0000950148-01-502056.txt : 20011029
0000950148-01-502056.hdr.sgml : 20011029
ACCESSION NUMBER: 0000950148-01-502056
CONFORMED SUBMISSION TYPE: POS AM
PUBLIC DOCUMENT COUNT: 2
FILED AS OF DATE: 20011024
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ANCHOR NATIONAL LIFE INSURANCE CO
CENTRAL INDEX KEY: 0000006342
STANDARD INDUSTRIAL CLASSIFICATION: []
IRS NUMBER: 860198983
STATE OF INCORPORATION: AZ
FISCAL YEAR END: 0930
FILING VALUES:
FORM TYPE: POS AM
SEC ACT: 1933 Act
SEC FILE NUMBER: 033-81476
FILM NUMBER: 1765598
BUSINESS ADDRESS:
STREET 1: 1 SUNAMERICA CENTER
STREET 2: C/O THOMAS B PHILLIPS
CITY: LOS ANGELES
STATE: CA
ZIP: 90067
BUSINESS PHONE: 3107726000
MAIL ADDRESS:
STREET 1: 1 SUN AMERICA CENTER
CITY: LOS ANGELES
STATE: CA
ZIP: 90067
FORMER COMPANY:
FORMER CONFORMED NAME: ANCHOR LIFE INSURANCE CO
DATE OF NAME CHANGE: 19600201
POS AM
1
v74068a4posam.txt
POST-EFFECTIVE AMENDMENT NO. 12 TO FORM S-3
As filed with the Securities and Exchange Commission on October 24, 2001
Registration No. 33-81476
-------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
Post-Effective Amendment
No. 12 on Form S-3
under
The Securities Act of 1933
--------------------
ANCHOR NATIONAL LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
California 6311 86-0198983
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation or Number)
organization)
1 SunAmerica Center
Los Angeles, California 90067-6022
(310) 772-6000
(Address, including zip code, and telephone number,
including area code, or registrant's
principal executive offices)
Christine A. Nixon, Esquire
Anchor National Life Insurance Company
1 SunAmerica Center
Los Angeles, California 90067-6022
(310) 772-6000
(Name, address, including zip code, and telephone number, including area code
of agent for service)
----------------------
Approximate date of commencement of proposed dale to the public: As
soon after the effective date of this Registration Statement as is practicable.
If the only securities being registered on this form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ______________
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ______________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
----------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
shall determine.
Registrant is filing this Post-Effective Amendment No. 12 for the sole
purpose of adding to the Registration Statement certain Prospectuses pursuant to
oral permission to do so provided by Mr. William Kotapish to Anchor National.
The Registrant does not intend for this Post-Effective Amendment No. 12 to
delete from the Registration Statement, any document included in the
Registration Statement but not filed here, including any currently effective
Prospectus or supplement thereto.
WM DIVERSIFIED STRATEGIES(III) LOGO
PROSPECTUS
November 1, 2001
FLEXIBLE PAYMENT DEFERRED ANNUITY CONTRACT
issued by
VARIABLE SEPARATE ACCOUNT
and
ANCHOR NATIONAL LIFE INSURANCE COMPANY
The annuity contract has 26 investment choices - 4 fixed-interest investment
options which offer interest rates guaranteed by Anchor National for different
periods of time and 22 variable investment portfolios. The 22 variable
portfolios are part of Anchor Series Trust ("AST"), the SunAmerica Series Trust
("SAST"), Van Kampen Life Investment Trust ("VKT") or the WM Variable Trust
("WMVT").
STRATEGIC ASSET MANAGEMENT PORTFOLIOS
STRATEGIC GROWTH WM ADVISORS, INC. WMVT
CONSERVATIVE GROWTH WM ADVISORS, INC. WMVT
BALANCED WM ADVISORS, INC. WMVT
CONSERVATIVE BALANCED WM ADVISORS, INC. WMVT
FLEXIBLE INCOME WM ADVISORS, INC. WMVT
EQUITY FUNDS
TECHNOLOGY MORGAN STANLEY INVESTMENT MGMT., INC. SAST
INTERNATIONAL GROWTH CAPITAL GUARDIAN TRUST COMPANY WMVT
GLOBAL EQUITIES ALLIANCE CAPITAL MGMT. L.P. SAST
SMALL CAP STOCK WM ADVISORS, INC. WMVT
MID CAP STOCK WM ADVISORS, INC. WMVT
MFS MID CAP GROWTH MASSACHUSETTS FINANCIAL SERVICES CO. SAST
CAPITAL APPRECIATION WELLINGTON MGMT. CO. LLP AST
GROWTH JANUS CAPITAL CORPORATION WMVT
ALLIANCE GROWTH ALLIANCE CAPITAL MGMT. L.P. SAST
GROWTH FUND OF THE NORTHWEST WM ADVISORS, INC. WMVT
VAN KAMPEN LIT COMSTOCK, CLASS II SHARES VAN KAMPEN ASSET MANAGEMENT INC. VKT
GROWTH & INCOME WM ADVISORS, INC. WMVT
EQUITY INCOME WM ADVISORS, INC. WMVT
FIXED-INCOME FUNDS
U.S. GOVERNMENT SECURITIES WM ADVISORS, INC. WMVT
INCOME WM ADVISORS, INC. WMVT
SHORT TERM INCOME WM ADVISORS, INC. WMVT
MONEY MARKET WM ADVISORS, INC. WMVT
You can put your money into any one or all of the Variable Portfolios and/or
fixed investment options.
Please read this prospectus carefully before investing and keep it for your
future reference. It contains important information you should know about the WM
Diversified Strategies(III) Variable Annuity.
To learn more about the annuity offered by this prospectus, you can obtain a
copy of the Statement of Additional Information ("SAI") dated November 1, 2001.
The SAI has been filed with the Securities and Exchange Commission ("SEC") and
can be considered part of this prospectus.
The table of contents of the SAI appears on page 38 of this prospectus. For a
free copy of the SAI, call us at 1-877-311-WMVA (9682) or write our Annuity
Service Center at, P.O. Box 54299, Los Angeles, California 90054-0299.
A registration statement has been filed with the SEC under the Securities Act of
1933 relating to the contract. This prospectus does not contain all the
information in the registration statement as permitted by SEC regulations. The
omitted information can be obtained from the SEC's principal office in
Washington, D.C., upon payment of a prescribed fee.
In addition, the SEC maintains a website (http://www.sec.gov) that contains the
SAI, materials incorporated by reference and other information filed
electronically with the SEC.
ANNUITIES INVOLVE RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL, AND ARE NOT A
DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY, ANY BANK. THEY ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
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.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Anchor National's Annual Report on Form 10-K for the year ended December 31,
2000, and its quarterly report on Form 10-Q for the quarter ended March 31, and
June 30, 2001 are incorporated herein by reference.
All documents or reports filed by Anchor National under Section 13(a), 13(c),
14, or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") after the effective date of this prospectus are also incorporated by
reference. Statements contained in this prospectus and subsequently filed
documents which are incorporated by reference or deemed to be incorporated by
reference are deemed to modify or supersede documents incorporated herein by
reference.
Anchor National files its Exchange Act documents and reports, including its
annual and quarterly reports on Form 10-K and Form 10-Q, electronically pursuant
to EDGAR under CIK No. 0000006342.
Anchor National is subject to the informational requirements of the Securities
and Exchange Act of 1934 (as amended). We file reports and other information
with the SEC to meet those requirements. You can inspect and copy this
information at SEC public facilities at the following locations:
WASHINGTON, DISTRICT OF COLUMBIA
450 Fifth Street, N.W., Room 1024
Washington, D.C. 20549
CHICAGO, ILLINOIS
500 West Madison Street
Chicago, IL 60661
NEW YORK, NEW YORK
233 Broadway
New York, NY 10048
To obtain copies by mail, contact the Washington, D.C. location. After you pay
the fees as prescribed by the rules and regulations of the SEC, the required
documents are mailed.
Registration statements under the Securities Act of 1933, as amended, related to
the contracts offered by this prospectus are on file with the SEC. This
prospectus does not contain all of the information contained in the registration
statements and exhibits. For further information regarding the separate account,
Anchor National and its general account, the Variable Portfolios and the
contract, please refer to the registration statements and exhibits.
The SEC also maintains a website (http:// www.sec.gov) that contains the SAI,
materials incorporated by reference and other information filed electronically
with the SEC by Anchor National.
Anchor National will provide without charge to each person to whom this
prospectus is delivered, upon written or oral request, a copy of the documents
incorporated by reference. Requests for these documents should be directed to
Anchor National's Annuity Service Center, as follows:
Anchor National Life Insurance Company
Annuity Service Center
P.O. Box 54299
Los Angeles, California 90054-0299
Telephone Number: (800) 445-SUN2
SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION
Indemnification for liabilities arising under the Securities Act of 1933 (the
"Act") is provided to Anchor National's officers, directors and controlling
persons. The SEC has advised that it believes such indemnification is against
public policy under the Act and unenforceable. If a claim for indemnification
against such liabilities (other than for Anchor National's payment of expenses
incurred or paid by its directors, officers or controlling persons in the
successful defense of any legal action) is asserted by a director, officer or
controlling person of Anchor National in connection with the securities
registered under this prospectus, Anchor National will submit to a court with
jurisdiction to determine whether the indemnification is against public policy
under the Act. Anchor National will be governed by final judgment of the issue.
However, if in the opinion of Anchor National's counsel this issue has been
determined by controlling precedent, Anchor National will not submit the issue
to a court for determination.
2
TABLE OF CONTENTS
GLOSSARY.................................................... 4
HIGHLIGHTS.................................................. 5
FEE TABLES.................................................. 6
Owner Transaction Expenses.............................. 6
Annual Separate Account Expenses........................ 6
The Optional Estate Rewards Death Benefit Fee........... 6
The Optional Earnings Advantage Fee..................... 6
The Optional Income Protector Fee....................... 6
Investment Portfolio Expenses of Variable Portfolios.... 7
EXAMPLES.................................................... 9
THE WM DIVERSIFIED STRATEGIES(III) VARIABLE ANNUITY......... 12
PURCHASING A WM DIVERSIFIED STRATEGIES(III) VARIABLE
ANNUITY................................................... 13
Allocation of Purchase Payments......................... 13
Accumulation Units...................................... 13
Free Look............................................... 14
INVESTMENT OPTIONS.......................................... 14
Variable Portfolios..................................... 14
Fixed Investment Options................................ 16
Market Value Adjustment................................. 16
Transfers During the Accumulation Phase................. 17
Dollar Cost Averaging................................... 18
Asset Allocation Rebalancing Program.................... 19
Principal Advantage Program............................. 19
Voting Rights........................................... 19
Substitution............................................ 20
ACCESS TO YOUR MONEY........................................ 20
Free Withdrawal Provision............................... 20
Systematic Withdrawal Program........................... 22
Minimum Contract Value.................................. 22
Qualified Contract Owners............................... 22
DEATH BENEFIT............................................... 22
Standard Death Benefit.................................. 23
Estate Rewards Death Benefit(s)......................... 23
Earnings Advantage...................................... 24
Spousal Continuation.................................... 25
EXPENSES.................................................... 26
Insurance Charges....................................... 26
Withdrawal Charges...................................... 26
Investment Charges...................................... 27
Contract Maintenance Fee................................ 27
Transfer Fee............................................ 27
Optional Death Benefit Fees............................. 27
Optional Income Protector Fee........................... 27
Premium Tax............................................. 27
Income Taxes............................................ 27
Reduction or Elimination of Charges and Expenses, and
Additional Amounts Credited............................ 28
INCOME OPTIONS.............................................. 28
Annuity Date............................................ 28
Income Options.......................................... 28
Allocation of Annuity Payments.......................... 29
Transfers During the Income Phase....................... 30
Deferment of Payments................................... 30
Income Protector........................................ 30
TAXES....................................................... 33
Annuity Contracts in General............................ 33
Tax Treatment of Distributions--Non-qualified
Contracts.............................................. 33
Tax Treatment of Distributions--Qualified Contracts..... 33
Minimum Distributions................................... 34
Tax Treatment of Death Benefits......................... 34
Diversification......................................... 35
PERFORMANCE................................................. 35
OTHER INFORMATION........................................... 36
Anchor National......................................... 36
The Separate Account.................................... 36
Custodian............................................... 36
The General Account..................................... 36
Distribution of the Contract............................ 36
Administration.......................................... 37
Legal Proceedings....................................... 37
Ownership............................................... 37
Independent Accountants................................. 37
Registration Statement.................................. 37
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.... 38
APPENDIX A--MARKET VALUE ADJUSTMENT......................... A-1
APPENDIX B--DEATH BENEFITS FOLLOWING SPOUSAL CONTINUATION... B-1
APPENDIX C--HYPOTHETICAL EXAMPLE OF THE OPERATION OF THE
INCOME PROTECTOR PROGRAM.................................. C-1
APPENDIX D--PREMIUM TAXES................................... D-1
3
GLOSSARY
We have capitalized some of the technical terms used in this prospectus. To help
you understand these terms, we define 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(S)--The person(s) on whose life (lives) 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.
COMPANY--Anchor National Life Insurance Company ("Anchor National"), We, Us, the
issuer of this annuity contract.
INCOME PHASE--The period during which we make annuity payments to you.
IRS--The Internal Revenue Service.
NON-QUALIFIED (CONTRACT)--A contract purchased with after-tax dollars. In
general, these contracts are not under any pension plan, specially sponsored
program or individual retirement account ("IRA").
VARIABLE PORTFOLIOS--A sub-account of Variable Separate Account which provides
for the variable investment options available under the contract. Each has a
distinct investment objective and is invested in the underlying investment
portfolios of the Anchor Series Trust, SunAmerica Series Trust, Van Kampen Life
Investment Trust or the WM Variable Trust as applicable.
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 account ("IRA").
4
HIGHLIGHTS
The WM Diversified Strategies(III) Variable Annuity is a contract between you
and Anchor National Life Insurance Company (Anchor National). It is designed to
help you invest on a tax-deferred basis and meet long-term financial goals.
There are minimum Purchase Payment amounts required to purchase a contract.
Purchase Payments may be invested in a variety of variable and fixed account
options. Like all deferred annuities, the contract has an Accumulation Phase and
an Income Phase. During the Accumulation Phase, you invest money in your
contract. The Income Phase begins when you start receiving income payments from
your annuity to provide for your retirement.
FREE LOOK: You may cancel your contract within 10 days after receiving it (or
whatever period is required in your state). You will receive whatever your
contract is worth on the day that we receive your request. The amount refunded
may be more or less than your original Purchase Payment. We will return your
original Purchase Payment if required by law. Please see PURCHASING A WM
DIVERSIFIED STRATEGIES(III) VARIABLE ANNUITY in the prospectus.
EXPENSES: There are fees and charges associated with the contract. Each year, we
deduct a $35 contract maintenance fee from your contract, which may be waived
for contracts of $50,000 or more. We also deduct insurance charges, which equal
1.55% annually of the average daily value of your contract allocated to the
Variable Portfolios. There are investment charges on amounts invested in the
Variable Portfolios. If you elect optional features available under the contract
we may charge additional fees for these features. A separate withdrawal charge
schedule applies to each Purchase Payment. The amount of the withdrawal charge
declines over time. After a Purchase Payment has been in the contract for three
complete years, withdrawal charges no longer apply to that portion of the
Purchase Payment. Please see the FEE TABLE, PURCHASING A WM DIVERSIFIED
STRATEGIES(III) VARIABLE ANNUITY and EXPENSES in the prospectus.
ACCESS TO YOUR MONEY: You may withdraw money from your contract during the
Accumulation Phase. If you do so, earnings are deemed to be withdrawn first. You
will pay income taxes on earnings and untaxed contributions when you withdraw
them. Payments received during the Income Phase are considered partly a return
of your original investment. A federal tax penalty may apply if you make
withdrawals before age 59 1/2. As noted above, a withdrawal charge may apply.
Please see ACCESS TO YOUR MONEY and TAXES in the prospectus.
DEATH BENEFIT: A death benefit feature is available under the contract to
protect your Beneficiaries in the event of your death during the Accumulation
Phase. Optional enhanced death benefits are also available. Please see DEATH
BENEFITS in the prospectus.
INCOME OPTIONS: When you are ready to begin taking income, you can choose to
receive income payments on a variable basis, fixed basis or a combination of
both. You may also chose from five different income options, including an option
for income that you cannot outlive. Please see INCOME OPTIONS in the prospectus.
PLEASE READ THE PROSPECTUS CAREFULLY FOR MORE DETAILED INFORMATION REGARDING
THESE AND OTHER FEATURES AND BENEFITS OF THE CONTRACT, AS WELL AS THE RISKS OF
INVESTING.
INQUIRIES: If you have questions about your contract call your investment
representative or contact us at Anchor National Life Insurance Company Annuity
Service Center P.O. Box 54299 Los Angeles, California 90054-0299. Telephone
Number: 1 (877) 311-WMVA (9682).
ANCHOR NATIONAL OFFERS SEVERAL DIFFERENT VARIABLE ANNUITY PRODUCTS TO MEET THE
DIVERSE NEEDS OF OUR INVESTORS. EACH PRODUCT MAY OFFER DIFFERENT FEATURES AND
BENEFITS AND CORRESPONDINGLY DIFFERENT FEES AND CHARGES. WHEN WORKING WITH YOUR
INVESTMENT REPRESENTATIVE TO DETERMINE THE BEST PRODUCT TO MEET YOUR NEEDS YOU
SHOULD CONSIDER, AMONG OTHER THINGS, WHETHER THE FEATURES OF THIS CONTRACT AND
THE RELATED FEES PROVIDE THE MOST APPROPRIATE PACKAGE TO HELP YOU MEET YOUR
LONG-TERM RETIREMENT SAVINGS GOALS.
Please read the prospectus carefully for more detailed information regarding
these and other features and benefits of the contract, as well as the risks of
investing.
5
WM DIVERSIFIED STRATEGIES(III) VARIABLE ANNUITY FEE TABLES
--------------------------------------------------------------------------------
OWNER TRANSACTION EXPENSES
Withdrawal Charge as a percentage of Purchase Payments:
YEARS: 1 2 3 4
7% 6% 6% 0%
Contract Maintenance
Charge................. $35 each year ($30 in North
Dakota) (waived for contracts
over $50,000)
Transfer Fee........... No charge for first 15
transfers each contract year;
thereafter, fee is $25 ($10
in Pennsylvania and Texas)
per transfer in any contract
year
THE OPTIONAL ESTATE REWARDS DEATH BENEFIT FEE
(The Estate Rewards Death Benefit offers a choice of one of two optional
enhanced death benefits which are described more fully in the prospectus. If
elected, the fee is an annualized charge that is deducted daily from your daily
net asset value.)
Fee as a % of your daily
net asset value....... 0.15%
THE OPTIONAL INCOME PROTECTOR FEE
(The Income Protector which is described more fully in the prospectus is
optional and if elected the fee is deducted annually from your contract value.)
GROWTH RATE ANNUAL FEE AS A % OF YOUR INCOME BENEFIT BASE*
----------- ----------------------------------------------
0%.... 0.10%
* The Income Benefit Base, which is described more fully in the prospectus is
generally calculated by using your contract value on the date of your effective
enrollment in the program and then each subsequent contract anniversary, adding
purchase payments made since the prior contract anniversary, less proportionate
withdrawals, and fees and charges applicable to those withdrawals.
ANNUAL SEPARATE ACCOUNT EXPENSES
(as a percentage of your daily net asset value)
Mortality Risk Charge..................... 1.05%
Expense Risk Charge....................... 0.35%
Distribution Expense Charge............... 0.15%
----
Total Separate Account
Expenses...................... 1.55%
THE OPTIONAL EARNINGS ADVANTAGE FEE
(Earnings Advantage, an enhanced death benefit feature, which is described more
fully in the prospectus is optional and if elected, the fee is an annualized
charge that is deducted daily from your contract value.)
Fee as a % of your daily
net asset value....... 0.25%
6
INVESTMENT PORTFOLIO EXPENSES OF VARIABLE
PORTFOLIOS
ANCHOR SERIES TRUST
(as a percentage of average net assets for the
Trust's fiscal year ended December 31, 2000)
MANAGEMENT SERVICE (12b-1) OTHER TOTAL ANNUAL
PORTFOLIO FEE FEES(1) EXPENSES EXPENSES
----------------------------------------------------------------------------------------------------
Capital Appreciation(2) 0.70% 0.15% 0.05% 0.90%
----------------------------------------------------------------------------------------------------
SUNAMERICA SERIES TRUST
(as a percentage of average net assets after
reimbursement or waiver of expenses for the
Trust's fiscal year ended January 31, 2001)
Alliance Growth 0.60% 0.15% 0.04% 0.79%
Global Equities 0.70% 0.15% 0.14% 0.99%
MFS Mid Cap Growth(3,4) 0.75% 0.15% 0.07% 0.97%
Technology(5) 1.20% 0.15% 0.29% 1.64%
----------------------------------------------------------------------------------------------------
(1) This Service Fee became effective pursuant to a 12b-1 Plan adopted by the
Board of Trustees on May 21, 2001 (SunAmerica Series Trust) and May 30, 2001
(Anchor Series Trust). Although the 0.15% Service Fee is reflected in the
figures shown here, it was not in effect on December 31, 2000 or January 1,
2001 for the Anchor Series Trust or SunAmerica Series Trust, respectively.
(2) The expenses noted here are restated to reflect an estimate of the fees for
the portfolio for the current fiscal year. The fee increase became effective
on August 1, 2000, following approval by the Board of Trustees and
shareholders. Actual management fees and total annual expenses incurred at
fiscal year end 2000 were 0.65% and 0.70%, respectively.
(3) For this portfolio the adviser, SunAmerica Asset Management Corp., has
voluntarily agreed to waive fees or expenses as necessary to keep operating
expenses at or below established maximum amounts. All waivers or
reimbursements may be terminated at any time. Only certain portfolios relied
on these waivers and/or reimbursements during this fiscal year as follows:
MFS Mid-Cap Growth Portfolio, the adviser recouped prior year expense
reimbursements that were mathematically insignificant resulting in the
expense ratio before and after recoupment remaining at 0.97%.
(4) Gross of custody credits of 0.01%.
(5) Annualized.
THE ABOVE INVESTMENT PORTFOLIO EXPENSES WERE PROVIDED BY THE ANCHOR
SERIES TRUSTS AND SUNAMERICA SERIES TRUST, RESPECTIVELY.
WE HAVE NOT INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION.
7
WM VARIABLE TRUST
(as a percentage of average net assets for the Trust's fiscal year ended
December 31, 2000)
TOTAL
MANAGEMENT SERVICE(12b-1) OTHER ANNUAL
FEE FEES(2) EXPENSES(3) EXPENSES()(3, 4)
---------------------------------------------------------------------------------------------------------
Balanced Portfolio* 0.10% 0.25% 0.19% 0.54%
Conservative Balanced Portfolio* 0.10% 0.25% 0.34% 0.69%
Conservative Growth Portfolio* 0.10% 0.25% 0.18% 0.53%
Equity Income Fund 0.63% 0.25% 0.19% 1.07%
Flexible Income Portfolio* 0.10% 0.25% 0.21% 0.56%
Growth & Income Fund 0.76% 0.25% 0.03% 1.04%
Growth Fund 0.88% 0.25% 0.06% 1.19%
Growth Fund of the Northwest 0.63% 0.25% 0.10% 0.98%
Income Fund 0.50% 0.25% 0.08% 0.83%
International Growth Fund 0.92% 0.25% 0.21% 1.38%
Mid Cap Stock Fund(1) 0.75% 0.25% 0.11% 1.11%
Money Market Fund 0.45% 0.25% 0.15% 0.85%
Short Term Income Fund 0.50% 0.25% 0.14% 0.89%
Small Cap Stock Fund 0.86% 0.25% 0.07% 1.18%
Strategic Growth Portfolio* 0.10% 0.25% 0.20% 0.55%
U.S. Government Securities Fund 0.50% 0.25% 0.08% 0.83%
---------------------------------------------------------------------------------------------------------
(1) Other Expenses are estimated for the current fiscal year for the Mid Cap
Stock Fund.
(2)The Board of Trustees has adopted a 12b-1 Plan with respect to the Class 2
shares of the WM Variable Trust Funds. The expense information shown reflects
the 0.25% fee paid under that 12b-1 Plan.
(3)The Other Expenses for the Portfolios and the Funds are based on 2000
operating experience adjusted to reflect the elimination of an administration
fee that had been paid by the funds prior to January 1, 2001.
(4)The Annual Expenses of the Portfolios, combined with the Annual Expenses of
the underlying Funds are shown under "Annual Expenses of the Portfolios and
Underlying Funds Combined," immediately following.
* ANNUAL EXPENSES OF THE PORTFOLIOS AND UNDERLYING FUNDS COMBINE
Each Portfolio will invest in Funds of the WM Variable Trust and in the WM
High Yield Fund (a series of WM Trust I) in keeping with certain allocations
and investment objectives. You will bear certain expenses associated with
those Funds in addition to those related to the Portfolios themselves. The
chart below shows estimated combined annual expenses for each Portfolio and
the Funds in which the Portfolio may invest. The expenses are based upon
estimated expenses of each Portfolio and underlying Fund for the fiscal year
ended December 31, 2000, restated to reflect current management and 12b-1
fees. Please refer to the Trust prospectus for more details.
The estimates assume a constant allocation of each Portfolio's assets among the
Funds identical to such Portfolio's actual allocation at December 31, 2000.
COMBINED
PORTFOLIOS ANNUAL EXPENSES
-----------------------------------------------------------------------------
Balanced Portfolio.......................................... 1.29%
Conservative Balanced Portfolio............................. 1.40%
Conservative Growth Portfolio............................... 1.35%
Flexible Income Portfolio................................... 1.22%
Strategic Growth Portfolio.................................. 1.42%
-----------------------------------------------------------------------------
THE ABOVE INVESTMENT PORTFOLIO EXPENSES WERE PROVIDED BY THE WM VARIABLE TRUST.
8
WE HAVE NOT INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION.
VAN KAMPEN LIFE INVESTMENT TRUST
(as a percentage of average net assets after reimbursement or waiver of
expenses for the Trust's fiscal year ended December 31, 2000)
TOTAL
MANAGEMENT SERVICE (12B-1) OTHER ANNUAL
PORTFOLIO FEE FEE EXPENSES EXPENSES
------------------------------------------------------------------------------------------
Van Kampen LIT Comstock(1, 2)......... 0.00% 0.25% 0.95% 1.20%
------------------------------------------------------------------------------------------
(1)Van Kampen Life Investment Trust Comstock Portfolio, Class II Shares.
(2)For this portfolio, the advisor, Van Kampen Asset Management Inc. has agreed
to waive fees and/or reimburse expenses, if necessary, to reflect operating
expenses at or below established maximum amounts. Absent these waivers or
reimbursements, the expenses were as follows: Van Kampen LIT Comstock 2.38%.
THE ABOVE PORTFOLIO EXPENSES WERE PROVIDED BY THE VAN KAMPEN LIFE INVESTMENT
TRUST. WE HAVE NOT INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION.
ANNUAL EXPENSES OF THE PORTFOLIO AND UNDERLYING FUNDS
EXAMPLES
You will pay the following expenses on a $1,000 investment, assuming a 5% annual
return on assets, Investment Portfolio Expenses after any waiver, reimbursement
or recoupment (assuming the waiver, reimbursement or recoupment will continue
for the period shown), if applicable, and
(a) If the contract is surrendered at the end of the stated time period
and no optional features are elected.
(b) If the contract is surrendered and you elect the optional Estate
Rewards, Earnings Advantage and the Income Protector Program at the
maximum charges offered of [0.15%, 0.25% and 0.10%], respectively.
(c) If the contract is not surrendered or is annuitized and no optional
features are elected.*
(d) If the contract is not surrendered and you elect the optional Estate
Rewards, Earnings Advantage and the Income Protector Program at the
maximum charges offered of [0.15%, 0.25% and 0.10%], respectively.
TIME PERIODS
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ANCHOR SERIES TRUST 1 YEAR 3 YEARS 5 YEARS 10 YEARS
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Capital Appreciation Portfolio (a) $ 96 (a) $139 (a) $135 (a) $287
(b) $101 (b) $154 (b) $160 (b) $335
(c) $ 26 (c) $ 79 (c) $135 (c) $287
(d) $ 31 (d) $ 94 (d) $160 (d) $335
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SUNAMERICA SERIES TRUST 1 YEAR 3 YEARS 5 YEARS 10 YEARS
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Alliance Growth Portfolio (a) $ 95 (a) $136 (a) $129 (a) $276
(b) $100 (b) $151 (b) $154 (b) $325
(c) $ 25 (c) $ 76 (c) $129 (c) $276
(d) $ 30 (d) $ 91 (d) $154 (d) $325
Global Equities Portfolio (a) $ 97 (a) $142 (a) $139 (a) $296
(b) $102 (b) $156 (b) $164 (b) $344
(c) $ 27 (c) $ 82 (c) $139 (c) $296
(d) $ 32 (d) $ 96 (d) $164 (d) $344
MFS Mid Cap Growth (a) $ 96 (a) $141 (a) $138 (a) $294
(b) $101 (b) $156 (b) $163 (b) $342
(c) $ 26 (c) $ 81 (c) $138 (c) $294
(d) $ 31 (d) $ 96 (d) $163 (d) $342
Technology Portfolio (a) $103 (a) $161 (a) $171 (a) $357
(b) $108 (b) $175 (b) $195 (b) $402
(c) $ 33 (c) $101 (c) $171 (c) $357
(d) $ 38 (d) $115 (d) $195 (d) $402
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9
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WM VARIABLE TRUST 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------------------------------------------------------------------------------------
Balanced Portfolio (a) $100 (a) $151 (a) $154 (a) $325
(b) $105 (b) $165 (b) $178 (b) $371
(c) $ 30 (c) $ 91 (c) $154 (c) $325
(d) $ 35 (d) $105 (d) $178 (d) $371
Conservative Balanced Portfolio (a) $101 (a) $154 (a) $160 (a) $335
(b) $106 (b) $168 (b) $183 (b) $381
(c) $ 31 (c) $ 94 (c) $160 (c) $335
(d) $ 36 (d) $108 (d) $183 (d) $381
Conservative Growth Portfolio (a) $100 (a) $152 (a) $157 (a) $331
(b) $105 (b) $167 (b) $181 (b) $376
(c) $ 30 (c) $ 92 (c) $157 (c) $331
(d) $ 35 (d) $107 (d) $181 (d) $376
Equity Income Fund (a) $ 97 (a) $144 (a) $143 (a) $304
(b) $102 (b) $159 (b) $168 (b) $351
(c) $ 27 (c) $ 84 (c) $143 (c) $304
(d) $ 32 (d) $ 99 (d) $168 (d) $351
Flexible Income Portfolio (a) $ 99 (a) $149 (a) $151 (a) $318
(b) $104 (b) $163 (b) $175 (b) $365
(c) $ 29 (c) $ 89 (c) $151 (c) $318
(d) $ 34 (d) $103 (d) $175 (d) $365
Growth & Income Fund (a) $ 97 (a) $143 (a) $142 (a) $301
(b) $102 (b) $158 (b) $166 (b) $348
(c) $ 27 (c) $ 83 (c) $142 (c) $301
(d) $ 32 (d) $ 98 (d) $166 (d) $348
Growth Fund (a) $ 99 (a) $148 (a) $149 (a) $315
(b) $104 (b) $162 (b) $173 (b) $362
(c) $ 29 (c) $ 88 (c) $149 (c) $315
(d) $ 34 (d) $102 (d) $173 (d) $362
Growth Fund of the Northwest (a) $ 96 (a) $141 (a) $139 (a) $295
(b) $101 (b) $156 (b) $163 (b) $343
(c) $ 26 (c) $ 81 (c) $139 (c) $295
(d) $ 31 (d) $ 96 (d) $163 (d) $343
Income Fund (a) $ 95 (a) $137 (a) $131 (a) $280
(b) $100 (b) $152 (b) $156 (b) $329
(c) $ 25 (c) $ 77 (c) $131 (c) $280
(d) $ 30 (d) $ 92 (d) $156 (d) $329
International Growth Fund (a) $100 (a) $153 (a) $159 (a) $333
(b) $105 (b) $168 (b) $183 (b) $379
(c) $ 30 (c) $ 93 (c) $159 (c) $333
(d) $ 35 (d) $108 (d) $183 (d) $379
Mid Cap Stock Fund (a) $ 98 (a) $145 (a) $145 (a) $308
(b) $103 (b) $160 (b) $170 (b) $355
(c) $ 28 (c) $ 85 (c) $145 (c) $308
(d) $ 33 (d) $100 (d) $170 (d) $355
Money Market Fund (a) $ 95 (a) $137 (a) $132 (a) $282
(b) $100 (b) $152 (b) $157 (b) $331
(c) $ 25 (c) $ 77 (c) $132 (c) $282
(d) $ 30 (d) $ 92 (d) $157 (d) $331
Short Term Income Fund (a) $ 96 (a) $139 (a) $134 (a) $286
(b) $101 (b) $154 (b) $159 (b) $334
(c) $ 26 (c) $ 79 (c) $134 (c) $286
(d) $ 31 (d) $ 94 (d) $159 (d) $334
Small Cap Stock Fund (a) $ 98 (a) $147 (a) $149 (a) $314
(b) $103 (b) $162 (b) $173 (b) $361
(c) $ 28 (c) $ 87 (c) $149 (c) $314
(d) $ 33 (d) $102 (d) $173 (d) $361
Strategic Growth Portfolio (a) $101 (a) $154 (a) $160 (a) $337
(b) $106 (b) $169 (b) $184 (b) $382
(c) $ 31 (c) $ 94 (c) $160 (c) $337
(d) $ 36 (d) $109 (d) $184 (d) $382
U.S. Government Securities Fund (a) $ 95 (a) $137 (a) $131 (a) $280
(b) $100 (b) $152 (b) $156 (b) $329
(c) $ 25 (c) $ 77 (c) $131 (c) $280
(d) $ 30 (d) $ 92 (d) $156 (d) $329
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* We do not currently charge a surrender charge upon annuitization, unless the
contract is annuitized under the Income Protector Program. We will assess any
applicable surrender charges upon annuitizations effected using the Income
Protector Program as if you had fully surrendered your contract.
10
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VAN KAMPEN LIFE INVESTMENT TRUST 1 YEAR 3 YEARS 5 YEARS 10 YEARS
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Van Kampen LIT Comstock, Class II Shares (a) $ 99 (a) $148 (a) $150 (a) $316
(b) $104 (b) $163 (b) $174 (b) $363
(c) $ 29 (c) $ 88 (c) $150 (c) $316
(d) $ 34 (d) $103 (d) $174 (d) $363
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EXPLANATION OF FEE TABLES AND EXAMPLES
1. The purpose of the Fee Tables is to show you the various expenses you
will incur directly and indirectly by investing in the contract. The
example reflects owner transaction expenses, separate account expenses
including optional benefit fees in some examples and variable portfolio
expenses. We converted the contract administration charge to a percentage
(0.09%) using an assumed contract size of $40,000. The actual impact of
the administration charge may differ from this percentage and may be
waived for contract values over $50,000. Additional information on the
portfolio company fees can be found in the Trust prospectuses located
behind this prospectus.
2. The Examples assume that no transfer fees were imposed. Premium taxes are
not reflected but may be applicable.
3. For certain underlying investment portfolios in which the Variable
Portfolios invest, the adviser 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 variable
Portfolios' average net assets: MFS Mid Cap Growth 1.15% (recouping prior
expense reimbursement); Technology 1.70% and Van Kampen LIT Comstock
2.38%. The adviser also may voluntarily waive or reimburse additional
amounts to increase a Variable 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 Variable
Portfolio is able to make such payment and remain in compliance with the
foregoing expense limitations.
4. THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
As of the date of this Prospectus sales of WM Diversified Strategies(III)
Variable Annuity have not begun.
Therefore no condensed financial information is shown in this prospectus.
11
THE WM DIVERSIFIED STRATEGIES(III) VARIABLE ANNUITY
--------------------------------------------------------------------------------
An annuity is a contract between you and an insurance company. You are the owner
of the contract. The contract provides three main benefits:
- Tax Deferral: You do not pay taxes on your earnings from the annuity
until you withdraw them.
- Death Benefit: If you die during the Accumulation Phase, the insurance
company pays a death benefit to your Beneficiary.
- Guaranteed Income: If elected, you receive a stream of income for your
lifetime, or another available period you select.
Tax-qualified retirement plans (e.g., IRAs, 401(k) or 403(b) plans) defer
payment of taxes on earnings until withdrawn. If you are considering funding a
tax-qualified retirement plan with an annuity, you should know that an annuity
does not provide any additional tax deferral treatment of earnings beyond the
treatment provided by the tax-qualified retirement plan itself. However,
annuities do provide other features and benefits which may be valuable to you.
You should fully discuss this decision with your financial advisor.
This annuity was developed to help you contribute to your retirement savings.
This annuity works in two stages, the Accumulation Phase and the Income Phase.
Your contract is in the Accumulation Phase during the period when you make
payments into the contract. The Income Phase begins when you request us to start
making payments to you out of the money accumulated in your contract.
The Contract is called a "variable" annuity because it allows you to invest in
variable investment portfolios which we call Variable Portfolios. The Variable
Portfolios, are similar to mutual funds, in that they have specific investment
objectives and their performance varies. You can gain or lose money if you
invest in these Variable Portfolios. The amount of money you accumulate in your
contract depends on the performance of the Variable Portfolio(s) in which you
invest.
The Contract also offers several fixed account options for varying time periods.
Fixed account options earn interest at a rate set and guaranteed by Anchor
National. If you allocate money to the fixed account options, the amount of
money that accumulates in your Contract depends on the total interest credited
to the particular fixed account option(s) in which you are invested.
For more information on the Variable Portfolios and fixed account options
available under this contract, SEE INVESTMENT OPTIONS PAGE 14.
Anchor National issues the WM Diversified Strategies(III) Variable Annuity. When
you purchase a WM Diversified Strategies(III) Variable Annuity, a contract
exists between you and Anchor National. The Company is a stock life insurance
company organized under the laws of the state of Arizona. Its principal place of
business is 1 SunAmerica Center, Los Angeles, California 90067. The Company
conducts life insurance and annuity business in the District of Columbia and all
states except New York. Anchor National is an indirect, wholly owned subsidiary
of American International Group, Inc., a Delaware corporation. WM Diversified
Strategies(III) Variable Annuity may not currently be available in all states.
Please check with your financial advisor regarding availability in your state.
This annuity is designed for investors whose personal circumstances allow for a
long-term investment time horizon, to assist in contributing to retirement
savings. As a function of the Internal Revenue Code ("IRC"), you may be assessed
a 10% federal tax penalty on any withdrawal made prior to your reaching age
59 1/2. Additionally, this contract provides that you will be charged a
withdrawal charge on each Purchase Payment withdrawn if that Purchase Payment
has not been invested in this contract for at least 3 years. Because of the
potential penalty, you should fully discuss all of the benefits and risks of
this contract with your financial adviser prior to purchase.
12
PURCHASING A WM DIVERSIFIED STRATEGIES(III)
VARIABLE ANNUITY
--------------------------------------------------------------------------------
An initial Purchase Payment is the money you give us to buy a contract. Any
additional money you give us to invest in the contract after purchase is a
subsequent Purchase Payment.
This chart shows the minimum initial and subsequent Purchase Payments permitted
under your contract. These amounts depend upon whether a contract is Qualified
or Non-qualified for tax purposes.
MINIMUM MINIMUM SUBSEQUENT
MINIMUM INITIAL SUBSEQUENT PURCHASE PAYMENT--
PURCHASE PAYMENT PURCHASE PAYMENT AUTOMATIC PAYMENT PLAN
---------------- ---------------- ----------------------
Qualified $ 2,000 $250 $100
Non-qualified $10,000 $500 $100
Prior Company approval is required to accept Purchase Payments greater than
$1,500,000. The Company reserves the right to refuse any Purchase Payment
including one which would cause Total Purchase Payments to exceed $1,500,000 at
the time of the Purchase Payment. Further, we reserve the right to aggregate all
contracts having the same owners' and/or annuitants' social security or federal
tax identification number for purposes of determining which contracts and/or
purchase payments require Company pre-approval. Also, the optional Automatic
Payment Plan allows you to make subsequent Purchase Payments of as little as
$100.
In general, we will not issue a Qualified contract to anyone who is age 70 1/2
or older, unless they certify to us that the minimum distribution required by
the federal tax code is being made. In addition, we may not issue a contract to
anyone age 91 or older (unless state law requires otherwise). Neither Estate
Rewards nor Earnings Advantage is available to you if you are age 81 or older at
the time of contract issue.
We allow spouses to jointly own this contract. However, the age of the older
spouse is used to determine the availability of any age driven benefits. The
addition of a joint owner after the contract has been issued in contingent upon
prior review and approval by the Company.
ALLOCATION OF PURCHASE PAYMENTS
We invest your Purchase Payments in the fixed accounts and/or Variable
Portfolio(s) according to your instructions. If we receive a Purchase Payment
without allocation instructions, we will invest the money according to the last
future payment allocation instructions provided by you. Purchase Payments are
applied to your contract based upon the value of the variable investment option
next determined after receipt of your money. SEE INVESTMENT OPTIONS PAGE 14.
In order to issue your contract, we must receive your completed application,
Purchase Payment allocation instructions and any other required paper work at
our Annuity Service Center. We allocate your initial Purchase Payment within two
days of receiving it. If we do not have complete information necessary to issue
your contract, we will contact you. If we do not have the information necessary
to issue your contract within 5 business days we will:
- Send your money back to you; or
- Ask your permission to keep your money until we get the information
necessary to issue the contract.
ACCUMULATION UNITS
The value of the variable portion of your contract will go up or down depending
upon the investment performance of the Variable Portfolio(s) you select. 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.
13
An Accumulation Unit value is determined each day that the New York Stock
Exchange ("NYSE") is open. We base the number of Accumulation Units you receive
on the unit value of the Variable Portfolio as of the day we receive your money
if we receive it before 1:00 p.m. Pacific Standard Time ("PST") and on the next
day's unit value if we receive your money after 1:00 p.m. PST. We calculate an
Accumulation Unit for each Variable Portfolio after the NYSE closes each day. We
do this by:
1. determining the total value of money invested in a particular Variable
Portfolio;
2. subtracting from that amount any asset-based charges and any other
charges such as taxes we have deducted; and
3. dividing this amount by the number of outstanding Accumulation Units.
EXAMPLE:
We receive a $25,000 Purchase Payment from you on Wednesday. You allocate
the money to the Alliance Growth Portfolio. We determine that the value of
an Accumulation Unit for the Alliance Growth 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 2,252.2523 Accumulation Units for the
Alliance Growth Portfolio.
Performance of the Variable Portfolios and expenses under your contract affect
Accumulation Unit values. These factors cause the value of your contract to go
up and down.
FREE LOOK
You may cancel your contract within ten days after receiving it (or longer if
required by state law). We call this a "free look." To cancel, you must mail the
contract along with your free look request to our Annuity Service Center at P.O.
Box 54299, Los Angeles, California 90054-0299. If you decide to cancel your
contract during the free look period, we will refund to you the value of your
contract on the day we receive your request. The amount refunded to you may be
more or less than your original investment.
Certain states require us to return your Purchase Payments upon a free look
request. Additionally, all contracts issued as an IRA require the full return of
Purchase Payments upon a free look. With respect to those contracts, we reserve
the right to put your money in the Money Market investment option during the
free look period and will allocate your money according to your instructions at
the end of the applicable free look period. Currently, we do not put your money
in the Money Market investment option during the free look period unless you
allocate your money to it. If your contract was issued in a state requiring
return of Purchase Payments or as an IRA and you cancel your contract during the
free look period, we return the greater of (1) your Purchase Payments; or (2)
the value of your contract. At the end of the free look period, we allocate your
money according to your instructions.
INVESTMENT OPTIONS
--------------------------------------------------------------------------------
The contract offers variable investment options which we call Variable
Portfolios, and fixed investment options. We designed the contract to meet your
varying investment needs over time. You can achieve this by using the Variable
Portfolios alone or in concert with the fixed investment options. The Variable
Portfolios operate similar to a mutual fund but are only available through the
purchase of certain variable annuities. A mixture of your investment in the
Variable Portfolios and fixed account options may lower the risk associated with
investing only in a variable investment option.
VARIABLE PORTFOLIOS
The contract currently offers 22 Variable Portfolios. These Variable Portfolios
invest in shares of the Anchor Series Trust, SunAmerica Series Trust, Van Kampen
Life Investment Trust and the WM Variable Trust (the "Trusts"). Additional
Variable Portfolios may be available in the future. The Variable Portfolios
operate similar to a mutual fund but are only available through the purchase of
certain insurance contracts.
14
SunAmerica Asset Management Corp., an indirect wholly owned subsidiary of AIG,
is the investment adviser to the AST and SAST Trusts. Van Kampen Asset
Management Inc. is the advisor to the VKT. WM Advisors is the adviser to the
WMVT. The Trusts serve as the underlying investment vehicles for other variable
annuity contracts issued by Anchor National, and other affiliated/unaffiliated
insurance companies. Neither Anchor National nor the Trusts believe that
offering shares of the Trusts in this manner disadvantages you. The advisers
monitor the Trusts for potential conflicts.
ANCHOR SERIES TRUST
Wellington Management Company, LLP serves as subadviser to the AST Portfolio.
AST has Variable Portfolios in addition to those listed below which are not
available for investment under the contract.
SUNAMERICA SERIES TRUST
Various subadvisers provide investment advice for the SAST Portfolios. SAST has
Variable Portfolios in addition to those listed below which are not available
for investment under the contract.
VAN KAMPEN LIFE INVESTMENT TRUST
Van Kampen Asset Management Inc. provides investment advice for the VKT
portfolios. VKT has investments portfolios in addition to the one listed here
which are not available for investment under the contract.
WM VARIABLE TRUST
WM Advisors, Inc. serves as adviser for the WMVT Funds and also hires
subadvisers to manage the day-to-day operations of certain investment options.
The 22 Variable Portfolios along with their respective subadvisers are listed
below:
STRATEGIC ASSET MANAGEMENT PORTFOLIOS
Strategic Growth WM Advisors, Inc. WMVT
Conservative Growth WM Advisors, Inc. WMVT
Balanced WM Advisors, Inc. WMVT
Conservative Balanced WM Advisors, Inc. WMVT
Flexible Income WM Advisors, Inc. WMVT
EQUITY FUNDS
Technology Morgan Stanley Investment Mgmt. Inc. SAST
International Growth Capital Guardian Trust Company WMVT
Global Equities Alliance Capital Mgmt. L.P. SAST
Small Cap Stock WM Advisors, Inc. WMVT
Mid Cap Stock WM Advisors, Inc. WMVT
MFS Mid Cap Growth Massachusetts Financial Services Co. SAST
Capital Appreciation Wellington Mgmt. Co. LLP AST
Growth Janus Capital Corporation WMVT
Alliance Growth Alliance Capital Mgmt, L.P. SAST
Growth Fund of the Northwest WM Advisors, Inc. WMVT
Van Kampen LIT Comstock, Class II Shares Van Kampen Asset Management Inc. VKT
Growth & Income WM Advisors, Inc. WMVT
Equity Income WM Advisors, Inc. WMVT
FIXED-INCOME FUNDS
Income WM Advisors, Inc. WMVT
U.S. Government Securities WM Advisors, Inc. WMVT
Short Term Income WM Advisors, Inc. WMVT
Money Market WM Advisors, Inc. WMVT
YOU SHOULD READ THE PROSPECTUSES FOR THE TRUSTS ATTACHED HERETO CAREFULLY. THESE
PROSPECTUSES CONTAIN DETAILED INFORMATION ABOUT THE PORTFOLIOS, INCLUDING EACH
VARIABLE PORTFOLIO'S INVESTMENT OBJECTIVE AND RISK FACTORS.
15
FIXED INVESTMENT OPTIONS
The contract also offers four fixed investment options. Anchor National will
guarantee the interest rate earned on money you allocate to any of these fixed
investment options. We currently offer fixed investment options for periods of
one and three years, which we call guarantee periods. In Washington only the one
year fixed account option is available. We guarantee the interest rate for money
allocated to the 6-month DCA fixed account and/or the 1-year DCA fixed account
(the "DCA fixed accounts") which are available only in conjunction with the
Dollar Cost Averaging Program. Please see the section on the Dollar Cost
Averaging Program on page 26 for additional information about, including
limitations on, the availability and operation of the DCA fixed accounts. The
DCA fixed accounts are only available for new Purchase Payments.
All of these fixed account options pay interest at rates set and guaranteed by
Anchor National. Interest rates may differ from time to time and are set at our
sole discretion. We will never credit less than a 3% annual effective rate to
any of the fixed account options. The interest rate offered for new Purchase
Payments may differ from that offered for subsequent Purchase Payments and money
already in the fixed account options. In addition, different guarantee periods
offer different interest rates. Rates for specified payments are declared at the
beginning of the guarantee period and do not change during the specified period.
There are three scenarios in which you may put money into the fixed account
options. In each scenario your money may be credited a different rate of
interest as follows:
- INITIAL RATE: Rate credited to new Purchase Payments allocated to the
fixed account when you purchase your contract.
- CURRENT RATE: Rate credited to subsequent Purchase Payments allocated to
the fixed account.
- RENEWAL RATE: Rate credited to money remaining in a fixed account after
expiration of a guarantee period and money transferred from a fixed
account or one of the Variable Portfolios into a fixed account.
Each of these rates may differ from one another. Although once declared the
applicable rate is guaranteed until your guarantee period expires.
The DCA fixed accounts also credit a fixed rate of interest. Interest is
credited to amounts allocated to the 6-month or 1-year DCA fixed account while
your investment is systematically transferred to the Variable Portfolio(s). The
rates applicable to the DCA fixed accounts may differ from each other and/or the
other fixed account options but will never be less than an effective rate of 3%.
SEE DOLLAR COST AVERAGING ON PAGE 18 for more information.
When a guarantee period ends, you may leave your money in the same guarantee
period. You may also reallocate money to another fixed investment option (other
than the DCA fixed accounts) or to any of the Variable Portfolio(s). If you want
to reallocate your money, you must contact us within 30 days after the end of
the current guarantee period and instruct us how to reallocate your money. If we
do not hear from you, we will keep your money in the same guarantee period where
it will earn the renewal interest rate applicable at that time.
MARKET VALUE ADJUSTMENT
NOTE: MARKET VALUE ADJUSTMENTS APPLY TO THE 3-YEAR FIXED INVESTMENT OPTION ONLY.
THIS OPTION IS NOT AVAILABLE IN WASHINGTON AND MAY NOT BE AVAILABLE IN OTHER
STATES. PLEASE CONTACT YOUR INVESTMENT REPRESENTATIVE FOR MORE INFORMATION.
If you take money out of the 3-year fixed investment option before the end of
the guarantee period, we make an adjustment to your contract. We refer to the
adjustment as a market value adjustment (the "MVA"). The MVA reflects any
difference in the interest rate environment between the time you place your
money in the fixed investment option and the time when you withdraw or transfer
that money. This adjustment can increase or decrease your contract value. You
have 30 days after the end of each guarantee period to reallocate your funds
without incurring any MVA.
16
We calculate the MVA by doing a comparison between current rates and the rate
being credited to you in the fixed investment option. For the current rate we
use a rate being offered by us for a guarantee period that is equal to the time
remaining in the guarantee period from which you seek withdrawal or transfer. If
we are not currently offering a guarantee period for that period of time, we
determine an applicable rate by using a formula to arrive at a number between
the interest rates currently offered for the two closest periods available.
Generally, if interest rates drop between the time you put your money into the
fixed investment options and the time you take it out, we credit a positive
adjustment to your contract. Conversely, if interest rates increase during the
same period, we post a negative adjustment to your contract.
Where the MVA is negative, we first deduct the adjustment from any money
remaining in the fixed investment option. If there is not enough money in the
fixed investment option to meet the negative deduction, we deduct the remainder
from your withdrawal or transfer amount. Where the MVA is positive, we add the
adjustment to your withdrawal amount or transfer amount. For withdrawals under
the systematic withdrawal program that result in a negative market value
adjustment, the MVA amount will be deducted from your withdrawal.
The 1-year fixed investment option and the DCA fixed accounts do not impose a
MVA. These fixed investment options are not registered under the Securities Act
of 1933 and are not subject to the provisions of the Investment Company Act of
1940.
Anchor National does not assess an MVA against withdrawals under the following
circumstances:
- If a withdrawal is made within 30 days after the end of a guarantee
period;
- If a withdrawal is made to pay contract fees and charges;
- To pay a death benefit; and
- Upon annuitization, if occurring on the latest Annuity Date.
Please see APPENDIX A for more information on how we calculate the MVA.
TRANSFERS DURING THE ACCUMULATION PHASE
During the Accumulation Phase, you may transfer funds between the Variable
Portfolio(s) and the fixed investment options. Funds already in your contract
cannot be transferred into the DCA fixed accounts.
You must transfer at least $100. If less than $100 will remain in any Variable
Portfolio after a transfer, that amount must be transferred as well.
You may request transfers of your account value between the Variable Portfolios
and/or the fixed account options in writing or by telephone. Additionally, you
may access your account and request transfers between Variable Portfolios and/or
the fixed account options through SunAmerica's website
(http://www.sunamerica.com). We currently allow 15 free transfers per contract
year. We charge $25 ($10 in Pennsylvania and Texas) for each additional transfer
in any contract year. Transfers resulting from your participation in the DCA
program count against your 15 free transfers per contract year. However,
transfers resulting from your participation in the Automatic Asset Rebalancing
Program do not count against your 15 free transfers.
We accept transfer requests by telephone unless you tell us not to on your
contract application. Additionally, you may request transfers over the internet
unless you indicate you do not wish your account to be traded over the internet.
When receiving instructions over the telephone or the internet, we follow
appropriate procedures to provide reasonable assurance that the transactions
executed are genuine. Thus, we are not responsible for any claim, loss or
expense from any error resulting from instructions received over the telephone.
If we fail to follow our procedures, we may be liable for any losses due to
unauthorized or fraudulent instructions.
We may limit the number of transfers in any contract year or refuse any transfer
request for you or others invested in the contract if we believe that excessive
trading or a specific transfer request or group transfer requests may have a
detrimental effect on unit values or the share prices of the underlying Variable
Portfolios.
17
Where permitted by law, we may accept your authorization for a third party to
make transfers for you subject to our rules. We reserve the right to suspend or
cancel such acceptance at any time and will notify you accordingly.
Additionally, we may restrict the investment options available for transfers
during any period in which such third party acts for you. We notify such third
party beforehand regarding any restrictions. However, we will not enforce these
restrictions if we are satisfied that such third party has been appointed by a
court of competent jurisdiction to act on your behalf; or such third party is a
trustee/fiduciary appointed, by you or for you, to act on your behalf for all
your financial affairs.
We may provide administrative or other support services to independent third
parties you authorize to make transfers on your behalf. We do not currently
charge you extra for providing these support services. This includes, but is not
limited to, transfers between investment options in accordance with market
timing strategies. Such independent third parties may or may not be appointed
with us for the sale of annuities. However, WE DO NOT ENGAGE ANY THIRD PARTIES
TO OFFER INVESTMENT ALLOCATION SERVICES OF ANY TYPE. WE TAKE NO RESPONSIBILITY
FOR THE INVESTMENT ALLOCATION AND TRANSFERS TRANSACTED ON YOUR BEHALF BY SUCH
THIRD PARTIES OR FOR ANY INVESTMENT ALLOCATION RECOMMENDATIONS MADE BY SUCH
PARTIES.
For information regarding transfers during the Income Phase, SEE INCOME OPTIONS
ON PAGE 28.
We reserve the right to modify, suspend or terminate these transfer privileges
at any time.
DOLLAR COST AVERAGING PROGRAM
The Dollar Cost Averaging ("DCA") program allows you to invest gradually in the
Variable Portfolios. Under the program you systematically transfer a set dollar
amount or percentage from one Variable Portfolio or the 1-year fixed account
option (source accounts) to any other Variable Portfolio. You may also
systematically transfer the interest earned in the 1-year fixed account to any
of the Variable Portfolios. Transfers may be monthly or quarterly and count
against your 15 free transfers per contract year. You may change the frequency
at any time by notifying us in writing. The minimum transfer amount under the
DCA program is $100, regardless of the source account. Fixed account options are
not available as target accounts for the DCA program.
We also offer the 6-month and a 1-year DCA fixed accounts exclusively to
facilitate this program. The DCA fixed accounts only accept new Purchase
Payments. You can not transfer money already in your contract into these
options. If you allocate new Purchase Payment into a DCA fixed account, we
transfer all your money allocated to that account into the Variable Portfolio(s)
over the selected 6-month or 1-year period. You cannot change the option or the
frequency of transfers once selected. The minimum transfer amount under the DCA
program is $100, regardless of the source account. Fixed account options are not
available as target accounts for the DCA program.
If allocated to the 6-month DCA fixed account, we transfer your money over a
maximum of 6 monthly transfers. We base the actual number of transfers on the
total amount allocated to that account. For example, if you allocate $500 to the
6-month DCA fixed account, we transfer your money over a period of five months,
so that each payment complies with the $100 per transfer minimum.
We determine the amount of the transfers from the 1-year DCA fixed account based
on:
- the total amount of money allocated to the account, and
- the frequency of transfers selected.
For example, if you allocate $1,000 to the 1-year DCA fixed account and you
select monthly transfers, we completely transfer all of your money to the
selected investment options over a period of ten months.
You may terminate your DCA program at any time. If money remains in the DCA
fixed accounts, we transfer the remaining money to the 1-year fixed account
option, unless we receive different instructions from you. Transfers resulting
from a termination of this program do not count towards your 15 free transfers.
The DCA program is designed to lessen the impact of market fluctuations on your
investment. However, we cannot ensure that you will make a profit. When you
elect the DCA Program, you are continuously investing in securities regardless
of fluctuating price levels. You should consider your tolerance for investing
through periods of fluctuating price levels.
18
We reserve the right to modify, suspend or terminate this program at any time.
EXAMPLE:
Assume that you want to gradually move $750 each quarter from the Money
Market Portfolio to the Alliance Growth Portfolio over six quarters. You
set up dollar cost averaging and purchase Accumulation Units at the
following values:
QUARTER ACCUMULATION UNIT UNITS 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
You paid an average price of only $6.67 per Accumulation Unit over 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. This example is for illustrative
purposes only.
ASSET ALLOCATION REBALANCING PROGRAM
Earnings in your contract may cause the percentage of your investment in each
investment option to differ from your original allocations. The Automatic Asset
Rebalancing Program addresses this situation. At your election, we periodically
rebalance your investments in the Variable Portfolios to return your allocations
to their original percentages. Asset rebalancing typically involves shifting a
portion of your money out of an investment option with a higher return into an
investment option with a lower return. At your request, rebalancing occurs on a
quarterly, semi-annual or annual basis. Transfers made as a result of
rebalancing do not count against your 15 free transfers for the contract year.
We reserve the right to modify, suspend or terminate this program at any time.
PRINCIPAL ADVANTAGE PROGRAM
The Principal Advantage Program allows you to invest in one or more of the
Variable Portfolios without putting your principal at direct risk. The program
accomplishes this by allocating your investment strategically between the fixed
investment options (other than the DCA fixed accounts) and the Variable
Portfolio(s) you select. You decide how much you want to invest and
approximately when you want a return of principal. We calculate how much of your
Purchase Payment to allocate to the particular fixed investment option to ensure
that it grows to an amount equal to your total principal invested under this
program. We invest the rest of your principal in the Variable Portfolio(s) of
your choice.
EXAMPLE:
Assume that you want to allocate a portion of your initial Purchase Payment
of $100,000 to the fixed investment option. You want the amount allocated
to the fixed investment option to grow to $100,000 in 3-years. If the
3-year fixed investment option is offering a 5% interest rate, we will
allocate 91,514 to the 3-year fixed investment option to ensure that this
amount will grow to $100,000 at the end of the 3-year period. The remaining
$8,486 may be allocated among the Variable Portfolios, as determined by
you, to provide opportunity for greater growth.
We reserve the right to modify, suspend or terminate this program at any time.
VOTING RIGHTS
Anchor National is the legal owner of shares of the Trusts. However, when a
Variable Portfolio solicits proxies in conjunction with a vote of shareholders,
we must obtain your instructions on how to vote those shares. We vote all
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of the shares we own in proportion to your instructions. This includes any
shares we own on our own behalf. Should we determine that we are no longer
required to comply with these rules, we will vote the shares in our own right.
SUBSTITUTION
If underlying Trust portfolios become unavailable for investment, we may be
required to substitute shares of another underlying trust portfolio. We will
seek prior approval of the SEC and give you notice before substituting shares.
ACCESS TO YOUR MONEY
--------------------------------------------------------------------------------
You can access money in your contract in two ways:
- by making a partial or total withdrawal, and/or;
- by receiving income payments during the Income Phase. SEE INCOME OPTIONS
ON PAGE 28.
Generally, we deduct a withdrawal charge applicable to any partial or total
withdrawal and a MVA if a withdrawal comes from the 3-year fixed investment
option prior to the end of a guarantee period. If you withdraw your entire
contract value, we also deduct any applicable premium taxes and a contract
maintenance fee. SEE EXPENSES ON PAGE 26. We calculate charges due on a total
withdrawal on the day after we receive your request and other required paper
work. We return your contract value less any applicable fees and charges.
The minimum partial withdrawal amount is $1,000. We require that the value left
in any Variable Portfolio or fixed account be at least $500 after the
withdrawal. You must send a written withdrawal request. Unless you provide us
with different instructions, partial withdrawals will be made in equal amounts
from each Variable Portfolio and the fixed investment option in which your
contract is invested. Withdrawals from fixed investment options prior to the end
of the guarantee period may result in a market value adjustment.
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 with 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 a
fixed investment option. Such deferrals are limited to no longer than six
months.
FREE WITHDRAWAL PROVISION
Your contract provides for a free withdrawal amount each year. A free withdrawal
amount is the portion of your account that we allow you to take out each year
without being charged a surrender penalty. However, upon a future full surrender
of your contract any previous free withdrawals would be subject to a surrender
charge, if any is applicable at the time of the full surrender (except in the
state of Washington).
Purchase payments, above and beyond the amount of your free withdrawal amount,
that are withdrawn prior to the end of the third year will result in your paying
a penalty in the form of a surrender charge. The amount of the charge and how it
applies are discussed more fully below. SEE EXPENSES ON PAGE 26. You should
consider, before purchasing this contract, the effect this charge will have on
your investment if you need to withdraw more money than the free withdrawal
amount. You should fully discuss this decision with your financial
representative.
To determine your free withdrawal amount and your withdrawal charge, we refer to
two special terms. These are penalty free earnings and the total invested
amount.
The penalty-free earnings portion of your contract is simply your account value
less your total invested amount. The total invested amount is the total of all
Purchase Payments you have made into the contract less portions of
20
some prior withdrawals you made. The portions of prior withdrawals that reduce
your total invested amount are as follows:
-Free withdrawals in any year that were in excess of your penalty-free earnings
and were based on the part of the total invested amount that was no longer
subject to withdrawal charges at the time of the withdrawal, and
-Any prior withdrawals (including withdrawal charges on those withdrawals) of
the total invested amount on which you already paid a surrender penalty.
When you make a withdrawal, we assume that it is taken from penalty-free
earnings first, then from the total invested amount on a first-in, first-out
basis. This means that you can also access your Purchase Payments which are no
longer subject to a withdrawal charge before those Purchase Payments which are
still subject to the withdrawal charge.
During the first year after we issue your contract your free withdrawal amount
is the greater of (1) your penalty-free earnings; and (2) if you are
participating in the Systematic Withdrawal program, a total of 10% of your total
invested amount. If you are a Washington resident, you may withdraw during the
first contract year, the greater of (1); (2); or (3) interest earnings from the
amounts allocated to the fixed account options, not previously withdrawn.
After the first contract year, you can take out the greater of the following
amounts each year (1) your penalty-free earnings and any portion of your total
invested amount no longer subject to withdrawal charge or (2) 10% of the portion
of your total invested amount that has been in your contract for at least one
year. If you are a Washington resident, your maximum free withdrawal amount,
after the first contract year, is the greater of (1); (2); or (3) interest
earnings from amounts allocated to the fixed account options, not previously
withdrawn.
We calculate charges due on a total withdrawal on the day after we receive your
request and your contract. We return to you your contract value less any
applicable fees and charges.
The withdrawal charge percentage is determined by the age of the Purchase
Payment remaining in the contract at the time of the withdrawal. For the purpose
of calculating the withdrawal charge, any prior Free Withdrawal is not
subtracted from the total Purchase Payments still subject to withdrawal charges.
For example, you make an initial Purchase Payment of $100,000. For purposes of
this example we will assume a 0% growth rate over the life of the contract, no
election of Estate Rewards, Earnings Advantage or Income Protection options
selected and no subsequent Purchase Payments. In contract year 2, you take out
your maximum free withdrawal of $10,000. After that free withdrawal your
contract value is $90,000. In contract year 3 you request a full surrender of
your contract. We will apply the following calculation,
A-(B x C)=D, where:
A=Your contract value at the time of your request for surrender ($90,000)
B=The amount of your Purchase Payments still subject to withdrawal charge
($100,000)
C=The withdrawal charge percentage applicable to the age of each Purchase
Payment (6%)[B x C=$6,000]
D=Your full surrender value ($84,000)
Under most circumstances, the partial withdrawal minimum is $1,000. We require
that the value left in any investment option be at least $100, after the
withdrawal. You must send a written withdrawal request. Unless you provide us
with different instructions, partial withdrawals will be made pro rata from each
Variable Portfolio and the fixed account option in which your contract is
invested.
Under certain Qualified plans, access to the money in your contract may be
restricted. Additionally, withdrawals made prior to age 59 1/2 may result in a
10% federal penalty tax. SEE TAXES ON PAGE 34.
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 with the NYSE is restricted; (3) an emergency
exists such that disposal of or determination of the value of shares of the
Variable Portfolios is not reasonably practicable; (4) the SEC, by order, so
permits for the protection of contract owners.
21
Additionally, we reserve the right to defer payments for a withdrawal from a
fixed account option. Such deferrals are limited to no longer than six months.
SYSTEMATIC WITHDRAWAL PROGRAM
During the Accumulation Phase, you may elect to receive periodic income payments
under the systematic withdrawal program. Under the program, you may choose to
take monthly, quarterly, semi-annual or annual payments from your contract.
Electronic transfer of these funds to your bank account is also available. The
minimum amount of each withdrawal is $100. Withdrawals may be taxable and a 10%
federal penalty tax may apply if you are under age 59 1/2. There is no
additional charge for participating in this program, although a withdrawal
charge and/or MVA may apply.
The 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.
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) you have not made any Purchase Payments during the past three years. We
will provide you with sixty days written notice. At the end of the notice
period, we will distribute the contract's remaining value to you.
QUALIFIED CONTRACT OWNERS
Certain Qualified plans restrict and/or prohibit your ability to withdraw money
from your contract. SEE TAXES ON PAGE 34 for a more detailed explanation.
DEATH BENEFIT
--------------------------------------------------------------------------------
If you should die during the Accumulation Phase, your Beneficiary will receive a
death benefit. The death benefit options are discussed in detail below.
The death benefit is not paid after you are in the Income Phase. If you die
during the Income Phase, your Beneficiary will receive any remaining guaranteed
income payments in accordance with the income option you choose. SEE INCOME
OPTIONS ON PAGE 28.
You select the Beneficiary 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.
We calculate and pay the death benefit when we receive all required paperwork
and satisfactory proof of death. We consider the following satisfactory 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
proof before we pay the death benefit.
The death benefit must be paid within 5 years of the date of death. The
Beneficiary may, in the alternative, elect to have the death benefit payable in
the form of an income payment. If the Beneficiary elects an income option, it
must be paid over the Beneficiary's lifetime or for a period not extending
beyond the Beneficiary's life expectancy. Income payments must begin within one
year of the owner's death. If the Beneficiary is the spouse of the deceased
owner, he or she can elect to continue the contract, rather than receive a death
benefit. SEE SPOUSAL CONTINUATION ON PAGE 25. If the Beneficiary does not elect
a specific form of pay out within 60 days of our receipt of all required
paperwork and satisfactory proof of death, we pay a lump sum death benefit to
the Beneficiary.
22
If the Annuitant dies before annuity payments begin, you can name a new
Annuitant. If no Annuitant is named within 30 days, you will become the
Annuitant. However, if the owner is a non-natural person (for example, a trust),
then the death of the Annuitant will be treated as the death of the owner, no
new Annuitant may be named and the death benefit will be paid.
This contract provides three death benefit options: the Standard Death Benefit
which is automatically included in your contract for no additional fee, an
optional enhanced death benefit called "Estate Rewards" which offers you the
selection of one of two options. If you choose the Estate Rewards death benefit,
you may also elect, for an additional fee, the Earnings Advantage feature. Your
death benefit elections must be made at the time of contract application and the
election cannot be terminated.
The term "Net Purchase Payment" is used frequently in explaining the death
benefit options. Net Purchase Payment is an on-going calculation. It does not
represent a contract value.
We define Net Purchase Payments as Purchase Payments less an Adjustment for each
withdrawal. If you have not taken any withdrawals from your contract, Net
Purchase Payments equals total Purchase Payments into your contract. To
calculate the Adjustment amount for the first withdrawal made under the
contract, we determine the percentage by which the withdrawal reduced contract
value. For example, a $10,000 withdrawal from a $100,000 contract is a 10%
reduction in value. This percentage is calculated by dividing the amount of each
withdrawal (including fees and charges applicable to the withdrawal) by the
contract value immediately before taking that withdrawal. The resulting
percentage is then multiplied by the amount of total Purchase Payments and
subtracted from the amount of total Purchase Payments on deposit at the time of
the withdrawal. The resulting amount is the initial Net Purchase Payment
calculation.
To arrive at the Net Purchase Payment calculation for subsequent withdrawals, we
determine the percentage by which the contract value is reduced by taking the
amount of the withdrawal in relation to the contract value immediately before
taking the withdrawal. We then multiply the Net Purchase Payment calculation as
determined prior to the withdrawal by this percentage. We subtract that result
from the Net Purchase Payment calculation as determined prior to the withdrawal
to arrive at all subsequent Net Purchase Payment calculations.
STANDARD DEATH BENEFIT
The Standard Death Benefit on your contract, is the greater of:
1. Net Purchase Payments compounded at a 3% annual growth rate from the
date of issue until the earlier of age 75 or the date of death, plus any
Purchase Payments recorded after the earlier of age 75 or the date of
death; and reduced for any withdrawals (and fees and charges applicable
to those withdrawals) recorded after the earlier of age 75 or the date
of death, in the same proportion that the withdrawal reduced the
contract value on the date of the withdrawal.
2. the contract value on the date we receive all required paperwork and
satisfactory proof of death.
ESTATE REWARDS DEATH BENEFIT(S)
For an additional fee, you may elect one of the Estate Rewards death benefits
which can provide greater protection for your beneficiaries. You must chose
between Option 1 and Option 2 at the time you purchase your contract and you
cannot change your election at any time. The Estate Rewards death benefit is not
available if you are age 81 or older at the time of contract issue. The fee for
Estate Rewards death benefit is 0.15% of the average daily ending value of the
assets you have allocated to the Variable Portfolios.
OPTION 1 - 5% ACCUMULATION OPTION --
THE DEATH BENEFIT IS THE GREATER OF:
a. the contract value on the date we receive all required paperwork and
satisfactory proof of death; or
b. Net Purchase Payments compounded to the earlier of your 80th birthday
or the date of death, at a 5% annual growth rate, plus any Purchase
Payments recorded after the 80th birthday or the date of death; and
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reduced for any withdrawals (and fees and charges applicable to those
withdrawals) recorded after the 80th birthday or the date of death, in
the same proportion that the withdrawal reduced the contract value on
the date of the withdrawal, up to a maximum benefit of two times the
Net Purchase Payments made over the life of your contract.
If you die after your latest Annuity Date and you selected the 5%
Accumulation Option, any death benefit payable under the contract will
be the Standard Death Benefit as described above. Therefore, your
beneficiary will not receive any benefit from Estate Rewards. This
option may not be available in your state. Check with your investment
representative regarding availability.
OPTION 2 - MAXIMUM ANNIVERSARY VALUE OPTION --
THE DEATH BENEFIT IS THE GREATEST OF:
a. Net Purchase Payments; or
b. the contract value on the date we receive all required paperwork and
satisfactory proof of death; or
c. the maximum anniversary value on any contract anniversary prior to your
81st birthday. The anniversary value equals the contract value on a
contract anniversary increased by any Purchase Payments recorded after
that anniversary; and reduced for any withdrawals (and fees and charges
applicable to those withdrawals) recorded after the anniversary, in the
same proportion that the withdrawal reduced the contract value on the
date of the withdrawal.
If you are age 90 or older at the time of death and you had selected
the Maximum Anniversary Value option, the death benefit will be equal
to the contract value on the date we receive all required paperwork and
satisfactory proof of death. Therefore, your beneficiary may not
receive any benefit from Estate Rewards. This option may not be
available in your state. Check with your investment representative
regarding availability. Thus, you will not receive the advantage of the
Maximum Anniversary Value option if you are over age 80 at the time of
contract issue or if you are 90 or older at the time of your death.
B. EARNINGS ADVANTAGE
The Earnings Advantage benefit may increase the Estate Rewards death benefit
amount. In order to elect Earnings Advantage, you must also elect Estate Rewards
described above. The Earnings Advantage is available for an additional charge of
0.25% of the average daily ending value of the assets you have allocated to the
Variable Portfolios. You are not required to elect the Earnings Advantage
feature if you select Estate Rewards, but once elected, generally it cannot be
terminated. Further, if you elect both Estate Rewards and Earnings Advantage the
combined charge will be 0.40% of the average daily ending value of the assets
you have allocated to the Variable Portfolios.
With the Earnings Advantage benefit, if you have earnings in your contract at
the time of death, we will add a percentage of those earnings (the "Earnings
Advantage Percentage"), subject to a maximum dollar amount (the "Maximum
Earnings Advantage Amount), to the death benefit payable.
The Contract Year of Death will determine the Earnings Advantage Percentage and
the Maximum Earnings Advantage Amount, as set forth below:
------------------------------------------------------------------------------------------------------------------
EARNINGS ADVANTAGE MAXIMUM
CONTACT YEAR OF DEATH PERCENTAGE EARNINGS ADVANTAGE AMOUNT
------------------------------------------------------------------------------------------------------------------
Years 0 - 4 25% of Earnings 25% of Net Purchase Payments*
------------------------------------------------------------------------------------------------------------------
Years 5 - 9 40% of Earnings 40% of Net Purchase Payments*
------------------------------------------------------------------------------------------------------------------
Years 10+ 50% of Earnings 50% of Net Purchase Payments*
------------------------------------------------------------------------------------------------------------------
* Purchase Payments received after the 5th contract anniversary must remain in
the contract for at least 6 full months to be included as part of the Net
Purchase Payments for the purpose of the Maximum Earnings Advantage Amount
calculation.
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What is the Contract Year of Death?
Contract Year of Death is the number of full 12 month periods beginning with the
date your contract is issued and ending on the date of death.
What is the Earnings Advantage Percentage amount?
We determine the amount of the Earnings Advantage based upon a percentage of
earnings in your contract at the time of your death. For the purpose of this
calculation, earnings are defined as (1) minus (2) where
(1) equals the contract value on the date of death; and
(2) equals Net Purchase Payments.
What is the Maximum Earnings Advantage?
The Earnings Advantage benefit is subject to a maximum dollar amount. The
Maximum Earnings Advantage Amount is equal to a percentage of your Net Purchase
Payments.
Earning Advantage is not available if you are age 81 or older at the time we
issue your contract. Furthermore, a Continuing Spouse cannot benefit from
Earnings Advantage if he/she is age 81 or older on the Continuation Date. SEE
SPOUSAL CONTINUATION BELOW. The Earnings Advantage benefit is not payable after
the latest Annuity Date. SEE INCOME OPTIONS ON PAGE 28.
Earnings Advantage may not be available in your state or through the
broker-dealer with which your financial advisor is affiliated. See your
financial advisor for information regarding availability.
In the state of Washington only the Maximum Anniversary Value component of the
Estate Rewards death benefit is available. Neither the Purchase Payment
Accumulation nor the Earnings Advantage is available in Washington. The fee
charged for the Maximum Anniversary Value option in Washington is 0.15% of the
average daily ending value of the assets allocated to the Variable Portfolios.
WE RESERVE THE RIGHT TO MODIFY, SUSPEND OR TERMINATE THESE DEATH BENEFIT
FEATURES (IN THEIR ENTIRETY OR ANY COMPONENT) AT ANY TIME FOR PROSPECTIVELY
ISSUED CONTRACTS.
SPOUSAL CONTINUATION
If you are the original owner of the contract and the Beneficiary is your
spouse, your spouse may elect to continue the contract after your death. The
spouse becomes the new owner ("Continuing Spouse"). Generally, the contract and
its elected features, if any, remain the same. The Continuing Spouse is subject
to the same fees, charges and expenses applicable to the original owner of the
contract. A spousal continuation can only take place upon the death of the
original owner of the contract.
Upon a spouse's continuation of the contract, we will contribute to the contract
value an amount by which the death benefit that would have been paid to the
beneficiary upon the death of the original owner, exceeds the contract value
("Continuation Contribution"), if any. We calculate the Continuation
Contribution as of the date of the original owner's death. We will add the
Continuation Contribution as of the date we receive both the Continuing Spouse's
written request to continue the contract and proof of death of the original
owner in a form satisfactory to us ("Continuation Date"). If a Continuation
Contribution is added to the contract value, the age of the Continuing Spouse on
the Continuation Date and on the date of the Continuing Spouse's death will be
used in determining any future death benefits under the Contract. The
Continuation Contribution is not considered a Purchase Payment for the purposes
of any other calculations except as explained in Appendix B. SEE APPENDIX B FOR
FURTHER EXPLANATION OF THE DEATH BENEFIT CALCULATIONS FOLLOWING A SPOUSAL
CONTINUATION. To the extent that the Continuing Spouse invests in the Variable
Portfolios or MVA fixed account they will be subject to investment risk as was
the original owner.
Generally, the Continuing Spouse cannot change any contract provisions as the
new owner. However, on the Continuation Date, the Continuing Spouse may
terminate the original owner's election of the Estate Rewards and the available
death benefit will be the Standard Death Benefit. The Continuing Spouse cannot
elect to continue Earnings Advantage without also continuing the Estate Rewards.
We will terminate the Estate Rewards if the
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Continuing Spouse is age 81 or older on the Continuation Date if a Continuation
Contribution is added to the contract value, and the available death benefit
will be the Standard Death Benefit. If Estate Rewards is continued and the
Continuing Spouse dies after the latest Annuity Date, and the 5% Accumulation
option was selected, the death benefit will be the Standard Death Benefit. If
the Maximum Anniversary value option was selected and the Continuing Spouse
lives to age 90 or older, the death benefit will be the contract value. However,
if death occurs before the latest annuity date, the Continuing Spouse will still
benefit from the Earnings Advantage.
Generally, the age of the Continuing Spouse on the Continuation Date (if any
Continuation Contribution has been made) and on the date of the Continuing
Spouse's death will be used in determining any future death benefits under the
Contract. If no Continuation Contribution has been made to the contract on the
Continuation Date, the age of the spouse on the date of the original contract
issue will be used to determine any age-driven benefits. SEE APPENDIX B FOR A
DISCUSSION OF THE DEATH BENEFIT CALCULATIONS AFTER A SPOUSAL CONTINUATION.
WE RESERVE THE RIGHT TO MODIFY, SUSPEND OR TERMINATE THE SPOUSAL CONTINUATION
PROVISION (IN ITS ENTIRETY OR ANY COMPONENT) AT ANY TIME FOR PROSPECTIVELY
ISSUED CONTRACTS.
EXPENSES
--------------------------------------------------------------------------------
There are charges and expenses associated with your contract. These charges and
expenses reduce your investment return. We will not increase the contract
maintenance fee or withdrawal charges under your contract. However the
investment charges under your contract may increase or decrease. Some states may
require that we charge less than the amounts described below.
INSURANCE CHARGES
The Company deducts a mortality and expense risk charge in the amount of 1.55%,
annually of the value of your contract invested in the Variable Portfolios. We
deduct the charge daily. This charge compensates the Company for the mortality
and expense risk and the costs of contract distribution assumed by the Company.
Generally, the mortality risks assumed by the Company arise from its contractual
obligations to make income payments after the Annuity Date and to provide a
death benefit. The expense risk assumed by the Company is that the costs of
administering the contracts and the Separate Account will exceed the amount
received from the administrative fees and charges assessed under the contract.
If these charges do not cover all of our expenses, we will pay the difference.
Likewise, if these charges exceed our expenses, we will keep the difference.
WITHDRAWAL CHARGES
During the Accumulation Phase you may make withdrawals from your contract.
However, a withdrawal charge may apply. We apply a withdrawal charge upon an
early withdrawal against each Purchase Payment you put into the contract. The
withdrawal charge equals a percentage of the Purchase Payment you take out of
the contract. The contract does provide a free withdrawal amount every year. SEE
ACCESS TO YOUR MONEY ON PAGE 20. The withdrawal charge percentage declines each
year a Purchase Payment is in the contract, as follows:
YEAR 1 2 3 4
----------------- ---- ---- ---- ----
Withdrawal Charge 7% 6% 6% 0%
After a Purchase Payment has been in the contract for three complete years, the
withdrawal charge no longer applies to that Purchase Payment. When calculating
the withdrawal charge, we treat withdrawals as coming first from the Purchase
Payments that have been in your contract the longest. However, for tax purposes,
your withdrawals are considered earnings first, then Purchase Payments.
Whenever possible, we deduct the withdrawal charge from the money remaining in
your contract from each of your investment options on a pro-rata basis. If you
withdraw all of your contract value, we deduct any applicable withdrawal charges
from the amount withdrawn. We will not assess a withdrawal charge for money
withdrawn to pay a death benefit or to pay contract fees or charges. We do not
currently assess a withdrawal charge upon
26
election to receive income payments from your contract. Withdrawals made prior
to age 59 1/2 may result in tax penalties. SEE TAXES ON PAGE 34.
INVESTMENT CHARGES
Investment Management Fees
Charges are deducted from the assets of the investment portfolios underlying the
Variable Portfolio(s) for the advisory and other expenses of the portfolios. SEE
FEE TABLES ON PAGE 6.
Service Fees
Shares of certain Trusts may be subject to fees imposed under a servicing plan
adopted by that Trust pursuant to Rule 12b-1 of the Investment Company Act of
1940. The 0.15% service fee for the Anchor and SunAmerica Series Trust
portfolios and 0.25% for the Van Kampen Life Investment Trust and WM Variable
Trust portfolios is also known as a 12b-1 fee. Generally, this fee may be paid
to financial intermediaries for services provided over the life of the contract.
SEE FEE TABLE ON PAGE 6.
FOR MORE DETAILED INFORMATION ON THESE INVESTMENT CHARGES, REFER TO THE
PROSPECTUSES FOR THE ANCHOR SERIES TRUST, SUNAMERICA SERIES TRUST, VAN KAMPEN
LIFE INVESTMENT TRUST AND/OR WM VARIABLE TRUST.
CONTRACT MAINTENANCE FEE
During the Accumulation Phase, we subtract a contract maintenance fee from your
account once per year. This charge compensates us for the cost of contract
administration. If your contract value is $50,000 or more on your contract
anniversary date, we will waive the charge. This waiver is subject to change
without notice. We deduct the $35 ($30 in North Dakota) contract maintenance fee
on a pro-rata basis from your account value on your contract anniversary. In the
states of Texas and Washington a contract maintenance fee will be deducted
pro-rata from the Variable Portfolio(s) in which you are invested, only. If you
withdraw your entire contract value, we deduct the fee from that withdrawal.
TRANSFER FEE
We currently allow 15 free transfers per contract year. We charge $25 ($10 in
Pennsylvania and Texas) for each additional transfer in any contract year.
OPTIONAL DEATH BENEFIT FEES
Please see page 22 for additional information regarding the Estate Rewards and
Earnings Advantage fee.
OPTIONAL INCOME PROTECTOR FEE
Please see page 30 of this prospectus for additional information regarding the
Income Protector fee.
PREMIUM TAX
Certain states charge the Company a tax on the premiums you pay into the
contract. We deduct from your contract these premium tax charges. Currently we
deduct the charge for premium taxes when you fully surrender or annuitize the
contract. In the future, we may assess this deduction at the time you put
Purchase Payment(s) into the contract or upon payment of a death benefit.
APPENDIX D provides more information about premium taxes.
INCOME TAXES
We do not currently deduct income taxes from your contract. We reserve the right
to do so in the future.
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REDUCTION OR ELIMINATION OF CHARGES AND EXPENSES, AND ADDITIONAL AMOUNTS
CREDITED
Sometimes sales of the contracts to groups of similarly situated individuals may
lower our administrative and/or sales expenses. We reserve the right to reduce
or waive certain charges and expenses when this type of sale occurs. In
addition, we may also credit additional interest to policies sold to such
groups. We determine which groups are eligible for such treatment. Some of the
criteria we evaluate to make a determination are: size of the group; amount of
expected Purchase Payments; relationship existing between us and prospective
purchaser; nature of the purchase; length of time a group of contracts is
expected to remain active; purpose of the purchase and whether that purpose
increases the likelihood that our expenses will be reduced; and/or any other
factors that we believe indicate that administrative and/or sales expenses may
be reduced.
Anchor National may make such a determination regarding sales to its employees,
it affiliates' employees and employees of currently contracted broker-dealers;
its registered representatives and immediate family members of all of those
described.
We reserve the right to change or modify any such determination or the treatment
applied to a particular group, at any time.
INCOME OPTIONS
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ANNUITY DATE
During the Income Phase, the money in your Contract is used to make regular
income payments to you. You may switch to the Income Phase any time after your
second contract anniversary. You select the month and year in which you want
income payments to begin. The first day of that month is the Annuity Date. You
may change your Annuity Date, so long as you do so at least seven days before
the income payments are scheduled to begin. Once you begin receiving income
payments, you cannot change your Income Option. Except as discussed under Option
5, once you begin receiving income payments, you cannot otherwise access your
money through a withdrawal or surrender. Other pay out options may be available.
Contact Our Annuity Service Center for more information.
Income payments must begin on or before your 95th birthday or on your tenth
contract anniversary, whichever occurs later. If you do not choose an Annuity
Date, your income payments will automatically begin on this date (latest Annuity
Date.) Certain states may require your income payments to start earlier.
If the Annuity Date is past your 85th birthday, your contract could lose its
status as an annuity under Federal tax laws. This may cause you to incur adverse
tax consequences. In addition, certain Qualified contracts require you to take
minimum distributions after you reach age 70 1/2. SEE TAXES ON PAGE 34.
INCOME OPTIONS
Currently, this Contract offers five Income Options. Other annuity options may
be available. Please check with the Annuity Service Center for details. If you
elect to receive income payments but do not select an option, your income
payments will be made in accordance with Option 4 for a period of 10 years. For
income payments selected for joint lives, we pay according to Option 3.
We base our calculation of income payments on the life of the Annuitant and the
annuity rates set forth in your contract. As the contract owner, you may change
the Annuitant at any time prior to the Annuity Date. You must notify us if the
Annuitant dies before the Annuity Date and then designate a new Annuitant.
OPTION 1 - LIFE INCOME ANNUITY
This option provides income payments for the life of the Annuitant. Income
payments stop when the Annuitant dies.
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OPTION 2 - JOINT AND SURVIVOR LIFE ANNUITY
This option provides income payments for the life of the Annuitant and for the
life of another designated person. Upon the death of either person, we will
continue to make income payments during the lifetime of the survivor. Income
payments stop whenever the survivor dies.
OPTION 3 - JOINT AND 100% SURVIVOR LIFE ANNUITY WITH 10 OR 20 YEAR PERIOD
CERTAIN
This option is similar to Option 2 above, with an additional guarantee of
payments for at least 10 or 20 years. If the Annuitant and the Survivor die
before all of the payments have been made, the remaining payments are made to
the Beneficiary under your Contract.
OPTION 4 - LIFE ANNUITY WITH 10 OR 20 YEAR PERIOD CERTAIN
This option is similar to Option 1 above. In addition, this option provides a
guarantee that income payments will be made for at least 10 or 20 years. You
select the number of years. If the Annuitant dies before all guaranteed income
payments are made, the remaining income payments go to the Beneficiary under
your Contract.
OPTION 5 - INCOME FOR A SPECIFIED PERIOD
This option provides income payments for a guaranteed period ranging from 5 to
30 years. If the Annuitant dies before all the guaranteed income payments are
made, the remaining income payments are made to the Beneficiary under your
contract. Additionally, if variable income payments are elected under this
option, you (or the Beneficiary under the contract if the Annuitant dies prior
to all guaranteed payments being made) may redeem the contract value (in full or
in part) after the Annuity Date. The amount available upon such redemption would
be the discounted present value of any remaining guaranteed payments. The value
of an Annuity Unit, regardless of the option chosen, takes into account the
mortality and expense risk charge. Since Option 5 does not contain an element of
mortality risk, no benefit is derived from this charge.
We make income payments on a monthly, quarterly, semi-annual or annual basis.
You instruct us to send you a check or to have the payments direct deposited
into your bank account. If state law allows, we distribute annuities with a
contract value of $5,000 or less in a lump sum. Also, if the selected income
option results in annuity payments of less than $50 per payment, we may decrease
the frequency of the payments, state law allowing. See the INCOME PROTECTOR
section below for specifics relative to taking income under that feature.
ALLOCATION OF ANNUITY PAYMENTS
You can choose income payments that are fixed, variable or both. If payments are
fixed, Anchor National guarantees the amounts of each payment. If the payments
are variable, the amounts are not guaranteed. They will go up and/or down based
upon the performance of the Variable Portfolio(s) in which you invest.
FIXED OR VARIABLE INCOME PAYMENTS
If at the date when income payments begin you are invested in the Variable
Portfolio(s) only, your income payments will be variable. If your money is only
in fixed accounts at that time, your income payments will be fixed in amount. If
you are invested in both fixed and variable options at the time you begin the
Income Phase, a portion of your income payments will be fixed and a portion will
be variable.
INCOME PAYMENTS
Your income payments will vary if you are invested in the Variable Portfolio(s)
after the Annuity date depending on four factors:
- for life options, your age when payments begin,
- the value of your contract in the Variable Portfolio(s) on the Annuity
Date,
29
- the 3.5% assumed investment rate for variable income payments used in the
annuity table for the contract, and;
- the performance of the Variable Portfolio(s) in which you are invested
during the time you receive income payments.
If you are invested in both the fixed account options and the Variable
Portfolio(s) after the Annuity Date, the allocation of funds between the fixed
accounts and Variable Portfolio(s) also impacts the amount of your annuity
payments.
TRANSFERS DURING THE INCOME PHASE
During the Income Phase, one transfer per month is permitted between the
Variable Portfolios. No other transfers are allowed during the Income Phase.
DEFERMENT OF PAYMENTS
We may defer making fixed payments for up to six months, or less if required by
law. Interest is credited to you during the deferral period.
Please read the Statement of Additional Information, available upon request, for
a more detailed discussion of the income options.
INCOME PROTECTOR
You may elect to enroll in the Income Protector Program. The Income Protector
Program offers you the ability to receive a guaranteed fixed minimum retirement
income when you choose to switch to the Income Phase. Income Protector should be
regarded only as a "safety net." If you elect the Income Protector you can know
the level of minimum income that will be available to you upon annuitization,
regardless of fluctuating market conditions. In order to utilize the program,
you must follow the provisions discussed below.
The minimum level of Income Protector benefit available is generally based upon
your Purchase Payments remaining in your contract at the time you decide to
begin taking income. If available and elected, a growth rate can provide
increased levels of minimum guaranteed income. We charge a fee for the Income
Protector benefit. The amount of the fee and levels of income protection
available to you are described below. This feature may not be available in your
state. Once you have made an Income Protector election it can not be changed or
terminated. Check with your financial advisor regarding availability.
You are not required to use the Income Protector to receive income payments. The
general provisions of your contract provide other income options. However, we
will not refund fees paid for the Income Protector if you begin taking income
payments under the general provisions of your contract. In addition, if
applicable, surrender charges will be assessed upon your beginning the Income
Phase, if you annuitize under the Income Protector Program. YOU MAY NEVER NEED
TO RELY UPON INCOME PROTECTOR IF YOUR CONTRACT PERFORMS WITHIN A HISTORICALLY
ANTICIPATED RANGE. HOWEVER, PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
Certain federal tax code restrictions on the income options available to
qualified retirement investors may have an impact on your ability to benefit
from this feature. Qualified investors should read NOTE TO QUALIFIED CONTRACT
HOLDERS, below.
HOW DO WE DETERMINE THE AMOUNT OF YOUR MINIMUM GUARANTEED INCOME?
If you elect the Income Protector Program, we base the amount of minimum
retirement income available to you upon a calculation we call the Income Benefit
Base. At the time your enrollment in the Income Protector program becomes
effective, your Initial Income Benefit Base is equal to your contract value. If
elected, your participation becomes effective on the date of issue of the
contract.
The Income Benefit Base is only a calculation. It does not represent a contract
value, nor does it guarantee performance of the Variable Portfolios in which you
invest.
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Your Income Benefit Base increases if you make subsequent Purchase Payments and
decreases if you withdraw money from your contract. The exact Income Benefit
Base calculation is equal to (a) plus (b) minus (c) where:
(a) is equal to, for the first year of calculation, your contract value on
the date your participation became effective, and for each subsequent
year of calculation, the Income Benefit Base of your prior contract
anniversary, and;
(b) is equal to the sum of all subsequent Purchase Payments made into the
contract since the prior contract anniversary, and;
(c) is equal to all withdrawals and applicable fees and charges since the
last contract anniversary, in an amount proportionate to the amount by
which such withdrawals decreased your contract value. Your Income
Benefit Base may accumulate at the elected growth rate, if available,
from the date your election becomes effective through your Income
Benefit Date.
Any applicable growth rate will reduce to 0% on the anniversary immediately
after the annuitant's 90th birthday.
LEVEL OF PROTECTION
If you decide that you want the protection offered by the Income Protector
Program, you must elect the Income Protector by completing the Income Protector
Election form available through our Annuity Service Center. You must elect the
Income Protector feature at the time your contract is issued. You may only elect
one of the offered alternatives, if more than one is available, and you can
never change your election once made.
Your Income Benefit Base will begin accumulating at the applicable growth rate
on the contract anniversary following our receipt of your completed election
form. In order to obtain the benefit of the Income Protector you may not begin
the income Phase for at least ten years following your election. You may not
elect the Income Protector Program if the required waiting period before
beginning the income phase would occur later than your latest Annuity Date.
The Income Protector option(s) currently available under this contract are:
FEE AS A % OF YOUR INCOME WAITING PERIOD BEFORE THE
OPTION GROWTH RATE BENEFIT BASE INCOME PHASE
---------------------------- ---------------------------- ---------------------------- ----------------------------
Income Protector Base 0% 0.10% 10 years
ELECTING TO RECEIVE INCOME
You may elect to begin the Income Phase of your contract using the Income
Protector Program only within the 30 days after the 10th or later contract
anniversary following the effective date of your Income Protector participation.
The contract anniversary prior to your election to begin receiving income
payments is your Income Benefit Date. We calculate your Income Benefit Base as
of that date to use in determining your guaranteed minimum fixed retirement
income. To determine the minimum guaranteed retirement income available to you,
we apply your final Income Benefit Base to the annuity rates stated in your
Income Protector endorsement for the income option you select. You then choose
if you would like to receive the income annually, semi-annually, quarterly or
monthly for the time guaranteed under your selected income option. Your final
Income Benefit Base is equal to (a) minus (b) where:
(a) is your Income Benefit Base as of your Income Benefit Date, and;
(b) is any partial withdrawals of contract value and any charges applicable
to those withdrawals and any withdrawal charges otherwise applicable,
calculated as if you fully surrender your contract as of the Income
Benefit Date, and any applicable premium taxes.
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The income options available when using the Income Protector feature to receive
your retirement income are:
- Life Annuity with 10 years guaranteed, or
- Joint and 100% Survivor Life Annuity with 20 years guaranteed
At the time you elect to begin receiving income payments, we will calculate your
income payments using both your Income Benefit Base and your contract value. We
will use the same income option for each calculation; however, the annuity
factors used to calculate your income under the Income Protector feature will be
different. You will receive whichever provides a greater stream of income. If
you elect to receive income payments using the Income Protector feature your
income payments will be fixed in amount.
FEES ASSOCIATED WITH THE INCOME PROTECTOR PROGRAM
If you elect to participate in the Income Protector program we charge an annual
fee, as follows:
OPTION FEE AS A % OF YOUR INCOME BENEFIT BASE
---------------------------- ---------------------------------------
Income Protector Base 0.10%
We deduct the annual fee from your actual Contract Value. We begin deducting the
annual fee on your first contract anniversary.
Additionally, if you fully surrender your contract prior to your contract
anniversary, we will deduct the fee at the time of surrender based on your
Income Benefit Base as of the surrender date. Once elected, the Income Protector
Program and its corresponding charges may not be terminated until full surrender
or annuitization of the contract occurs.
NOTE TO QUALIFIED CONTRACT HOLDERS
Qualified contracts generally require that you select an income option that does
not exceed your life expectancy. That restriction, if it applies to you, may
limit the benefit of the Income Protector program. To utilize the Income
Protector feature, you must take income payments under one of the two income
options described above. If those income options exceed your life expectancy,
you may be prohibited from receiving your guaranteed fixed income under the
program. If you own a Qualified contract to which this restriction applies and
you elect the Income Protector program, you may pay for this minimum guarantee
and not be able to realize the benefit.
Generally, for Qualified contracts:
- for the Life Annuity with 10 years guaranteed, you must annuitize before
age 79, and;
- for the Joint and 100% Survivor Annuity with 20 years guaranteed, both
annuitants must be 70 or younger or one of the annuitants must be 65 or
younger upon annuitization. Other age combinations may be available.
You may wish to consult your tax advisor for information concerning your
particular circumstances.
The Income Protector program may not be available in all states. Check with your
financial advisor for availability in your state.
We reserve the right to modify, suspend or terminate the Income Protector
Program at any time.
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TAXES
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NOTE: WE PREPARED THE FOLLOWING INFORMATION ON TAXES AS A GENERAL DISCUSSION OF
THE SUBJECT. IT IS NOT TAX ADVICE. WE CAUTION YOU TO SEEK COMPETENT TAX ADVICE
ABOUT YOUR OWN CIRCUMSTANCES. WE DO NOT GUARANTEE THE TAX STATUS OF YOUR
ANNUITY. TAX LAWS CONSTANTLY CHANGE, THEREFORE WE CANNOT GUARANTEE THAT THE
INFORMATION CONTAINED HEREIN IS COMPLETE AND/OR ACCURATE.
ANNUITY CONTRACTS IN GENERAL
The Internal Revenue Code ("federal tax code" or "IRC") provides for special
rules regarding the tax treatment of annuity contracts. Generally, taxes on the
earnings in your annuity contract are deferred until you take the money out.
Qualified retirement investments automatically provide tax deferral regardless
of whether the underlying contract is an annuity. Different rules apply
depending on how you take the money out and whether your contract is Qualified
or Non-qualified.
If you do not purchase your contract under a pension plan, a specially sponsored
employer program or an individual retirement account, your contract is referred
to as a Non-qualified contract. A Non-qualified contract receives different tax
treatment than a Qualified contract. In general, your cost basis in a
Non-qualified 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, a specially sponsored
employer program or as an individual retirement account, your contract is
referred to as a Qualified contract. Examples of Qualified plans are: Individual
Retirement Accounts ("IRAs"), Roth IRAs, 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--NON-QUALIFIED CONTRACTS
If you make a withdrawal from a Non-qualified contract, the federal tax code
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 federal tax
code provides for a 10% penalty tax on any earnings that are withdrawn other
than in conjunction with the following circumstances: (1) after reaching age
59 1/2; (2) when paid to your Beneficiary after you die; (3) after you become
disabled (as defined in the federal tax code); (4) in a series of substantially
equal installments made for your life or for the joint lives of you and you
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. Any amount of money you take out as a withdrawal or as
income payments is taxable income. The federal tax code further provides for a
10% penalty tax on any withdrawal or income payment paid to you other than in
conjunction with the following circumstances: (1) after reaching age 59 1/2; (2)
when paid to your Beneficiary after you die; (3) after you become disabled (as
defined in the federal tax code); (4) in a series of substantially equal
installments made for your life or for the joint lives of you and your
Beneficiary; (5) to the extent such withdrawals do not exceed limitations set by
the federal tax code for amounts paid during the taxable year for medical care;
(6) to fund higher education expenses (as defined in federal tax code); (7) to
fund certain first- time home purchase expenses; and, except in the case of an
IRA; (8) when you separate from service after attaining age 55; and (9) when
paid to an alternate payee pursuant to a qualified domestic relations order.
The federal tax code 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 federal tax code); or (5) in the case of hardship. In the case of
hardship,
33
the owner can only withdraw Purchase Payments. These restrictions do not apply
to amounts transferred to another TSA contract under section 403(b) or to a
custodial account under section 403(b)(7).
TAX TREATMENT OF NON-QUALIFIED CONTRACTS OWNED BY A TRUST OR CORPORATION
A Trust or Corporation ("Non-Natural Owner") that is considering purchasing this
contract should consult a tax advisor. Generally, the IRC does not treat a
Non-qualified contract owned by a non-natural owner as an annuity contract for
Federal income tax purposes. The non-natural owner pays tax currently on the
contract's value in excess of the owner's cost basis. SEE THE STATEMENT OF
ADDITIONAL INFORMATION FOR A MORE DETAILED DISCUSSION OF THE POTENTIAL ADVERSE
TAX CONSEQUENCES ASSOCIATED WITH NON-NATURAL OWNERSHIP OF A NON-QUALIFIED
ANNUITY CONTRACT.
TAX TREATMENT OF GIFTS, PLEDGES AND/OR ASSIGNMENTS OF A NON-QUALIFIED CONTRACT
If you gift your Non-qualified contract to a person other than your spouse (or
former spouse incident to divorce) you will pay federal tax on the contract's
cash value to the extent it exceeds your cost basis. The recipient's cost basis
will be increased by the amount on which you will pay federal taxes. Also, the
IRC treats any assignment or pledge (or agreement to assign or pledge) of any
portion of a Non-qualified contract as a withdrawal. PLEASE SEE THE STATEMENT OF
ADDITIONAL INFORMATION FOR A MORE DETAILED DISCUSSION REGARDING POTENTIAL TAX
CONSEQUENCES OF GIFTING, ASSIGNING OR PLEDGING A NON-QUALIFIED CONTRACT.
MINIMUM DISTRIBUTIONS
Generally, the IRS requires that you begin taking annual distributions from
Qualified contracts by April 1, of the calendar year following the later of (1)
the calendar year in which you attain age 70 1/2 or (2) for Qualified contracts
other than IRAs the calendar year in which you retire. Minimum distributions are
not required in a Roth IRA, during your lifetime. Failure to satisfy the minimum
distribution requirements may result in a tax penalty. You should contact your
tax advisor for more information.
The IRS has issued new proposed regulations regarding required minimum
distributions from Qualified contracts. These new rules are to be effective
January 1, 2002. However, these new rules may be used in determining required
minimum distributions for 2001 by owners of IRAs, Tax-Sheltered Annuities and
pension and profit sharing plans. You should consult your Qualified plan sponsor
and your tax advisor to determine if these new rules are available for your
benefit.
You may elect to have the required minimum distribution amount on your contract
calculated and withdrawn each year under the automatic withdrawal option. You
may select either monthly, quarterly, semi-annual or annual withdrawals for this
purpose. This service is provided as a courtesy and we do not guarantee the
accuracy of our calculations. Accordingly, we recommend you consult your tax
advisor concerning your required minimum distribution. You may terminate your
election for automated minimum distribution at any time by sending a written
request to our Annuity Service Center. We reserve the right to change, modify or
discontinue the service at any time.
TAX TREATMENT OF DEATH BENEFITS
Any death benefits paid under the contract are taxable to the Beneficiary. The
rules governing the taxation of payments from an annuity contract, as discussed
above, generally apply whether the death benefits are paid as lump sum or
annuity payments. Estate taxes may also apply.
Certain enhanced death benefits may be purchased under your contract. Although
these types of benefits are used as investment protection and should not give
rise to any adverse tax effects, the IRS could take the position that some or
all of the charges for these death benefits should be treated as a partial
withdrawal from the contract. In such case, the amount of the partial withdrawal
may be includable in taxable income and subject to the 10% penalty if the owner
is under 59 1/2.
If you own a Qualified contract and purchase these enhanced death benefits, the
IRS may consider these benefits "incidental death benefits." The IRC imposes
limits on the amount of the incidental death benefits allowable for
34
Qualified contracts. If the death benefit(s) selected by you are considered to
exceed these limits, the benefit(s) could result in taxable income to the owner
of the Qualified contract. Furthermore, the IRC provides that the assets of an
IRA (including a Roth IRA) may not be invested in life insurance, but may
provide, in the case of death during the Accumulation Phase, for a death benefit
payment equal to the greater of Purchase Payments or contract value. This
Contract offers death benefits, which may exceed the greater of Purchase
Payments or contract value. If the IRS determines that these benefits are
providing life insurance, the contract may not qualify as an IRA (including Roth
IRAs). You should consult your tax adviser regarding these features and benefits
prior to purchasing a contract.
DIVERSIFICATION
The IRC imposes certain diversification requirements on the underlying
investments for a variable annuity. We believe that the underlying Portfolios'
management monitors the variable Portfolios so as to comply with these
requirements. To be treated as a variable annuity for tax purposes, the
underlying investments must meet 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 underlying 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.
PERFORMANCE
--------------------------------------------------------------------------------
We advertise the Cash Management Portfolio's yield and effective yield. In
addition, the other Variable Portfolios advertise total return, gross yield and
yield-to-maturity. These figures represent past performance of the Variable
Portfolios. These performance numbers do not indicate future results.
When we advertise performance for periods prior to the date the contracts were
first issued, we derive the figures from the performance of the corresponding
portfolios for the Trusts, if available. We modify these numbers to reflect
charges and expenses as if the contract was in existence during the period
stated in the advertisement. Figures calculated in this manner do not represent
actual historic performance of the particular Variable Portfolio.
Consult the Statement of Additional Information for more detailed information
regarding the calculation of performance data. The performance of each Variable
Portfolio may also be measured against unmanaged market indices. The indices we
use include but are 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. We may compare the Variable
Portfolios' performance 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 Variable Annuity Research
& Data Service ("VARDS").
Anchor National may also advertise the rating and other information assigned to
it by independent industry ratings organizations. Some of those organizations
are A.M. Best Company ("A.M. Best"), Moody's Investor's Service ("Moody's"),
Standard & Poor's Insurance Rating Services ("S&P"), and Fitch IBCA 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 and
health insurance industry. S&P's and Fitch IBCA Duff & Phelps' ratings measure
the ability of an insurance company to meet its obligations under insurance
policies it issues. These two ratings do not measure the insurer's ability to
meet non-policy obligations. Ratings in general do not relate to the performance
of the Variable Portfolios.
35
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 and its affiliates, SunAmerica Life Insurance Company, First
SunAmerica Life Insurance Company, SunAmerica Asset Management Corporation, and
the SunAmerica Financial Network, Inc. (comprising six wholly owned
broker-dealers), specialize in retirement savings and investment products and
services. Business focuses include fixed and variable annuities, mutual funds
and broker-dealer services.
THE SEPARATE ACCOUNT
Anchor National originally established a separate account, Variable Separate
Account (the "Separate Account"), under Arizona law on January 1, 1996 when it
assumed the separate account, originally established under California law on
June 25, 1981. The Separate Account is registered with the SEC as a unit
investment trust under the Investment Company Act of 1940, as amended.
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 conducted by Anchor National. Income gains and losses (realized
and unrealized) resulting from 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. Assets in the Separate Account are not guaranteed by
Anchor National.
CUSTODIAN
State Street Bank and Trust Company, 255 Franklin Street, Boston, Massachusetts
02110, serves as the custodian of the assets of the Separate Account. Anchor
National pays State Street Bank for services provided, based on a schedule of
fees.
THE GENERAL ACCOUNT
Money allocated to the fixed account options goes into Anchor National's general
account. The general account consists 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 holders
as well as all of its creditors. The general account funds are invested as
permitted under state insurance laws.
DISTRIBUTION OF THE CONTRACT
Registered representatives of broker-dealers sell the contract. We pay
commissions to these representatives for the sale of the contracts. We do not
expect the total commissions to exceed 8.0% of your Purchase Payments. We may
also pay a bonus to representatives for contracts which stay active for a
particular period of time, in addition to standard commissions. We do not deduct
commissions paid to registered representatives directly from your Purchase
Payments.
From time to time, we may pay or allow additional promotional incentives in the
form of cash or other compensation. We reserve the right to offer these
additional incentives only to certain broker-dealers that sell or are expected
to sell, certain minimum amounts of the contract, or other contracts offered by
us. Promotional incentives may change at any time.
WM Funds Distributor, 12009 Foundation Place, Suite 350, Gold River, California
95670 distributes the contracts. WM Funds Distributor is a registered as a
broker-dealer under the Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc.
No underwriting fees are paid in connection with the distribution of the
contracts.
36
ADMINISTRATION
We are responsible for the administrative servicing of your contract. During the
Accumulation Phase, you will receive confirmation of transactions within your
contract. Transactions made pursuant to contractual or systematic agreements,
such as deduction of the annual maintenance fee and dollar cost averaging, may
be confirmed quarterly. Purchase payments received through the Automatic Payment
Plan or a salary reduction arrangement, may also be confirmed quarterly. For all
other transactions, we send confirmations immediately.
During the Accumulation and Income Phases, you will receive a statement of your
transactions over the past quarter and a summary of your account values. Please
contact our Annuity Service Center at 1-877-311-WMVA (9682), if you have any
comment, question or service request.
We send out transaction confirmations and quarterly statements. It is your
responsibility to review these documents carefully and notify us of any
inaccuracies immediately. We investigate all inquiries. To the extent that we
believe we made an error, we retroactively adjust your contract, provided you
notify us within 30 days of receiving the transaction confirmation or quarterly
statement. Any other adjustments we deem warranted are made as of the time we
receive notice of the error.
LEGAL PROCEEDINGS
There are no pending legal proceedings affecting the Separate Account. Anchor
National and its subsidiaries engage in various kinds of routine litigation. In
management's opinion, these matters are not of material importance to their
respective total assets nor are they material with respect to the Separate
Account.
OWNERSHIP
The WM Diversified Strategies(III) Variable Annuity is a Flexible Payment Group
Deferred Annuity contract. We issue a group contract to a contract holder for
the benefit of the participants in the group. As a participant in the group, you
will receive a certificate which evidences your 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 is available instead. Such a contract is identical to the contract
described in this prospectus, with the exception that we issue it directly to
the owner.
INDEPENDENT ACCOUNTANTS
The audited consolidated financial statements of Anchor National at December 31,
2000 and 1999, for the years ended December 31, 2000 and 1999, for the three
months ended December 31, 1998 and for the year ended September 30, 1998 are
incorporated herein by reference in this prospectus in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting. As of the date of this
prospectus, sales of WM Diversified Strategies(III) Variable Annuity have just
begun; therefore there are no separate account financial statements incorporated
by reference.
REGISTRATION STATEMENT
A registration statement has been filed with the SEC under the Securities Act of
1933 relating to the contract. This prospectus does not contain all the
information in the registration statement as permitted by SEC regulations. The
omitted information can be obtained from the SEC's principal office in
Washington, D.C., upon payment of a prescribed fee.
37
TABLE OF CONTENTS OF
STATEMENT OF ADDITIONAL INFORMATION
Additional information concerning the operations of the separate account is
contained in a Statement of Additional Information ("SAI"), which is available
without charge upon written request addressed to us at our Annuity Service
Center, P.O. Box 54299, Los Angeles, California 90054-0299 or by calling (800)
445-SUN2. The contents of the SAI are tabulated below.
Separate Account............................................ 3
General Account............................................. 4
Performance Data............................................ 4
Income Payments............................................. 9
Annuity Unit Values......................................... 10
Taxes....................................................... 13
Distribution of Contracts................................... 18
Financial Statements........................................ 18
38
APPENDIX A - MARKET VALUE ADJUSTMENT ("MVA")
--------------------------------------------------------------------------------
The MVA reflects the impact that changing interest rates have on the value of
money invested at a fixed interest rate. The longer the period of time remaining
in the term you initially agreed to leave your money in the fixed investment
option, the greater the impact of changing interest rates. The impact of the
market value adjustment can be either positive or negative, and is computed by
multiplying the amount withdrawn, transferred or annuitized by the following
factor:
(N/12)
[(1+I/(1+J+L)] - 1
The MVA formula
may differ in certain states
where:
I is the interest rate you are earning on the money invested in
the fixed investment option;
J is the interest rate then currently available for the period of
time equal to the number of years remaining in the term you initially agreed to
leave your money in the fixed investment option; and
L is equal to 0.005, except in Florida where it is equal to
0.0025.
N is the number of full months remaining in the term you initially
agreed to leave your money in the fixed investment option.
EXAMPLES OF THE MVA
The examples below assume the following:
(1) You made an initial Purchase Payment of $10,000 and allocated it to the
3-year fixed investment option at a rate of 5%;
(2) You make a partial withdrawal of $4,000 when 1 year (12 months) remain
in the 3-year term you initially agreed to leave your money in the fixed
investment option (N=12); and
(3) You have not made any other transfers, additional Purchase Payments, or
withdrawals.
No withdrawal charges are reflected because your Purchase Payment has been in
the contract for three full years. If a withdrawal charge applies, it is
deducted before the MVA. The MVA is assessed on the amount withdrawn less any
withdrawal charges.
POSITIVE ADJUSTMENT
Assume that on the date of withdrawal, the interest rate in effect for a new
Purchase Payments in the 3-year fixed investment option is 4%.
The MVA factor is
(N/12)
= [(1+I/(1+J+0.005)] - 1
(12/12)
= [(1.05)/(1.04+0.005)] - 1
(1)
= (1.004785) - 1
= 1.004785 - 1
= +0.004785
The requested withdrawal amount is multiplied by the MVA factor to determine the
MVA:
$4,000 X (+0.004785) = +$19.14
$19.14 represents the MVA that would be added to your withdrawal.
A-1
NEGATIVE ADJUSTMENT
Assume that on the date of withdrawal, the interest rate in effect for new
Purchase Payments in the 3-year fixed investment option is 6%.
The MVA factor is
(N/12)
= [(1+I)/(1+J+0.005)] - 1
(12/12)
= [(1.05)/(1.06+0.005)] - 1
(1)
= (0.985915) - 1
= 0.985915 - 1
= -0.014085
The requested withdrawal amount is multiplied by the MVA factor to determine the
MVA:
$4,000 X (-0.014085) = -$56.34
$56.34 represents the MVA that will be deducted from the money remaining in the
3-year fixed investment option.
A-2
APPENDIX B - DEATH BENEFITS FOLLOWING SPOUSAL CONTINUATION
--------------------------------------------------------------------------------
The term "Continuation Net Purchase Payment" is used frequently to describe the
death benefit options payable to the beneficiary of a Continuing Spouse. We
define Continuation Net Purchase Payment as Net Purchase Payments made as of the
Continuation Date plus any Purchase Payments recorded after the Continuation
Date; and reduced for any withdrawals recorded after the Continuation Date, in
the same proportion that the withdrawal reduced the contract value on the date
of the withdrawal. For the purposes of calculating Continuation Net Purchase
Payments, the amount that equals the contract value on the Continuation Date,
including the Continuation Contribution is considered a Purchase Payment. If the
Continuing Spouse makes no additional Purchase Payments or withdrawals,
Continuation Net Purchase Payments equal the contract value on the Continuation
Date, including the Continuation Contribution. All other capitalized terms have
the meanings defined in the glossary and/or prospectus.
STANDARD DEATH BENEFIT PAYABLE UPON CONTINUING SPOUSE'S DEATH
I. If the Standard Death Benefit is applicable upon the Continuing Spouse's
death and a Continuation Contribution was made we will pay the beneficiary
the greater of:
1.Continuation Net Purchase Payments compounded at a 3% annual growth
rate from the Continuation Date until the earlier of age 75 or the
date of death of the Continuing Spouse, plus any Purchase Payments
recorded after the earlier of age 75 or the date of death of the
Continuing Spouse; and reduced for any withdrawals recorded after the
earlier of age 75 or the date of death, in the same proportion that
the withdrawal reduced the contract value on the date of the
withdrawal.
2.The contract value on the date we receive all required paperwork and
satisfactory proof of death.
II.If the Standard Death Benefit is applicable upon the Continuing Spouse's
death and no Continuation Contributions was made we will pay the beneficiary
the greater of:
1.Net Purchase Payments compounded at a 3% annual growth rate from the
date of issue until the earlier of age 75 or the date of death, plus
any Purchase Payments recorded after the earlier of age 75 or the date
of death; and reduced for any withdrawals recorded after the earlier
of age 75 or the date of death, in the same proportion that the
withdrawal reduced the contract value on the date of withdrawal.
2.The contract value on the date we receive all required paperwork and
satisfactory proof of death.
ESTATE REWARDS DEATH BENEFIT PAYABLE UPON CONTINUING SPOUSE'S DEATH
If Estate Rewards is applicable upon the Continuing Spouse's death, we will pay
the Beneficiary the applicable death benefit under Option 1 or 2.
OPTION 1 - 5% ACCUMULATION:
I. If the 5% Accumulation Option is selected and a Continuation Contribution
was made the death benefit is the greater of:
a.The contract value on the date we receive all required paperwork and
satisfactory proof of the Continuing Spouse's death; or
b.Continuation Net Purchase Payments made from the Continuation Date
including the Continuation Contribution, compounded to the earlier of
the Continuing Spouse's 80th birthday or the date of death at a 5%
annual growth rate, plus any Purchase Payments recorded after the 80th
birthday or the date of death; and reduced for any withdrawals
recorded after the 80th birthday or the date of death, in the same
proportion that the withdrawal reduced the contract value on the date
of the withdrawal, up to a maximum benefit of two times the
Continuation Net Purchase Payments.
B-1
II. If 5% Accumulation Option is selected and no Continuation Contribution was
made:
a.The contract value on the date we receive all required paperwork and
satisfactory proof of Continuing Spouse's death; or
b.Net Purchase Payments made from the date of issue compounded to the
earlier of the Continuing Spouse's 80th birthday or the date of death
at a 5% annual growth rate, plus any Purchase Payments recorded after
the 80th birthday or the date of death; and reduced for any
withdrawals recorded after the 80th birthday or the date of death, in
the same proportion that the withdrawal reduced the contract value on
the date of the withdrawal, up to a maximum of two times the Net
Purchase Payments.
If the Continuing Spouse dies after the latest Annuity Date and the 5%
Accumulation option applied, any death benefit payable under the contract will
be the Standard Death Benefit as described above. The Continuing Spouse's
beneficiary will not receive any benefit from Seasons Estate Advantage.
OPTION 2 - MAXIMUM ANNIVERSARY VALUE:
III.If the Maximum Anniversary Value option is selected and if the Continuing
Spouse is younger than age 90 at the time of death and a Continuation
Contribution was made, the death benefit is the greatest of:
a.Continuation Net Purchase Payments; or
b.The contract value on the date we receive all required paperwork and
satisfactory proof of the Continuing Spouse's death; or
c.The maximum anniversary value on any contract anniversary (of the
original issue date) occurring after the Continuation Date but prior
to the Continuing Spouse's 81st birthday. The anniversary value equals
the value on the contract anniversary plus any Purchase Payments
recorded after that anniversary; and reduced for any withdrawals
recorded after that anniversary, in the same proportion that the
withdrawal reduced the contract value on the date of the withdrawal.
IV.If the Maximum Anniversary Value option is selected and no Continuation
Contribution was made the death benefit is the greatest of:
a.Net Purchase Payments; or
b.The contract value on the date we receive all required paperwork and
satisfactory proof of the Continuing Spouse's death; or
c.The maximum anniversary value on any contract anniversary (of the
original issue date) occurring after the issue date but before the
Continuing Spouse's 81st birthday. The anniversary value equals the
value on the contract anniversary plus any Purchase Payments recorded
after that anniversary; and reduced for any withdrawals recorded after
that anniversary, in the same proportion that the withdrawal reduced
the contract value on the date of the withdrawal.
If the Continuing Spouse is age 90 or older at the time of death and the Maximum
Anniversary Value option applied, the death benefit will be equal to the
contract value at the time we receive all required paperwork and satisfactory
proof of death. The Continuing Spouse's beneficiary will not receive any benefit
from Estate Rewards. However, the Continuing Spouse's beneficiary may still
receive a benefit from Earnings Advantage if the date of death is prior to the
latest annuity date.
EARNINGS ADVANTAGE BENEFIT FOR SPOUSAL CONTINUATION:
The Earnings Advantage benefit may increase the death benefit amount. The
Earnings Advantage benefit is only available if the original owner elected
Earnings Advantage and it has not been discontinued or terminated. If the
Continuing Spouse had earnings in the contract at the time of his/her death, we
will add a percentage of those earnings (the "Earnings Advantage Percentage"),
subject to a maximum dollar amount (the "Maximum Earnings Advantage
Percentage"), to the death benefit payable.
B-2
The Contract Year of Death (from Continuation Date forward) will determine the
Earnings Advantage Percentage and the Maximum Earnings Advantage amount, as set
forth below:
--------------------------------------------------------------------------------------------
EARNINGS ADVANTAGE
CONTRACT YEAR OF DEATH PERCENTAGE MAXIMUM EARNINGS ADVANTAGE PERCENTAGE
--------------------------------------------------------------------------------------------
Years 0 - 4 25% of earnings 25% of Continuation Net Purchase Payments
--------------------------------------------------------------------------------------------
Years 5 - 9 40% of earnings 40% of Continuation Net Purchase Payments*
--------------------------------------------------------------------------------------------
Years 10+ 50% of earnings 50% of Continuation Net Purchase Payments*
--------------------------------------------------------------------------------------------
*PURCHASE PAYMENTS RECEIVED AFTER THE 5TH CONTRACT ANNIVERSARY MUST REMAIN IN
THE CONTRACT FOR AT LEAST SIX FULL MONTHS AT THE TIME OF YOUR DEATH TO BE
INCLUDED AS PART OF CONTINUATION NET PURCHASE PAYMENTS FOR PURPOSES OF THE
MAXIMUM EARNINGS ADVANTAGE CALCULATION.
What is the Contract Year of Death?
Contract Year of Death is the number of full 12 month periods starting on the
Continuation Date and ending on the Continuing Spouse's date of death.
What is the Earnings Advantage amount?
We determine the Earnings Advantage amount based upon a percentage of earnings
in the contract at the time of the Continuing Spouse's death. For the purpose of
this calculation, earnings are defined as (1) minus (2) where
(1) equals the contract value on the Continuing Spouse's date of death;
(2) equals the Continuation Net Purchase Payment(s).
What is the Maximum Earnings Advantage amount?
The Earnings Advantage amount is subject to a maximum. The Maximum Earnings
Advantage amount is a percentage of the Continuation Net Purchase Payments.
The Earnings Advantage benefit will only be paid if the Continuing Spouse's date
of death is prior to the latest Annuity Date.
WE RESERVE THE RIGHT TO MODIFY, SUSPEND OR TERMINATE THE SPOUSAL CONTINUATION
PROVISION (IN ITS ENTIRETY OR ANY COMPONENT) AT ANY TIME.
B-3
APPENDIX C
--------------------------------------------------------------------------------
HYPOTHETICAL EXAMPLE OF THE OPERATION OF THE INCOME PROTECTOR PROGRAM:
This table assumes a $100,000 initial investment in a Non-qualified contract,
the election of the optional Income Protector Program at contract issue, with no
withdrawals, additional payments or premium taxes, no election of Estate Rewards
or Earnings Advantage.
-----------------------------------------------------------------------------------------------------------------------------
ANNUAL INCOME IF YOU ANNUITIZE ON THE FOLLOWING CONTRACT ANNIVERSARY
IF AT ISSUE YOU 10 11 12 15 19 20
ARE... 1-8 (AGE 70) (AGE 71) (AGE 72) (AGE 75) (AGE 79) (AGE 80)
-----------------------------------------------------------------------------------------------------------------------------
MALE N/A 6,672 6,864 7,080 7,716 8,616 8,832
AGE 60*
-----------------------------------------------------------------------------------------------------------------------------
FEMALE N/A 5,880 6,060 6,252 6,900 7,860 8,112
AGE 60*
-----------------------------------------------------------------------------------------------------------------------------
MALE, AGE 60 N/A 5,028 5,136 5,244 5,544 5,868 5,928
FEMALE, AGE 60**
-----------------------------------------------------------------------------------------------------------------------------
* Life Annuity with 10 Year Period Certain
** Joint and 100% Survivor Annuity with 20 Year Period Certain
The Income Protector may not be available in your state. Please consult your
financial adviser for information regarding availability of this program in your
state.
C-1
APPENDIX D - 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.
QUALIFIED NON-QUALIFIED
STATE CONTRACT CONTRACT
----- --------- -------------
California.................................................. 0.50% 2.35%
Maine....................................................... 0% 2.00%
Nevada...................................................... 0% 3.50%
South Dakota................................................ 0% 1.25%
West Virginia............................................... 1.00% 1.00%
Wyoming..................................................... 0% 1.00%
D-1
Please forward a copy (without charge) of the WM Diversified Strategies(III)
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 52499, Los Angeles, California 90054-0299
PART II
-------
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
-------------------------------------------
The following table sets forth the expenses in connection with the issuance
and distribution of the securities being registered, other than underwriting
discounts and commissions. All of the amounts shown are estimates, except the
SEC registration fee.
SEC registration fee ................................. $ 24,338.10
Printing and engraving ............................... $ 50,000
Legal fees and expenses .............................. $ 10,000
Rating agency fees ................................... $ 7,500
Miscellaneous ........................................ $ 10,000
-----------
Total ............................................ $101,338.10
Item 15. Indemnification of Directors and Officers.
------------------------------------------
Section 10-851 of the Arizona Corporations and Associations law permits the
indemnification of directors, officers, employees and agents of Arizona
corporations. Article Eight of the Company's Restated Articles of Incorporation,
as amended and restated (the "Articles") and Article Five of the Company's
By-Laws ("By-Laws") authorize the indemnification of directors and officers to
the full extent required or permitted by the Laws of the State of Arizona, now
or hereafter in force, whether such persons are serving the Company, or, at its
request, any other entity, which indemnification shall include the advance of
expenses under the procedures and to the full extent permitted by law. In
addition, the Company's officers and directors are covered by certain directors'
and officers' liability insurance policies maintained by the Company's parent.
Reference is made to section 10-851 of the Arizona Corporations and Associations
Law, Article Eight of the Articles, and Article Five of the By-Laws, which are
incorporated herein by reference.
Item 16. Exhibits and Financial Statement Schedules.
-------------------------------------------
Exhibit No. Description
(1) Underwriting Agreement***
(2) Plan of Acquisition, Reorganization,
Arrangement, Liquidation or Succession**
(3) (a) Articles of Incorporation***
(b) By-Laws+
(4) (a) Vista Capital Advantage
Fixed and Variable Contract***
(b) Application for Contract***
(5) Opinion of Counsel re: Legality***
(6) Opinion re Discount on Capital Shares**
(7) Opinion re Liquidation Preference**
(8) Opinion re Tax Matters**
(9) Voting Trust Agreement**
(10) Material Contracts**
(11) Statement re Computation of Per Share
Earnings**
(12) Statement re Computation of Ratios**
(14) Material Foreign Patents**
(15) Letter re Unaudited Financial Information**
(16) Letter re Change in Certifying Accountant**
(21) Subsidiaries of Registrant***
(23) (a) Consent of Independent Accountants*
(b) Consent of Attorney***
(24) Powers of Attorney*****
(25) Statement of Eligibility of Trustee**
(26) Invitation for Competitive Bids**
(27) Financial Data Schedule****
(28) Information Reports Furnished to State
Insurance Regulatory Authority**
(29) Other Exhibits**
* Filed Herewith
** Not Applicable
*** Incorporated by Reference to
Post-Effective Amendment No. 3
to Registration Statement
No. 33-81476 on Form S-1
filed on 12-24-97.
**** Incorporated by Reference to
Post-Effective Amendment No. 5
to Registration Statement
No. 33-81476 on Form S-1 filed
on 12-24-98.
***** Incorporated by Reference to Post-
Effective Amendment 9 to
Registration Statement No. 33-81476
on Form S-3 filed on December 19,
2000
+ Incorporated by Reference to
Post-Effective Amendment 10 to this
Registration Statement on
April 10, 2001.
Item 17. Undertakings.
------------
The undersigned registrant, Anchor National Life Insurance
Company, hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement
to include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, State of California on this 24th
day of October, 2001.
By: ANCHOR NATIONAL LIFE INSURANCE COMPANY
By: /s/ JAY S. WINTROB
-----------------------------------------
Jay S. Wintrob
President
Pursuant to 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.
SIGNATURE TITLE DATE
--------- ----- ----
JAY S. WINTROB* Chief Executive Officer,
--------------------- President & Director October 24, 2001
Jay S. Wintrob (Principal Executive Officer)
N. SCOTT GILLIS* Senior Vice President & October 24, 2001
--------------------- Director
N. Scott Gillis (Principal Financial Officer)
JAMES R. BELARDI* Senior Vice President & October 24, 2001
--------------------- Director
James R. Belardi
JANA W. GREER* Senior Vice President & October 24, 2001
--------------------- Director
Jana W. Greer
MAURICE S. HEBERT* Vice President & Controller October 24, 2001
--------------------- (Principal Accounting Officer)
Maurice S. Hebert
MARC H. GAMSIN* Senior Vice President & October 24, 2001
---------------------- Director
Marc H. Gamsin
By: /s/ CHRISTINE A. NIXON October 24, 2001
-----------------------
Christine A. Nixon
Attorney-in-Fact
Date: October 24, 2001
EXHIBIT INDEX
Number Description
------ -----------
23(a) Consent of Independent Accountants
EX-23.(A)
3
v74068a4ex23-a.txt
EXHIBIT 23(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
January 31, 2001 appearing on page F-2 of Anchor National Life Insurance
Company's Annual Report on Form 10-K for the year ended December 31, 2000. We
also consent to the reference to us under the heading "Independent Accountants"
in such Prospectus.
PricewaterhouseCoopers LLP
Los Angeles, California
October 24, 2001