As filed with the Securities and Exchange Commission on October 1, 2002
Registration No. 33-87864
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
Post-Effective Amendment
No. 16 on Form S-3
under
The Securities Act of 1933
--------------------
AIG SUNAMERICA LIFE ASSURANCE COMPANY
(DOING BUSINESS AS ANCHOR NATIONAL LIFE INSURANCE COMPANY)
("ANCHOR NATIONAL")
(Exact name of registrant as specified in its charter)
California 6311 86-0198983
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation or Number)
organization)
1 SunAmerica Center
Los Angeles, California 90067-6022
(310) 772-6000
(Address, including zip code, and telephone number,
including area code, or registrant's
principal executive offices)
Christine A. Nixon, Esquire
Anchor National
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 to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ______________
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ______________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
----------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
shall determine.
Registrant is filing this Post-Effective Amendment No. 16 for the sole
purpose of adding to the Registration Statement certain Prospectuses, pursuant
to oral permission to do so provided by Mr. William Kotapish to Anchor National.
The Registrant does not intend for this Post-Effective Amendment No. 16 to
delete from the Registration Statement, any document included in the
Registration Statement but not filed herein, including any currently effective
Prospectus or supplement thereto.
WM DIVERSIFIED STRATEGIES
PROSPECTUS
October 7, 2002
FLEXIBLE PAYMENT DEFERRED ANNUITY CONTRACT
issued by
VARIABLE SEPARATE ACCOUNT
and
ANCHOR NATIONAL LIFE INSURANCE COMPANY
The annuity contract has 29 investment choices - 7 available fixed investment
options which offer interest rates guaranteed by Anchor National for different
periods of time and 22 variable investment portfolios. The 22 variable
portfolios are part of Anchor Series Trust ("AST"), the SunAmerica Series Trust
("SAST") or the WM Variable Trust ("WMVT").
STRATEGIC ASSET MANAGEMENT PORTFOLIOS
<Table>
STRATEGIC GROWTH WM ADVISORS, INC. WMVT
CONSERVATIVE GROWTH WM ADVISORS, INC. WMVT
BALANCED WM ADVISORS, INC. WMVT
CONSERVATIVE BALANCED WM ADVISORS, INC. WMVT
FLEXIBLE INCOME WM ADVISORS, INC. WMVT
</Table>
EQUITY FUNDS
<Table>
EQUITY INCOME WM ADVISORS, INC. WMVT
GROWTH & INCOME WM ADVISORS, INC. WMVT
DAVIS VENTURE VALUE DAVIS ADVISORS SAST
WEST COAST EQUITY FUND WM ADVISORS, INC. WMVT
ALLIANCE GROWTH ALLIANCE CAPITAL MGMT. L.P. SAST
GROWTH COLUMBIA MANAGEMENT COMPANY, WMVT
JANUS CAPITAL CORPORATION,
OPPENHEIMERFUNDS, INC.
CAPITAL APPRECIATION WELLINGTON MGMT. CO. LLP AST
MFS MID CAP GROWTH MASSACHUSETTS FINANCIAL SERVICES CO. SAST
MID CAP STOCK WM ADVISORS, INC. WMVT
SMALL CAP STOCK WM ADVISORS, INC. WMVT
GLOBAL EQUITIES ALLIANCE CAPITAL MGMT. L.P. SAST
INTERNATIONAL GROWTH CAPITAL GUARDIAN TRUST COMPANY WMVT
TECHNOLOGY VANKAMPEN SAST
</Table>
FIXED-INCOME FUNDS
<Table>
U.S. GOVERNMENT SECURITIES WM ADVISORS, INC. WMVT
INCOME WM ADVISORS, INC. WMVT
SHORT TERM INCOME WM ADVISORS, INC. WMVT
MONEY MARKET WM ADVISORS, INC. WMVT
</Table>
You can put your money into any one or all of the Variable Portfolios and/or
fixed investment options.
Please read this prospectus carefully before investing and keep it for your
future reference. It contains important information you should know about the WM
Diversified Strategies Variable Annuity.
To learn more about the annuity offered by this prospectus, you can obtain a
copy of the Statement of Additional Information ("SAI") dated October 7, 2002.
The SAI has been filed with the Securities and Exchange Commission ("SEC") and
can be considered part of this prospectus.
The table of contents of the SAI appears on page 41 of this prospectus. For a
free copy of the SAI, call us at 1-877-311-WMVA (9682) or write our Annuity
Service Center at, P.O. Box 54299, Los Angeles, California 90054-0299.
A registration statement has been filed with the SEC under the Securities Act of
1933 relating to the contract. This prospectus does not contain all the
information in the registration statement as permitted by SEC regulations. The
omitted information can be obtained from the SEC's principal office in
Washington, D.C., upon payment of a prescribed fee.
In addition, the SEC maintains a website (http://www.sec.gov) that contains the
SAI, materials incorporated by reference and other information filed
electronically with the SEC.
ANNUITIES INVOLVE RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL, AND ARE NOT A
DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY, ANY BANK. THEY ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Anchor National Life Insurance Company is in the process of changing its name to
AIG SunAmerica Life Assurance Company. We anticipate this process will take some
time to implement in all jurisdictions where We do business. We expect the name
change to be completed during 2003. To begin this process We officially changed
the name in our state of domicile, Arizona. However, We continue to do business,
today, under the name Anchor National and will refer to the Company by that name
throughout this prospectus. You will be notified when the name is changed to AIG
SunAmerica Life Assurance Company and We are no longer doing business as Anchor
National. Please keep in mind, this is a name change only and will not affect
the substance of your contract.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Anchor National's Annual Report on Form 10-K/A for the year ended December 31,
2001 is incorporated herein by reference.
All documents or reports filed by Anchor National under Section 13(a), 13(c), 14
or 15(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
after the effective date of this prospectus are also incorporated by reference.
Statements contained in this prospectus and subsequently filed documents which
are incorporated by reference are deemed to modify or supercede documents
incorporated herein by reference.
Anchor National files its Exchange Act documents and reports, including its
annual and quarterly reports on Form 10-K and Form 10-Q, electronically pursuant
to EDGAR under CIK No. 0000006342.
Anchor National is subject to the informational requirements of the Securities
and Exchange Act of 1934 (as amended). We file reports and other information
with the SEC to meet those requirements. You can inspect and copy this
information at SEC public facilities at the following locations:
WASHINGTON, DISTRICT OF COLUMBIA
450 Fifth Street, N.W., Room 1024
Washington, D.C. 20549
CHICAGO, ILLINOIS
500 West Madison Street
Chicago, IL 60661
NEW YORK, NEW YORK
233 Broadway
New York, NY 10048
To obtain copies by mail, contact the Washington, D.C. location. After you pay
the fees as prescribed by the rules and regulations of the SEC, the required
documents are mailed.
Registration statements under the Securities Act of 1933, as amended, related to
the contracts offered by this prospectus are on file with the SEC. This
prospectus does not contain all of the information contained in the registration
statements and exhibits. For further information regarding the separate account,
Anchor National and its general account, the Variable Portfolios and the
contract, please refer to the registration statements and exhibits.
The SEC also maintains a website (http:// www.sec.gov) that contains the SAI,
materials incorporated by reference and other information filed electronically
with the SEC by Anchor National.
Anchor National will provide without charge to each person to whom this
prospectus is delivered, upon written or oral request, a copy of the documents
incorporated by reference. Requests for these documents should be directed to
Anchor National's Annuity Service Center, as follows:
Anchor National Life Insurance Company
Annuity Service Center
P.O. Box 54299
Los Angeles, California 90054-0299
Telephone Number: (800) 445-SUN2
SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION
Indemnification for liabilities arising under the Securities Act of 1933 (the
"Act") is provided to Anchor National's officers, directors and controlling
persons. The SEC has advised that it believes such indemnification is against
public policy under the Act and unenforceable. If a claim for indemnification
against such liabilities (other than for Anchor National's payment of expenses
incurred or paid by its directors, officers or controlling persons in the
successful defense of any legal action) is asserted by a director, officer or
controlling person of Anchor National in connection with the securities
registered under this prospectus, Anchor National will submit to a court with
jurisdiction to determine whether the indemnification is against public policy
under the Act. Anchor National will be governed by final judgment of the issue.
However, if in the opinion of Anchor National's counsel this issue has been
determined by controlling precedent, Anchor National will not submit the issue
to a court for determination.
2
TABLE OF CONTENTS
<Table>
GLOSSARY.................................................... 4
HIGHLIGHTS.................................................. 5
FEE TABLES.................................................. 6
Owner Transaction Expenses............................... 6
Annual Separate Account Expenses......................... 6
The Optional Income Protector Fee........................ 6
The Optional Estate Rewards Death Benefit Fee............ 6
The Optional Earnings Advantage Fee...................... 6
The Optional Capital Protector Fee....................... 6
Investment Portfolio Expenses of Variable Portfolios..... 7
EXAMPLES.................................................... 9
THE WM DIVERSIFIED STRATEGIES VARIABLE ANNUITY.............. 12
PURCHASING A WM DIVERSIFIED STRATEGIES VARIABLE ANNUITY..... 13
Allocation of Purchase Payments.......................... 13
Accumulation Units....................................... 13
Capital Protector........................................ 14
Free Look................................................ 16
Exchange Offers.......................................... 16
INVESTMENT OPTIONS.......................................... 16
Variable Portfolios...................................... 17
Market Value Adjustment.................................. 18
Transfers During the Accumulation Phase.................. 19
Dollar Cost Averaging.................................... 20
Asset Allocation Rebalancing Program..................... 22
Principal Advantage Program.............................. 22
Voting Rights............................................ 22
Substitution............................................. 22
ACCESS TO YOUR MONEY........................................ 23
Free Withdrawal Provision................................ 23
Systematic Withdrawal Program............................ 25
Nursing Home Waiver...................................... 25
Minimum Contract Value................................... 26
Qualified Contract Owners................................ 26
DEATH BENEFIT............................................... 26
Standard Death Benefit................................... 27
Estate Rewards Death Benefit............................. 27
Spousal Continuation..................................... 29
EXPENSES.................................................... 29
Insurance Charges........................................ 29
Withdrawal Charges....................................... 30
Investment Charges....................................... 30
Contract Maintenance Fee................................. 30
Transfer Fee............................................. 31
Option Death Benefit Fees................................ 31
Optional Income Protector Fee............................ 31
Optional Capital Protector Fee........................... 31
Premium Tax.............................................. 31
Income Taxes............................................. 31
Reduction or Elimination of Charges and Expenses, and
Additional Amounts Credited............................ 31
INCOME OPTIONS.............................................. 32
Annuity Date............................................. 32
Income Options........................................... 32
Allocation of Annuity Payments........................... 33
Transfers During the Income Phase........................ 34
Deferment of Payments.................................... 34
The Income Protector..................................... 34
TAXES....................................................... 37
Annuity Contracts in General............................. 37
Tax Treatment of Distributions--Non-qualified
Contracts.............................................. 37
Tax Treatment of Distributions--Qualified Contracts...... 37
Minimum Distributions.................................... 38
Tax Treatment of Death Benefits.......................... 38
Contracts Owned by a Trust or Corporation................ 39
Gifts, Pledges and/or Assignments of a Non-Qualified
Contract............................................... 39
Diversification.......................................... 39
PERFORMANCE................................................. 39
OTHER INFORMATION........................................... 41
Anchor National.......................................... 41
The Separate Account..................................... 41
Custodian................................................ 41
The General Account...................................... 41
Distribution of the Contract............................. 41
Administration........................................... 42
Legal Proceedings........................................ 42
INDEPENDENT ACCOUNTANTS..................................... 42
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.... 43
APPENDIX A--MARKET VALUE ADJUSTMENT......................... A-1
APPENDIX B--DEATH BENEFITS FOLLOWING SPOUSAL CONTINUATION... B-1
APPENDIX C.................................................. C-1
APPENDIX D--PREMIUM TAXES................................... D-1
APPENDIX E--CONDENSED FINANCIAL INFORMATION................. E-1
</Table>
3
GLOSSARY
We have capitalized some of the technical terms used in this prospectus. To help
you understand these terms, we define them in this glossary.
ACCUMULATION PHASE--The period during which you invest money in your contract.
ACCUMULATION UNITS--A measurement we use to calculate the value of the variable
portion of your contract during the Accumulation Phase.
ANNUITANT(S)--The person(s) on whose life (lives) we base annuity payments.
ANNUITY DATE--The date on which annuity payments are to begin, as selected by
you.
ANNUITY UNITS--A measurement we use to calculate the amount of annuity payments
you receive from the variable portion of your contract during the Income Phase.
BENEFICIARY(IES)--The person(s) designated to receive any benefits under the
contract if you or the Annuitant dies.
COMPANY--Anchor National Life Insurance Company ("Anchor National"), We, Us, the
issuer of this annuity contract.
INCOME PHASE--The period during which we make annuity payments to you.
IRS--The Internal Revenue Service.
NON-QUALIFIED (CONTRACT)--A contract purchased with after-tax dollars. In
general, these contracts are not under any pension plan, specially sponsored
program or individual retirement account ("IRA").
VARIABLE PORTFOLIOS--A sub-account of Variable Separate Account which provides
for the variable investment options available under the contract. Each has a
distinct investment objective and is invested in the underlying investment
portfolios of the Anchor Series Trust, SunAmerica Series Trust or the WM
Variable Trust as applicable.
PURCHASE PAYMENTS--The money you give us to buy the contract, as well as any
additional money you give us to invest in the contract after you own it.
QUALIFIED (CONTRACT)--A contract purchased with pretax dollars. These contracts
are generally purchased under a pension plan, specially sponsored program or
individual retirement account ("IRA").
4
HIGHLIGHTS
Anchor National offers several different variable annuity products to meet the
diverse needs of our investors. Each product may provide different features and
benefits offered at different fees, charges, and expenses. When working with
your financial advisor to determine the best product to meet your needs you
should consider, among other things, whether the features of this contract and
the related fees provide the most appropriate package to help you meet your
long-term retirement savings goals.
The WM Diversified Strategies Variable Annuity is a contract between you and
Anchor National Life Insurance Company (Anchor National). It is designed to help
you invest on a tax-deferred basis and meet long-term financial goals. There are
minimum Purchase Payment amounts required to purchase a contract. Purchase
Payments may be invested in a variety of variable and fixed account options.
Like all deferred annuities, the contract has an Accumulation Phase and an
Income Phase. During the Accumulation Phase, you invest money in your contract.
The Income Phase begins when you start receiving income payments from your
annuity to provide for your retirement.
FREE LOOK: If you cancel your contract within 10 days after receiving it (or
whatever period is required in your state), we will cancel the contract without
charging a withdrawal charge. You will receive whatever your contract is worth
on the day that we receive your request. This amount may be more or less than
your original Purchase Payment. We will return your original Purchase Payment if
required by law. Please see PURCHASING A WM DIVERSIFIED STRATEGIES VARIABLE
ANNUITY in the prospectus.
EXPENSES: There are fees and charges associated with the contract. Each year, we
deduct a $35 contract maintenance fee from your contract, which may be waived
for contracts of $50,000 or more. We also deduct insurance charges, which equal
1.40% annually of the average daily value of your contract allocated to the
Variable Portfolios. There are investment charges on amounts invested in the
Variable Portfolios. If you elect optional features available under the contract
we may charge additional fees for these features. A separate withdrawal charge
schedule applies to each Purchase Payment. The amount of the withdrawal charge
declines over time. After a Purchase Payment has been in the contract for seven
complete years, withdrawal charges no longer apply to that portion of the
Purchase Payment. Please see the FEE TABLE, PURCHASING A WM DIVERSIFIED
STRATEGIES VARIABLE ANNUITY and EXPENSES in the prospectus.
ACCESS TO YOUR MONEY: You may withdraw money from your contract during the
Accumulation Phase. If you do so, earnings are deemed to be withdrawn first. You
will pay income taxes on earnings and untaxed contributions when you withdraw
them. Payments received during the Income Phase are considered partly a return
of your original investment. A federal tax penalty may apply if you make
withdrawals before age 59 1/2. As noted above, a withdrawal charge may apply.
Please see ACCESS TO YOUR MONEY and TAXES in the prospectus.
DEATH BENEFIT: A death benefit feature is available under the contract to
protect your Beneficiaries in the event of your death during the Accumulation
Phase. Optional enhanced death benefits are also available. Please see DEATH
BENEFITS in the prospectus.
INCOME OPTIONS: When you are ready to begin taking income, you can choose to
receive income payments on a variable basis, fixed basis or a combination of
both. You may also chose from five different income options, including an option
for income that you cannot outlive. Please see INCOME OPTIONS in the prospectus.
PLEASE READ THE PROSPECTUS CAREFULLY FOR MORE DETAILED INFORMATION REGARDING
THESE AND OTHER FEATURES AND BENEFITS OF THE CONTRACT, AS WELL AS THE RISKS OF
INVESTING.
INQUIRIES: If you have questions about your contract call your investment
representative or contact us at Anchor National Life Insurance Company Annuity
Service Center P.O. Box 54299 Los Angeles, California 90054-0299. Telephone
Number: 1 (877) 311-WMVA (9682).
5
WM DIVERSIFIED STRATEGIES VARIABLE ANNUITY FEE TABLES
- --------------------------------------------------------------------------------
OWNER TRANSACTION EXPENSES
Withdrawal Charge as a percentage of Purchase Payments:
<Table>
<Caption>
YEARS: 1 2 3 4 5 6 7 8
7% 6% 6% 5% 4% 3% 2% 0%
</Table>
<Table>
Contract Maintenance
Charge................. $35 each year ($30 in North
Dakota) (waived for contracts
over $50,000)
Transfer Fee........... No charge for first 15
transfers each contract year;
thereafter, fee is $25 ($10
in Pennsylvania and Texas)
per transfer
</Table>
THE OPTIONAL ESTATE REWARDS DEATH BENEFIT FEE
(The Estate Rewards Death Benefit offers a choice of one of two optional
enhanced death benefits which are described more fully in the prospectus. If
elected, the fee is an annualized charge that is deducted daily from your
contract value.)
<Table>
Fee as a % of your daily
net asset value....... 0.15%
</Table>
THE OPTIONAL INCOME PROTECTOR FEE
(The Income Protector which is described more fully in the prospectus is
optional and if elected the fee is deducted annually from your contract value.)
<Table>
<Caption>
GROWTH RATE ANNUAL FEE AS A % OF YOUR INCOME BENEFIT BASE*
- ----------- ----------------------------------------------
0% 0.10%
</Table>
* The Income Benefit Base, which is described more fully in the prospectus is
generally calculated by using your contract value on the date of your effective
enrollment in the program and then each subsequent contract anniversary, adding
purchase payments made since the prior contract anniversary, less proportionate
withdrawals, and fees and charges applicable to those withdrawals.
ANNUAL SEPARATE ACCOUNT EXPENSES
(as a percentage of your daily net asset value)
<Table>
Mortality Risk Charge..................... 0.90%
Expense Risk Charge....................... 0.35%
Distribution Expense Charge............... 0.15%
----
Total Separate Account
Expenses...................... 1.40%
====
</Table>
THE OPTIONAL EARNINGS ADVANTAGE FEE
(Earnings Advantage, an enhanced death benefit feature, which is described more
fully in the prospectus is optional and if elected, the fee is an annualized
charge that is deducted daily from your contract value.)
<Table>
Fee as a % of your daily
net asset value....... 0.25%
</Table>
OPTIONAL CAPITAL PROTECTOR FEE
(This feature is more fully described in the prospectus and if elected, the fee
is deducted at the end of the first contract quarter and quarterly thereafter
from your contract value.)
<Table>
<Caption>
CONTRACT YEAR ANNUALIZED CHARGE*
- ------------- ------------------
0-7 1.00%
8-10 0.80%
11+ none
</Table>
* As a percentage of your contract value minus Purchase Payments received after
the 90th day since the purchase of your contract.
6
INVESTMENT PORTFOLIO EXPENSES OF VARIABLE
PORTFOLIOS
ANCHOR SERIES TRUST
Class B
(as a percentage of average net assets for the
Trust's fiscal year ended December 31, 2001)
<Table>
<Caption>
MANAGEMENT SERVICE (12b-1) OTHER TOTAL ANNUAL
PORTFOLIO FEE FEES EXPENSES EXPENSES
- ----------------------------------------------------------------------------------------------------
Capital Appreciation 0.70% 0.15% 0.08% 0.93%
- ----------------------------------------------------------------------------------------------------
SUNAMERICA SERIES TRUST
Class B
(as a percentage of average net assets for the
Trust's fiscal year ended January 31, 2002)
Alliance Growth 0.60% 0.15% 0.06% 0.81%
Davis Venture Value 0.71% 0.15% 0.06% 0.92%
Global Equities 0.73% 0.15% 0.17% 1.05%
MFS Mid Cap Growth 0.75% 0.15% 0.08% 0.98%
Technology 1.20% 0.15% 0.25% 1.60%
- ----------------------------------------------------------------------------------------------------
</Table>
THE ABOVE INVESTMENT PORTFOLIO EXPENSES WERE PROVIDED BY THE TRUSTS.
WE HAVE NOT INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION.
7
THE WM VARIABLE TRUST
Class 1
(as a percentage of average net assets (after waiver or reimbursement of
expenses)
as of the fiscal year end of the Trust ended December 31, 2001)
<Table>
<Caption>
TOTAL
MANAGEMENT OTHER ANNUAL
FEE EXPENSES EXPENSES
- ----------------------------------------------------------------------------------------------
Balanced Portfolio(1)....................................... 0.10% 0.18% 0.28%
Conservative Balanced Portfolio(1, 2)....................... 0.00% 0.30% 0.30%
Conservative Growth Portfolio(1)............................ 0.10% 0.18% 0.28%
Equity Income Fund.......................................... 0.63% 0.07% 0.70%
Flexible Income Portfolio(1)................................ 0.10% 0.23% 0.33%
Growth & Income Fund........................................ 0.75% 0.03% 0.78%
Growth Fund................................................. 0.88% 0.06% 0.94%
Income Fund................................................. 0.50% 0.05% 0.55%
International Growth Fund................................... 0.94% 0.25% 1.19%
Mid Cap Stock Fund.......................................... 0.75% 0.07% 0.82%
Money Market Fund........................................... 0.45% 0.17% 0.62%
Short Term Income Fund...................................... 0.50% 0.10% 0.60%
Small Cap Stock Fund........................................ 0.87% 0.08% 0.95%
Strategic Growth Portfolio(1)............................... 0.10% 0.21% 0.31%
U.S. Government Securities Fund............................. 0.50% 0.06% 0.56%
West Coast Equity Fund(3)................................... 0.63% 0.07% 0.70%
- ----------------------------------------------------------------------------------------------
</Table>
(1) The Annual Expenses of the Portfolios, combined with the Annual Expenses of
the Underlying Funds in which they invest, are shown immediately below.
(2) Reflects the commitment by WM Advisors to waive management fees and
reimburse expenses to the extent necessary to limit total annual expenses to
0.30% for the fiscal year ending December 31, 2002. Without this waiver or
reimbursement, the Total Annual Expenses for the Conservative Balanced
Portfolio would have been 0.53% for the fiscal year shown above.
(3) Formerly named the Growth Fund of the Northwest.
ANNUAL EXPENSES OF THE PORTFOLIOS AND UNDERLYING FUNDS COMBINED
Each Portfolio will invest in Funds of the WM Trust and in the WM High Yield
Fund (a series of WM Trust I) in keeping with certain allocations and
investment objectives. You will bear certain expenses associated with those
Funds in addition to those related to the Portfolios themselves. The chart
below shows estimated combined annual expenses for each Portfolio and the
Funds in which the Portfolio may invest. The expenses are based upon estimated
expenses of each Portfolio and underlying Fund for the fiscal year ended
December 31, 2001, restated to reflect current management fees. Please refer
to the Trust prospectus for more details.
The estimates assume a constant allocation of each Portfolio's assets among the
Funds identical to such Portfolio's actual allocation at December 31, 2001.
<Table>
<Caption>
COMBINED
PORTFOLIOS ANNUAL EXPENSES
- -----------------------------------------------------------------------------
Balanced Portfolio.......................................... 1.01%
Conservative Balanced Portfolio............................. 0.94%
Conservative Growth Portfolio............................... 1.06%
Flexible Income Portfolio................................... 0.95%
Strategic Growth Portfolio.................................. 1.15%
- -----------------------------------------------------------------------------
</Table>
THE ABOVE INVESTMENT PORTFOLIO EXPENSES WERE PROVIDED BY THE WM VARIABLE TRUST.
WE HAVE NOT INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION.
8
EXAMPLES
You will pay the following expenses on a $1,000 investment, assuming a 5% annual
return on assets, Investment Portfolio Expenses after any waiver, reimbursement
or recoupment (assuming the waiver, reimbursement or recoupment will continue
for the period shown), if applicable, and
(a) If the contract is surrendered at the end of the stated time period
and no optional features are elected.
(b) If the contract is surrendered and you elect the Enhanced Death
Benefit, Earnings Advantage and Capital Protector at the maximum
charges offered of 0.15%, 0.25% and 1.00%, respectively.*
(c) If the contract is not surrendered or is annuitized and no optional
features are elected.
(d) If the contract is not surrendered or is annuitized and you elect the
Enhanced Death Benefit, Earnings Advantage and Capital Protector at
the maximum charges offered of 0.15%, 0.25% and 1.00%, respectively.*
<Table>
<Caption>
TIME PERIODS
- ---------------------------------------------------------------------------------------------------------------------
ANCHOR SERIES TRUST 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------------------------
Capital Appreciation Portfolio............. (a) 94 (a) 135 (a) 169 (a) 275
(b) 108 (b) 177 (b) 237 (b) 405
(c) 24 (c) 75 (c) 129 (c) 275
(d) 38 (d) 117 (d) 197 (d) 405
- ---------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------------------------
SUNAMERICA SERIES TRUST 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------------------------
Alliance Growth Portfolio.................. (a) 93 (a) 132 (a) 163 (a) 263
(b) 107 (b) 173 (b) 231 (b) 395
(c) 23 (c) 72 (c) 123 (c) 263
(d) 37 (d) 113 (d) 191 (d) 395
Davis Venture Value Portfolio.............. (a) 94 (a) 135 (a) 168 (a) 274
(b) 108 (b) 176 (b) 236 (b) 404
(c) 24 (c) 75 (c) 128 (c) 274
(d) 38 (d) 116 (d) 196 (d) 404
Global Equities Portfolio.................. (a) 96 (a) 139 (a) 175 (a) 287
(b) 110 (b) 180 (b) 242 (b) 415
(c) 26 (c) 79 (c) 135 (c) 287
(d) 40 (d) 120 (d) 202 (d) 415
MFS Mid-Cap Growth......................... (a) 95 (a) 137 (a) 171 (a) 280
(b) 109 (b) 178 (b) 239 (b) 409
(c) 25 (c) 77 (c) 131 (c) 280
(d) 39 (d) 118 (d) 199 (d) 409
Technology................................. (a) 101 (a) 155 (a) 202 (a) 340
(b) 115 (b) 196 (b) 267 (b) 460
(c) 31 (c) 95 (c) 162 (c) 340
(d) 45 (d) 136 (d) 227 (d) 460
- ---------------------------------------------------------------------------------------------------------------------
</Table>
9
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------------------------
WM VARIABLE TRUST 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------------------------
Balanced Portfolio....................... (a) 95 (a) 138 (a) 173 (a) 283
(b) 109 (b) 179 (b) 240 (b) 412
(c) 25 (c) 78 (c) 133 (c) 283
(d) 39 (d) 119 (d) 200 (d) 412
Conservative Balanced Portfolio.......... (a) 95 (a) 136 (a) 169 (a) 276
(b) 108 (b) 177 (b) 237 (b) 406
(c) 25 (c) 76 (c) 129 (c) 276
(d) 38 (d) 117 (d) 197 (d) 406
Conservative Growth Portfolio............ (a) 96 (a) 139 (a) 175 (a) 288
(b) 110 (b) 180 (b) 243 (b) 416
(c) 26 (c) 79 (c) 135 (c) 288
(d) 40 (d) 120 (d) 203 (d) 416
Equity Income Fund....................... (a) 92 (a) 128 (a) 157 (a) 252
(b) 106 (b) 170 (b) 226 (b) 385
(c) 22 (c) 68 (c) 117 (c) 252
(d) 36 (d) 110 (d) 186 (d) 385
Flexible Income Portfolio................ (a) 95 (a) 136 (a) 170 (a) 277
(b) 109 (b) 177 (b) 238 (b) 407
(c) 25 (c) 76 (c) 130 (c) 277
(d) 39 (d) 117 (d) 198 (d) 407
Growth & Income Fund..................... (a) 93 (a) 131 (a) 161 (a) 260
(b) 107 (b) 172 (b) 230 (b) 392
(c) 23 (c) 71 (c) 121 (c) 260
(d) 37 (d) 112 (d) 190 (d) 392
Growth Fund.............................. (a) 95 (a) 136 (a) 169 (a) 276
(b) 109 (b) 177 (b) 237 (b) 406
(c) 25 (c) 76 (c) 129 (c) 276
(d) 39 (d) 117 (d) 197 (d) 406
Income Fund.............................. (a) 91 (a) 124 (a) 150 (a) 237
(b) 105 (b) 166 (b) 219 (b) 372
(c) 21 (c) 64 (c) 110 (c) 237
(d) 35 (d) 106 (d) 179 (d) 372
International Growth Fund................ (a) 97 (a) 143 (a) 182 (a) 301
(b) 111 (b) 184 (b) 249 (b) 427
(c) 27 (c) 83 (c) 142 (c) 301
(d) 41 (d) 124 (d) 209 (d) 427
Mid Cap Stock Fund....................... (a) 93 (a) 132 (a) 163 (a) 264
(b) 107 (b) 173 (b) 231 (b) 396
(c) 23 (c) 72 (c) 123 (c) 264
(d) 37 (d) 113 (d) 191 (d) 396
Money Market Fund........................ (a) 91 (a) 126 (a) 153 (a) 244
(b) 105 (b) 168 (b) 222 (b) 378
(c) 21 (c) 66 (c) 113 (c) 244
(d) 35 (d) 108 (d) 182 (d) 378
Short Term Income Fund................... (a) 91 (a) 125 (a) 152 (a) 242
(b) 105 (b) 167 (b) 221 (b) 376
(c) 21 (c) 65 (c) 112 (c) 242
(d) 35 (d) 107 (d) 181 (d) 376
Small Cap Stock Fund..................... (a) 95 (a) 136 (a) 170 (a) 277
(b) 109 (b) 177 (b) 238 (b) 407
(c) 25 (c) 76 (c) 130 (c) 277
(d) 39 (d) 117 (d) 198 (d) 407
Strategic Growth Portfolio............... (a) 97 (a) 142 (a) 180 (a) 297
(b) 111 (b) 183 (b) 247 (b) 424
(c) 27 (c) 82 (c) 140 (c) 297
(d) 41 (d) 123 (d) 207 (d) 424
U.S. Government Securities Portfolio..... (a) 91 (a) 124 (a) 150 (a) 238
(b) 105 (b) 166 (b) 219 (b) 373
(c) 21 (c) 64 (c) 110 (c) 238
(d) 35 (d) 106 (d) 179 (d) 373
West Coast Equity Fund................... (a) 92 (a) 128 (a) 157 (a) 252
(b) 106 (b) 170 (b) 226 (b) 385
(c) 22 (c) 68 (c) 117 (c) 252
(d) 36 (d) 110 (d) 186 (d) 385
- ---------------------------------------------------------------------------------------------------------------------
</Table>
* We do not currently charge a surrender charge upon annuitization, unless the
contract is annuitized under the Income Protector Program. We will assess any
applicable surrender charges upon annuitizations effected using the Income
Protector Program as if you had fully surrendered your contract.
10
EXPLANATION OF FEE TABLES AND EXAMPLES
1. The purpose of the Fee Tables is to show you the various expenses you
will incur directly and indirectly by investing in the contract. The
example reflects owner transaction expenses, separate account expenses
including optional benefit fees in some examples and variable portfolio
expenses. We converted the contract administration charge to a percentage
(0.09%) using an assumed contract size of $40,000. The actual impact of
the administration charge may differ from this percentage and may be
waived for contract values over $50,000.
2. The Examples assume that no transfer fees were imposed. Premium taxes are
not reflected but may be applicable.
3. Examples reflecting application of optional features and benefits use the
highest fees and charges being offered for those features. If you elected
the Income Protector program, instead of the Capital Protector program,
your expenses would be lower than those shown in these tables. The fees
for the Capital Protector and Income Protector features are not
calculated as a percentage of your daily net asset value but on other
calculations more fully described in the prospectus.
4. THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
11
THE WM DIVERSIFIED STRATEGIES
VARIABLE ANNUITY
- --------------------------------------------------------------------------------
An annuity is a contract between you and an insurance company. You are the owner
of the contract. The contract provides three main benefits:
- Tax Deferral: You do not pay taxes on your earnings from the annuity
until you withdraw them.
- Death Benefit: If you die during the Accumulation Phase, the insurance
company pays a death benefit to your Beneficiary.
- Guaranteed Income: If elected, you receive a stream of income for your
lifetime, or another available period you select.
Tax-qualified retirement plans (e.g., IRAs, 401(k) or 403(b) plans) defer
payment of taxes on earnings until withdrawn. If you are considering funding a
tax-qualified retirement plan with an annuity, you should know that an annuity
does not provide any additional tax deferral treatment of earnings beyond the
treatment provided by the tax-qualified retirement plan itself. However,
annuities do provide other features and benefits which may be valuable to you.
You should fully discuss this decision with your financial advisor.
This annuity was developed to help you contribute to your retirement savings.
This annuity works in two stages, the Accumulation Phase and the Income Phase.
Your contract is in the Accumulation Phase during the period when you make
payments into the contract. The Income Phase begins when you request us to start
making payments to you out of the money accumulated in your contract.
The Contract is called a "variable" annuity because it allows you to invest in
variable investment portfolios which we call Variable Portfolios. The Variable
Portfolios, are similar to mutual funds, in that they have specific investment
objectives and their performance varies. You can gain or lose money if you
invest in these Variable Portfolios. The amount of money you accumulate in your
contract depends on the performance of the Variable Portfolio(s) in which you
invest.
The Contract also offers several fixed account options for varying time periods.
Fixed account options earn interest at a rate set and guaranteed by Anchor
National. If you allocate money to the fixed account options, the amount of
money that accumulates in your Contract depends on the total interest credited
to the particular fixed account option(s) in which you are invested.
For more information on the Variable Portfolios and fixed account options
available under this contract, SEE INVESTMENT OPTIONS PAGE 15.
Anchor National issues the WM Diversified Strategies Variable Annuity. When you
purchase a WM Diversified Strategies Variable Annuity, a contract exists between
you and Anchor National. The Company is a stock life insurance company organized
under the laws of the state of Arizona. Its principal place of business is 1
SunAmerica Center, Los Angeles, California 90067. The Company conducts life
insurance and annuity business in the District of Columbia and all states except
New York. Anchor National is an indirect, wholly owned subsidiary of American
International Group, Inc., a Delaware corporation. WM Diversified Strategies may
not currently be available in all states. Please check with your financial
advisor regarding availability in your state.
This annuity is designed for investors whose personal circumstances allow for a
long-term investment time horizon, to assist in contributing to retirement
savings. As a function of the federal tax code you may be assessed a 10% federal
tax penalty on any withdrawal made prior to your reaching age 59 1/2.
Additionally, this contract provides that you will be charged a withdrawal
charge on each Purchase Payment withdrawn if that Purchase Payment has not been
invested in this contract for at least 7 years. Because of these potential
penalties, you should fully discuss all of the benefits and risks of this
contract with your financial adviser prior to purchase.
12
PURCHASING A WM DIVERSIFIED STRATEGIES
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.
<Table>
<Caption>
MINIMUM MINIMUM SUBSEQUENT
MINIMUM INITIAL SUBSEQUENT PURCHASE PAYMENT--
PURCHASE PAYMENT PURCHASE PAYMENT AUTOMATIC PAYMENT PLAN
---------------- ---------------- ----------------------
Qualified $2,000 $100 $50
Non-qualified $5,000 $100 $50
</Table>
WE RESERVE THE RIGHT TO REQUIRE COMPANY APPROVAL PRIOR TO ACCEPTING PURCHASE
PAYMENTS GREATER THAN $1,000,000. FOR CONTRACTS OWNED BY A NON-NATURAL OWNER, WE
RESERVE THE RIGHT TO REQUIRE PRIOR COMPANY APPROVAL TO ACCEPT PURCHASE PAYMENTS
GREATER THAN $250,000. SUBSEQUENT PURCHASE PAYMENTS THAT WOULD CAUSE TOTAL
PURCHASE PAYMENTS IN ALL CONTRACTS ISSUED BY ANCHOR NATIONAL TO THE SAME OWNER
TO EXCEED THESE LIMITS MAY ALSO BE SUBJECT TO COMPANY PRE-APPROVAL. WE RESERVE
THE RIGHT TO CHANGE THE AMOUNT AT WHICH PRE-APPROVAL IS REQUIRED, AT ANY TIME.
Also, the optional automatic payment plan allows you to make subsequent Purchase
Payments of as little as $50.00.
In general, we will not issue a Qualified contract to anyone who is age 70 1/2
or older, unless they certify to us that the minimum distribution required by
the federal tax code is being made. In addition, we may not issue a contract to
anyone age 91 or older (unless state law requires otherwise). Neither Estate
Rewards nor Earnings Advantage is available to you if you are age 81 or older at
the time of contract issue.
We allow spouses to jointly own this contract. However, the age of the older
spouse is used to determine the availability of any age driven benefits. The
addition of a joint owner after the contract has been issued in contingent upon
prior review and approval by the Company.
ALLOCATION OF PURCHASE PAYMENTS
We invest your Purchase Payments in the fixed accounts and/or Variable
Portfolio(s) according to your instructions. If we receive a Purchase Payment
without allocation instructions, we will invest the money according to your last
allocation instructions. Purchase Payments are applied to your contract based
upon the value of the variable investment option next determined after receipt
of your money. SEE INVESTMENT OPTIONS PAGE 15.
In order to issue your contract, we must receive your completed application,
Purchase Payment allocation instructions and any other required paper work at
our Annuity Service Center. We allocate your initial Purchase Payment within two
days of receiving it. If we do not have complete information necessary to issue
your contract, we will contact you. If we do not have the information necessary
to issue your contract within 5 business days we will:
- Send your money back to you; or
- Ask your permission to keep your money until we get the information
necessary to issue the contract.
ACCUMULATION UNITS
The value of the variable portion of your contract will go up or down depending
upon the investment performance of the Variable Portfolio(s) you select. In
order to keep track of the value of your contract, we use a unit of measure
called an Accumulation Unit which works like a share of a mutual fund. During
the Income Phase, we call them Annuity Units.
13
An Accumulation Unit value is determined each day that the New York Stock
Exchange ("NYSE") is open. We base the number of Accumulation Units you receive
on the unit value of the Variable Portfolio as of the day we receive your money
if we receive it before 1:00 p.m. Pacific Standard Time ("PST") and on the next
day's unit value if we receive your money after 1:00 p.m. PST. We calculate an
Accumulation Unit for each Variable Portfolio after the NYSE closes each day. We
do this by:
1. determining the total value of money invested in a particular Variable
Portfolio;
2. subtracting from that amount any asset-based charges and any other
charges such as taxes we have deducted; and
3. dividing this amount by the number of outstanding Accumulation Units.
EXAMPLE:
We receive a $25,000 Purchase Payment from you on Wednesday. You allocate
the money to the Alliance Growth Portfolio. We determine that the value of
an Accumulation Unit for the Alliance Growth Portfolio is $11.10 when the
NYSE closes on Wednesday. We then divide $25,000 by $11.10 and credit your
contract on Wednesday night with 2,252.2523 Accumulation Units for the
Alliance Growth Portfolio.
CAPITAL PROTECTOR
The Capital Protector is an optional feature of your variable annuity currently
available only on contracts issued on or after October 7, 2002. If you elect
this feature, for which you will be charged an annualized fee, at the end of the
applicable waiting period your contract will be worth at least the amount of
your initial Purchase Payment (less adjustments for withdrawals). The Capital
Protector may offer protection in the event that your contract value declines
due to unfavorable investment performance in your contract. The Capital
Protector feature has rules and restrictions, which are discussed more fully,
below.
ELECTION OF THE FEATURE
You may only elect this feature at the time your contract is issued, so long as
the applicable waiting period prior to receiving the benefit ends before your
latest Annuity Date. You can elect this feature on your contract application.
The effective date for this feature will be your contract issue date. Capital
Protector is not available if you elect the Income Protector program. SEE INCOME
PROTECTOR ON PAGE 32.
The Capital Protector feature may not be available in your state or through the
broker-dealer with which your financial advisor is affiliated. Please check with
your financial advisor for availability.
APPLICABLE WAITING PERIOD AND BENEFIT DATE
If you elect the Capital Protector, at the end of the applicable waiting period
we will evaluate your contract to determine if a Capital Protector benefit is
payable to you. The applicable waiting period is ten full contract years from
your contract issue date. The last day in the waiting period is your benefit
date, the date on which we will calculate any Capital Protector benefit payable
to you.
TERMINATION
Generally, this feature and its corresponding charge cannot be terminated prior
to the end of the waiting period. The feature terminates automatically following
the end of the waiting period. In addition, the Capital Protector will no longer
be available and no benefit will be paid if a death benefit is paid or if the
contract is fully surrendered or annuitized before the end of the waiting
period.
CALCULATION OF THE BENEFIT
The Capital Protector is a one-time adjustment to your contract value in the
event that your contract value at the end of the waiting period is less than the
guaranteed amount. The amount of the benefit payable to you, if any, at the end
of the waiting period will be based upon the amount of your initial Purchase
Payment and may also
14
include certain portions of subsequent Purchase Payments contributed to your
contract over specified periods of time, as follows:
<Table>
<Caption>
PERCENTAGE OF PURCHASE PAYMENTS
TIME ELAPSED SINCE INCLUDED IN THE
EFFECTIVE DATE CAPITAL PROTECTOR BENEFIT CALCULATION
- ------------------ -------------------------------------
0-90 days 100%
91+ days 0%
</Table>
THE CAPITAL PROTECTOR FEATURE MAY NOT GUARANTEE A RETURN OF ALL OF YOUR PURCHASE
PAYMENTS. IF YOU PLAN TO ADD SUBSEQUENT PURCHASE PAYMENTS OVER THE LIFE OF YOUR
CONTRACT, YOU SHOULD KNOW THAT THE CAPITAL PROTECTOR WOULD NOT PROTECT THE
MAJORITY OF THOSE PAYMENTS.
The Capital Protector benefit calculation is equal to your Capital Protector
Base, as defined below, minus your Contract Value on the benefit date. If the
resulting amount is positive, you will receive a benefit under the feature. If
the resulting amount is negative, you will not receive a benefit. Your Capital
Protector Base is equal to (a) minus (b) where:
(a) is/are the Purchase Payments received on or after the effective date
multiplied by the applicable percentages in the table above, and;
(b) is an adjustment for all withdrawals and applicable fees and charges
made subsequent to the effective date, in an amount proportionate to
the amount by which the withdrawal decreased the contract value at the
time of the withdrawal.
We will allocate any benefit amount contributed to the contract value on the
benefit date to the Money Market Fund. Any Capital Protector benefit paid is not
considered a Purchase Payment for purposes of calculating other benefits.
Benefits based on earnings, such as Earnings Advantage, will continue to define
earnings as the difference between contract value and Purchase Payments adjusted
for withdrawals. For information about how the benefit is treated for income tax
purposes, you should consult a qualified tax advisor for information concerning
your particular circumstances.
SINCE THE CAPITAL PROTECTOR FEATURE MAY NOT GUARANTEE A RETURN OF ALL PURCHASE
PAYMENTS AT THE END OF THE WAITING PERIOD, IT IS IMPORTANT TO REALIZE THAT
SUBSEQUENT PURCHASE PAYMENTS MADE INTO THE CONTRACT MAY DECREASE THE VALUE OF
THE CAPITAL PROTECTOR BENEFIT. For example, if near the end of the waiting
period your Capital Protector Base is greater than your contract value, and you
then make a subsequent Purchase Payment that causes your Contract Value to be
larger than your Capital Protector Base on your benefit date, you will not
receive any benefit even though you have paid for the Capital Protector feature
throughout the waiting period. You should discuss subsequent Purchase Payments
with your financial advisor as such activity may reduce the value of this
Capital Protector benefit.
THE CAPITAL PROTECTOR FEE
Capital Protector is an optional feature. If elected, you will incur an
additional charge for this feature. The annualized charge will be deducted on a
quarterly basis throughout the waiting period, beginning at the end of the first
contract quarter following the effective date of the feature and up to and
including on the benefit date. The full quarterly charge will be deducted at the
time of a full surrender or annuitization prior to the end of the waiting
period, even though no Capital Protector benefit is payable. The fee is
calculated as a percentage of your contract value minus Purchase Payments
received after the 90th day since the purchase of the contract. The amount of
this
15
charge is subject to change at any time for prospectively issued contracts. Once
the feature is terminated, as discussed above, the charge will no longer be
deducted. The annual fee is:
<Table>
<Caption>
CONTRACT YEAR ANNUALIZED CHARGE*
- ------------- ------------------
0-7 1.00%
8-10 0.80%
11+ none
</Table>
* As a percentage of your contract value minus Purchase Payments received after
the 90th day since the purchase of your contract.
EFFECT OF SPOUSAL CONTINUATION ON THE CAPITAL PROTECTOR FEATURE
If your qualified spouse chooses to continue this contract upon your death, this
benefit cannot be terminated. The effective date, the waiting period and the
corresponding benefit payment date will not change as a result of a spousal
continuation. SEE SPOUSAL CONTINUATION PAGE 29.
WE RESERVE THE RIGHT TO MODIFY, SUSPEND OR TERMINATE THE CAPITAL PROTECTOR
FEATURE (IN ITS ENTIRETY OR ANY COMPONENT) AT ANY TIME FOR PROSPECTIVELY ISSUED
CONTRACTS.
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 your original investment.
Certain states require us to return your Purchase Payments upon a free look
request. Additionally, all contracts issued as an IRA require the full return of
Purchase Payments upon a free look. With respect to those contracts, we reserve
the right to put your money in the Money Market investment option during the
free look period and will allocate your money according to your instructions at
the end of the applicable free look period. Currently, we do not put your money
in the Money Market investment option during the free look period unless you
allocate your money to it. If your contract was issued in a state requiring
return of Purchase Payments or as an IRA and you cancel your contract during the
free look period, we return the greater of (1) your Purchase Payments; or (2)
the value of your contract. At the end of the free look period, we allocate your
money according to your instructions.
EXCHANGE OFFERS
From time to time, we may offer to allow you to exchange an older variable
annuity issued by Anchor National or one of its affiliates, for a newer product
with more current features and benefits, also issued by Anchor National or one
of its affiliates. Such an Exchange Offer will be made in accordance with
applicable state and federal securities and insurance rules and regulations. We
will explain the specific terms and conditions of any such Exchange Offer at the
time the offer is made.
INVESTMENT OPTIONS
- --------------------------------------------------------------------------------
The contract offers variable investment options which we call Variable
Portfolios, and fixed investment options. We designed the contract to meet your
varying investment needs over time. You can achieve this by using the Variable
Portfolios alone or in concert with the fixed investment options. The Variable
Portfolios operate similar to a mutual fund but are only available through the
purchase of certain variable annuities. A mixture of your investment in the
Variable Portfolios and fixed account options may lower the risk associated with
investing only in a variable investment option.
16
VARIABLE PORTFOLIOS
The contract currently offers 22 Variable Portfolios. These Variable Portfolios
invest in shares of the Anchor Series Trust, SunAmerica Series Trust and the WM
Variable Trust (the "Trusts"), Additional Variable Portfolios may be available
in the future. The Variable Portfolios operate similar to a mutual fund but are
only available through the purchase of certain insurance contracts.
SunAmerica Asset Management Corp., an indirect wholly owned subsidiary of AIG,
is the investment adviser to the AST and SAST Trusts. WM Advisors is the adviser
to the WMVT. The Trusts serve as the underlying investment vehicles for other
variable annuity contracts issued by Anchor National, and other affiliated/
unaffiliated insurance companies. Neither Anchor National nor the Trusts believe
that offering shares of the Trusts in this manner disadvantages you. The adviser
monitors the Trusts for potential conflicts.
ANCHOR SERIES TRUST
Wellington Management Company, LLP serves as subadviser to the AST Portfolio.
AST has Variable Portfolios in addition to those listed below which are not
available for investment under the contract.
SUNAMERICA SERIES TRUST
Various subadvisers provide investment advice for the SAST Portfolios. SAST has
Variable Portfolios in addition to those listed below which are not available
for investment under the contract.
WM VARIABLE TRUST
WM Advisors, Inc. serves as adviser for the WMVT Funds and also hires
subadvisers to manage the day-to-day operations of certain investment options.
The 22 Variable Portfolios along with their respective subadvisers are listed
below:
<Table>
STRATEGIC ASSET MANAGEMENT PORTFOLIOS
Strategic Growth WM Advisors, Inc. WMVT
Conservative Growth WM Advisors, Inc. WMVT
Balanced WM Advisors, Inc. WMVT
Conservative Balanced WM Advisors, Inc. WMVT
Flexible Income WM Advisors, Inc. WMVT
EQUITY FUNDS
Equity Income WM Advisors, Inc. WMVT
Growth & Income WM Advisors, Inc. WMVT
Davis Venture Value Davis Advisors SAST
West Coast Equity Fund WM Advisors, Inc. WMVT
Alliance Growth Alliance Capital Mgmt, L.P. SAST
Growth Columbia Management Company, WMVT
Janus Capital Corporation,
OppenheimerFunds, Inc.
Capital Appreciation Wellington Mgmt. Co. LLP AST
MFS Mid Cap Growth Massachusetts Financial Services Co. SAST
Mid Cap Stock WM Advisors, Inc. WMVT
Small Cap Stock WM Advisors, Inc. WMVT
Global Equities Alliance Capital Mgmt. L.P. SAST
International Growth Capital Guardian Trust Company WMVT
Technology VanKampen SAST
FIXED-INCOME FUNDS
U.S. Government Securities WM Advisors, Inc. WMVT
Income WM Advisors, Inc. WMVT
Short Term Income WM Advisors, Inc. WMVT
Money Market WM Advisors, Inc. WMVT
</Table>
YOU SHOULD READ THE PROSPECTUSES FOR THE TRUSTS ATTACHED HERETO CAREFULLY. THESE
PROSPECTUSES CONTAIN DETAILED INFORMATION ABOUT THE PORTFOLIOS, INCLUDING EACH
VARIABLE PORTFOLIO'S INVESTMENT OBJECTIVE AND RISK FACTORS.
17
FIXED INVESTMENT OPTIONS
The contract also offers seven fixed investment options. Anchor National will
guarantee the interest rate earned on money you allocate to any of these fixed
investment options. We currently offer fixed investment options for periods of
one, three, five, seven and ten years, which we call guarantee periods. In
Maryland, Oregon and Washington only the one year fixed account option is
available. We guarantee the interest rate for money allocated to the 6-month DCA
fixed account and/or the 1-year DCA fixed account (the "DCA fixed accounts")
which are available only in conjunction with the Dollar Cost Averaging Program.
Please see the section on the Dollar Cost Averaging Program on page 26 for
additional information about, including limitations on, the availability and
operation of the DCA fixed accounts. The DCA fixed accounts are only available
for new Purchase Payments.
All of these fixed account options pay interest at rates set and guaranteed by
Anchor National. Interest rates may differ from time to time and are set at our
sole discretion. We will never credit less than a 3% annual effective rate to
any of the fixed account options. The interest rate offered for new Purchase
Payments may differ from that offered for subsequent Purchase Payments and money
already in the fixed account options. In addition, different guarantee periods
offer different interest rates. Rates for specified payments are declared at the
beginning of the guarantee period and do not change during the specified period.
There are three scenarios in which you may put money into the fixed account
options. In each scenario your money may be credited a different rate of
interest as follows:
- INITIAL RATE: Rate credited to new Purchase Payments allocated to the
fixed account when you purchase your contract.
- CURRENT RATE: Rate credited to subsequent Purchase Payments allocated to
the fixed account.
- RENEWAL RATE: Rate credited to money remaining in a fixed account after
expiration of a guarantee period and money transferred from a fixed
account or one of the Variable Portfolios into a fixed account.
Each of these rates may differ from one another. Although once declared the
applicable rate is guaranteed until your guarantee period expires.
The DCA fixed accounts also credit a fixed rate of interest. Interest is
credited to amounts allocated to the 6-month or 1-year DCA fixed account while
your investment is systematically transferred to the Variable Portfolio(s). The
rates applicable to the DCA fixed accounts may differ from each other and/or the
other fixed account options but will never be less than an effective rate of 3%.
SEE DOLLAR COST AVERAGING ON PAGE 19 for more information.
When a guarantee period ends, you may leave your money in the same guarantee
period. You may also reallocate money to another fixed investment option (other
than the DCA fixed accounts) or to any of the Variable Portfolio(s). If you want
to reallocate your money, you must contact us within 30 days after the end of
the current guarantee period and instruct us how to reallocate your money. If we
do not hear from you, we will keep your money in the same guarantee period where
it will earn the renewal interest rate applicable at that time.
For Contracts issued in the state of Oregon withdrawal charge schedule applied
to amounts withdrawn from the one year fixed account declines over seven years
as follows: 6%, 5%, 4%, 3%, 2%, 1%, 0%.
MARKET VALUE ADJUSTMENT
NOTE: THE FOLLOWING DISCUSSION APPLIES TO THE 3, 5, 7 OR 10 YEAR FIXED
INVESTMENT OPTIONS ONLY. THESE OPTIONS ARE NOT AVAILABLE IN MARYLAND, OREGON AND
WASHINGTON AND MAY NOT BE AVAILABLE IN OTHER STATES. PLEASE CONTACT YOUR
FINANCIAL ADVISOR FOR MORE INFORMATION. THIS DISCUSSION DOES NOT APPLY TO
WITHDRAWALS TO PAY A DEATH BENEFIT OR CONTRACT FEES AND CHARGES.
If you take money out of the 3, 5, 7 or 10 year fixed investment options before
the end of the guarantee period, we make an adjustment to your contract (the
"market value adjustment" or "MVA"). This market value adjustment reflects any
difference in the interest rate environment between the time you place your
money in the fixed investment option and the time when you withdraw or transfer
that money. This adjustment can increase or
18
decrease your contract value. You have 30 days after the end of each guarantee
period to reallocate your funds without incurring a market value adjustment.
We will not assess a market value adjustment against withdrawals made (1) to pay
a death benefit; (2) to pay contract fees and charges; or (3) to begin the
Income Phase of your contract on the latest Annuity Date.
We calculate the market value adjustment by doing a comparison between current
rates and the rate being credited to you in the fixed investment option. For the
current rate we use a rate being offered by us for a guarantee period that is
equal to the time remaining in the guarantee period from which you seek
withdrawal or transfer. If we are not currently offering a guarantee period for
that period of time, we determine an applicable rate by using a formula to
arrive at a number between the interest rates currently offered for the two
closest periods available.
Generally, if interest rates drop between the time you put your money into the
fixed investment options and the time you take it out, we credit a positive
adjustment to your contract. On the other hand, if interest rates increase
during the same period, we post a negative adjustment to your contract.
Where the market value adjustment is negative, we first deduct the adjustment
from any money remaining in the fixed investment option. If there is not enough
money in the fixed investment option to meet the negative deduction, we deduct
the remainder from your withdrawal or transfer amount. Where the market value
adjustments is positive, we add the adjustment to your withdrawal amount or
transfer amount. For withdrawals under the systematic withdrawal program that
result in a negative market value adjustment, the MVA amount will be deducted
from your withdrawal.
The 1-year fixed investment option and the DCA fixed accounts do not impose a
market value adjustment. These fixed investment options are not registered under
the Securities Act of 1933 and are not subject to the provisions of the
Investment Company Act of 1940.
Please see APPENDIX A for more information on how we calculate the market value
adjustment.
TRANSFERS DURING THE ACCUMULATION PHASE
During the Accumulation Phase, you may transfer money among the Variable
Portfolio(s) and the fixed investment options by written request or by
telephone. Additionally, you may access your account and request transfers
through our website, www.sunamerica.com. Funds already in your contract cannot
be transferred into the DCA fixed accounts. Transfers out of a 3, 5, 7 or 10
year fixed investment option may be subject to a market value adjustment.
The minimum amount you can transfer is $100, or a lesser amount if you transfer
the entire balance from a Variable Portfolio or a fixed investment option. Any
money remaining in a Variable Portfolio or fixed investment option after making
a transfer must equal at least $100. Your request for transfer must clearly
state which investment option(s) are involved and the amount you want to
transfer. Please see the section on Dollar Cost Averaging on page 26 for
specific rules regarding the DCA fixed accounts. We currently allow 15 free
transfers per contract year. We charge $25 ($10 in Pennsylvania and Texas) for
each additional transfer in a contract year.
We will accept transfers by telephone and/or the internet unless you specify
otherwise on your contract application. When receiving telephone and/or the
internet account transfers, 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 or the internet. If we fail to follow
our procedures we may be liable for any losses due to unauthorized or fraudulent
transactions.
For information regarding transfers during the Income Phase, SEE INCOME OPTIONS
ON PAGE 30.
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
portfolios.
This product is not designed for professional "market timing" organizations or
other organizations or individuals engaged in trading strategies that seek to
benefit from short term price fluctuations or price irregularities by making
programming transfers, frequent transfers or transfers that are large in
relation to the total assets of the underlying portfolio in which the Variable
Portfolios invest. These marketing timing strategies are disruptive to the
underlying
19
portfolios in which the Variable Portfolios invest and thereby potentially
harmful to investors. If we determine, in our sole discretion, that your
transfer patterns among the Variable Portfolios reflect a market timing
strategy, we reserve the right to take action to protect the other investors.
Such action may include but would not be limited to restricting the mechanisms
you can use to request transfers among the Variable Portfolios or imposing
penalty fees on such trading activity and/or otherwise restricting transfer
options in accordance with state and federal rules and regulations.
Certain transfers will be restricted in order to protect you from abusive or
disruptive trading activity. You can request up to 15 transfers per contract
each contract year via U.S. Mail, telephone, facsimile or internet. Any transfer
request in excess of 15 transfers per contract year must be submitted in writing
by U.S. mail. Transfer requests sent by same day mail, overnight mail or courier
service will not be accepted. Transfer requests required to be submitted by U.S.
Mail can only be cancelled in a written request submitted via U.S. Mail. We will
process any transfer and/or cancellation request as of the day we receive it, if
received before 1:00 p.m. Pacific Standard Time ("PST"). If received after 1:00
p.m. PST, the request will be processed on the next business day. This policy
will apply beginning September 30, 2002 through your next contract anniversary
and then during each contract year thereafter. Transfers pursuant to Dollar Cost
Averaging or Automatic Asset Rebalancing programs will not count towards Our
calculation of when you have exceeded the 15 transfers for purposes of
restricting your transfer rights. However, Dollar Cost Averaging transfers do
count towards the 15 free transfers for purposes of determining when we will
begin charging you for transfers over 15 (SEE DOLLAR COST AVERAGING ON PAGE 20).
Regardless of the number of transfers you have made, we will monitor and may
terminate your transfer privileges if we determine that you are engaging in a
pattern of transfers that reflects a market timing strategy or is potentially
harmful to other policy owners. Some of the factors we will consider include:
- - the dollar amount of the transfer;
- - the total assets of the Variable Portfolio involved in the transfer;
- - the number of transfers completed in the current calendar quarter; or
- - whether the transfer is part of a pattern of transfers to take advantage of
short-term market fluctuations or market inefficiencies.
We reserve the right to modify, suspend or terminate the transfer privileges at
any time.
DOLLAR COST AVERAGING
The Dollar Cost Averaging ("DCA") program allows you to invest gradually in the
Variable Portfolios. There is no fee to participate in this program. Under the
program you systematically transfer a set dollar amount or percentage from any
Variable Portfolio or the 1-year fixed account option (source accounts) to any
other Variable Portfolio. You may also systematically transfer the interest
earned in the 1-year fixed account to any of the Variable Portfolios. Transfers
may be monthly or quarterly (monthly only from DCA fixed accounts). You may
change the frequency at any time by notifying us in writing. The minimum
transfer amount under the DCA program is $100, regardless of the source account.
Fixed account options are not available as target account for the DCA program.
We also offer the 6-month and a 1-year DCA fixed accounts exclusively to
facilitate this program. The DCA fixed accounts only accept new Purchase
Payments with a minimum of $600 in the 6-month DCA and $1200 in the 1-year DCA
with monthly transfers. You can not 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 Portfolio(s)
you select over the selected 6-month or 1-year period. You cannot change the
option once selected.
20
We determine the amount of the transfers from the DCA fixed accounts based on
the total amount of money allocated to the account and monthly transfers.
In Oregon, the withdrawal schedule applicable to funds placed in the DCA fixed
accounts is 6% for the period when those funds are in the DCA fixed accounts.
Once those funds are moved into the target accounts they are subject to the
standard withdrawal charge schedule. SEE EXPENSES ON PAGE 27.
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 Money
Market Portfolio to the Alliance Growth Portfolio over six quarters. You
set up dollar cost averaging and purchase Accumulation Units at the
following values:
<Table>
<Caption>
QUARTER ACCUMULATION UNIT UNITS PURCHASED
------- ----------------- ---------------
1 $ 7.50 100
2 $ 5.00 150
3 $10.00 75
4 $ 7.50 100
5 $ 5.00 150
6 $ 7.50 100
</Table>
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.
21
ASSET ALLOCATION REBALANCING PROGRAM
Earnings in your contract may cause the percentage of your investment in each
investment option to differ from your original allocations. The Automatic Asset
Rebalancing Program addresses this situation. At your election, we periodically
rebalance your investments in the Variable Portfolios to return your allocations
to their original percentages. Asset rebalancing typically involves shifting a
portion of your money out of an investment option with a higher return into an
investment option with a lower return. At your request, rebalancing occurs on a
quarterly, semi-annual or annual basis. We reserve the right to modify, suspend
or terminate this program at any time.
PRINCIPAL ADVANTAGE PROGRAM
The Principal Advantage Program allows you to invest in one or more of the
Variable Portfolios without putting your principal at direct risk. The program
accomplishes this by allocating your investment strategically between the fixed
investment options (other than the DCA fixed accounts) and the Variable
Portfolio(s) you select. You decide how much you want to invest and
approximately when you want a return of principal. We calculate how much of your
Purchase Payment needs to be allocated to the particular fixed investment option
to ensure that it grows to an amount equal to your total principal invested
under this program.
EXAMPLE:
Assume that you want to allocate a portion of your initial Purchase Payment
of $100,000 to the fixed investment option. You want the amount allocated
to the fixed investment option to grow to $100,000 in 7 years. If the
7-year fixed investment option is offering a 5% interest rate, we will
allocate $71,069 to the 7-year fixed investment 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.
We reserve the right to modify, suspend or terminate this program at any time.
VOTING RIGHTS
Anchor National is the legal owner of shares of the Trusts. However, when an
underlying 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
We may amend your contract due to changes to the Variable Portfolios offered
under your contract. For example, we may offer new Variable Portfolios, delete
Variable Portfolios, or stop accepting allocations and/or investments in a
particular Variable Portfolio. We may move assets and re-direct future premium
allocations from one Variable Portfolio to another if we receive investor
approval through a proxy vote or SEC approval for a fund substitution. This
would occur if a Variable Portfolio is no longer an appropriate investment for
the contract, for reasons such as continuing substandard performance, or for
changes to the portfolio manager, investment objectives, risks and strategies,
or federal or state laws. The new Variable Portfolio offered may have different
fees and expenses. You will be notified of any upcoming proxies or substitutions
that affect your Variable Portfolio choices.
22
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 30.
Generally, we deduct a withdrawal charge applicable to any partial or total
withdrawal and a market value adjustment if a withdrawal comes from the 3, 5, 7
or 10 year fixed investment options prior to the end of a guarantee period. If
you withdraw your entire contract value, we also deduct any applicable premium
taxes and a contract maintenance fee. SEE EXPENSES ON PAGE 27. We calculate
charges due on a total withdrawal on the day after we receive your request and
other required paper work. We return your contract value less any applicable
fees and charges.
The minimum partial withdrawal amount is $1,000. We require that the value left
in any Variable Portfolio or fixed account be at least $500 after the
withdrawal. You must send a written withdrawal request. Unless you provide us
with different instructions, partial withdrawals will be made in equal amounts
from each Variable Portfolio and the fixed investment option in which your
contract is invested. Withdrawals from fixed investment options prior to the end
of the guarantee period may result in a market value adjustment.
We may be required to suspend or postpone the payment of a withdrawal for any
period of time when: (1) the NYSE is closed (other than a customary weekend and
holiday closings); (2) trading with the NYSE is restricted; (3) an emergency
exists such that disposal of or determination of the value of shares of the
Portfolios is not reasonably practicable; (4) the SEC, by order, so permits for
the protection of contract owners.
Additionally, we reserve the right to defer payments for a withdrawal from a
fixed investment option. Such deferrals are limited to no longer than six
months.
FREE WITHDRAWAL PROVISION
Your contract provides for a free withdrawal amount each year. A free withdrawal
amount is the portion of your account that we allow you to take out each year
without being charged a surrender penalty. However, upon a future full surrender
of your contract, any previous free withdrawals would be subject to a surrender
charge, if any is applicable at the time of the full surrender (except in the
state of Washington).
To determine your free withdrawal amount and the amount, if any, on which we
assess a 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 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:
1. Any prior withdrawals on which you previously paid a withdrawal charge,
plus the amount of the withdrawal charge.
2. Any prior free withdrawals in any year that were in excess of your
penalty-free earnings and were free because the Purchase Payment
withdrawn is no longer subject to surrender charges at the time of the
withdrawal.
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 surrender charge before those Purchase Payments which are
still subject to the surrender charge.
During your first contract year your free withdrawal amount is the greater of:
1. Your penalty-free earnings, or;
2. If you are participating in the Systematic Withdrawal program, a total
of 10% of your Total Invested Amount less any prior withdrawals taken
during the contract year.
23
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 surrender charges, or;
2. 10% of the portion of your Total Invested Amount that has been in your
contract for at least one year less any withdrawals taken during the
contract year.
24
Purchase Payments withdrawn, above and beyond the amount of your free withdrawal
amount, which have been invested for less than 7 years will result in your
paying a withdrawal charge. The amount of the charge and how it applies are
discussed more fully below. You should consider, before purchasing this
contract, the effect this charge will have on your investment if you need to
withdraw more money than the free withdrawal amount. You should fully discuss
this decision with your financial advisor.
The withdrawal charge percentage applicable is determined by the age of the
Purchase Payment being withdrawn. For purposes of calculating the surrender
charge in the event of a full surrender, the charge is calculated based on the
remaining Total Invested Amount still subject to surrender charge.
For example, you make an initial Purchase Payment of $100,000. For purposes of
this example, we will assume a 0% growth rate over the life of the contract, no
Income Protector Program, Estate Rewards or Earnings Advantage and no subsequent
Purchase Payments. In contract year 2 and year 3, you take out your maximum free
withdrawal of $10,000 for each year. After those free withdrawals your contract
value is $80,000. In contract year 5 you request a full surrender of your
contract. We will apply the following calculation, A - (B X C) = D, where:
A = Your contract value at the time of your request for surrender ($80,000)
B = The amount of your Total Invested Amount still subject to surrender charge
($100,000)
C = The withdrawal charge percentage applicable to the age of each Purchase
Payment at the time of full surrender (4%) [B X C = $4,000]
D = Your full surrender value ($76,000)
SYSTEMATIC WITHDRAWAL PROGRAM
If you elect, we use money in your contract to pay you monthly, quarterly,
semi-annual or annual payments during the Accumulation Phase. Electronic
transfer of these funds to your bank account is also available. The minimum
amount of each withdrawal is $250. There must be at least $500 remaining in your
contract at all times. Withdrawals may be taxable and a 10% IRS tax penalty may
apply if you are under age 59 1/2. Any withdrawals you make using this program
count against your free withdrawal amount as described above. Withdrawals in
excess of that amount may incur a withdrawal charge. There is no additional
charge for participating in this program.
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.
25
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.
QUALIFIED CONTRACT OWNERS
Certain Qualified plans restrict and/or prohibit your ability to withdraw money
from your contract. SEE TAXES ON PAGE 35 for a more detailed explanation.
DEATH BENEFIT
- --------------------------------------------------------------------------------
If you should die during the Accumulation Phase, your Beneficiary will receive a
death benefit. The death benefit options are discussed in detail below.
The death benefit is not paid after you are in the Income Phase. If you die
during the Income Phase, your Beneficiary will receive any remaining guaranteed
income payments in accordance with the income option you choose. SEE INCOME
OPTIONS ON PAGE 30.
You select the Beneficiary to receive any amounts payable on death. You may
change the Beneficiary at any time, unless you previously made an irrevocable
Beneficiary designation. A new Beneficiary designation is not effective until we
record the change.
We calculate and pay the death benefit when we receive all required paperwork
and satisfactory proof of death. We consider the following satisfactory proof of
death:
1. a certified copy of 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.
The death benefit must be paid within 5 years of the date of death. The
Beneficiary may, in the alternative, elect to have the death benefit payable in
the form of an annuity. If the Beneficiary elects an income option, it must be
paid over the Beneficiary's lifetime or for a period not extending beyond the
Beneficiary's life expectancy. Income payments must begin within one year of the
owner's death. If the Beneficiary is the spouse of the owner, he or she can
elect to continue the contract, rather than receive a death benefit. SEE SPOUSAL
CONTINUATION ON PAGE 27. If the Beneficiary does not make a specific election as
to how they want the death benefit distributed within sixty days of our receipt
of adequate proof of death, it will be paid in a lump sum.
If the Annuitant dies before annuity payments begin, you can name a new
Annuitant. If no Annuitant is named within 30 days, you will become the
Annuitant. However, if the owner is a non-natural person (for example, a trust),
then the death of the Annuitant will be treated as the death of the owner, no
new Annuitant may be named and the death benefit will be paid.
This contract provides three death benefit options: The first is, the Standard
Death Benefit which is automatically included in your contract for no additional
fee. We also offer, for an additional fee, an optional
26
enhanced death benefit called "Estate Rewards" which offers you the selection of
one of two options. If you choose the Estate Rewards death benefit you may also
elect, for an additional fee, the Earnings Advantage feature. Your death benefit
elections must be made at the time of contract application and the election
cannot be terminated.
The term "Net Purchase Payment" is used frequently in explaining the death
benefit options and Estate Rewards benefit below. Net Purchase Payment is an
on-going calculation. It does not represent a contract value.
We define Net Purchase Payments as Purchase Payments less an Adjustment for each
withdrawal. If you have not taken any withdrawals from your contract, Net
Purchase Payments equals total purchase payments into your contract. To
calculate the Adjustment amount for the first withdrawal made under the
contract, we determine the percentage by which the withdrawal reduced the
contract value. For example, a $10,000 withdrawal from a $100,000 contract is a
10% reduction in value. This percentage is calculated by dividing the amount of
each withdrawal (and any applicable fees and charges) by the contract value
immediately before taking the withdrawal. The resulting percentage is then
multiplied by the amount of the total Purchase Payments and subtracted from the
amount of the total Purchase Payments on deposit at the time of the withdrawal.
The resulting amount is the initial Net Purchase Payment.
To arrive at the Net Purchase Payment calculation for subsequent withdrawals, we
determine the percentage by which the contract value is reduced by taking the
amount of the withdrawal in relation to the contract value immediately before
taking the withdrawal. We then multiply the Net Purchase Payment calculation as
determined prior to the withdrawal, by this percentage. We subtract that result
from the Net Purchase Payment calculation as determined prior to the withdrawal
to arrive at all subsequent Net Purchase Payment calculations.
STANDARD DEATH BENEFIT
The standard death benefit on your contract is the greater of:
1. Net Purchase Payments compounded at a 3% annual growth rate from the
date of issue until the earlier of age 75 or the date of death, plus
any Purchase Payments recorded after the earlier of age 75 or the date
of death; and reduced for any withdrawals (and fees and charges
applicable to those withdrawals) recorded after the earlier of age 75
or date of death, in the same proportion that the withdrawal reduced
the contract value on the date of the withdrawal.
2. the contract value at the time we receive satisfactory proof of death.
ESTATE REWARDS DEATH BENEFIT(S)
For an additional fee, you may elect one of the Estate Rewards Death Benefits
which can provide greater protection for your beneficiaries. You must choose
between Option 1 and Option 2 at the time you purchase your contract and you can
not change your election at any time. The Estate Rewards Death Benefit is not
available if you are age 81 or older at the time of contract issue. The fee for
Estate Rewards death benefit is 0.15% of the average daily ending value of the
assets you have allocated to the Variable Portfolios.
OPTION 1 - 5% ACCUMULATION OPTION
THE DEATH BENEFIT IS THE GREATER OF:
a. the contract value at the time we receive satisfactory proof of death;
or
b. Net Purchase Payments compounded to the earlier of your 80th birthday
or the date of death, at a 5% annual growth rate, plus any Purchase
Payments recorded after the 80th birthday or the date of death; and
reduced for any withdrawals (and fees and charges applicable to those
withdrawals) recorded after the 80th birthday or the date of death, in
the same proportion that the withdrawal reduced the contract value on
the date of the withdrawal, up to a maximum benefit of two times the
Net Purchase Payments made over the life of your contract.
If you die after your latest Annuity Date, the 5% Accumulation Option death
benefit reverts to the Standard Death Benefit. Thus, your beneficiaries may
receive no benefit from Estate Rewards Death Benefit. This option may not be
available in all states. Check with your investment representative regarding
availability.
27
OPTION 2 - MAXIMUM ANNIVERSARY VALUE OPTION
THE DEATH BENEFIT IS THE GREATEST OF:
a. Net Purchase Payments; or
b. the contract value at the time we receive satisfactory proof of death;
or
c. the maximum anniversary value on any contract anniversary prior to your
81st birthday. The anniversary value equals the contract value on a
contract anniversary increased by any Purchase Payments recorded after
that anniversary; and reduced for any withdrawals (and fees and charges
applicable to those withdrawals) recorded after the anniversary, in the
same proportion that the withdrawal reduced the contract value on the
date of the withdrawal.
If the Maximum Anniversary Value option was elected and you or the
Continuing Spouse live to be age 90 or older, the death benefit will be
the contract value because the Maximum Anniversary Value option ends at
age 90. However, if you selected the Earnings Advantage benefit and
death occurs after age 90 but before the latest annuity date at age 95,
your beneficiary or Continuing Spouse will benefit from the Earnings
Advantage.
EARNINGS ADVANTAGE
The Earnings Advantage benefit may increase the Estate Rewards death benefit
amount. In order to make an Earnings Advantage election you must have already
elected one of the Estate Rewards Death Benefits described above. The Earnings
Advantage is available for an additional charge of 0.25% of the average daily
ending value of the assets you have allocated to the Variable Portfolios. You
are not required to elect the Earnings Advantage feature if you select the
Estate Rewards Death Benefit, but once elected, generally it can not be
terminated. Further, if you elect both the Estate Rewards and Earnings Advantage
the combined charge will be 0.40% of the average daily ending value of the
assets you have allocated to the Variable Portfolios.
If you have earnings in your contract at the time of death, we will add a
percentage of those earnings (the "Earnings Advantage Percentage"), subject to a
maximum dollar amount (the "Maximum Earnings Advantage Percentage"), to the
death benefit payable.
The Contract Year of Death will determine the Earnings Advantage Percentage and
the Maximum Earnings Advantage amount, as set forth below:
<Table>
- ------------------------------------------------------------------------------------------------------------------
EARNINGS ADVANTAGE MAXIMUM
CONTACT YEAR OF DEATH PERCENTAGE EARNINGS ADVANTAGE AMOUNT
- ------------------------------------------------------------------------------------------------------------------
Years 0 - 4 25% of Earnings 25% of Net Purchase Payments
- ------------------------------------------------------------------------------------------------------------------
Years 5 - 9 40% of Earnings 40% of Net Purchase Payments*
- ------------------------------------------------------------------------------------------------------------------
Years 10+ 50% of Earnings 50% of Net Purchase Payments*
- ------------------------------------------------------------------------------------------------------------------
</Table>
* Purchase Payments received after the 5th contract anniversary must remain in
the contract for at least 6 full months to be included as part of the Net
Purchase Payments for the purpose of the Maximum Earnings Advantage Amount
calculation.
What is the Contract Year of Death?
Contract Year of Death is the number of full 12 month periods beginning with the
date your contract is issued and ending on the date of death.
What is the Earnings Advantage Percentage Amount?
We determine the amount of the Earnings Advantage based upon a percentage of
earnings in your contract at the time of your death. For the purpose of this
calculation, earnings are defined as (1) minus (2) where
(1) equals the contract value on the date of death; and
(2) equals Net Purchase Payments.
28
What is the Maximum Earnings Advantage?
The Earnings Advantage amount is subject to a maximum. The maximum Earnings
Advantage amount is equal to a percentage of your Net Purchase Payments.
The Earnings Advantage benefit will only be paid if your date of death is prior
to the latest Annuity Date. Thus, your beneficiaries may receive no benefit from
your election of the Earnings Advantage Benefit if you live past your latest
Annuity Date. This option may not be available in all states. Check with your
Investment Representative regarding availability.
WE RESERVE THE RIGHT TO MODIFY, SUSPEND OR TERMINATE THESE DEATH BENEFIT
FEATURES (IN THEIR ENTIRETY OR ANY COMPONENT) AT ANY TIME FOR PROSPECTIVELY
ISSUED CONTRACTS.
SPOUSAL CONTINUATION
If you are the original owner of the contract and the Beneficiary is your
spouse, your Spouse may elect to continue the contract after your death. The
spouse becomes the new owner ("Continuing Spouse"). The contract and its elected
features, if any, remain the same. The Continuing Spouse is subject to the same
fees, charges and expenses applicable to the original owner of the contract. The
Continuing Spouse can only elect to continue the contract upon the death of the
original owner of the contract.
Upon continuation of the contract, we will contribute to the contract value an
amount by which the death benefit that would have been paid to the beneficiary
upon the death of the original owner exceeds the contract value ("Continuation
Contribution"), if any. We calculate the Continuation Contribution as of the
date of the original owner's death. We will add the Continuation Contribution as
of the date we receive both the Continuing Spouse's written request to continue
the contract and proof of death of the original owner in a form satisfactory to
us ("Continuation Date"). The age of the Continuing Spouse on the Continuation
Date and on the date of the Continuing Spouse's death will be used in
determining any future death benefits under the Contract. SEE APPENDIX B FOR
FURTHER EXPLANATION OF THE DEATH BENEFIT CALCULATION FOLLOWING A SPOUSAL
CONTINUATION. The Continuation Contribution is not considered a Purchase Payment
for any other calculation except as noted in Appendix B. To the extent the
Continuing Spouse invests in the Variable Portfolios or MVA fixed accounts, they
will be subject to investment risk as was the original owner.
Generally, the Continuing Spouse cannot change any contract provisions as the
new owner. However, on the Continuation Date, the Continuing Spouse may
terminate the original owner's election of Earnings Advantage. We will terminate
Earnings Advantage if the Continuing Spouse is age 81 or older on the
Continuation Date. If Earnings Advantage is not terminated or discontinued and
the Continuing Spouse dies after the latest Annuity Date no Earnings Advantage
benefit will be payable.
EXPENSES
- --------------------------------------------------------------------------------
There are charges and expenses associated with your contract. These charges and
expenses reduce your investment return. We will not increase the contract
maintenance fee or withdrawal charges under your contract. However the
investment charges under your contract may increase or decrease. Some states may
require that we charge less than the amounts described below.
INSURANCE CHARGES
The Company deducts a mortality and expense risk charge in the amount of 1.40%
annually of the value of your contract invested in the Variable Portfolios. We
deduct the charge daily. This charge compensates the Company for the mortality
and expense risk and the costs of contract distribution assumed by the Company.
Generally, the mortality risks assumed by the Company arise from its contractual
obligations to make income payments after the Annuity Date and to provide a
death benefit. The expense risk assumed by the Company is that the costs of
administering the contracts and the Separate Account will exceed the amount
received from the administrative fees and charges assessed under the contract.
29
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. The
Insurance Charge is expected to result in a profit. Profit may be used for any
legitimate cost/expense including distribution, depending upon market
conditions.
OTHER REVENUE
We may receive compensation of up to 0.25% from the investment advisers of
certain of the Underlying Funds for services related to the availability of
those Underlying Funds in the Contract.
WITHDRAWAL CHARGES
During the Accumulation Phase you may make withdrawals from your contract.
However, a withdrawal charge may apply. We apply a withdrawal charge upon an
early withdrawal against each Purchase Payment you put into the contract. The
withdrawal charge equals a percentage of the Purchase Payment you take out of
the contract. The contract does provide a free withdrawal amount every year. SEE
ACCESS TO YOUR MONEY ON PAGE 21. The withdrawal charge percentage declines each
year a Purchase Payment is in the contract, as follows:
<Table>
<Caption>
YEAR 1 2 3 4 5 6 7 8
- ----------------- --- --- --- --- --- --- --- ---
Withdrawal Charge 7% 6% 6% 5% 4% 3% 2% 0%
</Table>
After a Purchase Payment has been in the contract for seven complete years the
withdrawal charge no longer applies to that Purchase Payment. When calculating
the withdrawal charge, we treat withdrawals as coming first from the Purchase
Payments that have been in your contract the longest. However, for tax purposes,
your withdrawals are considered earnings first, then Purchase Payments.
Whenever possible, we deduct the withdrawal charge from the money remaining in
your contract from each of your investment options on a pro-rata basis. If you
withdraw all of your contract value, we deduct any applicable withdrawal charges
from the amount withdrawn. We will not assess a withdrawal charge for money
withdrawn to pay a death benefit. We do not currently assess a withdrawal charge
upon election to receive income payments from your contract. Withdrawals made
prior to age 59 1/2 may result in tax penalties. SEE TAXES ON PAGE 35.
INVESTMENT CHARGES
Investment Management Fees
Charges are deducted from the assets of the investment portfolios underlying the
Variable Portfolio(s) for the advisory and other expenses of the portfolios. SEE
FEE TABLES ON PAGE 7.
12b-1 Fees
Shares of certain trusts may be subject to fees imposed under a distribution
and/or servicing plan adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940. For SunAmerica Series Trust ("SAST"), under the
distribution plan which is applicable to Class B shares, recaptured brokerage
commissions will be used to make payments to SunAmerica Capital Services, Inc.,
the SAST Distributor, to pay for various distribution activities on behalf of
the SAST Portfolios. These distribution fees will not increase the cost of your
investment or affect your return.
In addition, the 0.15% fee applicable to Class B shares of Anchor Series Trust
and the SAST Portfolios is generally used to pay financial intermediaries for
services provided over the life of your contract.
FOR MORE DETAILED INFORMATION ON THESE INVESTMENT CHARGES, REFER TO THE
PROSPECTUSES FOR THE ANCHOR SERIES TRUST AND SUNAMERICA SERIES TRUST.
CONTRACT MAINTENANCE FEE
During the Accumulation Phase, we subtract a contract maintenance fee from your
account once per year. This charge compensates us for the cost of contract
administration. If your contract value is $50,000 or more on your contract
anniversary date, we will waive the charge. This waiver is subject to change
without notice. We will deduct the $35 ($30 in North Dakota) contract
maintenance fee on a pro-rata basis from your account
30
value on your contract anniversary. In the states of Pennsylvania, Texas and
Washington a contract maintenance fee will be deducted pro-rata from the
Variable Portfolio(s) in which you are invested, only. If you withdraw your
entire contract value, we deduct the fee from that withdrawal.
TRANSFER FEE
We currently allow 15 free transfers per contract year. We charge $25 ($10 in
Pennsylvania and Texas) for each additional transfer in a contract year.
OPTIONAL DEATH BENEFIT FEES
Please see pages 25 and 26 of this prospectus for additional information
regarding the Estate Rewards death benefit and Earnings Advantage fee.
OPTIONAL INCOME PROTECTOR FEE
Please see page 32 of this prospectus for additional information regarding the
Income Protector fee.
OPTIONAL CAPITAL PROTECTOR FEE
Please see page 15 of this prospectus for more information on the Capital
Protector fee.
PREMIUM TAX
Certain states charge the Company a tax on the premiums you pay into the
contract. We deduct from your contract these premium tax charges. Currently we
deduct the charge for premium taxes when you fully surrender or annuitize the
contract. In the future, we may assess this deduction at the time you put
Purchase Payment(s) into the contract or upon payment of a death benefit.
APPENDIX D provides more information about premium taxes.
INCOME TAXES
We do not currently deduct income taxes from your contract. We reserve the right
to do so in the future.
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.
31
INCOME OPTIONS
- --------------------------------------------------------------------------------
ANNUITY DATE
During the Income Phase, the money in your Contract is used to make regular
income payments to you. You may switch to the Income Phase any time after your
second contract anniversary. You select the month and year in which you want
income payments to begin. The first day of that month is the Annuity Date. You
may change your Annuity Date, so long as you do so at least seven days before
the income payments are scheduled to begin. Once you begin receiving income
payments, you cannot change your Income Option. Except as discussed under Option
5, once you begin receiving income payments, you cannot otherwise access your
money through a withdrawal or surrender. Other pay out options may be available.
Contact Our Annuity Service Center for more information.
Income payments must begin on or before your 95th birthday or on your tenth
contract anniversary, whichever occurs later. If you do not choose an Annuity
Date, your income payments will automatically begin on this date (latest Annuity
Date.) Certain states may require your income payments to start earlier.
If the Annuity Date is past your 85th birthday, your contract could lose its
status as an annuity under Federal tax laws. This may cause you to incur adverse
tax consequences. In addition, certain Qualified contracts require you to take
minimum distributions after you reach age 70 1/2. SEE TAXES ON PAGE 35.
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
selected for joint lives, we pay according to Option 3.
We base our calculation of income payments on the life of the Annuitant and the
annuity rates set forth in your contract. As the contract owner, you may change
the Annuitant at any time prior to the Annuity Date. You must notify us if the
Annuitant dies before the Annuity Date and then designate a new Annuitant.
OPTION 1 - LIFE INCOME ANNUITY
This option provides income payments for the life of the Annuitant. Income
payments stop when the Annuitant dies.
OPTION 2 - JOINT AND SURVIVOR LIFE ANNUITY
This option provides income payments for the life of the Annuitant and for the
life of another designated person. Upon the death of either person, we will
continue to make income payments during the lifetime of the survivor. Income
payments stop whenever the survivor dies.
OPTION 3 - JOINT AND 100% SURVIVOR LIFE ANNUITY WITH 10 YEAR PERIOD CERTAIN
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 payments have been made, the remaining payments are made to the
Beneficiary under your Contract.
32
OPTION 4 - LIFE ANNUITY WITH 10 OR 20 YEAR PERIOD CERTAIN
This option is similar to Option 1 above. In addition, this option provides a
guarantee that income payments will be made for at least 10 or 20 years. You
select the number of years. If the Annuitant dies before all guaranteed income
payments are made, the remaining income payments go to the Beneficiary under
your Contract.
OPTION 5 - INCOME FOR A SPECIFIED PERIOD
This option provides income payments for a guaranteed period ranging from 5 to
30 years. If the Annuitant dies before all the guaranteed income payments are
made, the remaining income payments are made to the Beneficiary under your
contract. Additionally, if variable income payments are elected under this
option, you (or the Beneficiary under the contract if the Annuitant dies prior
to all guaranteed payments being made) may redeem the contract value (in full or
in part) after the Annuity Date. The amount available upon such redemption would
be the discounted present value of any remaining guaranteed payments. The value
of an Annuity Unit, regardless of the option chosen, takes into account the
mortality and expense risk charge. Since Option 5 does not contain an element of
mortality risk, no benefit is derived from this charge.
We make income payments on a monthly, quarterly, semi-annual or annual basis.
You instruct us to send you a check or to have the payments direct deposited
into your bank account. If state law allows, we distribute annuities with a
contract value of $5,000 or less in a lump sum. Also, if the selected income
option results in annuity payments of less than $50 per payment, we may decrease
the frequency of the payments, state law allowing. See the INCOME PROTECTOR
section below for specifics relative to taking income under that feature.
ALLOCATION OF ANNUITY PAYMENTS
You can choose income payments that are fixed, variable or both. If payments are
fixed, Anchor National guarantees the amounts of each payment. If the payments
are variable, the amounts are not guaranteed. They will go up and/or down based
upon the performance of the Variable Portfolio(s) in which you invest.
FIXED OR VARIABLE INCOME PAYMENTS
Unless otherwise elected, if at the date when income payments begin you are
invested in the Variable Portfolio(s) only, your income payments will be
variable and your money is only in fixed accounts at that time, your income
payments will be fixed in amount. If you are invested in both fixed and variable
options at the time you begin the Income Phase, a portion of your income
payments will be fixed and a portion will be variable, unless otherwise elected.
INCOME PAYMENTS
Your income payments will vary if you are invested in the Variable Portfolio(s)
after the Annuity date depending on four factors:
- for life options, your age when payments begin,
- the value of your contract in the Variable Portfolio(s) on the Annuity
Date,
- the 3.5% assumed investment rate for variable income payments used in the
annuity table for the contract, and;
- the performance of the Variable Portfolio(s) in which you are invested
during the time you receive income payments.
33
If you are invested in both the fixed account options and the Variable
Portfolio(s) after the Annuity Date, the allocation of funds between the fixed
accounts and Variable Portfolio(s) also impacts the amount of your annuity
payments.
TRANSFERS DURING THE INCOME PHASE
During the Income Phase, one (1) transfer per month is permitted between the
Variable Portfolios. No other transfers are allowed during the Income Phase.
DEFERMENT OF PAYMENTS
We may defer making fixed payments for up to six months, or less if required by
law. Interest is credited to you during the deferral period.
Please read the Statement of Additional Information, available upon request, for
a more detailed discussion of the income options.
INCOME PROTECTOR
You may elect to enroll in the Income Protector Program. The Income Protector
Program can provide a future "safety net" which can offer you the ability to
receive a guaranteed fixed minimum retirement income when you choose to switch
to the Income Phase. If you elect the Income Protector you can know the level of
minimum income that will be available to you upon annuitization, regardless of
fluctuating market conditions. In order to utilize the program, you must follow
the provisions discussed below.
The minimum level of Income Protector benefit available is generally based upon
your Purchase Payments remaining in your contract at the time you decide to
begin taking income. If available and elected, a growth rate can provide
increased levels of minimum guaranteed income. We charge a fee for the Income
Protector benefit. The amount of the fee and levels of income protection
available to you are described below. This feature may not be available in your
state. Once you have made an Income Protector election it can not be changed or
terminated. Check with your financial advisor regarding availability.
You are not required to use the Income Protector to receive income payments. The
general provisions of your contract provide other income options. However, we
will not refund fees paid for the Income Protector if you begin taking income
payments under the general provisions of your contract. In addition, if
applicable, surrender charges will be assessed upon your beginning the Income
Phase, if you annuitize under the Income Protector Program. YOU MAY NEVER NEED
TO RELY UPON INCOME PROTECTOR IF YOUR CONTRACT PERFORMS WITHIN A HISTORICALLY
ANTICIPATED RANGE. HOWEVER, PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
Certain federal tax code restrictions on the income options available to
qualified retirement investors may have an impact on your ability to benefit
from this feature. Qualified investors should read NOTE TO QUALIFIED CONTRACT
HOLDERS, below.
HOW DO WE DETERMINE THE AMOUNT OF YOUR MINIMUM GUARANTEED INCOME?
If you elect the Income Protector Program, we base the amount of minimum
retirement income available to you upon a calculation we call the Income Benefit
Base. At the time your enrollment in the Income Protector program becomes
effective, your Initial Income Benefit Base is equal to your contract value. If
elected, your participation becomes effective on the date of issue of the
contract.
The Income Benefit Base is only a calculation. It does not represent a contract
value, nor does it guarantee performance of the Variable Portfolios in which you
invest.
34
Your Income Benefit Base increases if you make subsequent Purchase Payments and
decreases if you withdraw money from your contract. The exact Income Benefit
Base calculation is equal to (a) plus (b) minus (c) where:
(a) is equal to, for the first year of calculation, your contract value on
the date your participation became effective, and for each subsequent
year of calculation, the Income Benefit Base of your prior contract
anniversary, and;
(b) is equal to the sum of all subsequent Purchase Payments made into the
contract since the prior contract anniversary, and;
(c) is equal to all withdrawals and applicable fees and charges since the
last contract anniversary, in an amount proportionate to the amount by
which such withdrawals decreased your contract value. Your Income
Benefit Base may accumulate at the elected growth rate, if available,
from the date your election becomes effective through your Income
Benefit Date.
Any applicable growth rate will reduce to 0% on the anniversary immediately
after the annuitant's 90th birthday.
LEVEL OF PROTECTION
If you decide that you want the protection offered by the Income Protector
Program, you must elect the Income Protector by completing the Income Protector
Election Form available through our Annuity Service Center. You must elect the
Income Protector feature at the time your contract is issued. You may only elect
one of the offered alternatives, if more than one is available, and you can
never change your election once made.
Your Income Benefit Base will begin accumulating at the applicable growth rate
on the contract anniversary following our receipt of your completed election
form. In order to obtain the benefit of the Income Protector you may not begin
the income Phase for at least nine years following your election. You may not
elect the Income Protector Program if the required waiting period before
beginning the income phase would occur later than your latest Annuity Date.
The Income Protector option(s) currently available under this contract are:
<Table>
<Caption>
FEE* AS A % OF YOUR INCOME WAITING PERIOD BEFORE THE
OPTION GROWTH RATE BENEFIT BASE INCOME PHASE
- ---------------------------- ---------------------------- ---------------------------- ----------------------------
Income Protector Base 0% .10% 9 years
</Table>
* See Fee Tables on page 7.
ELECTING TO RECEIVE INCOME
You may elect to begin the Income Phase of your contract using the Income
Protector Program ONLY within the 30 days after the 9th or later contract
anniversary following the effective date of your Income Protector participation.
The contract anniversary of or prior to your election to begin receiving income
payments is your Income Benefit Date. We calculate your Income Benefit Base as
of that date to use in determining your guaranteed minimum fixed retirement
income. To determine the minimum guaranteed retirement income available to you,
we apply your final Income Benefit Base to the annuity rates stated in your
Income Protector endorsement for the income option you select. You then choose
if you would like to receive the income annually, semi-annually, quarterly or
monthly for the time guaranteed under your selected income option. Your final
Income Benefit Base is equal to (a) minus (b) where:
(a) is your Income Benefit Base as of your Income Benefit Date, and;
(b) is any partial withdrawals of contract value and any charges applicable
to those withdrawals and any withdrawal charges otherwise applicable,
calculated as if you fully surrender your contract as of the Income
Benefit Date, and any applicable premium taxes.
35
The income options available when using the Income Protector feature to receive
your retirement income are:
- Life Annuity with 10 years guaranteed, or
- Joint and 100% Survivor Life Annuity with 20 years guaranteed
At the time you elect to begin receiving income payments, we will calculate your
income payments using both your Income Benefit Base and your contract value. We
will use the same income option for each calculation; however, the annuity
factors used to calculate your income under the Income Protector feature will be
different. You will receive whichever provides a greater stream of income. If
you elect to receive income payments using the Income Protector feature your
income payments will be fixed in amount.
FEES ASSOCIATED WITH THE INCOME PROTECTOR PROGRAM
If you elect to participate in the Income Protector program we charge an annual
fee, as follows:
<Table>
<Caption>
OPTION FEE* AS A % OF YOUR INCOME BENEFIT BASE
- ---------------------------- ---------------------------------------
Income Protector Base 0.10%
</Table>
* See Fee Tables on page 7.
We deduct the annual fee from your actual Contract Value. We begin deducting the
annual fee on your first contract anniversary.
Additionally, if you fully surrender your contract prior to your contract
anniversary, we will deduct the fee at the time of surrender based on your
Income Benefit Base as of the surrender date. Once elected, the Income Protector
Program and its corresponding charges may not be terminated until full surrender
or annuitization of the contract occurs.
NOTE TO QUALIFIED CONTRACT HOLDERS
Qualified contracts generally require that you select an income option that does
not exceed your life expectancy. That restriction, if it applies to you, may
limit the benefit of the Income Protector program. To utilize the Income
Protector feature, you must take income payments under one of the two income
options described above. If those income options exceed your life expectancy,
you may be prohibited from receiving your guaranteed fixed income under the
program. If you own a Qualified contract to which this restriction applies and
you elect the Income Protector program, you may pay for this minimum guarantee
and not be able to realize the benefit.
Generally, for Qualified contracts:
- for the Life Annuity with 10 years guaranteed, you must annuitize before
age 79, and;
- for the Joint and 100% Survivor Annuity with 20 years guaranteed, both
annuitants must be 70 or younger or one of the annuitants must be 65 or
younger upon annuitization. Other age combinations may be available.
You may wish to consult your tax advisor for information concerning your
particular circumstances. If you elect Capital Protector, you may not elect to
participate in the Income Protector program.
The Income Protector program may not be available in all states. Check with your
financial advisor for availability in your state.
We reserve the right to modify, suspend or terminate the Income Protector
Program at any time.
36
TAXES
- --------------------------------------------------------------------------------
NOTE: WE PREPARED THE FOLLOWING INFORMATION ON TAXES AS A GENERAL DISCUSSION OF
THE SUBJECT. THIS INFORMATION ADDRESSES GENERAL FEDERAL TAXATION MATTERS, AND
GENERALLY DOES NOT ADDRESS STATE TAXATION ISSUES OR QUESTIONS. 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 that satisfy specific tax and ERISA requirements automatically
provide tax deferral regardless of whether the underlying contract is an
annuity, a trust, or a custodial account. 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), plans of self-employed individuals (often referred to as H.R.
10 Plans or 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. However,
you normally will have cost basis in a Roth IRA, and you may have cost basis in
a traditional IRA or in another Qualified Contract.
TAX TREATMENT OF DISTRIBUTIONS -- NON-QUALIFIED CONTRACTS
If you make a partial or total 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. Purchase payments made prior to August 14, 1982,
however, are an important exception to this general rule, and for tax purposes
are treated as being distributed before the earnings on those contributions. If
you annuitize your contract, a portion of each income payment will be
considered, for tax purposes, to be a return of a portion of your Purchase
Payment(s). Any portion of each income 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 are attributable to 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. As a result, with certain limited exceptions, 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 taxable 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, that begins after separation from service with the
employer sponsoring the plan; (5) to the extent such withdrawals do not exceed
limitations set by the IRC for deductible amounts paid during the taxable year
for medical care; (6) to fund higher education expenses (as defined in IRC; only
from an IRA); (7) to fund certain first-time home
37
purchase expenses (only from an IRA); and, except in the case of an IRA; (8)
when you separate from service after attaining age 55; (9) when paid for health
insurance if you are unemployed and meet certain requirements; and (10) when
paid to an alternate payee pursuant to a qualified domestic relations order.
The IRC limits the withdrawal of an employee's voluntary Purchase Payments to a
Tax-Sheltered Annuity (TSA). Withdrawals can only be made when an owner: (1)
reaches age 59 1/2; (2) severs employment with the employer; (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. Additional plan limitations may also apply. Amounts held in a
TSA annuity contract as of December 31, 1988 are not subject to these
restrictions. Qualifying transfers of amounts from one TSA contract to another
TSA contract under section 403(b) or to a custodial account under section
403(b)(7), and qualifying transfers to a state defined benefit plan to purchase
service credits, are not considered distributions, and thus are not subject to
these withdrawal limitations. If amounts are transferred from a custodial
account described in Code section 403(b)(7) to this contract the transferred
amount will retain the custodial account withdrawal restrictions.
Withdrawals from other Qualified Contracts are often limited by the IRC and by
the employer's plan.
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. If you own an IRA, you must begin taking distributions when
you attain 70 1/2, regardless of when you retire. If you own more than one TSA,
you may be permitted to take your annual distributions in any combination from
your TSAs. A similar rule applies if you own more than one IRA. However, you
cannot satisfy this distribution requirement for your TSA contract by taking a
distribution from an IRA, and you cannot satisfy the requirement for your IRA by
taking a distribution from a TSA.
You may be subject to a surrender charge on withdrawals taken to meet minimum
distribution requirements, if the withdrawals exceed the contract's maximum
penalty free amount.
Failure to satisfy the minimum distribution requirements may result in a tax
penalty. You should consult your tax advisor for more information.
You may elect to have the required minimum distribution amount on your contract
calculated and withdrawn each year under the automatic withdrawal option. You
may select either monthly, quarterly, semiannual or annual withdrawals for this
purpose. This service is provided as a courtesy and we do not guarantee the
accuracy of our calculations. Accordingly, we recommend you consult your tax
advisor concerning your required minimum distribution. You may terminate your
election for automated minimum distribution at any time by sending a written
request to our Annuity Service Center. We reserve the right to change or
discontinue this service at any time.
TAX TREATMENT OF DEATH BENEFITS
Any death benefits paid under the contract are taxable to the Beneficiary. The
rules governing the taxation of payments from an annuity contract, as discussed
above, generally apply whether the death benefits are paid as lump sum or
annuity payments. Estate taxes may also apply.
Certain enhanced death benefits may be purchased under your contract. Although
these types of benefits are used as investment protection and should not give
rise to any adverse tax effects, the IRS could take the position that some or
all of the charges for these death benefits should be treated as a partial
withdrawal from the contract. In such case, the amount of the partial withdrawal
may be includible in taxable income and subject to the 10% penalty if the owner
is under 59 1/2.
If you own a Qualified contract and purchase these enhanced death benefits, the
IRS may consider these benefits "incidental death benefits." The IRC imposes
limits on the amount of the incidental death benefits allowable for Qualified
contracts. If the death benefit(s) selected by you are considered to exceed
these limits, the benefit(s) could result in taxable income to the owner of the
Qualified contract. Furthermore, the IRC provides that the
38
assets of an IRA (including a Roth IRA) may not be invested in life insurance,
but may provide, in the case of death during the Accumulation Phase, for a death
benefit payment equal to the greater of Purchase Payments or Contract Value.
This Contract offers death benefits, which may exceed the greater of Purchase
Payments or Contract Value. If the IRS determines that these benefits are
providing life insurance, the contract may not qualify as an IRA (including Roth
IRAs). You should consult your tax adviser regarding these features and benefits
prior to purchasing a contract.
CONTRACTS OWNED BY A TRUST OR CORPORATION
A Trust or Corporation ("Non-Natural Owner") that is considering purchasing this
contract should consult a tax advisor. Generally, the IRC does not treat a
Non-Qualified contract owned by a non-natural owner as an annuity contract for
Federal income tax purposes. The non-natural owner pays tax currently on the
contract's value in excess of the owner's cost basis. However, this treatment is
not applied to a Contract held by a trust or other entity as an agent for a
natural person nor to Contracts held by Qualified Plans. See the SAI for a more
detailed discussion of the potential adverse tax consequences associated with
non-natural ownership of a non-qualified annuity contract.
GIFTS, PLEDGES AND/OR ASSIGNMENTS OF A NON-QUALIFIED CONTRACT
If you transfer ownership of your Non-Qualified contract to a person other than
your spouse (or former spouse incident to divorce) as a gift you will pay
federal income tax on the contract's cash value to the extent it exceeds your
cost basis. The recipient's cost basis will be increased by the amount on which
you will pay federal taxes. Also, the IRC treats any assignment or pledge (or
agreement to assign or pledge) of any portion of a Non-Qualified contract as a
withdrawal. See the SAI for a more detailed discussion regarding potential tax
consequences of gifting, assigning or pledging a non-qualified contract.
DIVERSIFICATION
The IRC imposes certain diversification requirements on the underlying
investments for a variable annuity. We believe that the 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, and not Anchor National, would be considered the owner of the
shares of the Variable Portfolios under your Nonqualified Contract, because of
the degree of control you exercise over the underlying investments. This
diversification requirement is sometimes referred to as "investor control." 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
Nonqualified 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.
These investor control limitations generally do not apply to Qualified
Contracts, which are referred to as "Pension Plan Contracts" for purposes of
this rule, although the limitations could be applied to Qualified Contracts in
the future.
PERFORMANCE
- --------------------------------------------------------------------------------
From time to time we will advertise the performance of the Variable Portfolios.
Any such performance results are based on historical earnings and are not
intended to indicate future performance.
39
We advertise the Money Market Fund'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.
We may show performance of each Variable Portfolios in comparison to various
appropriate indices and the performance of other similar variable annuity
products with similar objectives as reported by such independent reporting
services as Morningstar, Inc., Lipper Analytical Services, Inc. and the Variable
Annuity Research Data Service ("VARDS").
Please see the Statement of Additional Information, available upon request, for
more information regarding the methods used to calculate performance data.
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"), Fitch Ratings ("Fitch's")
and A.M. Best's and Moody's ratings reflect their current opinion of our
financial strength and performance in comparison to others in the life and
health insurance industry. S&P's and Fitch's 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.
40
OTHER INFORMATION
- --------------------------------------------------------------------------------
ANCHOR NATIONAL
Anchor National is a stock life insurance company originally organized under the
laws of the state of California in April, 1965. On January 1, 1996, Anchor
National redomesticated under the laws of the state of Arizona.
Anchor National and its affiliates, SunAmerica Life Insurance Company, First
SunAmerica Life Insurance Company, SunAmerica Asset Management Corporation, and
the SunAmerica Financial Network, Inc. (comprising six wholly owned
broker-dealers), specialize in retirement savings and investment products and
services. Business focuses include fixed and variable annuities, mutual funds,
broker-dealer services and trust administration services.
THE SEPARATE ACCOUNT
Anchor National originally established a separate account, Variable Separate
Account (the "Separate Account"), under Arizona law on January 1, 1996 when it
assumed the separate account, originally established under California law on
June 25, 1981. The Separate Account is registered with the SEC as a unit
investment trust under the Investment Company Act of 1940, as amended.
Anchor National owns the assets in the Separate Account. However, the assets in
the Separate Account are not chargeable with liabilities arising out of any
other business conducted by Anchor National. Income gains and losses (realized
and unrealized) resulting from assets in the Separate Account are credited to or
charged against the Separate Account without regard to other income, gains or
losses of Anchor National. Assets in the Separate Account are not guaranteed by
Anchor National.
CUSTODIAN
State Street Bank and Trust Company, 255 Franklin Street, Boston, Massachusetts
02110, serves as the custodian of the assets of the Separate Account. Anchor
National pays State Street Bank for services provided, based on a schedule of
fees.
THE GENERAL ACCOUNT
Money allocated to the fixed account options goes into Anchor National's general
account. The general account consists of all of Anchor National's assets other
than assets attributable to a separate account. All of the assets in the general
account are chargeable with the claims of any Anchor National contract holders
as well as all of its creditors. The general account funds are invested as
permitted under state insurance laws.
DISTRIBUTION OF THE CONTRACT
Registered representatives of broker-dealers sell the contract. We pay
commissions to these representatives for the sale of the contracts. We do not
expect the total commissions to exceed 8.0% of your Purchase Payments. We may
also pay a bonus to representatives for contracts which stay active for a
particular period of time, in addition to standard commissions. We do not deduct
commissions paid to registered representatives directly from your Purchase
Payments.
41
From time to time, we may pay or allow additional promotional incentives in the
form of cash or other compensation. We reserve the right to offer these
additional incentives only to certain broker-dealers that sell or are expected
to sell, certain minimum amounts of the contract, or other contracts offered by
us. Promotional incentives may change at any time.
WM Funds Distributor, 12009 Foundation Place, Suite 350, Gold River, California
95670 distributes the contracts. WM Funds Distributor is a registered as a
broker-dealer under the Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc.
No underwriting fees are paid in connection with the distribution of the
contracts.
ADMINISTRATION
We are responsible for the administrative servicing of your contract. During the
Accumulation Phase, you will receive confirmation of transactions within your
contract. Transactions made pursuant to contractual or systematic agreements,
such as deduction of the annual maintenance fee and dollar cost averaging, may
be confirmed quarterly. Purchase payments received through the Automatic Payment
Plan or a salary reduction arrangement, may also be confirmed quarterly. For all
other transactions, we send confirmations immediately.
During the Accumulation and Income Phases, you will receive a statement of your
transactions over the past quarter and a summary of your account values. Please
contact our Annuity Service Center at 1-877-311-WMVA (9682), if you have any
comment, question or service request.
We send out transaction confirmations and quarterly statements. It is your
responsibility to review these documents carefully and notify us of any
inaccuracies immediately. We investigate all inquiries. To the extent that we
believe we made an error, we retroactively adjust your contract, provided you
notify us within 30 days of receiving the transaction confirmation or quarterly
statement. Any other adjustments we deem warranted are made as of the time we
receive notice of the error.
LEGAL PROCEEDINGS
There are no pending legal proceedings affecting the Separate Account. Anchor
National and its subsidiaries engage in various kinds of routine litigation. In
management's opinion these matters are not of material importance to the
Company's total assets, with the potential exception of McMurdie, et al. v.
SunAmerica Inc., et al, Case No. BC 194082, filed on July 10, 1998 in the
Superior Court for the County of Los Angeles. This lawsuit is a representative
action wherein the plaintiffs allege violations of California's Business and
Professions Code Sections 17200 et seq. The Company is vigorously defending the
lawsuit. The probability of any particular outcome is not reasonably estimable
at this time.
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
The audited consolidated financial statements of AIG SunAmerica Life Assurance
Company (formerly, Anchor National Life Insurance Company) at December 31, 2001
and 2000, for the years ended December 31, 2001, 2000, and 1999, and the audited
financial statements of Variable Separate Account (portion relating to WM
Diversified Strategies Variable Annuity) at December 31, 2001 and for the period
from July 9, 2001 (inception) to December 31, 2001, are incorporated by
reference in this prospectus in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
42
TABLE OF CONTENTS OF
STATEMENT OF ADDITIONAL INFORMATION
<Table>
Separate Account............................................ 3
General Account............................................. 4
Performance Data............................................ 4
Income Payments............................................. 10
Annuity Unit Values......................................... 10
Taxes....................................................... 13
Distribution of Contracts................................... 18
Financial Statements........................................ 19
</Table>
43
APPENDIX A - MARKET VALUE ADJUSTMENT
- --------------------------------------------------------------------------------
The market value adjustment reflects the impact that changing interest rates
have on the value of money invested at a fixed interest rate. The longer the
period of time remaining in the term you initially agreed to leave your money in
the fixed investment option, the greater the impact of changing interest rates.
The impact of the market value adjustment can be either positive or negative,
and is computed by multiplying the amount withdrawn, transferred or annuitized
by the following factor:
[(1+I/(1+J+L)](N/12) - 1
The market value adjustment formula
may differ in certain states
where:
I is the interest rate you are earning on the money invested in
the fixed investment option;
J is the interest rate then currently available for the period of
time equal to the number of years remaining in the term you initially agreed to
leave your money in the fixed investment option; and
L is equal to 0.005, except in Florida where it is equal to .0025.
N is the number of full months remaining in the term you initially
agreed to leave your money in the fixed investment option.
EXAMPLES OF THE MARKET VALUE ADJUSTMENT
The examples below assume the following:
(1) You made an initial Purchase Payment of $10,000 and allocated it to the
10-year fixed investment option at a rate of 5%;
(2) You make a partial withdrawal of $4,000 when 1 year (12 months) remain
in the 10-year term you initially agreed to leave your money in the fixed
investment option (N=12); and
(3) You have not made any other transfers, additional Purchase Payments, or
withdrawals.
No withdrawal charges are reflected because your Purchase Payment has been in
the contract for nine full years. If a withdrawal charge applies, it is deducted
before the market value adjustment. The market value adjustment 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 investment option is 4%.
The market value adjustment 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
= 1.004785 - 1
= +0.004785
The requested withdrawal amount is multiplied by the market value adjustment
factor to determine the market value adjustment:
$4,000 X (+0.004785) = +$19.14
$19.14 represents the market value adjustment that would be added to your
withdrawal.
A-1
NEGATIVE ADJUSTMENT
Assume that on the date of withdrawal, the interest rate in effect for new
Purchase Payments in the 1-year fixed investment option is 6%.
The market value adjustment 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 market value adjustment
factor to determine the market value adjustment:
$4,000 X (-0.014085) = -$56.34
$56.34 represents the market value adjustment that will be deducted from the
money remaining in the 10-year fixed investment option.
A-2
APPENDIX B - DEATH BENEFITS FOLLOWING SPOUSAL CONTINUATION
- --------------------------------------------------------------------------------
Capitalized terms used in the Appendix have the same meaning as they have in the
Death Benefit section starting on page 22 of the prospectus.
The term "Continuation Net Purchase Payment" is used frequently to describe the
death benefit options payable to the beneficiary of a Continuing Spouse. We
define Continuation Net Purchase Payment as Net Purchase Payments made as of the
Continuation Date. For the purposes of calculating Continuation Net Purchase
Payments, the amount that equals the contract value on the Continuation Date,
including the Continuation Contribution is considered a Purchase Payment. If the
Continuing Spouse makes no additional Purchase Payments or withdrawals,
Continuation Net Purchase Payments equal the contract value on the Continuation
Date, including the Continuation Contribution.
STANDARD DEATH BENEFIT PAYABLE UPON CONTINUING SPOUSE'S DEATH
If the Standard Death Benefit is applicable upon the Continuing Spouse's death
we will pay the beneficiary the greater of:
1. Continuation Net Purchase Payments compounded at a 3% annual growth
rate until the earlier of Continuing Spouses age 75 or the date of
death of the Continuing Spouse, plus any Purchase Payments recorded
after the date of death of the Continuing Spouse; and reduced for any
withdrawals (and fees and charges applicable to those withdrawals)
recorded after the earlier of age 75 or the date of death, in the same
proportion that the withdrawal reduced the contract value on the date
of the withdrawal.
2. The contract value at the time we receive satisfactory proof of death.
ENHANCED DEATH BENEFIT PAYABLE UPON CONTINUING SPOUSE'S DEATH
If the Enhanced Death Benefit is applicable upon the Continuing Spouse's death,
we will pay the Beneficiary the applicable death benefit under Option 1 or
Option 2.
OPTION 1 - 5% ACCUMULATION:
The death benefit is the greater of:
a. The contract value on the date we receive satisfactory proof of the
Continuing Spouse's death; or
b. Net Purchase Payments made from the original contract issue date
including the Continuation Contribution, compounded to the earlier of
the Continuing Spouse's 80th birthday or the date of death at a 5%
annual growth rate, plus any Purchase Payments recorded after the 80th
birthday or the date of death; and reduced for any withdrawals (and
fees and charges applicable to those withdrawals) recorded after the
80th birthday or the date of death, in the same proportion that the
withdrawal reduced the contract value on the date of the withdrawal, up
to a maximum benefit of two times the Net Purchase Payments.
If the Continuing Spouse dies after the latest Annuity Date and the [5%]
Accumulation option applied, any death benefit payable under the contract will
be the Standard Death Benefit as described above. The Continuing Spouse's
beneficiary will not receive any benefit from the Enhanced Death Benefit.
OPTION 2 - MAXIMUM ANNIVERSARY VALUE:
If the continuing Spouse is younger than age 90 at the time of death, the death
benefit is the greatest of:
a. Continuation Net Purchase Payments; or
b. The contract value at the time we receive satisfactory proof of the
Continuing Spouse's death; or
c. The maximum anniversary value on any contract anniversary (of the
original issue date) occurring after the Continuation Date prior to
the Continuing Spouse's 81st birthday. The anniversary value equals
the value on the contract anniversary plus any Purchase Payments
recorded after that
B-1
anniversary; and reduced for any withdrawals (and fees and charges
applicable to those withdrawals) recorded after that anniversary, in the
same proportion that the withdrawal reduced the contract value on the
date of the withdrawal.
If the Continuing Spouse is age 90 or older at the time of death and the Maximum
Anniversary Value option applied, the death benefit will be equal to the
contract value at the time we receive satisfactory proof of death.
EARNINGS ADVANTAGE BENEFIT FOR SPOUSAL CONTINUATION:
If the original owner's Earnings Advantage remained in effect upon continuation,
the Earnings Advantage benefit may increase the death benefit amount. The
Earnings Advantage benefit is only available if the original owner elected the
feature and it has not been discontinued or terminated. If the Continuing Spouse
had earnings in the contract at the time of his/her death, we will add a
percentage of those earnings (the "Earnings Advantage Percentage"), subject to a
maximum dollar amount (the "Maximum Earnings Advantage Percentage"), to the
death benefit payable.
The Contract Year of Death (from Continuation Date forward) will determine the
Earnings Advantage Percentage and the Maximum Earnings Advantage amount, as set
forth below:
<Table>
<Caption>
- --------------------------------------------------------------------------------------------
EARNINGS ADVANTAGE
CONTACT YEAR OF DEATH PERCENTAGE MAXIMUM EARNINGS ADVANTAGE PERCENTAGE
- --------------------------------------------------------------------------------------------
Years 0 - 4 25% of Earnings 25% of Continuation Net Purchase Payments
- --------------------------------------------------------------------------------------------
Years 5 - 9 40% of Earnings 40% of Continuation Net Purchase Payments*
- --------------------------------------------------------------------------------------------
Years 10+ 50% of Earnings 50% of Continuation Net Purchase Payments*
- --------------------------------------------------------------------------------------------
</Table>
* PURCHASE PAYMENTS RECEIVED AFTER THE 5TH ANNIVERSARY FOLLOWING THE
CONTINUATION DATE MUST REMAIN IN THE CONTRACT FOR AT LAST 6 FULL MONTHS TO BE
INCLUDED AS PART OF THE NET PURCHASE PAYMENTS FOR THE PURPOSE OF THE MAXIMUM
EARNINGS ADVANTAGE PERCENTAGE CALCULATION.
What is the Contract Year of Death?
Contract Year of Death is the number of full 12 month periods starting on the
Continuation Date and ending on the Continuing Spouse's date of death.
What is the Earnings Advantage Amount?
We determine the Earnings Advantage amount based upon a percentage of earnings
in the contract at the time of the Continuing Spouse's death. For the purpose of
this calculation, earnings are defined as (1) minus (2) where
(1) equals the contract value on the Continuing Spouse's date of death;
(2) equals the Continuation Net Purchase Payment(s).
What is the Maximum Earnings Advantage amount?
The Earnings Advantage amount is subject to a maximum. The Maximum Earnings
Advantage amount is a percentage of the Continuation Net Purchase Payments.
The Earnings Advantage benefit will only be paid if the Continuing Spouse's date
of death is prior to the latest Annuity Date.
WE RESERVE THE RIGHT TO MODIFY, SUSPEND OR TERMINATE THE SPOUSAL CONTINUATION
PROVISION (IN ITS ENTIRETY OR ANY COMPONENT) AT ANY TIME.
B-2
APPENDIX C
- --------------------------------------------------------------------------------
HYPOTHETICAL EXAMPLE OF THE OPERATION OF THE INCOME PROTECTOR PROGRAM:
This table assumes a $100,000 initial investment in a non qualified contract
with no further premiums, no withdrawals and no premium taxes; and the election
of the optional Base Income Protector at contract issue.
<Table>
- -----------------------------------------------------------------------------------------------------------------------------
ANNUAL INCOME IF YOU ANNUITIZE ON THE FOLLOWING CONTRACT ANNIVERSARY
IF AT ISSUE YOU 9 10 11 15 19 20
ARE... 1-8 (AGE 69) (AGE 70) (AGE 71) (AGE 75) (AGE 79) (AGE 80)
- -----------------------------------------------------------------------------------------------------------------------------
MALE N/A 6,480 6,672 6,864 7,716 8,616 8,832
AGE 60*
- -----------------------------------------------------------------------------------------------------------------------------
FEMALE N/A 5,700 5,880 6,060 6,900 7,860 8,112
AGE 60*
- -----------------------------------------------------------------------------------------------------------------------------
MALE, AGE 60 N/A 4,920 5,028 5,136 5,544 5,868 5,928
FEMALE, AGE 60**
- -----------------------------------------------------------------------------------------------------------------------------
</Table>
* Life Annuity with 10 Year Period Certain
** Joint and 100% Survivor Annuity with 20 Year Period Certain
The Income Protector may not be available in your state. Please consult your
financial adviser for information regarding availability of this program in your
state.
C-1
APPENDIX D - PREMIUM TAXES
- --------------------------------------------------------------------------------
Premium taxes vary according to the state and are subject to change without
notice. In many states, there is no tax at all. Listed below are the current
premium tax rates in those states that assess a premium tax. For current
information, you should consult your tax adviser.
<Table>
<Caption>
QUALIFIED NON-QUALIFIED
STATE CONTRACT CONTRACT
----- --------- -------------
California.................................................. 0.50% 2.35%
Maine....................................................... 0% 2.00%
Nevada...................................................... 0% 3.50%
South Dakota................................................ 0% 1.25%*
West Virginia............................................... 1.00% 1.00%
Wyoming..................................................... 0% 1.00%
</Table>
* On the first $500,000 of premiums; 0.80% on the amount in excess of $500,000.
D-1
APPENDIX E
- --------------------------------------------------------------------------------
DIVERSIFIED STRATEGIES -- CONDENSED FINANCIAL INFORMATION
<Table>
<Caption>
Fiscal Year
ANCHOR SERIES TRUST: 12/31/01
- ---------------------------------------------------------------------------------------
Capital Appreciation Portfolio (Inception
Date -- 07/09/01)
Beginning AUV....................................... (a) $35.378
(b) $35.378
Ending AUV.......................................... (a) $33.835
(b) $33.791
Ending Number of AUs................................ (a) 4,781
(b) 3,896
- ---------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
SUNAMERICA SERIES TRUST: 12/31/01
- -------------------------------------------------------------------------------
Alliance Growth Portfolio (Inception Date -- 07/09/01)
Beginning AUV....................................... (a) $32.786
(b) $32.786
Ending AUV.......................................... (a) $32.676
(b) $32.649
Ending Number of AUs................................ (a) 735
(b) 1,409
- -------------------------------------------------------------------------------
Davis Venture Value Portfolio (Inception Date -- 07/09/01)
Beginning AUV....................................... (a) $27.129
(b) $27.129
Ending AUV.......................................... (a) $26.286
(b) $26.197
Ending Number of AUs................................ (a) 2,529
(b) 2,600
- -------------------------------------------------------------------------------
Global Equities Portfolio (Inception Date -- 07/09/01)
Beginning AUV....................................... (a) $17.986
(b) $17.986
Ending AUV.......................................... (a) $17.516
(b) $17.542
Ending Number of AUs................................ (a) 1,341
(b) 19
- -------------------------------------------------------------------------------
MFS Mid-Cap Growth Portfolio (Inception Date -- 07/09/01)
Beginning AUV....................................... (a) $15.227
(b) $15.227
Ending AUV.......................................... (a) $13.438
(b) $13.422
Ending Number of AUs................................ (a) 7,564
(b) 4,846
- -------------------------------------------------------------------------------
Technology Portfolio (Inception Date -- 07/09/01)
Beginning AUV....................................... (a) $4.018
(b) $4.018
Ending AUV.......................................... (a) $3.453
(b) $3.459
Ending Number of AUs................................ (a) 19,075
(b) 1,501
- -------------------------------------------------------------------------------
</Table>
AUV -- Accumulation Unit Value
AU -- Accumulation Units
(a) Reflects AUV/AU without election of EstatePlus
(b) Reflects AUV/AU with election of EstatePlus
E-1
<Table>
<Caption>
Fiscal Year
WM VARIABLE TRUST: 12/31/01
- ---------------------------------------------------------------------------------------
Balanced Portfolio (Inception Date -- 07/09/01)
Beginning AUV....................................... (a) $7.576
(b) $7.576
Ending AUV (a) $7.544
(b) $7.531
Ending Number of AUs................................ (a) 393,878
(b) 425,063
- ---------------------------------------------------------------------------------------
Conservative Balanced Portfolio (Inception
Date -- 07/09/01)
Beginning AUV....................................... (a) $5.514
(b) $5.514
Ending AUV.......................................... (a) $5.543
(b) $5.539
Ending Number of AUs................................ (a) 99,398
(b) 23,679
- ---------------------------------------------------------------------------------------
Conservative Growth Portfolio (Inception Date -- 07/09/01)
Beginning AUV....................................... (a) $8.163
(b) $8.163
Ending AUV.......................................... (a) $7.966
(b) $7.957
Ending Number of AUs...................................... (a) 217,903
(b) 180,433
- ---------------------------------------------------------------------------------------
Equity Income Fund (Inception Date -- 07/09/01)
Beginning AUV....................................... (a) $6.289
(b) $6.289
Ending AUV.......................................... (a) $6.393
(b) $6.381
Ending Number of AUs................................ (a) 109,250
(b) 58,313
- ---------------------------------------------------------------------------------------
Flexible Income Portfolio (Inception Date -- 07/09/01)
Beginning AUV....................................... (a) $6.404
(b) $6.404
Ending AUV.......................................... (a) $6.530
(b) $6.513
Ending Number of AUs................................ (a) 186,817
(b) 121,877
- ---------------------------------------------------------------------------------------
Growth & Income Fund (Inception Date -- 07/09/01)
Beginning AUV....................................... (a) $6.374
(b) $6.374
Ending AUV.......................................... (a) $6.044
(b) $6.035
Ending Number of AUs................................ (a) 83,275
(b) 57,082
- ---------------------------------------------------------------------------------------
Growth Fund (Inception Date -- 07/09/01)
Beginning AUV....................................... (a) $8.096
(b) $8.096
Ending AUV.......................................... (a) $7.147
(b) $7.131
Ending Number of AUs................................ (a) 27,301
(b) 5,665
- ---------------------------------------------------------------------------------------
Income Fund (Inception Date -- 07/09/01)
Beginning AUV....................................... (a) $5.506
(b) $5.506
Ending AUV.......................................... (a) $5.725
(b) $5.714
Ending Number of AUs................................ (a) 72,090
(b) 46,356
- ---------------------------------------------------------------------------------------
International Growth Fund (Inception Date -- 07/09/01)
Beginning AUV....................................... (a) $4.693
(b) $4.693
Ending AUV.......................................... (a) $4.550
(b) $4.569
Ending Number of AUs................................ (a) 909
(b) 175
- ---------------------------------------------------------------------------------------
</Table>
AUV -- Accumulation Unit Value
AU -- Accumulation Units
(a) Reflects AUV/AU without election of EstatePlus
(b) Reflects AUV/AU with election of EstatePlus
E-2
<Table>
<Caption>
Fiscal Year
WM VARIABLE TRUST: 12/31/01
- ---------------------------------------------------------------------------------------
Mid Cap Stock Fund (Inception Date -- 07/09/01)
Beginning AUV....................................... (a) $6.488
(b) $6.488
Ending AUV.......................................... (a) $6.675
(b) $6.668
Ending Number of AUs................................ (a) 27,209
(b) 22,411
- ---------------------------------------------------------------------------------------
Money Market Fund (Inception Date -- 07/09/01)
Beginning AUV....................................... (a) $5.756
(b) $5.756
Ending AUV.......................................... (a) $5.795
(b) $5.764
Ending Number of AUs................................ (a) 46,507
(b) 10,619
- ---------------------------------------------------------------------------------------
Short Term Income Fund (Inception Date -- 07/09/01)
Beginning AUV....................................... (a) $5.728
(b) $5.728
Ending AUV.......................................... (a) $5.909
(b) $5.895
Ending Number of AUs................................ (a) 4,605
(b) 11,940
- ---------------------------------------------------------------------------------------
Small Cap Stock Fund (Inception Date -- 07/09/01)
Beginning AUV....................................... (a) $8.272
(b) $8.272
Ending AUV.......................................... (a) $7.425
(b) $7.422
Ending Number of AUs................................ (a) 14,716
(b) 3,471
- ---------------------------------------------------------------------------------------
Strategic Growth Portfolio (Inception Date -- 07/09/01)
Beginning AUV....................................... (a) $9.190
(b) $9.190
Ending AUV.......................................... (a) $8.800
(b) $8.800
Ending Number of AUs................................ (a) 43,009
(b) 27,642
- ---------------------------------------------------------------------------------------
U.S. Government Securities Fund (Inception
Date -- 07/09/01)
Beginning AUV....................................... (a) $5.671
(b) $5.671
Ending AUV.......................................... (a) $5.847
(b) $5.843
Ending Number of AUs................................ (a) 123,734
(b) 74,564
- ---------------------------------------------------------------------------------------
West Coast Equity Fund (Inception Date -- 07/09/01)
Beginning AUV....................................... (a) $9.446
(b) $9.446
Ending AUV.......................................... (a) $8.858
(b) $8.844
Ending Number of AUs................................ (a) 29,204
(b) 36,362
- ---------------------------------------------------------------------------------------
</Table>
AUV -- Accumulation Unit Value
AU -- Accumulation Units
(a) Reflects AUV/AU without election of EstatePlus
(b) Reflects AUV/AU with election of EstatePlus
E-3
Please forward a copy (without charge) of the WM Diversified Strategies Variable
Annuity Statement of Additional Information to:
(Please print or type and fill in all information.)
------------------------------------------------------------------
Name
------------------------------------------------------------------
Address
------------------------------------------------------------------
City/State/Zip
------------------------------------------------------------------
Date: ------------------------- Signed: -------------------------
Return to: Anchor National Life Insurance Company, Annuity Service Center, P.O.
Box 52499, Los Angeles, California 90054-0299
PART II
-------
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
-------------------------------------------
The following table sets forth the expenses in connection with the issuance
and distribution of the securities being registered, other than underwriting
discounts and commissions. All of the amounts shown are estimates, except the
SEC registration fee.
<Table>
SEC registration fee ................................. $ 24,338
Printing and engraving ............................... $ 50,000
Legal fees and expenses .............................. $ 10,000
Rating agency fees ................................... $ 7,500
Miscellaneous ........................................ $ 10,000
--------
Total ............................................ $101,838
</Table>
Item 15. Indemnification of Directors and Officers.
------------------------------------------
Section 10-851 of the Arizona Corporations and Associations law permits the
indemnification of directors, officers, employees and agents of Arizona
corporations. Article Eight of the Company's Restated Articles of Incorporation,
as amended and restated (the "Articles") and Article Five of the Company's
By-Laws ("By-Laws") authorize the indemnification of directors and officers to
the full extent required or permitted by the Laws of the State of Arizona, now
or hereafter in force, whether such persons are serving the Company, or, at its
request, any other entity, which indemnification shall include the advance of
expenses under the procedures and to the full extent permitted by law. In
addition, the Company's officers and directors are covered by certain directors'
and officers' liability insurance policies maintained by the Company's parent.
Reference is made to section 10-851 of the Arizona Corporations and Associations
Law, Article Eight of the Articles, and Article Five of the By-Laws, which are
incorporated herein by reference.
Item 16. Exhibits and Financial Statement Schedules.
-------------------------------------------
Exhibit No. Description
(1) Underwriting Agreement***
(2) Plan of Acquisition, Reorganization,
Arrangement, Liquidation or Succession**
(3) (a) Articles of Incorporation+
(b) By-Laws+
(4) (a) Vista Capital Advantage
Fixed and Variable Contract***
(b) Application for Contract***
(5) Opinion of Counsel re: Legality***
(6) Opinion re Discount on Capital Shares**
(7) Opinion re Liquidation Preference**
(8) Opinion re Tax Matters**
(9) Voting Trust Agreement**
(10) Material Contracts**
(11) Statement re Computation of Per Share
Earnings**
(12) Statement re Computation of Ratios**
(14) Material Foreign Patents**
(15) Letter re Unaudited Financial Information**
(16) Letter re Change in Certifying Accountant**
(21) Subsidiaries of Registrant***
(23) (a) Consent of Independent Accountants*
(b) Consent of Attorney***
(24) Powers of Attorney*****
(25) Statement of Eligibility of Trustee**
(26) Invitation for Competitive Bids**
(27) Financial Data Schedule****
(28) Information Reports Furnished to State
Insurance Regulatory Authority**
(29) Other Exhibits**
* Filed Herewith
** Not Applicable
*** Incorporated by Reference to
Post-Effective Amendment No. 3
to Registration Statement
No. 33-81476 on Form S-1
filed on 12-24-97.
**** Incorporated by Reference to
Post-Effective Amendment No. 5
to Registration Statement
No. 33-81476 on Form S-1 filed
on 12-24-98.
***** Incorporated by Reference to Post-
Effective Amendment 9 to
Registration Statement No. 33-81476
on Form S-3 filed on December 19,
2000.
+ Incorporated by reference to Post-
Effective Amendment No. 13 to this
Registration Statement filed
April 15, 2002.
Item 17. Undertakings.
------------
The undersigned registrant, Anchor National, hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement
to include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, State of California on this 1st
day of October, 2002.
By: ANCHOR NATIONAL LIFE INSURANCE COMPANY
By: /s/ JAY S. WINTROB
-----------------------------------------
Jay S. Wintrob
Chief Executive Officer
Pursuant to the Securities Act of 1933, this Post-Effective Amendment to
the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
JAY S. WINTROB* Chief Executive Officer & October 1, 2002
- --------------------- Director
Jay S. Wintrob (Principal Executive Officer)
JANA W. GREER* President & Director October 1, 2002
- ---------------------
Jana W. Greer
N. SCOTT GILLIS* Senior Vice President & October 1, 2002
- --------------------- Director
N. Scott Gillis (Principal Financial Officer)
JAMES R. BELARDI* Senior Vice President & October 1, 2002
- --------------------- Director
James R. Belardi
MAURICE S. HEBERT* Vice President & Controller October 1, 2002
- --------------------- (Principal Accounting Officer)
Maurice S. Hebert
MARC H. GAMSIN* Senior Vice President & October 1, 2002
- ---------------------- Director
Marc H. Gamsin
By: /s/ CHRISTINE A. NIXON October 1, 2002
-----------------------
Christine A. Nixon
*Attorney-in-Fact
Date: October 1, 2002
EXHIBIT INDEX
Exhibit Description
- ------- -----------
(23) (a) Consent of Independent Accountants