or facsimile signatures of the President or any Vice
President, and countersigned by the Treasurer or Secretary of the Corporation
and sealed with the seal or facsimile seal of the Corporation. Any stock
certificates bearing the facsimile signatures of the officers above named shall
be manually signed by an authorized representative of the Corporation's duly
constituted transfer agent. If an officer whose signature appears on a
certificate ceases to be an officer before the certificate is issued, it may,
nevertheless, be issued with the same effect as if such officer were still in
office.
Section 2. Transfers. No transfers of shares shall be recognized or
binding upon the Corporation until recorded on the transfer books of the
Corporation upon surrender and cancellation of certificates for a like number of
shares. All transfers shall be effected only by the holder of record of such
shares or by his legal representative, or by his attorney thereunto authorized
by power of attorney duly executed. The person in whose name shares
<PAGE> 7
shall stand on the books of the Corporation may be deemed by the Corporation the
owner thereof for all purposes. The Corporation's transfer agent shall maintain
a stock transfer book, shall record therein all stock transfers and shall
forward copies of all transfer sheets at regular prompt intervals to the
Corporation's registrar, if there be one, or, if not, then to the Corporation's
principal office for transcription on the stock registry books.
Section 3. Form of Certificates; Procedure. The Board of Directors shall
have power and authority to determine the form of stock certificates (except
insofar as prescribed by law), and to make all such rules and regulations as the
Board may deem expedient concerning the issue; transfer and registration of said
certificates, and to appoint one or more transfer agents and/or registrars to
countersign and register the same. The transfer agent and registrar may be the
same party.
Section 4. Record Dates for Dividends and Shareholders' Meetings. The
Board of Directors may fix the time, not exceeding twenty (20) days preceding
the date of any meeting of shareholders, any dividend payment date or any date
for the allotment of rights, during which the books of the Corporation shall be
closed against transfers of stock, or the Board of Directors may fix a date not
exceeding forty (40) days preceding the date of any meeting of shareholders, any
dividend payment date or any date for the allotment of rights, as a record date
for the determination of the shareholders entitled to notice of and to vote at
such meeting, or entitled to receive such dividends or rights, as the case may
be, and only shareholders of record on such date shall be entitled to notice of
and to vote at such meeting or to receive such dividends or rights, as the case
may be. In the case of a meeting of shareholders, the record date shall be fixed
not less than ten (10) days prior to the date of the meeting.
Section 5. Lost Certificates. In case any certificate of shares is lost,
mutilated or destroyed, the Board of Directors may issue a new certificate in
place thereof, upon indemnity to the Corporation against loss and upon such
other terms and conditions as the Board of Directors may deem advisable.
ARTICLE IX.
Notice.
Section 1. Notice to Shareholders. Whenever by law or these Bylaws notice
is required to be given to any shareholder, such notice may be given to each
shareholder, whether or not such shareholder is entitled to vote, by leaving the
same with him or at his residence or usual place of business, or by mailing it,
postage prepaid, and addressed to him at his address as it appears on the books
of the Corporation. Such leaving or mailing of notice shall be deemed the time
of giving such notice.
Section 2. Notice to Directors and Officers. Whenever by law of these
Bylaws notice is required to be given to any director or officer, such notice
may be given in any one of the following ways: by personal notice to such
director or officer; by telephone communication with such director or officer
personally; by wire, addressed to such director or officer at his then address
or at his address as it appears on the books of the Corporation; or by
depositing the same in writing in the post office or in a letter box in a
postage paid, sealed wrapper addressed to such director or officer at his then
address or at his address as it appears on the books of the Corporation; and the
time when such notice shall be mailed or consigned to a telegraph company for
delivery shall be deemed to be the time of the giving of such notice.
ARTICLE X.
Voting of Securities in Other Corporations.
Any stock or other voting securities in other corporations, which may from
time to time be held by the Corporation, may be represented and voted at any
meeting of shareholders of such other corporation by the President, any Vice
President, or the Treasurer, or by proxy or proxies appointed by the President,
any Vice President, or the Treasurer, or otherwise pursuant to authorization
thereunto given by a resolution of the Board of Directors.
<PAGE> 8
ARTICLE XI.
Amendments.
These Bylaws may be added to, altered, amended or repealed by a majority
vote of the entire Board of Directors at any regular meeting of the Board or at
any special meeting called for that purpose. Any action of the Board of
Directors in adding to, altering, amending or repealing these Bylaws shall be
reported to the shareholders at the next annual meeting and may be changed or
rescinded by majority vote of all of the stock then outstanding and entitled to
vote, without, however, affecting the validity of any action taken in the
meanwhile in reliance on these Bylaws so added to, altered, amended or repealed
as aforesaid by the Board of Directors. In no event shall the Board of Directors
have any power to amend this Article.
<PAGE> 1
EXHIBIT 8
FUND PARTICIPATION AGREEMENT
----------------------------
AGREEMENT, made on this 12th day of August, 1996, between ANCHOR
NATIONAL LIFE INSURANCE COMPANY ("Anchor National"), a life insurance company
organized under the laws of the State of Arizona, on behalf of itself and on
behalf of VARIABLE ANNUITY ACCOUNT FOUR ("Variable Account"), a separate
account of Anchor National existing pursuant to the laws of the State of
Arizona, and ANCHOR SERIES TRUST ("Fund"), an open-end management investment
company established pursuant to the laws of the Commonwealth of Massachusetts
under s Declaration of Fund dated August 26, 1983, which is composed of
multiple investment series ("Portfolios").
WITNESSETH:
WHEREAS, Anchor National, by resolution, has established the Variable
Account on its books of account for the purpose of funding certain variable
annuity contracts issued by it; and
WHEREAS, the Variable Account is divided into various portfolios
("Divisions") under which the income, gains and losses, whether or not
realized, from assets allocated to each such Division are, in accordance with
the applicable variable annuity contracts, credited to or charged against such
Division without regard to any income, gains or losses of other Divisions or
separate accounts of Anchor National; and
WHEREAS, the Variable Account is registered with the Securities and
Exchange Commission as a unit investment trust under the Investment Company Act
of 1940 ("Act"); and
WHEREAS, the Fund, a registered, open-end, diversified management
investment company, is divided into various Portfolios, each Portfolio being
subject to separate investment objectives and restrictions which may not be
changed without a majority vote of the shareholders of each such Portfolio; and
WHEREAS, the Variable Account desires to purchase shares of the Fund in
connection with the issuance of certain variable annuity contracts to be
marketed under the name Anchor Advisor (collectively with other contracts and
policies that may be funded through the Fund, "Contracts"); and
WHEREAS, the Fund agrees to make shares of certain of its Portfolios
available to serve as underlying investment media for the corresponding
Divisions of the Variable Account; and
WHEREAS, SUNAMERICA CAPITAL SERVICES, INC. ("Distributor"), which
serves as the distributor for the Contracts funded in the Variable Account
pursuant to an agreement with Anchor National on behalf of itself and the
Variable Account is a broker-dealer
<PAGE> 2
registered as such under the Securities Exchange Act of 1934 and a member of
the National Association of Securities Dealers, Inc.;
NOW, THEREFORE, in consideration of the foregoing and of mutual
covenants and conditions set forth herein and for other good and valuable
consideration, Anchor National (on behalf of itself and the Variable Account)
and the Fund hereby agree as follows:
1. The Contracts funded by the Variable Account will provide for the
allocation of net amounts among certain Divisions of the Variable Account for
investment in the shares of the particular portfolio of the Fund underlying
each such Division. The selection of a particular Division is to be made (and
such selection may be changed) in accordance with the terms of the applicable
Contract.
2. No representation is made as to the number or amount of such
Contracts to be sold. Anchor National, pursuant to its agreement with
Distributor, will make reasonable efforts to market those Contracts it
determines from time to time to offer for sale and, although it is not required
to offer for sale new Contracts, Anchor National will accept payments and
otherwise service existing Contracts funded in the Variable Account.
3. Fund shares to be made available to the respective Divisions of the
Variable Account shall be sold by each of the respective Portfolios of the Fund
and purchased by Anchor National for that Division at the net asset value next
computed after receipt of each order, as established in accordance with the
provisions of the then current prospectus of the Fund. Shares of a particular
Portfolio of the Fund shall be ordered in such quantities and at such times as
determined by Anchor National to be necessary to meet the requirements of those
Contracts having amounts allocated to the Division for which the Fund Portfolio
shares serve as the underlying investment medium. Orders and payments for
shares purchased will be sent promptly to the Fund and will be made payable in
the manner established from time to time by the Fund for the receipt of such
payments. The Fund reserves the right to delay transfer of its shares until
the payment check has cleared. The Fund has the obligation to insure that
its shares to be made available to the appropriate Division(s) under the
Contracts are registered at all times under the Securities Act of 1933
("1933 Act").
4. The Fund will redeem the shares of the various Portfolios when
requested by Anchor National on behalf of the corresponding Division of the
Variable Account at the net asset value next computed after receipt of each
request for redemption, as established in accordance with the provisions of the
then current prospectus of the Fund. The Fund will make payment in the manner
established from time to time by the Fund for the receipt of such redemption
requests, but in no event shall payment be delayed for a greater period than is
permitted by the Act.
5. Transfer of the Fund's shares will be by book entry only. No stock
certificates will be issued to the Variable Account. Shares ordered from a
particular Portfolio to the Fund will be recorded in an appropriate title for
the corresponding Division of the Variable Account.
- 2 -
<PAGE> 3
6. The Fund shall furnish notice promptly to Anchor National of any
dividend or distribution payable on its shares which are subject to this
Agreement. All of such dividends and distributions as are payable on each of
the Portfolio shares in the title for the corresponding Division of the
Variable Account shall be automatically reinvested in additional shares of that
Portfolio of the Fund. The Fund shall notify Anchor National of the number of
shares so issued.
7. All expenses incident to the performance of the Fund under this
Agreement shall be paid by the Fund. The Fund shall ensure that all of its
shares which are subject to this Agreement are registered and authorized for
issue in accordance with applicable federal and state laws prior to their
purchase by the Variable Account. Anchor National shall bear none of the
expenses for the cost of registration of the Fund's shares, preparation of the
Fund's prospectuses, proxy materials and reports, the distribution of such
items to shareholders, the preparation of all statements and notices required
by any federal or state law or any taxes on the issue or transfer of the Fund's
shares subject to this Agreement.
8. Anchor National, either directly or through Distributor, shall make
no representations concerning the Fund's shares which are subject to this
Agreement other than those contained in the then current prospectus of the Fund
and in printed information subsequently issued by the Fund as supplemental to
such prospectus.
9. Anchor National and the Fund acknowledge that in the future, the
Fund's shares may become available for investment by separate accounts of other
insurance companies, which may or may not be affiliated persons (as that term
is defined in the Act) of Anchor National (collectively with Anchor National,
"Participating Insurers"). In such event, (a) the Fund shall undertake that its
Board of Trustees ("Board") will monitor the Fund for the existence of material
irreconcilable conflicts that may arise between the Contract owners of
Participating Insurers, for the purpose of identifying and remedying any such
conflict and (b) paragraphs 10, 11 and 12 shall apply. In discharging its
responsibilities under paragraphs 10, 11 and 12 hereinafter, Anchor National
will cooperate and coordinate, to the extent necessary, with the Board and with
other Participating Insurers. The Fund agrees that it will require, as a
condition to participation, that all Participating Insurers shall have
obligations and responsibilities regarding conflicts of interest corresponding
to those that are agreed to herein by Anchor National pursuant to such
paragraphs 10, 11 and 12 and pursuant to this paragraph 9.
10. Anchor National shall provide pass-through voting privileges to
all variable Contract owners so long as the U.S. Securities and Exchange
Commission continues to interpret the Act to require pass-through voting
privileges for variable Contract owners. Anchor National shall be responsible
for assuring that the Variable Account calculates voting privilege in a manner
consistent with separate accounts of other Participating Insurers, as
determined by the Board. Anchor National will vote shares for which it has not
received voting instructions in the same proportion as it votes shares for
which it has received instructions.
- 3 -
<PAGE> 4
11. Anchor National will report to the Board any potential or existing
conflicts of which it is or becomes aware between any of its Contract owners or
between any of its Contract owners and Contract owners of other Participating
Insurers. Anchor National will be responsible for assisting the Board in
carrying out its responsibilities to identify material conflicts by providing
the Board with all information available to it that is reasonably necessary for
the Board to consider any issues raised, including information as to a decision
by Anchor National to disregard voting instructions of its Contract owners.
12. The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly by it to
Anchor National and other Participating Insurers. An irreconcilable material
conflict may arise for a variety of reasons, including: (a) an action by any
state insurance regulatory authority; (b) a change in applicable federal or
state insurance tax, or securities laws or regulations, or a public ruling,
private letter ruling, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any Portfolio
are being managed; (e) a difference in voting instructions given by variable
annuity Contract owners and variable life insurance Contract owners or by
Contract owners of different Participating Insurers; or (f) a decision by a
Participating Insurer to disregard the voting instructions of variable Contract
owners.
13. If it is determined by a majority of the Board or a majority of
its disinterested Trustees that a material irreconcilable conflict exists that
affects the interests of Anchor National Contract owners, Anchor National shall,
in cooperation with other Participating Insurers whose Contract owners'
interests are also affected by the conflict, take whatever steps are necessary
to remedy or eliminate the irreconcilable material conflict, which steps could
include: (a) withdrawing the assets allocable to the Variable Account from the
Fund or any portfolio and reinvesting such assets in a different investment
medium, including another Portfolio of the Fund, or submitting the question of
whether such segregation should be implemented to a vote of all affected
Contract owners and, as appropriate, segregating the assets of any particular
group (e.g., annuity Contract owners or life insurance Contract owners) that
votes in favor of such segregation, or offering to the affected Contract owners
of the option of making such a change; and (b) establishing a new registered
management investment company or managed separate account. Anchor National
shall take such steps at its expense if the conflict affects solely the
interests of the owners of Anchor National Contracts, but shall bear only its
equitable portion of any such expense if the conflict also affects the interest
of the Contract owners of one or more Participating Insurers other than Anchor
National, provided: that this sentence shall not be construed to require the
Fund to bear any portion of such expense. If a material irreconcilable conflict
arises because of Anchor National's decision to disregard Contract owner voting
instructions and that decision represents a minority position or would preclude
a majority vote, Anchor National may be required, at Fund's election, to
withdraw the Variable Account's investment in the Fund, and no charge or
penalty will be imposed against the Variable Account as a result of such a
withdrawal. Anchor National agrees to take such remedial action as may be
required under this paragraph 13 with a view only to the interests of its
Contract owners. For purposes of this paragraph 13, a majority of
- 4 -
<PAGE> 5
the disinterested members of the Board shall determine whether or not any
proposed action adequately remedies any irreconcilable conflict, but in no
event will Fund be required to establish a new funding medium for any variable
Contracts. Anchor National shall not be required by this paragraph 13 to
establish a new funding medium for any variable Contract if an offer to do so
has been declined by vote of a majority of affected Contract owners.
14. This Agreement shall terminate:
(a) at the option of Anchor National or the Fund upon 60 days'
advance written notice to all other parties to this Agreement;
or
(b) at the option of Anchor National if any of the Fund's shares
are not reasonably available to meet the requirements of the
Contracts funded in the Variable Account as determined by
Anchor National. Prompt notice of election to terminate shall
be furnished by Anchor National; or
(c) at the option of Anchor National upon institution of formal
proceedings against the Fund by the Securities and Exchange
Commission; or
(d) upon the vote of Contract owners having an interest in a
particular Division of the Variable Account to substitute the
shares of another investment company for the corresponding
Fund Portfolio shares in accordance with the terms of the
Contracts for which those Fund shares had been selected to
serve as the underlying investment medium. Anchor National
will give 30 days' prior written notice to the Fund of the
date of any proposed action to replace the Fund's shares; or
(e) in the event the Fund's shares are not registered, issued or
sold in accordance with applicable state and/or federal law
or such law precludes the use of such shares as the
underlying investment medium of the Contracts funded in the
Variable Account. Prompt notice shall be given by each party
to all other parties in the event that the conditions stated
in subsections (b), (c) or (d) of this paragraph 14 should
occur.
15. Notwithstanding any other provisions of this Agreement, the
obligations of the Fund hereunder are not personally binding upon any of the
trustees, shareholders, officers, employees or agents of the Fund; resort in
satisfaction of such obligations shall be had only to the assets and property
of the Fund and not to the private property of any of such Fund's trustees,
shareholders, officers, employees or agents.
16. This Agreement shall be construed in accordance with the laws of
the State of California.
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ANCHOR NATIONAL LIFE INSURANCE COMPANY
By: /s/ SUSAN L. HARRIS
------------------------------------
Susan L. Harris
Senior Vice President
VARIABLE ANNUITY ACCOUNT FOUR
BY: ANCHOR NATIONAL LIFE INSURANCE
COMPANY
By: /s/ SUSAN L. HARRIS
------------------------------------
Susan L. Harris
Senior Vice President
ANCHOR SERIES TRUST
By: /s/ ROBERT M. ZAKEM
------------------------------------
Robert M. Zakem
Secretary
Acknowledged and Agreed:
SUNAMERICA CAPITAL SERVICES, INC.
By: /s/ J. STEVEN NEAMTZ Dated: August 12, 1996
------------------------------
J. Steven Neamtz
President
- 6 -
<PAGE> 7
FUND PARTICIPATION AGREEMENT
----------------------------
AGREEMENT, made on this 12th day of August, 1996, between ANCHOR
NATIONAL LIFE INSURANCE COMPANY ("Anchor National"), a life insurance company
organized under the laws of the State of Arizona, on behalf of itself and on
behalf of VARIABLE ANNUITY ACCOUNT FOUR ("Variable Account"), a separate
account of Anchor National existing pursuant to the laws of the State of
Arizona, and SUNAMERICA SERIES TRUST ("Fund"), an open-end management investment
company established pursuant to the laws of the Commonwealth of Massachusetts
under s Declaration of Fund dated September 11, 1992, which is composed of
multiple investment series ("Portfolios").
WITNESSETH:
WHEREAS, Anchor National, by resolution, has established the Variable
Account on its books of account for the purpose of funding certain variable
annuity contracts issued by it; and
WHEREAS, the Variable Account is divided into various portfolios
("Divisions") under which the income, gains and losses, whether or not
realized, from assets allocated to each such Division are, in accordance with
the applicable variable annuity contracts, credited to or charged against such
Division without regard to any income, gains or losses of other Divisions or
separate accounts of Anchor National; and
WHEREAS, the Variable Account is registered with the Securities and
Exchange Commission as a unit investment trust under the Investment Company Act
of 1940 ("Act"); and
WHEREAS, the Fund, a registered, open-end, diversified management
investment company, is divided into various Portfolios, each Portfolio being
subject to separate investment objectives and restrictions which may not be
changed without a majority vote of the shareholders of each such Portfolio; and
WHEREAS, the Variable Account desires to purchase shares of the Fund in
connection with the issuance of certain variable annuity contracts to be
marketed under the name Anchor Advisor (collectively with other contracts and
policies that may be funded through the Fund, "Contracts"); and
WHEREAS, the Fund agrees to make shares of certain of its Portfolios
available to serve as underlying investment media for the corresponding
Divisions of the Variable Account; and
WHEREAS, SUNAMERICA CAPITAL SERVICES, INC. ("Distributor"), which
serves as the distributor for the Contracts funded in the Variable Account
pursuant to an agreement with Anchor National on behalf of itself and the
Variable Account is a broker-dealer
<PAGE> 8
registered as such under the Securities Exchange Act of 1934 and a member of
the National Association of Securities Dealers, Inc.;
NOW, THEREFORE, in consideration of the foregoing and of mutual
covenants and conditions set forth herein and for other good and valuable
consideration, Anchor National (on behalf of itself and the Variable Account)
and the Fund hereby agree as follows:
1. The Contracts funded by the Variable Account will provide for the
allocation of net amounts among certain Divisions of the Variable Account for
investment in the shares of the particular portfolio of the Fund underlying
each such Division. The selection of a particular Division is to be made (and
such selection may be changed) in accordance with the terms of the applicable
Contract.
2. No representation is made as to the number or amount of such
Contracts to be sold. Anchor National, pursuant to its agreement with
Distributor, will make reasonable efforts to market those Contracts it
determines from time to time to offer for sale and, although it is not required
to offer for sale new Contracts, Anchor National will accept payments and
otherwise service existing Contracts funded in the Variable Account.
3. Fund shares to be made available to the respective Divisions of the
Variable Account shall be sold by each of the respective Portfolios of the Fund
and purchased by Anchor National for that Division at the net asset value next
computed after receipt of each order, as established in accordance with the
provisions of the then current prospectus of the Fund. Shares of a particular
Portfolio of the Fund shall be ordered in such quantities and at such times as
determined by Anchor National to be necessary to meet the requirements of those
Contracts having amounts allocated to the Division for which the Fund Portfolio
shares serve as the underlying investment medium. Orders and payments for
shares purchased will be sent promptly to the Fund and will be made payable in
the manner established from time to time by the Fund for the receipt of such
payments. The Fund reserves the right to delay transfer of its shares until
the payment check has cleared. The Fund has the obligation to insure that
its shares to be made available to the appropriate Division(s) under the
Contracts are registered at all times under the Securities Act of 1933
("1933 Act").
4. The Fund will redeem the shares of the various Portfolios when
requested by Anchor National on behalf of the corresponding Division of the
Variable Account at the net asset value next computed after receipt of each
request for redemption, as established in accordance with the provisions of the
then current prospectus of the Fund. The Fund will make payment in the manner
established from time to time by the Fund for the receipt of such redemption
requests, but in no event shall payment be delayed for a greater period than is
permitted by the Act.
5. Transfer of the Fund's shares will be by book entry only. No stock
certificates will be issued to the Variable Account. Shares ordered from a
particular Portfolio to the Fund will be recorded in an appropriate title for
the corresponding Division of the Variable Account.
- 2 -
<PAGE> 9
6. The Fund shall furnish notice promptly to Anchor National of any
dividend or distribution payable on its shares which are subject to this
Agreement. All of such dividends and distributions as are payable on each of
the Portfolio shares in the title for the corresponding Division of the
Variable Account shall be automatically reinvested in additional shares of that
Portfolio of the Fund. The Fund shall notify Anchor National of the number of
shares so issued.
7. All expenses incident to the performance of the Fund under this
Agreement shall be paid by the Fund. The Fund shall ensure that all of its
shares which are subject to this Agreement are registered and authorized for
issue in accordance with applicable federal and state laws prior to their
purchase by the Variable Account. Anchor National shall bear none of the
expenses for the cost of registration of the Fund's shares, preparation of the
Fund's prospectuses, proxy materials and reports, the distribution of such
items to shareholders, the preparation of all statements and notices required
by any federal or state law or any taxes on the issue or transfer of the Fund's
shares subject to this Agreement.
8. Anchor National, either directly or through Distributor, shall make
no representations concerning the Fund's shares which are subject to this
Agreement other than those contained in the then current prospectus of the Fund
and in printed information subsequently issued by the Fund as supplemental to
such prospectus.
9. Anchor National and the Fund acknowledge that in the future, the
Fund's shares may become available for investment by separate accounts of other
insurance companies, which may or may not be affiliated persons (as that term
is defined in the Act) of Anchor National (collectively with Anchor National,
"Participating Insurers"). In such event, (a) the Fund shall undertake that its
Board of Trustees ("Board") will monitor the Fund for the existence of material
irreconcilable conflicts that may arise between the Contract owners of
Participating Insurers, for the purpose of identifying and remedying any such
conflict and (b) paragraphs 10, 11 and 12 shall apply. In discharging its
responsibilities under paragraphs 10, 11 and 12 hereinafter, Anchor National
will cooperate and coordinate, to the extent necessary, with the Board and with
other Participating Insurers. The Fund agrees that it will require, as a
condition to participation, that all Participating Insurers shall have
obligations and responsibilities regarding conflicts of interest corresponding
to those that are agreed to herein by Anchor National pursuant to such
paragraphs 10, 11 and 12 and pursuant to this paragraph 9.
10. Anchor National shall provide pass-through voting privileges to
all variable Contract owners so long as the U.S. Securities and Exchange
Commission continues to interpret the Act to require pass-through voting
privileges for variable Contract owners. Anchor National shall be responsible
for assuring that the Variable Account calculates voting privilege in a manner
consistent with separate accounts of other Participating Insurers, as
determined by the Board. Anchor National will vote shares for which it has not
received voting instructions in the same proportion as it votes shares for
which it has received instructions.
- 3 -
<PAGE> 10
11. Anchor National will report to the Board any potential or existing
conflicts of which it is or becomes aware between any of its Contract owners or
between any of its Contract owners and Contract owners of other Participating
Insurers. Anchor National will be responsible for assisting the Board in
carrying out its responsibilities to identify material conflicts by providing
the Board with all information available to it that is reasonably necessary for
the Board to consider any issues raised, including information as to a decision
by Anchor National to disregard voting instructions of its Contract owners.
12. The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly by it to
Anchor National and other Participating Insurers. An irreconcilable material
conflict may arise for a variety of reasons, including: (a) an action by any
state insurance regulatory authority; (b) a change in applicable federal or
state insurance tax, or securities laws or regulations, or a public ruling,
private letter ruling, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of any Portfolio
are being managed; (e) a difference in voting instructions given by variable
annuity Contract owners and variable life insurance Contract owners or by
Contract owners of different Participating Insurers; or (f) a decision by a
Participating Insurer to disregard the voting instructions of variable Contract
owners.
13. If it is determined by a majority of the Board or a majority of
its disinterested Trustees that a material irreconcilable conflict exists that
affects the interests of Anchor National Contract owners, Anchor National shall,
in cooperation with other Participating Insurers whose Contract owners'
interests are also affected by the conflict, take whatever steps are necessary
to remedy or eliminate the irreconcilable material conflict, which steps could
include: (a) withdrawing the assets allocable to the Variable Account from the
Fund or any portfolio and reinvesting such assets in a different investment
medium, including another Portfolio of the Fund, or submitting the question of
whether such segregation should be implemented to a vote of all affected
Contract owners and, as appropriate, segregating the assets of any particular
group (e.g., annuity Contract owners or life insurance Contract owners) that
votes in favor of such segregation, or offering to the affected Contract owners
of the option of making such a change; and (b) establishing a new registered
management investment company or managed separate account. Anchor National
shall take such steps at its expense if the conflict affects solely the
interests of the owners of Anchor National Contracts, but shall bear only its
equitable portion of any such expense if the conflict also affects the interest
of the Contract owners of one or more Participating Insurers other than Anchor
National, provided: that this sentence shall not be construed to require the
Fund to bear any portion of such expense. If a material irreconcilable conflict
arises because of Anchor National's decision to disregard Contract owner voting
instructions and that decision represents a minority position or would preclude
a majority vote, Anchor National may be required, at Fund's election, to
withdraw the Variable Account's investment in the Fund, and no charge or
penalty will be imposed against the Variable Account as a result of such a
withdrawal. Anchor National agrees to take such remedial action as may be
required under this paragraph 13 with a view only to the interests of its
Contract owners. For purposes of this paragraph 13, a majority of
- 4 -
<PAGE> 11
the disinterested members of the Board shall determine whether or not any
proposed action adequately remedies any irreconcilable conflict, but in no
event will Fund be required to establish a new funding medium for any variable
Contracts. Anchor National shall not be required by this paragraph 13 to
establish a new funding medium for any variable Contract if an offer to do so
has been declined by vote of a majority of affected Contract owners.
14. This Agreement shall terminate:
(a) at the option of Anchor National or the Fund upon 60 days'
advance written notice to all other parties to this Agreement;
or
(b) at the option of Anchor National if any of the Fund's shares
are not reasonably available to meet the requirements of the
Contracts funded in the Variable Account as determined by
Anchor National. Prompt notice of election to terminate shall
be furnished by Anchor National; or
(c) at the option of Anchor National upon institution of formal
proceedings against the Fund by the Securities and Exchange
Commission; or
(d) upon the vote of Contract owners having an interest in a
particular Division of the Variable Account to substitute the
shares of another investment company for the corresponding
Fund Portfolio shares in accordance with the terms of the
Contracts for which those Fund shares had been selected to
serve as the underlying investment medium. Anchor National
will give 30 days' prior written notice to the Fund of the
date of any proposed action to replace the Fund's shares; or
(e) in the event the Fund's shares are not registered, issued or
sold in accordance with applicable state and/or federal law
or such law precludes the use of such shares as the
underlying investment medium of the Contracts funded in the
Variable Account. Prompt notice shall be given by each party
to all other parties in the event that the conditions stated
in subsections (b), (c) or (d) of this paragraph 14 should
occur.
15. Notwithstanding any other provisions of this Agreement, the
obligations of the Fund hereunder are not personally binding upon any of the
trustees, shareholders, officers, employees or agents of the Fund; resort in
satisfaction of such obligations shall be had only to the assets and property
of the Fund and not to the private property of any of such Fund's trustees,
shareholders, officers, employees or agents.
16. This Agreement shall be construed in accordance with the laws of
the State of California.
- 5 -
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ANCHOR NATIONAL LIFE INSURANCE COMPANY
By: /s/ SUSAN L. HARRIS
------------------------------------
Susan L. Harris
Senior Vice President
VARIABLE ANNUITY ACCOUNT FOUR
BY: ANCHOR NATIONAL LIFE INSURANCE
COMPANY
By: /s/ SUSAN L. HARRIS
------------------------------------
Susan L. Harris
Senior Vice President
SUNAMERICA SERIES TRUST
By: /s/ ROBERT M. ZAKEM
------------------------------------
Robert M. Zakem
Secretary
Acknowledged and Agreed:
SUNAMERICA CAPITAL SERVICES, INC.
By: /s/ J. STEVEN NEAMTZ Dated: August 12, 1996
------------------------------
J. Steven Neamtz
President
- 6 -
<PAGE> 1
EXHIBIT (9)
[ANCHOR NATIONAL LOGO]
[ANCHOR NATIONAL LIFE INSURANCE COMPANY LETTERHEAD]
April 25, 1995
Anchor National Life Insurance Company
1 SunAmerica Center
Los Angeles, CA 90067
Ladies and Gentlemen:
Having examined and being familiar with the articles of incorporation
and by-laws of Anchor National Life Insurance Company ("Anchor National"), the
applicable resolutions relating to Variable Annuity Account Four (the
"Account"), and other pertinent records and documents, I am of the opinion that:
1) Anchor National is a duly organized and existing stock life
insurance company under the laws of the State of California;
2) the Account is a duly organized and existing Separate Account of
Anchor National; and
3) the annuity contracts being registered by the Registration
Statement will, upon sale thereof, be legally issued, fully paid and
nonassessable, and, to the extent that they are construed to constitute
debt securities, will be binding obligations of Anchor National, except
as enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors
generally.
I hereby consent to the filing of this opinion with the Securities and
Exchange Commission in connection with the Registration Statement on Form N-4
on behalf of the Account.
Very truly yours,
/s/ SUSAN L. HARRIS
Susan L. Harris
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the use in the Prospectus and Statement of Additional
Information constituting part of this Registration Statement on Form N-4 for
Variable Annuity Account Four of Anchor National Life Insurance Company, of
our report dated November 7, 1997 relating to the consolidated financial
statements of Anchor National Life Insurance Company, and of our report
dated January 16, 1998 relating to the financial statements of Variable Annuity
Account Four of Anchor National Life Insurance Company, which appear in such
Statement of Additional Information. We also consent to the reference to us
under the heading "Financial Statements" in such Statement of Additional
Information.
PRICE WATERHOUSE LLP
Los Angeles, California
January 26, 1998
<PAGE> 1
EXHIBIT 14
SunAmerica Inc. (a Maryland corporation) owns 100% of SunAmerica Financial, Inc.
(a Georgia corporation); Resources Trust Company (a Colorado corporation, which
owns 100% of Resources Consolidated Inc. (a Colorado corporation); SunAmerica
Life Insurance Company (an Arizona corporation); Imperial Premium Finance, Inc.
(a Delaware corporation); SA Investment Group, Inc. (a California corporation);
SunAmerica Capital Trust I (a Delaware business trust); SunAmerica Capital Trust
II (a Delaware business trust); SunAmerica Capital Trust III (a Delaware
business trust); SunAmerica Capital Trust IV (a Delaware business trust);
SunAmerica Capital Trust V (a Delaware business trust); SunAmerica Capital Trust
VI (a Delaware business trust); SunAmerica Affordable Housing Finance Corp. (a
Delaware corporation); Stanford Ranch, Inc. (a Delaware corporation) which owns
100% of Stanford Ranch, Inc. (a California corporation); Arrowhead SAHP Corp. (a
New Mexico corporation); Bear Run SAHP Corp. (a Delaware corporation); Chelsea
SAHP Corp. (a Florida corporation); Tierra Vista SAHP Corp. (a Florida
corporation); Westwood SAHP Corp. (a New Mexico corporation); Bryton SAHP Corp.
(a Delaware close corporation); Crossings SAHP Corp. (a Delaware close
corporation); Emerald SAHP Corp. (a Delaware close corporation); Forest SAHP
Corp. (a Delaware close corporation); Pleasant SAHP Corp. (a Delaware close
corporation); Westlake SAHP Corp. (a Delaware close corporation); Williamsburg
SAHP Corp. (a Delaware close corporation); and Willow SAHP Corp. (a Delaware
close corporation). In addition, SunAmerica Inc. owns 80% of AMSUN Realty
Holdings (a California corporation); and 33% of New California Life Holdings,
Inc. (a Delaware corporation) which owns 100% of Aurora National Life Assurance
Company (a California corporation).
SunAmerica Financial, Inc. owns 100% of SunAmerica Marketing, Inc. (a Maryland
corporation); SunAmerica Advertising, Inc. (a Georgia corporation); SunAmerica
Investments, Inc. (a Delaware corporation) which owns 100% of Accelerated
Capital Corp. (a Florida corporation); 1401 Sepulveda Corp. (a California
corporation); SunAmerica Louisiana Properties, Inc. (a California corporation);
SunAmerica Real Estate and Office Administration, Inc. (a Delaware corporation);
SunAmerica Affordable Housing Partners, Inc. (a California corporation); Hampden
I & II Corp. (a California corporation); Sunport Holdings, Inc. (a California
corporation) which owns 100% of Sunport Property Co. (a Florida corporation);
SunAmerica Mortgages, Inc. (a Delaware corporation); Sun Princeton II, Inc. (a
California corporation) which owns 100% of Sun Princeton I (a California
corporation); Advantage Capital Corporation (a New York corporation); SunAmerica
Planning, Inc. (a Maryland corporation which owns 100% of SunAmerica Securities,
Inc. (a Delaware corporation) and 100% of Anchor Insurance Services, Inc. (a
Hawaii corporation) which owns 50% of Royal Alliance Associates Inc. (a Delaware
corporation); SunAmerica Insurance Company (Cayman), Ltd. (a Cayman Islands
corporation); Sun Mexico Holdings, Inc. (a Delaware corporation) which owns 100%
of Sun Cancun I, Inc. (a Delaware corporation), Sun Cancun II, Inc. (a Delaware
corporation), Sun Ixtapa I, Inc. (a Delaware corporation) and Sun Ixtapa II,
Inc. (a Delaware corporation); Sun Hechs, Inc. (a California corporation); and
SunAmerica Travel Services, Inc. (a California corporation); SAI Investment
Adviser, Inc. (a Delaware corporation); Sun GP Corp. (a California corporation);
The Financial Group, Inc. (a Georgia Corporation) which owns 100% of Keogler,
Morgan Co., Keogler Investment Advisory, Inc., and Keogler, Morgan investment
Inc. (all Georgia Corporations); Sun CRC, Inc. (a California corporation);
Sun-Dollar, Inc. (a California close corporation); and 70% of Home Systems
Partners (a California limited partnership) which owns 100% of Extraneous
Holdings Corp. (a Delaware corporation).
SunAmerica Life Insurance Company owns 100% of First SunAmerica Life Insurance
Company (a New York corporation); SunAmerica National Life Insurance Company (an
Arizona corporation); John Alden Life Insurance Company of New York (a New York
corporation); CalAmerica Life Insurance Company (a California corporation);
Anchor National Life Insurance Company (a California corporation) which owns
100% of Anchor Pathway Fund, Anchor Series Trust, SunAmerica Series Trust, and
Seasons Series Trust, (all Massachusetts business trusts); UG Corporation (a
Georgia corporation); Export Leasing FSC, Inc. (a U.S. Virgin Islands
corporation); SunAmerica Virginia Properties, Inc. (a California corporation);
SAL Investment Group (a California corporation); and Saamsun Holding Corporation
(a Delaware corporation) which owns 100% of SAM Holdings Corporation (a
California corporation) which owns 100% of SunAmerica Asset Management Corp. (a
Delaware corporation), SunAmerica Capital Services, Inc. (a Delaware
corporation), SunAmerica Fund Services, Inc. (a Delaware corporation), ANF
Property Holdings, Inc. (a California corporation), Capitol Life Mortgage Corp.
(a Delaware corporation) and Sun Royal Holdings Corporation (a California
corporation) which owns 50% of Royal Alliance Associates, Inc. In addition,
SunAmerica Life Insurance Company owns 80% of SunAmerica Realty Partners (a
California corporation) and 33% of New California Life Holdings, Inc. (a
Delaware corporation) which owns 100% of Aurora National Life Assurance Company
(a California corporation; and 88.75% of Sun Quorum L.L.C. (a Delaware limited
liability company).
Imperial Premium Finance, Inc. (Delaware) owns 100% of Imperial Premium Finance,
Inc. (a California corporation); Imperial Premium Funding, Inc. (a Delaware
corporation); and SunAmerica Financial Resources, Inc. (a Delaware corporation).
Updated As of 10/21/97
<PAGE> 1
EXHIBIT 15
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below hereby constitutes and appoints JAY S. WINTROB, SUSAN L. HARRIS and
CHRISTINE A. NIXON or any of them, his or her true and lawful attorneys-in-fact
and agents, with full power of substitution, to do any and all acts and things
and to execute any and all instruments that said attorneys-in-fact and agents
may deem necessary or advisable to enable VARIABLE ANNUITY ACCOUNT FOUR
("Separate Account") of ANCHOR NATIONAL LIFE INSURANCE COMPANY ("Company"),
and the Company, to comply with any rules, regulations and requirements of the
Securities and Exchange Commission, and in connection with any variable annuity
contracts that may be registered under the Securities Act of 1933, as amended
("1933 Act") and/or the Investment Company Act of 1940, as amended ("1940 Act")
and offered in connection with the Separate Account, to comply with any rules,
regulations and requirements of the Securities and Exchange Commission under
the 1933 Act or the 1940 Act or under any other federal securities laws,
including specifically, but without limiting the generality of the foregoing,
power and authority to sign the name of the undersigned director to any
instrument or document filed as a part of or in connection with or in any way
related to (i) any action taken to comply with any rules, regulations or
requirements of the Securities and Exchange Commission under the federal
securities laws; (ii) any application for and the securing of any exemptions
from the federal securities laws; (iii) the registration of additional variable
annuity contracts under the 1933 Act or the 1940 Act, if registration is deemed
necessary; and (iv) any and all amendments (including post-effective
amendments) to any registration statement that may be filed in connection with
the variable annuity contracts. The undersigned hereby ratifies and confirms
all that said attorneys-in-fact and agents shall do or cause to be done by
virtue thereof.
As required by the Securities Act of 1933, the Registration Statement
has been signed by the following persons in the capacity and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ELI BROAD President, Chief Executive Officer November 22, 1994
- ----------------------------- and Chairman of the Board
Eli Broad (Principal Executive Officer)
/s/ SCOTT L. ROBINSON Senior Vice President and Director November 22, 1994
- ----------------------------- (Principal Financial Officer)
Scott L. Robinson
/s/ N. SCOTT GILLIS Vice President and Controller November 22, 1994
- ----------------------------- (Principal Accounting Officer)
N. Scott Gillis
/s/ JAMES R. BELARDI Director November 22, 1994
- -----------------------------
James R. Belardi
/s/ LORIN M. FIFE Director November 22, 1994
- -----------------------------
Lorin M. Fife
/s/ JANA W. GREER Director November 22, 1994
- -----------------------------
Jana W. Greer
/s/ SUSAN L. HARRIS Director November 22, 1994
- -----------------------------
Susan L. Harris
Director ___________, 1994
- -----------------------------
Gary W. Krat
/s/ CLARK P. MANNING, JR. Director November 22, 1994
- -----------------------------
Clark P. Manning, Jr.
/s/ PETER McMILLAN Director November 22, 1994
- -----------------------------
Peter McMillan
/s/ JAY S. WINTROB Director November 22, 1994
- -----------------------------
Jay S. Wintrob
</TABLE>
