-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BNslK1AwjC0gos5SBE7W2VUBCzxiurBw+q/zwouuaWiknUVZtgC8Mxh945qPOtC4 qKXSjPWj5TRWRiww47uu4A== 0000950148-99-000686.txt : 19990403 0000950148-99-000686.hdr.sgml : 19990403 ACCESSION NUMBER: 0000950148-99-000686 CONFORMED SUBMISSION TYPE: POS AM PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19990401 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: SEC FILE NUMBER: 333-18333 FILM NUMBER: 99584553 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 POS AM 1 As filed with the Securities and Exchange Commission on March 31, 1999 Registration No. 333-18333 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------- POST-EFFECTIVE AMENDMENT NO. 7 ON FORM S-3 TO FORM S-1 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) Susan L. Harris, 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 sale 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 being 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. ================================================================================ 2 LOGO THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT POINTS THAT YOU SHOULD KNOW AND CONSIDER BEFORE PURCHASING THE POLARISII VARIABLE ANNUITY. THE ANNUITY IS MORE FULLY DESCRIBED IN THE PROSPECTUS. PLEASE READ THE PROSPECTUS CAREFULLY. June 1, 1999 - ---------------------------------------------------------------- - ---------------------------------------------------------------- 1. THE POLARISII VARIABLE ANNUITY - ---------------------------------------------------------------- - ---------------------------------------------------------------- The PolarisII Variable Annuity is a contract between you and Anchor National Life Insurance Company. It is designed to help you invest on a tax-deferred basis and meet long-term financial goals, such as retirement funding. Tax deferral means all your money, including the amount you would otherwise pay in current income taxes, remains in your contract to generate more earnings. Your money could grow faster than it would in a comparable taxable investment. PolarisII offers a diverse selection of money managers and investment options. You may divide your money among any or all 27 variable portfolios and 7 fixed account options. To the extent you invest in the variable portfolios, your investment is not guaranteed. The value of your PolarisII contract can fluctuate up and down, based on the performance of the underlying investments you select and you may experience a loss. The variable portfolios offer professionally managed investment choices with goals ranging from capital preservation to aggressive growth. Your choices for the various investment options are found on the next page. The contract also offers 7 fixed account options, for different time periods. Each may have a different interest rate. Interest rates are guaranteed by Anchor National. Like most annuities, the contract has an accumulation phase and an income phase. During the accumulation phase, you invest money in your contract. Your earnings are based on the investment performance of the variable portfolios to which your money is allocated and/or the interest rate(s) earned on the fixed account option(s) in which you invest. You may withdraw money from your contract during the accumulation phase. However, as with other tax-deferred investments, you will pay taxes on earnings and untaxed contributions when you withdraw them. A federal tax penalty may apply if you make withdrawals before age 59 1/2. During the income phase, you may receive income payments from your annuity. Your income payments may be fixed in dollar amount, vary with investment performance or a combination of both, depending on where your money is allocated. Among other factors, the amount of money you are able to accumulate in your contract during the accumulation phase will affect the amount of your income payments during the income phase. - ---------------------------------------------------------------- - ---------------------------------------------------------------- 2. INCOME OPTIONS - ---------------------------------------------------------------- - ---------------------------------------------------------------- You can select from one of five income options: (1) payments for your lifetime; (2) payments for your lifetime and your survivor's lifetime; (3) payments for your lifetime and your survivor's lifetime, but for not less than 10 or 20 years; (4) payments for your lifetime, but for not less than 10 or 20 years; and (5) payments for a specified period of 5 to 30 years. You will also need to decide when your income payments begin and if you want your income payments to fluctuate with investment performance or remain constant. Once you begin receiving income payments, you cannot change your income option. If your contract is part of a non-qualified retirement plan (one that is established with after-tax dollars), payments during the income phase are considered partly a return of your original investment. The "original investment" part of each payment is not taxable as income. For contracts which are part of a qualified retirement plan using before-tax dollars, the entire income payment is taxable as income. In addition to the above income options, you may elect to take income payments under the income protector feature, subject to the provisions thereof. - ---------------------------------------------------------------- - ---------------------------------------------------------------- 3. PURCHASING A POLARISII VARIABLE ANNUITY CONTRACT - ---------------------------------------------------------------- - ---------------------------------------------------------------- You can buy a contract through your financial representative, who can also help you complete the proper forms. For non-qualified contracts, the minimum initial purchase payment is $5,000 and subsequent amounts of $500 or more may be added to your contract at any time during the accumulation phase. For qualified contracts, the minimum initial purchase payment is $2,000 and subsequent amounts of $250 or more may be added to your contract at any time during the accumulation phase. You may elect to participate in the principal rewards program when you apply for your contract. Under this program, we add an amount to your contract (an "initial payment enhancement") each time you invest a purchase payment. Additionally, we may also pay an amount to your contract at a future date (a "deferred payment enhancement"). Payment enhancement amounts are calculated as a percentage of each purchase payment. The principal rewards program may not be available through your broker-dealer. Please check with your financial representative regarding availability of this program. 3 ---------------------------------------------------------------- ---------------------------------------------------------------- 4. INVESTMENT OPTIONS ---------------------------------------------------------------- ---------------------------------------------------------------- You may allocate money to the following variable portfolios of the Anchor Series Trust and/or the SunAmerica Series Trust: ANCHOR SERIES TRUST MANAGED BY WELLINGTON MANAGEMENT COMPANY, LLP - Capital Appreciation Portfolio - Growth Portfolio - Natural Resources Portfolio - Government and Quality Bond Portfolio SUNAMERICA SERIES TRUST MANAGED BY ALLIANCE CAPITAL MANAGEMENT L.P. - Global Equities Portfolio - Alliance Growth Portfolio - Growth-Income Portfolio MANAGED BY DAVIS SELECTED ADVISERS, L.P. - Venture Value Portfolio - Real Estate Portfolio MANAGED BY FEDERATED INVESTORS - Federated Value Portfolio - Utility Portfolio - Corporate Bond Portfolio MANAGED BY GOLDMAN SACHS ASSET MANAGEMENT/ GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL - Asset Allocation Portfolio - Global Bond Portfolio MANAGED BY MASSACHUSETTS FINANCIAL SERVICES COMPANY - MFS Mid-Cap Growth - MFS Growth and Income Portfolio - MFS Total Return Portfolio MANAGED BY MORGAN STANLEY ASSET MANAGEMENT - International Diversified Equities Portfolio - Worldwide High Income Portfolio MANAGED BY PUTNAM INVESTMENT MANAGEMENT, INC. - Putnam Growth Portfolio - International Growth and Income Portfolio - Emerging Markets Portfolio MANAGED BY SUNAMERICA ASSET MANAGEMENT CORP. - Aggressive Growth Portfolio - "Dogs" of Wall Street Portfolio - SunAmerica Balanced Portfolio - High-Yield Bond Portfolio - Cash Management Portfolio You may also allocate money to the 1-year fixed account option or the 3, 5, 7 and 10-year market value adjustment ("MVA") fixed account options and, under certain circumstances, the 6-month and 1-year Dollar Cost Averaging ("DCA") fixed account options. The interest rates applicable for these fixed account options may differ from time to time, however, we will never credit less than a 3% annual effective rate. Once established, the rate will not change during the selected period. Your contract value will be adjusted up or down for withdrawals or transfers from the 3, 5, 7 and 10-year fixed account options prior to the end of the guarantee period. ---------------------------------------------------------------- ---------------------------------------------------------------- 5. EXPENSES ---------------------------------------------------------------- ---------------------------------------------------------------- Each year, we deduct a $35 contract maintenance fee ($30 in North Dakota) from your contract. We also deduct insurance charges which equal 1.52% annually of the average daily value of your contract allocated to the variable portfolios. As with other professionally managed investments, there are investment charges imposed on contracts with money allocated to the variable portfolios. We estimate these fees to range from .58 to 1.90. If you take money out of your contract, you may be assessed a withdrawal charge which is a percentage of purchase payments. The percentage declines over the time the money is in the contract. The withdrawal charge schedule also varies dependent upon whether you elect to participate in the principal rewards program when you purchase your contract. The two withdrawal charge schedules are as follows: WITHDRAWAL CHARGE WITHOUT THE PRINCIPAL REWARDS PROGRAM (SCHEDULE A)
- ----------------------------------------------------------------------------------------- Year 1 2 3 4 5 6 7 8 - ----------------------------------------------------------------------------------------- WITHDRAWAL CHARGE 7% 6% 5% 4% 3% 2% 1% 0% - -----------------------------------------------------------------------------------------
WITHDRAWAL CHARGE WITH THE PRINCIPAL REWARDS PROGRAM (SCHEDULE B)
- ----------------------------------------------------------------------------------------------------------- Year 1 2 3 4 5 6 7 8 9 10 - ----------------------------------------------------------------------------------------------------------- WITHDRAWAL CHARGE 9% 9% 8% 7% 6% 5% 4% 3% 2% 0% - -----------------------------------------------------------------------------------------------------------
Each year, you are allowed to make 15 transfers without charge. After your first 15 free transfers, a $25 transfer fee ($10 in Pennsylvania and Texas) applies to each subsequent transfer. In a limited number of states, you may also be assessed a state premium tax of up to 3.5% depending upon the state. The following chart is designed to help you understand the charges in your contract. The column "Total Annual Charges" shows the total of the 1.52% insurance charges, the $35 contract maintenance fee and the investment charges for each variable portfolio. We converted the contract maintenance fee to a percentage using an assumed contract size of $40,000. The actual impact of this charge on your contract may differ from this percentage. The next two columns show two examples of the charges you would pay under the contract. The examples assume that you invested $1,000 in a contract which earns 5% annually and that you withdraw your money: (1) at the end of year 1, and (2) at the end of year 10. The premium tax is assumed to be 0% in both examples. 4
- ----------------------------------------------------------------------------------------------------------------------- EXAMPLES: TOTAL EXPENSES AT END OF 1 YEAR TOTAL ANNUAL TOTAL ANNUAL WITHOUT/WITH TOTAL EXPENSES INSURANCE INVESTMENT TOTAL ANNUAL PRINCIPAL AT END OF ANCHOR SERIES TRUST PORTFOLIO CHARGES CHARGES CHARGES REWARDS PROGRAM 10 YEARS - ----------------------------------------------------------------------------------------------------------------------- Capital Appreciation 1.61% .68% 2.29% $ 93/$ $262 Growth 1.61% .75% 2.36% $ 94/$ $269 Natural Resources 1.61% .88% 2.49% $ 95/$ $282 Government and Quality Bond 1.61% .67% 2.28% $ 93/$ $261 - ----------------------------------------------------------------------------------------------------------------------- SUNAMERICA SERIES TRUST PORTFOLIO Emerging Markets* 1.61% 1.90% 3.51% $105/$ $378 International Diversified Equities 1.61% 1.26% 2.87% $ 99/$ $319 Global Equities 1.61% .88% 2.49% $ 95/$ $282 International Growth and Income* 1.61% 1.46% 3.07% $101/$ $338 Aggressive Growth* 1.61% .83% 2.44% $ 95/$ $277 MFS Mid-Cap Growth 1.61% 1.00% 2.61% $ 96/$ $294 Real Estate* 1.61% .95% 2.56% $ 96/$ $289 Putnam Growth 1.61% .86% 2.47% $ 95/$ $280 MFS Growth and Income(1) 1.61% .73% 2.34% $ 94/$ $267 Alliance Growth 1.61% .64% 2.25% $ 93/$ $258 "Dogs" of Wall Street* 1.61% .85% 2.46% $ 95/$ $279 Venture Value 1.61% .75% 2.36% $ 94/$ $269 Federated Value* 1.61% .83% 2.44% $ 95/$ $277 Growth-Income 1.61% .60% 2.21% $ 92/$ $254 Utility* 1.61% 1.01% 2.62% $ 96/$ $295 Asset Allocation 1.61% .64% 2.25% $ 93/$ $258 MFS Total Return(2) 1.61% .77% 2.38% $ 94/$ $271 SunAmerica Balanced* 1.61% .78% 2.39% $ 94/$ $272 Worldwide High Income 1.61% 1.08% 2.69% $ 97/$ $302 High-Yield Bond 1.61% .69% 2.30% $ 93/$ $263 Corporate Bond 1.61% .77% 2.38% $ 94/$ $271 Global Bond 1.61% .85% 2.46% $ 95/$ $279 Cash Management 1.61% .58% 2.19% $ 92/$ $252 - ----------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------------------
* For these Portfolios, the adviser, SunAmerica Asset Management Corp., has voluntarily agreed to waive fees or reimburse expenses, if necessary, to keep operating expenses at or below an established maximum amount. All waivers or reimbursements may be terminated at any time. For more detailed information, see Fee Tables and Examples in the prospectus. (1) Formerly named Growth/Phoenix and managed by Phoenix Investment Counsel, Inc. (2) Formerly named Balanced/Phoenix and managed by Phoenix Investment Counsel, Inc. ---------------------------------------------------------------- ---------------------------------------------------------------- 6. TAXES ---------------------------------------------------------------- ---------------------------------------------------------------- Unlike taxable investments where earnings are taxed in the year they are earned, taxes on amounts earned in a non-qualified contract are deferred until they are withdrawn. In a qualified contract, all amounts are taxable when they are withdrawn. When you begin taking distributions or withdrawals from your contract, earnings are considered to be taken out first and will be taxed at your ordinary income rate. You may be subject to a 10% federal tax penalty for distributions or withdrawals before age 59 1/2. ---------------------------------------------------------------- ---------------------------------------------------------------- 7. ACCESS TO YOUR MONEY ---------------------------------------------------------------- ---------------------------------------------------------------- During the first year, you may withdraw free of a withdrawal charge an amount that is equal to the penalty-free earnings in your contract as of the date you make the withdrawal or, if you participate in the systematic withdrawal program, you may withdraw 10% of your total invested amount less any withdrawals made during the year. The penalty-free earnings amount is calculated by taking the value of your contract on the day you make the withdrawal and subtracting your total invested amount. After the first year, your maximum free withdrawal amount is the greater of: (1) the penalty-free earnings or (2) 10% of your total invested amount that has been invested for at least one year, less any withdrawals made during the year. Withdrawals in excess of these limits will be assessed a withdrawal charge. If you withdraw your entire contract value, you will not receive the benefit of any free withdrawal amount. After a purchase payment has been in the contract for seven years, or nine years if you participate in the principal rewards program, there are no withdrawal charges on that purchase payment. 5 ---------------------------------------------------------------- ---------------------------------------------------------------- 8. PERFORMANCE ---------------------------------------------------------------- ---------------------------------------------------------------- When you invest in the PolarisII Variable Annuity, your money is actually invested in the underlying portfolios of the Anchor Series Trust and/or the SunAmerica Series Trust. The value of your annuity will fluctuate depending upon the investment performance of the portfolio(s) you choose. The following chart shows total returns for each portfolio for the time periods shown. These numbers reflect the insurance charges, the contract maintenance fee and the investment charges. Withdrawal charges are not reflected in the chart. Past performance is no guarantee of future results.
- -------------------------------------------------------------- ANCHOR SERIES CALENDAR TRUST PORTFOLIO YEAR 1998 - -------------------------------------------------------------- Capital Appreciation 20.27% Growth 26.93% Natural Resources (18.80)% Government and Quality Bond 7.42% - -------------------------------------------------------------- SUNAMERICA SERIES TRUST PORTFOLIO Emerging Markets (25.62)% International Diversified Equities 16.60% Global Equities 20.86% International Growth and Income 9.03% Aggressive Growth 15.55% MFS Mid-Cap Growth --* Real Estate (16.76)% Putnam Growth 32.60% MFS Growth and Income1 27.22% Alliance Growth 49.83% "Dogs" of Wall Street (1.83)%** Venture Value 11.96% Federated Value 16.05% Growth-Income 28.74% Utility 12.21% Asset Allocation 1.67% MFS Total Return2 17.64% SunAmerica Balanced 22.67% Worldwide High Income (18.45)% High-Yield Bond (4.51)% Corporate Bond 4.31% Global Bond 9.04% Cash Management 3.51% - -------------------------------------------------------------- - --------------------------------------------------------------
* This portfolio was not available for sale during calendar year 1998. ** Inception to 12/31/98. 1 Formerly named Growth/Phoenix and managed by Phoenix Investment Counsel, Inc. 2 Formerly named Balanced/Phoenix and managed by Phoenix Investment Counsel, Inc. ---------------------------------------------------------------- ---------------------------------------------------------------- 9. DEATH BENEFIT ---------------------------------------------------------------- ---------------------------------------------------------------- If you should die during the accumulation phase, your beneficiary will receive a death benefit. You must select from the two death benefit options described below at the time you purchase your contract. Once selected, your death benefit may not be changed. You should discuss with your financial representative the options available to you and which option is best for you. OPTION 1 - PURCHASE PAYMENT ACCUMULATION OPTION: The death benefit is the greater of: (1) the value of your contract at the time we receive satisfactory proof of death; or (2) total purchase payments less withdrawals (and any fees or charges applicable to such withdrawals), compounded at a 4% annual growth rate until the date of death (3% growth rate if 70 or older at the time of contract issue) plus any purchase payments less withdrawals recorded after the date of death (and any fees or charges applicable to such withdrawals); or (3) the value of your contract on the seventh contract anniversary, plus any purchase payments since the seventh anniversary and less any withdrawals (and any fees or charges applicable to such withdrawals), all compounded at a 4% annual growth rate until the date of death (3% if 70 or older at the time of contract issue) plus any purchase payments less withdrawals recorded after the date of death (and any fees or charges applicable to such withdrawals). OPTION 2 - MAXIMUM ANNIVERSARY OPTION: The death benefit is the greater of: (1) the value of your contract at the time we receive satisfactory proof of death; or (2) total purchase payments less any withdrawals (and any fees or charges applicable to such withdrawals); or (3) the maximum anniversary value on any contract anniversary prior to your 81st birthday. The anniversary value equals the value of your contract on a contract anniversary plus any purchase payments and less any withdrawals (and any fees or charges applicable to such withdrawals) since that anniversary. If you participate in the principal rewards program and die prior to a deferred payment enhancement date, we will not allocate the corresponding deferred payment enhancement(s) to your contract. If you are age 90 or older at the time of death and selected the option 2 death benefit, the death benefit will be equal to the value of your contract at the time we receive satisfactory proof of death. ---------------------------------------------------------------- ---------------------------------------------------------------- 10. OTHER INFORMATION ---------------------------------------------------------------- ---------------------------------------------------------------- FREE LOOK: You may cancel your contract within ten days (or longer if required by your state) by mailing it to our Annuity Service Center. Your contract will be treated as void on the date we receive it and we will pay you an amount equal to the value of your contract (unless otherwise required by state law) less any payment enhancement(s). Its value may be more or less than the money you initially invested. PRINCIPAL REWARDS PROGRAM: If elected by you, we add an amount to your contract (an "initial payment enhancement") each time you submit a purchase payment. Additionally, we may also add an amount to your contract at a future date (a "deferred payment enhancement"). Payment enhancement 6 amounts are calculated as a percentage of your purchase payment amount. ASSET ALLOCATION REBALANCING: If elected by you, this program seeks to keep your investment in line with your goals. We will maintain your specified allocation mix in the variable portfolios and the 1-year fixed account option by readjusting your money on a calendar quarter, semiannual or annual basis. SYSTEMATIC WITHDRAWAL PROGRAM: If elected by you, this program allows you to receive either monthly, quarterly, semiannual or annual checks during the accumulation phase. Systematic withdrawals may also be electronically transferred to your bank account. Of course, withdrawals may be taxable and a 10% federal tax penalty may apply if you are under age 59 1/2. PRINCIPAL ADVANTAGE PROGRAM: If elected by you, this program allows you to obtain growth potential without any market risk to your principal. We will guarantee that the portion of your money allocated to the 1, 3, 5, 7 or 10-year fixed account option will grow to equal your principal investment when it is allocated in accordance with the program. DOLLAR COST AVERAGING: If elected by you, this program allows you to invest gradually in the variable portfolios from any of the variable portfolios or the 1-year fixed account option. You may also invest in the variable portfolios from the 6-month DCA fixed account option or the 1-year DCA fixed account option if you do not participate in the principal rewards program.. AUTOMATIC PAYMENT PLAN: You can add to your contract directly from your bank account with as little as $20 per month. CONFIRMATIONS AND QUARTERLY STATEMENTS: During the accumulation phase, you will receive a confirmation of each transaction within your contract. 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. ---------------------------------------------------------------- ---------------------------------------------------------------- 11. INQUIRIES ---------------------------------------------------------------- ---------------------------------------------------------------- If you have questions about your contract or need to make changes, call your financial representative or contact us at: Anchor National Life Insurance Company Annuity Service Center P.O. Box 54299 Los Angeles, California 90054-0299 Telephone Number: (800) 445-SUN2 If money accompanies your correspondence, you should direct it to: Anchor National Life Insurance Company P.O. Box 100330 Pasadena, California 91189-0001 7 [POLARIS II LOGO] PROSPECTUS JUNE 1, 1999 Please read this prospectus carefully FLEXIBLE PAYMENT DEFERRED ANNUITY CONTRACTS before investing and keep it for issued by future reference. It contains ANCHOR NATIONAL LIFE INSURANCE COMPANY important information about the in connection with Polaris(II) Variable Annuity. VARIABLE SEPARATE ACCOUNT The annuity has 34 investment choices -7 fixed account To learn more about the annuity options and 27 Variable Portfolios listed below. The 7 fixed offered by this prospectus, you can account options include specified periods of 1, 3, 5, 7 and obtain a copy of the Statement of 10 years and DCA accounts for 6-month and 1-year periods. Additional Information ("SAI") dated The 27 Variable Portfolios are part of the Anchor Series June 1, 1999. The SAI has been filed Trust or the SunAmerica Series Trust. with the Securities and Exchange Commission ("SEC") and is ANCHOR SERIES TRUST: incorporated by reference into this MANAGED BY WELLINGTON MANAGEMENT COMPANY, LLP prospectus. The Table of Contents of - Capital Appreciation Portfolio the SAI appears on page 22 of this - Growth Portfolio prospectus. For a free copy of the - Natural Resources Portfolio SAI, call us at (800) 445-SUN2 or - Government and Quality Bond Portfolio write to us at our Annuity Service Center, P.O. Box 54299, Los Angeles, SUNAMERICA SERIES TRUST: California 90054-0299. MANAGED BY ALLIANCE CAPITAL MANAGEMENT L.P. - Global Equities Portfolio In addition, the SEC maintains a - Alliance Growth Portfolio website (http://www.sec.gov) that - Growth-Income Portfolio contains the SAI, materials MANAGED BY DAVIS SELECTED ADVISERS, L.P. incorporated by reference and other - Venture Value Portfolio information filed electronically with - Real Estate Portfolio the SEC by Anchor National. MANAGED BY FEDERATED INVESTORS - Federated Value Portfolio ANNUITIES INVOLVE RISKS, INCLUDING - Utility Portfolio POSSIBLE LOSS OF PRINCIPAL, AND ARE - Corporate Bond Portfolio NOT A DEPOSIT OR OBLIGATION OF, OR MANAGED BY GOLDMAN SACHS ASSET MANAGEMENT/ GUARANTEED OR ENDORSED BY, ANY BANK. GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL THEY ARE NOT FEDERALLY INSURED BY THE - Asset Allocation Portfolio FEDERAL DEPOSIT INSURANCE - Global Bond Portfolio CORPORATION, THE FEDERAL RESERVE MANAGED BY MASSACHUSETTS FINANCIAL SERVICES COMPANY BOARD OR ANY OTHER AGENCY. - MFS Mid-Cap Growth - MFS Growth and Income Portfolio - MFS Total Return Portfolio MANAGED BY MORGAN STANLEY ASSET MANAGEMENT - International Diversified Equities Portfolio - Worldwide High Income Portfolio MANAGED BY PUTNAM INVESTMENT MANAGEMENT, INC. - Putnam Growth Portfolio - International Growth and Income Portfolio - Emerging Markets Portfolio MANAGED BY SUNAMERICA ASSET MANAGEMENT CORP. - Aggressive Growth Portfolio - "Dogs" of Wall Street Portfolio - SunAmerica Balanced Portfolio - High-Yield Bond Portfolio - Cash Management Portfolio
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. 8 - ---------------------------------------------------------------- - ---------------------------------------------------------------- INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE - ---------------------------------------------------------------- - ---------------------------------------------------------------- Anchor National's Annual Report on Form 10-K for the year ended September 30, 1998, and its quarterly report on Form 10-Q for the quarter ended December 31, 1998 are incorporated herein by reference. In addition, Anchor National filed three reports on Form 8-K on January 14 and 15 and March 12, 1999. These reports are also 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 shall also be 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 7 World Trade Center, 13th Fl. 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 registrations statement and its 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 statement and its 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 above documents incorporated herein 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 Anchor National 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 need not submit the issue to a court for determination. 2 9 ------------------------------------------------------------------ ------------------------------------------------------------------ TABLE OF CONTENTS ------------------------------------------------------------------ ------------------------------------------------------------------ INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............. 2 SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION........................................... 2 GLOSSARY.................................................... 3 FEE TABLES.................................................. 4 Owner Transaction Expenses............................ 4 Annual Separate Account Expenses...................... 4 Portfolio Expenses.................................... 4 EXAMPLES.................................................... 5 THE POLARIS(II) VARIABLE ANNUITY............................ 6 PURCHASING A POLARIS(II) VARIABLE ANNUITY................... 6 Allocation of Purchase Payments....................... 7 Principal Rewards Program............................. 8 Accumulation Units.................................... 8 Free Look............................................. 9 INVESTMENT OPTIONS.......................................... 9 Variable Portfolios................................... 9 Anchor Series Trust................................... 9 SunAmerica Series Trust............................... 9 Fixed Account Options................................. 10 Market Value Adjustment ("MVA")....................... 10 Transfers During the Accumulation Phase............... 11 Dollar Cost Averaging................................. 11 Asset Allocation Rebalancing.......................... 12 Principal Advantage Program........................... 12 Voting Rights......................................... 13 Substitution.......................................... 13 ACCESS TO YOUR MONEY........................................ 13 Systematic Withdrawal Program......................... 13 Nursing Home Waiver................................... 14 Minimum Contract Value................................ 14 DEATH BENEFIT............................................... 14 EXPENSES.................................................... 15 Insurance Charges..................................... 15 Withdrawal Charges.................................... 15 Investment Charges.................................... 15 Contract Maintenance Fee.............................. 16 Transfer Fee.......................................... 16 Premium Tax........................................... 16 Income Taxes.......................................... 16 Reduction or Elimination of Charges and Expenses, and Additional Amounts Credited........................... 16 INCOME OPTIONS.............................................. 16 Annuity Date.......................................... 16 Income Options........................................ 16 Fixed or Variable Income Payments..................... 17 Income Payments....................................... 17 Transfers During the Income Phase..................... 17 Deferment of Payments................................. 17 The Income Protector Feature.......................... 17 TAXES....................................................... 19 Annuity Contracts in General.......................... 19 Tax Treatment of Distributions - Non-Qualified Contracts............................................. 19 Tax Treatment of Distributions - Qualified Contracts............................................. 19 Minimum Distributions................................. 20 Diversification....................................... 20 PERFORMANCE................................................. 20 OTHER INFORMATION........................................... 20 Anchor National....................................... 20 The Separate Account.................................. 21 The General Account................................... 21 Distribution of the Contract.......................... 21 Administration........................................ 21 Year 2000............................................. 21 Legal Proceedings..................................... 22 Ownership............................................. 22 Custodian............................................. 22 Independent Accountants............................... 22 Legal Matters......................................... 22 Registration Statement................................ 22 TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.... 22 APPENDIX A -- CONDENSED FINANCIAL INFORMATION............... A-1 APPENDIX B -- MARKET VALUE ADJUSTMENT ("MVA")............... B-1 APPENDIX C -- PREMIUM TAXES................................. C-1 ------------------------------------------------------------------ ------------------------------------------------------------------ GLOSSARY ------------------------------------------------------------------ ------------------------------------------------------------------ We have capitalized some of the technical terms used in this prospectus. To help you understand these terms, we have defined them in this glossary. ACCUMULATION PHASE - The period during which you invest money in your contract. ACCUMULATION UNITS - A measurement we use to calculate the value of the variable portion of your contract during the Accumulation Phase. ANNUITANT(S) - The person(s) on whose life (lives) we base income payments. ANNUITY DATE - The date on which income payments are to begin, as selected by you. ANNUITY UNITS - A measurement we use to calculate the amount of income payments you receive from the variable portion of your contract during the Income Phase. BENEFICIARY - The person designated to receive any benefits under the contract if you or the Annuitant dies. COMPANY - Anchor National Life Insurance Company, We, Us, the insurer which issues this contract. INCOME PHASE - The period during which we make income 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"). PAYMENT ENHANCEMENT(S) - The amount(s) allocated to your contract by us under the Principal Rewards Program. Payment Enhancements are calculated as a percentage of your Purchase Payments and are considered earnings. 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 IRA. TRUSTS - Refers to the Anchor Series Trust and the SunAmerica Series Trust collectively. VARIABLE PORTFOLIO(S) - The variable investment options available under the contract. Each Variable Portfolio has its own investment objective and is invested in the underlying investments of the Anchor Series Trust or the SunAmerica Series Trust.
ALL FINANCIAL REPRESENTATIVES OR AGENTS THAT SELL THE CONTRACTS OFFERED BY THIS PROSPECTUS ARE REQUIRED TO DELIVER A PROSPECTUS. 3 10 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FEE TABLES - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OWNER TRANSACTION EXPENSES WITHDRAWAL CHARGE (AS A PERCENTAGE OF EACH PURCHASE PAYMENT) YEARS:.................. 1 2 3 4 5 6 7 8 9 10 Schedule A*............. 7% 6% 5% 4% 3% 2% 1% 0% 0% 0% Schedule B**............ 9% 9% 8% 7% 6% 5% 4% 3% 2% 0%
* This schedule applies to each Purchase Payment if you are not participating in the Principal Rewards Program. ** This schedule applies to each Purchase Payment if you are participating in the Principal Rewards Program. TRANSFER FEE.................... No charge for first 15 transfers each contract year; thereafter, fee is $25 ($10 in Pennsylvania and Texas) per transfer
CONTRACT MAINTENANCE FEE* $35 ($30 in North Dakota) *waived if contract value is $50,000 or more ANNUAL SEPARATE ACCOUNT EXPENSES (AS A PERCENTAGE OF AVERAGE ACCOUNT VALUE) Mortality and Expense Risk Charge................ 1.37% Distribution Expense Charge...................... 0.15% ----- TOTAL SEPARATE ACCOUNT EXPENSES 1.52% =====
PORTFOLIO EXPENSES ANCHOR SERIES TRUST (AS A PERCENTAGE OF AVERAGE NET ASSETS FOR THE TRUST'S TWELVE-MONTH PERIOD ENDED NOVEMBER 30, 1998)
MANAGEMENT OTHER TOTAL ANNUAL PORTFOLIO FEE EXPENSES EXPENSES - ----------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------- Capital Appreciation .64% .04% .68% - ----------------------------------------------------------------------------------------------------------- Growth .70% .05% .75% - ----------------------------------------------------------------------------------------------------------- Natural Resources .75% .13% .88% - ----------------------------------------------------------------------------------------------------------- Government and Quality Bond .61% .06% .67% - ----------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------
SUNAMERICA SERIES TRUST (AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER REIMBURSEMENT OR WAIVER OF EXPENSES FOR THE TRUST'S FISCAL YEAR ENDED NOVEMBER 30, 1998)
MANAGEMENT OTHER TOTAL ANNUAL PORTFOLIO FEE EXPENSES EXPENSES - ----------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------- Emerging Markets* 1.25% .65% 1.90% - ----------------------------------------------------------------------------------------------------------- International Diversified Equities 1.00% .26% 1.26% - ----------------------------------------------------------------------------------------------------------- Global Equities .74% .14% .88% - ----------------------------------------------------------------------------------------------------------- International Growth and Income** 1.00% .46% 1.46% - ----------------------------------------------------------------------------------------------------------- Aggressive Growth .74% .09% .83% - ----------------------------------------------------------------------------------------------------------- MFS Mid-Cap Growth*** .75% .25% 1.00% - ----------------------------------------------------------------------------------------------------------- Real Estate** .80% .15% .95% - ----------------------------------------------------------------------------------------------------------- Putnam Growth .81% .05% .86% - ----------------------------------------------------------------------------------------------------------- MFS Growth and Income****+ .70% .03% .73% - ----------------------------------------------------------------------------------------------------------- Alliance Growth+ .61% .03% .64% - ----------------------------------------------------------------------------------------------------------- "Dogs" of Wall Street* .60% .25% .85%***** - ----------------------------------------------------------------------------------------------------------- Venture Value .72% .03% .75% - ----------------------------------------------------------------------------------------------------------- Federated Value .75% .08% .83% - ----------------------------------------------------------------------------------------------------------- Growth-Income .56% .04% .60% - ----------------------------------------------------------------------------------------------------------- Utility** .75% .26% 1.01% - ----------------------------------------------------------------------------------------------------------- Asset Allocation .59% .05% .64% - ----------------------------------------------------------------------------------------------------------- MFS Total Return****+ .67% .10% .77% - ----------------------------------------------------------------------------------------------------------- SunAmerica Balanced .68% .10% .78% - ----------------------------------------------------------------------------------------------------------- Worldwide High Income 1.00% .08% 1.08% - ----------------------------------------------------------------------------------------------------------- High-Yield Bond .63% .06% .69% - ----------------------------------------------------------------------------------------------------------- Corporate Bond .65% .12% .77% - ----------------------------------------------------------------------------------------------------------- Global Bond .70% .15% .85% - ----------------------------------------------------------------------------------------------------------- Cash Management .53% .05% .58% - ----------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------
* Absent fee waivers or reimbursement of expenses by the adviser, you would have incurred the following expenses during the last fiscal year: Emerging Markets (2.01%) and "Dogs" of Wall Street (.92%). ** Absent recoupment of expenses by the adviser, you would have incurred the following expenses during the last fiscal year: International Growth and Income (1.40%); Real Estate (.93%); and Utility (.92%). *** This Portfolio was not available for sale during fiscal year 1998. The percentages are based on estimated amounts for the current fiscal year. **** As of January 4, 1998, the Growth/Phoenix Portfolio was renamed the MFS Growth and Income Portfolio, and the Balanced/Phoenix Portfolio was renamed the MFS Total Return Portfolio, each managed by Massachusetts Financial Services Company. ***** Annualized. + The expenses noted here are restated to reflect an estimate of fees for each portfolio for the current fiscal year. THE ABOVE PORTFOLIO EXPENSES WERE PROVIDED BY THE TRUSTS. WE HAVE NOT INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION. 4 11 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXAMPLES - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- You will pay the following expenses on a $1,000 investment in each Variable Portfolio, assuming a 5% annual return on assets, no participation in the Principal Rewards Program and: (a) you surrender the contract at the end of the stated time period. (b) you do not surrender the contract.*
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ Capital Appreciation (a) $ 93 (a) $121 (a) $152 (a) $262 (b) $ 23 (b) $ 71 (b) $122 (b) $262 - ------------------------------------------------------------------------------------------------------ Growth (a) $ 94 (a) $124 (a) $156 (a) $269 (b) $ 24 (b) $ 74 (b) $126 (b) $269 - ------------------------------------------------------------------------------------------------------ Natural Resources (a) $ 95 (a) $127 (a) $162 (a) $282 (b) $ 25 (b) $ 77 (b) $132 (b) $282 - ------------------------------------------------------------------------------------------------------ Government and Quality Bond (a) $ 93 (a) $121 (a) $152 (a) $261 (b) $ 23 (b) $ 71 (b) $122 (b) $261 - ------------------------------------------------------------------------------------------------------ Emerging Markets (a) $105 (a) $158 (a) $212 (a) $378 (b) $ 35 (b) $108 (b) $182 (b) $378 - ------------------------------------------------------------------------------------------------------ International Diversified Equities (a) $ 99 (a) $139 (a) $181 (a) $319 (b) $ 29 (b) $ 89 (b) $151 (b) $319 - ------------------------------------------------------------------------------------------------------ Global Equities (a) $ 95 (a) $127 (a) $162 (a) $282 (b) $ 25 (b) $ 77 (b) $132 (b) $282 - ------------------------------------------------------------------------------------------------------ International Growth and Income (a) $101 (a) $145 (a) $191 (a) $338 (b) $ 31 (b) $ 95 (b) $161 (b) $338 - ------------------------------------------------------------------------------------------------------ Aggressive Growth (a) $ 95 (a) $126 (a) $160 (a) $277 (b) $ 25 (b) $ 76 (b) $130 (b) $277 - ------------------------------------------------------------------------------------------------------ MFS Mid-Cap Growth (a) $ 96 (a) $131 (a) $168 (a) $294 (b) $ 26 (b) $ 81 (b) $138 (b) $294 - ------------------------------------------------------------------------------------------------------ Real Estate (a) $ 96 (a) $130 (a) $166 (a) $289 (b) $ 26 (b) $ 80 (b) $136 (b) $289 - ------------------------------------------------------------------------------------------------------ Putnam Growth (a) $ 95 (a) $127 (a) $161 (a) $280 (b) $ 25 (b) $ 77 (b) $131 (b) $280 - ------------------------------------------------------------------------------------------------------ MFS Growth and Income (a) $ 94 (a) $123 (a) $155 (a) $267 (b) $ 24 (b) $ 73 (b) $125 (b) $267 - ------------------------------------------------------------------------------------------------------ Alliance Growth (a) $ 93 (a) $120 (a) $150 (a) $258 (b) $ 23 (b) $ 70 (b) $120 (b) $258 - ------------------------------------------------------------------------------------------------------ "Dogs" of Wall Street (a) $ 95 (a) $127 (a) $161 (a) $279 (b) $ 25 (b) $ 77 (b) $131 (b) $279 - ------------------------------------------------------------------------------------------------------ Venture Value (a) $ 94 (a) $124 (a) $156 (a) $269 (b) $ 24 (b) $ 74 (b) $126 (b) $269 - ------------------------------------------------------------------------------------------------------ Federated Value (a) $ 95 (a) $126 (a) $160 (a) $277 (b) $ 25 (b) $ 76 (b) $130 (b) $277 - ------------------------------------------------------------------------------------------------------ Growth-Income (a) $ 92 (a) $119 (a) $148 (a) $254 (b) $ 22 (b) $ 69 (b) $118 (b) $254 - ------------------------------------------------------------------------------------------------------ Utility (a) $ 96 (a) $131 (a) $169 (a) $295 (b) $ 26 (b) $ 81 (b) $139 (b) $295 - ------------------------------------------------------------------------------------------------------ Asset Allocation (a) $ 93 (a) $120 (a) $150 (a) $258 (b) $ 23 (b) $ 70 (b) $120 (b) $258 - ------------------------------------------------------------------------------------------------------ MFS Total Return (a) $ 94 (a) $124 (a) $157 (a) $271 (b) $ 24 (b) $ 74 (b) $127 (b) $271 - ------------------------------------------------------------------------------------------------------ SunAmerica Balanced (a) $ 94 (a) $124 (a) $157 (a) $272 (b) $ 24 (b) $ 74 (b) $127 (b) $272 - ------------------------------------------------------------------------------------------------------ Worldwide High Income (a) $ 97 (a) $133 (a) $172 (a) $302 (b) $ 27 (b) $ 83 (b) $142 (b) $302 - ------------------------------------------------------------------------------------------------------ High-Yield Bond (a) $ 93 (a) $122 (a) $153 (a) $263 (b) $ 23 (b) $ 72 (b) $123 (b) $263 - ------------------------------------------------------------------------------------------------------ Corporate Bond (a) $ 94 (a) $124 (a) $157 (a) $271 (b) $ 24 (b) $ 74 (b) $127 (b) $271 - ------------------------------------------------------------------------------------------------------ Global Bond (a) $ 95 (a) $127 (a) $161 (a) $279 (b) $ 25 (b) $ 77 (b) $131 (b) $279 - ------------------------------------------------------------------------------------------------------ Cash Management (a) $ 92 (a) $118 (a) $147 (a) $252 (b) $ 22 (b) $ 68 (b) $117 (b) $252 - ------------------------------------------------------------------------------------------------------ - 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* We do not currently charge a surrender charge upon annuitization unless the contract is annuitized using the Income Protector feature. We will assess any applicable surrender charge upon annuitizations effected using the Income Protector feature as if you had fully surrendered your contract. 5 12 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXAMPLES - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- You will pay the following expenses on a $1,000 investment in each Variable Portfolio, assuming a 5% annual return on assets, participation in the Principal Rewards Program and: (a) you surrender the contract at the end of the stated time period. (b) you do not surrender the contract*
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ Capital Appreciation (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ Growth (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ Natural Resources (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ Government and Quality Bond (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ Emerging Markets (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ International Diversified Equities (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ Global Equities (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ International Growth and Income (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ Aggressive Growth (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ MFS Mid-Cap Growth (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ Real Estate (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ Putnam Growth (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ MFS Growth and Income (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ Alliance Growth (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ "Dogs" of Wall Street (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ Venture Value (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ Federated Value (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ Growth-Income (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ Utility (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ Asset Allocation (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ MFS Total Return (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ SunAmerica Balanced (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ Worldwide High Income (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ High-Yield Bond (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ Corporate Bond (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ Global Bond (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ Cash Management (a) $ (a) $ (a) $ (a) $ (b) $ (b) $ (b) $ (b) $ - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------
* We do not currently charge a surrender charge upon annuitization unless the contract is annuitized using the Income Protector feature. We will assess any applicable surrender charge upon annuitizations effected using the Income Protector feature as if you had fully surrendered your contract. 6 13 EXPLANATION OF FEE TABLES AND EXAMPLES 1. The purpose of the Fee Tables is to show you the various expenses you would incur directly and indirectly by investing in the contract. 2. For certain Variable Portfolios, the adviser, SunAmerica Asset Management Corp., has voluntarily agreed to waive fees or reimburse certain expenses, if necessary, to keep annual operating expenses at or below the lesser of the maximum allowed by any applicable state expense limitations or the following percentages of each Variable Portfolio's average net assets: SunAmerica Balanced (1.00%); "Dogs" of Wall Street (.85%); Aggressive Growth (.90%); Federated Value (1.03%); Utility (1.05%); Emerging Markets (1.90%); International Growth and Income (1.60%); and Real Estate (1.25%). 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. 3. The Examples assume that no transfer fees were imposed. Although premium taxes may apply in certain states, they are not reflected in the Examples. 4. THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THE HISTORICAL ACCUMULATION UNIT VALUES ARE CONTAINED IN APPENDIX A -- CONDENSED FINANCIAL INFORMATION. - ---------------------------------------------------------------- - ---------------------------------------------------------------- THE POLARIS(II) 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: This means that 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. 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 income 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 portfolios which, like mutual funds, have different investment objectives and performance which 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 Portfolios in which you invest. This contract currently offers 27 Variable Portfolios. 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 the contract depends on the total interest credited to the particular fixed account option(s) in which you invest. For more information on investment options available under this contract SEE INVESTMENT OPTIONS ON PAGE 9. Anchor National Life Insurance Company (Anchor National, The Company, Us, We) issues the PolarisII Variable Annuity. When you purchase a PolarisII 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. ("AIG"), a Delaware corporation. - ---------------------------------------------------------------- - ---------------------------------------------------------------- PURCHASING A POLARIS(II) 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. FOR FURTHER EXPLANATION, SEE TAXES ON PAGE 19. - ----------------------------------------------------------- Minimum Minimum Initial Subsequent Purchase Payment Purchase Payment - ----------------------------------------------------------- Qualified $2,000 $250 - ----------------------------------------------------------- Non-Qualified $5,000 $500 - -----------------------------------------------------------
Prior Company approval is required to accept Purchase Payments greater than $1,000,000. The Company reserves the right to refuse any Purchase Payment including, but not limited, to one which would cause the contract value to exceed $1,000,000 at the time of the Purchase Payment. Also, the optional automatic payment plan allows you to make subsequent Purchase Payments of as little as $20.00. 7 14 We may refuse any Purchase Payment. In general, we will not issue a Qualified contract to anyone who is age 70 1/2 or older, unless it is shown that the minimum distribution required by the IRS is being made. In addition we may not issue a contract to anyone over age 90. ALLOCATION OF PURCHASE PAYMENTS We invest your Purchase Payments in the fixed and variable investment options according to your instructions. If we receive a Purchase Payment without allocation instructions, we will invest the money according to your last allocation instructions. SEE INVESTMENT OPTIONS ON PAGE 9. In order to issue your contract, we must receive your completed application, Purchase Payment allocation instructions and any other required paperwork at our principal place of business. 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. PRINCIPAL REWARDS PROGRAM If you elect to participate in this program at contract issue, we contribute an amount to your contract for each Purchase Payment you invest. This amount is referred to as a Payment Enhancement. If you elect to participate in this program, all Purchase Payments are subject to a nine year withdrawal charge period. Payment Enhancements are considered earnings under your contract and are allocated to your contract according to the terms discussed below. Initial Payment Enhancement An Initial Payment Enhancement is the amount we add to your contract on the day we receive a Purchase Payment. An Initial Payment Enhancement is calculated as a percentage of each Purchase Payment and is allocated among the fixed and variable investment options according to the allocation instructions in effect on the day we receive the Purchase Payment. Purchase Payments may not be invested in the six-month or the one year Dollar Cost Averaging fixed accounts if you participate in the Principal Rewards Program. The Initial Payment Enhancement is 2.00% of each Purchase Payment. Deferred Payment Enhancement A Deferred Payment Enhancement is the amount we may add to your contract on a future date (the "Deferred Payment Enhancement Date"). The amount(s) and date(s) of a Deferred Payment Enhancement are guaranteed based on the Current Deferred Payment Enhancement Percentage and Current Deferred Payment Enhancement Date in effect at the time we receive your Purchase Payment. The Deferred Payment Enhancement amount, if any, is determined as a percentage of each Purchase Payment (the "Deferred Payment Enhancement Percentage"). If you withdraw any portion of a Purchase Payment prior to the Deferred Payment Enhancement Date, we reduce the amount of the corresponding Deferred Payment Enhancement in the same proportion that your withdrawal reduces your Purchase Payment (and any fees and charges associated with such withdrawals). Withdrawals are assumed to be taken from earnings first then from Purchase Payments, on a first-in-first-out basis. APPENDIX B shows how we calculate the Deferred Payment Enhancement amount. We periodically establish the Current Deferred Payment Enhancement Percentage(s) and Date(s). For Purchase Payments received by March 31, 2000, the Current Deferred Payment Enhancement Percentage is 2.00% and the Current Deferred Payment Enhancement Date is nine years from the date we receive each Purchase Payment. After March 31, 2000, the Current Deferred Payment Enhancement Percentage may be increased, decreased or eliminated by the Company. We will not allocate a Deferred Payment Enhancement to your contract if any of the following circumstances occurs prior to the Deferred Payment Enhancement Date: - You surrender your contract; - A death benefit is paid on your contract; - You switch to the Income Phase of your contract; or - You fully withdraw the corresponding Purchase Payment. The Principal Rewards Program may not be available through your broker-dealer. Please check with your financial representative regarding the availability of this program. We reserve the right to modify, suspend or terminate the Principal Rewards Program at any time. ACCUMULATION UNITS When you allocate a Purchase Payment to the Variable Portfolios, we credit your contract with Accumulation Units of the separate account. 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 p.m. Pacific Standard Time, or on the next business day's unit value if we receive your money after 1 p.m. Pacific Standard Time. The value of an Accumulation Unit goes up and down based on the performance of the Variable Portfolios. We calculate the value of an Accumulation Unit each day that the New York Stock Exchange ("NYSE") is open as follows: 1. We determine the total value of money invested in a particular Variable Portfolio; 2. We subtract from that amount all applicable contract charges; and 3. We divide this amount by the number of outstanding Accumulation Units. We determine the number of Accumulation Units credited to your contract by dividing the Purchase Payment and Payment Enhancement, if applicable, by the Accumulation Unit value for the specific Variable Portfolio. 8 15 EXAMPLE (CONTRACTS WITHOUT PRINCIPAL REWARDS): We receive a $25,000 Purchase Payment from you on Wednesday. You allocate the money to the Global Bond Portfolio. We determine that the value of an Accumulation Unit for the Global Bond Portfolio is $11.10 when the NYSE closes on Wednesday. We then divide $25,000 by $11.10 and credit your contract on Wednesday night with 2252.2523 Accumulation Units for the Global Bond Portfolio. EXAMPLE (CONTRACTS WITH PRINCIPAL REWARDS): We receive a $25,000 Purchase Payment from you on Wednesday. You allocate the money to the Global Bond Portfolio. The Initial Payment Enhancement is 2.00% of your Purchase Payment. Therefore, we add an Initial Payment Enhancement of $500 to your contract. We determine that the value of an Accumulation Unit for the Global Bond Portfolio is $11.10 when the NYSE closes on Wednesday. We then divide $25,500 by $11.10 and credit your contract on Wednesday with 2,297.2973 Accumulation Units for the Global Bond 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. We will refund to you the value of your contract on the day we receive your request less any Payment Enhancement. The amount refunded to you may be more or less than the amount you originally invested. 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 Cash Management Portfolio during the free look period. If you cancel your contract during the free look period, we return your Purchase Payment or the value of your contract, less any Payment Enhancement whichever is larger. At the end of the free look period, we allocate your money according to your instructions. - ---------------------------------------------------------------- - ---------------------------------------------------------------- INVESTMENT OPTIONS - ---------------------------------------------------------------- - ---------------------------------------------------------------- VARIABLE PORTFOLIOS The contract currently offers 27 Variable Portfolios. These Variable Portfolios invest in shares of the Anchor Series Trust and the SunAmerica Series 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. SunAmerica Asset Management Corp., an indirect wholly owned subsidiary of AIG, is the investment adviser to the Trusts. 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 adviser monitors the Trusts for potential conflicts. The Variable Portfolios along with their respective subadvisers are listed below: ANCHOR SERIES TRUST Wellington Management Company, LLP serves as subadviser to the Anchor Series Trust Portfolios. Anchor Series Trust has investment portfolios in addition to those listed below which are not available for investment under the contract. The 4 available investment portfolios are: MANAGED BY WELLINGTON MANAGEMENT COMPANY, LLP - Capital Appreciation Portfolio - Growth Portfolio - Natural Resources Portfolio - Government and Quality Bond Portfolio SUNAMERICA SERIES TRUST Various subadvisers provide investment advice for the SunAmerica Series Trust Portfolios. SunAmerica Series Trust has investment portfolios in addition to those listed below which are not available for investment under the contract. The 23 investment portfolios and the subadvisers are: MANAGED BY ALLIANCE CAPITAL MANAGEMENT L.P. - Global Equities Portfolio - Alliance Growth Portfolio - Growth Income Portfolio MANAGED BY DAVIS SELECTED ADVISERS, L.P. - Venture Value Portfolio - Real Estate Portfolio MANAGED BY FEDERATED INVESTORS - Federated Value Portfolio - Utility Portfolio - Corporate Bond Portfolio MANAGED BY GOLDMAN SACHS ASSET MANAGEMENT/GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL - Asset Allocation Portfolio - Global Bond Portfolio MANAGED BY MASSACHUSETTS FINANCIAL SERVICES COMPANY - MFS Mid-Cap Growth - MFS Growth and Income Portfolio - MFS Total Return Portfolio MANAGED BY MORGAN STANLEY ASSET MANAGEMENT 9 16 - International Diversified Equities Portfolio - Worldwide High Income Portfolio MANAGED BY PUTNAM INVESTMENT MANAGEMENT - Putnam Growth Portfolio - International Growth and Income Portfolio - Emerging Markets Portfolio MANAGED BY SUNAMERICA ASSET MANAGEMENT, INC. - Aggressive Growth Portfolio - "Dogs" of Wall Street Portfolio - SunAmerica Balanced Portfolio - High-Yield Bond Portfolio - Cash Management Portfolio YOU SHOULD READ THE ATTACHED PROSPECTUSES FOR THE TRUSTS CAREFULLY. THESE PROSPECTUSES CONTAIN DETAILED INFORMATION ABOUT THE VARIABLE PORTFOLIOS, INCLUDING EACH VARIABLE PORTFOLIO'S INVESTMENT OBJECTIVE AND RISK FACTORS. FIXED ACCOUNT OPTIONS The contract also offers seven fixed account options. Anchor National will guarantee the interest rate earned on money you allocate to any of these fixed account options. We currently offer fixed account options for periods of one, three, five, seven and ten years, which we call guarantee periods. Additionally, we guarantee the interest rate for money allocated to the six-month DCA fixed account and/or the one year DCA fixed account (the "DCA fixed accounts") which are available in conjunction with the Dollar Cost Averaging Program if you do not participate in the Principal Rewards Program. Please see the section on DOLLAR COST AVERAGING ON PAGE 11 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. Each guarantee period may offer a different interest rate but will never be less than an annual effective rate of 3%. Once established the rates for specified payments do not change during the guarantee period. The guarantee period is that period for which we credit the applicable rate (one, three, five, seven or ten years). There are three scenarios in which you may put money into the MVA fixed account options. In each scenario your money may be credited a different rate of interest as follows: - Initial Rate: Rate credited to amounts allocated to the fixed account when you purchase your contract. - Current Rate: Rate credited to subsequent amounts allocated to the fixed account. - Renewal Rate: Rate credited to money transferred from one fixed account or one of the Variable Portfolios to another fixed account. Each of these rates may differ from one another. Once declared, the applicable rate is guaranteed until the corresponding guarantee period expires. When a guarantee period ends, you may leave your money in the same fixed investment option. You may also reallocate your money to another fixed investment option (other than the DCA fixed accounts) or to the Variable Portfolios. If you want to reallocate your money to a different fixed account option or a Variable Portfolio, you must contact us within 30 days after the end of the current interest guarantee period and instruct us how to reallocate the money. We do not contact you. If we do not hear from you, your money will remain in the same fixed account option, where it will earn interest at the renewal rate then in effect for the fixed account option. The DCA fixed accounts also credit a fixed rate of interest for a predetermined amount of time. The interest rate in the 1-year or 6-month DCA fixed account is credited while your investment is systematically transferred to the Variable Portfolios. The rates applicable to the DCA fixed accounts may differ from each other and/or the other fixed account options. See DOLLAR COST AVERAGING ON PAGE 11 for more information. MARKET VALUE ADJUSTMENT ("MVA") NOTE: THE FOLLOWING DISCUSSION APPLIES TO THE 3, 5, 7 AND 10-YEAR FIXED ACCOUNT OPTIONS, ONLY. THESE OPTIONS ARE NOT AVAILABLE IN ALL STATES. PLEASE CONTACT YOUR FINANCIAL REPRESENTATIVE FOR MORE INFORMATION. If you take money out of the multi-year fixed account options 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 account 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. We calculate the MVA by doing a comparison between current rates and the rate being credited to you in the fixed account 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. 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 account 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 account option. If there is not enough money in the fixed account option to meet the negative deduction, we deduct the remainder from your 10 17 withdrawal. Where the MVA is positive, we add the adjustment to your withdrawal amount. Anchor National does not assess a MVA against withdrawals under the following circumstances: - If made within 30 days after the end of a guarantee period; - If made to pay contract fees and charges; - To pay a death benefit; and - If annuitization occurs on the latest Annuity Date. The one year fixed account option and the DCA fixed accounts do not impose a MVA. These fixed accounts are not registered under the Securities Act of 1933 and are not subject to the provisions of the Investment Company Act of 1940. APPENDIX C shows how we calculate the MVA. TRANSFERS DURING THE ACCUMULATION PHASE During the Accumulation Phase you may transfer funds between the Variable Portfolios and/or the fixed account 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. We currently allow 15 free transfers per contract per 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, in the future you may be able to execute transfers or other financial transactions over the internet. When receiving instructions over the telephone, 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. Upon implementation of internet account transactions we will have appropriate procedures in place to provide reasonable assurance that the transactions executed are genuine. Thus, we would not be responsible for any claim, loss or expense from any error resulting from instructions received over the internet. 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. 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, for you or appointed by 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 16. We reserve the right to modify, suspend, waive or terminate these transfer provisions at any time. DOLLAR COST AVERAGING 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 of portfolio value from one Variable Portfolio or the 1-year fixed account option (source accounts) to any other Variable Portfolio. 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. We also offer the 6-month and 1-year DCA fixed accounts exclusively to facilitate this program. If you elected to participate in the Principal Rewards Program, the 6-month and 1-year DCA fixed accounts are not available under your contract. The DCA fixed accounts only accept new Purchase Payments. You cannot transfer money already in your contract into these options. If you allocate new Purchase Payments into a DCA fixed account, we transfer all your 11 18 money allocated to that account into the Variable Portfolios over the selected 6-month or 1-year period. You cannot change the option or the frequency of transfers once selected. 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 the 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, let's say you allocate $1,000 to the 1-year DCA account. 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. 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 Cash Management Portfolio to the Aggressive Growth Portfolio over six quarters. You set up dollar cost averaging and purchase Accumulation Units at the following values:
- ------------------------------------------- ACCUMULATION UNITS QUARTER UNIT PURCHASED - ------------------------------------------- 1 $ 7.50 100 2 $ 5.00 150 3 $10.00 75 4 $ 7.50 100 5 $ 5.00 150 6 $ 7.50 100 - -------------------------------------------
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 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, semiannual 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. EXAMPLE: Assume that you want your initial Purchase Payment split between two Variable Portfolios. You want 50% in the Corporate Bond Portfolio and 50% in the Growth Portfolio. Over the next calendar quarter, the bond market does very well while the stock market performs poorly. At the end of the calendar quarter, the Corporate Bond Portfolio now represents 60% of your holdings because it has increased in value and the Growth Portfolio represents 40% of your holdings. If you had chosen quarterly rebalancing, on the last day of that quarter, we would sell some of your units in the Corporate Bond Portfolio to bring its holdings back to 50% and use the money to buy more units in the Growth Portfolio to increase those holdings to 50%. PRINCIPAL ADVANTAGE PROGRAM The Principal Advantage Program allows you to invest in one or more Variable Portfolios without putting your principal at direct risk. The program accomplishes this by allocating your investment strategically between the fixed account options and Variable Portfolios. 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 account 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. We reserve the right to modify, suspend or terminate this program at any time. EXAMPLE: Assume that you want to allocate a portion of your initial Purchase Payment of $100,000 to the fixed account option. You want the amount allocated to the fixed account option to grow to $100,000 in 7 years. If the 12 19 7-year fixed account option is offering a 5% interest rate, we will allocate $71,069 to the 7-year fixed account option to ensure that this amount will grow to $100,000 at the end of the 7-year period. The remaining $28,931 may be allocated among the Variable Portfolios, as determined by you, to provide opportunity for greater growth. VOTING RIGHTS Anchor National is the legal owner of the Trusts' shares. 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 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 funds of the Trusts become unavailable for investment, we may be required to substitute shares of another underlying fund. 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 16. Generally, we deduct a withdrawal charge applicable to any total or partial withdrawal and a MVA if a partial withdrawal comes from the 3, 5, 7 or 10 year fixed account options. If you withdraw your entire contract value, we also deduct premium taxes and a contract maintenance fee. SEE EXPENSES ON PAGE 15. 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 we will recoup any withdrawal charges which would have been due if your free withdrawal had not been free. Additionally, you will not receive your Deferred Payment Enhancement if you fully withdraw the Purchase Payment or your contract value prior to the corresponding Deferred Payment Enhancement Date. SEE PRINCIPAL REWARDS PROGRAM ON PAGE 8. 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 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 charges; and (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. Although we do not assess a withdrawal charge when you take a 10% penalty-free withdrawal, we will proportionally reduce the amount of any corresponding Deferred Payment Enhancement. 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. 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% IRS penalty tax. SEE TAXES ON PAGE 19. 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. 13 20 Additionally, we reserve the right to defer payments for a withdrawal from a fixed account in 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. If you are an Oregon resident, the minimum withdrawal amount is $100 per withdrawal or an amount equal to your free withdrawal amount, as described on page 10. There must be at least $500 remaining in your contract at all times. Withdrawals may be taxable and a 10% IRS 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. NURSING HOME WAIVER If you are confined to a nursing home for 60 days or longer, we may waive the withdrawal charge and/or market value adjustment on certain withdrawals prior to the Annuity Date (not available in Texas). The waiver applies only to withdrawals made while you are in a nursing home or within 90 days after you leave the nursing home. Your contract prohibits use of this waiver during the first 90 days after you purchase your contract. In addition, the confinement period for which you seek the waiver must begin after you purchase your contract. In order to use this waiver, you must submit with your withdrawal request, the following documents: (1) a doctor's note recommending admittance to a nursing home; (2) an admittance form which shows the type of facility you entered; and (3) a bill from the nursing home which shows that you met the 60 day confinement requirement. 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. - ---------------------------------------------------------------- - ---------------------------------------------------------------- DEATH BENEFIT - ---------------------------------------------------------------- - ---------------------------------------------------------------- If you die during the Accumulation Phase of your contract, we pay a death benefit to your Beneficiary. At the time you purchase your contract, you must select one of the two death benefits described below. Once selected, you can not change your death benefit option. You should discuss the available options with your financial representative to determine which option is best for you. OPTION 1 - PURCHASE PAYMENT ACCUMULATION OPTION The death benefit is the greater of: 1. the value of your contract at the time we receive satisfactory proof of death; or 2. total Purchase Payments less withdrawals (and any fees or charges applicable to such withdrawals), compounded at a 4% annual growth rate until the date of death (3% growth rate if 70 or older at the time of contract issue) plus any Purchase Payments less withdrawals recorded after the date of death (and any fees or charges applicable to such withdrawals); or 3. the value of your contract on the seventh contract anniversary, plus any Purchase Payments and less any withdrawals (and any fees or charges applicable to such withdrawals), since the seventh contract anniversary, all compounded at a 4% annual growth rate until the date of death (3% growth rate if age 70 or older at the time of contract issue) plus any Purchase Payments less withdrawals recorded after the date of death (and any fees or charges applicable to such withdrawals). OPTION 2 - MAXIMUM ANNIVERSARY OPTION The death benefit is the greater of: 1. the value of your contract at the time we receive satisfactory proof of death; or 2. total Purchase Payments less any withdrawals (and any fees or charges applicable to such withdrawals); or 3. the maximum anniversary value on any contract anniversary prior to your 81st birthday. The anniversary value equals the value of your contract on a contract anniversary plus any Purchase Payments and less any withdrawals (and any fees or charges applicable to such withdrawals), since that contract anniversary. If you are age 90 or older at the time of death and selected the Option 2 death benefit, the death benefit will be equal to the value of your contract at the time we receive satisfactory proof of death. Accordingly, you do not get the advantage of option 2 if: - you are over age 80 at the time of contract issue, or - you are 90 or older at the time of your death. We will not pay a Deferred Payment Enhancement on a Purchase Payment if you die before the corresponding Deferred Payment Enhancement Date. SEE PRINCIPAL REWARDS PROGRAM ON PAGE 8. We do not pay the death benefit if you die after you switch to the Income Phase. However, if you die during the Income 14 21 Phase, your Beneficiary receives any remaining guaranteed income payments in accordance with the income option you selected. SEE INCOME OPTIONS ON PAGE 16. You name your Beneficiary. You may change the Beneficiary at any time, unless you previously made an irrevocable Beneficiary designation. We pay the death benefit when we receive satisfactory proof of death. We consider the following satisfactory proof of death: 1. a certified copy of the death certificate; or 2. a certified copy of a decree of a court of competent jurisdiction as to the finding of death; or 3. a written statement by a medical doctor who attended the deceased at the time of death; or 4. any other proof satisfactory to us. We may require additional proof before we pay the death benefit. The death benefit payment must begin immediately upon receipt of all necessary documents. In any event, the death benefit must be paid within 5 years of the date of death unless the Beneficiary elects to have it payable in the form of an income option. 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. Payments must begin within one year of your death. If the Beneficiary is the spouse of a deceased owner, he or she can elect to continue the Contract at the then current value. If the Beneficiary/spouse continues the contract, we do not pay a death benefit to him or her. If a Beneficiary does not elect a specific form of pay out within 60 days of our receipt of proof of death, we pay a lump sum death benefit to the Beneficiary. - ---------------------------------------------------------------- - ---------------------------------------------------------------- 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 the insurance and 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 amount of this charge is 1.52% annually, of the value of your contract invested in the Variable Portfolios. We deduct the charge daily. The insurance charge compensates us for the mortality and expense risks and the costs of contract distribution assumed by Anchor National. 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 The contract provides a free withdrawal amount every year. SEE ACCESS TO YOUR MONEY, PAGE 13. If you take money out in excess of the free withdrawal amount, and upon a full surrender, you may incur a withdrawal charge. We apply a withdrawal charge against each Purchase Payment you put into the contract. After a Purchase Payment has been in the contract for 7 complete years, or 9 years if you elected to participate in the Principal Rewards Program, no withdrawal charge applies. The withdrawal charge equals a percentage of the Purchase Payment you take out of the contract. The withdrawal charge percentage declines each year a Purchase Payment is in the contract. The two withdrawal charge schedules are as follows: WITHDRAWAL CHARGE WITHOUT THE PRINCIPAL REWARDS PROGRAM (SCHEDULE A)
- ----------------------------------------------------------------------------------------- Year 1 2 3 4 5 6 7 8 - ----------------------------------------------------------------------------------------- WITHDRAWAL CHARGE 7% 6% 5% 4% 3% 2% 1% 0% - -----------------------------------------------------------------------------------------
WITHDRAWAL CHARGE WITH THE PRINCIPAL REWARDS PROGRAM (SCHEDULE B)
- ----------------------------------------------------------------------------------------------------------- Year 1 2 3 4 5 6 7 8 9 10 - ----------------------------------------------------------------------------------------------------------- WITHDRAWAL CHARGE 9% 9% 8% 7% 6% 5% 4% 3% 2% 0% - -----------------------------------------------------------------------------------------------------------
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. 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 will not assess a withdrawal charge when you switch to the Income Phase, except when you elect to receive income payments using the Income Protector feature. If you elect to receive income payments using the Income Protector feature, we assess the entire withdrawal charge applicable to Purchase Payments remaining in your contract when calculating your income benefit base. SEE INCOME OPTIONS ON PAGE 16. Withdrawals made prior to age 59 1/2 may result in tax penalties. SEE, TAXES ON PAGE 19. 15 22 INVESTMENT CHARGES Charges are deducted from your Variable Portfolios for the advisory and other expenses of the Variable Portfolios. THE FEE TABLES LOCATED AT PAGE 4 illustrate these charges and expenses. For more detailed information on these investment charges, refer to the prospectuses for the Trusts, enclosed or attached. 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. We deduct the $35 contract maintenance fee ($30 in North Dakota) from your account value on your contract anniversary. If you withdraw your entire contract value, we deduct the fee from that withdrawal. 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. TRANSFER FEE We currently permit 15 free transfers between investment options each contract year. We charge you $25 for each additional transfer that contract year ($10 in Pennsylvania and Texas). SEE INVESTMENT OPTIONS ON PAGE 9. 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 take a full withdrawal or begin the Income Phase of 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 C 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. 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 - ---------------------------------------------------------------- - ---------------------------------------------------------------- ANNUITY DATE During the Income Phase, we use the money accumulated in your contract to make regular income payments to you. You may switch to the Income Phase any time after your 2nd contract anniversary. You select the month and year 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 indicated under Option 5 below, once you begin receiving income payments, you cannot otherwise access your money through a withdrawal or surrender. If you switch to the Income Phase prior to a Deferred Payment Enhancement Date, we will not allocate the corresponding Deferred Payment Enhancement to your contract. SEE PRINCIPAL REWARDS PROGRAM ON PAGE 8. Income payments must begin on or before your 90th 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. 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, most Qualified contracts require you to take minimum distributions after you reach age 70 1/2. SEE TAXES ON PAGE 19. INCOME OPTIONS Currently, this Contract offers five income options. 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 based on joint lives, we pay according to option 3 for a period of 10 years. 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 16 23 time prior to the Annuity Date. You must notify us if the Annuitant dies before the Annuity Date and 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. 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 when the survivor dies. OPTION 3 - JOINT AND SURVIVOR LIFE ANNUITY WITH 10 OR 20 YEARS GUARANTEED This option is similar to option 2 above, with an additional guarantee of payments for at least 10 years. If the Annuitant and the survivor die before all of the guaranteed income payments have been made, the remaining payments are made to the Beneficiary under your contract. OPTION 4 - LIFE ANNUITY WITH 10 OR 20 YEARS GUARANTEED 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 any remaining guaranteed variable income payments after the Annuity Date for a discounted value determined by Us. If provided for in your contract, any applicable withdrawal charge will be deducted from the discounted value as if you fully surrendered your contract. 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. Please read the Statement of Additional Information ("SAI") for a more detailed discussion of the income options. FIXED OR VARIABLE INCOME PAYMENTS You can choose income payments that are fixed, variable or both. If at the date when income payments begin you are invested in the Variable Portfolios 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. Further, if you are invested in both fixed and variable investment options when income payments begin, your payments will be fixed and variable. If income payments are fixed, Anchor National guarantees the amount of each payment. If the income payments are variable the amount is not guaranteed. INCOME PAYMENTS We make income payments on a monthly, quarterly, semiannual or annual basis. You instruct us to send you a check or to have the payments directly 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 income payments of less than $50 per payment, we may decrease the frequency of payments, state law allowing. If you are invested in the Variable Portfolios after the Annuity date, your income payments vary depending on four things: - for life options, your age when payments begin, and; - the value of your contract in the Variable Portfolios on the Annuity Date, and; - the 3.5% assumed investment rate used in the annuity table for the contract, and; - the performance of the Variable Portfolios 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 Portfolios after the Annuity Date, the allocation of funds between the fixed and variable options 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. THE INCOME PROTECTOR FEATURE The Income Protector feature is a future "safety net" which offers you the ability to receive a guaranteed fixed minimum retirement income when you switch to the Income Phase. With the Income Protector feature you can know the level of minimum income that will be available to you, regardless of fluctuating market conditions. The Income Protector is a standard feature of your contract, if available in your state. There is no additional charge associated with this feature. 17 24 Other options were previously available under the Income Protector feature. If you purchased your contract between November 2, 1998 and March 31, 1999, the other provisions continue to apply to your contract. Please contact our Annuity Service Center for more information. We reserve the right to modify, suspend or terminate the Income Protector feature at any time. HOW WE DETERMINE THE AMOUNT OF YOUR MINIMUM GUARANTEED INCOME We base the amount of minimum income available to you if you elect to receive income payments using the Income Protector feature upon a calculation we call the income benefit base. 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. 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 initial Purchase Payment, or for each subsequent year of calculation, the income benefit base on the prior contract anniversary, and; (b) is equal to the sum of all subsequent Purchase Payments made into the contract since the last 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. ELECTING TO RECEIVE INCOME PAYMENTS You may elect to begin the Income Phase of your contract using the Income Protector feature ONLY within the 30 days after the seventh or later contract anniversary. The contract anniversary prior to your election to begin receiving income payments is your income benefit date. This is the date as of which we calculate your income benefit base to use in determining your guaranteed minimum fixed retirement income. Your final income benefit base is equal to (a) minus (b) where: (a) is equal to your income benefit base as of your income benefit date, and; (b) is equal to 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 the income benefit date, and any applicable premium taxes. To arrive at the minimum guaranteed retirement income available to you we apply to your final income benefit base the annuity rates stated in your Income Protector endorsement for the income option you select. You then choose if you would like to receive that income annually, semi-annually quarterly or monthly for the time guaranteed under your selected income option. 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 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. You are not required to use the Income Protector feature to receive income payments. NOTE TO QUALIFIED CONTRACT HOLDERS Qualified contracts generally require that you select an income option which does not exceed your life expectancy. That restriction, if it applies to you, may limit your ability to use the Income Protector feature. You may wish to consult your tax advisor for information concerning your particular circumstances. 18 25 HYPOTHETICAL EXAMPLE OF THE OPERATION OF THE INCOME PROTECTOR FEATURE This table assumes $100,000 initial investment in a Non-qualified contract with no withdrawals, additional Purchase Payments or premium taxes.
- ------------------------------------------------------------------------------------------------------------- Minimum annual income if you elect to receive income payments If at issue on contract anniversary . . . you are . . . 7 10 15 20 - ------------------------------------------------------------------------------------------------------------- Male 6,108 6,672 7,716 8,832 age 60* - ------------------------------------------------------------------------------------------------------------- Female 5,388 5,880 6,900 8,112 age 60* - ------------------------------------------------------------------------------------------------------------- Joint** 4,716 5,028 5,544 5,928 Male-60 Female-60 - -------------------------------------------------------------------------------------------------------------
* Life annuity with 10 years guaranteed ** Joint and survivor life annuity with 20 years guaranteed - ---------------------------------------------------------------- - ---------------------------------------------------------------- TAXES - ---------------------------------------------------------------- - ---------------------------------------------------------------- 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 ("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 IRC treats such a withdrawal as first coming from the earnings and then as coming from your Purchase Payments. For income payments, any portion of each payment that is considered a return of your Purchase Payment will not be taxed. Withdrawn earnings are treated as income to you and are taxable. The IRC 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 IRC); (4) when paid 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 IRC 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 IRC); (4) in a series of substantially equal installments made for your life or for the joint lives of you and your Beneficiary; (5) to the extent such withdrawals do not exceed limitations set by the IRC for amounts paid during the taxable year for medical care; (6) to fund higher education expenses (as defined in IRC); (7) to fund certain first-time 19 26 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 IRC limits the withdrawal of Purchase Payments from certain Tax-Sheltered Annuities. Withdrawals can only be made when an owner: (1) reaches age 59 1/2; (2) leaves his or her job; (3) dies; (4) becomes disabled (as defined in the IRC); or (5) experiences a hardship (as defined in the IRC). In the case of hardship, the owner can only withdraw Purchase Payments. MINIMUM DISTRIBUTIONS Generally, the IRS requires that you begin taking annual distributions from qualified annuity 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) the calendar year in which you retire. Failure to satisfy the minimum distribution requirements may result in a tax penalty. You should consult your tax advisor for more information. DIVERSIFICATION The IRC imposes certain diversification requirements on the underlying investments for a variable annuity. We believe that each underlying Variable 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 Variable Portfolios. It is unknown to what extent owners are permitted to select investments, to make transfers among Variable Portfolios or the number and type of Variable 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 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 SAI 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 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 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. - ---------------------------------------------------------------- - ---------------------------------------------------------------- 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, CalAmerica Life Insurance Company, SunAmerica National Life Insurance Company, SunAmerica Asset Management Corp., Resources Trust Company, and six broker-dealers, specialize in retirement savings and investment products and 20 27 services. Business focuses include fixed and variable annuities, mutual funds, broker-dealer services and trust administration services. THE SEPARATE ACCOUNT Anchor National established Variable Separate Account ("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. 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 7% 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. SunAmerica Capital Services, Inc., 733 Third Avenue, 4th Floor, New York, New York 10017 distributes the contracts. SunAmerica Capital Services, an affiliate of Anchor National, is registered as a broker-dealer under the Exchange Act of 1934 and is a member of the National Association of Securities Dealers, Inc. No underwriting fees are paid in connection with the distribution of the contracts. ADMINISTRATION We are responsible for the administrative servicing of your contract. Please contact our Annuity Service Center at 1-800-445-SUN2, 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. YEAR 2000 We rely significantly on computer systems and applications in our daily operations. Many of our systems are not presently year 2000 compliant, which means that because they have historically used only two digits to identify the year in a date, they will fail to distinguish dates in the "2000s" from dates in the "1900s." Anchor National's business, financial condition and results of operations could be materially and adversely affected by the failure of our systems and applications (and those operated by third parties interfacing with our systems and applications) to properly operate or manage these dates. Anchor National has a coordinated plan to repair or replace these noncompliant systems and to obtain similar assurances from third parties interfacing with our systems and applications. In fiscal 1997, the Company's parent recorded a $15.0 million provision for estimated programming costs to make necessary repairs of certain specific noncompliant systems of which $6.2 million was allocated to Anchor National. Anchor National's management is making expenditures which we expect will ultimately total $5.0 million to replace certain other noncompliant systems. Total expenditures relating to the replacement of noncompliant systems will be capitalized by the Company as software costs and will be amortized over future periods. Both phases of the project are progressing according to plan and were substantially completed by the end of calendar 1998. Testing of both the repaired and replacement systems is being conducted during calendar 1999. In addition, we distributed a year 2000 questionnaire to our significant suppliers, distributors, financial institutions, lessors and others we do business with to evaluate their year 2000 compliance plans and state of readiness and to determine how our systems and applications may be affected by their failure to solve their own year 2000 issues. To date, however, we have only received preliminary feedback from such parties and have not independently confirmed any information received from other parties with respect to the year 2000 issues. Therefore, we cannot assure that such other parties 21 28 will complete their year 2000 conversions in a timely fashion or will not suffer a year 2000 business disruption that may adversely affect our financial condition and results of operations. Because we expect to complete our year 2000 conversion prior to any potential disruption to our business, we have not developed a comprehensive year 2000 contingency plan. Anchor National closely monitors the progression of its plan for compliance, and if necessary, would devote additional resources to assure the timely completion of our year 2000 plan. If we determine that our business is at material risk of disruption due to the year 2000 issue or anticipate that we will not complete our year 2000 conversion in a timely fashion, we will work to enhance our contingency plans. The above statements are forward-looking. The costs of our year 2000 conversion, the date which we have set to complete such conversion and the possible risks associated with the year 2000 issue are based on our current estimates and are subject to various uncertainties that could cause the actual results to differ materially from our expectations. Such uncertainties include, among others, our success in identifying systems and applications that are not year 2000 compliant, the nature and amount of programming required to upgrade or replace each of the affected systems and applications, the availability of qualified personnel, consultants and other resources, and the success of the year 2000 conversion efforts of others. 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 PolarisII 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. 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. INDEPENDENT ACCOUNTANTS The financial statements of Anchor National as of September 30, 1998 and 1997 and for each of the three years in the period ended September 30, 1998 incorporated by reference in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. LEGAL MATTERS The organization of Anchor National, its authority to issue the contracts and the validity of the form of the contracts have been passed upon by Susan L. Harris, Senior Vice President and General Counsel of SunAmerica Inc., of which Anchor National is an indirect-wholly owned subsidiary. 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. - ---------------------------------------------------------------- - ---------------------------------------------------------------- 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............................... 3 Performance Data.............................. 4 Income Payments............................... 9 Annuity Unit Values........................... 10 Taxes......................................... 12 Distribution of Contracts..................... 16 Financial Statements.......................... 16
22 29 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- APPENDIX A - CONDENSED FINANCIAL INFORMATION - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
INCEPTION TO FISCAL YEAR PORTFOLIOS 11/30/97 11/30/98 - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Capital Appreciation (Inception Date - 6/3/97) Beginning AUV.................................. $ 18.52 $ 21.26 Ending AUV..................................... $ 21.26 $ 23.72 Ending Number of AUs........................... 1,392,262 7,356,862 - ------------------------------------------------------------------------------------------- Growth (Inception Date - 6/3/97) Beginning AUV.................................. $ 17.93 $ 20.31 Ending AUV..................................... $ 20.31 $ 24.41 Ending Number of AUs........................... 789,274 3,678,108 - ------------------------------------------------------------------------------------------- Natural Resources (Inception Date - 6/4/97) Beginning AUV.................................. $ 12.39 $ 11.14 Ending AUV..................................... $ 11.14 $ 9.30 Ending Number of AUs........................... 195,946 641,479 - ------------------------------------------------------------------------------------------- Government and Quality Bond (Inception Date - 6/11/97) Beginning AUV.................................. $ 11.99 $ 12.65 Ending AUV..................................... $ 12.65 $ 13.66 Ending Number of AUs........................... 395,258 5,697,571 - ------------------------------------------------------------------------------------------- Emerging Markets (Inception Date - 6/5/97) Beginning AUV.................................. $ 10.14 $ 7.97 Ending AUV..................................... $ 7.97 $ 6.14 Ending Number of AUs........................... 663,212 2,574,316 - ------------------------------------------------------------------------------------------- International Diversified Equities (Inception Date - 6/4/97) Beginning AUV.................................. $ 12.04 $ 11.62 Ending AUV..................................... $ 11.62 $ 13.53 Ending Number of AUs........................... 1,040,812 4,519,545 - ------------------------------------------------------------------------------------------- Global Equities (Inception Date - 6/3/97) Beginning AUV.................................. $ 16.54 $ 16.90 Ending AUV..................................... $ 16.90 $ 19.21 Ending Number of AUs........................... 600,294 2,566,912 - ------------------------------------------------------------------------------------------- International Growth and Income (Inception Date - 6/4/97) Beginning AUV.................................. $ 9.97 $ 10.33 Ending AUV..................................... $ 10.33 $ 11.16 Ending Number of AUs........................... 1,310,126 6,738,263 - ------------------------------------------------------------------------------------------- Aggressive Growth (Inception Date - 6/9/97) Beginning AUV.................................. $ 10.03 $ 11.51 Ending AUV..................................... $ 11.51 $ 11.86 Ending Number of AUs........................... 821,105 2,794,187 - ------------------------------------------------------------------------------------------- MFS Mid-Cap Growth (Inception Date - 4/1/99) Beginning AUV.................................. $ -- $ -- Ending AUV..................................... $ -- $ -- Ending Number of AUs........................... -- -- - ------------------------------------------------------------------------------------------- Real Estate (Inception Date - 6/4/97) Beginning AUV.................................. $ 9.98 $ 11.44 Ending AUV..................................... $ 11.44 $ 9.80 Ending Number of AUs........................... 887,321 3,336,767 - ------------------------------------------------------------------------------------------- Putnam Growth (Inception Date - 6/3/97) Beginning AUV.................................. $ 15.80 $ 18.47 Ending AUV..................................... $ 18.47 $ 22.29 Ending Number of AUs........................... 831,178 4,949,624 - ------------------------------------------------------------------------------------------- MFS Growth and Income* (Inception Date - 6/4/97) Beginning AUV.................................. $ 15.82 $ 17.63 Ending AUV..................................... $ 17.63 $ 20.46 Ending Number of AUs........................... 191,101 694,076 - ------------------------------------------------------------------------------------------- Alliance Growth (Inception Date - 6/2/97) Beginning AUV.................................. $ 21.81 $ 24.51 Ending AUV..................................... $ 24.51 $ 32.81 Ending Number of AUs........................... 2,092,044 12,001,651 - ------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------
* Formerly named Growth/Phoenix and managed by Phoenix Investment Counsel, Inc. AUV - Accumulation Unit Value AU - Accumulation Units A-1 30
INCEPTION TO FISCAL YEAR PORTFOLIOS 11/30/97 11/30/98 - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- "Dogs of Wall Street" (Inception Date - 4/1/98) Beginning AUV.................................. $ -- $ 10.00 Ending AUV..................................... $ -- $ 9.71 Ending Number of AUs........................... -- 4,324,225 - ------------------------------------------------------------------------------------------- Venture Value (Inception Date - 6/2/97) Beginning AUV.................................. $ 18.63 $ 21.30 Ending AUV..................................... $ 21.30 $ 23.36 Ending Number of AUs........................... 4,281,879 20,734,371 - ------------------------------------------------------------------------------------------- Federated Value (Inception Date - 6/4/97) Beginning AUV.................................. $ 12.14 $ 13.62 Ending AUV..................................... $ 13.62 $ 15.86 Ending Number of AUs........................... 736,333 3,783,248 - ------------------------------------------------------------------------------------------- Growth-Income (Inception Date - 6/3/97) Beginning AUV.................................. $ 18.84 $ 21.41 Ending AUV..................................... $ 21.41 $ 25.71 Ending Number of AUs........................... 1,949,292 9,786,202 - ------------------------------------------------------------------------------------------- Utility (Inception Date - 6/6/97) Beginning AUV.................................. $ 11.41 $ 12.74 Ending AUV..................................... $ 12.74 $ 14.56 Ending Number of AUs........................... 177,618 1,807,529 - ------------------------------------------------------------------------------------------- Asset Allocation (Inception Date - 6/3/97) Beginning AUV.................................. $ 16.59 $ 17.98 Ending AUV..................................... $ 17.98 $ 18.22 Ending Number of AUs........................... 1,498,681 8,996,522 - ------------------------------------------------------------------------------------------- MFS Total Return** (Inception Date - 6/10/97) Beginning AUV.................................. $ 14.44 $ 15.45 Ending AUV..................................... $ 15.45 $ 17.28 Ending Number of AUs........................... 218,391 1,492,175 - ------------------------------------------------------------------------------------------- SunAmerica Balanced (Inception Date - 6/5/97) Beginning AUV.................................. $ 11.84 $ 13.22 Ending AUV..................................... $ 13.22 $ 15.60 Ending Number of AUs........................... 363,136 3,543,245 - ------------------------------------------------------------------------------------------- Worldwide High Income (Inception Date - 6/5/97) Beginning AUV.................................. $ 15.57 $ 15.98 Ending AUV..................................... $ 15.98 $ 13.57 Ending Number of AUs........................... 596,308 2,430,509 - ------------------------------------------------------------------------------------------- High-Yield Bond (Inception Date - 6/9/97) Beginning AUV.................................. $ 13.63 $ 14.66 Ending AUV..................................... $ 14.66 $ 14.25 Ending Number of AUs........................... 758,856 5,006,115 - ------------------------------------------------------------------------------------------- Corporate Bond (Inception Date - 6/9/97) Beginning AUV.................................. $ 11.83 $ 12.54 Ending AUV..................................... $ 12.54 $ 13.15 Ending Number of AUs........................... 328,300 3,633,064 - ------------------------------------------------------------------------------------------- Global Bond (Inception Date - 6/11/97) Beginning AUV.................................. $ 12.41 $ 13.08 Ending AUV..................................... $ 13.08 $ 14.40 Ending Number of AUs........................... 183,563 1,342,157 - ------------------------------------------------------------------------------------------- Cash Management (Inception Date - 6/5/97) Beginning AUV.................................. $ 11.24 $ 11.43 Ending AUV..................................... $ 11.43 $ 11.83 Ending Number of AUs........................... 1,514,290 5,488,046 - ------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------
** Formerly named Balanced/Phoenix and managed by Phoenix Investment Counsel, Inc. AUV - Accumulation Unit Value AU - Accumulation Units A-2 31 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- APPENDIX B - PRINCIPAL REWARDS PROGRAM DEFERRED PAYMENT ENHANCEMENT EXAMPLES - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- If you elect to participate in the Principal Rewards Program at contract issue, we contribute 2.00% of each Purchase Payment to your contract for each Purchase Payment we receive. Any applicable Deferred Payment Enhancement is allocated to your contract on the corresponding Deferred Payment Enhancement Date and, if declared by the Company, is a percentage of your REMAINING Purchase Payment on the Deferred Payment Enhancement Date. Deferred Purchase Payment Enhancements are reduced proportionately by partial withdrawals of that Purchase Payment prior to the Deferred Payment Enhancement Date. The examples that follow assume an initial Purchase Payment of $50,000 and that the Deferred Payment Enhancement is 2.00%. For purposes of the example, the Deferred Payment Enhancement Date is the 9th anniversary of the Purchase Payment. EXAMPLE 1 - NO WITHDRAWALS ARE MADE The Initial Payment Enhancement allocated to your contract is $1,000.00 (2.00% of $50,000.00). On your 9th contract anniversary, the Deferred Payment Enhancement Date, your Deferred Payment Enhancement of $1,000.00 (2.00% of your remaining Purchase Payment or $50,000.00) will be allocated to your contract. EXAMPLE 2 - WITHDRAWAL MADE PRIOR TO DEFERRED PAYMENT ENHANCEMENT DATE As in Example 1, your Initial Payment Enhancement is $1,000.00. This example also assumes the following: 1. Your contract value on your 5th contract anniversary is $75,000.00. 2. You request a withdrawal of $30,000.00 on your 5th contract anniversary. 3. No subsequent Purchase Payments have been made. 4. No prior withdrawals have been taken. 5. Funds are not allocated to any of the MVA Fixed Accounts. On your 5th contract anniversary, your penalty-free earnings in the contract are $25,000.00 ($75,000.00 contract value less your $50,000.00 investment in the contract). Therefore, you are withdrawing $5,000.00 of your initial Purchase Payment. Your contract value will also be reduced by a $250.00 withdrawal charge on the $5,000.00 Purchase Payment (5.00% of $5,000.00). Your gross withdrawal is $30,250.00 of which $5,250 constitutes part of your initial Purchase Payment. The withdrawal of $5,250.00 of your $50,000.00 Purchase Payment is a withdrawal of 10.50% of your Purchase Payment. Therefore, only 89.50%, or $44,750.00, of your initial Purchase Payment remains in your contract. On your 9th contract anniversary, the Deferred Payment Enhancement Date, assuming no other transactions occur affecting the Purchase Payment, we allocate your Deferred Payment Enhancement of $895.00 (2.00% of your remaining Purchase Payment, $44,750.00) to your contract. B-1 32 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- APPENDIX C - 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 account option, the greater the impact of changing interest rates. The impact of the MVA can be either positive or negative, and is computed by multiplying the amount withdrawn, transferred or switched to the Income Phase by the following factor: [(1+I/(1+J+0.005)](N/12) - 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 account 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 account option; and N is the number of full months remaining in the term you initially agreed to leave your money in the fixed account 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 10-year fixed account option at a rate of 5%; (2) You make a partial withdrawal of $4,000 when 1 year (12 months) remains in the 10-year term you initially agreed to leave your money in the fixed account 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 nine 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 1-year fixed account option is 4%. The MVA factor is = [(1+I/(1+J+0.005)](N/12) - 1 = [(1.05)/(1.04+0.005)](12/12) - 1 = (1.004785)(1) - 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. NEGATIVE ADJUSTMENT Assume that on the date of withdrawal, the interest rate in effect for new Purchase Payments in the 1-year fixed account option is 6%. The MVA factor is = [(1+I)/(1+J+0.005)](N/12) - 1 = [(1.05)/(1.06+0.005)](12/12) - 1 = (0.985915)(1) - 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 10-year fixed account option. C-1 33 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 .50% 2.35% - ---------------------------------------------------------------------------------------- Kentucky 2% 2% - ---------------------------------------------------------------------------------------- Maine 0% 2% - ---------------------------------------------------------------------------------------- Nevada 0% 3.5% - ---------------------------------------------------------------------------------------- South Dakota 0% 1.25% - ---------------------------------------------------------------------------------------- West Virginia 1% 1% - ---------------------------------------------------------------------------------------- Wyoming 0% 1% - ---------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------
D-1 34 - -------------------------------------------------------------------------------- Please forward a copy (without charge) of the Polaris(II) 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 - -------------------------------------------------------------------------------- 35 LOGO THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT POINTS THAT YOU SHOULD KNOW AND CONSIDER BEFORE PURCHASING THE POLARISII VARIABLE ANNUITY. THE ANNUITY IS MORE FULLY DESCRIBED IN THE PROSPECTUS. PLEASE READ THE PROSPECTUS CAREFULLY. June 1, 1999 - ---------------------------------------------------------------- - ---------------------------------------------------------------- 1. THE POLARISII VARIABLE ANNUITY - ---------------------------------------------------------------- - ---------------------------------------------------------------- The PolarisII Variable Annuity is a contract between you and Anchor National Life Insurance Company. It is designed to help you invest on a tax-deferred basis and meet long-term financial goals, such as retirement funding. Tax deferral means all your money, including the amount you would otherwise pay in current income taxes, remains in your contract to generate more earnings. Your money could grow faster than it would in a comparable taxable investment. PolarisII offers a diverse selection of money managers and investment options. You may divide your money among any or all 27 variable portfolios and 7 fixed account options. To the extent you invest in the variable portfolios, your investment is not guaranteed. The value of your PolarisII contract can fluctuate up and down, based on the performance of the underlying investments you select and you may experience a loss. The variable portfolios offer professionally managed investment choices with goals ranging from capital preservation to aggressive growth. Your choices for the various investment options are found on the next page. The contract also offers 7 fixed account options, for different time periods. Each may have a different interest rate. Interest rates are guaranteed by Anchor National. Like most annuities, the contract has an accumulation phase and an income phase. During the accumulation phase, you invest money in your contract. Your earnings are based on the investment performance of the variable portfolios to which your money is allocated and/or the interest rate(s) earned on the fixed account option(s) in which you invest. You may withdraw money from your contract during the accumulation phase. However, as with other tax-deferred investments, you will pay taxes on earnings and untaxed contributions when you withdraw them. A federal tax penalty may apply if you make withdrawals before age 59 1/2. During the income phase, you may receive income payments from your annuity. Your income payments may be fixed in dollar amount, vary with investment performance or a combination of both, depending on where your money is allocated. Among other factors, the amount of money you are able to accumulate in your contract during the accumulation phase will affect the amount of your income payments during the income phase. - ---------------------------------------------------------------- - ---------------------------------------------------------------- 2. INCOME OPTIONS - ---------------------------------------------------------------- - ---------------------------------------------------------------- You can select from one of five income options: (1) payments for your lifetime; (2) payments for your lifetime and your survivor's lifetime; (3) payments for your lifetime and your survivor's lifetime, but for not less than 10 or 20 years; (4) payments for your lifetime, but for not less than 10 or 20 years; and (5) payments for a specified period of 5 to 30 years. You will also need to decide when your income payments begin and if you want your income payments to fluctuate with investment performance or remain constant. Once you begin receiving income payments, you cannot change your income option. If your contract is part of a non-qualified retirement plan (one that is established with after-tax dollars), payments during the income phase are considered partly a return of your original investment. The "original investment" part of each payment is not taxable as income. For contracts which are part of a qualified retirement plan using before-tax dollars, the entire income payment is taxable as income. In addition to the above income options, you may elect to take income payments under the income protector feature, subject to the provisions thereof. - ---------------------------------------------------------------- - ---------------------------------------------------------------- 3. PURCHASING A POLARISII VARIABLE ANNUITY CONTRACT - ---------------------------------------------------------------- - ---------------------------------------------------------------- You can buy a contract through your financial representative, who can also help you complete the proper forms. For non-qualified contracts, the minimum initial purchase payment is $5,000 and subsequent amounts of $500 or more may be added to your contract at any time during the accumulation phase. For qualified contracts, the minimum initial purchase payment is $2,000 and subsequent amounts of $250 or more may be added to your contract at any time during the accumulation phase. 36 ---------------------------------------------------------------- ---------------------------------------------------------------- 4. INVESTMENT OPTIONS ---------------------------------------------------------------- ---------------------------------------------------------------- You may allocate money to the following variable portfolios of the Anchor Series Trust and/or the SunAmerica Series Trust: ANCHOR SERIES TRUST MANAGED BY WELLINGTON MANAGEMENT COMPANY, LLP - Capital Appreciation Portfolio - Growth Portfolio - Natural Resources Portfolio - Government and Quality Bond Portfolio SUNAMERICA SERIES TRUST MANAGED BY ALLIANCE CAPITAL MANAGEMENT L.P. - Global Equities Portfolio - Alliance Growth Portfolio - Growth-Income Portfolio MANAGED BY DAVIS SELECTED ADVISERS, L.P. - Venture Value Portfolio - Real Estate Portfolio MANAGED BY FEDERATED INVESTORS - Federated Value Portfolio - Utility Portfolio - Corporate Bond Portfolio MANAGED BY GOLDMAN SACHS ASSET MANAGEMENT/ GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL - Asset Allocation Portfolio - Global Bond Portfolio MANAGED BY MASSACHUSETTS FINANCIAL SERVICES COMPANY - MFS Mid-Cap Growth - MFS Growth and Income Portfolio - MFS Total Return Portfolio MANAGED BY MORGAN STANLEY ASSET MANAGEMENT - International Diversified Equities Portfolio - Worldwide High Income Portfolio MANAGED BY PUTNAM INVESTMENT MANAGEMENT, INC. - Putnam Growth Portfolio - International Growth and Income Portfolio - Emerging Markets Portfolio MANAGED BY SUNAMERICA ASSET MANAGEMENT CORP. - Aggressive Growth Portfolio - "Dogs" of Wall Street Portfolio - SunAmerica Balanced Portfolio - High-Yield Bond Portfolio - Cash Management Portfolio You may also allocate money to the 1-year fixed account option or the 3, 5, 7 and 10-year market value adjustment ("MVA") fixed account options and, under certain circumstances, the 6-month and 1-year Dollar Cost Averaging ("DCA") fixed account options. The interest rates applicable for these fixed account options may differ from time to time, however, we will never credit less than a 3% annual effective rate. Once established, the rate will not change during the selected period. Your contract value will be adjusted up or down for withdrawals or transfers from the 3, 5, 7 and 10-year fixed account options prior to the end of the guarantee period. ---------------------------------------------------------------- ---------------------------------------------------------------- 5. EXPENSES ---------------------------------------------------------------- ---------------------------------------------------------------- Each year, we deduct a $35 contract maintenance fee ($30 in North Dakota) from your contract. We also deduct insurance charges which equal 1.52% annually of the average daily value of your contract allocated to the variable portfolios. As with other professionally managed investments, there are investment charges imposed on contracts with money allocated to the variable portfolios. We estimate these fees to range from .58 to 1.90. If you take money out of your contract, you may be assessed a withdrawal charge which is a percentage of the money you withdraw. The percentage declines over the time the money is in the contract.
- ----------------------------------------------------------------------------------------- Year 1 2 3 4 5 6 7 8 - ----------------------------------------------------------------------------------------- WITHDRAWAL CHARGE 7% 6% 5% 4% 3% 2% 1% 0% - -----------------------------------------------------------------------------------------
Each year, you are allowed to make 15 transfers without charge. After your first 15 free transfers, a $25 transfer fee ($10 in Pennsylvania and Texas) applies to each subsequent transfer. In a limited number of states, you may also be assessed a state premium tax of up to 3.5% depending upon the state. The following chart is designed to help you understand the charges in your contract. The column "Total Annual Charges" shows the total of the 1.52% insurance charges, the $35 contract maintenance fee and the investment charges for each variable portfolio. We converted the contract maintenance fee to a percentage using an assumed contract size of $40,000. The actual impact of this charge on your contract may differ from this percentage. The next two columns show two examples of the charges you would pay under the contract. The examples assume that you invested $1,000 in a contract which earns 5% annually and that you withdraw your money: (1) at the end of year 1, and (2) at the end of year 10. The premium tax is assumed to be 0% in both examples. 37
- ---------------------------------------------------------------------------------------------------------------------------- EXAMPLES: TOTAL ANNUAL TOTAL ANNUAL TOTAL EXPENSES TOTAL EXPENSES INSURANCE INVESTMENT TOTAL ANNUAL AT END OF AT END OF ANCHOR SERIES TRUST PORTFOLIO CHARGES CHARGES CHARGES 1 YEAR 10 YEARS - ---------------------------------------------------------------------------------------------------------------------------- Capital Appreciation 1.61% .68% 2.29% $ 93 $262 Growth 1.61% .75% 2.36% $ 94 $269 Natural Resources 1.61% .88% 2.49% $ 95 $282 Government and Quality Bond 1.61% .67% 2.28% $ 93 $261 - ---------------------------------------------------------------------------------------------------------------------------- SUNAMERICA SERIES TRUST PORTFOLIO Emerging Markets* 1.61% 1.90% 3.51% $105 $378 International Diversified Equities 1.61% 1.26% 2.87% $ 99 $319 Global Equities 1.61% .88% 2.49% $ 95 $282 International Growth and Income* 1.61% 1.46% 3.07% $101 $338 Aggressive Growth* 1.61% .83% 2.44% $ 95 $277 MFS Mid-Cap Growth 1.61% 1.00% 2.61% $ 96 $294 Real Estate* 1.61% .95% 2.56% $ 96 $289 Putnam Growth 1.61% .86% 2.47% $ 95 $280 MFS Growth and Income(1) 1.61% .73% 2.34% $ 94 $267 Alliance Growth 1.61% .64% 2.25% $ 93 $258 "Dogs" of Wall Street* 1.61% .85% 2.46% $ 95 $279 Venture Value 1.61% .75% 2.36% $ 94 $269 Federated Value* 1.61% .83% 2.44% $ 95 $277 Growth-Income 1.61% .60% 2.21% $ 92 $254 Utility* 1.61% 1.01% 2.62% $ 96 $295 Asset Allocation 1.61% .64% 2.25% $ 93 $258 MFS Total Return(2) 1.61% .77% 2.38% $ 94 $271 SunAmerica Balanced* 1.61% .78% 2.39% $ 94 $272 Worldwide High Income 1.61% 1.08% 2.69% $ 97 $302 High-Yield Bond 1.61% .69% 2.30% $ 93 $263 Corporate Bond 1.61% .77% 2.38% $ 94 $271 Global Bond 1.61% .85% 2.46% $ 95 $279 Cash Management 1.61% .58% 2.19% $ 92 $252 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------
* For these Portfolios, the adviser, SunAmerica Asset Management Corp., has voluntarily agreed to waive fees or reimburse expenses, if necessary, to keep operating expenses at or below an established maximum amount. All waivers or reimbursements may be terminated at any time. For more detailed information, see Fee Tables and Examples in the prospectus. (1) Formerly named Growth/Phoenix and managed by Phoenix Investment Counsel, Inc. (2) Formerly named Balanced/Phoenix and managed by Phoenix Investment Counsel, Inc. ---------------------------------------------------------------- ---------------------------------------------------------------- 6. TAXES ---------------------------------------------------------------- ---------------------------------------------------------------- Unlike taxable investments where earnings are taxed in the year they are earned, taxes on amounts earned in a non-qualified contract are deferred until they are withdrawn. In a qualified contract, all amounts are taxable when they are withdrawn. When you begin taking distributions or withdrawals from your contract, earnings are considered to be taken out first and will be taxed at your ordinary income rate. You may be subject to a 10% federal tax penalty for distributions or withdrawals before age 59 1/2. ---------------------------------------------------------------- ---------------------------------------------------------------- 7. ACCESS TO YOUR MONEY ---------------------------------------------------------------- ---------------------------------------------------------------- During the first year, you may withdraw free of a withdrawal charge an amount that is equal to the penalty-free earnings in your contract as of the date you make the withdrawal or, if you participate in the systematic withdrawal program, you may withdraw 10% of your total invested amount less any withdrawals made during the year. The penalty-free earnings amount is calculated by taking the value of your contract on the day you make the withdrawal and subtracting your total invested amount. After the first year, your maximum free withdrawal amount is the greater of: (1) the penalty-free earnings or (2) 10% of your total invested amount that has been invested for at least one year, less any withdrawals made during the year. Withdrawals in excess of these limits will be assessed a withdrawal charge. If you withdraw your entire contract value, you will not receive the benefit of any free withdrawal amount. After your money has been in the contract for seven full years, there are no withdrawal charges on that portion of the money that you have invested for at least seven full years. ---------------------------------------------------------------- ---------------------------------------------------------------- 8. PERFORMANCE ---------------------------------------------------------------- ---------------------------------------------------------------- When you invest in the PolarisII Variable Annuity, your money is actually invested in the underlying portfolios of the Anchor Series Trust and/or the SunAmerica Series Trust. The value of your annuity will fluctuate depending upon the investment performance of the portfolio(s) you choose. The following chart shows total returns for each portfolio for the time periods shown. These numbers reflect the insurance charges, the contract maintenance fee and the investment charges. Withdrawal charges are not reflected in the chart. Past performance is no guarantee of future results. 38
- -------------------------------------------------------------- ANCHOR SERIES CALENDAR TRUST PORTFOLIO YEAR 1998 - -------------------------------------------------------------- Capital Appreciation 20.27% Growth 26.93% Natural Resources (18.80)% Government and Quality Bond 7.42% - -------------------------------------------------------------- SUNAMERICA SERIES TRUST PORTFOLIO Emerging Markets (25.62)% International Diversified Equities 16.60% Global Equities 20.86% International Growth and Income 9.03% Aggressive Growth 15.55% MFS Mid-Cap Growth --* Real Estate (16.76)% Putnam Growth 32.60% MFS Growth and Income1 27.22% Alliance Growth 49.83% "Dogs" of Wall Street (1.83)%** Venture Value 11.96% Federated Value 16.05% Growth-Income 28.74% Utility 12.21% Asset Allocation 1.67% MFS Total Return2 17.64% SunAmerica Balanced 22.67% Worldwide High Income (18.45)% High-Yield Bond (4.51)% Corporate Bond 4.31% Global Bond 9.04% Cash Management 3.51% - -------------------------------------------------------------- - --------------------------------------------------------------
* This portfolio was not available for sale during calendar year 1998. ** Inception to 12/31/98. 1 Formerly named Growth/Phoenix and managed by Phoenix Investment Counsel, Inc. 2 Formerly named Balanced/Phoenix and managed by Phoenix Investment Counsel, Inc. ---------------------------------------------------------------- ---------------------------------------------------------------- 9. DEATH BENEFIT ---------------------------------------------------------------- ---------------------------------------------------------------- If you should die during the accumulation phase, your beneficiary will receive a death benefit. You must select from the two death benefit options described below at the time you purchase your contract. Once selected, your death benefit may not be changed. You should discuss with your financial representative the options available to you and which option is best for you. OPTION 1 - PURCHASE PAYMENT ACCUMULATION OPTION: The death benefit is the greater of: (1) the value of your contract at the time we receive satisfactory proof of death; or (2) total purchase payments less withdrawals (and any fees or charges applicable to such withdrawals), compounded at a 4% annual growth rate until the date of death (3% growth rate if 70 or older at the time of contract issue) plus any purchase payments less withdrawals recorded after the date of death (and any fees or charges applicable to such withdrawals); or (3) the value of your contract on the seventh contract anniversary, plus any purchase payments since the seventh anniversary and less any withdrawals (and any fees or charges applicable to such withdrawals), all compounded at a 4% annual growth rate until the date of death (3% if 70 or older at the time of contract issue) plus any purchase payments less withdrawals recorded after the date of death (and any fees or charges applicable to such withdrawals). OPTION 2 - MAXIMUM ANNIVERSARY OPTION: The death benefit is the greater of: (1) the value of your contract at the time we receive satisfactory proof of death; or (2) total purchase payments less any withdrawals (and any fees or charges applicable to such withdrawals); or (3) the maximum anniversary value on any contract anniversary prior to your 81st birthday. The anniversary value equals the value of your contract on a contract anniversary plus any purchase payments and less any withdrawals (and any fees or charges applicable to such withdrawals) since that anniversary. If you are age 90 or older at the time of death and selected the option 2 death benefit, the death benefit will be equal to the value of your contract at the time we receive satisfactory proof of death. ---------------------------------------------------------------- ---------------------------------------------------------------- 10. OTHER INFORMATION ---------------------------------------------------------------- ---------------------------------------------------------------- FREE LOOK: You may cancel your contract within ten days (or longer if required by your state) by mailing it to our Annuity Service Center. Your contract will be treated as void on the date we receive it and we will pay you an amount equal to the value of your contract (unless otherwise required by state law). Its value may be more or less than the money you initially invested. ASSET ALLOCATION REBALANCING: If selected by you, this program seeks to keep your investment in line with your goals. We will maintain your specified allocation mix in the variable portfolios and the 1-year fixed account option by readjusting your money on a calendar quarter, semiannual or annual basis. SYSTEMATIC WITHDRAWAL PROGRAM: If selected by you, this program allows you to receive either monthly, quarterly, semiannual or annual checks during the accumulation phase. Systematic withdrawals may also be electronically transferred to your bank account. Of course, withdrawals may be taxable and a 10% federal tax penalty may apply if you are under age 59 1/2. PRINCIPAL ADVANTAGE PROGRAM: If selected by you, this program allows you to obtain growth potential without any market risk to your principal. We will guarantee that the portion of your money allocated to the 1, 3, 5, 7 or 10-year fixed account option will grow to equal your principal investment when it is allocated in accordance with the program. DOLLAR COST AVERAGING: If selected by you, this program allows you to invest gradually in the variable portfolios from any of the variable portfolios, the 1-year fixed account option, 39 the 6-month DCA fixed account option or the 1-year DCA fixed account option. AUTOMATIC PAYMENT PLAN: You can add to your contract directly from your bank account with as little as $20 per month. CONFIRMATIONS AND QUARTERLY STATEMENTS: During the accumulation phase, you will receive a confirmation of each transaction within your contract. 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. ---------------------------------------------------------------- ---------------------------------------------------------------- 11. INQUIRIES ---------------------------------------------------------------- ---------------------------------------------------------------- If you have questions about your contract or need to make changes, call your financial representative or contact us at: Anchor National Life Insurance Company Annuity Service Center P.O. Box 54299 Los Angeles, California 90054-0299 Telephone Number: (800) 445-SUN2 If money accompanies your correspondence, you should direct it to: Anchor National Life Insurance Company P.O. Box 100330 Pasadena, California 91189-0001 40 [POLARIS II LOGO] PROSPECTUS JUNE 1, 1999 Please read this prospectus carefully FLEXIBLE PAYMENT DEFERRED ANNUITY CONTRACTS before investing and keep it for issued by future reference. It contains ANCHOR NATIONAL LIFE INSURANCE COMPANY important information about the in connection with Polaris(II) Variable Annuity. VARIABLE SEPARATE ACCOUNT The annuity has 34 investment choices -7 fixed account To learn more about the annuity options and 27 Variable Portfolios listed below. The 7 fixed offered by this prospectus, you can account options include specified periods of 1, 3, 5, 7 and obtain a copy of the Statement of 10 years and DCA accounts for 6-month and 1-year periods. Additional Information ("SAI") dated The 27 Variable Portfolios are part of the Anchor Series June 1, 1999. The SAI has been filed Trust or the SunAmerica Series Trust. with the Securities and Exchange Commission ("SEC") and is ANCHOR SERIES TRUST: incorporated by reference into this MANAGED BY WELLINGTON MANAGEMENT COMPANY, LLP prospectus. The Table of Contents of - Capital Appreciation Portfolio the SAI appears on page 21 of this - Growth Portfolio prospectus. For a free copy of the - Natural Resources Portfolio SAI, call us at (800) 445-SUN2 or - Government and Quality Bond Portfolio write to us at our Annuity Service Center, P.O. Box 54299, Los Angeles, SUNAMERICA SERIES TRUST: California 90054-0299. MANAGED BY ALLIANCE CAPITAL MANAGEMENT L.P. - Global Equities Portfolio In addition, the SEC maintains a - Alliance Growth Portfolio website (http://www.sec.gov) that - Growth-Income Portfolio contains the SAI, materials MANAGED BY DAVIS SELECTED ADVISERS, L.P. incorporated by reference and other - Venture Value Portfolio information filed electronically with - Real Estate Portfolio the SEC by Anchor National. MANAGED BY FEDERATED INVESTORS - Federated Value Portfolio ANNUITIES INVOLVE RISKS, INCLUDING - Utility Portfolio POSSIBLE LOSS OF PRINCIPAL, AND ARE - Corporate Bond Portfolio NOT A DEPOSIT OR OBLIGATION OF, OR MANAGED BY GOLDMAN SACHS ASSET MANAGEMENT/ GUARANTEED OR ENDORSED BY, ANY BANK. GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL THEY ARE NOT FEDERALLY INSURED BY THE - Asset Allocation Portfolio FEDERAL DEPOSIT INSURANCE - Global Bond Portfolio CORPORATION, THE FEDERAL RESERVE MANAGED BY MASSACHUSETTS FINANCIAL SERVICES COMPANY BOARD OR ANY OTHER AGENCY. - MFS Mid-Cap Growth - MFS Growth and Income Portfolio - MFS Total Return Portfolio MANAGED BY MORGAN STANLEY ASSET MANAGEMENT - International Diversified Equities Portfolio - Worldwide High Income Portfolio MANAGED BY PUTNAM INVESTMENT MANAGEMENT, INC. - Putnam Growth Portfolio - International Growth and Income Portfolio - Emerging Markets Portfolio MANAGED BY SUNAMERICA ASSET MANAGEMENT CORP. - Aggressive Growth Portfolio - "Dogs" of Wall Street Portfolio - SunAmerica Balanced Portfolio - High-Yield Bond Portfolio - Cash Management Portfolio
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. 41 - ---------------------------------------------------------------- - ---------------------------------------------------------------- INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE - ---------------------------------------------------------------- - ---------------------------------------------------------------- Anchor National's Annual Report on Form 10-K for the year ended September 30, 1998, and its quarterly report on Form 10-Q for the quarter ended December 31, 1998 are incorporated herein by reference. In addition, Anchor National filed three reports on Form 8-K on January 14 and 15 and March 12, 1999. These reports are also 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 shall also be 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 7 World Trade Center, 13th Fl. 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 registrations statement and its 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 statement and its 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 above documents incorporated herein 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 Anchor National 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 need not submit the issue to a court for determination. 2 42 ------------------------------------------------------------------ ------------------------------------------------------------------ TABLE OF CONTENTS ------------------------------------------------------------------ ------------------------------------------------------------------ INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............. 2 SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION........................................... 2 GLOSSARY.................................................... 3 FEE TABLES.................................................. 4 Owner Transaction Expenses............................ 4 Annual Separate Account Expenses...................... 4 Portfolio Expenses.................................... 4 EXAMPLES.................................................... 5 THE POLARIS(II) VARIABLE ANNUITY............................ 6 PURCHASING A POLARIS(II) VARIABLE ANNUITY................... 6 Allocation of Purchase Payments....................... 7 Accumulation Units.................................... 7 Free Look............................................. 7 INVESTMENT OPTIONS.......................................... 7 Variable Portfolios................................... 7 Anchor Series Trust................................... 7 SunAmerica Series Trust............................... 8 Fixed Account Options................................. 8 Market Value Adjustment ("MVA")....................... 9 Transfers During the Accumulation Phase............... 9 Dollar Cost Averaging................................. 10 Asset Allocation Rebalancing.......................... 11 Principal Advantage Program........................... 11 Voting Rights......................................... 11 Substitution.......................................... 11 ACCESS TO YOUR MONEY........................................ 11 Systematic Withdrawal Program......................... 12 Nursing Home Waiver................................... 12 Minimum Contract Value................................ 12 DEATH BENEFIT............................................... 12 EXPENSES.................................................... 13 Insurance Charges..................................... 13 Withdrawal Charges.................................... 13 Investment Charges.................................... 14 Contract Maintenance Fee.............................. 14 Transfer Fee.......................................... 14 Premium Tax........................................... 14 Income Taxes.......................................... 14 Reduction or Elimination of Charges and Expenses, and Additional Amounts Credited........................... 14 INCOME OPTIONS.............................................. 14 Annuity Date.......................................... 14 Income Options........................................ 15 Fixed or Variable Income Payments..................... 15 Income Payments....................................... 15 Transfers During the Income Phase..................... 16 Deferment of Payments................................. 16 The Income Protector Feature.......................... 16 TAXES....................................................... 17 Annuity Contracts in General.......................... 17 Tax Treatment of Distributions - Non-Qualified Contracts............................... 18 Tax Treatment of Distributions - Qualified Contracts................................... 18 Minimum Distributions................................. 18 Diversification....................................... 18 PERFORMANCE................................................. 18 OTHER INFORMATION........................................... 19 Anchor National....................................... 19 The Separate Account.................................. 19 The General Account................................... 19 Distribution of the Contract.......................... 19 Administration........................................ 19 Year 2000............................................. 19 Legal Proceedings..................................... 20 Ownership............................................. 20 Custodian............................................. 20 Independent Accountants............................... 21 Legal Matters......................................... 21 Registration Statement................................ 21 TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.... 21 APPENDIX A -- CONDENSED FINANCIAL INFORMATION............... A-1 APPENDIX B -- MARKET VALUE ADJUSTMENT ("MVA")............... B-1 APPENDIX C -- PREMIUM TAXES................................. C-1 ------------------------------------------------------------------ ------------------------------------------------------------------ GLOSSARY ------------------------------------------------------------------ ------------------------------------------------------------------ We have capitalized some of the technical terms used in this prospectus. To help you understand these terms, we have defined them in this glossary. ACCUMULATION PHASE - The period during which you invest money in your contract. ACCUMULATION UNITS - A measurement we use to calculate the value of the variable portion of your contract during the Accumulation Phase. ANNUITANT(S) - The person(s) on whose life (lives) we base income payments. ANNUITY DATE - The date on which income payments are to begin, as selected by you. ANNUITY UNITS - A measurement we use to calculate the amount of income payments you receive from the variable portion of your contract during the Income Phase. BENEFICIARY - The person designated to receive any benefits under the contract if you or the Annuitant dies. COMPANY - Anchor National Life Insurance Company, We, Us, the insurer which issues this contract. INCOME PHASE - The period during which we make income 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"). 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 IRA. TRUSTS - Refers to the Anchor Series Trust and the SunAmerica Series Trust collectively. VARIABLE PORTFOLIO(S) - The variable investment options available under the contract. Each Variable Portfolio has its own investment objective and is invested in the underlying investments of the Anchor Series Trust or the SunAmerica Series Trust.
ALL FINANCIAL REPRESENTATIVES OR AGENTS THAT SELL THE CONTRACTS OFFERED BY THIS PROSPECTUS ARE REQUIRED TO DELIVER A PROSPECTUS. 3 43 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FEE TABLES - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- OWNER TRANSACTION EXPENSES WITHDRAWAL CHARGE (AS A PERCENTAGE OF EACH PURCHASE PAYMENT) Year 1...................... 7% Year 5...................... 3% Year 2...................... 6% Year 6...................... 2% Year 3...................... 5% Year 7...................... 1% Year 4...................... 4% Year 8+..................... 0% TRANSFER FEE.................... No charge for first 15 transfers each contract year; thereafter, fee is $25 ($10 in Pennsylvania and Texas) per transfer CONTRACT MAINTENANCE FEE*....... $35 ($30 in North Dakota) *waived if contract value is $50,000 or more
ANNUAL SEPARATE ACCOUNT EXPENSES (AS A PERCENTAGE OF AVERAGE ACCOUNT VALUE) Mortality and Expense Risk Charge................ 1.37% Distribution Expense Charge...................... 0.15% ----- TOTAL SEPARATE ACCOUNT EXPENSES 1.52% =====
PORTFOLIO EXPENSES ANCHOR SERIES TRUST (AS A PERCENTAGE OF AVERAGE NET ASSETS FOR THE TRUST'S TWELVE-MONTH PERIOD ENDED NOVEMBER 30, 1998)
MANAGEMENT OTHER TOTAL ANNUAL PORTFOLIO FEE EXPENSES EXPENSES - ----------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------- Capital Appreciation .64% .04% .68% - ----------------------------------------------------------------------------------------------------------- Growth .70% .05% .75% - ----------------------------------------------------------------------------------------------------------- Natural Resources .75% .13% .88% - ----------------------------------------------------------------------------------------------------------- Government and Quality Bond .61% .06% .67% - ----------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------
SUNAMERICA SERIES TRUST (AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER REIMBURSEMENT OR WAIVER OF EXPENSES FOR THE TRUST'S FISCAL YEAR ENDED NOVEMBER 30, 1998)
MANAGEMENT OTHER TOTAL ANNUAL PORTFOLIO FEE EXPENSES EXPENSES - ----------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------- Emerging Markets* 1.25% .65% 1.90% - ----------------------------------------------------------------------------------------------------------- International Diversified Equities 1.00% .26% 1.26% - ----------------------------------------------------------------------------------------------------------- Global Equities .74% .14% .88% - ----------------------------------------------------------------------------------------------------------- International Growth and Income** 1.00% .46% 1.46% - ----------------------------------------------------------------------------------------------------------- Aggressive Growth .74% .09% .83% - ----------------------------------------------------------------------------------------------------------- MFS Mid-Cap Growth*** .75% .25% 1.00% - ----------------------------------------------------------------------------------------------------------- Real Estate** .80% .15% .95% - ----------------------------------------------------------------------------------------------------------- Putnam Growth .81% .05% .86% - ----------------------------------------------------------------------------------------------------------- MFS Growth and Income****+ .70% .03% .73% - ----------------------------------------------------------------------------------------------------------- Alliance Growth+ .61% .03% .64% - ----------------------------------------------------------------------------------------------------------- "Dogs" of Wall Street* .60% .25% .85%***** - ----------------------------------------------------------------------------------------------------------- Venture Value .72% .03% .75% - ----------------------------------------------------------------------------------------------------------- Federated Value .75% .08% .83% - ----------------------------------------------------------------------------------------------------------- Growth-Income .56% .04% .60% - ----------------------------------------------------------------------------------------------------------- Utility** .75% .26% 1.01% - ----------------------------------------------------------------------------------------------------------- Asset Allocation .59% .05% .64% - ----------------------------------------------------------------------------------------------------------- MFS Total Return****+ .67% .10% .77% - ----------------------------------------------------------------------------------------------------------- SunAmerica Balanced .68% .10% .78% - ----------------------------------------------------------------------------------------------------------- Worldwide High Income 1.00% .08% 1.08% - ----------------------------------------------------------------------------------------------------------- High-Yield Bond .63% .06% .69% - ----------------------------------------------------------------------------------------------------------- Corporate Bond .65% .12% .77% - ----------------------------------------------------------------------------------------------------------- Global Bond .70% .15% .85% - ----------------------------------------------------------------------------------------------------------- Cash Management .53% .05% .58% - ----------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------
* Absent fee waivers or reimbursement of expenses by the adviser, you would have incurred the following expenses during the last fiscal year: Emerging Markets (2.01%) and "Dogs" of Wall Street (.92%). ** Absent recoupment of expenses by the adviser, you would have incurred the following expenses during the last fiscal year: International Growth and Income (1.40%); Real Estate (.93%); and Utility (.92%). *** This Portfolio was not available for sale during fiscal year 1998. The percentages are based on estimated amounts for the current fiscal year. **** As of January 4, 1998, the Growth/Phoenix Portfolio was renamed the MFS Growth and Income Portfolio, and the Balanced/Phoenix Portfolio was renamed the MFS Total Return Portfolio, each managed by Massachusetts Financial Services Company. ***** Annualized. + The expenses noted here are restated to reflect an estimate of fees for each portfolio for the current fiscal year. THE ABOVE PORTFOLIO EXPENSES WERE PROVIDED BY THE TRUSTS. WE HAVE NOT INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION. 4 44 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXAMPLES - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- You will pay the following expenses on a $1,000 investment in each Variable Portfolio, assuming a 5% annual return on assets and: (a) you surrender the contract at the end of the stated time period. (b) you do not surrender the contract.*
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ Capital Appreciation (a) $ 93 (a) $121 (a) $152 (a) $262 (b) $ 23 (b) $ 71 (b) $122 (b) $262 - ------------------------------------------------------------------------------------------------------ Growth (a) $ 94 (a) $124 (a) $156 (a) $269 (b) $ 24 (b) $ 74 (b) $126 (b) $269 - ------------------------------------------------------------------------------------------------------ Natural Resources (a) $ 95 (a) $127 (a) $162 (a) $282 (b) $ 25 (b) $ 77 (b) $132 (b) $282 - ------------------------------------------------------------------------------------------------------ Government and Quality Bond (a) $ 93 (a) $121 (a) $152 (a) $261 (b) $ 23 (b) $ 71 (b) $122 (b) $261 - ------------------------------------------------------------------------------------------------------ Emerging Markets (a) $105 (a) $158 (a) $212 (a) $378 (b) $ 35 (b) $108 (b) $182 (b) $378 - ------------------------------------------------------------------------------------------------------ International Diversified Equities (a) $ 99 (a) $139 (a) $181 (a) $319 (b) $ 29 (b) $ 89 (b) $151 (b) $319 - ------------------------------------------------------------------------------------------------------ Global Equities (a) $ 95 (a) $127 (a) $162 (a) $282 (b) $ 25 (b) $ 77 (b) $132 (b) $282 - ------------------------------------------------------------------------------------------------------ International Growth and Income (a) $101 (a) $145 (a) $191 (a) $338 (b) $ 31 (b) $ 95 (b) $161 (b) $338 - ------------------------------------------------------------------------------------------------------ Aggressive Growth (a) $ 95 (a) $126 (a) $160 (a) $277 (b) $ 25 (b) $ 76 (b) $130 (b) $277 - ------------------------------------------------------------------------------------------------------ MFS Mid-Cap Growth (a) $ 96 (a) $131 (a) $168 (a) $294 (b) $ 26 (b) $ 81 (b) $138 (b) $294 - ------------------------------------------------------------------------------------------------------ Real Estate (a) $ 96 (a) $130 (a) $166 (a) $289 (b) $ 26 (b) $ 80 (b) $136 (b) $289 - ------------------------------------------------------------------------------------------------------ Putnam Growth (a) $ 95 (a) $127 (a) $161 (a) $280 (b) $ 25 (b) $ 77 (b) $131 (b) $280 - ------------------------------------------------------------------------------------------------------ MFS Growth and Income (a) $ 94 (a) $123 (a) $155 (a) $267 (b) $ 24 (b) $ 73 (b) $125 (b) $267 - ------------------------------------------------------------------------------------------------------ Alliance Growth (a) $ 93 (a) $120 (a) $150 (a) $258 (b) $ 23 (b) $ 70 (b) $120 (b) $258 - ------------------------------------------------------------------------------------------------------ "Dogs" of Wall Street (a) $ 95 (a) $127 (a) $161 (a) $279 (b) $ 25 (b) $ 77 (b) $131 (b) $279 - ------------------------------------------------------------------------------------------------------ Venture Value (a) $ 94 (a) $124 (a) $156 (a) $269 (b) $ 24 (b) $ 74 (b) $126 (b) $269 - ------------------------------------------------------------------------------------------------------ Federated Value (a) $ 95 (a) $126 (a) $160 (a) $277 (b) $ 25 (b) $ 76 (b) $130 (b) $277 - ------------------------------------------------------------------------------------------------------ Growth-Income (a) $ 92 (a) $119 (a) $148 (a) $254 (b) $ 22 (b) $ 69 (b) $118 (b) $254 - ------------------------------------------------------------------------------------------------------ Utility (a) $ 96 (a) $131 (a) $169 (a) $295 (b) $ 26 (b) $ 81 (b) $139 (b) $295 - ------------------------------------------------------------------------------------------------------ Asset Allocation (a) $ 93 (a) $120 (a) $150 (a) $258 (b) $ 23 (b) $ 70 (b) $120 (b) $258 - ------------------------------------------------------------------------------------------------------ MFS Total Return (a) $ 94 (a) $124 (a) $157 (a) $271 (b) $ 24 (b) $ 74 (b) $127 (b) $271 - ------------------------------------------------------------------------------------------------------ SunAmerica Balanced (a) $ 94 (a) $124 (a) $157 (a) $272 (b) $ 24 (b) $ 74 (b) $127 (b) $272 - ------------------------------------------------------------------------------------------------------ Worldwide High Income (a) $ 97 (a) $133 (a) $172 (a) $302 (b) $ 27 (b) $ 83 (b) $142 (b) $302 - ------------------------------------------------------------------------------------------------------ High-Yield Bond (a) $ 93 (a) $122 (a) $153 (a) $263 (b) $ 23 (b) $ 72 (b) $123 (b) $263 - ------------------------------------------------------------------------------------------------------ Corporate Bond (a) $ 94 (a) $124 (a) $157 (a) $271 (b) $ 24 (b) $ 74 (b) $127 (b) $271 - ------------------------------------------------------------------------------------------------------ Global Bond (a) $ 95 (a) $127 (a) $161 (a) $279 (b) $ 25 (b) $ 77 (b) $131 (b) $279 - ------------------------------------------------------------------------------------------------------ Cash Management (a) $ 92 (a) $118 (a) $147 (a) $252 (b) $ 22 (b) $ 68 (b) $117 (b) $252 - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------
* We do not currently charge a surrender charge upon annuitization unless the contract is annuitized using the Income Protector feature. We will assess any applicable surrender charge upon annuitizations effected using the Income Protector feature as if you had fully surrendered your contract. 5 45 EXPLANATION OF FEE TABLES AND EXAMPLES 1. The purpose of the Fee Tables is to show you the various expenses you would incur directly and indirectly by investing in the contract. 2. For certain Variable Portfolios, the adviser, SunAmerica Asset Management Corp., has voluntarily agreed to waive fees or reimburse certain expenses, if necessary, to keep annual operating expenses at or below the lesser of the maximum allowed by any applicable state expense limitations or the following percentages of each Variable Portfolio's average net assets: SunAmerica Balanced (1.00%); "Dogs" of Wall Street (.85%); Aggressive Growth (.90%); Federated Value (1.03%); Utility (1.05%); Emerging Markets (1.90%); International Growth and Income (1.60%); and Real Estate (1.25%). 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. 3. The Examples assume that no transfer fees were imposed. Although premium taxes may apply in certain states, they are not reflected in the Examples. 4. THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THE HISTORICAL ACCUMULATION UNIT VALUES ARE CONTAINED IN APPENDIX A -- CONDENSED FINANCIAL INFORMATION. - ---------------------------------------------------------------- - ---------------------------------------------------------------- THE POLARIS(II) 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: This means that 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. 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 income 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 portfolios which, like mutual funds, have different investment objectives and performance which 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 Portfolios in which you invest. This contract currently offers 27 Variable Portfolios. 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 the contract depends on the total interest credited to the particular fixed account option(s) in which you invest. For more information on investment options available under this contract SEE INVESTMENT OPTIONS ON PAGE 7. Anchor National Life Insurance Company (Anchor National, The Company, Us, We) issues the PolarisII Variable Annuity. When you purchase a PolarisII 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. ("AIG"), a Delaware corporation. - ---------------------------------------------------------------- - ---------------------------------------------------------------- PURCHASING A POLARIS(II) 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. FOR FURTHER EXPLANATION, SEE TAXES ON PAGE 17. - ----------------------------------------------------------- Minimum Minimum Initial Subsequent Purchase Payment Purchase Payment - ----------------------------------------------------------- Qualified $2,000 $250 - ----------------------------------------------------------- Non-Qualified $5,000 $500 - -----------------------------------------------------------
Prior Company approval is required to accept Purchase Payments greater than $1,000,000. The Company reserves the right to refuse any Purchase Payment including, but not limited to, one which would cause the contract value to exceed $1,000,000 are the time of the Purchase Payment. Also, the optional automatic payment plan allows you to make subsequent Purchase Payments of as little as $20.00. 6 46 We may refuse any Purchase Payment. In general, we will not issue a Qualified contract to anyone who is age 70 1/2 or older, unless it is shown that the minimum distribution required by the IRS is being made. In addition we may not issue a contract to anyone over age 90. ALLOCATION OF PURCHASE PAYMENTS We invest your Purchase Payments in the fixed and variable investment options according to your instructions. If we receive a Purchase Payment without allocation instructions, we will invest the money according to your last allocation instructions. SEE INVESTMENT OPTIONS BELOW. In order to issue your contract, we must receive your completed application, Purchase Payment allocation instructions and any other required paperwork at our principal place of business. 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 When you allocate a Purchase Payment to the Variable Portfolios, we credit your contract with Accumulation Units of the separate account. 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 p.m. Pacific Standard Time, or on the next business day's unit value if we receive your money after 1 p.m. Pacific Standard time. The value of an Accumulation Unit goes up and down based on the performance of the Variable Portfolios. We calculate the value of an Accumulation Unit each day that the New York Stock Exchange ("NYSE") is open as follows: 1. We determine the total value of money invested in a particular Variable Portfolio; 2. We subtract from that amount all applicable contract charges; and 3. We divide this amount by the number of outstanding Accumulation Units. We determine the number of Accumulation Units credited to your contract by dividing the Purchase Payment by the Accumulation Unit value for the specific Variable Portfolio. EXAMPLE: We receive a $25,000 Purchase Payment from you on Wednesday. You allocate the money to the Global Bond Portfolio. We determine that the value of an Accumulation Unit for the Global Bond Portfolio is $11.10 when the NYSE closes on Wednesday. We then divide $25,000 by $11.10 and credit your contract on Wednesday night with 2252.52 Accumulation Units for the Global Bond 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. 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 the amount you originally invested. 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 Cash Management Portfolio during the free look period. If you cancel your contract during the free look period, we return your Purchase Payment or the value of your contract, whichever is larger. At the end of the free look period, we allocate your money according to your instructions. - ---------------------------------------------------------------- - ---------------------------------------------------------------- INVESTMENT OPTIONS - ---------------------------------------------------------------- - ---------------------------------------------------------------- VARIABLE PORTFOLIOS The contract currently offers 27 Variable Portfolios. These Variable Portfolios invest in shares of the Anchor Series Trust and the SunAmerica Series 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. SunAmerica Asset Management Corp., an indirect wholly owned subsidiary of AIG, is the investment adviser to the Trusts. 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 adviser monitors the Trusts for potential conflicts. The Variable Portfolios along with their respective subadvisers are listed below: ANCHOR SERIES TRUST Wellington Management Company, LLP serves as subadviser to the Anchor Series Trust portfolios. Anchor Series Trust has investment portfolios in addition to those listed below which 7 47 are not available for investment under the contract. The 4 available investment portfolios are: MANAGED BY WELLINGTON MANAGEMENT COMPANY, LLP - Capital Appreciation Portfolio - Growth Portfolio - Natural Resources Portfolio - Government and Quality Bond Portfolio SUNAMERICA SERIES TRUST Various subadvisers provide investment advice for the SunAmerica Series Trust portfolios. SunAmerica Series Trust has investment portfolios in addition to those listed below which are not available for investment under the contract. The 23 investment portfolios and the subadvisers are: MANAGED BY ALLIANCE CAPITAL MANAGEMENT L.P. - Global Equities Portfolio - Alliance Growth Portfolio - Growth Income Portfolio MANAGED BY DAVIS SELECTED ADVISERS, L.P. - Venture Value Portfolio - Real Estate Portfolio MANAGED BY FEDERATED INVESTORS - Federated Value Portfolio - Utility Portfolio - Corporate Bond Portfolio MANAGED BY GOLDMAN SACHS ASSET MANAGEMENT/GOLDMAN SACHS ASSET MANAGEMENT INTERNATIONAL - Asset Allocation Portfolio - Global Bond Portfolio MANAGED BY MASSACHUSETTS FINANCIAL SERVICES COMPANY - MFS Mid-Cap Growth - MFS Growth and Income Portfolio - MFS Total Return Portfolio MANAGED BY MORGAN STANLEY ASSET MANAGEMENT - International Diversified Equities Portfolio - Worldwide High Income Portfolio MANAGED BY PUTNAM INVESTMENT MANAGEMENT - Putnam Growth Portfolio - International Growth and Income Portfolio - Emerging Markets Portfolio MANAGED BY SUNAMERICA ASSET MANAGEMENT, INC. - Aggressive Growth Portfolio - "Dogs" of Wall Street Portfolio - SunAmerica Balanced Portfolio - High-Yield Bond Portfolio - Cash Management Portfolio YOU SHOULD READ THE ATTACHED PROSPECTUSES FOR THE TRUSTS CAREFULLY. THESE PROSPECTUSES CONTAIN DETAILED INFORMATION ABOUT THE VARIABLE PORTFOLIOS, INCLUDING EACH VARIABLE PORTFOLIO'S INVESTMENT OBJECTIVE AND RISK FACTORS. FIXED ACCOUNT OPTIONS The contract also offers seven fixed account options. Anchor National will guarantee the interest rate earned on money you allocate to any of these fixed account options. We currently offer fixed account options for periods of one, three, five, seven and ten years, which we call guarantee periods. Additionally, we guarantee the interest rate for money allocated to the six-month DCA fixed account and/or the one 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 DOLLAR COST AVERAGING ON PAGE 10 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. Each guarantee period may offer a different interest rate but will never be less than an annual effective rate of 3%. Once established the rates for specified payments do not change during the guarantee period. The guarantee period is that period for which we credit the applicable rate (one, three, five, seven or ten years). There are three scenarios in which you may put money into the MVA 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 transferred from one fixed account or one of the Variable Portfolios to another fixed account. Each of these rates may differ from one another. Once declared, the applicable rate is guaranteed until the corresponding guarantee period expires. When a guarantee period ends, you may leave your money in the same fixed investment option. You may also reallocate your money to another fixed investment option (other than the DCA fixed accounts) or to the Variable Portfolios. If you want to reallocate your money to a different fixed account option or a Variable Portfolio, you must contact us within 30 days after the end of the current interest guarantee period and instruct us how to reallocate the money. We do not contact you. If we do not hear from you, your money will remain in the same fixed account option, where it will earn interest at the renewal rate then in effect for the fixed account option. The DCA fixed accounts also credit a fixed rate of interest for a predetermined amount of time. The interest rate in the 1-year or 6-month DCA fixed account is credited while your investment is systematically transferred to the Variable Portfolios. The rates applicable to the DCA fixed accounts may differ from each other and/or the other fixed account 8 48 options. See DOLLAR COST AVERAGING ON PAGE 10 for more information. MARKET VALUE ADJUSTMENT ("MVA") NOTE: THE FOLLOWING DISCUSSION APPLIES TO THE 3, 5, 7 AND 10-YEAR FIXED ACCOUNT OPTIONS, ONLY. THESE OPTIONS ARE NOT AVAILABLE IN ALL STATES. PLEASE CONTACT YOUR FINANCIAL REPRESENTATIVE FOR MORE INFORMATION. If you take money out of the multi-year fixed account options 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 account option and the time when you withdraw 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. We calculate the MVA by doing a comparison between current rates and the rate being credited to you in the fixed account 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. 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 account 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 account option. If there is not enough money in the fixed account option to meet the negative deduction, we deduct the remainder from your withdrawal. Where the MVA is positive, we add the adjustment to your withdrawal amount. Anchor National does not assess a MVA against withdrawals under the following circumstances: - If made within 30 days after the end of a guarantee period; - If made to pay contract fees and charges; - To pay a death benefit; and - If annuitization occurs on the latest Annuity Date. The one year fixed account option and the DCA fixed accounts do not impose a MVA. These fixed accounts are not registered under the Securities Act of 1933 and are not subject to the provisions of the Investment Company Act of 1940. APPENDIX B shows how we calculate the MVA. TRANSFERS DURING THE ACCUMULATION PHASE During the Accumulation Phase you may transfer funds between the Variable Portfolios and/or the fixed account 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. We currently allow 15 free transfers per contract per 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, in the future you may be able to execute transfers or other financial transactions over the internet. When receiving instructions over the telephone, 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. Upon implementation of internet account transactions we will have appropriate procedures in place to provide reasonable assurance that the transactions executed are genuine. Thus, we would not be responsible for any claim, loss or expense from any error resulting from instructions received over the internet. 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. 9 49 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, for you or appointed by 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 14. We reserve the right to modify, suspend, waive or terminate these transfer provisions at any time. DOLLAR COST AVERAGING 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 of portfolio value from one Variable Portfolio or the 1-year fixed account option (source accounts) to any other Variable Portfolio. 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. We also offer the 6-month and 1-year DCA fixed accounts exclusively to facilitate this program. The DCA fixed accounts only accept new Purchase Payments. You cannot transfer money already in your contract into these options. If you allocate a Purchase Payment into a DCA fixed account, we transfer all your money allocated to that account into the Variable Portfolios over the selected 6-month or 1-year period. You cannot change the option or the frequency of transfers once selected. 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 the 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, let's say you allocate $1,000 to the 1-year DCA account. 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. 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 Cash Management Portfolio to the Aggressive Growth Portfolio over six quarters. You set up dollar cost averaging and purchase Accumulation Units at the following values:
- ------------------------------------------- ACCUMULATION UNITS QUARTER UNIT PURCHASED - ------------------------------------------- 1 $ 7.50 100 2 $ 5.00 150 3 $10.00 75 4 $ 7.50 100 5 $ 5.00 150 6 $ 7.50 100 - -------------------------------------------
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 10 50 and fewer Accumulation Units when the market price is high. This example is for illustrative purposes only. ASSET ALLOCATION REBALANCING 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, semiannual 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. EXAMPLE: Assume that you want your initial Purchase Payment split between two Variable Portfolios. You want 50% in the Corporate Bond Portfolio and 50% in the Growth Portfolio. Over the next calendar quarter, the bond market does very well while the stock market performs poorly. At the end of the calendar quarter, the Corporate Bond Portfolio now represents 60% of your holdings because it has increased in value and the Growth Portfolio represents 40% of your holdings. If you had chosen quarterly rebalancing, on the last day of that quarter, we would sell some of your units in the Corporate Bond Portfolio to bring its holdings back to 50% and use the money to buy more units in the Growth Portfolio to increase those holdings to 50%. PRINCIPAL ADVANTAGE PROGRAM The Principal Advantage Program allows you to invest in one or more Variable Portfolios without putting your principal at direct risk. The program accomplishes this by allocating your investment strategically between the fixed account options and Variable Portfolios. 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 account 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. We reserve the right to modify, suspend or terminate this program at any time. EXAMPLE: Assume that you want to allocate a portion of your initial Purchase Payment of $100,000 to the fixed account option. You want the amount allocated to the fixed account option to grow to $100,000 in 7 years. If the 7-year fixed account option is offering a 5% interest rate, we will allocate $71,069 to the 7-year fixed account option to ensure that this amount will grow to $100,000 at the end of the 7-year period. The remaining $28,931 may be allocated among the Variable Portfolios, as determined by you, to provide opportunity for greater growth. VOTING RIGHTS Anchor National is the legal owner of the Trusts' shares. 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 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 funds of the Trusts become unavailable for investment, we may be required to substitute shares of another underlying fund. 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 14. Generally, we deduct a withdrawal charge applicable to any total or partial withdrawal and a MVA if a partial withdrawal comes from the 3, 5, 7 or 10 year fixed account options. If you withdraw your entire contract value, we also deduct premium taxes and a contract maintenance fee. SEE EXPENSES ON PAGE 13. 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 we will recoup any withdrawal charges which would have been due if your free withdrawal had not been free. 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 some prior withdrawals you made. The portions of prior withdrawals that reduce your total invested amount is 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 11 51 - Any prior withdrawals (including surrender 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 charges; and (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. 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% IRS penalty tax. SEE TAXES ON PAGE 17. 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. Additionally, we reserve the right to defer payments for a withdrawal from a fixed account in 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 $250. If you are an Oregon resident, the minimum withdrawal amount is $250 per withdrawal or an amount equal to your free withdrawal amount, as described on page 10. There must be at least $500 remaining in your contract at all times. Withdrawals may be taxable and a 10% IRS 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. NURSING HOME WAIVER If you are confined to a nursing home for 60 days or longer, we may waive the withdrawal charge and/or market value adjustment on certain withdrawals prior to the Annuity Date (not available in Texas). The waiver applies only to withdrawals made while you are in a nursing home or within 90 days after you leave the nursing home. Your contract prohibits use of this waiver during the first 90 days after you purchase your contract. In addition, the confinement period for which you seek the waiver must begin after you purchase your contract. In order to use this waiver, you must submit with your withdrawal request, the following documents: (1) a doctor's note recommending admittance to a nursing home; (2) an admittance form which shows the type of facility you entered; and (3) a bill from the nursing home which shows that you met the 60 day confinement requirement. 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. - ---------------------------------------------------------------- - ---------------------------------------------------------------- DEATH BENEFIT - ---------------------------------------------------------------- - ---------------------------------------------------------------- If you die during the Accumulation Phase of your contract, we pay a death benefit to your Beneficiary. At the time you purchase your contract, you must select one of the two death benefits described below. Once selected, you can not change your death benefit option. You should discuss the available options with your financial representative to determine which option is best for you. 12 52 OPTION 1 - PURCHASE PAYMENT ACCUMULATION OPTION The death benefit is the greater of: 1. the value of your contract at the time we receive satisfactory proof of death; or 2. total Purchase Payments less withdrawals (and any fees or charges applicable to such withdrawals), compounded at a 4% annual growth rate until the date of death (3% growth rate if 70 or older at the time of contract issue) plus any Purchase Payments less withdrawals recorded after the date of death (and any fees or charges applicable to such withdrawals); or 3. the value of your contract on the seventh contract anniversary, plus any Purchase Payments and less any withdrawals (and any fees or charges applicable to such withdrawals), since the seventh contract anniversary, all compounded at a 4% annual growth rate until the date of death (3% growth rate if age 70 or older at the time of contract issue) plus any Purchase Payments less withdrawals recorded after the date of death (and any fees or charges applicable to such withdrawals). OPTION 2 - MAXIMUM ANNIVERSARY OPTION The death benefit is the greater of: 1. the value of your contract at the time we receive satisfactory proof of death; or 2. total Purchase Payments less any withdrawals (and any fees or charges applicable to such withdrawals); or 3. the maximum anniversary value on any contract anniversary prior to your 81st birthday. The anniversary value equals the value of your contract on a contract anniversary plus any Purchase Payments and less any withdrawals (and any fees or charges applicable to such withdrawals), since that contract anniversary. If you are age 90 or older at the time of death and selected the Option 2 death benefit, the death benefit will be equal to the value of your contract at the time we receive satisfactory proof of death. Accordingly, you do not get the advantage of option 2 if: - you are over age 80 at the time of contract issue, or - you are 90 or older at the time of your death. We do not pay the death benefit if you die after you switch to the Income Phase. However, if you die during the Income Phase, your Beneficiary receives any remaining guaranteed income payments in accordance with the income option you selected. SEE INCOME OPTIONS ON PAGE 14. You name your Beneficiary. You may change the Beneficiary at any time, unless you previously made an irrevocable Beneficiary designation. We pay the death benefit when we receive satisfactory proof of death. We consider the following satisfactory proof of death: 1. a certified copy of the death certificate; or 2. a certified copy of a decree of a court of competent jurisdiction as to the finding of death; or 3. a written statement by a medical doctor who attended the deceased at the time of death; or 4. any other proof satisfactory to us. We may require additional proof before we pay the death benefit. The death benefit payment must begin immediately upon receipt of all necessary documents. In any event, the death benefit must be paid within 5 years of the date of death unless the Beneficiary elects to have it payable in the form of an income option. 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. Payments must begin within one year of your death. If the Beneficiary is the spouse of a deceased owner, he or she can elect to continue the Contract at the then current value. If the Beneficiary/spouse continues the contract, we do not pay a death benefit to him or her. If a Beneficiary does not elect a specific form of pay out within 60 days of our receipt of proof of death, we pay a lump sum death benefit to the Beneficiary. - ---------------------------------------------------------------- - ---------------------------------------------------------------- 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 the insurance and 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 amount of this charge is 1.52% annually, of the value of your contract invested in the Variable Portfolios. We deduct the charge daily. The insurance charge compensates us for the mortality and expense risks and the costs of contract distribution assumed by Anchor National. 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 The contract provides a free withdrawal amount every year. SEE ACCESS TO YOUR MONEY, PAGE 11. If you take 13 53 money out in excess of the free withdrawal amount, and upon a full surrender, you may incur a withdrawal charge. We apply a withdrawal charge against each Purchase Payment you put into the contract. After a Purchase Payment has been in the contract for 7 complete years, no withdrawal charge applies. The withdrawal charge equals a percentage of the Purchase Payment you take out of the contract. The withdrawal charge percentage declines each year a Purchase Payment is in the contract, as follows
- ------------------------------------------------------------------- Year 1 2 3 4 5 6 7 8 - ------------------------------------------------------------------- WITHDRAWAL CHARGE 7% 6% 5% 4% 3% 2% 1% 0% - -------------------------------------------------------------------
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. 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 will not assess a withdrawal charge when you switch to the Income Phase, except when you elect to receive income payments using the Income Protector feature. If you elect to receive income payments using the Income Protector feature, we assess the entire withdrawal charge applicable to Purchase Payments remaining in your contract when calculating your income benefit base. SEE INCOME OPTIONS ON THIS PAGE. Withdrawals made prior to age 59 1/2 may result in tax penalties. SEE, TAXES ON PAGE 17. INVESTMENT CHARGES Charges are deducted from your Variable Portfolios for the advisory and other expenses of the Variable Portfolios. THE FEE TABLES LOCATED AT PAGE 4 illustrate these charges and expenses. For more detailed information on these investment charges, refer to the prospectuses for the Trusts, enclosed or attached. 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. We deduct the $35 contract maintenance fee ($30 in North Dakota) from your account value on your contract anniversary. If you withdraw your entire contract value, we deduct the fee from that withdrawal. 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. TRANSFER FEE We currently permit 15 free transfers between investment options each contract year. We charge you $25 for each additional transfer that contract year ($10 in Pennsylvania and Texas). SEE INVESTMENT OPTIONS ON PAGE 7. 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 take a full withdrawal or begin the Income Phase of 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 C 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. 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 - ---------------------------------------------------------------- - ---------------------------------------------------------------- ANNUITY DATE During the Income Phase, we use the money accumulated in your contract to make regular income payments to you. You may switch to the Income Phase any time after your 2nd 14 54 contract anniversary. You select the month and year 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 indicated under Option 5 below, once you begin receiving income payments, you cannot otherwise access your money through a withdrawal or surrender. Income payments must begin on or before your 90th 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. 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, most Qualified contracts require you to take minimum distributions after you reach age 70 1/2. SEE TAXES ON PAGE 17. INCOME OPTIONS Currently, this Contract offers five income options. 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 based on 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 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. 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 when the survivor dies. OPTION 3 - JOINT AND SURVIVOR LIFE ANNUITY WITH 10 OR 20 YEARS GUARANTEED This option is similar to option 2 above, with an additional guarantee of payments for at least 10 years. If the Annuitant and the survivor die before all of the guaranteed income payments have been made, the remaining payments are made to the Beneficiary under your contract. OPTION 4 - LIFE ANNUITY WITH 10 OR 20 YEARS GUARANTEED 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 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. Please read the Statement of Additional Information ("SAI") for a more detailed discussion of the income options. FIXED OR VARIABLE INCOME PAYMENTS You can choose income payments that are fixed, variable or both. If at the date when income payments begin you are invested in the Variable Portfolios 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. Further, if you are invested in both fixed and variable investment options when income payments begin, your payments will be fixed and variable. If income payments are fixed, Anchor National guarantees the amount of each payment. If the income payments are variable the amount is not guaranteed. INCOME PAYMENTS We make income payments on a monthly, quarterly, semiannual or annual basis. You instruct us to send you a check or to have the payments directly 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 income payments of less than $50 per payment, we may decrease the frequency of payments, state law allowing. If you are invested in the Variable Portfolios after the Annuity date, your income payments vary depending on four things: - for life options, your age when payments begin, and; - the value of your contract in the Variable Portfolios on the Annuity Date, and; 15 55 - the 3.5% assumed investment rate used in the annuity table for the contract, and; - the performance of the Variable Portfolios 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 Portfolios after the Annuity Date, the allocation of funds between the fixed and variable options 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. THE INCOME PROTECTOR FEATURE The Income Protector feature is a future "safety net" which offers you the ability to receive a guaranteed fixed minimum retirement income when you switch to the Income Phase. With the Income Protector feature you can know the level of minimum income that will be available to you, regardless of fluctuating market conditions. The Income Protector is a standard feature of your contract, if available in your state. There is no additional charge associated with this feature. Other options were previously available under the Income Protector feature. If you purchased your contract between November 2, 1998 and March 31, 1999, the other provisions continue to apply to your contract. Please contact our Annuity Service Center for more information. We reserve the right to modify, suspend or terminate the Income Protector feature at any time. HOW WE DETERMINE THE AMOUNT OF YOUR MINIMUM GUARANTEED INCOME We base the amount of minimum income available to you if you elect to receive income payments using the Income Protector feature upon a calculation we call the income benefit base. 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. 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 initial Purchase Payment, or for each subsequent year of calculation, the income benefit base on the prior contract anniversary, and; (b) is equal to the total of all Purchase Payments made to the contract since the last 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. ELECTING TO RECEIVE INCOME PAYMENTS You may elect to begin the Income Phase of your contract using the Income Protector feature ONLY within the 30 days after the seventh or later contract anniversary. The contract anniversary prior to your election to begin receiving income payments is your income benefit date. This is the date as of which we calculate your income benefit base to use in determining your guaranteed minimum fixed retirement income. Your final income benefit base is equal to (a) minus (b) where: (a) is equal to your income benefit base as of your income benefit date, and; (b) is equal to 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 the income benefit date, and any applicable premium taxes. To arrive at 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 that income annually, semi-annually quarterly or monthly for the time guaranteed under your selected income option. 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 Survivor Life Annuity with 20 Years Guaranteed At the time you elect to begin receiving income payments, we will calculate your annual income using both your income benefit base and your contract value. We will use the same income option for each calculation, however, the annuity 16 56 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. You are not required to use the Income Protector feature to receive income payments. NOTE TO QUALIFIED CONTRACT HOLDERS Qualified contracts generally require that you select an income option which does not exceed your life expectancy. That restriction, if it applies to you, may limit your ability to use the Income Protector feature. You may wish to consult your tax advisor for information concerning your particular circumstances. HYPOTHETICAL EXAMPLE OF THE OPERATION OF THE INCOME PROTECTOR FEATURE This table assumes $100,000 initial investment in a Non-qualified contract with no withdrawals, additional Purchase Payments or premium taxes.
- ------------------------------------------------------------------------------------------------------------- Minimum annual income if you elect to receive income payments If at issue on contract anniversary . . . you are . . . 7 10 15 20 - ------------------------------------------------------------------------------------------------------------- Male 6,108 6,672 7,716 8,832 age 60* - ------------------------------------------------------------------------------------------------------------- Female 5,388 5,880 6,900 8,112 age 60* - ------------------------------------------------------------------------------------------------------------- Joint** 4,716 5,028 5,544 5,928 Male-60 Female-60 - -------------------------------------------------------------------------------------------------------------
* Life annuity with 10 years guaranteed ** Joint and survivor life annuity with 20 years guaranteed - ---------------------------------------------------------------- - ---------------------------------------------------------------- TAXES - ---------------------------------------------------------------- - ---------------------------------------------------------------- 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 ("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. 17 57 TAX TREATMENT OF DISTRIBUTIONS - NON-QUALIFIED CONTRACTS If you make a withdrawal from a Non-qualified contract, the IRC treats such a withdrawal as first coming from the earnings and then as coming from your Purchase Payments. For income payments, any portion of each payment that is considered a return of your Purchase Payment will not be taxed. Withdrawn earnings are treated as income to you and are taxable. The IRC 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 IRC); (4) when paid 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 IRC 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 IRC); (4) in a series of substantially equal installments made for your life or for the joint lives of you and your Beneficiary; (5) to the extent such withdrawals do not exceed limitations set by the IRC for amounts paid during the taxable year for medical care; (6) to fund higher education expenses (as defined in IRC); (7) to fund certain first-time home purchase expenses; and, except in the case of an IR; (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 IRC limits the withdrawal of Purchase Payments from certain Tax-Sheltered Annuities. Withdrawals can only be made when an owner: (1) reaches age 59 1/2; (2) leaves his or her job; (3) dies; (4) becomes disabled (as defined in the IRC); or (5) experiences a hardship (as defined in the IRC). In the case of hardship, the owner can only withdraw Purchase Payments. MINIMUM DISTRIBUTIONS Generally, the IRS requires that you begin taking annual distributions from qualified annuity 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) the calendar year in which you retire. Failure to satisfy the minimum distribution requirements may result in a tax penalty. You should consult your tax advisor for more information. DIVERSIFICATION The IRC imposes certain diversification requirements on the underlying investments for a variable annuity. We believe that each underlying Variable 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 Variable Portfolios. It is unknown to what extent owners are permitted to select investments, to make transfers among Variable Portfolios or the number and type of Variable 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 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 SAI 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 18 58 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 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 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. - ---------------------------------------------------------------- - ---------------------------------------------------------------- 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, CalAmerica Life Insurance Company, SunAmerica National Life Insurance Company, SunAmerica Asset Management Corp., Resources Trust Company, and six broker-dealers, specialize in retirement savings and investment products and services. Business focuses include fixed and variable annuities, mutual funds, broker-dealer services and trust administration services. THE SEPARATE ACCOUNT Anchor National established Variable Separate Account ("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. 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 7% 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. SunAmerica Capital Services, Inc., 733 Third Avenue, 4th Floor, New York, New York 10017 distributes the contracts. SunAmerica Capital Services, an affiliate of Anchor National, is registered as a broker-dealer under the Exchange Act of 1934 and is a member of the National Association of Securities Dealers, Inc. No underwriting fees are paid in connection with the distribution of the contracts. ADMINISTRATION We are responsible for the administrative servicing of your contract. Please contact our Annuity Service Center at 1-800-445-SUN2, 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. YEAR 2000 We rely significantly on computer systems and applications in our daily operations. Many of our systems are not presently 19 59 year 2000 compliant, which means that because they have historically used only two digits to identify the year in a date, they will fail to distinguish dates in the "2000s" from dates in the "1900s." Anchor National's business, financial condition and results of operations could be materially and adversely affected by the failure of our systems and applications (and those operated by third parties interfacing with our systems and applications) to properly operate or manage these dates. Anchor National has a coordinated plan to repair or replace these noncompliant systems and to obtain similar assurances from third parties interfacing with our systems and applications. In fiscal 1997, the Company's parent recorded a $15.0 million provision for estimated programming costs to make necessary repairs of certain specific noncompliant systems, of which $6.2 million was allocated to Anchor National. Anchor National's management is making expenditures which we expect will ultimately total $5.0 million to replace certain other noncompliant systems. Total expenditures relating to the replacement of noncompliant systems will be capitalized by the Company as software costs and will be amortized over future periods. Both phases of the project are progressing according to plan and were substantially completed by the end of calendar 1998. Testing of both the repaired and replacement systems is being conducted during calendar 1999. In addition, we distributed a year 2000 questionnaire to our significant suppliers, distributors, financial institutions, lessors and others we do business with to evaluate their year 2000 compliance plans and state of readiness and to determine how our systems and applications may be affected by their failure to solve their own year 2000 issues. To date, however, we have only received preliminary feedback from such parties and have not independently confirmed any information received from other parties with respect to the year 2000 issues. Therefore, we cannot assure that such other parties will complete their year 2000 conversions in a timely fashion or will not suffer a year 2000 business disruption that may adversely affect our financial condition and results of operations. Because we expect to complete our year 2000 conversion prior to any potential disruption to our business, we have not developed a comprehensive year 2000 contingency plan. Anchor National closely monitors the progression of its plan for compliance, and if necessary, would devote additional resources to assure the timely completion of our year 2000 plan. If we determine that our business is at material risk of disruption due to the year 2000 issue or anticipate that we will not complete our year 2000 conversion in a timely fashion, we will work to enhance our contingency plans. The above statements are forward-looking. The costs of our year 2000 conversion, the date which we have set to complete such conversion and the possible risks associated with the year 2000 issue are based on our current estimates and are subject to various uncertainties that could cause the actual results to differ materially from our expectations. Such uncertainties include, among others, our success in identifying systems and applications that are not year 2000 compliant, the nature and amount of programming required to upgrade or replace each of the affected systems and applications, the availability of qualified personnel, consultants and other resources, and the success of the year 2000 conversion efforts of others. 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 PolarisII 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. 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. 20 60 INDEPENDENT ACCOUNTANTS The financial statements of Anchor National as of September 30, 1998 and 1997 and for each of the three years in the period ended September 30, 1998 incorporated by reference in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. LEGAL MATTERS The organization of Anchor National, its authority to issue the contracts and the validity of the form of the contracts have been passed upon by Susan L. Harris, Senior Vice President and General Counsel of SunAmerica Inc., of which Anchor National is an indirect-wholly owned subsidiary. 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. - ---------------------------------------------------------------- - ---------------------------------------------------------------- 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............................... 3 Performance Data.............................. 4 Income Payments............................... 9 Annuity Unit Values........................... 10 Taxes......................................... 12 Distribution of Contracts..................... 16 Financial Statements.......................... 16
21 61 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- APPENDIX A - CONDENSED FINANCIAL INFORMATION - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
INCEPTION TO FISCAL YEAR PORTFOLIOS 11/30/97 11/30/98 - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Capital Appreciation (Inception Date - 6/3/97) Beginning AUV.................................. $ 18.52 $ 21.26 Ending AUV..................................... $ 21.26 $ 23.72 Ending Number of AUs........................... 1,392,262 7,356,862 - ------------------------------------------------------------------------------------------- Growth (Inception Date - 6/3/97) Beginning AUV.................................. $ 17.93 $ 20.31 Ending AUV..................................... $ 20.31 $ 24.41 Ending Number of AUs........................... 789,274 3,678,108 - ------------------------------------------------------------------------------------------- Natural Resources (Inception Date - 6/4/97) Beginning AUV.................................. $ 12.39 $ 11.14 Ending AUV..................................... $ 11.14 $ 9.30 Ending Number of AUs........................... 195,946 641,479 - ------------------------------------------------------------------------------------------- Government and Quality Bond (Inception Date - 6/11/97) Beginning AUV.................................. $ 11.99 $ 12.65 Ending AUV..................................... $ 12.65 $ 13.66 Ending Number of AUs........................... 395,258 5,697,571 - ------------------------------------------------------------------------------------------- Emerging Markets (Inception Date - 6/5/97) Beginning AUV.................................. $ 10.14 $ 7.97 Ending AUV..................................... $ 7.97 $ 6.14 Ending Number of AUs........................... 663,212 2,574,316 - ------------------------------------------------------------------------------------------- International Diversified Equities (Inception Date - 6/4/97) Beginning AUV.................................. $ 12.04 $ 11.62 Ending AUV..................................... $ 11.62 $ 13.53 Ending Number of AUs........................... 1,040,812 4,519,545 - ------------------------------------------------------------------------------------------- Global Equities (Inception Date - 6/3/97) Beginning AUV.................................. $ 16.54 $ 16.90 Ending AUV..................................... $ 16.90 $ 19.21 Ending Number of AUs........................... 600,294 2,566,912 - ------------------------------------------------------------------------------------------- International Growth and Income (Inception Date - 6/4/97) Beginning AUV.................................. $ 9.97 $ 10.33 Ending AUV..................................... $ 10.33 $ 11.16 Ending Number of AUs........................... 1,310,126 6,738,263 - ------------------------------------------------------------------------------------------- Aggressive Growth (Inception Date - 6/9/97) Beginning AUV.................................. $ 10.03 $ 11.51 Ending AUV..................................... $ 11.51 $ 11.86 Ending Number of AUs........................... 821,105 2,794,187 - ------------------------------------------------------------------------------------------- MFS Mid-Cap Growth (Inception Date - 4/1/99 Beginning AUV.................................. $ -- $ -- Ending AUV..................................... $ -- $ -- Ending Number of AUs........................... -- -- - ------------------------------------------------------------------------------------------- Real Estate (Inception Date - 6/4/97) Beginning AUV.................................. $ 9.98 $ 11.44 Ending AUV..................................... $ 11.44 $ 9.80 Ending Number of AUs........................... 887,321 3,336,767 - ------------------------------------------------------------------------------------------- Putnam Growth (Inception Date - 6/3/97) Beginning AUV.................................. $ 15.80 $ 18.47 Ending AUV..................................... $ 18.47 $ 22.29 Ending Number of AUs........................... 831,178 4,949,624 - ------------------------------------------------------------------------------------------- MFS Growth and Income* (Inception Date - 6/4/97) Beginning AUV.................................. $ 15.82 $ 17.63 Ending AUV..................................... $ 17.63 $ 20.46 Ending Number of AUs........................... 191,101 694,076 - ------------------------------------------------------------------------------------------- Alliance Growth (Inception Date - 6/2/97) Beginning AUV.................................. $ 21.81 $ 24.51 Ending AUV..................................... $ 24.51 $ 32.81 Ending Number of AUs........................... 2,092,044 12,001,651 - ------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------
* Formerly named Growth/Phoenix and managed by Phoenix Investment Counsel, Inc. AUV - Accumulation Unit Value AU - Accumulation Units A-1 62
INCEPTION TO FISCAL YEAR PORTFOLIOS 11/30/97 11/30/98 - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- "Dogs of Wall Street" (Inception Date - 4/1/98) Beginning AUV.................................. $ -- $ 10.00 Ending AUV..................................... $ -- $ 9.71 Ending Number of AUs........................... -- 4,324,225 - ------------------------------------------------------------------------------------------- Venture Value (Inception Date - 6/2/97) Beginning AUV.................................. $ 18.63 $ 21.30 Ending AUV..................................... $ 21.30 $ 23.36 Ending Number of AUs........................... 4,281,879 20,734,371 - ------------------------------------------------------------------------------------------- Federated Value (Inception Date - 6/4/97) Beginning AUV.................................. $ 12.14 $ 13.62 Ending AUV..................................... $ 13.62 $ 15.86 Ending Number of AUs........................... 736,333 3,783,248 - ------------------------------------------------------------------------------------------- Growth-Income (Inception Date - 6/3/97) Beginning AUV.................................. $ 18.84 $ 21.41 Ending AUV..................................... $ 21.41 $ 25.71 Ending Number of AUs........................... 1,949,292 9,786,202 - ------------------------------------------------------------------------------------------- Utility (Inception Date - 6/6/97) Beginning AUV.................................. $ 11.41 $ 12.74 Ending AUV..................................... $ 12.74 $ 14.56 Ending Number of AUs........................... 177,618 1,807,529 - ------------------------------------------------------------------------------------------- Asset Allocation (Inception Date - 6/3/97) Beginning AUV.................................. $ 16.59 $ 17.98 Ending AUV..................................... $ 17.98 $ 18.22 Ending Number of AUs........................... 1,498,681 8,996,522 - ------------------------------------------------------------------------------------------- MFS Total Return** (Inception Date - 6/10/97) Beginning AUV.................................. $ 14.44 $ 15.45 Ending AUV..................................... $ 15.45 $ 17.28 Ending Number of AUs........................... 218,391 1,492,175 - ------------------------------------------------------------------------------------------- SunAmerica Balanced (Inception Date - 6/5/97) Beginning AUV.................................. $ 11.84 $ 13.22 Ending AUV..................................... $ 13.22 $ 15.60 Ending Number of AUs........................... 363,136 3,543,245 - ------------------------------------------------------------------------------------------- Worldwide High Income (Inception Date - 6/5/97) Beginning AUV.................................. $ 15.57 $ 15.98 Ending AUV..................................... $ 15.98 $ 13.57 Ending Number of AUs........................... 596,308 2,430,509 - ------------------------------------------------------------------------------------------- High-Yield Bond (Inception Date - 6/9/97) Beginning AUV.................................. $ 13.63 $ 14.66 Ending AUV..................................... $ 14.66 $ 14.25 Ending Number of AUs........................... 758,856 5,006,115 - ------------------------------------------------------------------------------------------- Corporate Bond (Inception Date - 6/9/97) Beginning AUV.................................. $ 11.83 $ 12.54 Ending AUV..................................... $ 12.54 $ 13.15 Ending Number of AUs........................... 328,300 3,633,064 - ------------------------------------------------------------------------------------------- Global Bond (Inception Date - 6/11/97) Beginning AUV.................................. $ 12.41 $ 13.08 Ending AUV..................................... $ 13.08 $ 14.40 Ending Number of AUs........................... 183,563 1,342,157 - ------------------------------------------------------------------------------------------- Cash Management (Inception Date - 6/5/97) Beginning AUV.................................. $ 11.24 $ 11.43 Ending AUV..................................... $ 11.43 $ 11.83 Ending Number of AUs........................... 1,514,290 5,488,046 - ------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------
** Formerly named Balanced/Phoenix and managed by Phoenix Investment Counsel, Inc. AUV - Accumulation Unit Value AU - Accumulation Units A-2 63 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- APPENDIX B - 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 account option, the greater the impact of changing interest rates. The impact of the MVA can be either positive or negative, and is computed by multiplying the amount withdrawn, transferred or switched to the Income Phase by the following factor: (N/12) [(1+I/(1+J+0.005)] - 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 account 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 account option; and N is the number of full months remaining in the term you initially agreed to leave your money in the fixed account 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 10-year fixed account option at a rate of 5%; (2) You make a partial withdrawal of $4,000 when 1 1/2 years (18 months) remain in the 10-year term you initially agreed to leave your money in the fixed account option (N=18); 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 seven 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 1-year fixed account option is 3.5% and the 3-year fixed account option is 4.5%. By linear interpolation, the interest rate for the remaining 2 years (1 1/2 years rounded up to the next full year) in the contract is calculated to be 4%. (N/12) The MVA factor is = [(1+I/(1+J+0.005)] - 1 (18/12) = [(1.05)/(1.04+0.005)] - 1 (1.5) = (1.004785) - 1 = 1.007186 - 1 = + 0.007186 The requested withdrawal amount is multiplied by the MVA factor to determine the MVA: $4,000 x (+0.007186) = +$28.74 $28.74 represents the MVA that would be added to your withdrawal. NEGATIVE ADJUSTMENT Assume that on the date of withdrawal, the interest rate in effect for new Purchase Payments in the 1-year fixed account option is 5.5% and the 3-year fixed account option is 6.5%. By linear interpolation, the interest rate for the remaining 2 years (1 1/2 years rounded up to the next full year) in the contract is calculated to be 6%. (N/12) The MVA factor is = [(1+I)/(1+J+0.005)] - 1 (18/12) = [(1.05)/(1.06+0.005)] - 1 (1.5) = (0.985915) - 1 = 0.978948 - 1 = - 0.021052 The requested withdrawal amount is multiplied by the MVA factor to determine the MVA: $4,000 X (- 0.021052) = -$84.21 $84.21 represents the MVA that will be deducted from the money remaining in the 10-year fixed account option. B-1 64 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- APPENDIX C - 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 .50% 2.35% - ---------------------------------------------------------------------------------------- Kentucky 2% 2% - ---------------------------------------------------------------------------------------- Maine 0% 2% - ---------------------------------------------------------------------------------------- Nevada 0% 3.5% - ---------------------------------------------------------------------------------------- South Dakota 0% 1.25% - ---------------------------------------------------------------------------------------- West Virginia 1% 1% - ---------------------------------------------------------------------------------------- Wyoming 0% 1% - ---------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------
C-1 65 - -------------------------------------------------------------------------------- Please forward a copy (without charge) of the Polaris(II) 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 - -------------------------------------------------------------------------------- 66 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 ................................. $ 15,152 Printing and engraving ............................... 50,000 Legal fees and expenses .............................. 10,000 Rating agency fees ................................... 7,500 Miscellaneous ........................................ 10,000 -------- Total ............................................ $ 93,259 ========
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) Form of Underwriting Agreement*** (2) Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession** (3) (a) Articles of Incorporation*** (b) By-Laws*** (4) (a) Polaris II Group Annuity Certificate*** (b) Polaris II (Principal Rewards) Group Annuity Certificate* (c) Polaris II Individual Annuity Contract*** (d) Polaris II (Principal Rewards) Individual Annuity Contract* (e) Polaris II Participant Enrollment Form* (f) Polaris II Annuity Application* (5) Opinion of Counsel re: Legality** (included on Exhibit (23)(b)) (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** (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**
* Herewith ** Not Applicable *** Incorporated by Reference to Pre-Effective Amendment No. 1 to Registration Statement No. 333-18338 on Form S-1 filed on April 18, 1997. **** Incorporated by Reference to Post-Effective Amendment No. 5 to Registration Number 333-18333 on Form S-3 Filed February 2, 1999. 67 Item 17. Undertakings. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represents a fundamental change in the information set forth in the registration statement; (iii) 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 such 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. (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. 68 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 31st day of March, 1999. By: ANCHOR NATIONAL LIFE INSURANCE COMPANY By: /s/ JAY S. WINTROB --------------------------------------- Jay S. Wintrob Executive Vice President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- ELI BROAD* President, Chief Executive - ---------------- Officer, & Chairman of Eli Broad Board (Principal Executive Officer) SCOTT L. ROBINSON* Senior Vice President & - ---------------- Director Scott L. Robinson (Principal Financial Officer) N. SCOTT GILLIS* Senior Vice President & - ---------------- Controller N. Scott Gillis (Principal Accounting Officer) JAMES R. BELARDI* Director - ---------------- James R. Belardi JANA W. GREER* Director - ---------------- Jana W. Greer JAY S. WINTROB* Director - ---------------- Jay S. Wintrob /s/ SUSAN L. HARRIS Director March 31, 1999 - ------------------- Susan L. Harris PETER McMILLAN* Director - ---------------- Peter McMillan JAMES W. ROWAN* Director - ----------------- James W. Rowan *By: /s/ SUSAN L. HARRIS Attorney-in-Fact ----------------------- Susan L. Harris
Date: March 31, 1999 69 EXHIBIT INDEX
Exhibit No. Description ----------- ----------- (4) (b) Polaris II (Principal Rewards) Group Annuity Certificate (d) Polaris II (Principal Rewards) Individual Annuity Contract* (e) Polaris II Participant Enrollment Form (f) Polaris II Annuity Application (23) (a) Consent of Independent Accountants
EX-4.(B) 2 EXHIBIT 4.(B) 1 ANCHOR NATIONAL LIFE INSURANCE COMPANY A STOCK COMPANY LOS ANGELES, CALIFORNIA CERTIFICATE NUMBER P9999999999 PARTICIPANT JOHN DOE
STATUTORY HOME OFFICE EXECUTIVE OFFICE ANNUITY SERVICE CENTER 2999 NORTH 44TH ST., STE 250 1 SUNAMERICA CENTER P. O. BOX 54299 PHOENIX, AZ 85018 LOS ANGELES, CA 90067-6022 LOS ANGELES, CA 90054-0299
ANCHOR NATIONAL LIFE INSURANCE COMPANY ("We", "Us", the "Company", or "Anchor National") agrees to provide benefits to the Participant under the Group Contract, in accordance with the provisions set forth in this Certificate and in consideration of Purchase Payments We receive. THIS CERTIFICATE IS EVIDENCE OF COVERAGE UNDER THE GROUP CONTRACT. THE COVERAGE WILL BEGIN AS OF THE CERTIFICATE DATE, SHOWN ON THE CERTIFICATE DATA PAGE. THE VALUE OF AMOUNTS ALLOCATED TO THE SEPARATE ACCOUNT DURING THE ACCUMULATION AND ANNUITY PERIODS IS NOT GUARANTEED, AND WILL INCREASE OR DECREASE BASED UPON THE INVESTMENT EXPERIENCE OF THE VARIABLE PORTFOLIOS YOU CHOOSE. THE CASH SURRENDER BENEFIT OF AMOUNTS ALLOCATED TO ANY FIXED-MVA ACCOUNT OPTION INCREASES OR DECREASES BASED ON THE APPLICATION OF THE MARKET VALUE ADJUSTMENT EXCEPT DURING THE 30 DAYS AFTER THE END OF THE GUARANTEE PERIOD. THERE IS NO MARKET VALUE ADJUSTMENT TO AMOUNTS ALLOCATED TO THE NON-MVA FIXED ACCOUNT OPTION. RIGHT TO EXAMINE - YOU MAY RETURN THIS CERTIFICATE TO OUR ANNUITY SERVICE CENTER OR TO THE AGENT THROUGH WHOM THE CERTIFICATE WAS PURCHASED WITHIN 10 DAYS AFTER YOU RECEIVE IT, IF YOU ARE NOT SATISFIED WITH IT. THE COMPANY WILL REFUND THE CERTIFICATE VALUE, LESS ANY PAYMENT ENHANCEMENT(S), ON THE BUSINESS DAY DURING WHICH THE CERTIFICATE IS RECEIVED. UPON SUCH REFUND, THE CERTIFICATE SHALL BE VOID. For Individual Retirement Annuities, a refund of the Purchase Payment(s) may be required. Therefore, We reserve the right to allocate Your Purchase Payment(s) and any Payment Enhancement to the Cash Management Portfolio until the end of the Right To Examine period. Thereafter, allocations will be made as shown on the Certificate Data Page. THIS IS A LEGAL DOCUMENT. READ IT CAREFULLY. /s/ Susan L. Harris /s/ Eli Broad - ---------------------------- ---------------------------- Susan L. Harris Eli Broad Secretary President ALLOCATED FIXED AND VARIABLE GROUP ANNUITY CERTIFICATE Nonparticipating 1 2
TABLE OF CONTENTS CERTIFICATE DATA PAGE.............................................PAGE 3 PURCHASE PAYMENT ALLOCATION.......................................PAGE 4 DEFINITIONS.......................................................PAGE 5 PURCHASE PAYMENT PROVISIONS.......................................PAGE 8 ACCUMULATION PROVISIONS...........................................PAGE 9 PAYMENT ENHANCEMENT PROVISIONS...................................PAGE 11 FEES AND CHARGES.................................................PAGE 12 TRANSFER PROVISIONS..............................................PAGE 12 WITHDRAWAL PROVISIONS............................................PAGE 13 GENERAL PROVISIONS...............................................PAGE 15 DEATH PROVISIONS.................................................PAGE 17 ANNUITY PROVISIONS...............................................PAGE 20 ANNUITY PAYMENT OPTIONS .........................................PAGE 22 FIXED ANNUITY PAYMENT OPTIONS TABLE..............................PAGE 23 VARIABLE ANNUITY PAYMENT OPTIONS TABLE...........................PAGE 26
2 3
CERTIFICATE DATA PAGE CERTIFICATE NUMBER: ANNUITY SERVICE CENTER: P9999999999 P. O. BOX 54299 LOS ANGELES, CA 90054-0299 PARTICIPANT: AGE AT ISSUE: JOHN DOE 35 ANNUITANT: INITIAL PURCHASE PAYMENT: JOHN DOE $10,000.00 CERTIFICATE DATE: FIXED ACCOUNT OPTIONS - March 1, 1999 Minimum Guarantee Rate: 3.0% ANNUITY DATE: INITIAL PAYMENT ENHANCEMENT: March 1, 2029 2.0% LATEST ANNUITY DATE: MORTALITY RISK CHARGE: March 1, 2054 [0.35%] ANNUAL CERTIFICATE MAINTENANCE FEE: EXPENSE RISK CHARGE: $35.00 [0.90%] GUARANTEED DEATH BENEFIT RISK CHARGE: DISTRIBUTION EXPENSE CHARGE: [0.12%] [0.15%] BENEFICIARY: SEPARATE ACCOUNT: As named by You. Variable Separate Account DEATH BENEFIT OPTION: Option I: Purchase Payment Accumulation
PAYMENT ENHANCEMENT SCHEDULE FOR INITIAL PURCHASE PAYMENT - ------------------------------------------------- ----------------------------------------------- PAYMENT ENHANCEMENT DATE PAYMENT ENHANCEMENT - ------------------------------------------------- ----------------------------------------------- INITIAL PAYMENT ENHANCEMENT: - ------------------------------------------------- ----------------------------------------------- March 1, 1999 $200.00 - ------------------------------------------------- ----------------------------------------------- DEFERRED PAYMENT ENHANCEMENT(S): - ------------------------------------------------- ----------------------------------------------- [March 1, 2008] [$200.00*] - ------------------------------------------------- -----------------------------------------------
*May be reduced by certain withdrawals of Certificate Value. Please see Payment Enhancement Provisions. FOR INQUIRIES CALL 1-800-445-SUN2 3 4 PURCHASE PAYMENT ALLOCATION
Variable Portfolios ------------------- SUNAMERICA ANCHOR SERIES TRUST SERIES TRUST 0.00% Cash Management 0.00% Government & Quality Bond 0.00% Corporate Bond 0.00% Growth 0.00% Global Bond 25.00% Natural Resources 0.00% High-Yield Bond 0.00% Capital Appreciation 0.00% Worldwide High Income 0.00% SunAmerica Balanced 25.00% MFS Total Return 0.00% Asset Allocation 0.00% Utility 0.00% Growth-Income 0.00% MFS Growth and Income 0.00% Federated Value 0.00% Venture Value 0.00% "Dogs" of Wall St. 0.00% Alliance Growth 25.00% Putnam Growth 0.00% Real Estate 0.00% MFS Mid-Cap Growth 0.00% Aggressive Growth 0.00% International Growth and Income 0.00% Global Equities 0.00% International Diversified Equities 0.00% Emerging Markets
Fixed Account Options --------------------- Guarantee Initial Period Interest Rate --------- ------------- 25.00% 1-Year Fixed Non-MVA 3.00% 0.00% 3-Year Fixed MVA 0.00% 5-Year Fixed MVA 0.00% 7-Year Fixed MVA 0.00% 10-Year Fixed MVA
4 5 DEFINITIONS Defined in this section are some of the words and phrases used in this Certificate. These terms are capitalized when used in the Certificate. Other capitalized terms in the Certificate refer to the captioned paragraph explaining that particular concept in the Certificate. ACCUMULATION UNIT A measurement used to compute the Certificate Value in a Variable Portfolio prior to the Annuity Date. AGE Age as of last birthday. ANNUITANT The natural person or persons (collectively, Joint Annuitants) whose life or lives is/are used to determine the annuity benefits under the Certificate. If the Certificate is in force and the Annuitant(s) is/are alive on the Annuity Date, We will begin payments to the Payee. This Certificate cannot have Joint Annuitants if it is issued on a tax-qualified basis. ANNUITY DATE The date on which annuity payments ("income payments") to the Payee are to start. The Participant specifies the Annuity Date, which must be at least two years after the Certificate Date. ANNUITY SERVICE CENTER As specified on the Certificate Data Page. ANNUITY UNIT A unit of measurement used to compute annuity payments from the Variable Portfolio. BENEFICIARY The Beneficiary is as named by You unless later changed by You in a written request to Us at Our Annuity Service Center. CERTIFICATE This Certificate, which describes Your interest as a Participant under the group annuity contract. CERTIFICATE DATE The date Your Certificate is issued, as shown on the Certificate Data Page. It is the date from which Certificate Years and anniversaries are measured. CERTIFICATE VALUE The sum of: (1) the Accumulation Unit Values for Your amounts allocated to the Variable Portfolios and (2) the value of amounts allocated to the Fixed Account Options. CERTIFICATE YEAR 5 6 A year starting from the Certificate Date in one calendar year and ending on the day preceding the anniversary of such date in the succeeding calendar year. CONTRIBUTION YEAR A year starting from the date a Purchase Payment is made in one calendar year and ending on the day preceding the anniversary of such date in succeeding calendar years. CURRENT INTEREST RATE The rate(s) of interest declared by Us applicable to allocations of subsequent Purchase Payments to the Fixed Account Options. The Current Interest Rate will not be less than the Minimum Guarantee Rate as shown on the Certificate Data Page. DEFERRED PAYMENT ENHANCEMENT Any Payment Enhancement allocated to Your Certificate Value on any Deferred Payment Enhancement Date. FIXED ACCOUNT OPTIONS The investment options under this Certificate that are credited with a fixed rate of interest declared by the Company. All amounts allocated to the Fixed Account Options become part of the Company's general asset account. The general asset account contains all the assets of the Company except for the Separate Account and other segregated asset accounts. The Fixed Account Options for this Certificate are shown on page 4. FIXED ANNUITY A series of periodic annuity payments in predetermined amounts that do not vary with investment experience. Such payments are made from the Company's general asset account. GUARANTEE PERIOD The period for which either the Initial Interest Rate, the Current Interest Rate or the Renewal Interest Rate is credited to amounts allocated to the Fixed Account Options. INITIAL INTEREST RATE The rate(s) of interest credited to any portion of the initial Purchase Payment allocated to the Fixed Account Option(s), as described in the Accumulation Provisions section. The Initial Interest Rate(s) for this Certificate is/are listed on page 4. The Initial Interest Rate may not be less than the Minimum Guarantee Rate as shown on the Certificate Data Page. INITIAL PAYMENT ENHANCEMENT The Payment Enhancement allocated to Your Certificate Value on the date a Purchase Payment is credited to Your Certificate. IRC The Internal Revenue Code of 1986, as amended, or as it may be amended or superseded. JOINT PARTICIPANT If Joint Participants are named, they must be spouses. Each Joint Participant has an equal ownership interest in the Certificate unless We are advised otherwise in writing. 6 7 NYSE New York Stock Exchange. Generally, the close of any NYSE business day is 4:00PM, Eastern Time. Financial transactions and/or Purchase Payments received after the close of any NYSE business day will be credited with the next NYSE business day's Accumulation Unit Value for the selected Variable Portfolio. PARTICIPANT The person or entity named in the Certificate who is entitled to exercise all rights and privileges of ownership under the Certificate. Participant means both Joint Participants, if applicable. PAYEE The person receiving payment of annuity benefits under this Certificate. PAYMENT ENHANCEMENT Payment Enhancements are amounts allocated to Your Certificate Value by Us. Payment Enhancements are not considered Purchase Payments. PURCHASE PAYMENTS Payments in U.S. currency made by or on behalf of the Participant to the Company for the Certificate. Payment Enhancements are not considered Purchase Payments. RENEWAL INTEREST RATE The rate(s) of interest declared by Us applicable to transfers from the Variable Portfolios into the Fixed Account Options and to amounts previously allocated to a Fixed Account Option wherein the Guarantee Period has expired. The Renewal Interest Rate may not be less than the Minimum Guarantee Rate as shown on the Certificate Data Page. SEPARATE ACCOUNT A segregated asset account named on the Certificate Data Page. The Separate Account consists of the Variable Portfolios. The assets of the Separate Account are not comingled with the general assets and liabilities of the Company. The value of amounts allocated to the Variable Portfolios of the Separate Account is not guaranteed. SUBSEQUENT PURCHASE PAYMENTS Purchase Payments made after the Initial Purchase Payment. TOTAL INVESTED AMOUNT The sum of all Purchase Payments less amounts previously withdrawn that incurred a Withdrawal Charge, less Purchase Payments withdrawn that were no longer subject to a Withdrawal Charge. VARIABLE ANNUITY A series of periodic annuity payments which vary in amount according to the investment experience of one or more Variable Portfolio, as selected by You. VARIABLE PORTFOLIO The variable investment options available under this Certificate. Each Variable Portfolio has its own investment objective and is invested in an underlying fund of the Anchor Series Trust or the SunAmerica Series Trust. Each Variable Portfolio is not chargeable with liabilities arising out of any other Variable Portfolio. The available Variable Portfolios are shown on page 4. Additional Variable Portfolios may become available in the future. 7 8 WE, OUR, US, THE COMPANY Anchor National Life Insurance Company. YOU, YOUR The Participant. PURCHASE PAYMENT PROVISIONS PURCHASE PAYMENTS Purchase Payments are flexible. This means that, subject to Company declared minimums and maximums, You may change the amounts, frequency or timing of Purchase Payments. Purchase Payments will be allocated to the Fixed Account Option(s) and Variable Portfolio(s) in accordance with instructions from You. We reserve the right to specify the minimum Purchase Payment that may be allocated to a Variable Portfolio under the Certificate. PRINCIPAL ADVANTAGE PROGRAM An optional program under which We allocate a portion of Your Purchase Payment to a Fixed Account Option selected by You. This allocation will accumulate to the full amount of that Purchase Payment by the end of the Guarantee Period, provided there are no withdrawals or transfers prior to the end of the Guarantee Period from that Fixed Account Option. The amount of the allocation depends upon: (a) the Guarantee Period for the Fixed Account Option You select; and (b) the interest rate applicable to that allocation. We reserve the right to modify, suspend or terminate the Principal Advantage Program at any time. DEFERMENT OF PAYMENTS We may defer making payments from the Fixed Account Options for up to six (6) months. Interest, subject to state requirements, will be credited during the deferral period. SUSPENSION OF PAYMENTS We may suspend or postpone any payments from the Variable Portfolios if any of the following occur: (a) the NYSE is closed; (b) trading on the NYSE is restricted; (c) an emergency exists such that it is not reasonably practical to dispose of securities in the Variable Portfolios or to determine the value of its assets; or (d) the Securities and Exchange Commission, by order, so permits for the protection of Participants. Conditions in (b) and (c) will be decided by or in accordance with rules of the Securities and Exchange Commission. 8 9 SUBSTITUTION OF VARIABLE PORTFOLIO If: (a) the shares of the underlying funds of the SunAmerica Series Trust or the Anchor Series Trust should no longer be available for investment by the Separate Account; or (b) in the judgment of the Board of Trustees for the SunAmerica Series Trust and the Anchor Series Trust, further investment in the underlying funds of such entities is no longer appropriate in view of the purpose of the Certificate, then We may substitute shares of another underlying fund, for shares already purchased, or to be purchased in the future by subsequent Purchase Payments under the Certificate. No substitution of securities may take place without prior approval of the Securities and Exchange Commission and under such requirements as it may impose. ACCUMULATION PROVISIONS SEPARATE ACCOUNT ACCUMULATION VALUE The Separate Account Accumulation Value under the Certificate shall be the sum of the values of the Accumulation Units held in the Variable Portfolios for each Participant. NUMBER OF ACCUMULATION UNITS Your Certificate is credited with Accumulation Units of the Separate Account when Purchase Payments are allocated to the Variable Portfolios. For that portion of each Purchase Payment allocated to a Variable Portfolio, the number of Accumulation Units credited is equal to the sum of each Purchase Payment, any Payment Enhancement and/or transfer amount allocated to that Variable Portfolio, reduced by premium taxes, if any: Divided by The Accumulation Unit value for that Variable Portfolio for the NYSE business day on which the Purchase Payment, Payment Enhancement or transfer amount is allocated. The number of Accumulation Units will be similarly adjusted for withdrawals, annuitizations, transfers and charges. Adjustments will be made as of the NYSE business day on which We receive all requirements for the transaction, as appropriate. ACCUMULATION UNIT VALUE (AUV) The AUV of a Variable Portfolio for any NYSE business day is calculated by subtracting (2) from (1) and dividing the result by (3) where: (1) is the total value for the given NYSE business day of the assets attributable to the Accumulation Units of the Variable Portfolio, minus the total liabilities; (2) is the cumulative unpaid charge for assumption of Expense Risk, Distribution Expense, Mortality Risk and Guaranteed Death Benefit Risk charges (See CHARGES AND DEDUCTIONS); and (3) is the number of Accumulation Units outstanding at the end of the given NYSE business day. 9 10 FIXED ACCOUNT ACCUMULATION VALUE Under the Certificate, the Fixed Account Accumulation Value shall be the sum of all monies then invested in the Fixed Account Option(s), reduced by any applicable premium taxes, plus all interest credited thereto. This amount shall be adjusted for withdrawals (which includes any Withdrawal Charges associated with those withdrawals), annuitizations, transfers, any applicable MVA on such transactions, and the deduction of the Certificate Maintenance Fee. The Fixed Account Accumulation Value shall not be less than the minimum values required by law in the state where this Certificate is issued. FIXED ACCOUNT GUARANTEE PERIOD OPTIONS AND INTEREST CREDITING Any amounts allocated to the Fixed Account Options from the initial Purchase Payment and the Payment Enhancement for the initial Purchase Payment will earn interest at the Initial Interest Rate for the Fixed Account Option(s) selected for the duration of the Guarantee Period. Subsequent Purchase Payments and the initial Payment Enhancement for Subsequent Purchase Payments, if any, allocated to the Fixed Account Options will earn interest at the Current Interest Rate for the Fixed Account Option(s) selected for the duration of the Guarantee Period. Transfers to the Fixed Account Options from the Variable Portfolios and amounts renewed into the Fixed Account Options will earn interest at the Renewal Interest Rate for the Fixed Account Option(s) selected for the duration of the Guarantee Period. For thirty (30) days following the date of expiration of a Guarantee Period, You may renew for the same or any other Guarantee Period at the Renewal Interest Rate or You may transfer all or a portion of the amount to the Variable Portfolios. If during that 30-day period You do not specify a different Guarantee Period or otherwise transfer to a Variable Portfolio, We will select the same Guarantee Period as has just expired, crediting Your Certificate with the Renewal Interest Rate in effect on the date of expiration of the Guarantee Period, so long as such Guarantee Period does not extend beyond the Annuity Date. If the guarantee period extends beyond the Annuity Date, We will credit interest up to the Annuity Date at the Renewal Interest Rate for the 1-Year Fixed Account Option. MARKET VALUE ADJUSTMENT (MVA) Any payments and values based on the 3, 5, 7 or 10-year Fixed Account Options may be subject to a MVA, the operation of which may result in upward or downward adjustments in the Certificate Value, if withdrawn, transferred or annuitized prior to the end of the respective Guarantee Period. The MVA will be calculated by multiplying the amount withdrawn, transferred or annuitized by the following formula: (N/12) {(1 + I)/(1+J+0.0050)} -1 I = The interest rate currently in effect for that Guarantee Period. 10 11 J = The Initial Interest Rate available for the Guarantee Period equal to the number of years (rounded up to an integer) remaining in the current Guarantee Period at the time of withdrawal, transfer or annuitization. In the determination of J, if the Company currently does not offer the applicable Guarantee Period, then the rate will be determined by linear interpolation of the Initial Interest Rate for the nearest two Guarantee Periods that are available. N = The number of full months remaining in the current Guarantee Period at the time the withdrawal or annuitization request is processed. There will be no MVA from the Fixed Account Options in the following situations: (1) upon withdrawal or transfer within thirty (30) days after the end of the Guarantee Period; (2) upon withdrawal to pay fees or charges; (3) upon payment of the death benefit; or (4) upon annuitization on the latest Annuity Date. PAYMENT ENHANCEMENT PROVISIONS Payment Enhancements are amounts allocated to Your Certificate Value by Us. Payment Enhancements are not considered Purchase Payments. Payment Enhancements are subject to Our terms and conditions as discussed below. PAYMENT ENHANCEMENT FOR INITIAL PURCHASE PAYMENT We will allocate the Initial Payment Enhancement shown on the Certificate Data Page to the Fixed Account Options and Variable Portfolios in the same proportion as Your Initial Purchase Payment. The Initial Payment Enhancement will be allocated on Your Certificate Date. We will allocate any Deferred Payment Enhancement(s) shown on the Certificate Data Page to the Cash Management Portfolio on the corresponding Deferred Payment Enhancement Date(s) shown. Any Deferred Payment Enhancement(s) will be reduced proportionately by Partial Withdrawals (including any fees or charges associated with such withdrawals) of the Initial Purchase Payment(s), prior to the Deferred Payment Enhancement Date(s). PAYMENT ENHANCEMENT FOR SUBSEQUENT PURCHASE PAYMENT(S) The Initial Payment Enhancement for Subsequent Purchase Payments is a percentage of each Subsequent Purchase Payment. This percentage is shown on the Certificate Data Page. We will allocate the Initial Payment Enhancement for the Subsequent Purchase Payment to the Fixed Account Options and Variable Portfolios in the same proportion as that Subsequent Purchase Payment. Any Deferred Payment Enhancement(s) and Deferred Payment Enhancement date(s) for Subsequent Purchase Payment(s) will be determined by Us at the time the Subsequent Purchase Payment is received. We will allocate any Deferred Payment Enhancement(s) for Subsequent Purchase Payments to the Cash Management Portfolio. Deferred Payment Enhancement(s) corresponding to Subsequent Purchase Payments will be reduced proportionately by Partial Withdrawals (including any fees or charges associated with such withdrawals) of that Subsequent Purchase Payment, prior to the Deferred Payment Enhancement Date(s). DEFERRED PAYMENT ENHANCEMENTS 11 12 For purposes of determining a Deferred Payment Enhancement, Partial Withdrawals are assumed to be withdrawn from earnings first, then from Purchase Payments on a first-in-first-out (FIFO) basis. No Deferred Payment Enhancement will be allocated if prior to the Deferred Payment Enhancement Date: (a) the Certificate Value is fully withdrawn; or (b) a death benefit has been paid; or (c) Annuity payments have begun; or (d) the entire Purchase Payment has been withdrawn. FEES AND CHARGES We will deduct the following charges from the Certificate: CERTIFICATE MAINTENANCE FEE The charge specified on the Certificate Data Page will be deducted on each Certificate anniversary that occurs on or prior to the Annuity Date. It will also be deducted when the Certificate Value is withdrawn in full if the withdrawal is not on the Certificate anniversary. We reserve the right to assess a charge on a class basis which is less than the charge specified on the Certificate Data Page. WITHDRAWAL CHARGE The charge, if any, to be deducted upon withdrawal of any portion of the Certificate Value. See WITHDRAWAL PROVISIONS. MORTALITY RISK CHARGE On an annual basis this charge, as shown on the Certificate Data Page, equals a percentage of the average daily total net asset value of the Variable Portfolios to which Your Purchase Payments are allocated. This charge is to compensate Us for assuming the mortality risks under the Certificate. EXPENSE RISK CHARGE On an annual basis this charge, as shown on the Certificate Data Page, equals a percentage of the average daily total net asset value of the Variable Portfolios to which Your Purchase Payments are allocated. This charge is to compensate Us for assuming the expense risks under the Certificate. DISTRIBUTION EXPENSE CHARGE On an annual basis this charge, as shown on the Certificate Data Page, equals a percentage of the average daily total net asset value of the Variable Portfolios to which Your Purchase Payments are allocated. This charge is to compensate Us for all distribution expenses associated with the Certificate. GUARANTEED DEATH BENEFIT RISK CHARGE On an annual basis this charge, as shown on the Certificate Data Page, equals a percentage of the average daily total net asset value of the Variable Portfolios to which Your Purchase Payments are allocated. This charge is to compensate Us for the risk assumed as a result of contractual obligations to provide a minimum guaranteed Death Benefit prior to the Annuity Date. 12 13 TRANSFER PROVISIONS Prior to the Annuity Date, You may transfer all or part of Your Certificate Value to any of the Variable Portfolios or Fixed Account Options. We reserve the right to charge a fee for transfers if the number of transfers exceeds the limit specified by Us. The minimum amount that can be transferred and the amount that can remain in a Variable Portfolio or Fixed Account Option are subject to Company limits. TRANSFERS OF ACCUMULATION AND ANNUITY UNITS BETWEEN VARIABLE PORTFOLIOS Prior to the Annuity Date, You may transfer all or a portion of Your Certificate Value between Variable Portfolios. A transfer will result in the redemption of Accumulation Units in a Variable Portfolio and the purchase of Accumulation Units in the other Variable Portfolio. Transfers will be effected at the next computed Accumulation Unit Value following Our receipt of Your request for transfer. Accumulation Unit Values are calculated at the close of each NYSE business day. After the Annuity Date, You may transfer all or a portion of Your Certificate Value from one Variable Portfolio to another Variable Portfolio. A transfer will result in the redemption of Annuity Units in a Variable Portfolio and the purchase of Annuity Units in the other Variable Portfolio. Transfers will be effected for the last NYSE business day of the month in which We receive Your request for the transfer. TRANSFERS OF ACCUMULATION AND ANNUITY UNITS TO AND FROM THE FIXED ACCOUNT OPTIONS Prior to the Annuity Date, You may transfer all or any part of Your Certificate Value from the Variable Portfolio(s) to any Fixed Account Option(s) or from the Fixed Account Option(s) to the Variable Portfolio(s) of the Contract. After the Annuity Date, transfers into or out of the Fixed Account Option(s) are not allowed. DOLLAR COST AVERAGING (DCA) An optional program under which You authorize the automatic transfer of specified amounts or percentages, at the interval selected by You, from the 1-Year Fixed Account Option or any Variable Portfolio(s) into any Variable Portfolio, other than the source account. The unit values credited and applied to Your Certificate are determined on each date of transfer. You may terminate the DCA program at any time. We reserve the right to modify, suspend or terminate the DCA program at any time. WITHDRAWAL PROVISIONS On or before the Annuity Date and while the Participant is living, You may withdraw all or part of Your Certificate Value under this Certificate by informing Us at Our Annuity Service Center. For a full withdrawal, this Certificate must be returned to Our Annuity Service Center. The minimum amount that can be withdrawn and the amount remaining after withdrawal are subject to Company limits. 13 14 Without a written notice to the contrary, withdrawals will be deducted from the Certificate Value in proportion to their allocation among the Fixed Account Options and the Variable Portfolios. Withdrawals will be based on values for the NYSE business day in which the request for withdrawal and the Certificate (in the case of a full withdrawal), are received at Our Annuity Service Center. Unless the SUSPENSION OF PAYMENTS or DEFERMENT OF PAYMENTS sections are in effect, payment of withdrawals will be made within seven calendar days. WITHDRAWAL CHARGE Withdrawals of all or a portion of the Certificate Value may be subject to a Withdrawal Charge as shown in the chart below. The Withdrawal Charge applied to any withdrawal will depend on how long the Purchase Payment to which the withdrawal is attributed has been in the Certificate. No Withdrawal Charge is made on an amount withdrawn which is considered to be a withdrawal of penalty-free earnings. For the purpose of determining the Withdrawal Charge, a withdrawal will be attributed to amounts in the following order: (1) penalty-free earnings in the Certificate; (2) Purchase Payments which are both no longer subject to the Withdrawal Charge and not yet withdrawn; (3) any remaining Penalty-Free Withdrawal amount (except in the case of a full surrender); and (4) Purchase Payments subject to a Withdrawal Charge. Purchase Payments, when withdrawn, are assumed to be withdrawn on a first-in-first-out (FIFO) basis. You will not receive the benefit of a Penalty-Free Withdrawal in the case of a full surrender.
Number of Years Elapsed Withdrawal Charge as a Between Purchase Payment Contribution Percentage of Withdrawn and Date of Withdrawal Purchase Payment - ------------------------------------- ------------------------ 0 9% 1 9% 2 8% 3 7% 4 6% 5 5% 6 4% 7 3% 8 2% 9+ 0%
The Withdrawal Charge will be deducted from amounts remaining in the Variable Portfolios and the Fixed Account Options after the withdrawal, in the same proportion as the remaining Certificate Value is allocated, unless You request that the withdrawal come from a particular Fixed Account Option or Variable Portfolio. If the remaining Certificate Value is insufficient to cover the Withdrawal Charge, any remaining balance will be deducted from the withdrawal amount requested. PENALTY-FREE WITHDRAWALS As of any day, You may make a withdrawal of up to the Penalty-Free Withdrawal amount for that day without incurring a Withdrawal Charge. Any Penalty-Free Withdrawal made in excess of 14 15 penalty-free earnings in the Certificate is considered to be a withdrawal of future penalty-free earnings and is therefore not a withdrawal of the Total Invested Amount. On any day, penalty-free earnings in the Certificate are calculated as the Certificate Value at the end of that day less the Total Invested Amount. During the first Certificate Year, the Penalty-Free Withdrawal amount is equal to the penalty-free earnings in the Certificate as of the date of withdrawal. Alternatively, during the first Certificate Year, You may make withdrawals of the Penalty-Free Withdrawal amount through the Systematic Withdrawal Program. The Penalty-Free Withdrawal amount as of any systematic withdrawal date is 10% of the Total Invested Amount less any withdrawals already made during the Certificate Year. After the first Certificate Year, the maximum Penalty-Free Withdrawal amount as of the date of the withdrawal is the greater of: (a) penalty-free earnings in the Certificate as of that date; or (b) 10% of the Total Invested Amount on deposit for at least one year, less any withdrawals already made during the year. Although amounts withdrawn free of a Withdrawal Charge may reduce principal, they do not reduce the Total Invested Amount for purposes of calculating the Withdrawal Charge or for the purposes of calculating penalty-free earnings in the Certificate. As a result, You will not receive the benefit of a Penalty-Free Withdrawal in a full surrender. SYSTEMATIC WITHDRAWAL PROGRAM Prior to the Annuity Date, You may elect to participate in the Systematic Withdrawal Program by informing Us at Our Annuity Service Center. The Systematic Withdrawal Program allows You to make automatic withdrawals from Your account monthly, quarterly, semiannually or annually. The minimum systematic withdrawal amount is subject to Company limits. Any amount withdrawn through the Systematic Withdrawal Program may be subject to a Withdrawal Charge and/or a Market Value Adjustment. See the WITHDRAWAL CHARGE and MARKET VALUE ADJUSTMENT provisions. You may terminate Your participation in the Systematic Withdrawal Program at any time by sending Us a written request. We reserve the right to modify, suspend or terminate the Systematic Withdrawal Program at any time. GENERAL PROVISIONS ENTIRE CONTRACT The entire contract between You and Us consists of the group annuity contract, the application, the Participant Enrollment Form as completed by You at the time of purchase, this Certificate and any attached endorsement(s). No one can change the terms or conditions of this contract other than Us. Any change must be in writing and approved by Us. Only Our President, Secretary, or one of Our Vice-Presidents can give Our approval. CHANGE OF ANNUITANT If the Participant is an individual, the Participant may change the Annuitant(s) at any time prior to the Annuity Date. To make a change, the Participant must send a written notice to Us at least 30 15 16 days before the Annuity Date. If the Participant is a non-natural person, the Participant may not change the Annuitant. DEATH OF ANNUITANT If the Participant and Annuitant are different, and the Annuitant dies before the Annuity Date, the Participant becomes the Annuitant until the Participant elects a new Annuitant. If there are Joint Annuitants, upon the death of any Annuitant prior to the Annuity Date, the Participant may elect a new Joint Annuitant. However, if the Participant is a non-natural person, We will treat the death of any Annuitant as the death of the "Primary Annuitant" and as the death of the Participant, see DEATH PROVISIONS. MISSTATEMENT OF AGE OR SEX If the Age or sex of any Annuitant has been misstated, future annuity payments will be adjusted using the correct Age and sex, according to Our rates in effect on the date that annuity payments were determined. Any overpayment from the Fixed Account Options, plus interest at the rate of 4% per year, will be deducted from the next payment(s) due. Any underpayment from the Fixed Account Options, plus interest at the rate of 4% per year, will be paid in full with the next payment due. Any overpayment from the Variable Portfolios will be deducted from the next payment(s) due. Any underpayment from the Variable Portfolios will be paid in full with the next payment due. PROOF OF AGE, SEX, OR SURVIVAL The Company may require satisfactory proof of correct Age or sex at any time. If any payment under this Certificate depends on the Annuitant being alive, the Company may require satisfactory proof of survival. CONFORMITY WITH STATE LAWS The provisions of this Certificate will be interpreted by the laws of the state in which the enrollment form was signed or such other state as is required by law. Any provision which, on the Certificate Date, is in conflict with the law of such state is amended to conform to the minimum requirements of such law. CHANGES IN LAW If the laws governing this Certificate or the taxation of benefits under the Certificate change, We reserve the right to amend this Certificate to comply with these changes. ASSIGNMENT You may assign this Certificate before the Annuity Date, but We will not be bound by an assignment unless it is received by Us in writing. Your rights and those of any other person referred to in this Certificate will be subject to the assignment. Certain assignments may be taxable. We do not assume any responsibility for the validity or tax consequences of any assignment. CLAIMS OF CREDITORS To the extent permitted by law, no right or proceeds payable under this Certificate will be subject to claims of creditors or legal process. 16 17 PREMIUM TAXES OR OTHER TAXES The Company may deduct from Your Certificate Value any premium tax or other taxes payable to a state or other government entity, if applicable. Should We advance any amount so due, We are not waiving any right to collect such amount at a later date. The Company will deduct any withholding taxes required by applicable law. WRITTEN NOTICE Any notice We send to You will be sent to Your address shown in the Participant Enrollment Form unless You request otherwise. Any written request or notice to Us must be sent to Our Annuity Service Center, as specified on the Certificate Data Page. PERIODIC REPORTS During each Certificate Year, We will send You quarterly statements of the account activity of the Certificate as well as confirmation reports after each financial transaction. The quarterly statements will include all transactions which have occurred during the accounting period shown on the statement. INCONTESTABILITY This Certificate will be incontestable from the Certificate Date. NONPARTICIPATING This Certificate does not share in Our surplus. DEATH PROVISIONS Notwithstanding any provision of this Certificate to the contrary, all payments of benefits under this Certificate will be made in a manner that satisfies the requirements of IRC Section 72(s), as amended from time to time. If the Certificate is owned by a trust or other non-natural person, We will treat the death of any Annuitant as the death of the "Primary Annuitant" and as the death of any Participant. DEATH OF PARTICIPANT BEFORE THE ANNUITY DATE We will pay a death benefit to the Beneficiary upon Our receiving all required documentation including: (a) due proof that any Participant died before the Annuity Date; and (b) an election form selecting the payment option from the options listed below. If no election is received within 60 days of our receipt of due proof of death, the death benefit will be paid in accordance with option 1 below. The Beneficiary must select one of the following options: 1. Immediately collect the death benefit in a lump sum payment. If a lump sum payment is elected, payment will be in accordance with any applicable laws and regulations governing payments on death; or 2. Collect the death benefit in the form of one of the Annuity Payment Options. The payments must be over the life of the Beneficiary or over a period not extending beyond the life expectancy of the Beneficiary. 17 18 Payments under this option must commence within one year after the Participant's death, otherwise, the death benefit will be paid in accordance with option 1 above; or 3. If the Beneficiary is the Participant's spouse, the Beneficiary may elect to become the Participant and continue the Certificate in force. If this option is elected, no death benefit is paid. Upon the new Participant's subsequent death, the entire interest must be distributed immediately under option 1 or 2 above. DUE PROOF OF DEATH Due Proof of Death means: 1. a certified copy of a death certificate; or 2. a certified copy of a decree of a court of competent jurisdiction as to the finding of death; or 3. a written statement by a medical doctor who attended the deceased Participant at the time of death; or 4. any other proof satisfactory to Us. AMOUNT OF DEATH BENEFIT The amount of the death benefit will be determined based upon Your death benefit option selection. Once selected, the death benefit option cannot be changed. The death benefit options are as described below. OPTION I: PURCHASE PAYMENT ACCUMULATION DEATH BENEFIT OPTION Prior to the Annuity Date and upon death of the Participant, the Beneficiary will receive the greatest of: 1. the Certificate Value for the NYSE business day during which We receive all required documentation including due proof of death of the Participant and an election of the type of payment to be made at Our Annuity Service Center; or 2. Purchase Payments less any withdrawals (and any fees or charges applicable to such withdrawals), compounded until the date of death at 4% interest, plus any Purchase Payments and less any withdrawals (and any fees or charges applicable to such withdrawals) recorded after the date of death; or 3. the Certificate Value at the seventh Certificate anniversary, plus any subsequent Purchase Payments and less any subsequent withdrawals (and any fees or charges applicable to such withdrawals) compounded until the date of death at 4% interest, plus any Purchase Payments and less any withdrawals (and any fees or charges applicable to such withdrawals) recorded after the date of death. 18 19 If the Participant was age 70 or older on the Certificate Date, both (2) and (3) above will be compounded at 3%, rather than 4%. If the death benefit is paid on the death of a Participant who was not originally named in the application and was age 70 or older on the Certificate Date, both (2) and (3) above will be compounded at 3%, rather than 4%. OPTION II: MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT OPTION If, upon the death of the Participant and prior to the Annuity Date, the Participant has not attained his or her 90th birthday, the Beneficiary will receive the greatest of: 1. the Certificate Value for the NYSE business day during which We receive all required documentation including due proof of death of the Participant and an election of the type of payment to be made at Our Annuity Service Center; or 2. Purchase Payments less any withdrawals (and any fees or charges applicable to such withdrawals); or 3. the maximum anniversary value preceding the date of death. The maximum anniversary value is equal to the greatest anniversary value attained from the following: As of the date of receipt of due proof of death and an election of the type of payment to be made, at our Annuity Service Center, We will calculate an anniversary value for each Certificate anniversary prior to the Participant's 81st birthday. The anniversary value is equal to the Certificate Value on a Certificate anniversary, increased by the dollar amount of any Purchase Payments made since that anniversary and reduced by the dollar amount of any withdrawals (and any fees or charges applicable to such withdrawals) since that anniversary. If the deceased Participant has attained age 90, then the death benefit will be the Certificate Value as defined in (1) above. DEATH OF PARTICIPANT OR ANNUITANT ON OR AFTER THE ANNUITY DATE. If any Participant or Annuitant dies on or after the Annuity Date and before the entire interest in the Certificate has been distributed, We will pay the remaining portion of the interest of the Certificate under the annuity payment option being used on the date of death. For further information pertaining to death of the Annuitant, see ANNUITY PAYMENT OPTIONS. BENEFICIARY 19 20 The Beneficiary is selected by the Participant. While (a) the Participant is living; and (b) before the Annuity Date, the Participant may change the Beneficiary by written notice in a form satisfactory to Us. The change will take effect on the date We record the proper notice subject to any payments We have made. If two or more persons are named, (a) those surviving the Participant will share equally unless otherwise stated; and (b) the Beneficiaries must elect to receive their respective portions of the death benefit according to the options listed under DEATH OF PARTICIPANT BEFORE THE ANNUITY DATE. If the Annuitant survives the Participant, and there are no surviving Beneficiaries, the Annuitant will be deemed the Beneficiary. Joint Participants, if applicable, shall be each other's primary Beneficiary. Joint Annuitants, if any, when the Participant is a non-natural person, shall be each other's primary Beneficiary. Any other Beneficiary designation will be treated as a contingent Beneficiary. If the Participant is also the Annuitant and there are no surviving Beneficiaries at the death of the Participant, the death benefit will be paid to the estate of the Participant in accordance with option 1, under DEATH OF PARTICIPANT BEFORE THE ANNUITY DATE. ANNUITY PROVISIONS ANNUITY DATE The Participant selects an Annuity Date (the date on which annuity payments are to begin) at the time of application. The Participant may change the Annuity Date at any time, at least seven days prior to the Annuity Date, by written notice to the Company at its Annuity Service Center. The Annuity Date must always be the first day of the calendar month and must be at least two years after the Certificate Date, but not beyond the later of the Participant's 90th birthday or ten years after the Certificate Date. If the Participant is a non-natural person, the latest Annuity Date is the later of the Annuitant's 90th birthday or ten years after the Certificate Date. If no Annuity Date is selected, the Annuity Date will be the latest Annuity Date, as set by the Company. PAYMENTS TO PARTICIPANT Unless You request otherwise, We will make annuity payments to You. If You want the annuity payments to be made to some other Payee, We will make such payments subject to receipt of a written request filed at the Annuity Service Center no later than thirty (30) days before the due date of the first annuity payment. Any such request is subject to the rights of any assignee. No payments available to or being paid to the Payee while the Annuitant is alive can be transferred, commuted, anticipated or encumbered. FIXED ANNUITY PAYMENTS If a Fixed Annuity payment option has been elected, the proceeds payable under this Certificate less any applicable premium taxes, shall be applied to the payment of the Fixed Annuity payment option elected at rates which are at least equal to the annuity rates based upon the applicable tables. In no event will the Fixed Annuity payments be changed once they begin. AMOUNT OF FIXED ANNUITY PAYMENTS The amount of each Fixed Annuity payment will be determined by applying the portion of the Certificate Value allocated to Fixed Annuity payments less any applicable premium taxes to the annuity table applicable to the Fixed Annuity payment option chosen. 20 21 AMOUNT OF VARIABLE ANNUITY PAYMENTS (a) FIRST VARIABLE ANNUITY PAYMENT: The dollar amount of the first Variable Annuity payment will be determined by applying the portion of the Certificate Value allocated to the Variable Portfolio, less any applicable premium taxes, to rates which are equal to the annuity rates based upon the annuity table applicable to the Variable Annuity payment option chosen. If the Certificate Value is allocated to more than one Variable Portfolio, the value of Your interest in each Variable Portfolio is applied separately to the Variable Annuity payment option table to determine the amount of the first annuity payment attributable to each Variable Portfolio. (b) NUMBER OF VARIABLE ANNUITY UNITS: The number of Annuity Units for each applicable Variable Portfolio is the amount of the first annuity payment attributable to that Variable Portfolio divided by the value of the applicable Annuity Unit for that Variable Portfolio as of the Annuity Date. The number will not change as a result of investment experience. (c) VALUE OF EACH VARIABLE ANNUITY UNIT: The value of an Annuity Unit may increase or decrease from one month to the next. For any month, the value of an Annuity Unit of a particular Variable Portfolio is the value of that Annuity Unit as of the last NYSE business day of the preceding month, multiplied by the Net Investment Factor for that Variable Portfolio for the last NYSE business day of the current month. The Net Investment Factor for any Variable Portfolio for a certain month is determined by dividing (1) by (2) where: (1) is the Accumulation Unit Value of the Variable Portfolio determined as of the last business day at the end of that month, and (2) is the Accumulation Unit Value of the Variable Portfolio determined as of the last business day at the end of the preceding month. The result is then multiplied by a factor that neutralizes the assumed investment rate of 3.5%. (d) SUBSEQUENT VARIABLE ANNUITY PAYMENTS: After the first Variable Annuity payment, subsequent Variable Annuity payments will vary in amount according to the investment performance of the applicable Variable Portfolio(s) to which a portion of Your Certificate Value is allocated. The amount may change from month to month. The amount of each subsequent payment for each Variable Portfolio is: The number of Annuity Units for each Variable Portfolio as determined for the first annuity payment Multiplied by The value of an Annuity Unit for that Variable Portfolio at the end of the month immediately preceding the month in which payment is due. We guarantee that the amount of each Variable Annuity payment will not be affected by variations in expenses or mortality experience. 21 22 ANNUITY PAYMENT OPTIONS During the Annuitant's life, upon written election and the return of this Certificate to the Company at its Annuity Service Center, the Certificate Value may be applied to provide one of the following options or any annuity payment option that is mutually agreeable. After two years from the Certificate Date, and prior to the Annuity Date, You can choose one of the options described below. If no option has been selected by the Annuity Date, You will automatically receive option 4, below, with 120 monthly payments guaranteed. OPTIONS 1 & 1v - LIFE ANNUITY, LIFETIME PAYMENTS GUARANTEED Payments payable to a Payee during the lifetime of the Annuitant. No further payments are payable after the death of the Annuitant. OPTIONS 2 & 2v - JOINT AND 100% SURVIVOR LIFE ANNUITY Payments payable to the Payee during the lifetime of the Annuitant and during the lifetime of a designated second person. No further payments are payable after the deaths of both the Annuitant and the designated second person. OPTIONS 3 & 3v - JOINT AND 100% SURVIVOR LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 OR 20 YEARS Payments are payable to the Payee during the lifetime of the Annuitant and during the lifetime of a designated second person. If, at the death of the survivor, payments have been made for less than the 10 or 20 years, as selected at the time of annuitization, the remaining guaranteed annuity payments will be continued to the Beneficiary. OPTIONS 4 & 4v - LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 OR 20 YEARS Payments payable to the Payee during the lifetime of the Annuitant. If, at the death of the Annuitant, payments have been made for less than the 10 or 20 years, as selected at the time of annuitization, the remaining guaranteed annuity payments will be continued to the Beneficiary. 22 23 OPTIONS 5 & 5v - FIXED PAYMENTS FOR A SPECIFIED PERIOD CERTAIN Payments payable to the Payee for any specified period of time for five (5) years or more, but not exceeding thirty (30) years, as selected at the time of annuitization. The selection must be made for full twelve month periods. In the event of death of the Annuitant, any remaining guaranteed annuity payments will be continued to the Beneficiary. If Variable Annuity Payments are elected under this Annuity Payment Option, any remaining guaranteed Variable Annuity payments may be redeemed for a discounted value determined by Us. Any applicable Withdrawal Charges will be deducted from the discounted value as if You fully surrendered Your Certificate. 23 24 FIXED ANNUITY PAYMENT OPTIONS TABLE BASIS OF COMPUTATION The actuarial basis for the Table of Annuity Rates is the 1983a Annuity Mortality Table with projection and a guaranteed interest rate of 3%. The mortality table is projected using Projection Scale G factors, assuming annuitization in the year 2000. The Fixed Annuity Payment Options Table does not included any applicable premium tax. OPTIONS 1 & 4 - TABLE OF MONTHLY INSTALLMENTS PER $1,000. (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.)
OPTION 1 OPTION 4 OPTION 4 AGE OF LIFE ANNUITY LIFE ANNUITY ANNUITANT LIFE ANNUITY (w/120 PAYMENTS GUARANTEED) (w/240 PAYMENTS GUARANTEED) --------- ------------ -------------------------- ------------------------- MALE FEMALE MALE FEMALE MALE FEMALE 55 4.23 3.84 4.19 3.82 4.05 3.76 56 4.32 3.91 4.27 3.88 4.11 3.81 57 4.41 3.98 4.35 3.95 4.17 3.87 58 4.51 4.05 4.44 4.02 4.24 3.93 59 4.61 4.13 4.54 4.10 4.31 4.00 60 4.72 4.22 4.64 4.18 4.37 4.06 61 4.84 4.31 4.74 4.27 4.44 4.13 62 4.96 4.40 4.85 4.36 4.51 4.20 63 5.10 4.51 4.97 4.45 4.58 4.27 64 5.24 4.62 5.10 4.55 4.65 4.35 65 5.40 4.73 5.22 4.66 4.72 4.42 66 5.56 4.86 5.36 4.78 4.79 4.50 67 5.74 4.99 5.50 4.90 4.86 4.57 68 5.93 5.14 5.65 5.02 4.92 4.65 69 6.13 5.29 5.80 5.16 4.99 4.73 70 6.35 5.46 5.96 5.30 5.05 4.80 71 6.58 5.64 6.13 5.46 5.10 4.88 72 6.82 5.84 6.29 5.62 5.16 4.95 73 7.08 6.05 6.47 5.78 5.20 5.02 74 7.36 6.28 6.64 5.96 5.25 5.08 75 7.66 6.53 6.82 6.14 5.29 5.14 76 7.98 6.80 7.00 6.33 5.33 5.19 77 8.33 7.09 7.19 6.53 5.36 5.24 78 8.69 7.41 7.37 6.73 5.39 5.29 79 9.09 7.75 7.55 6.94 5.41 5.33 80 9.51 8.11 7.73 7.14 5.43 5.36 81 9.97 8.51 7.91 7.35 5.45 5.39 82 10.45 8.94 8.08 7.55 5.47 5.42 83 10.97 9.41 8.24 7.76 5.48 5.44 84 11.52 9.92 8.40 7.95 5.49 5.46 85 12.10 10.47 8.54 8.13 5.50 5.48
24 25 OPTION 2 - TABLE OF MONTHLY INSTALLMENTS PER $1,000. (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.) JOINT & 100% SURVIVOR LIFE ANNUITY
AGE OF MALE ANNUITANT AGE OF FEMALE ANNUITANT --------- ----------------------- 55 60 65 70 75 80 85 55 3.54 3.69 3.84 3.96 4.06 4.13 4.17 60 3.63 3.83 4.04 4.23 4.39 4.52 4.60 65 3.70 3.95 4.23 4.51 4.78 5.00 5.16 70 3.75 4.04 4.39 4.78 5.18 5.56 5.85 75 3.78 4.11 4.51 5.01 5.57 6.14 6.65 80 3.81 4.15 4.60 5.18 5.89 6.70 7.52 85 3.82 4.18 4.66 5.30 6.14 7.18 8.35
OPTION 3 - TABLE OF MONTHLY INSTALLMENTS PER $1,000. (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST) JOINT & 100% SURVIVOR LIFE ANNUITY (w/120 PAYMENTS GUARANTEED)
AGE OF MALE ANNUITANT AGE OF FEMALE ANNUITANT --------- ----------------------- 55 60 65 70 75 80 85 55 3.54 3.69 3.83 3.96 4.05 4.12 4.16 60 3.63 3.83 4.03 4.22 4.38 4.50 4.57 65 3.70 3.95 4.22 4.50 4.76 4.97 5.10 70 3.75 4.04 4.38 4.76 5.15 5.48 5.72 75 3.78 4.10 4.50 4.98 5.50 6.00 6.40 80 3.80 4.14 4.58 5.13 5.78 6.46 7.04 85 3.81 4.16 4.62 5.22 5.97 6.80 7.55
OPTION 3 - TABLE OF MONTHLY INSTALLMENTS PER $1,000. (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST) JOINT & 100% SURVIVOR LIFE ANNUITY (w/240 PAYMENTS GUARANTEED)
AGE OF MALE ANNUITANT AGE OF FEMALE ANNUITANT --------- ----------------------- 55 60 65 70 75 80 85 55 3.53 3.68 3.81 3.92 3.99 4.03 4.04 60 3.62 3.81 4.00 4.16 4.27 4.34 4.37 65 3.68 3.92 4.16 4.39 4.56 4.66 4.71 70 3.72 3.99 4.29 4.58 4.81 4.96 5.03 75 3.74 4.03 4.36 4.70 4.99 5.17 5.26 80 3.75 4.05 4.40 4.77 5.09 5.30 5.40 85 3.76 4.06 4.42 4.80 5.13 5.35 5.46
25 26 OPTION 5 - TABLE OF MONTHLY INSTALLMENTS PER $1,000.
FIXED PAYMENT FOR SPECIFIED PERIOD NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT -------- ------- -------- ------- -------- ------- -------- ------- 10 9.61 17 6.23 24 4.84 11 8.86 18 5.96 25 4.71 5 17.91 12 8.24 19 5.73 26 4.59 6 15.14 13 7.71 20 5.51 27 4.47 7 13.16 14 7.26 21 5.32 28 4.37 8 11.68 15 6.87 22 5.15 29 4.27 9 10.53 16 6.53 23 4.99 30 4.18
26 27 VARIABLE ANNUITY PAYMENT OPTIONS TABLE BASIS OF COMPUTATION The actuarial basis for the Table of Annuity Rates is the 1983a Annuity Mortality Table with projection and an effective annual Assumed Investment Rate of 3.5%. The mortality table is projected using Projection Scale G factors, assuming annuitization in the year 2000. The Variable Annuity Payment Options Table does not include any applicable premium tax. OPTIONS 1v & 4v - TABLE OF MONTHLY INSTALLMENTS PER $1,000 (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.)
OPTION 1v OPTION 4v OPTION 4v LIFE ANNUITY LIFE ANNUITY AGE OF (w/120 PAYMENTS (w/240 PAYMENTS ANNUITANT LIFE ANNUITY GUARANTEED) GUARANTEED) --------- ------------ --------------- --------------- MALE FEMALE MALE FEMALE MALE FEMALE 55 4.53 4.13 4.48 4.11 4.33 4.05 56 4.62 4.20 4.56 4.18 4.39 4.10 57 4.71 4.27 4.64 4.24 4.45 4.16 58 4.80 4.34 4.73 4.31 4.52 4.22 59 4.90 4.42 4.82 4.39 4.58 4.28 60 5.01 4.51 4.92 4.47 4.65 4.34 61 5.13 4.60 5.03 4.55 4.71 4.41 62 5.26 4.69 5.14 4.64 4.78 4.48 63 5.39 4.80 5.25 4.74 4.85 4.55 64 5.54 4.91 5.38 4.84 4.92 4.62 65 5.69 5.02 5.51 4.94 4.99 4.69 66 5.86 5.15 5.64 5.06 5.05 4.77 67 6.03 5.28 5.78 5.18 5.12 4.84 68 6.22 5.43 5.93 5.30 5.18 4.92 69 6.43 5.58 6.08 5.44 5.24 4.99 70 6.64 5.75 6.23 5.58 5.30 5.06 71 6.87 5.93 6.40 5.73 5.36 5.14 72 7.12 6.13 6.56 5.89 5.41 5.21 73 7.38 6.34 6.73 6.06 5.46 5.27 74 7.66 6.57 6.91 6.23 5.50 5.33 75 7.96 6.82 7.09 6.41 5.54 5.39 76 8.28 7.09 7.27 6.60 5.57 5.44 77 8.63 7.38 7.45 6.79 5.61 5.49 78 9.00 7.70 7.63 6.99 5.63 5.54 79 9.40 8.04 7.81 7.19 5.66 5.58 80 9.82 8.41 7.98 7.40 5.68 5.61 81 10.28 8.81 8.16 7.60 5.70 5.64 82 10.76 9.24 8.32 7.81 5.71 5.66 83 11.28 9.71 8.48 8.00 5.72 5.69 84 11.83 10.23 8.64 8.19 5.73 5.70 85 12.42 10.78 8.78 8.38 5.74 5.72
27 28 OPTION 2v - TABLE OF MONTHLY INSTALLMENTS PER $1,000. (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.) JOINT & 100% SURVIVOR LIFE ANNUITY
AGE OF MALE ANNUITANT AGE OF FEMALE ANNUITANT --------- ------------------------ 55 60 65 70 75 80 85 55 3.83 3.98 4.12 4.24 4.34 4.42 4.46 60 3.92 4.11 4.32 4.51 4.67 4.80 4.89 65 3.99 4.23 4.50 4.79 5.05 5.28 5.44 70 4.04 4.33 4.67 5.05 5.46 5.83 6.13 75 4.07 4.39 4.79 5.28 5.84 6.41 6.93 80 4.10 4.44 4.88 5.45 6.16 6.97 7.79 85 4.11 4.47 4.94 5.57 6.41 7.45 8.61
OPTION 3v - TABLE OF MONTHLY INSTALLMENTS PER $1,000. (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST) JOINT AND 100% SURVIVOR LIFE ANNUITY (w/120 PAYMENTS GUARANTEED)
AGE OF MALE ANNUITANT AGE OF FEMALE ANNUITANT --------- ------------------------ 55 60 65 70 75 80 85 55 3.83 3.98 4.12 4.24 4.34 4.40 4.45 60 3.92 4.11 4.31 4.50 4.66 4.78 4.86 65 3.99 4.23 4.50 4.78 5.03 5.24 5.38 70 4.04 4.32 4.66 5.03 5.41 5.75 5.99 75 4.07 4.38 4.78 5.25 5.77 6.26 6.66 80 4.09 4.43 4.86 5.40 6.05 6.72 7.29 85 4.10 4.45 4.90 5.50 6.24 7.05 7.80
OPTION 3v - TABLE OF MONTHLY INSTALLMENTS PER $1,000. (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST) JOINT & 100% SURVIVOR LIFE ANNUITY (w/240 PAYMENTS GUARANTEED)
AGE OF MALE ANNUITANT AGE OF FEMALE ANNUITANT --------- ------------------------ 55 60 65 70 75 80 85 55 3.82 3.97 4.10 4.20 4.27 4.31 4.33 60 3.91 4.09 4.28 4.44 4.55 4.61 4.64 65 3.97 4.20 4.44 4.66 4.83 4.93 4.97 70 4.01 4.27 4.56 4.84 5.07 5.21 5.28 75 4.03 4.31 4.64 4.97 5.25 5.42 5.51 80 4.04 4.33 4.67 5.03 5.34 5.55 5.65 85 4.05 4.34 4.69 5.06 5.38 5.60 5.70
28 29 OPTION 5v - TABLE OF MONTHLY INSTALLMENTS PER $1,000. PAYMENTS FOR A SPECIFIED PERIOD
NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT -------- ------- -------- ------- -------- ------- -------- ------- 10 9.83 17 6.47 24 5.09 11 9.09 18 6.20 25 4.96 5 18.12 12 8.46 19 5.97 26 4.84 6 15.35 13 7.94 20 5.75 27 4.73 7 13.38 14 7.49 21 5.56 28 4.63 8 11.90 15 7.10 22 5.39 29 4.53 9 10.75 16 6.76 23 5.24 30 4.45
29 30 ANCHOR NATIONAL LIFE INSURANCE COMPANY A STOCK COMPANY LOS ANGELES, CALIFORNIA 30 31 ALLOCATED FIXED AND VARIABLE GROUP ANNUITY CERTIFICATE Nonparticipating 31 EX-4.(D) 3 EXHIBIT 4.(D) 1 ANCHOR NATIONAL LIFE INSURANCE COMPANY A STOCK COMPANY LOS ANGELES, CALIFORNIA CONTRACT NUMBER P9999999999 OWNER JOHN DOE STATUTORY HOME OFFICE EXECUTIVE OFFICE ANNUITY SERVICE CENTER 2999 NORTH 44TH ST., STE 250 1 SUNAMERICA CENTER P. O. BOX 54299 PHOENIX, AZ 85018 LOS ANGELES, CA 90067-6022 LOS ANGELES, CA 90054-0299
ANCHOR NATIONAL LIFE INSURANCE COMPANY ("We", "Us", the "Company", or "Anchor National") agrees to provide benefits to the Owner under the Group Contract, in accordance with the provisions set forth in this Contract and in consideration of Purchase Payments We receive. THE VALUE OF AMOUNTS ALLOCATED TO THE SEPARATE ACCOUNT DURING THE ACCUMULATION AND ANNUITY PERIODS IS NOT GUARANTEED, AND WILL INCREASE OR DECREASE BASED UPON THE INVESTMENT EXPERIENCE OF THE VARIABLE PORTFOLIOS YOU CHOOSE. THE CASH SURRENDER BENEFIT OF AMOUNTS ALLOCATED TO ANY FIXED-MVA ACCOUNT OPTION INCREASES OR DECREASES BASED ON THE APPLICATION OF THE MARKET VALUE ADJUSTMENT EXCEPT DURING THE 30 DAYS AFTER THE END OF THE GUARANTEE PERIOD. THERE IS NO MARKET VALUE ADJUSTMENT TO AMOUNTS ALLOCATED TO THE NON-MVA FIXED ACCOUNT OPTION. RIGHT TO EXAMINE - YOU MAY RETURN THIS CONTRACT TO OUR ANNUITY SERVICE CENTER OR TO THE AGENT THROUGH WHOM THE CONTRACT WAS PURCHASED WITHIN 10 DAYS AFTER YOU RECEIVE IT, IF YOU ARE NOT SATISFIED WITH IT. THE COMPANY WILL REFUND THE CONTRACT VALUE, LESS ANY PAYMENT ENHANCEMENT(S), ON THE BUSINESS DAY DURING WHICH THE CONTRACT IS RECEIVED. UPON SUCH REFUND, THE CONTRACT SHALL BE VOID. For Individual Retirement Annuities, a refund of the Purchase Payment(s) may be required. Therefore, We reserve the right to allocate Your Purchase Payment(s) and any Payment Enhancement to the Cash Management Portfolio until the end of the Right To Examine period. Thereafter, allocations will be made as shown on the Contract Data Page. THIS IS A LEGAL DOCUMENT. READ IT CAREFULLY. /s/ SUSAN L. HARRIS /s/ ELI BROAD - ------------------------------ ---------------------------- Susan L. Harris Eli Broad Secretary President INDIVIDUAL FIXED AND VARIABLE ANNUITY CONTRACT Nonparticipating 1 2 TABLE OF CONTENTS CONTRACT DATA PAGE......................................................................PAGE 3 PURCHASE PAYMENT ALLOCATION.............................................................PAGE 4 DEFINITIONS.............................................................................PAGE 5 PURCHASE PAYMENT PROVISIONS.............................................................PAGE 8 ACCUMULATION PROVISIONS.................................................................PAGE 9 PAYMENT ENHANCEMENT PROVISIONS.........................................................PAGE 11 FEES AND CHARGES.......................................................................PAGE 12 TRANSFER PROVISIONS....................................................................PAGE 12 WITHDRAWAL PROVISIONS..................................................................PAGE 13 GENERAL PROVISIONS.....................................................................PAGE 15 DEATH PROVISIONS.......................................................................PAGE 17 ANNUITY PROVISIONS.....................................................................PAGE 20 ANNUITY PAYMENT OPTIONS ...............................................................PAGE 22 FIXED ANNUITY PAYMENT OPTIONS TABLE....................................................PAGE 23 VARIABLE ANNUITY PAYMENT OPTIONS TABLE.................................................PAGE 26
2 3 CONTRACT DATA PAGE CONTRACT NUMBER: ANNUITY SERVICE CENTER: P9999999999 P. O. BOX 54299 LOS ANGELES, CA 90054-0299 OWNER: AGE AT ISSUE: JOHN DOE 35 ANNUITANT: INITIAL PURCHASE PAYMENT: JOHN DOE $10,000.00 CONTRACT DATE: FIXED ACCOUNT OPTIONS - March 1, 1999 Minimum Guarantee Rate: 3.0% ANNUITY DATE: INITIAL PAYMENT ENHANCEMENT: March 1, 2029 2.0% LATEST ANNUITY DATE: MORTALITY RISK CHARGE: March 1, 2054 [0.35%] ANNUAL CONTRACT MAINTENANCE FEE: EXPENSE RISK CHARGE: $35.00 [0.90%] GUARANTEED DEATH BENEFIT RISK CHARGE: DISTRIBUTION EXPENSE CHARGE: [0.12%] [0.15%] BENEFICIARY: SEPARATE ACCOUNT: As named by You. Variable Separate Account DEATH BENEFIT OPTION: Option I: Purchase Payment Accumulation PAYMENT ENHANCEMENT SCHEDULE FOR INITIAL PURCHASE PAYMENT PAYMENT ENHANCEMENT DATE PAYMENT ENHANCEMENT INITIAL PAYMENT ENHANCEMENT: March 1, 1999 $200.00 DEFERRED PAYMENT ENHANCEMENT(S): [March 1, 2008] [$200.00*]
*May be reduced by certain withdrawals of Contract Value. Please see Payment Enhancement Provisions. FOR INQUIRIES CALL 1-800-445-SUN2 3 4 PURCHASE PAYMENT ALLOCATION Variable Portfolios
SUNAMERICA ANCHOR SERIES TRUST SERIES TRUST 0.00% Cash Management 0.00% Government & Quality Bond 0.00% Corporate Bond 0.00% Growth 0.00% Global Bond 25.00% Natural Resources 0.00% High-Yield Bond 0.00% Capital Appreciation 0.00% Worldwide High Income 0.00% SunAmerica Balanced 25.00% MFS Total Return 0.00% Asset Allocation 0.00% Utility 0.00% Growth-Income 0.00% MFS Growth and Income 0.00% Federated Value 0.00% Venture Value 0.00% "Dogs" of Wall St. 0.00% Alliance Growth 25.00% Putnam Growth 0.00% Real Estate 0.00% MFS Mid-Cap Growth 0.00% Aggressive Growth 0.00% International Growth and Income 0.00% Global Equities 0.00% International Diversified Equities 0.00% Emerging Markets
Fixed Account Options
Guarantee Initial Period Interest Rate 25.00% 1-Year Fixed Non-MVA 3.00% 0.00% 3-Year Fixed MVA 0.00% 5-Year Fixed MVA 0.00% 7-Year Fixed MVA 0.00% 10-Year Fixed MVA
4 5 DEFINITIONS Defined in this section are some of the words and phrases used in this Contract. These terms are capitalized when used in the Contract. Other capitalized terms in the Contract refer to the captioned paragraph explaining that particular concept in the Contract. ACCUMULATION UNIT A measurement used to compute the Contract Value in a Variable Portfolio prior to the Annuity Date. AGE Age as of last birthday. ANNUITANT The natural person or persons (collectively, Joint Annuitants) whose life or lives is/are used to determine the annuity benefits under the Contract. If the Contract is in force and the Annuitant(s) is/are alive on the Annuity Date, We will begin payments to the Payee. This Contract cannot have Joint Annuitants if it is issued on a tax-qualified basis. ANNUITY DATE The date on which annuity payments ("income payments") to the Payee are to start. The Owner specifies the Annuity Date, which must be at least two years after the Contract Date. ANNUITY SERVICE CENTER As specified on the Contract Data Page. ANNUITY UNIT A unit of measurement used to compute annuity payments from the Variable Portfolio. BENEFICIARY The Beneficiary is as named by You unless later changed by You in a written request to Us at Our Annuity Service Center. CONTRACT DATE The date Your Contract is issued, as shown on the Contract Data Page. It is the date from which Contract Years and anniversaries are measured. CONTRACT VALUE The sum of: (1) the Accumulation Unit Values for Your amounts allocated to the Variable Portfolios and (2) the value of amounts allocated to the Fixed Account Options. CONTRACT YEAR A year starting from the Contract Date in one calendar year and ending on the day preceding the anniversary of such date in the succeeding calendar year. 5 6 CONTRIBUTION YEAR A year starting from the date a Purchase Payment is made in one calendar year and ending on the day preceding the anniversary of such date in succeeding calendar years. CURRENT INTEREST RATE The rate(s) of interest declared by Us applicable to allocations of subsequent Purchase Payments to the Fixed Account Options. The Current Interest Rate will not be less than the Minimum Guarantee Rate as shown on the Contract Data Page. DEFERRED PAYMENT ENHANCEMENT Any Payment Enhancement allocated to Your Contract Value on any Deferred Payment Enhancement Date. FIXED ACCOUNT OPTIONS The investment options under this Contract that are credited with a fixed rate of interest declared by the Company. All amounts allocated to the Fixed Account Options become part of the Company's general asset account. The general asset account contains all the assets of the Company except for the Separate Account and other segregated asset accounts. The Fixed Account Options for this Contract are shown on page 4. FIXED ANNUITY A series of periodic annuity payments in predetermined amounts that do not vary with investment experience. Such payments are made from the Company's general asset account. GUARANTEE PERIOD The period for which either the Initial Interest Rate, the Current Interest Rate or the Renewal Interest Rate is credited to amounts allocated to the Fixed Account Options. INITIAL INTEREST RATE The rate(s) of interest credited to any portion of the initial Purchase Payment allocated to the Fixed Account Option(s), as described in the Accumulation Provisions section. The Initial Interest Rate(s) for this Contract is/are listed on page 4. The Initial Interest Rate may not be less than the Minimum Guarantee Rate as shown on the Contract Data Page. INITIAL PAYMENT ENHANCEMENT The Payment Enhancement allocated to Your Contract Value on the date a Purchase Payment is credited to Your Contract. IRC The Internal Revenue Code of 1986, as amended, or as it may be amended or superseded. JOINT OWNER If Joint Owners are named, they must be spouses. Each Joint Owner has an equal ownership interest in the Contract unless We are advised otherwise in writing. 6 7 NYSE New York Stock Exchange. Generally, the close of any NYSE business day is 4:00 PM, Eastern Time. Financial transactions and/or Purchase Payments received after the close of any NYSE business day will be credited with the next NYSE business day's Accumulation Unit Value for the selected Variable Portfolio. OWNER The person or entity named in the Contract who is entitled to exercise all rights and privileges of ownership under the Contract. Owner means both Joint Owners, if applicable. PAYEE The person receiving payment of annuity benefits under this Contract. PAYMENT ENHANCEMENT Payment Enhancements are amounts allocated to Your Contract Value by Us. Payment Enhancements are not considered Purchase Payments. PURCHASE PAYMENTS Payments in U.S. currency made by or on behalf of the Owner to the Company for the Contract. Payment Enhancements are not considered Purchase Payments. RENEWAL INTEREST RATE The rate(s) of interest declared by Us applicable to transfers from the Variable Portfolios into the Fixed Account Options and to amounts previously allocated to a Fixed Account Option wherein the Guarantee Period has expired. The Renewal Interest Rate may not be less than the Minimum Guarantee Rate as shown on the Contract Data Page. SEPARATE ACCOUNT A segregated asset account named on the Contract Data Page. The Separate Account consists of the Variable Portfolios. The assets of the Separate Account are not comingled with the general assets and liabilities of the Company. The value of amounts allocated to the Variable Portfolios of the Separate Account is not guaranteed. SUBSEQUENT PURCHASE PAYMENTS Purchase Payments made after the Initial Purchase Payment. TOTAL INVESTED AMOUNT The sum of all Purchase Payments less amounts previously withdrawn that incurred a Withdrawal Charge, less Purchase Payments withdrawn that were no longer subject to a Withdrawal Charge. VARIABLE ANNUITY A series of periodic annuity payments which vary in amount according to the investment experience of one or more Variable Portfolio, as selected by You. VARIABLE PORTFOLIO The variable investment options available under this Contract. Each Variable Portfolio has its own investment objective and is invested in an underlying fund of the Anchor Series Trust or the SunAmerica Series Trust. Each Variable Portfolio is not chargeable with liabilities arising out of any other Variable Portfolio. The available Variable Portfolios are shown on page 4. Additional Variable Portfolios may become available in the future. 7 8 WE, OUR, US, THE COMPANY Anchor National Life Insurance Company. YOU, YOUR The Owner. PURCHASE PAYMENT PROVISIONS PURCHASE PAYMENTS Purchase Payments are flexible. This means that, subject to Company declared minimums and maximums, You may change the amounts, frequency or timing of Purchase Payments. Purchase Payments will be allocated to the Fixed Account Option(s) and Variable Portfolio(s) in accordance with instructions from You. We reserve the right to specify the minimum Purchase Payment that may be allocated to a Variable Portfolio under the Contract. PRINCIPAL ADVANTAGE PROGRAM An optional program under which We allocate a portion of Your Purchase Payment to a Fixed Account Option selected by You. This allocation will accumulate to the full amount of that Purchase Payment by the end of the Guarantee Period, provided there are no withdrawals or transfers prior to the end of the Guarantee Period from that Fixed Account Option. The amount of the allocation depends upon: (a) the Guarantee Period for the Fixed Account Option You select; and (b) the interest rate applicable to that allocation. We reserve the right to modify, suspend or terminate the Principal Advantage Program at any time. DEFERMENT OF PAYMENTS We may defer making payments from the Fixed Account Options for up to six (6) months. Interest, subject to state requirements, will be credited during the deferral period. SUSPENSION OF PAYMENTS We may suspend or postpone any payments from the Variable Portfolios if any of the following occur: (a) the NYSE is closed; (b) trading on the NYSE is restricted; (c) an emergency exists such that it is not reasonably practical to dispose of securities in the Variable Portfolios or to determine the value of its assets; or (d) the Securities and Exchange Commission, by order, so permits for the protection of Owners. Conditions in (b) and (c) will be decided by or in accordance with rules of the Securities and Exchange Commission. SUBSTITUTION OF VARIABLE PORTFOLIO If: (a) the shares of the underlying funds of the SunAmerica Series Trust or the Anchor Series Trust should no longer be available for investment by the Separate Account; or (b) in the judgment of the Board of Trustees for the SunAmerica Series Trust and the Anchor Series Trust, 8 9 further investment in the underlying funds of such entities is no longer appropriate in view of the purpose of the Contract, then We may substitute shares of another underlying fund, for shares already purchased, or to be purchased in the future by subsequent Purchase Payments under the Contract. No substitution of securities may take place without prior approval of the Securities and Exchange Commission and under such requirements as it may impose. ACCUMULATION PROVISIONS SEPARATE ACCOUNT ACCUMULATION VALUE The Separate Account Accumulation Value under the Contract shall be the sum of the values of the Accumulation Units held in the Variable Portfolios for each Owner. NUMBER OF ACCUMULATION UNITS Your Contract is credited with Accumulation Units of the Separate Account when Purchase Payments are allocated to the Variable Portfolios. For that portion of each Purchase Payment allocated to a Variable Portfolio, the number of Accumulation Units credited is equal to the sum of each Purchase Payment, any Payment Enhancement and/or transfer amount allocated to that Variable Portfolio, reduced by premium taxes, if any: Divided by The Accumulation Unit value for that Variable Portfolio for the NYSE business day on which the Purchase Payment, Payment Enhancement or transfer amount is allocated. The number of Accumulation Units will be similarly adjusted for withdrawals, annuitizations, transfers and charges. Adjustments will be made as of the NYSE business day on which We receive all requirements for the transaction, as appropriate. ACCUMULATION UNIT VALUE (AUV) The AUV of a Variable Portfolio for any NYSE business day is calculated by subtracting (2) from (1) and dividing the result by (3) where: (1) is the total value for the given NYSE business day of the assets attributable to the Accumulation Units of the Variable Portfolio, minus the total liabilities; (2) is the cumulative unpaid charge for assumption of Expense Risk, Distribution Expense, Mortality Risk and Guaranteed Death Benefit Risk charges (See CHARGES AND DEDUCTIONS); and (3) is the number of Accumulation Units outstanding at the end of the given NYSE business day. FIXED ACCOUNT ACCUMULATION VALUE Under the Contract, the Fixed Account Accumulation Value shall be the sum of all monies then invested in the Fixed Account Option(s), reduced by any applicable premium taxes, plus all interest credited thereto. This amount shall be adjusted for withdrawals (which includes any Withdrawal Charges associated with those withdrawals), annuitizations, transfers, any applicable MVA on such transactions, and the deduction of the Contract Maintenance Fee. The Fixed 9 10 Account Accumulation Value shall not be less than the minimum values required by law in the state where this Contract is issued. FIXED ACCOUNT GUARANTEE PERIOD OPTIONS AND INTEREST CREDITING Any amounts allocated to the Fixed Account Options from the initial Purchase Payment and the Payment Enhancement for the initial Purchase Payment will earn interest at the Initial Interest Rate for the Fixed Account Option(s) selected for the duration of the Guarantee Period. Subsequent Purchase Payments and the initial Payment Enhancement for Subsequent Purchase Payments, if any, allocated to the Fixed Account Options will earn interest at the Current Interest Rate for the Fixed Account Option(s) selected for the duration of the Guarantee Period. Transfers to the Fixed Account Options from the Variable Portfolios and amounts renewed into the Fixed Account Options will earn interest at the Renewal Interest Rate for the Fixed Account Option(s) selected for the duration of the Guarantee Period. For thirty (30) days following the date of expiration of a Guarantee Period, You may renew for the same or any other Guarantee Period at the Renewal Interest Rate or You may transfer all or a portion of the amount to the Variable Portfolios. If during that 30-day period You do not specify a different Guarantee Period or otherwise transfer to a Variable Portfolio, We will select the same Guarantee Period as has just expired, crediting Your Contract with the Renewal Interest Rate in effect on the date of expiration of the Guarantee Period, so long as such Guarantee Period does not extend beyond the Annuity Date. If the guarantee period extends beyond the Annuity Date, We will credit interest up to the Annuity Date at the Renewal Interest Rate for the 1-Year Fixed Account Option. MARKET VALUE ADJUSTMENT (MVA) Any payments and values based on the 3, 5, 7 or 10-year Fixed Account Options may be subject to a MVA, the operation of which may result in upward or downward adjustments in the Contract Value, if withdrawn, transferred or annuitized prior to the end of the respective Guarantee Period. The MVA will be calculated by multiplying the amount withdrawn, transferred or annuitized by the following formula: {(1 + I)/(1+J+0.0050)}N/12 -1 I = The interest rate currently in effect for that Guarantee Period. J = The Initial Interest Rate available for the Guarantee Period equal to the number of years (rounded up to an integer) remaining in the current Guarantee Period at the time of withdrawal, transfer or annuitization. In the determination of J, if the Company currently does not offer the applicable Guarantee Period, then the rate will be determined by linear interpolation of the Initial Interest Rate for the nearest two Guarantee Periods that are available. N = The number of full months remaining in the current Guarantee Period at the time the withdrawal or annuitization request is processed. There will be no MVA from the Fixed Account Options in the following situations: (1) upon withdrawal or transfer within thirty (30) days after the end of the Guarantee Period; (2) upon withdrawal to pay fees or charges; (3) upon payment of the death benefit; or (4) upon annuitization on the latest Annuity Date. 10 11 PAYMENT ENHANCEMENT PROVISIONS Payment Enhancements are amounts allocated to Your Contract Value by Us. Payment Enhancements are not considered Purchase Payments. Payment Enhancements are subject to Our terms and conditions as discussed below. PAYMENT ENHANCEMENT FOR INITIAL PURCHASE PAYMENT We will allocate the Initial Payment Enhancement shown on the Contract Data Page to the Fixed Account Options and Variable Portfolios in the same proportion as Your Initial Purchase Payment. The Initial Payment Enhancement will be allocated on Your Contract Date. We will allocate any Deferred Payment Enhancement(s) shown on the Contract Data Page to the Cash Management Portfolio on the corresponding Deferred Payment Enhancement Date(s) shown. Any Deferred Payment Enhancement(s) will be reduced proportionately by Partial Withdrawals (including any fees or charges associated with such withdrawals) of the Initial Purchase Payment(s), prior to the Deferred Payment Enhancement Date(s). PAYMENT ENHANCEMENT FOR SUBSEQUENT PURCHASE PAYMENT(S) The Initial Payment Enhancement for Subsequent Purchase Payments is a percentage of each Subsequent Purchase Payment. This percentage is shown on the Contract Data Page. We will allocate the Initial Payment Enhancement for the Subsequent Purchase Payment to the Fixed Account Options and Variable Portfolios in the same proportion as that Subsequent Purchase Payment. Any Deferred Payment Enhancement(s) and Deferred Payment Enhancement date(s) for Subsequent Purchase Payment(s) will be determined by Us at the time the Subsequent Purchase Payment is received. We will allocate any Deferred Payment Enhancement(s) for Subsequent Purchase Payments to the Cash Management Portfolio. Deferred Payment Enhancement(s) corresponding to Subsequent Purchase Payments will be reduced proportionately by Partial Withdrawals (including any fees or charges associated with such withdrawals) of that Subsequent Purchase Payment, prior to the Deferred Payment Enhancement Date(s). DEFERRED PAYMENT ENHANCEMENTS For purposes of determining a Deferred Payment Enhancement, Partial Withdrawals are assumed to be withdrawn from earnings first, then from Purchase Payments on a first-in-first-out (FIFO) basis. No Deferred Payment Enhancement will be allocated if prior to the Deferred Payment Enhancement Date: (a) the Contract Value is fully withdrawn; or (b) a death benefit has been paid; or (c) Annuity payments have begun; or (d) the entire Purchase Payment has been withdrawn. 11 12 FEES AND CHARGES We will deduct the following charges from the Contract: CONTRACT MAINTENANCE FEE The charge specified on the Contract Data Page will be deducted on each Contract anniversary that occurs on or prior to the Annuity Date. It will also be deducted when the Contract Value is withdrawn in full if the withdrawal is not on the Contract anniversary. We reserve the right to assess a charge on a class basis which is less than the charge specified on the Contract Data Page. WITHDRAWAL CHARGE The charge, if any, to be deducted upon withdrawal of any portion of the Contract Value. See WITHDRAWAL PROVISIONS. MORTALITY RISK CHARGE On an annual basis this charge, as shown on the Contract Data Page, equals a percentage of the average daily total net asset value of the Variable Portfolios to which Your Purchase Payments are allocated. This charge is to compensate Us for assuming the mortality risks under the Contract. EXPENSE RISK CHARGE On an annual basis this charge, as shown on the Contract Data Page, equals a percentage of the average daily total net asset value of the Variable Portfolios to which Your Purchase Payments are allocated. This charge is to compensate Us for assuming the expense risks under the Contract. DISTRIBUTION EXPENSE CHARGE On an annual basis this charge, as shown on the Contract Data Page, equals a percentage of the average daily total net asset value of the Variable Portfolios to which Your Purchase Payments are allocated. This charge is to compensate Us for all distribution expenses associated with the Contract. GUARANTEED DEATH BENEFIT RISK CHARGE On an annual basis this charge, as shown on the Contract Data Page, equals a percentage of the average daily total net asset value of the Variable Portfolios to which Your Purchase Payments are allocated. This charge is to compensate Us for the risk assumed as a result of contractual obligations to provide a minimum guaranteed Death Benefit prior to the Annuity Date. TRANSFER PROVISIONS Prior to the Annuity Date, You may transfer all or part of Your Contract Value to any of the Variable Portfolios or Fixed Account Options. We reserve the right to charge a fee for transfers if the number of transfers exceeds the limit specified by Us. The minimum amount that can be transferred and the amount that can remain in a Variable Portfolio or Fixed Account Option are subject to Company limits. 12 13 TRANSFERS OF ACCUMULATION AND ANNUITY UNITS BETWEEN VARIABLE PORTFOLIOS Prior to the Annuity Date, You may transfer all or a portion of Your Contract Value between Variable Portfolios. A transfer will result in the redemption of Accumulation Units in a Variable Portfolio and the purchase of Accumulation Units in the other Variable Portfolio. Transfers will be effected at the next computed Accumulation Unit Value following Our receipt of Your request for transfer. Accumulation Unit Values are calculated at the close of each NYSE business day. After the Annuity Date, You may transfer all or a portion of Your Contract Value from one Variable Portfolio to another Variable Portfolio. A transfer will result in the redemption of Annuity Units in a Variable Portfolio and the purchase of Annuity Units in the other Variable Portfolio. Transfers will be effected for the last NYSE business day of the month in which We receive Your request for the transfer. TRANSFERS OF ACCUMULATION AND ANNUITY UNITS TO AND FROM THE FIXED ACCOUNT OPTIONS Prior to the Annuity Date, You may transfer all or any part of Your Contract Value from the Variable Portfolio(s) to any Fixed Account Option(s) or from the Fixed Account Option(s) to the Variable Portfolio(s) of the Contract. After the Annuity Date, transfers into or out of the Fixed Account Option(s) are not allowed. DOLLAR COST AVERAGING (DCA) An optional program under which You authorize the automatic transfer of specified amounts or percentages, at the interval selected by You, from the 1-Year Fixed Account Option or any Variable Portfolio(s) into any Variable Portfolio, other than the source account. The unit values credited and applied to Your Contract are determined on each date of transfer. You may terminate the DCA program at any time. We reserve the right to modify, suspend or terminate the DCA program at any time. 13 14 WITHDRAWAL PROVISIONS On or before the Annuity Date and while the Owner is living, You may withdraw all or part of Your Contract Value under this Contract by informing Us at Our Annuity Service Center. For a full withdrawal, this Contract must be returned to Our Annuity Service Center. The minimum amount that can be withdrawn and the amount remaining after withdrawal are subject to Company limits. Without a written notice to the contrary, withdrawals will be deducted from the Contract Value in proportion to their allocation among the Fixed Account Options and the Variable Portfolios. Withdrawals will be based on values for the NYSE business day in which the request for withdrawal and the Contract (in the case of a full withdrawal), are received at Our Annuity Service Center. Unless the SUSPENSION OF PAYMENTS or DEFERMENT OF PAYMENTS sections are in effect, payment of withdrawals will be made within seven calendar days. WITHDRAWAL CHARGE Withdrawals of all or a portion of the Contract Value may be subject to a Withdrawal Charge as shown in the chart below. The Withdrawal Charge applied to any withdrawal will depend on how long the Purchase Payment to which the withdrawal is attributed has been in the Contract. No Withdrawal Charge is made on an amount withdrawn which is considered to be a withdrawal of penalty-free earnings. For the purpose of determining the Withdrawal Charge, a withdrawal will be attributed to amounts in the following order: (1) penalty-free earnings in the Contract; (2) Purchase Payments which are both no longer subject to the Withdrawal Charge and not yet withdrawn; (3) any remaining Penalty-Free Withdrawal amount (except in the case of a full surrender); and (4) Purchase Payments subject to a Withdrawal Charge. Purchase Payments, when withdrawn, are assumed to be withdrawn on a first-in-first-out (FIFO) basis. You will not receive the benefit of a Penalty-Free Withdrawal in the case of a full surrender.
Number of Years Elapsed Withdrawal Charge as a Between Purchase Payment Contribution Percentage of Withdrawn and Date of Withdrawal Purchase Payment ------------------------------------- ----------------------- 0 9% 1 9% 2 8% 3 7% 4 6% 5 5% 6 4% 7 3% 8 2% 9+ 0%
The Withdrawal Charge will be deducted from amounts remaining in the Variable Portfolios and the Fixed Account Options after the withdrawal, in the same proportion as the remaining Contract 14 15 Value is allocated, unless You request that the withdrawal come from a particular Fixed Account Option or Variable Portfolio. If the remaining Contract Value is insufficient to cover the Withdrawal Charge, any remaining balance will be deducted from the withdrawal amount requested. PENALTY-FREE WITHDRAWALS As of any day, You may make a withdrawal of up to the Penalty-Free Withdrawal amount for that day without incurring a Withdrawal Charge. Any Penalty-Free Withdrawal made in excess of penalty-free earnings in the Contract is considered to be a withdrawal of future penalty-free earnings and is therefore not a withdrawal of the Total Invested Amount. On any day, penalty-free earnings in the Contract are calculated as the Contract Value at the end of that day less the Total Invested Amount. During the first Contract Year, the Penalty-Free Withdrawal amount is equal to the penalty-free earnings in the Contract as of the date of withdrawal. Alternatively, during the first Contract Year, You may make withdrawals of the Penalty-Free Withdrawal amount through the Systematic Withdrawal Program. The Penalty-Free Withdrawal amount as of any systematic withdrawal date is 10% of the Total Invested Amount less any withdrawals already made during the Contract Year. After the first Contract Year, the maximum Penalty-Free Withdrawal amount as of the date of the withdrawal is the greater of: (a) penalty-free earnings in the Contract as of that date; or (b) 10% of the Total Invested Amount on deposit for at least one year, less any withdrawals already made during the year. Although amounts withdrawn free of a Withdrawal Charge may reduce principal, they do not reduce the Total Invested Amount for purposes of calculating the Withdrawal Charge or for the purposes of calculating penalty-free earnings in the Contract. As a result, You will not receive the benefit of a Penalty-Free Withdrawal in a full surrender. SYSTEMATIC WITHDRAWAL PROGRAM Prior to the Annuity Date, You may elect to participate in the Systematic Withdrawal Program by informing Us at Our Annuity Service Center. The Systematic Withdrawal Program allows You to make automatic withdrawals from Your account monthly, quarterly, semiannually or annually. The minimum systematic withdrawal amount is subject to Company limits. Any amount withdrawn through the Systematic Withdrawal Program may be subject to a Withdrawal Charge and/or a Market Value Adjustment. See the WITHDRAWAL CHARGE and MARKET VALUE ADJUSTMENT provisions. You may terminate Your participation in the Systematic Withdrawal Program at any time by sending Us a written request. We reserve the right to modify, suspend or terminate the Systematic Withdrawal Program at any time. GENERAL PROVISIONS ENTIRE CONTRACT The entire contract between You and Us consists of the application as completed by You at the time of purchase, this Contract and any attached endorsement(s). No one can change the terms or 15 16 conditions of this contract other than Us. Any change must be in writing and approved by Us. Only Our President, Secretary, or one of Our Vice-Presidents can give Our approval. CHANGE OF ANNUITANT If the Owner is an individual, the Owner may change the Annuitant(s) at any time prior to the Annuity Date. To make a change, the Owner must send a written notice to Us at least 30 days before the Annuity Date. If the Owner is a non-natural person, the Owner may not change the Annuitant. DEATH OF ANNUITANT If the Owner and Annuitant are different, and the Annuitant dies before the Annuity Date, the Owner becomes the Annuitant until the Owner elects a new Annuitant. If there are Joint Annuitants, upon the death of any Annuitant prior to the Annuity Date, the Owner may elect a new Joint Annuitant. However, if the Owner is a non-natural person, We will treat the death of any Annuitant as the death of the "Primary Annuitant" and as the death of the Owner, see DEATH PROVISIONS. MISSTATEMENT OF AGE OR SEX If the Age or sex of any Annuitant has been misstated, future annuity payments will be adjusted using the correct Age and sex, according to Our rates in effect on the date that annuity payments were determined. Any overpayment from the Fixed Account Options, plus interest at the rate of 4% per year, will be deducted from the next payment(s) due. Any underpayment from the Fixed Account Options, plus interest at the rate of 4% per year, will be paid in full with the next payment due. Any overpayment from the Variable Portfolios will be deducted from the next payment(s) due. Any underpayment from the Variable Portfolios will be paid in full with the next payment due. PROOF OF AGE, SEX, OR SURVIVAL The Company may require satisfactory proof of correct Age or sex at any time. If any payment under this Contract depends on the Annuitant being alive, the Company may require satisfactory proof of survival. CONFORMITY WITH STATE LAWS The provisions of this Contract will be interpreted by the laws of the state in which the enrollment form was signed or such other state as is required by law. Any provision which, on the Contract Date, is in conflict with the law of such state is amended to conform to the minimum requirements of such law. CHANGES IN LAW If the laws governing this Contract or the taxation of benefits under the Contract change, We reserve the right to amend this Contract to comply with these changes. ASSIGNMENT You may assign this Contract before the Annuity Date, but We will not be bound by an assignment unless it is received by Us in writing. Your rights and those of any other person 16 17 referred to in this Contract will be subject to the assignment. Certain assignments may be taxable. We do not assume any responsibility for the validity or tax consequences of any assignment. CLAIMS OF CREDITORS To the extent permitted by law, no right or proceeds payable under this Contract will be subject to claims of creditors or legal process. PREMIUM TAXES OR OTHER TAXES The Company may deduct from Your Contract Value any premium tax or other taxes payable to a state or other government entity, if applicable. Should We advance any amount so due, We are not waiving any right to collect such amount at a later date. The Company will deduct any withholding taxes required by applicable law. WRITTEN NOTICE Any notice We send to You will be sent to Your address shown in the Application unless You request otherwise. Any written request or notice to Us must be sent to Our Annuity Service Center, as specified on the Contract Data Page. PERIODIC REPORTS During each Contract Year, We will send You quarterly statements of the account activity of the Contract as well as confirmation reports after each financial transaction. The quarterly statements will include all transactions which have occurred during the accounting period shown on the statement. INCONTESTABILITY This Contract will be incontestable from the Contract Date. NONPARTICIPATING This Contract does not share in Our surplus. DEATH PROVISIONS Notwithstanding any provision of this Contract to the contrary, all payments of benefits under this Contract will be made in a manner that satisfies the requirements of IRC Section 72(s), as amended from time to time. If the Contract is owned by a trust or other non-natural person, We will treat the death of any Annuitant as the death of the "Primary Annuitant" and as the death of any Owner. DEATH OF OWNER BEFORE THE ANNUITY DATE We will pay a death benefit to the Beneficiary upon Our receiving all required documentation including: (a) due proof that any Owner died before the Annuity Date; and (b) an election form selecting the payment option from the options listed below. If no election is received within 60 days of our receipt of due proof of death, the death benefit will be paid in accordance with option 1 below. The Beneficiary must select one of the following options: 17 18 1. Immediately collect the death benefit in a lump sum payment. If a lump sum payment is elected, payment will be in accordance with any applicable laws and regulations governing payments on death; or 2. Collect the death benefit in the form of one of the Annuity Payment Options. The payments must be over the life of the Beneficiary or over a period not extending beyond the life expectancy of the Beneficiary. Payments under this option must commence within one year after the Owner's death, otherwise, the death benefit will be paid in accordance with option 1 above; or 3. If the Beneficiary is the Owner's spouse, the Beneficiary may elect to become the Owner and continue the Contract in force. If this option is elected, no death benefit is paid. Upon the new Owner's subsequent death, the entire interest must be distributed immediately under option 1 or 2 above. DUE PROOF OF DEATH Due Proof of Death means: 1. a certified copy of a death certificate; or 2. a certified copy of a decree of a court of competent jurisdiction as to the finding of death; or 3. a written statement by a medical doctor who attended the deceased Owner at the time of death; or 4. any other proof satisfactory to Us. AMOUNT OF DEATH BENEFIT The amount of the death benefit will be determined based upon Your death benefit option selection. Once selected, the death benefit option cannot be changed. The death benefit options are as described below. OPTION I: PURCHASE PAYMENT ACCUMULATION DEATH BENEFIT OPTION Prior to the Annuity Date and upon death of the Owner, the Beneficiary will receive the greatest of: 1. the Contract Value for the NYSE business day during which We receive all required documentation including due proof of death of the Owner and an election of the type of payment to be made at Our Annuity Service Center; or 2. Purchase Payments less any withdrawals (and any fees or charges applicable to such withdrawals), compounded until the date of death at 4% interest, plus any Purchase 18 19 Payments and less any withdrawals (and any fees or charges applicable to such withdrawals) recorded after the date of death; or 3. the Contract Value at the seventh Contract anniversary, plus any subsequent Purchase Payments and less any subsequent withdrawals (and any fees or charges applicable to such withdrawals) compounded until the date of death at 4% interest, plus any Purchase Payments and less any withdrawals (and any fees or charges applicable to such withdrawals) recorded after the date of death. If the Owner was age 70 or older on the Contract Date, both (2) and (3) above will be compounded at 3%, rather than 4%. If the death benefit is paid on the death of a Owner who was not originally named in the application and was age 70 or older on the Contract Date, both (2) and (3) above will be compounded at 3%, rather than 4%. OPTION II: MAXIMUM ANNIVERSARY VALUE DEATH BENEFIT OPTION If, upon the death of the Owner and prior to the Annuity Date, the Owner has not attained his or her 90th birthday, the Beneficiary will receive the greatest of: 1. the Contract Value for the NYSE business day during which We receive all required documentation including due proof of death of the Owner and an election of the type of payment to be made at Our Annuity Service Center; or 2. Purchase Payments less any withdrawals (and any fees or charges applicable to such withdrawals); or 3. the maximum anniversary value preceding the date of death. The maximum anniversary value is equal to the greatest anniversary value attained from the following: As of the date of receipt of due proof of death and an election of the type of payment to be made, at our Annuity Service Center, We will calculate an anniversary value for each Contract anniversary prior to the Owner's 81st birthday. The anniversary value is equal to the Contract Value on a Contract anniversary, increased by the dollar amount of any Purchase Payments made since that anniversary and reduced by the dollar amount of any withdrawals (and any fees or charges applicable to such withdrawals) since that anniversary. If the deceased Owner has attained age 90, then the death benefit will be the Contract Value as defined in (1) above. 19 20 DEATH OF OWNER OR ANNUITANT ON OR AFTER THE ANNUITY DATE. If any Owner or Annuitant dies on or after the Annuity Date and before the entire interest in the Contract has been distributed, We will pay the remaining portion of the interest of the Contract under the annuity payment option being used on the date of death. For further information pertaining to death of the Annuitant, see ANNUITY PAYMENT OPTIONS. BENEFICIARY The Beneficiary is selected by the Owner. While (a) the Owner is living; and (b) before the Annuity Date, the Owner may change the Beneficiary by written notice in a form satisfactory to Us. The change will take effect on the date We record the proper notice subject to any payments We have made. If two or more persons are named, (a) those surviving the Owner will share equally unless otherwise stated; and (b) the Beneficiaries must elect to receive their respective portions of the death benefit according to the options listed under DEATH OF OWNER BEFORE THE ANNUITY DATE. If the Annuitant survives the Owner, and there are no surviving Beneficiaries, the Annuitant will be deemed the Beneficiary. Joint Owners, if applicable, shall be each other's primary Beneficiary. Joint Annuitants, if any, when the Owner is a non-natural person, shall be each other's primary Beneficiary. Any other Beneficiary designation will be treated as a contingent Beneficiary. If the Owner is also the Annuitant and there are no surviving Beneficiaries at the death of the Owner, the death benefit will be paid to the estate of the Owner in accordance with option 1, under DEATH OF OWNER BEFORE THE ANNUITY DATE. ANNUITY PROVISIONS ANNUITY DATE The Owner selects an Annuity Date (the date on which annuity payments are to begin) at the time of application. The Owner may change the Annuity Date at any time, at least seven days prior to the Annuity Date, by written notice to the Company at its Annuity Service Center. The Annuity Date must always be the first day of the calendar month and must be at least two years after the Contract Date, but not beyond the later of the Owner's 90th birthday or ten years after the Contract Date. If the Owner is a non-natural person, the latest Annuity Date is the later of the Annuitant's 90th birthday or ten years after the Contract Date. If no Annuity Date is selected, the Annuity Date will be the latest Annuity Date, as set by the Company. PAYMENTS TO OWNER Unless You request otherwise, We will make annuity payments to You. If You want the annuity payments to be made to some other Payee, We will make such payments subject to receipt of a written request filed at the Annuity Service Center no later than thirty (30) days before the due date of the first annuity payment. Any such request is subject to the rights of any assignee. No payments available to or being paid to the Payee while the Annuitant is alive can be transferred, commuted, anticipated or encumbered. FIXED ANNUITY PAYMENTS 20 21 If a Fixed Annuity payment option has been elected, the proceeds payable under this Contract less any applicable premium taxes, shall be applied to the payment of the Fixed Annuity payment option elected at rates which are at least equal to the annuity rates based upon the applicable tables. In no event will the Fixed Annuity payments be changed once they begin. AMOUNT OF FIXED ANNUITY PAYMENTS The amount of each Fixed Annuity payment will be determined by applying the portion of the Contract Value allocated to Fixed Annuity payments less any applicable premium taxes to the annuity table applicable to the Fixed Annuity payment option chosen. AMOUNT OF VARIABLE ANNUITY PAYMENTS (a) FIRST VARIABLE ANNUITY PAYMENT: The dollar amount of the first Variable Annuity payment will be determined by applying the portion of the Contract Value allocated to the Variable Portfolio, less any applicable premium taxes, to rates which are equal to the annuity rates based upon the annuity table applicable to the Variable Annuity payment option chosen. If the Contract Value is allocated to more than one Variable Portfolio, the value of Your interest in each Variable Portfolio is applied separately to the Variable Annuity payment option table to determine the amount of the first annuity payment attributable to each Variable Portfolio. (b) NUMBER OF VARIABLE ANNUITY UNITS: The number of Annuity Units for each applicable Variable Portfolio is the amount of the first annuity payment attributable to that Variable Portfolio divided by the value of the applicable Annuity Unit for that Variable Portfolio as of the Annuity Date. The number will not change as a result of investment experience. (c) VALUE OF EACH VARIABLE ANNUITY UNIT: The value of an Annuity Unit may increase or decrease from one month to the next. For any month, the value of an Annuity Unit of a particular Variable Portfolio is the value of that Annuity Unit as of the last NYSE business day of the preceding month, multiplied by the Net Investment Factor for that Variable Portfolio for the last NYSE business day of the current month. The Net Investment Factor for any Variable Portfolio for a certain month is determined by dividing (1) by (2) where: (1) is the Accumulation Unit Value of the Variable Portfolio determined as of the last business day at the end of that month, and (2) is the Accumulation Unit Value of the Variable Portfolio determined as of the last business day at the end of the preceding month. The result is then multiplied by a factor that neutralizes the assumed investment rate of 3.5%. (d) SUBSEQUENT VARIABLE ANNUITY PAYMENTS: After the first Variable Annuity payment, subsequent Variable Annuity payments will vary in amount according to the investment performance of the applicable Variable Portfolio(s) to which a portion of Your Contract Value is allocated. The amount may change from month to month. The amount of each subsequent payment for each Variable Portfolio is: 21 22 The number of Annuity Units for each Variable Portfolio as determined for the first annuity payment Multiplied by The value of an Annuity Unit for that Variable Portfolio at the end of the month immediately preceding the month in which payment is due. We guarantee that the amount of each Variable Annuity payment will not be affected by variations in expenses or mortality experience. ANNUITY PAYMENT OPTIONS During the Annuitant's life, upon written election and the return of this Contract to the Company at its Annuity Service Center, the Contract Value may be applied to provide one of the following options or any annuity payment option that is mutually agreeable. After two years from the Contract Date, and prior to the Annuity Date, You can choose one of the options described below. If no option has been selected by the Annuity Date, You will automatically receive option 4, below, with 120 monthly payments guaranteed. OPTIONS 1 & 1V - LIFE ANNUITY, LIFETIME PAYMENTS GUARANTEED Payments payable to a Payee during the lifetime of the Annuitant. No further payments are payable after the death of the Annuitant. OPTIONS 2 & 2V - JOINT AND 100% SURVIVOR LIFE ANNUITY Payments payable to the Payee during the lifetime of the Annuitant and during the lifetime of a designated second person. No further payments are payable after the deaths of both the Annuitant and the designated second person. OPTIONS 3 & 3V - JOINT AND 100% SURVIVOR LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 OR 20 YEARS 22 23 Payments are payable to the Payee during the lifetime of the Annuitant and during the lifetime of a designated second person. If, at the death of the survivor, payments have been made for less than the 10 or 20 years, as selected at the time of annuitization, the remaining guaranteed annuity payments will be continued to the Beneficiary. OPTIONS 4 & 4V - LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR 10 OR 20 YEARS Payments payable to the Payee during the lifetime of the Annuitant. If, at the death of the Annuitant, payments have been made for less than the 10 or 20 years, as selected at the time of annuitization, the remaining guaranteed annuity payments will be continued to the Beneficiary. OPTIONS 5 & 5V - FIXED PAYMENTS FOR A SPECIFIED PERIOD CERTAIN Payments payable to the Payee for any specified period of time for five (5) years or more, but not exceeding thirty (30) years, as selected at the time of annuitization. The selection must be made for full twelve month periods. In the event of death of the Annuitant, any remaining guaranteed annuity payments will be continued to the Beneficiary. If Variable Annuity Payments are elected under this Annuity Payment Option, any remaining guaranteed Variable Annuity payments may be redeemed for a discounted value determined by Us. Any applicable Withdrawal Charges will be deducted from the discounted value as if You fully surrendered Your Certificate. 23 24 FIXED ANNUITY PAYMENT OPTIONS TABLE BASIS OF COMPUTATION The actuarial basis for the Table of Annuity Rates is the 1983a Annuity Mortality Table with projection and a guaranteed interest rate of 3%. The mortality table is projected using Projection Scale G factors, assuming annuitization in the year 2000. The Fixed Annuity Payment Options Table does not included any applicable premium tax. OPTIONS 1 & 4 - TABLE OF MONTHLY INSTALLMENTS PER $1,000. (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.)
OPTION 1 OPTION 4 OPTION 4 AGE OF LIFE ANNUITY LIFE ANNUITY ANNUITANT LIFE ANNUITY (W/120 PAYMENTS GUARANTEED) (W/240 PAYMENTS GUARANTEED) MALE FEMALE MALE FEMALE MALE FEMALE 55 4.23 3.84 4.19 3.82 4.05 3.76 56 4.32 3.91 4.27 3.88 4.11 3.81 57 4.41 3.98 4.35 3.95 4.17 3.87 58 4.51 4.05 4.44 4.02 4.24 3.93 59 4.61 4.13 4.54 4.10 4.31 4.00 60 4.72 4.22 4.64 4.18 4.37 4.06 61 4.84 4.31 4.74 4.27 4.44 4.13 62 4.96 4.40 4.85 4.36 4.51 4.20 63 5.10 4.51 4.97 4.45 4.58 4.27 64 5.24 4.62 5.10 4.55 4.65 4.35 65 5.40 4.73 5.22 4.66 4.72 4.42 66 5.56 4.86 5.36 4.78 4.79 4.50 67 5.74 4.99 5.50 4.90 4.86 4.57 68 5.93 5.14 5.65 5.02 4.92 4.65 69 6.13 5.29 5.80 5.16 4.99 4.73 70 6.35 5.46 5.96 5.30 5.05 4.80 71 6.58 5.64 6.13 5.46 5.10 4.88 72 6.82 5.84 6.29 5.62 5.16 4.95 73 7.08 6.05 6.47 5.78 5.20 5.02 74 7.36 6.28 6.64 5.96 5.25 5.08 75 7.66 6.53 6.82 6.14 5.29 5.14 76 7.98 6.80 7.00 6.33 5.33 5.19 77 8.33 7.09 7.19 6.53 5.36 5.24 78 8.69 7.41 7.37 6.73 5.39 5.29 79 9.09 7.75 7.55 6.94 5.41 5.33 80 9.51 8.11 7.73 7.14 5.43 5.36 81 9.97 8.51 7.91 7.35 5.45 5.39 82 10.45 8.94 8.08 7.55 5.47 5.42 83 10.97 9.41 8.24 7.76 5.48 5.44 84 11.52 9.92 8.40 7.95 5.49 5.46 85 12.10 10.47 8.54 8.13 5.50 5.48
24 25 OPTION 2 - TABLE OF MONTHLY INSTALLMENTS PER $1,000. (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.) JOINT & 100% SURVIVOR LIFE ANNUITY
AGE OF MALE ANNUITANT AGE OF FEMALE ANNUITANT --------- ----------------------- 55 60 65 70 75 80 85 55 3.54 3.69 3.84 3.96 4.06 4.13 4.17 60 3.63 3.83 4.04 4.23 4.39 4.52 4.60 65 3.70 3.95 4.23 4.51 4.78 5.00 5.16 70 3.75 4.04 4.39 4.78 5.18 5.56 5.85 75 3.78 4.11 4.51 5.01 5.57 6.14 6.65 80 3.81 4.15 4.60 5.18 5.89 6.70 7.52 85 3.82 4.18 4.66 5.30 6.14 7.18 8.35
OPTION 3 - TABLE OF MONTHLY INSTALLMENTS PER $1,000. (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST) JOINT & 100% SURVIVOR LIFE ANNUITY (W/120 PAYMENTS GUARANTEED)
AGE OF MALE ANNUITANT AGE OF FEMALE ANNUITANT --------- ----------------------- 55 60 65 70 75 80 85 55 3.54 3.69 3.83 3.96 4.05 4.12 4.16 60 3.63 3.83 4.03 4.22 4.38 4.50 4.57 65 3.70 3.95 4.22 4.50 4.76 4.97 5.10 70 3.75 4.04 4.38 4.76 5.15 5.48 5.72 75 3.78 4.10 4.50 4.98 5.50 6.00 6.40 80 3.80 4.14 4.58 5.13 5.78 6.46 7.04 85 3.81 4.16 4.62 5.22 5.97 6.80 7.55
OPTION 3 - TABLE OF MONTHLY INSTALLMENTS PER $1,000. (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST) JOINT & 100% SURVIVOR LIFE ANNUITY (W/240 PAYMENTS GUARANTEED)
AGE OF MALE ANNUITANT AGE OF FEMALE ANNUITANT --------- ----------------------- 55 60 65 70 75 80 85 55 3.53 3.68 3.81 3.92 3.99 4.03 4.04 60 3.62 3.81 4.00 4.16 4.27 4.34 4.37 65 3.68 3.92 4.16 4.39 4.56 4.66 4.71 70 3.72 3.99 4.29 4.58 4.81 4.96 5.03 75 3.74 4.03 4.36 4.70 4.99 5.17 5.26 80 3.75 4.05 4.40 4.77 5.09 5.30 5.40 85 3.76 4.06 4.42 4.80 5.13 5.35 5.46
25 26 OPTION 5 - TABLE OF MONTHLY INSTALLMENTS PER $1,000. FIXED PAYMENT FOR SPECIFIED PERIOD
NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT -------- ------- -------- ------- -------- ------- -------- ------- 10 9.61 17 6.23 24 4.84 11 8.86 18 5.96 25 4.71 5 17.91 12 8.24 19 5.73 26 4.59 6 15.14 13 7.71 20 5.51 27 4.47 7 13.16 14 7.26 21 5.32 28 4.37 8 11.68 15 6.87 22 5.15 29 4.27 9 10.53 16 6.53 23 4.99 30 4.18
26 27 VARIABLE ANNUITY PAYMENT OPTIONS TABLE BASIS OF COMPUTATION The actuarial basis for the Table of Annuity Rates is the 1983a Annuity Mortality Table with projection and an effective annual Assumed Investment Rate of 3.5%. The mortality table is projected using Projection Scale G factors, assuming annuitization in the year 2000. The Variable Annuity Payment Options Table does not include any applicable premium tax. OPTIONS 1V & 4V - TABLE OF MONTHLY INSTALLMENTS PER $1,000 (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.)
OPTION 1V OPTION 4V OPTION 4V LIFE ANNUITY LIFE ANNUITY AGE OF (W/120 PAYMENTS (W/240 PAYMENTS ANNUITANT LIFE ANNUITY GUARANTEED) GUARANTEED) MALE FEMALE MALE FEMALE MALE FEMALE 55 4.53 4.13 4.48 4.11 4.33 4.05 56 4.62 4.20 4.56 4.18 4.39 4.10 57 4.71 4.27 4.64 4.24 4.45 4.16 58 4.80 4.34 4.73 4.31 4.52 4.22 59 4.90 4.42 4.82 4.39 4.58 4.28 60 5.01 4.51 4.92 4.47 4.65 4.34 61 5.13 4.60 5.03 4.55 4.71 4.41 62 5.26 4.69 5.14 4.64 4.78 4.48 63 5.39 4.80 5.25 4.74 4.85 4.55 64 5.54 4.91 5.38 4.84 4.92 4.62 65 5.69 5.02 5.51 4.94 4.99 4.69 66 5.86 5.15 5.64 5.06 5.05 4.77 67 6.03 5.28 5.78 5.18 5.12 4.84 68 6.22 5.43 5.93 5.30 5.18 4.92 69 6.43 5.58 6.08 5.44 5.24 4.99 70 6.64 5.75 6.23 5.58 5.30 5.06 71 6.87 5.93 6.40 5.73 5.36 5.14 72 7.12 6.13 6.56 5.89 5.41 5.21 73 7.38 6.34 6.73 6.06 5.46 5.27 74 7.66 6.57 6.91 6.23 5.50 5.33 75 7.96 6.82 7.09 6.41 5.54 5.39 76 8.28 7.09 7.27 6.60 5.57 5.44 77 8.63 7.38 7.45 6.79 5.61 5.49 78 9.00 7.70 7.63 6.99 5.63 5.54 79 9.40 8.04 7.81 7.19 5.66 5.58 80 9.82 8.41 7.98 7.40 5.68 5.61 81 10.28 8.81 8.16 7.60 5.70 5.64 82 10.76 9.24 8.32 7.81 5.71 5.66 83 11.28 9.71 8.48 8.00 5.72 5.69 84 11.83 10.23 8.64 8.19 5.73 5.70 85 12.42 10.78 8.78 8.38 5.74 5.72
27 28 OPTION 2V - TABLE OF MONTHLY INSTALLMENTS PER $1,000. (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST.) JOINT & 100% SURVIVOR LIFE ANNUITY
AGE OF MALE ANNUITANT AGE OF FEMALE ANNUITANT --------- ----------------------- 55 60 65 70 75 80 85 55 3.83 3.98 4.12 4.24 4.34 4.42 4.46 60 3.92 4.11 4.32 4.51 4.67 4.80 4.89 65 3.99 4.23 4.50 4.79 5.05 5.28 5.44 70 4.04 4.33 4.67 5.05 5.46 5.83 6.13 75 4.07 4.39 4.79 5.28 5.84 6.41 6.93 80 4.10 4.44 4.88 5.45 6.16 6.97 7.79 85 4.11 4.47 4.94 5.57 6.41 7.45 8.61
OPTION 3V - TABLE OF MONTHLY INSTALLMENTS PER $1,000. (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST) JOINT AND 100% SURVIVOR LIFE ANNUITY (W/120 PAYMENTS GUARANTEED)
AGE OF MALE ANNUITANT AGE OF FEMALE ANNUITANT --------- ----------------------- 55 60 65 70 75 80 85 55 3.83 3.98 4.12 4.24 4.34 4.40 4.45 60 3.92 4.11 4.31 4.50 4.66 4.78 4.86 65 3.99 4.23 4.50 4.78 5.03 5.24 5.38 70 4.04 4.32 4.66 5.03 5.41 5.75 5.99 75 4.07 4.38 4.78 5.25 5.77 6.26 6.66 80 4.09 4.43 4.86 5.40 6.05 6.72 7.29 85 4.10 4.45 4.90 5.50 6.24 7.05 7.80
OPTION 3V - TABLE OF MONTHLY INSTALLMENTS PER $1,000. (MONTHLY INSTALLMENTS FOR AGES NOT SHOWN WILL BE FURNISHED UPON REQUEST) JOINT & 100% SURVIVOR LIFE ANNUITY (W/240 PAYMENTS GUARANTEED)
AGE OF MALE ANNUITANT AGE OF FEMALE ANNUITANT --------- ----------------------- 55 60 65 70 75 80 85 55 3.82 3.97 4.10 4.20 4.27 4.31 4.33 60 3.91 4.09 4.28 4.44 4.55 4.61 4.64 65 3.97 4.20 4.44 4.66 4.83 4.93 4.97 70 4.01 4.27 4.56 4.84 5.07 5.21 5.28 75 4.03 4.31 4.64 4.97 5.25 5.42 5.51 80 4.04 4.33 4.67 5.03 5.34 5.55 5.65 85 4.05 4.34 4.69 5.06 5.38 5.60 5.70
28 29 OPTION 5V - TABLE OF MONTHLY INSTALLMENTS PER $1,000. PAYMENTS FOR A SPECIFIED PERIOD
NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY NUMBER MONTHLY OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT OF YEARS PAYMENT -------- ------- -------- ------- -------- ------- -------- ------- 10 9.83 17 6.47 24 5.09 11 9.09 18 6.20 25 4.96 5 18.12 12 8.46 19 5.97 26 4.84 6 15.35 13 7.94 20 5.75 27 4.73 7 13.38 14 7.49 21 5.56 28 4.63 8 11.90 15 7.10 22 5.39 29 4.53 9 10.75 16 6.76 23 5.24 30 4.45
29 30 ANCHOR NATIONAL LIFE INSURANCE COMPANY A STOCK COMPANY LOS ANGELES, CALIFORNIA 30 31 INDIVIDUAL FIXED AND VARIABLE ANNUITY CONTRACT Nonparticipating 31 EX-4.(E) 4 EXHIBIT 4.(E) 1 Overnight Address with checks: Mailing Address F.C.N.P.C. Mailing Address [LOGO] ANCHOR NATIONAL with checks: Attn: P.O. Box 100330 without checks: P. O. Box 100330 1111 Arroyo Parkway P. O. Box 54299 1 SunAmerica Center Pasadena, CA 91189-0001 Pasadena, CA 91105 Los Angeles, CA 90054-0299 Los Angeles, CA 90067-6022 - -------------------------------------------------------------------------------------------------------------------------------- PARTICIPANT ENROLLMENT FORM ANG-512 (3/99) DO NOT USE HIGHLIGHTER. Please Print or type. A. PARTICIPANT [ ] Mr. [ ] Mrs. [ ] Ms. [ ] Miss [ ] Dr. [ ] Sr. [ ] Jr. ---------------------------------------------------------------------------------------------------------- LAST NAME FIRST NAME MIDDLE INITIAL ---------------------------------------------------------------------------------------------------------- STREET ADDRESS ---------------------------------------------------------------------------------------------------------- CITY STATE ZIP CODE MO. DAY YR. [ ] M [ ] F ( ) -------------------- --------------------------- ---- ---------------- DATE OF BIRTH SEX SOC. SEC. OR TAX ID NUMBER TELEPHONE NUMBER JOINT PARTICIPANT(IF ANY, MUST BE SPOUSE) ----------------------------------------------------------------- LAST NAME FIRST NAME MIDDLE INITIAL MO. DAY YR. [ ] M [ ] F ( ) -------------------- --------------------------- ---- ---------------- DATE OF BIRTH SEX SOC. SEC. OR TAX ID NUMBER TELEPHONE NUMBER B. ANNUITANT (Complete only ---------------------------------------------------------------------------------------------------------- if different from LAST NAME FIRST NAME MIDDLE INITIAL participant) ---------------------------------------------------------------------------------------------------------- STREET ADDRESS ---------------------------------------------------------------------------------------------------------- CITY STATE ZIP CODE MO. DAY YR. [ ] M [ ] F ( ) -------------------- --------------------------- ---- ---------------- DATE OF BIRTH SEX SOC. SEC. OR TAX ID NUMBER TELEPHONE NUMBER JOINT PARTICIPANT(IF ANY, MUST BE SPOUSE) ----------------------------------------------------------------- LAST NAME FIRST NAME MIDDLE INITIAL MO. DAY YR. [ ] M [ ] F ( ) -------------------- --------------------------- ---- ---------------- DATE OF BIRTH SEX SOC. SEC. OR TAX ID NUMBER TELEPHONE NUMBER C. WITHDRAWAL [ ] Option 1: 7 Years (with DCA Fixed Account Options) CHARGE PERIOD [ ] Option 2: 9 Years (with Payment Enhancement Provisions) (Participant must (See your financial representative and the prospectus for information about these options.) choose one option) D. DEATH BENEFIT [ ] Purchase Payment Accumulation Death Benefit Option (Participant must [ ] Maximum Anniversary Value Death Benefit Option choose one) (See your financial representative and the prospectus for information about these options.) E. BENEFICIARY ----------------------------------------------------------------------------- PRIMARY [ ] CONTINGENT [ ] LAST NAME FIRST NAME MIDDLE INITIAL RELATIONSHIP ----------------------------------------------------------------------------- PRIMARY [ ] CONTINGENT [ ] LAST NAME FIRST NAME MIDDLE INITIAL RELATIONSHIP F. TYPE OF [ ] NON-QUALIFIED. If non-qualified, is this a 1035 Exchange? [ ] YES [ ] NO CONTRACT If yes, please complete a "Request for Transfer or 1035 Exchange" form (SA-2500RL). [ ] QUALIFIED, as indicated below. Is this a direct transfer? [ ] YES [ ] NO If yes, please complete a "Request for Transfer or 1035 Exchange" form (SA-2500RL). Please select an appropriate plan for qualified monies. [ ] SEP [ ] 403(b) [ ] Terminal funding [ ] 457 [ ] 401 retirement plan [ ] IRA Tax Year______ [ ] IRA rollover [ ] IRA transfer [ ] Roth IRA Roth IRA origination date__________ [ ] Other_______ G. ANNUITY DATE MO. DAY YR. Date annuity payments ("income payments") begin. (Must be at least 2 years ----------------------- after the Certificate Date. Maximum age is the later of the Participant's Age ANNUITY DATE 90 or 10 years after Certificate Date. NOTE: If left blank, the Annuity Date will default to maximum for non-qualified and to 70 1/2 for qualified contracts.) ANG-512 (3/99) OVER Group Allocated
2 - -------------------------------------------------------------------------------------------------------------------------------- PARTICIPANT ENROLLMENT FORM ANG-512 (3/99) SIDE 2 - -------------------------------------------------------------------------------------------------------------------------------- H. PURCHASE [ ] INITIAL PURCHASE PAYMENT: $_____________________ PAYMENT(S) Minimum initial payment is [$5,000] for nonqualified contracts; [$2,000] for qualified contracts. Payments may be wired or mailed. Make check payable to: Anchor National Life Insurance Company and Include Social Security Number on the check. [ ] AUTOMATIC PAYMENTS: $_____________________ To establish automatic bank drafts for future Purchase Payments, include a completed "Automatic Payment Authorization" ( Form SA-2233POS), and a voided check. I. SPECIAL [ ] SYSTEMATIC WITHDRAWAL: Check the box at left and include a "Systematic Withdrawal FEATURES Application" ( Form R-5550SW). [ ] DOLLAR COST AVERAGING: Check the box at left and include a completed "Dollar Cost Averaging Application" (Form R2-5551DCA). [ ] PRINCIPAL ADVANTAGE: Check the box at left. Under Investment Instructions, indicate the fixed account desired and specify other allocations as percentages. J. TELEPHONE/ Do you wish to authorize telephone TRANSFERS, subject to the conditions set forth below? [ ] YES [ ] NO INTERNET Do you wish to authorize Internet TRANSFERS, subject to the conditions set forth below? [ ] YES [ ] NO TRANSFERS (If no election is indicated the Company will default to yes for transfers via the AUTHORIZATION telephone or Internet.) I authorize the Company to accept telephone and/or Internet instructions for transfers in any amount among investment options from anyone providing proper identification subject to restrictions and limitations contained in the certificate and related prospectus, if any. I understand that I bear the risk of loss in the event of a telephone or Internet instruction not authorized by me. The Company will not be responsible for any losses resulting from unauthorized transactions if it follows reasonable procedures designed to verify the identity of the requestor and therefore, the Company will record telephone conversations containing transaction instructions, request personal identification information before acting upon telephone instructions and send written confirmation statements of transactions to the address of record. For Internet transfers the Company will require proper password or Internet authentication, keep records of all such transactions and send confirmations to the address of record. Do you authorize the delivery of the prospectus and other required documentation to your personal Internet Address in lieu of receipt by mail? [ ] YES [ ] NO If YES, You MUST indicate Your Internet Address in the space provided. ---------------------------------- Internet Address K. SPECIAL INSTRUCTIONS ---------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------- L. STATEMENT OF This Certificate [ ] WILL [ ] WILL NOT replace an existing life insurance or annuity contract. PARTICIPANT (If this will replace an existing policy, please indicate name of issuing company and contract number below.) COMPANY NAME CONTRACT NUMBER ------------------------------------ ------------------------------------ I hereby represent my answers to the above questions to be correct and true to the best of my knowledge and belief and agree that this Enrollment Form shall be a part of any Certificate issued by the COMPANY. I VERIFY MY UNDERSTANDING THAT ALL PURCHASE PAYMENTS AND VALUES PROVIDED BY THE CERTIFICATE, WHEN BASED ON INVESTMENT EXPERIENCE OF THE VARIABLE PORTFOLIOS, ARE VARIABLE AND NOT GUARANTEED AS TO DOLLAR AMOUNT. IF THE RETURN OF PURCHASE PAYMENTS IS REQUIRED UNDER THE RIGHT TO EXAMINE PROVISION OF THE CERTIFICATE, I UNDERSTAND THAT THE COMPANY RESERVES THE RIGHT TO ALLOCATE MY PURCHASE PAYMENT(S) AND ANY INITIAL PAYMENT ENHANCEMENT(S), IF APPLICABLE, TO THE CASH MANAGEMENT PORTFOLIO UNTIL THE END OF THE RIGHT TO EXAMINE PERIOD. I FURTHER UNDERSTAND THAT AT THE END OF THE RIGHT TO EXAMINE PERIOD, THE COMPANY WILL ALLOCATE MY FUNDS ACCORDING TO MY INVESTMENT INSTRUCTIONS. I UNDERSTAND THAT ALL PAYMENTS AND VALUES BASED ON THE MULTI-YEAR FIXED ACCOUNT OPTIONS ARE SUBJECT TO A MARKET VALUE ADJUSTMENT FORMULA, WHICH MAY RESULT IN UPWARD AND DOWNWARD ADJUSTMENTS IN AMOUNTS AVAILABLE FOR WITHDRAWAL. I UNDERSTAND THE TERMS OF THE WITHDRAWAL CHARGE PERIOD THAT I SELECTED. I ACKNOWLEDGE RECEIPT OF THE CURRENT PROSPECTUSES FOR [POLARIS II] INCLUDING THE SUNAMERICA SERIES TRUST AND ANCHOR SERIES TRUST PROSPECTUSES. I HAVE READ THEM CAREFULLY AND UNDERSTAND THEIR CONTENTS. Signed at ---------------------------------------------------------------- ---------------------------- CITY STATE DATE ---------------------------------------------------------- -------------------------------------- OWNER'S SIGNATURE REGISTERED REPRESENTATIVE'S SIGNATURE ---------------------------------------------------------- JOINT OWNER'S SIGNATURE (IF APPLICABLE) M. LICENSED/ Will this Certificate replace in whole or in part any existing life insurance or annuity contract? REGISTERED [ ] YES [ ] NO REPRESENTATIVE ---------------------------------------------------------------------------------------------------------- REPRESENTATIVE'S LAST NAME FIRST NAME MIDDLE INITIAL SOC. SEC. NUMBER
3 INFORMATION ------------------------------------------------------------------------------- ------------------------ REPRESENTATIVE'S STREET ADDRESS CITY STATE ZIP CODE ( ) ------------------------ --------------------------------------------------- ------------------------ BROKER/DEALER FIRM NAME REPRESENTATIVE'S TELEPHONE NO. LICENSED AGENT ID NUMBER ANG-512 (3/99) - -------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INSTRUCTIONS FOR FIXED ACCOUNT OPTIONS AND VARIABLE PORTFOLIOS ANG-512 (3/99) Side 3 - -------------------------------------------------------------------------------------------------------------------------------- Choose from the Variable Portfolios and the applicable Fixed Account Options listed below. If Dollar Cost Averaging was selected in Section I, then [Form R2-5551DCA] must accompany this Participant Enrollment Form. Allocations must be expressed in whole percentages and total allocation must equal 100%. VARIABLE PORTFOLIOS _____ PORTFOLIO _____ _____ MANAGER ______ _____ PORTFOLIO _____ _____ MANAGER ______ __% Cash Management SunAmerica Asset Mgmt. __% "Dogs" of Wall SunAmerica Asset Mgmt. Corp. Street Corp. __% Government & Wellington Mgmt. Co., LLP __% Alliance Growth Alliance Capital Mgmt. Quality Bond L.P. __% Corporate Bond Federated Investors __% Growth Wellington Mgmt. Co., LLP __% Global Bond Goldman Sachs Asset Mgmt. __% Putnam Growth Putnam Investment Mgmt., Inc. __% High-Yield Bond SunAmerica Asset Mgmt. __% Real Estate Davis Selected Advisers, Corp. L.P. __% Worldwide High Morgan Stanley Asset __% Natural Resources Wellington Mgmt. Co., Income Mgmt. LLP __% SunAmerica Balanced SunAmerica Asset Mgmt. __% MFS Mid-Cap Growth Massachusetts Financial Corp. Services Co. __% MFS Total Return Massachusetts Financial __% Capital Wellington Mgmt. Co., Services Co. Appreciation LLP __% Asset Allocation Goldman Sachs Asset Mgmt. __% Aggressive Growth SunAmerica Asset Mgmt. Corp. __% Utility Federated Investors __% Int'l. Growth and Putnam Investment Mgmt., Income Inc. __% Growth-Income Alliance Capital Mgmt. __% Global Equities Alliance Capital Mgmt. L.P. L.P. __% MFS Growth and Massachusetts Financial __% Int'l. Diversified Morgan Stanley Asset Income Services Co. Equities Mgmt. __% Federated Value Federated Investors __% Emerging Markets Putnam Investment Mgmt., Inc. __% Venture Value Davis Selected Advisers, L.P. FIXED ACCOUNT OPTION GUARANTEE PERIODS _____% 1 yr. _____ % 3 yr. ______% 5 yr. ______% 7 yr. _____%10 yr. DCA FIXED ACCOUNT OPTION GUARANTEE PERIODS IMPORTANT: THE DCA FIXED ACCOUNT OPTIONS ARE AVAILABLE ONLY IF OPTION 1 (THE 7 YEAR WITHDRAWAL CHARGE PERIOD) IN SECTION C WAS SELECTED. [Form R2-5551DCA] must accompany this Participant Enrollment Form. _____% 6 Month DCA _____% 1 yr. DCA FRAUD WARNING: ANY PERSON WHO WITH INTENT TO DEFRAUD OR KNOWING THAT HE IS FACILITATING A FRAUD AGAINST AN INSURER, SUBMITS AN APPLICATION OR FILES A CLAIM CONTAINING A FALSE OR DECEPTIVE STATEMENT MAY BE GUILTY OF INSURANCE FRAUD. - ------------------------------------------- ------------------------------------------ -------------------- PARTICIPANT'S SIGNATURE REGISTERED REPRESENTATIVE'S SIGNATURE DATE - ------------------------------------------- JOINT PARTICIPANT'S SIGNATURE REGISTERED/LICENSED REPRESENTATIVE INFORMATION ( ) - ------------------------------------------- ------------------------------------- ---------------------------- REPRESENTATIVE'S TELEPHONE NO. LICENSED AGENT ID NUMBER BROKER/DEALER FIRM NAME
4 - -------------------------------------------------------------------------------------------------------------------------------- FOR OFFICE USE ONLY - -------------------------------------------------------------------------------------------------------------------------------- ANG-512 (3/99)
EX-4.(F) 5 EXHIBIT 4.(F) 1 Overnight Address with checks: Mailing Address F.C.N.P.C. Mailing Address [LOGO] ANCHOR NATIONAL with checks: Attn: P.O. Box 100330 without checks: P. O. Box 100330 1111 Arroyo Parkway P. O. Box 54299 1 SunAmerica Center Pasadena, CA 91189-0001 Pasadena, CA 91105 Los Angeles, CA 90054-0299 Los Angeles, CA 90067-6022 - -------------------------------------------------------------------------------------------------------------------------------- DEFERRED ANNUITY APPLICATION ANA-513 (3/99) DO NOT USE HIGHLIGHTER. Please Print or type. A. OWNER [ ] Mr. [ ] Mrs. [ ] Ms. [ ] Miss [ ] Dr. [ ] Sr. [ ] Jr. ---------------------------------------------------------------------------------------------------------- LAST NAME FIRST NAME MIDDLE INITIAL ---------------------------------------------------------------------------------------------------------- STREET ADDRESS ---------------------------------------------------------------------------------------------------------- CITY STATE ZIP CODE JOINT OWNER (IF ANY, MUST BE SPOUSE) ---------------------------------------------------------------------- LAST NAME FIRST NAME MIDDLE INITIAL MO. DAY YR. [ ] M [ ] F ( ) -------------------- --------------------------- ---- ---------------- DATE OF BIRTH SEX SOC. SEC. OR TAX ID NUMBER TELEPHONE NUMBER B. ANNUITANT (Complete only ---------------------------------------------------------------------------------------------------------- if different from LAST NAME FIRST NAME MIDDLE INITIAL owner) ---------------------------------------------------------------------------------------------------------- STREET ADDRESS ---------------------------------------------------------------------------------------------------------- CITY STATE ZIP CODE MO. DAY YR. [ ] M [ ] F ( ) -------------------- --------------------------- ---- ---------------- DATE OF BIRTH SEX SOC. SEC. OR TAX ID NUMBER TELEPHONE NUMBER JOINT ANNUITANT (IF ANY) ---------------------------------------------------------------------------------- LAST NAME FIRST NAME MIDDLE INITIAL MO. DAY YR. [ ] M [ ] F ( ) -------------------- --------------------------- ---- ---------------- DATE OF BIRTH SEX SOC. SEC. OR TAX ID NUMBER TELEPHONE NUMBER C. WITHDRAWAL [ ] Option 1: 7 Years (with DCA Fixed Account Options) CHARGE PERIOD [ ] Option 2: 9 Years (with Payment Enhancement Provisions) (Owner must (See your financial representative and the prospectus for information about these options.) choose one option) D. DEATH BENEFIT [ ] Purchase Payment Accumulation Death Benefit Option (Owner must [ ] Maximum Anniversary Value Death Benefit Option choose one) (See your financial representative and the prospectus for information about these options.) E. BENEFICIARY ----------------------------------------------------------------------------- PRIMARY [ ] CONTINGENT [ ] LAST NAME FIRST NAME MIDDLE INITIAL RELATIONSHIP ----------------------------------------------------------------------------- PRIMARY [ ] CONTINGENT [ ] LAST NAME FIRST NAME MIDDLE INITIAL RELATIONSHIP F. TYPE OF [ ] NON-QUALIFIED. If non-qualified, is this a 1035 Exchange? [ ] YES [ ] NO CONTRACT If yes, please complete a "Request for Transfer or 1035 Exchange" form (SA-2500RL). [ ] QUALIFIED, as indicated below. Is this a direct transfer? [ ] YES [ ] NO If yes, please complete a "Request for Transfer or 1035 Exchange" form (SA-2500RL). Please select an appropriate plan for qualified monies. [ ] SEP [ ] 403(b) [ ] Terminal funding [ ] 457 [ ] 401 retirement plan [ ] IRA Tax Year_______ [ ] IRA rollover [ ] IRA transfer [ ] Roth IRA Roth IRA origination date__________ [ ] Other_____ G. ANNUITY DATE MO. DAY YR. Date annuity payments ("income payments") begin. (Must be at least 2 years ------------------------ after the Contract ANNUITY DATE Date. Maximum age is the later of the Owner's Age 90 or 10 years after Contract Date. NOTE: If left blank, the Annuity Date will default to maximum for non-qualified and to 70 1/2 for qualified contracts.) ANA-513 (3/99) OVER
2 - -------------------------------------------------------------------------------------------------------------------------------- DEFERRED ANNUITY APPLICATION ANA-513 (3/99) SIDE 2 - -------------------------------------------------------------------------------------------------------------------------------- H. PURCHASE [ ] INITIAL PURCHASE PAYMENT: $_____________________ PAYMENT(S) Minimum initial payment is [$5,000] for nonqualified contracts; [$2,000] for qualified contracts. Payments may be wired or mailed. Make check payable to: Anchor National Life Insurance Company and Include Social Security Number on the check. [ ] AUTOMATIC PAYMENTS: $_____________________ To establish automatic bank drafts for future Purchase Payments, include a completed "Automatic Payment Authorization" ( Form SA-2233POS), and a voided check. I. SPECIAL [ ] SYSTEMATIC WITHDRAWAL: Check the box at left and include a "Systematic Withdrawal FEATURES Application" ( Form R-5550SW). [ ] DOLLAR COST AVERAGING: Check the box at left and include a completed "Dollar Cost Averaging Application" (Form R2-5551DCA). [ ] PRINCIPAL ADVANTAGE: Check the box at left. Under Investment Instructions, indicate the fixed account desired and specify other allocations as percentages. J. TELEPHONE/ Do you wish to authorize telephone TRANSFERS, subject to the conditions set forth below? [ ] YES [ ] NO INTERNET Do you wish to authorize Internet TRANSFERS, subject to the conditions set forth below? [ ] YES [ ] NO TRANSFERS (If no election is indicated the Company will default to yes for transfers via the telephone or Internet.) AUTHORIZATION I authorize the Company to accept telephone and/or Internet instructions for transfers in any amount among investment options from anyone providing proper identification subject to restrictions and limitations contained in the contract and related prospectus, if any. I understand that I bear the risk of loss in the event of a telephone or Internet instruction not authorized by me. The Company will not be responsible for any losses resulting from unauthorized transactions if it follows reasonable procedures designed to verify the identity of the requestor and therefore, the Company will record telephone conversations containing transaction instructions, request personal identification information before acting upon telephone instructions and send written confirmation statements of transactions to the address of record. For Internet transfers the Company will require proper password or Internet authentication, keep records of all such transactions and send confirmations to the address of record. Do you authorize the delivery of the prospectus and other required documentation to your personal Internet Address in lieu of receipt by mail? [ ] YES [ ] NO If YES, You MUST indicate Your Internet Address in the space provided. ----------------------------------- Internet Address K. SPECIAL INSTRUCTIONS ---------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------- L. STATEMENT OF This Contract [ ] WILL [ ] WILL NOT replace an existing life insurance or annuity contract. (If this OWNER will replace an existing policy, please indicate name of issuing company and contract number below.) COMPANY NAME CONTRACT NUMBER ------------------------------------ ------------------------------------ I hereby represent my answers to the above questions to be correct and true to the best of my knowledge and belief and agree that this Enrollment Form shall be a part of any Contract issued by the Company. I VERIFY MY UNDERSTANDING THAT ALL PURCHASE PAYMENTS AND VALUES PROVIDED BY THE CONTRACT, WHEN BASED ON INVESTMENT EXPERIENCE OF THE VARIABLE PORTFOLIOS, ARE VARIABLE AND NOT GUARANTEED AS TO DOLLAR AMOUNT. IF THE RETURN OF PURCHASE PAYMENTS IS REQUIRED UNDER THE RIGHT TO EXAMINE PROVISION OF THE CONTRACT, I UNDERSTAND THAT THE COMPANY RESERVES THE RIGHT TO ALLOCATE MY PURCHASE PAYMENT(S) AND ANY INITIAL PAYMENT ENHANCEMENT(S), IF APPLICABLE, TO THE CASH MANAGEMENT PORTFOLIO UNTIL THE END OF THE RIGHT TO EXAMINE PERIOD. I FURTHER UNDERSTAND THAT AT THE END OF THE RIGHT TO EXAMINE PERIOD, THE COMPANY WILL ALLOCATE MY FUNDS ACCORDING TO MY INVESTMENT INSTRUCTIONS. I UNDERSTAND THAT ALL PAYMENTS AND VALUES BASED ON THE MULTI-YEAR FIXED ACCOUNT OPTIONS ARE SUBJECT TO A MARKET VALUE ADJUSTMENT FORMULA, WHICH MAY RESULT IN UPWARD AND DOWNWARD ADJUSTMENTS IN AMOUNTS AVAILABLE FOR WITHDRAWAL. I UNDERSTAND THE TERMS OF THE WITHDRAWAL CHARGE PERIOD THAT I SELECTED. I ACKNOWLEDGE RECEIPT OF THE CURRENT PROSPECTUSES FOR [POLARIS II] INCLUDING THE SUNAMERICA SERIES TRUST AND ANCHOR SERIES TRUST PROSPECTUSES. I HAVE READ THEM CAREFULLY AND UNDERSTAND THEIR CONTENTS. Signed at ---------------------------------------------------------------- ---------------------------- CITY STATE DATE ---------------------------------------------------------- -------------------------------------- OWNER'S SIGNATURE REGISTERED REPRESENTATIVE'S SIGNATURE ---------------------------------------------------------- JOINT OWNER'S SIGNATURE (IF APPLICABLE) M. LICENSED/ Will this Contract replace in whole or in part any existing life insurance or annuity contract? REGISTERED [ ] YES [ ] NO REPRESENTATIVE ---------------------------------------------------------------------------------------------------------- REPRESENTATIVE'S LAST NAME FIRST NAME MIDDLE INITIAL SOC. SEC. NUMBER
3 INFORMATION ---------------------------------------------------------------------------------------------------------- REPRESENTATIVE'S STREET ADDRESS CITY STATE ZIP CODE ( ) ------------------------ --------------------------------------------------- ------------------------ BROKER/DEALER FIRM NAME REPRESENTATIVE'S TELEPHONE NO. LICENSED AGENT ID NUMBER ANA-513 (3/99) - -------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INSTRUCTIONS FOR FIXED ACCOUNT OPTIONS AND VARIABLE PORTFOLIOS ANA-513 (3/99) SIDE 3 - -------------------------------------------------------------------------------------------------------------------------------- Choose from the Variable Portfolios and the applicable Fixed Account Options listed below. If Dollar Cost Averaging was selected in Section I, then [Form R2-5551DCA] must accompany this Deferred Annuity Application. Allocations must be expressed in whole percentages and total allocation must equal 100%. VARIABLE PORTFOLIOS ____ PORTFOLIO ____ ____ MANAGER ____ ____ PORTFOLIO ____ ____ MANAGER ____ __% Cash Management SunAmerica Asset Mgmt. Corp. __% "Dogs" of Wall Street SunAmerica Asset Mgmt. Corp. __% Government & Quality Wellington Mgmt. Co., LLP __% Alliance Growth Alliance Capital Mgmt. L.P. Bond __% Corporate Bond Federated Investors __% Growth Wellington Mgmt. Co., LLP __% Global Bond Goldman Sachs Asset Mgmt. __% Putnam Growth Putnam Investment Mgmt., Inc. __% High-Yield Bond SunAmerica Asset Mgmt. Corp. __% Real Estate Davis Selected Advisers, L.P. __% Worldwide High Income Morgan Stanley Asset Mgmt. __% Natural Resources Wellington Mgmt. Co., LLP __% SunAmerica Balanced SunAmerica Asset Mgmt. Corp. __% MFS Mid-Cap Growth Massachusetts Financial Services Co. __% MFS Total Return Massachusetts Financial __% Capital Appreciation Wellington Mgmt. Co., LLP Services Co. __% Asset Allocation Goldman Sachs Asset Mgmt. __% Aggressive Growth SunAmerica Asset Mgmt. Corp. __% Utility Federated Investors __% Int'l. Growth and Putnam Investment Mgmt., Inc. Income __% Growth-Income Alliance Capital Mgmt. L.P. __% Global Equities Alliance Capital Mgmt. L.P. __% MFS Growth and Income Massachusetts Financial __% Int'l. Diversified Morgan Stanley Asset Mgmt. Services Co. Equities __% Federated Value Federated Investors __% Emerging Markets Putnam Investment Mgmt., Inc. __% Venture Value Davis Selected Advisers, L.P. FIXED ACCOUNT OPTION GUARANTEE PERIODS _____% 1 yr. _____ % 3 yr. ______% 5 yr. ______% 7 yr. _____%10 yr. DCA FIXED ACCOUNT OPTION GUARANTEE PERIODS IMPORTANT: THE DCA FIXED ACCOUNT OPTIONS ARE AVAILABLE ONLY IF OPTION 1 (THE 7 YEAR WITHDRAWAL CHARGE PERIOD) IN SECTION C WAS SELECTED. [Form R2-5551DCA] must accompany this Deferred Annuity Application. _____% 6 Month DCA _____% 1 yr. DCA FRAUD WARNING: ANY PERSON WHO WITH INTENT TO DEFRAUD OR KNOWING THAT HE IS FACILITATING A FRAUD AGAINST AN INSURER, SUBMITS AN APPLICATION OR FILES A CLAIM CONTAINING A FALSE OR DECEPTIVE STATEMENT MAY BE GUILTY OF INSURANCE FRAUD. - ------------------------------------------- ------------------------------------------ -------------------- OWNER'S SIGNATURE REGISTERED REPRESENTATIVE'S SIGNATURE DATE - ------------------------------------------- JOINT OWNER'S SIGNATURE REGISTERED/LICENSED REPRESENTATIVE INFORMATION ( ) - ------------------------------------------- ------------------------------------- ---------------------------- REPRESENTATIVE'S TELEPHONE NO. LICENSED AGENT ID NUMBER BROKER/DEALER FIRM NAME
4 - -------------------------------------------------------------------------------------------------------------------------------- FOR OFFICE USE ONLY - -------------------------------------------------------------------------------------------------------------------------------- ANA-513 (3/99)
EX-23.(A) 6 EXHIBIT23.(A) 1 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 November 9, 1998 appearing on page F-2 of Anchor National Life Insurance Company's Annual Report on Form 10-K for the year ended September 30, 1998. We also consent to the reference to us under the heading "Independent Accountants" in such Prospectus. PricewaterhouseCoopers LLP Los Angeles, California March 31, 1999 -----END PRIVACY-ENHANCED MESSAGE-----