<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. 4 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [X]
Amendment No. 5
(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)
Title and Amount
of Securities
Being Registered
- ----------------
Flexible Payment
Deferred Annuity
Contracts
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on April 1, 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
<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
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
April 1, 1998
prospectus which discuss the topics in more detail. The
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 20 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
- "Dogs" of Wall Street 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
"Dogs" of Wall Street* 1.52% .85% 2.37% $24 $271
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 these portfolios, the adviser, SunAmerica Asset Management Corp., has
agreed to waive fees or reimburse expenses, if necessary, to keep operating
expenses at or below an established maximum amount. All waivers or
reimbursements may be terminated at any time.
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%
"Dogs" of Wall Street -- --
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
LOGO
PROSPECTUS
APRIL 1, 1998
<TABLE>
<S> <C> <C>
Please read this prospectus carefully FLEXIBLE PAYMENT DEFERRED ANNUITY CONTRACTS
before investing and keep it for issued by
future reference. It contains ANCHOR NATIONAL LIFE INSURANCE COMPANY
important information about the in connection with
Anchor Advisor Variable Annuity. VARIABLE ANNUITY ACCOUNT FOUR
The annuity has 21 investment choices - a one-year fixed
To learn more about the annuity investment option and 20 variable investment portfolios
offered by this prospectus, you can listed below. Your contract may also provide for a one-year
obtain a copy of the Statement of DCA account option. The 20 variable investment portfolios
Additional Information ("SAI") dated are part of Anchor Series Trust or SunAmerica Series Trust.
April 1, 1998. The SAI has been filed
with the Securities and Exchange ANCHOR SERIES TRUST:
Commission ("SEC") and is MANAGED BY WELLINGTON MANAGEMENT COMPANY, LLP
incorporated by reference into this - Capital Appreciation Portfolio
prospectus. The Table of Contents of - Growth Portfolio
the SAI appears on page 16 of this - Natural Resources Portfolio
prospectus. For a free copy of the - Government and Quality Bond Portfolio
SAI, call us at (800) 445-SUN2 or
write to us at our Annuity Service SUNAMERICA SERIES TRUST:
Center, P.O. Box 54299, Los Angeles, MANAGED BY ALLIANCE CAPITAL MANAGEMENT L.P.
California 90054-0299. - Global Equities Portfolio
- Alliance Growth Portfolio
In addition, the SEC maintains a - Growth-Income Portfolio
website (http://www.sec.gov) that MANAGED BY DAVIS SELECTED ADVISERS, L.P.
contains the SAI, materials - Venture Value Portfolio
incorporated by reference and other MANAGED BY FEDERATED INVESTORS
information filed electronically with - Federated Value Portfolio
the SEC by Anchor National Life - Utility Portfolio
Insurance Company. - Corporate Bond Portfolio
MANAGED BY GOLDMAN SACHS ASSET MANAGEMENT/
ANNUITIES INVOLVE RISKS, INCLUDING GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL
POSSIBLE LOSS OF PRINCIPAL, AND ARE - Asset Allocation Portfolio
NOT A DEPOSIT OR OBLIGATION OF, OR - Global Bond Portfolio
GUARANTEED OR ENDORSED BY, ANY BANK. MANAGED BY MORGAN STANLEY ASSET MANAGEMENT INC.
THEY ARE NOT FEDERALLY INSURED BY THE - International Diversified Equities Portfolio
FEDERAL DEPOSIT INSURANCE - Worldwide High Income Portfolio
CORPORATION, THE FEDERAL RESERVE MANAGED BY SUNAMERICA ASSET MANAGEMENT CORP.
BOARD OR ANY OTHER AGENCY. - Aggressive Growth Portfolio
- "Dogs" of Wall Street 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.............................. 11
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 and
Additional Amounts Credited.................... 11
6. TAXES.......................................... 12
Annuity Contracts in General................... 12
Tax Treatment of Distributions - Nonqualified
Contracts...................................... 12
Tax Treatment of Distributions - Qualified
Contracts...................................... 12
Diversification................................ 13
7. WITHDRAWALS.................................... 13
Systematic Withdrawal Program.................. 13
Minimum Contract Value......................... 13
8. PERFORMANCE.................................... 14
9. DEATH BENEFIT.................................. 14
10. OTHER INFORMATION.............................. 15
Anchor National................................ 15
The Separate Account........................... 15
The General Account............................ 15
Distribution................................... 15
Administration................................. 16
Legal Proceedings.............................. 16
Ownership...................................... 16
Custodian...................................... 16
Additional Information......................... 16
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL
INFORMATION.......................................... 17
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
per transfer ($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 AFTER REIMBURSEMENT OR WAIVER OF EXPENSES
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%
- -----------------------------------------------------------------------------------
"Dogs" of Wall Street* .60% .25% .85%
- -----------------------------------------------------------------------------------
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>
* As of the date of this Prospectus, the sale of contracts offering
"Dogs" of Wall Street Portfolio had not begun. The percentages shown
are based on estimated amounts for the current fiscal year.
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
- --------------------------------------------------------------------------------
"Dogs" of Wall Street $24 $74 $127 $271
- --------------------------------------------------------------------------------
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%); "Dogs" of Wall Street (.85%); 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. Absent fee waivers or reimbursement of expenses by the adviser, you would
have incurred the following expenses during the last fiscal year: Utility
(1.24%).
4. The Examples assume that no transfer fees were imposed. Although premium
taxes may apply in certain states, they are not reflected.
5. THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
THE HISTORICAL ACCUMULATION UNIT VALUES 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 20
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 20 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 16
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
- "Dogs" of Wall Street 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.
8
<PAGE> 16
The interest rates are set at Anchor National's sole discretion.
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.
9
<PAGE> 17
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 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.
10
<PAGE> 18
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.
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
AND ADDITIONAL AMOUNTS CREDITED
We may reduce or eliminate the amount of certain insurance charges, credit
additional amounts or grant bonus guaranteed interest rates 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.
In addition, we may waive or reduce the insurance charges, credit additional
amounts or grant bonus guaranteed interest rates in connection with contracts
sold to employees, employees of affiliates, registered representatives,
employees of broker-dealers which have a current selling agreement with us
("Eligible Individuals") and immediate family members of all Eligible
Individuals when purchased directly through SunAmerica Capital Services, Inc.
Such reductions or waivers may be withdrawn or modified by us. Commissions may
be waived or reduced with respect to contracts established for the personal
accounts of Eligible Individuals.
11
<PAGE> 19
=========================================================
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. From time to time, Federal initiatives are
proposed that could affect the tax treatment of insurance products. Recent
administration budget proposals include the proposed taxation of exchanges
involving variable annuity contracts, reallocations within variable annuity
contracts and certain other proposals relating to annuities. Please consult your
tax advisor for further information.
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. 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; (5) to
fund certain first time home purchase expenses; (6) to fund higher education
expenses (as defined in the IRC) and, except in the case of an IRA as to the
following: (7) after you separate from service after attaining age 55; (8) to
the extent such withdrawals do not exceed limitations set by the IRC for amounts
paid during the taxable year for medical care; and (9) 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
12
<PAGE> 20
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.
=========================================================
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.
13
<PAGE> 21
=========================================================
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 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.
14
<PAGE> 22
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 receipt
of such proof of death, the death benefit will be paid in a lump sum.
=========================================================
10. OTHER INFORMATION
=========================================================
ANCHOR NATIONAL
Anchor National is a stock life insurance company originally organized under the
laws of the State of California in April 1965. On January 1, 1996, Anchor
National redomesticated under the laws of the State of Arizona. Anchor National
is an indirect wholly owned subsidiary of SunAmerica, Inc., a Maryland
corporation.
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.
15
<PAGE> 23
Furthermore, we may, from time to time, pay or allow additional promotional
incentives, in the form of cash or other compensation. In some instances, these
additional incentives may be offered only to certain broker-dealers that sell or
are expected to sell, during specified time periods, certain minimum amounts of
the contract, or other contracts offered by us.
Commissions may be waived or reduced with respect to contracts established for
the personal account of our employees, or the employees of any of our
affiliates, or of persons engaged in distribution of the contracts, or of
certain family members of such employees or persons.
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.
The Company relies significantly on computer systems and applications in its
daily operations. Many of these systems are not currently year 2000 compliant.
The Company's business, financial condition and results of operations could be
materially and adversely affected by the failure of the Company's systems and
applications (and those operated by third parties interfacing with the Company's
systems and applications) to properly operate or manage dates beyond the year
1999. The Company has a coordinated plan to repair or replace these noncompliant
systems and to obtain similar assurances from third parties interfacing with the
Company's systems and applications and expects to significantly complete its
plan by the end of the calendar year 1998, leaving 1999 for testing.
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.
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.
ADDITIONAL INFORMATION
Anchor National is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended. In accordance with such requirements, we file
reports and other information with the SEC. Such reports and other information
we file can be inspected and copied. Copies can be obtained at the public
reference facilities of the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, or at the regional offices in Chicago and New
16
<PAGE> 24
York. The addresses of these regional offices are as follows: 500 West Madison
Street, Chicago, Illinois 60661 and 7 World Trade Center, 13th Floor, New York,
New York 10048. Copies of such material also can be obtained by mail from the
Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, upon payment of the fees prescribed by the rules and regulations of the
SEC at prescribed rates.
Registration statements have been filed with the SEC, Washington, D.C., under
the Securities Act of 1933 as amended, relating to the contracts offered by this
prospectus. This prospectus does not contain all the information set forth in
the registration statements and the exhibits filed as part of the registration
statements. Reference should be made to such registration statements, and
exhibits for further information concerning the separate account, Anchor
National and its general account, the Portfolios and the contract.
The SEC also maintains a website (http://wwwsec.gov) that contains the SAI,
materials incorporated by reference and other information filed electronically
with the SEC by Anchor National.
=========================================================
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................ 16
Financial Statements..................... 16
</TABLE>
17
<PAGE> 25
================================================================================
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> 26
<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
No Condensed Financial Information is shown for the "Dogs" of Wall
Street Portfolio, as sales had not begun as of the date of this
Prospectus.
A-2
<PAGE> 27
================================================================================
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%
- -------------------------------------------------------------------
Kentucky 2% 2%
- -------------------------------------------------------------------
Maine 0% 2%
- -------------------------------------------------------------------
Nevada 0% 3.5%
- -------------------------------------------------------------------
South Dakota 0% 1.25%
- -------------------------------------------------------------------
West Virginia 1% 1%
- -------------------------------------------------------------------
Wyoming 0% 1%
===================================================================
</TABLE>
B-1
<PAGE> 28
- --------------------------------------------------------------------------------
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> 29
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
APRIL 1, 1998
<PAGE> 30
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<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>
<PAGE> 31
SEPARATE ACCOUNT
Variable Annuity Account Four was originally established by 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 Company has since redomesticated to Arizona, effective January 1, 1996. 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).
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<PAGE> 32
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 and/or the one year DCA fixed account
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
one-year fixed investment option and/or the one year DCA fixed 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
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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 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)
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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).
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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The total returns of the various Portfolios for 1 year and since each
Portfolio's inception date 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%
"Dogs" of Wall Street* 4/01/98 ----- -----
International Diversified Equities 9/12/96 12.47% 16.72%
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.
*At the time of printing of this Statement of Additional Information, this
portfolio was not yet available for sale.
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
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ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the 1, 5, or 10 year period as of
the end of the period (or fractional portion thereof).
The total return figures reflect the effect of recurring charges, as
discussed herein. Recurring charges are taken into account in a manner similar
to that used for the yield computations for the Cash Management Portfolio,
described above. As with the Cash Management Portfolio yield figures, total
return figures are derived from historical data and are not intended to be a
projection of future performance.
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.
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<PAGE> 37
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 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.
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<PAGE> 38
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.
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<PAGE> 39
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 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.
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<PAGE> 40
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 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
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<PAGE> 41
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 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
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and terms and conditions of each specific plan. Owners, Annuitants and
Beneficiaries are cautioned that benefits under a Qualified plan may be subject
to the terms and conditions of the plan, regardless of the terms and conditions
of the contracts issued pursuant to the plan.
Following are general descriptions of the types of Qualified plans with
which the contracts may be used. Such descriptions are not exhaustive and are
for general information purposes only. The tax rules regarding Qualified plans
are very complex and will have differing applications depending on individual
facts and circumstances. Each purchaser should obtain competent tax advice prior
to purchasing a contract issued under a Qualified plan.
Contracts issued pursuant to Qualified plans include special provisions
restricting contract provisions that may otherwise be available and described in
this prospectus. Generally, contracts issued pursuant to Qualified plans are not
transferable except upon surrender or annuitization. Various penalty and excise
taxes may apply to contributions or distributions made in violation of
applicable limitations. Furthermore, certain withdrawal penalties and
restrictions may apply to surrenders from Qualified contracts.
(a) H.R. 10 PLANS
Section 401 of the Code permits self-employed individuals to
establish Qualified plans for themselves and their employees, commonly
referred to as "H.R. 10" or "Keogh" Plans. Contributions made to the
plan for the benefit of the employees will not be included in the gross
income of the employees until distributed from the plan. The tax
consequences to owners may vary depending upon the particular plan
design. However, the Code places limitations and restrictions on all
plans on such items as: amounts of allowable contributions; form, manner
and timing of distributions; vesting and nonforfeitability of interests;
nondiscrimination in eligibility and participation; and the tax
treatment of distributions, withdrawals and surrenders. Purchasers of
contracts for use with an H.R. 10 Plan should obtain competent tax
advice as to the tax treatment and suitability of such an investment.
(b) TAX-SHELTERED ANNUITIES
Section 403(b) of the Code permits the purchase of "tax-sheltered
annuities" by public 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.
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<PAGE> 43
(c) INDIVIDUAL RETIREMENT ANNUITIES
Section 408(b) of the Code permits eligible individuals to
contribute to an individual retirement program known as an "Individual
Retirement Annuity" ("IRA"). Under applicable limitations, certain
amounts may be contributed to an IRA which will be deductible from the
individual's gross income. These IRAs are subject to limitations on
eligibility, contributions, transferability and distributions. Sales of
contracts for use with IRAs are subject to special requirements imposed
by the Code, including the requirement that certain informational
disclosure be given to persons desiring to establish an IRA. Purchasers
of contracts to be qualified as IRAs should obtain competent tax advice
as to the tax treatment and suitability of such an investment.
(d) ROTH IRAS
Section 408A of the Code permits an individual to contribute to
an individual retirement program called a Roth IRA. Unlike contributions
to a regular IRA under Section 408(b) of the Code, contributions to a
Roth IRA are not made on a tax deferred basis, but distributions are
tax-free if certain requirements are satisfied. Like regular IRAs, Roth
IRAs are subject to limitations on the amount that may be contributed,
those who may be eligible and the time when distributions may commence
without tax penalty. Certain persons may be eligible to convert a
regular IRA into a Roth IRA, and the resulting income tax may be spread
over four years if the conversion occurs before January 1, 1999. If and
when Contracts are made available for use with Roth IRAs they may be
subject to special requirements imposed by the Internal Revenue Service.
Purchasers of the Contracts for this purpose will be provided with such
supplementary information as may be required by the Internal Revenue
Service or other appropriate agency.
(e) CORPORATE PENSION AND PROFIT-SHARING PLANS
Sections 401(a) and 401(k) of the Code permit corporate employers
to establish various types of retirement plans for employees. These
retirement plans may permit the purchase of the contracts to provide
benefits under the plan. Contributions to the plan for the benefit of
employees will not be includible in the gross income of the employee
until distributed from the plan. The tax consequences to owners may vary
depending upon the particular plan design. However, the Code places
limitations on all plans on such items as amount of allowable
contributions; form, manner and timing of distributions; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. Purchasers of contracts for use with corporate pension or
profit sharing plans should obtain competent tax advice as to the tax
treatment and suitability of such an investment.
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<PAGE> 44
(f) DEFERRED COMPENSATION PLANS - SECTION 457
Under Section 457 of the Code, governmental and certain other
tax-exempt employers may establish, for the benefit of their employees,
deferred compensation plans which may invest in annuity contracts. The
Code, as in the case of Qualified plans, establishes limitations and
restrictions on eligibility, contributions and distributions. Under
these plans, contributions made for the benefit of the employees will
not be includible in the employees' gross income until distributed from
the plan. However, under a 457 plan all the plan assets shall remain
solely the property of the employer, subject only to the claims of the
employer's general creditors until such time as made available to an
owner or a Beneficiary.
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 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,
-16-
<PAGE> 45
independent accountants, given
on the authority of said firm as experts in auditing and accounting.
-17-
<PAGE> 46
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
-17-
<PAGE> 47
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.
-18-
<PAGE> 48
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> 49
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> 50
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> 51
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> 52
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> 53
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> 54
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> 55
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> 56
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> 57
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> 58
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> 59
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> 60
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> 61
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> 62
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> 63
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> 64
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> 65
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> 66
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> 67
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> 68
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> 69
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> 70
VARIABLE ANNUITY ACCOUNT FOUR
OF
ANCHOR NATIONAL LIFE INSURANCE COMPANY
FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
-41-
<PAGE> 71
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> 72
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> 73
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> 74
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> 75
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> 76
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> 77
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> 78
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> 79
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> 80
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> 81
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> 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
<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> 83
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> 84
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> 85
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> 86
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> 87
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> 88
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> 89
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> 90
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> 91
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> 92
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 .. Previously Filed
(2) Custody Agreement .......................... Not Applicable
(3) (a) Form of Distribution Contract .......... Previously Filed
(b) Form of Selling Agreement .............. Previously Filed
(4) Variable Annuity Contract .................. Filed Herewith
(5) Application for Contract ................... Filed Herewith
(6) Depositor - Corporate Documents
(a) Certificate of Incorporation ........... Previously Filed
(b) By-Laws................................. Previously Filed
(7) Reinsurance Contract ....................... Not Applicable
(8) Form of Fund Participation Agreement ....... Previously Filed
(9) Opinion of Counsel ......................... Previously Filed
Consent of Counsel.......................... Previously Filed
(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 ...... Previously Filed
(15) Powers of Attorney.......................... Previously Filed
(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> 93
- ------------
(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> 94
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> 95
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 relation to the services
rendered; and (3) reasonable in relation to the expenses expected to
be incurred. 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> 96
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> 97
<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> 98
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
(4) Variable Annuity Contract
(5) Application For Contract
(10) Consent of Accountants
</TABLE>
<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
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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
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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.
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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
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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.
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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.
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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
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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
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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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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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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
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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
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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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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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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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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>
20
<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>
21
<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
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the use in the 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 references to us under the heading
"Financial Statements" in such Statement of Additional Information.
PRICE WATERHOUSE LLP
Los Angeles, California
March 25, 1998
