NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES CO I (Form: 485BPOS, Received: 09/28/2001 14:33:13)

REGISTRATION NO. 2-83631/811-3738

SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549

                                  FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933               [X]

                               Pre-Effective Amendment No.            [ ]
                               Post-Effective Amendment No.  32       [X]

                                     and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940       [X]

                               Amendment No.  33                      [X]

                              -------------------

North American Funds Variable Product Series I

(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

2929 ALLEN PARKWAY, HOUSTON, TEXAS 77019
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

(713) 831-3164
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

THE CORPORATION TRUST COMPANY
300 EAST LOMBARD ST.
BALTIMORE, MARYLAND 21202
(NAME AND ADDRESS OF AGENT FOR SERVICE)

Copy to:
JOHN A. DUDLEY, ESQ.
SULLIVAN & WORCESTER, LLP
1025 CONNECTICUT AVENUE, N.W.
WASHINGTON, D.C. 20036

It is proposed that this filing will become effective (check appropriate box):

[ ] immediately upon filing pursuant to paragraph (b)

[X] on (10/01/01) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:

[ ] This post-effective amendment designates a new effective date for a previously filed post-effective amendment.

Title of Securities Being Registered: Shares of Common Stock

NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES I
2929 Allen Parkway
Houston, Texas 77019

October 1, 2001
Prospectus

North American Funds Variable Product Series I (the "Series Company") is a mutual fund made up of 21 separate Funds (the "Funds"). Each of the Funds has a different investment objective. Each Fund is explained in more detail on its Fact Sheet contained in this Prospectus.

FUND NAMES ("SHORT" NAMES)

- NORTH AMERICAN -- AG ASSET ALLOCATION FUND (ASSET ALLOCATION FUND)

- NORTH AMERICAN -- T. ROWE PRICE BLUE CHIP GROWTH FUND (BLUE CHIP GROWTH FUND)

- NORTH AMERICAN -- AG CAPITAL CONSERVATION FUND (CAPITAL CONSERVATION FUND)

- NORTH AMERICAN CORE EQUITY FUND (CORE EQUITY FUND)

- NORTH AMERICAN -- AG GOVERNMENT SECURITIES FUND (GOVERNMENT SECURITIES FUND)

- NORTH AMERICAN -- AG GROWTH & INCOME FUND (GROWTH & INCOME FUND)

- NORTH AMERICAN -- T. ROWE PRICE HEALTH SCIENCES FUND (HEALTH SCIENCES FUND)

- NORTH AMERICAN -- AMERICAN CENTURY INCOME & GROWTH FUND (INCOME & GROWTH FUND)

- NORTH AMERICAN -- AG INTERNATIONAL EQUITIES FUND (INTERNATIONAL EQUITIES FUND)

- NORTH AMERICAN -- AG INTERNATIONAL GOVERNMENT BOND FUND (INTERNATIONAL GOVERNMENT BOND FUND)

- NORTH AMERICAN -- AMERICAN CENTURY INTERNATIONAL GROWTH FUND (INTERNATIONAL GROWTH FUND)

- NORTH AMERICAN -- FOUNDERS LARGE CAP GROWTH FUND (LARGE CAP GROWTH FUND)

- NORTH AMERICAN -- AG MIDCAP INDEX FUND (MIDCAP INDEX FUND)

- NORTH AMERICAN -- AG 1 MONEY MARKET FUND (MONEY MARKET FUND)

- NORTH AMERICAN -- AG NASDAQ-100(R) INDEX FUND (NASDAQ-100(R) INDEX FUND)

- NORTH AMERICAN -- PUTNAM OPPORTUNITIES FUND (PUTNAM OPPORTUNITIES FUND)

- NORTH AMERICAN -- T. ROWE PRICE SCIENCE & TECHNOLOGY FUND (SCIENCE & TECHNOLOGY FUND)

- NORTH AMERICAN -- FOUNDERS/T. ROWE PRICE SMALL CAP FUND (SMALL CAP FUND)

- NORTH AMERICAN -- AG SMALL CAP INDEX FUND (SMALL CAP INDEX FUND)

- NORTH AMERICAN -- AG SOCIAL AWARENESS FUND (SOCIAL AWARENESS FUND)

- NORTH AMERICAN -- AG STOCK INDEX FUND (STOCK INDEX FUND)

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES NOR HAS IT DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. IT IS A CRIMINAL OFFENSE TO STATE OTHERWISE.

TABLE OF CONTENTS

TOPIC                                                          PAGE
-----                                                          ----
COVER PAGE
WELCOME
ABOUT THE FUNDS
FUND FACT SHEETS
  Asset Allocation Fund
  Blue Chip Growth Fund
  Capital Conservation Fund
  Core Equity Fund
  Government Securities Fund
  Growth & Income Fund
  Health Sciences Fund
  Income & Growth Fund
  International Equities Fund
  International Government Bond Fund
  International Growth Fund
  Large Cap Growth Fund
  MidCap Index Fund
  Money Market Fund
  Nasdaq-100(R) Index Fund
  Putnam Opportunities Fund
  Science & Technology Fund
  Small Cap Fund
  Small Cap Index Fund
  Social Awareness Fund
  Stock Index Fund
MORE ABOUT PORTFOLIO INVESTMENTS
  American Depositary Receipts
  Asset-Backed Securities
  Derivatives
  Diversification
  Equity Securities
  Exchange Traded Funds
  Fixed Income Securities
  Foreign Currency
  Foreign Securities
  Illiquid Securities
  Lending Portfolio Securities
  Loan Participations
  Money Market Securities
  Mortgage-Related Securities
  Repurchase Agreements
  Reverse Repurchase Agreements, Dollar Rolls and Borrowings
  Temporary Defensive Investment Strategy
  Variable Rate Demand Notes
  When-Issued Securities

TOPIC                                                          PAGE
-----                                                          ----
ABOUT PORTFOLIO TURNOVER
ABOUT THE SERIES COMPANY'S MANAGEMENT
  Investment Adviser
  Investment Sub-Advisers
     American Century Investment Management, Inc.
     American General Investment Management, L.P.
     Founders Asset Management LLC
     Putnam Investment Management, LLC
     T. Rowe Price Associates, Inc.
     Wellington Management Company, LLP
ACCOUNT INFORMATION
  Series Company Shares
  Buying and Selling Shares
  How Shares are Valued
  Dividends and Capital Gains
  Tax Consequences
FINANCIAL HIGHLIGHTS

WELCOME

This prospectus provides you with information you need to know before investing in the Series Company. Please read and retain this prospectus for future reference. Unless otherwise specified in this prospectus, the words "we" and "our" mean VALIC. The words "you" and "your" mean the participant.

Individuals can't invest in these Funds directly. Instead, they participate through an annuity contract, variable life policy, or employer plan (collectively, the "Contracts" and each a Contract) with VALIC or one of its affiliates, or employee thrift plans maintained by VALIC or an affiliate.

All inquiries regarding this prospectus and annuity contracts issued by VALIC should be directed, in writing, to VALIC Client Service, A3-01, 2929 Allen Parkway, Houston, Texas 77019, or by calling 1-800-633-8960.

Although the Contracts may be sold by banks, an investment in a Fund through a Contract is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

ABOUT THE FUNDS

The investment objective and strategies for each of the Funds in this prospectus are non-fundamental and may be changed by the Series Company's Board of Directors without investor approval.

Please note that for temporary defensive purposes each Fund may invest up to 100% of its assets in high quality money market securities. Whenever a Fund assumes such a defensive position, it may not achieve its investment objective.

NORTH AMERICAN -- AG
ASSET ALLOCATION
FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT OBJECTIVE
The Fund seeks maximum aggregate rate of return over the long-term through controlled investment risk by adjusting its investment mix among stocks, long-term debt securities and short-term money market securities.

INVESTMENT STRATEGY
The Fund is an asset allocation fund that attempts to maximize returns with a mix of stocks, bonds and money market securities. We buy and sell securities for the Fund by changing its investment mix among stocks, intermediate and long-term bonds and money market securities. As a result, the Fund's investments may change often. Also, the Fund can invest 100% in just one of these market sectors.

Unlike an index fund, which tries to increase the money you invest by matching a specific index's performance, the Fund tries to perform better than a blend of three market sectors measured by:

- the Standard & Poor's ("S&P") 500 Index;

- the Lehman Brothers Aggregate Bond Index; and

- the Certificate of Deposit Primary Offering by New York City Banks, 30 Day Rate

To help us decide how to allocate the Fund's assets, we rely on an asset allocation model. The model analyzes many factors that affect the performance of securities that comprise certain indices.

Based on the model, we will normally allocate the Fund's assets approximately according to the following market sectors:

Stocks (common stock, preferred stock and convertible
  preferred stock)                                         55%
Intermediate and long-term bonds                           35%
High quality money market securities                       10%

The Fund has established separate sub-objectives for investments in each of the three market sectors. Within the stock sector, the Fund seeks appreciation of capital by selecting investments that it expects will participate in the growth of the nation's economy. Within the bond sector, the Fund will generally seek high current income consistent with reasonable investment risk. Within the money market sector, the Fund seeks the highest level of current income consistent with liquidity, stability, and preservation of capital.

As of May 31, 2001, the Fund's assets were invested as follows:

Stocks (common stock, preferred stock and convertible
  preferred stock)                                       52.30%
Intermediate and long-term bonds                         35.48%
High quality money market securities                     12.22%*

* After taking the contract value of futures positions into consideration.

INVESTMENT RISK

The Fund allocates its assets using an asset allocation model. The model tries to get the best return from three types of securities. A part of that program also tries to reduce risk. As with all funds, if you sell your shares when their value is less than the price you paid, you will lose money. Because of the following principal risks the value of your investment may fluctuate:

Credit Risk: The risk that an issuer of a fixed income security owned by the Fund may be unable to make interest or principal payments.

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

Interest Rate Risk: The risk that fluctuations in interest rates may affect the value of the Fund's interest-paying fixed income securities.

Market Risk: The Fund's share price can fall because of weakness in the broad market, a particular industry, or specific holdings. The market as a whole can decline for many reasons, including adverse political or economic developments here or abroad, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, the Adviser's assessment of companies held in the Fund may prove incorrect, resulting in losses or poor performance even in a rising market. Finally, the Fund's investment approach could fall out of favor with the investing public, resulting in lagging performance versus other comparable funds.

Model Risk: The risk that the asset allocation model fails to produce the optimal allocation.

Prepayment Risk: The risk that issuers of fixed income securities will make prepayments earlier than anticipated during periods of falling interest rates requiring the Fund to invest in new securities with lower interest rates. This will reduce the stream of cash payments that flow through the Fund.

ASSET ALLOCATION

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the S&P 500 Index. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

This chart illustrates the Fund's annual returns for the last ten calendar years. Charges imposed by the Contracts that invest in the Fund are not included in the calculations of return in this bar chart, and if those charges were included, the returns would have been less than those shown below.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was (2.43%).

Best quarter: 11.29%, quarter ending June 30, 1997

Worst quarter: -5.54%, quarter ending March 31, 2001

This table compares the Fund's average annual returns to the returns of the S&P 500 Index and a Model Benchmark, which is a blended index of the S&P 500 Index, the Lehman Brothers Aggregate Bond Index and the Certificate of Deposit Primary Offering to New York City Banks, 30 Day Rate, for the periods shown. The percentages of each index included in the Model Benchmark may differ from the percentages their respective asset classes represent in the Fund's investment portfolio.

---------------------------------------------------------------
                                    1 YEAR   5 YEARS   10 YEARS
                                    ------   -------   --------
The Fund                            -2.50%   11.93%     11.04%
Model Benchmark                     -0.59%   12.92%     12.95%
---------------------------------------------------------------

The S&P 500 Index is an index of the stocks of 500 major large-cap U.S. corporations, chosen for market size, liquidity, and industry group representation. It is a market-value weighted index, with each stock's percentage in the Index in proportion to its market value. The Lehman Brothers Aggregate Bond Index is an unmanaged index that is composed of securities from Lehman Brothers Government/Corporate Bond Index, Mortgage-Backed Securities Index, and the Asset-Backed Securities Index.

The Fund returns reflect investment management fees and other Fund expenses. The Fund returns do not reflect charges included in the annuity contract or variable life policy for mortality and expense guarantees, administrative fees or surrender charges.

NORTH AMERICAN --
T. ROWE PRICE
BLUE CHIP GROWTH FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT SUB-ADVISER
T. Rowe Price Associates, Inc.

INVESTMENT OBJECTIVE
The Fund seeks long-term capital growth. Income is a secondary objective.

INVESTMENT STRATEGY
The Fund pursues long-term capital appreciation by normally investing at least 65% of total assets in the common stocks of large and medium-sized blue chip growth companies. These are firms that, in the sub-adviser's view, are well-established in their industries and have the potential for above-average earnings. The sub-adviser focuses on companies with leading market position, seasoned management, and strong financial fundamentals. The sub-adviser's investment approach reflects the belief that solid company fundamentals (with emphasis on strong growth in earnings per share or operating cash flow) combined with a positive industry outlook will ultimately reward investors with strong investment performance. Some of the companies the sub-adviser targets will have good prospects for dividend growth.

The Fund may also invest up to 20% of its total assets in foreign securities, which include non-dollar denominated securities traded outside of the U.S. and dollar-denominated securities of foreign issuers traded in the U.S. (such as American Depositary Receipts).

While most assets will be invested in common stocks, other securities may also be purchased, including futures and options, in keeping with Fund objectives. The Fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or re-deploy assets into more promising opportunities.

INVESTMENT RISK
As with all funds, if you sell your shares when their value is less than the price you paid, you will lose money. Because of the following principal risks the value of your investment may fluctuate:

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

Foreign Investment Risk: Investments in foreign securities involve additional risks, due to changes in currency exchange rates, unfavorable political and legal developments or economic and financial instability, for example. Foreign companies are not subject to the U.S. accounting and financial reporting standards and public information may not be as available. In addition, the liquidity of these investments may be more limited than for U.S. investments. Certain of these risks may also apply to U.S. investments that are denominated in foreign currencies or that are traded in foreign markets, or to securities of U.S. companies that have significant foreign operations.

Growth Stock Risk: Even well-established growth stocks can be volatile. Since growth companies usually invest a high portion of earnings in their own businesses, their stocks may lack the dividends that can cushion share prices in a down market. Since many investors buy these stocks because of anticipated superior earnings growth, earnings disappointments often result in sharp price declines. Also, medium-sized companies may have greater volatility than larger ones.

Market Risk: As with all equity funds, this Fund's share price can fall because of weakness in the broad market, a particular industry, or specific holdings. The market as a whole can decline for many reasons, including adverse political or economic developments here or abroad, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, the sub-adviser's assessment of companies held in the Fund may prove incorrect, resulting in losses or poor performance even in a rising market. Finally, the Fund's investment approach could fall out of favor with the investing public, resulting in lagging performance versus other comparable funds.

PERFORMANCE INFORMATION
Performance is not shown because the Fund has been in operation less than a full calendar year.

NORTH AMERICAN -- AG
CAPITAL CONSERVATION
FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT OBJECTIVE
The Fund seeks the highest possible total return consistent with preservation of capital through current income and capital gains on investments in intermediate and long-term debt instruments and other income producing securities.

INVESTMENT STRATEGY
The Fund invests in high quality bonds to provide you with the highest possible total return from current income and capital gains while preserving your investment. To increase the Fund's earning potential, we may use a small part of the Fund's assets to make some higher risk investments.

The Fund invests at least 75% the Fund's total assets, at the time of purchase, in investment-grade, intermediate- and long-term corporate bonds, as well as securities issued or guaranteed by the U.S. Government, mortgage-backed securities, asset-backed securities, collateralized mortgage obligations, and high quality money market securities. The Fund purchases bonds that are rated at least Baa by Moody's Investor Services, Inc. ("Moody's") or another rating organization. See the Statement of Additional Information for a detailed description of the ratings. U.S. Government securities are securities issued or guaranteed by the U.S. Government, which are supported by (i) the full faith and credit of the U.S. Government; (ii) the right of the issuer to borrow from the U.S. Treasury; (iii) the credit of the issuing government agency; or (iv) the discretionary authority of the U.S. Government or GNMA to purchase certain obligations of the agency.

Credit Risk: The risk that an issuer of a fixed income security owned by the Fund may be unable to make interest or principal payments.

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

Interest Rate Risk: The risk that fluctuations in interest rates may affect the value of the Fund's interest-paying fixed income securities.

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the Lehman Brothers Aggregate Bond Index. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

This chart illustrates the Fund's annual returns for the last ten calendar years. Charges imposed by the Contracts that invest in the Fund are not included in the calculations of return in this

CAPITAL CONSERVATION

bar chart, and if those charges were included, the returns would have been less than those shown below.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was 4.17%.

Best quarter: 6.91%, quarter ending June 30, 1995

Worst quarter: -4.55%, quarter ending March 31, 1994

This table compares the Fund's average annual returns to the returns of the Lehman Brothers Aggregate Bond Index for the periods shown.

----------------------------------------------------------------
                                     1 YEAR   5 YEARS   10 YEARS
                                     ------   -------   --------
The Fund                              9.19%    5.22%     7.63%
Lehman Bros. Agg. Bond Index         11.63%    6.46%     7.96%
----------------------------------------------------------------

The Lehman Brothers Aggregate Bond Index is an unmanaged index that is composed of securities from Lehman Brothers Government/Corporate Bond Index, Mortgage-Backed Securities Index, and the Asset-Backed Securities Index.

NORTH AMERICAN CORE
EQUITY FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT SUB-ADVISER
Wellington Management Company, LLP

INVESTMENT OBJECTIVE
The Fund seeks to provide long-term growth of capital through investment primarily in equity securities.

INVESTMENT STRATEGY
The Fund invests primarily in large-cap quality companies with long-term growth potential. Important characteristics of such companies include: a strong management team, a leadership position within an industry, a globally competitive focus, a strong balance sheet and a high return on equity. The Fund will invest at least 75% of total assets, at the time of purchase, in common stocks and related securities, including preferred stocks and convertible stock.

The investment strategy is a conservative, long-term approach which is a blend of top down sector analysis and bottom up security selection.

- Top Down Sector Analysis. The sub-adviser analyzes the macroeconomic and investment environment, including an evaluation of economic conditions, U.S. fiscal and monetary policy, demographic trends and investor sentiment. Through top down analysis, the sub-adviser anticipates trends and changes in markets in the economy as a whole and identifies industries and sectors that are expected to outperform.

- Bottom Up Security Selection. Bottom up security selection consists of the use of fundamental analysis to identify specific securities for purchase or sale. Fundamental analysis of a company involves the assessment of such factors as its management, business environment, balance sheet, income statement, anticipated earnings, revenues, dividends and other related measures of value.

Market Risk: The Fund's share price can fall because of weakness in the broad market, a particular industry, or specific holdings. The market as a whole can decline for many reasons, including adverse political or economic developments here or abroad, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, the sub-adviser's assessment of companies held in the Fund may prove incorrect, resulting in losses or poor performance even in a rising market. Finally, the Fund's investment approach could fall out of favor with the investing public, resulting in lagging performance versus other comparable funds.

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the S&P 500 Index. Prior to September 1, 1999, the Fund was sub-advised by T. Rowe Price Associates, Inc. Wellington Management Company, LLP assumed sub-advisory duties September 1, 1999. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

This chart illustrates the Fund's annual returns for each full calendar year since inception of the Fund. Charges imposed by the Contracts that invest in the Fund are not included in the calculations of return in this bar chart, and if those charges were included, the returns would have been less than those shown below.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was -9.88%.

Best quarter: 27.67%, quarter ending December 31, 1998

Worst quarter: -20.82%, quarter ending September 30, 1998

This table compares the Fund's average annual returns to the returns of the S&P 500 Index for the periods shown.

----------------------------------------------------------------
                                                 SINCE INCEPTION
                              1 YEAR   5 YEARS     (4/29/1994)
                              ------   -------   ---------------
The Fund                      -6.29%   11.42%        15.14%
S&P 500 Index                 -9.10%   18.33%        19.71%
----------------------------------------------------------------

CORE EQUITY FUND

NORTH AMERICAN -- AG
GOVERNMENT SECURITIES
FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT OBJECTIVE
The Fund seeks high current income and protection of capital through investments in intermediate and long-term U.S. Government debt securities.

INVESTMENT STRATEGY
The Fund primarily invests in intermediate and long-term U.S. Government and government sponsored investments. The Fund may also use up to 20% of its assets to make high quality foreign investments payable in U.S. dollars.

The Fund will invest at least 80% of total assets in debt securities issued or guaranteed by the U.S. Government, asset-backed securities, or high quality domestic money market securities. U.S. Government securities are securities issued or guaranteed by the U.S. Government, which are supported by (i) the full faith and credit of the U.S. Government; (ii) the right of the issuer to borrow from the U.S. Treasury; (iii) the credit of the issuing government agency; or
(iv) the discretionary authority of the U.S. Government or GNMA to purchase certain obligations of the agency. The Fund may invest up to 25% of total assets in mortgage-backed securities.

Interest Rate Risk: The risk that fluctuations in interest rates may affect the value of the Fund's interest-paying fixed income securities.

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the Lehman Brothers Government Bond Index. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was 2.01%.

Best quarter: 6.47%, quarter ending September 30, 1991

Worst quarter: -3.75%, quarter ending March 31, 1994

This table compares the Fund's average annual returns to the returns of the Lehman Brothers Government Bond Index for the periods shown.

----------------------------------------------------------------
                                     1 YEAR   5 YEARS   10 YEARS
                                     ------   -------   --------
The Fund                             12.90%    5.83%     7.34%
Lehman Bros. Govt. Bond Index        13.24%    6.49%     7.92%
----------------------------------------------------------------

The Lehman Brothers Government Bond Index is a market-value weighted index of U.S. government and government agency securities (other than mortgage securities) with maturities of one year or more.

NORTH AMERICAN -- AG
GROWTH & INCOME
FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT OBJECTIVE
The Fund seeks to provide long-term growth of capital and, secondarily, current income through investment in common stocks and equity-related securities.

INVESTMENT STRATEGY
The Fund invests in stocks that provide long-term growth potential. As a secondary goal, the Fund invests in securities that will provide current income. We use a top-down, highly disciplined investment process. A universe of potential investment candidates is developed and then tested through various filters to determine the appropriate mix for achieving the desired returns while limiting variation relative to the market. The portfolio will usually consist of a diversified selection of large capitalization stocks with a tendency toward lower price/earnings multiples.

The Fund generally invests 90% to 95% of total assets, at the time of purchase, in common stocks and equity-related securities, bonds, preferred stocks, convertible stocks and warrants.

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the S&P 500 Index. Prior to February 22, 1999, the Fund was sub-advised by Value Line, Inc. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was -5.54%.

Best quarter: 23.67%, quarter ending December 31, 1998

Worst quarter: -15.68%, quarter ending September 30, 1998

This table compares the Fund's average annual returns to the returns of the S&P 500 Index for the periods shown.

----------------------------------------------------------------
                                                 SINCE INCEPTION
                             1 YEAR    5 YEARS     (4/29/1994)
                             -------   -------   ---------------
The Fund                     -10.86%   13.88%        14.90%
S&P 500 Index                 -9.10%   18.33%        19.71%
----------------------------------------------------------------

The Fund returns reflect investment management fees and other Fund expenses. The Fund returns do not reflect charges included in the annuity contract or variable annuity policy for mortality and expense guarantees, administrative fees or surrender charges.

GROWTH & INCOME FUND

Important Note: On July 16-17, 2001, the Board of Directors of the Fund approved a new subadvisory (fund management) agreement between VALIC and SunAmerica Asset Management Corp. ("SAAMCo"), to take effect as of January 1, 2002, subject to shareholder approval. SAAMCo is a wholly owned subsidiary of American International Group, Inc. ("AIG") and is an affiliate of VALIC. The subadvisory fees payable to SAAMCo will be borne by VALIC and not the Fund, and will not result in increased costs to shareholders. Please be sure to vote when you receive your proxy notice and call of shareholder meeting this fall.

NORTH AMERICAN --
T. ROWE PRICE
HEALTH SCIENCES FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT SUB-ADVISER
T. Rowe Price Associates, Inc.

INVESTMENT OBJECTIVE
The Fund seeks long-term capital growth.

INVESTMENT STRATEGY
The Fund pursues long-term capital appreciation by normally investing at least 65% of total assets in the common stocks of companies engaged in the research, development, production, or distribution of products or services related to health care, medicine, or the life sciences (collectively termed "health sciences"). While the Fund can invest in companies of any size, the majority of Fund assets are expected to be invested in large-and mid-capitalization companies.

The Fund's sub-adviser divides the health sciences sector into four main areas:
pharmaceuticals, health care services companies, products and devices providers, and biotechnology firms. The allocation among these four areas will vary depending on the relative potential the sub-adviser sees within each area and the outlook for the overall health sciences sector.

The Fund will use fundamental, bottom-up analysis that seeks to identify high-quality companies and the most compelling investment opportunities. In general, the Fund will follow a growth investment strategy, seeking companies whose earnings are expected to grow faster than inflation and the economy in general. When stock valuations seem unusually high, however, a "value" approach, which gives preference to seemingly undervalued companies, may be emphasized.

The Fund may invest up to 35% of its total assets in foreign stocks, which include non-dollar denominated securities traded outside the U.S. and dollar-denominated securities of foreign issuers traded in the U.S. (such as American Depositary Receipts).

While most assets will be invested in common stocks, other securities may also be purchased, including futures and options, in keeping with Fund objectives.

The Fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or re-deploy assets into more promising opportunities.

The Fund is a non-diversified fund. This means that it may invest more than 5% of its assets in the stock of a single company. However, this increases the risk of the Fund, since the economic and/or stock performance of any one company could impact a greater percentage of the Fund's investments. The Fund will, however, comply with diversification requirements imposed by the Internal Revenue Code of 1986 in order to pass on the maximum tax benefits associated with the income earned to each investor.

Concentration Risk: Since this Fund is concentrated in the health services industry, it is less diversified than stock funds investing in a broader range of industries and, therefore, could experience significant volatility. It may invest a considerable portion of assets in companies in the same business, such as pharmaceuticals, or in related businesses, such as hospital management and managed care. Developments that could adversely affect the Fund's share price include:

- increased competition within the health care industry;

- changes in legislation or government regulations;

- reductions in government funding;

- product liability or other litigation; and

- the obsolescence of popular products.

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

Non-diversification Risk: The Fund is considered non-diversified because it may invest more than 5% in the securities of any one company. Therefore, gains or losses on a single stock may have a greater impact on the Fund.

HEALTH SCIENCES FUND

Other Stock Risks: Growth stocks can have steep declines if their earnings disappoint investors. The value approach carries the risk that the market will not recognize a security's intrinsic value for a long time, or that a stock judged to be undervalued may actually be appropriately priced.

Sector Risk: Securities of companies within specific sectors of the economy can perform differently than the overall market. This may be due to changes in such things as the regulatory or competitive environment or to changes in investor perceptions regarding a sector. Because the Fund may allocate relatively more assets to certain industry sectors than others, the Fund's performance may be more susceptible to any developments which affect those sectors emphasized by the Fund.

Unseasoned Issuer Risk: The level of risk will be increased to the extent that the Fund has significant exposure to smaller or unseasoned companies (those with less than a three-year operating history), which may not have established products or more experienced management.

PERFORMANCE INFORMATION
Performance is not shown because the Fund has been in operation less than a full calendar year.

NORTH AMERICAN --
AMERICAN CENTURY
INCOME & GROWTH FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT SUB-ADVISER
American Century Investment Management, Inc.

INVESTMENT OBJECTIVE
The Fund seeks dividend growth, current income and capital appreciation by investing in common stocks. Current income is a secondary consideration.

INVESTMENT STRATEGY
The Fund's sub-adviser utilizes quantitative management techniques in a two-step process that draws heavily on computer technology. In the first step, the sub-adviser ranks stocks, primarily the 1,500 largest publicly traded companies in the U.S. (measured by the value of their stock) from most attractive to least attractive. This is determined by using a computer model that combines measures of a stock's value, as well as measures of its growth potential. To measure value, the sub-adviser uses ratios of stock price to book value and stock price to cash flow, as well as other factors. To measure growth, the sub-adviser uses, among others, the rate of growth of a company's earnings and changes in the earnings estimates for a company.

In the second step, the sub-adviser uses a technique called portfolio optimization. In portfolio optimization, the sub-adviser uses a computer model to build a portfolio of stocks, from the ranking described earlier, that the sub-adviser believes will provide the optimal balance between risk and expected return. The goal is to create a fund that provides better returns than the S&P 500 Index, without taking on significant additional risk. If the stocks that make up the S&P 500 Index do not have a high dividend yield, then the Fund may not have a high dividend yield.

The sub-adviser does not attempt to time the market. Instead, the sub-adviser intends to keep the Fund fully invested in stocks regardless of the movement of stock prices generally. When the sub-adviser believes it is prudent, the Fund may invest in securities other than stocks, such as convertible securities, foreign securities, short-term instruments and non-leveraged stock index futures contracts and other securities. Stock index futures contracts, a type of derivative security, can help the Fund's cash assets remain liquid while performing more like stocks. The Fund has a policy to help manage the risk of these types of investments.

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

Index Risk: The Fund is managed to an Index, the S&P 500 Index. Therefore, the Fund's performance will be closely tied to the Index. If the Index goes down, it is likely that the Fund's performance will also go down.

Market Risk: The Fund's share price can fall because of weakness in the broad market, a particular industry, or specific holdings. The market as a whole can decline for many reasons, including adverse political or economic developments here or abroad, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, the sub-adviser's assessment of companies held in the Fund may prove incorrect, resulting in losses or poor performance even in a rising market. Finally, the Fund's investment approach could fall out of favor with the investing public, resulting in lagging performance versus other comparable funds.

Price Volatility Risk: The value of the Fund's shares may fluctuate significantly in the short term.

PERFORMANCE INFORMATION
Performance is not shown because the Fund has been in operation less than a full calendar year.

NORTH AMERICAN -- AG
INTERNATIONAL EQUITIES
FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT OBJECTIVE
The Fund seeks to provide long-term growth of capital through investments primarily in a diversified portfolio of equity and equity-related securities of foreign issuers that, as a group, are expected to provide investment results closely corresponding to the performance of the Morgan Stanley Capital International, Europe, Australasia and the Far East Index ("EAFE Index").

INVESTMENT STRATEGY
The Fund invests in a sampling of about 300 foreign stocks of companies that are either in the EAFE Index or are similar to stocks in the EAFE Index. These stocks, as a group, should reflect EAFE's performance. The EAFE Index generally includes stock of large capitalization companies. Since it may not be possible for this Fund to buy every stock included in this index or in the same proportions, we buy as many stocks as are needed to closely track the performance of the EAFE Index.

The Fund invests at least 65% of total assets in stocks that are in the EAFE Index. It may invest up to 35% of total assets in other investments that are not in the EAFE Index, such as foreign equity and related securities, including common stocks, convertible stocks, preferred stocks and warrants. The Fund may invest up to 33% of total assets in futures and options, including covered put and call options on foreign currencies, listed and unlisted put and call options on currency futures, and listed and unlisted foreign currency contracts. All percentages are calculated as of the time of purchase.

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

Index Risk: The Fund is managed to an Index as noted above. Therefore, the Fund's performance will be closely tied to the Index. If the Index goes down, it is likely that the Fund's performance will also go down.

Market Risk: The Fund's share price can fall because of weakness in the broad market, a particular industry, or specific holdings. The market as a whole can decline for many reasons, including adverse political or economic developments here or abroad, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, the sub-adviser's assessment of companies held in the Fund may prove incorrect, resulting in losses or poor performance even in a rising market. Finally, the Fund's investment approach could fall out of favor with the investing public, resulting in lagging performance versus other comparable funds.

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the EAFE Index. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was -14.63%.

Best quarter: 21.36%, quarter ending December 31, 1998

Worst quarter: -15.01%, quarter ending September 30, 1998

INTERNATIONAL EQUITIES FUND

This table compares the Fund's average annual returns to the returns of the EAFE Index for the periods shown.

---------------------------------------------------------------
                                   1 YEAR    5 YEARS   10 YEARS
                                   -------   -------   --------
The Fund                           -17.30%    6.73%     7.55%
EAFE Index                         -14.17%    7.13%     8.24%
---------------------------------------------------------------

The EAFE Index is comprised of the 21 Morgan Stanley Capital International country indices and measures the performance of approximately 1,000 large-cap stocks.

NORTH AMERICAN -- AG
INTERNATIONAL
GOVERNMENT BOND FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT OBJECTIVE
The Fund seeks high current income through investments primarily in investment grade debt securities issued or guaranteed by foreign governments.

INVESTMENT STRATEGY
The Fund aims to give you foreign investment opportunities primarily in investment grade government and government sponsored debt securities. Since the Fund expects to concentrate in certain foreign government securities, it is classified as a "non-diversified" investment company. Also, the Fund attempts to have all of its investments payable in foreign currencies. The Fund may also convert its cash to foreign currency.

The Fund will invest at least 70% of total assets in investment grade debt securities. The Fund may invest up to 30% of total assets in below investment grade securities. At least 65% of the Fund securities purchased must be government issued, sponsored, or guaranteed. Examples of Fund investments include foreign debt and foreign money market securities, high quality domestic money market securities and debt obligations issued or guaranteed by the U.S. Government, and foreign currency exchange transactions. Additionally, the Fund may hedge currency, and may invest up to 50% of total assets in futures and options (derivatives), for currency hedging purposes. Futures and options include covered put and call options on foreign currencies, listed put and call options on currencies, and listed and unlisted foreign currency futures contracts. All percentages are calculated as of the time of purchase.

The Fund will use a blend of the JP Morgan Government Bond Index Plus and the JP Morgan Emerging Markets Bond Index Plus as a guide for choosing countries in which to invest. The Fund may invest in securities in other countries, provided that the securities are payable in currencies included in the blended benchmark.

Credit Risk: The risk that an issuer of a fixed income security owned by the Fund may be unable to make interest or principal payments.

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

Interest Rate Risk: The risk that fluctuations in interest rates may affect the value of the Fund's interest-paying fixed income securities.

Risk of lower rated fixed-income securities: A portion of the Fund's investments may be in high yielding, high risk fixed-income securities that are regarded as predominantly speculative with respect to the issuer's continuing ability to meet principal and interest payments. Investment in lower rated fixed-income securities involves significantly greater credit risk, market risk and interest rate risk compared to higher rated fixed-income securities. Accordingly, these investments could decrease in value and therefore negatively impact the Fund.

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of its benchmark index. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the

INTERNATIONAL
GOVERNMENT BOND FUND

market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

This chart illustrates the Fund's annual returns for each full calendar year since inception. Charges imposed by the Contracts that invest in the Fund are not included in the calculations of return in this bar chart, and if those charges were included, the returns would have been less than those shown below.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was -6.15%.

Best quarter: 13.39%, quarter ending March 31, 1995

Worst quarter: -6.97%, quarter ending December 31, 1992

This table compares the Fund's average annual returns to the returns of the new blended index (see below) and the old benchmark index, Salomon Brothers Non-U.S. Dollar World Government Bond Index, for the periods shown.

----------------------------------------------------------------
                                                 SINCE INCEPTION
                              1 YEAR   5 YEARS     (10/1/1991)
                              ------   -------   ---------------
The Fund                      -3.86%    1.02%         5.78%
Salomon Bros. Index           -2.69%    1.51%         6.55%
Blended Index                  6.48%    7.28%           N/A*
----------------------------------------------------------------

* (indices incepted 12/31/1993)

Effective June 1, 2001, the Fund selected a blended index as its benchmark for index comparison purposes, rather than the Salomon Brothers Non-U.S. Dollar World Government Bond Index. The new index is a blend of 70% JP Morgan Government Bond Index Plus and 30% JP Morgan Emerging Markets Bond Index Plus. The blended index better matches the asset and country composition of the Fund, and will better align the goals of the Fund with its benchmark index.

The JP Morgan Government Bond Index Plus measures the performance of leading government bond markets based on total return in U.S. currency. It includes only traded issues. The Emerging Markets Bond Index Plus (EMBI+) tracks total returns for traded external debt instruments in the emerging markets. The instruments include external-currency-denominated Brady bonds, loans and Eurobonds, as well as U.S. dollar local markets instruments.

NORTH AMERICAN --
AMERICAN CENTURY
INTERNATIONAL GROWTH FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT SUB-ADVISER
American Century Investment Management, Inc.

INVESTMENT OBJECTIVE
The Fund seeks capital growth through investments primarily in equity securities of issuers in developed foreign countries.

INVESTMENT STRATEGIES
The Fund's sub-adviser uses a growth strategy it developed to invest in stocks of companies they believe will increase in value over time. This strategy looks for companies with earnings and revenue growth. Ideally, the Fund sub-adviser looks for companies whose earnings and revenues are not only growing, but growing at a successively faster, or accelerating, pace. This strategy is based on the premise that, over the long term, the stocks of companies with earnings and revenue growth have a greater-than-average chance to increase in value.

The sub-adviser use a bottom-up approach to select stocks to buy for the Fund. That means the sub-adviser first looks for strong, growing companies to invest in, rather than simply buying any company in a growing industry or sector. The sub-adviser tracks financial information for thousands of companies to identify trends in the companies' earnings and revenues. This information is used to help the Fund sub-adviser select or decide to continue to hold the stocks of companies they believe will be able to sustain their growth, and to sell stocks of companies whose growth begins to slow down.

In addition to locating strong companies with earnings and revenue growth, the Fund sub-adviser believes that it is important to diversify the Fund's holdings across different countries and geographical regions in an effort to manage the risks of an international portfolio. For this reason, the Fund sub-adviser also considers the prospects for relative economic growth among countries or regions, economic and political conditions, expected inflation rates, currency exchange fluctuations and tax considerations when making investments.

The Fund sub-adviser does not attempt to time the market. Instead, under normal market conditions, they intend to keep the Fund essentially fully invested in stocks regardless of the movement of stock prices generally. The Fund can purchase other types of securities, when the sub-adviser believes it is prudent. The Fund may invest a portion of its assets in convertible securities, short-term securities, non-leveraged stock index futures contracts, notes, bonds and other debt securities of companies, and obligations of foreign governments and their agencies, or other similar securities. Stock index futures contracts, a type of derivative security, can help the Fund's cash assets remain liquid, while performing more like stocks. The Fund has a policy governing stock index futures and similar derivative securities to help manage the risk of these types of investments. For example, the sub-advisers cannot leverage the Fund's assets by investing in a derivative security.

In determining whether a company is foreign, the Fund sub-adviser will consider various factors, including where the company is headquartered, where the company's principal operations are located, where the company's revenues are derived, where the principal trading market is located and the country in which the company was legally organized. The weighting given to each of these factors will vary depending on the circumstances in a given case. The Fund considers developed countries to include Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom, and the United States.

Currency Risk: Because the Fund's foreign investments are generally held in foreign currencies, the Fund could experience gains or losses based solely on changes in the exchange rate between foreign currencies and the U.S. dollar.

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

Foreign Investment Risk: Investments in foreign securities involve additional risks, due to unfavorable political and legal developments or economic and financial instability, for example. Foreign companies are not subject to the U.S. accounting and financial reporting standards and public information may not be as available. In addition, the liquidity of these investments may be more limited than for U.S. investments. Certain of these risks may also apply to U.S. investments that are denominated in foreign currencies or that are traded in foreign markets, or to securities of U.S. companies that have significant foreign operations.

Market Risk: The Fund's share price can fall because of weakness in the broad market, a particular industry, or specific holdings. The market as a whole can decline for many reasons, including adverse political or economic developments here or abroad, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, the sub-adviser's assessment of companies held in the Fund may prove incorrect, resulting in losses or poor performance even in a rising market. Finally, the Fund's investment approach could fall out of favor with the investing public, resulting in lagging performance versus other comparable funds.

Price Volatility Risk: The value of the Fund's shares may fluctuate significantly in the short term.

PERFORMANCE INFORMATION
Performance is not shown since the Fund does not have a full year of performance.

NORTH AMERICAN --
FOUNDERS LARGE CAP
GROWTH FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT SUB-ADVISER
Founders Asset Management LLC

INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital.

INVESTMENT STRATEGY
The Fund pursues long-term growth by normally investing at least 65% of its total assets in common stocks of well-established, high-quality growth companies. These companies tend to have strong performance records, solid market positions, reasonable financial strength, and continuous operating records of three years or more. The Fund may also invest up to 30% of its total assets in foreign securities, with no more than 25% invested in any one foreign country.

Market Risk: The Fund's share price can fall because of weakness in the broad market, a particular industry, or specific holdings. The market as a whole can decline for many reasons, including adverse political or economic developments here or abroad, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, the sub-adviser's assessment of companies held in the Fund may prove incorrect, resulting in losses or poor performance even in a rising market. Finally, the Fund's investment approach could fall out of favor with the investing public, resulting in lagging performance versus other comparable funds.

PERFORMANCE INFORMATION
Performance is not shown since the Fund does not have a full year of performance.

NORTH AMERICAN -- AG
MIDCAP INDEX
FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT OBJECTIVE
The Fund seeks to provide growth of capital through investments primarily in a diversified portfolio of common stocks that, as a group, are expected to provide investment results closely corresponding to the performance of the S&P MidCap 400 Index.

INVESTMENT STRATEGY
The Fund invests in a sampling of stocks in the index that, as a group, should reflect its performance. The stocks of the S&P 400 MidCap Index to be included in the Fund will be selected utilizing a statistical sampling technique known as "optimization." This process selects stocks for the Fund so that various industry weightings, market capitalizations and fundamental characteristics (e.g. price-to-book, price-to-earnings, debt-to-asset ratios and dividend yields) closely approximate those of the S&P 400 MidCap Index. The stocks held by the Fund are weighted to make the Fund's aggregate investment characteristics similar to those of the Index as a whole. Since it may not be possible for this Fund to buy every stock included in this index or in the same proportions, we rely on the aforementioned statistical technique to figure out, of the stocks tracked by the index, how many and which ones to buy.

Because the companies whose stocks are owned by the Fund are medium sized, they have more potential to grow, which means the value of their stock may increase. An index fund holding nearly all of the 400 stocks in the S&P MidCap 400 Index avoids the risk of individual stock selection and seeks to provide the return of the medium-sized company sector of the market. On average that return has been positive over many years but can be negative at certain times. There is no assurance that a positive return will occur in the future.

At least 65% of the Fund's total assets are invested in stocks that are in the S&P MidCap 400 Index. The Fund may invest up to 33% of total assets in futures and options, and up to 35% in investments that are not in the S&P 400 MidCap Index, including common stock and related securities, high quality money market securities, and illiquid securities. All percentages are calculated as of the time of purchase.

Generally, an index fund tries to mirror the target index and its performance. The performance of the Fund will not match the index exactly, though, because an index fund incurs operating expenses and other investment overhead as part of its normal operations. The index is an unmanaged group of securities, so it does not have these expenses. An investor cannot invest directly in an index. These differences between an index fund and its index are called tracking differences. An index fund seeks a tracking difference of 0.05% or less. The tracking difference may also be shown as a correlation factor. A correlation factor of 0.95, after expenses, is considered to be good.

The tracking differences are reviewed periodically by the Adviser. If an index fund does not accurately track an index, the Adviser will rebalance the Fund's portfolio by selecting securities which will provide a more representative sampling of the securities in the index as a whole or the sector diversification within the index, as appropriate.

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

Index Risk: The Fund is managed to an Index, the S&P MidCap 400 Index. Therefore, the Fund's performance will be closely tied to the Index. If the Index goes down, it is likely that the Fund's performance will also go down.

Medium Capitalization Company Risk: The risk that medium sized companies, which usually do not have as much financial strength as very large companies, may not be able to do as well in difficult times.

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the S&P MidCap 400 Index. Prior to October 1, 1999, the Fund was sub-advised by Bankers Trust Company. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

This chart illustrates the Fund's annual returns for each full calendar year since the inception of the Fund. Charges imposed by the Contracts that invest in the Fund are not included in the

MIDCAP INDEX FUND

calculations of return in this bar chart, and if those charges were included, the returns would have been less than those shown below.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was 0.79%.

Best quarter: 28.22%, quarter ending December 31, 1998

Worst quarter: -14.54%, quarter ending September 30, 1998

This table compares the Fund's average annual returns to the returns of the S&P MidCap 400 Index for the periods shown.

-----------------------------------------------------------------
                                                  SINCE INCEPTION
                               1 YEAR   5 YEARS     (10/1/1991)
                               ------   -------   ---------------
The Fund                       16.58%   20.06%        17.23%
S&P MidCap 400 Index           17.51%   20.42%        17.87%
-----------------------------------------------------------------

The S&P MidCap 400 Index is an index of the stocks of 400 domestic stocks chosen for market size, liquidity, and industry group representation. It is a market-value weighted index, with each stock's percentage in the Index in proportion to its market value.

Standard & Poor's(R)," "S&P(R)," and "S&P MidCap 400(R)" are trademarks of S&P. The MidCap Index Fund is not sponsored, endorsed, sold or promoted by S&P, and S&P makes no representation regarding the advisability of investment in the Fund.

NORTH AMERICAN -- AG 1
MONEY MARKET FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT OBJECTIVE
The Fund seeks liquidity, protection of capital and current income through investments in short-term money market instruments.

INVESTMENT STRATEGY
The Fund invests in short-term money market securities to provide you with liquidity, protection of your investment and current income. Such securities must mature, after giving effect to any demand features, in 13 months or less and the Fund must have a dollar-weighted average portfolio maturity of 90 days or less. This is in accordance with Rule 2a-7 of the Investment Company Act of 1940 (the "1940 Act"). These practices are designed to minimize any fluctuation in the value of the Fund's portfolio.

The investments this Fund may buy include:

- Securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities

- Certificates of deposit and other obligations of domestic banks that have total assets in excess of $1 billion

- Commercial paper sold by corporations and finance companies

- Corporate debt obligations with remaining maturities of 13 months or less

- Repurchase agreements

- Money market instruments of foreign issuers payable in U.S. dollars (limited to no more than 20% of the Fund's net assets)

- Asset-backed securities

- Loan participations

- Adjustable rate securities

- Variable rate demand notes

- Illiquid securities (limited to 10% of the Fund's net assets)

INVESTMENT RISK
Because of the following principal risks the value of your investment may fluctuate and you could lose money:

- The rate of income varies daily depending on short-term interest rates

- A significant change in interest rates or a default on a security held by the Fund could cause the value of your investment to decline

- An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency

- Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of 30 Day Certificate of Deposit Primary Offering Rate by New York City Banks ("30 Day CD Rate"). How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was 2.36%.

Best quarter: 1.54%, quarter ending December 31, 2000

Worst quarter: 0.66%, quarter ending March 31, 1993

This table compares the Fund's average annual returns to the returns of the 30 Day CD Rate for the periods shown.

----------------------------------------------------------------
                                     1 YEAR   5 YEARS   10 YEARS
                                     ------   -------   --------
The Fund                             5.99%     5.21%     4.68%
30 Day CD Rate                       4.83%     4.66%     4.30%
----------------------------------------------------------------

For more current yield and return information, please call 1-800-448-2542.

NORTH AMERICAN --
AG NASDAQ-100
INDEX(R) FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT SUB-ADVISER

American General Investment Management L.P.

INVESTMENT OBJECTIVE
The Fund seeks long-term capital growth through investments in the stocks that are included in the Nasdaq-100 Index(R).

INVESTMENT STRATEGY
The Fund plans to invest in stocks that are included in the Nasdaq-100 Index(R) (the "Index"). The Index was established in January 1985. It represents the largest and most active non-financial domestic and international securities listed on The Nasdaq Stock Market, based on market value (capitalization). This includes major industry groups, such as computer hardware and software, telecommunications, retail and wholesale trade and biotechnology.

The sub-adviser invests its assets in companies that are listed in the Index, except for a small portion in cash, to be available for redemptions. Since it may not be possible for this Fund to buy every stock included in the Index, or in the same proportions, the Fund invests in a sampling of common stocks in the Index. The stocks to be included in the Fund will be selected utilizing a statistical sampling technique known as "optimization." This process selects stocks for the Fund so that various industry weightings, market capitalizations and fundamental characteristics (e.g. price-to-book, price-to-earnings, debt-to- asset ratios and dividend yields) closely approximate those of the Index. The common stocks held by the Fund are weighted to make the Fund's aggregate investment characteristics similar to those of the Index as a whole.

The Fund may also invest in some futures contracts in order to help the Fund's liquidity. If the market value of the futures contracts is close to the Fund's cash balance, then that helps to minimize the tracking errors, while helping to maintain liquidity.

The Fund is a non-diversified fund. This means that it may invest more than 5% of its assets in the stock of a single company. However, this increases the risk of the Fund, since the economic and/or stock performance of that one company impacts a greater percentage of the Fund's investments. The Fund will, however, comply with diversification requirements imposed by the Internal Revenue Code of 1986 in order to pass on the maximum tax benefits associated with the income earned to each investor.

The Fund may concentrate its investments (invest more than 25% of its assets) in the technology sector, in the proportion consistent with the industry weightings in the Index.

The tracking differences are reviewed periodically by the sub-adviser. If an index fund does not accurately track an index, the sub-adviser will rebalance the Fund's portfolio by selecting securities which will provide a more representative sampling of the securities in the index as a whole or the sector diversification within the index, as appropriate.

Concentration Risk: The Fund's investments are concentrated in the technology sector, as is the Nasdaq-100 Index(R). The technology sector changes rapidly and can be very volatile from day-to-day or month-to-month. This means that the value of the Fund is subject to greater volatility than a fund that does not concentrate in a particular sector. This may be due to changes in such things as the regulatory or competitive environment or to changes in investor perceptions regarding a sector. Because the Index may invest relatively more assets in certain industry sectors than others (such as technology), the Fund's performance may be more susceptible to any developments which affect those sectors emphasized by the Index.

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

Index Risk: The Nasdaq-100 Index(R) is a modified capitalization weighted index, which means that it purchases stocks in proportion to their total market capitalizations (overall market value), with some modifications. The modifications are to provide enhanced diversification, but could also mean that securities offered by larger companies may be purchased in larger proportions. Thus, poor performance of the largest companies could result in negative performance for both the Index and the Fund.

Market Risk: The Fund's share price can fall because of weakness in the broad market, a particular industry, or specific holdings. The market as a whole can decline for many reasons, including adverse political or economic developments here or abroad, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, the sub-adviser's assessment of companies held in the Fund may prove incorrect, resulting in losses or poor performance even in a rising market. Finally, the Fund's investment approach could fall out of favor with the investing public, resulting in lagging performance versus other comparable funds.

NASDAQ-100
INDEX(R) FUND

Non-diversification Risk: The Fund is considered non-diversified because it may invest more than 5% in the securities of any one company as it attempts to mirror the securities and weightings of the Nasdaq-100 Index(R). Therefore, gains or losses on a single stock may have a greater impact on the Fund.

PERFORMANCE INFORMATION
Performance information is not shown since the Fund does not have a full year of performance.

More about the Nasdaq-100 Index(R): To be eligible for the Index, a domestic security must have a minimum average daily trading volume of at least 100,000 shares, and must have been listed for one to two years. If the security is a foreign security, then the company must have a world market value of $10 billion or more, a U.S. market value of at least $4 billion, and average trading volume of at least 200,000 shares per day. Nasdaq reviews and adjusts the Index on a quarterly basis to ensure that certain pre-established weight distribution and diversification guidelines are met. This will also help to limit the domination of the Index by a few very large common stocks.

The Fund is not sponsored, endorsed, sold or promoted by the Nasdaq Stock Market Inc. (including its affiliates) (Nasdaq, with its affiliates, are referred to as the Corporations). The Corporations have not passed on the legality or suitability of, or the accuracy or adequacy of descriptions and disclosures relating to, the Fund. The Corporations make no representation or warranty, express or implied to the owners of the Fund or any member of the public regarding the advisability of investing in securities generally or in the Fund particularly, or the ability of the Nasdaq-100 Index(R) to track general stock market performance. The Corporations' only relationship to North American Funds Variable Product Series I (Licensee) is the licensing of the Nasdaq-100(R), Nasdaq-100 Index(R), and Nasdaq(R) trademarks or service marks, and certain trade names of the Corporations and the use of the Nasdaq-100 Index(R) which is determined, composed and calculated by Nasdaq without regard to Licensee or the Fund. Nasdaq has no obligation to take the needs of the Licensee or the owners of the Fund into consideration in determining, composing or calculating the Nasdaq-100 Index(R). The Corporations are not responsible for and have not participated in the determination of the timing of, prices at, or quantities of the Fund to be issued or in the determination or calculation of the equation by which the Fund is to be converted into cash. The Corporations have no liability in connection with the administration, marketing or trading of the Fund.

THE CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED CALCULATION OF THE NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED HEREIN. THE CORPORATIONS MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE CORPORATIONS HAVE ANY LIABILITY FOR ANY LOST PROFITS OR SPECIAL, INCIDENTAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

Important Note: On July 16-17, 2001, due to the impending acquisition, the Series Company Board of Directors approved an interim sub-advisory agreement and a new investment sub-advisory agreement between the Fund and American General Investment Management, L.P. ("AGIM"), or an affiliate of American International Group, Inc. ("AIG"). AGIM may be reorganized or merged into an affiliate. New agreements are required because the acquisition is considered a change of control under the 1940 Act, which terminates the previous agreements. The interim advisory agreement will cover the period from August 29th through the date of shareholder approval of the new investment sub-advisory agreement, when the new investment sub-advisory agreement will take effect. The new investment sub-advisory agreement is the same in all material respects as the current investment sub-advisory agreement, including the fees charged, except that it may be with AGIM or an affiliate. The new investment sub-advisory agreement will be submitted to shareholders for approval at a meeting that is currently scheduled to be held in mid-December 2001. Please be sure to vote when you receive your proxy notice and call of shareholder meeting this fall.

NORTH AMERICAN --
PUTNAM OPPORTUNITIES
FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT SUB-ADVISER
Putnam Investment Management, LLC

INVESTMENT OBJECTIVE
The Fund seeks capital appreciation through investments in common stocks.

INVESTMENT STRATEGY
The Fund invests mainly in common stocks of large U.S. companies, with a focus on growth stocks (those the sub-adviser believes whose earnings will grow faster than the economy, with a resultant price increase). The Fund invests in a relatively small number of companies that the sub-adviser believes will benefit from long-term trends in the economy, business conditions, consumer behavior or public perceptions of the economic environment.

The sub-adviser considers, among other things, a company's financial strength, competitive position in its industry, projected future earnings, cash flows and dividends when deciding whether to buy or sell investments. The Fund may also invest in securities of foreign issuers.

Market Risk: The Fund's share price can fall because of weakness in the broad market, a particular industry, or specific holdings. The market as a whole can decline for many reasons, including adverse political or economic developments here or abroad, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, the sub-adviser's assessment of companies held in the Fund may prove incorrect, resulting in losses or poor performance even in a rising market. Finally, the Fund's investment approach could fall out of favor with the investing public, resulting in lagging performance versus other comparable funds.

PERFORMANCE INFORMATION
Performance information is not shown since the Fund does not have a full year of performance.

NORTH AMERICAN --
T. ROWE PRICE
SCIENCE & TECHNOLOGY FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT SUB-ADVISER
T. Rowe Price Associates, Inc.

INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.

INVESTMENT STRATEGY
The Fund invests at least 65% of total assets in the common stocks of companies that are expected to benefit from the development, advancement, and use of science and technology. Some of the industries likely to be included in the portfolio are:

- electronics, including hardware, software, and components;

- communications;

- e-commerce (companies doing business through the Internet);

- information services;

- media;

- life sciences and health care;

- environmental services;

- chemicals and synthetic materials; and

- defense and aerospace.

While most assets will be invested in common stocks, other securities may also be purchased, including futures and options, in keeping with Fund objectives. The Fund may invest up to 30% of its total assets in foreign securities, which include non-dollar denominated securities traded outside the U.S. and dollar- denominated securities of foreign issuers traded in the U.S. All percentages are calculated at the time of purchase.

Stock selection reflects a growth approach and is based on intensive research that assesses a company's fundamental prospects for above-average earnings. Holdings can range from small, unseasoned companies developing new technologies to blue chip firms with established track records of developing and marketing technology. Investments may also include companies that should benefit from technological advances even if they are not directly involved in research and development.

The Fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or re-deploy assets into more promising opportunities.

Concentration Risk: The Fund's investments are concentrated in the science and technology industries. These sectors change rapidly and can be very volatile from day-to-day or month-to-month. This means that the value of the Fund is subject to greater volatility than a fund that does not concentrate in a particular sector. This may be due to changes in such things as the regulatory or competitive environment or to changes in investor perceptions regarding a sector.

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

Tech Company Risk: Technology stocks historically have experienced unusually wide price swings, both up and down. The potential for wide variation in performance reflects the special risks common to companies in the rapidly changing field of technology. For example, products or services that at first appear promising may not prove commercially successful or may become obsolete quickly. Earnings disappointments and intense competition for market share can result in sharp price declines.

Unseasoned Issuer Risk: The level of risk will be increased to the extent that the fund has significant exposure to smaller or unseasoned companies (those with less than a three-year operating history), which may not have established products or more experienced management.

PERFORMANCE INFORMATION

SCIENCE & TECHNOLOGY FUND

necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was -27.19%.

Best quarter: 48.04%, quarter ending December 31, 1998

Worst quarter: -37.73%, quarter ending March 31, 2001

This table compares the Fund's average annual returns to the returns of the S&P 500 Index for the periods shown.

----------------------------------------------------------------
                                                 SINCE INCEPTION
                             1 YEAR    5 YEARS     (4/29/1994)
                             -------   -------   ---------------
The Fund                     -34.13%   17.05%        25.13%
S&P 500 Index                 -9.10%   18.33%        19.71%
----------------------------------------------------------------

NORTH AMERICAN --
FOUNDERS/T. ROWE PRICE
SMALL CAP FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT SUB-ADVISERS
Founders Asset Management LLC
T. Rowe Price Associates, Inc.

INVESTMENT OBJECTIVE
The Fund seeks to provide long-term capital growth by investing primarily in the stocks of small companies.

INVESTMENT STRATEGY
The Fund will normally invest at least 65% of its total assets in stocks of small companies. A company is considered a "small" company if its total market value (capitalization) is $2.2 billion or less. The Fund may purchase stocks that have a market capitalization above the range if the companies appear to have better prospects for capital appreciation.

Stock selection may reflect either a growth or a value investment approach. For example, if a company's price/earnings ratio is attractive relative to the underlying earnings growth rate, it would be classified as a growth stock. A value stock would be one where the stock price appears undervalued in relation to earnings, projected cash flow, or asset value per share.

The portfolio investments are expected to be widely diversified by industry and company. The Fund may also purchase up to 30% in foreign securities, although it will normally invest in common stocks of U.S.-based companies. The Fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or re-deploy assets into more promising opportunities.

While most assets will be invested in U.S. common stocks, other securities may be purchased, including futures and options, in keeping with Fund objectives.

Founders Asset Management LLC and T. Rowe Price Associates, Inc. each manage a portion of the Fund. As of August 31, 2001, Founders managed approximately 40% and T. Rowe Price managed approximately 60% of the assets of the Fund.

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

Investment Style Risk: In general, stocks with growth characteristics can have relatively wide price swings as a result of their potentially high valuations. Stocks with value characteristics carry the risk that investors will not recognize their intrinsic value for a long time or that they are actually appropriately priced at a low level. Because this Fund holds stocks with both growth and value characteristics, its share price may be negatively affected by either set of risks.

Market Risk: The Fund's share price can fall because of weakness in the broad market, a particular industry, or specific holdings. The market as a whole can decline for many reasons, including adverse political or economic developments here or abroad, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, a sub-adviser's assessment of companies held in the Fund may prove incorrect, resulting in losses or poor performance even in a rising market. Finally, the Fund's investment approach could fall out of favor with the investing public, resulting in lagging performance versus other comparable funds.

Small Company Risk: Investing in small companies involves greater risk than is customarily associated with larger companies, because the small companies offer greater opportunity for capital appreciation. Stocks of small companies are subject to more abrupt or erratic price movements than larger company stocks. Small companies often are in the early stages of development and have limited product lines, markets, or financial resources. Their managements may lack depth and experience. Such companies seldom pay significant dividends that could cushion returns in a falling market. In addition, these companies may be more affected by intense competition from larger companies, and the trading markets for their securities may be less liquid and more volatile than securities of larger companies. This means that the Fund could have greater difficulty selling a security of a small-cap issuer at an acceptable price, especially in periods of market volatility. Also, it may take a substantial period of time

SMALL CAP FUND

before the Fund realizes a gain on an investment in a small-cap company, if it realizes any gain at all.

PERFORMANCE INFORMATION
Performance information is not shown since the Fund does not have a full year of performance.

NORTH AMERICAN -- AG
SMALL CAP INDEX
FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT OBJECTIVE
The Fund seeks to provide growth of capital through investment primarily in a diversified portfolio of common stocks that, as a group, are expected to provide investment results closely corresponding to the performance of the Russell 2000(R) Index.

INVESTMENT STRATEGY
The Fund invests in a sampling of stocks in the index that, as a group, should reflect its performance. The stocks of the Russell 2000(R) Index to be included in the Fund will be selected utilizing a statistical sampling technique known as "optimization." This process selects stocks for the Fund so that various industry weightings, market capitalizations and fundamental characteristics (e.g. price-to-book, price-to-earnings, debt-to-asset ratios and dividend yields) closely approximate those of the Russell 2000(R) Index. The stocks held by the Fund are weighted to make the Fund's aggregate investment characteristics similar to those of the Index as a whole. Since it may not be possible for this Fund to buy every stock included in this index or in the same proportions, we rely on this statistical technique to figure out, of the stocks tracked by the index, how many and which ones to buy.

An index fund holding a large sampling of the 2,000 stocks in the Russell 2000(R) Index avoids the risks of individual stock selection and seeks to provide the return of the smaller-sized company sector of the market. On average that return has been positive over the years but has been negative at certain times. There is no assurance that a positive return will occur in the future. Because the companies whose stocks the Fund owns are small, their stock prices may fluctuate more over the short-term, but they have more potential to grow. This means their stock value may offer greater potential for appreciation.

The Fund invests at least 65% of total assets in stocks that are in the Russell 2000(R) Index, and up to 35% in investments that are not part of the Russell 2000(R) Index, including common stock, related securities, illiquid securities, and high quality money market securities. The Fund may invest up to 33% in futures and options. All percentages are calculated at the time of purchase.

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

Index Risk: The Fund is managed to an Index, the Russell 2000(R) Index. Therefore, the Fund's performance will be closely tied to the Index. If the Index goes down, it is likely that the Fund's performance will also go down.

SMALL CAP INDEX FUND

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the Russell 2000(R) Index. Prior to October 1, 1999, the Fund was sub-advised by Bankers Trust Company. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was 6.61%.

Best quarter: 18.58%, quarter ending December 31, 1999

Worst quarter: -19.75%, quarter ending September 30, 1998

This table compares the Fund's average annual returns to the returns of the Russell 2000(R) Index for the periods shown.

------------------------------------------------------------------
                                                   SINCE INCEPTION
                               1 YEAR    5 YEARS     (5/1/1992)
                               ------    -------   ---------------
The Fund                       -3.38%     10.42%        11.69%
Russell 2000(R) Index          -3.02%     10.31%        12.59%
------------------------------------------------------------------

The Russell 2000(R) Index measures the performance of the 2,000 smallest companies in the Russell 3000(R) Index, which represents approximately 8% of the total market capitalization of the Russell 3000(R) Index. As of June 30, 2001, the average market capitalization was approximately $530 million. The largest company had an approximate market capitalization of $1.4 billion.

The Russell 2000(R) Index is a trademark/service mark of the Frank Russell Trust Company. The Small Cap Index Fund is not promoted, sponsored or endorsed by, nor in any way affiliated with Frank Russell Company. Frank Russell Company is not responsible for and has not reviewed the Fund or any associated literature or publications and makes no representation or warranty, express or implied, as to their accuracy, or completeness, or otherwise.

NORTH AMERICAN -- AG
SOCIAL AWARENESS
FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT OBJECTIVE
The Fund seeks to obtain growth of capital through investment, primarily in common stocks, in companies which meet the social criteria established for the Fund.

The Fund does not invest in companies that are significantly engaged in:

- the production of nuclear energy;

- the manufacture of military weapons or delivery systems;

- the manufacture of alcoholic beverages or tobacco products;

- the operation of gambling casinos; or

- business practices or the production of products that significantly pollute the environment.

INVESTMENT STRATEGY
The Fund will invest at least 80% of total assets in the common stocks of U.S. companies meeting the Fund's social criteria. The Fund may invest up to 20% in the securities of other types of companies meeting the social criteria, including foreign securities, preferred stock, convertible securities, and high quality money market securities and warrants. All percentages are calculated at the time of purchase.

To find out which companies meet the Fund's social criteria, we rely on industry classifications, research services such as the Investor Responsibility Research Center (IRRC), and special magazines and papers that publish this type of information.

Since our definition of social criteria is not "fundamental," the Series Company's Board of Directors may change it without shareholder approval. When deciding to make changes to the criteria, the Board will consider, among other things, new or revised state laws that govern or affect the investments of public funds.

Social Criteria Risk: If a company stops meeting the Fund's social criteria after the Fund invested in it, the Fund will sell these investments even if this means the Fund loses money. Also, if the Fund changes its social criteria and the companies the Fund has already invested in no longer qualify, the Fund will sell these investments even if this means the Fund loses money. Social criteria screening will limit the availability of investment opportunities for the Fund more than for funds having no such criteria.

PERFORMANCE INFORMATION

SOCIAL AWARENESS FUND

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was -7.92%.

Best quarter: 21.20%, quarter ending December 31, 1998

Worst quarter: -12.51%, quarter ending March 31, 2001

This table compares the Fund's average annual returns to the returns of the S&P 500 Index for the periods shown.

                                   1 YEAR    5 YEARS   10 YEARS
                                   -------   -------   --------
The Fund                           -10.37%   17.57%     15.94%
S&P 500 Index                       -9.10%   18.33%     17.46%
---------------------------------------------------------------

NORTH AMERICAN -- AG
STOCK INDEX FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT OBJECTIVE
The Fund seeks long-term capital growth through investment in common stocks that, as a group, are expected to provide investment results closely corresponding to the performance of the S&P 500 Index.

INVESTMENT STRATEGY
The Fund invests in a sampling of stocks in the index that, as a group, should reflect its performance. The stocks of the S&P 500 Index to be included in the Fund will be selected utilizing a statistical sampling technique known as "optimization." This process selects stocks for the Fund so that various industry weightings, market capitalizations and fundamental characteristics (e.g. price-to-book, price-to-earnings, debt-to-asset ratios and dividend yields) closely approximate those of the S&P 500 Index. The stocks held by the Fund are weighted to make the Fund's aggregate investment characteristics similar to those of the Index as a whole. Since it may not be possible for this Fund to buy every stock included on this index or in the same proportions, we rely on optimization to determine, of the stocks tracked by the index, how many and which ones to buy.

This Fund which holds nearly all of the 500 stocks in the S&P 500 Index avoids the risk of individual stock selection and seeks to provide the return of the large company sector of the market. In the past that return has been positive over many years but can be negative at certain times. There is no assurance that a positive return will occur in the future. The S&P 500 Index includes the stocks of many large, well-established companies. These companies usually have the financial strength to weather difficult financial times. However, the value of any stock can rise and fall over short and long periods of time.

The Fund will invest at least 65% of total assets in stocks that are in the S&P 500 Index, and up to 35% in investments that are not in the S&P 500 Index, including common stock and related securities, and high quality money market securities. The Fund may invest up to 33% in futures and options. All percentages are calculated at the time of purchase.

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the S&P 500 Index. Prior to October 1, 1999, the Fund was sub-advised by Bankers Trust Company. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

STOCK INDEX FUND

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was -6.9%.

Best quarter: 21.21%, quarter ending December 31, 1998

Worst quarter: -11.97%, quarter ending March 31, 2001

This table compares the Fund's average annual returns to the returns of the S&P 500 Index for the periods shown.

                                    1 YEAR   5 YEARS   10 YEARS
                                    ------   -------   --------
The Fund                            -9.35%   18.05%     16.97%
S&P 500 Index                       -9.10%   18.33%     17.46%
---------------------------------------------------------------

"Standard & Poor's(R)," "S&P(R)," and "S&P 500(R)," are trademarks of S&P. The Stock Index Fund is not sponsored, endorsed, sold or promoted by S&P, and S&P makes no representation regarding the advisability of investment in the Fund.

MORE ABOUT PORTFOLIO INVESTMENTS

Each Fund's principal (key) investment strategy and risks are shown above. More detail on investments and investment techniques is shown below. Funds may utilize these investments and techniques as noted, though the investment or technique may not be a principal strategy. All Money Market Fund investments must comply with Rule 2a-7 of the 1940 Act, which allows the purchase of only high quality money market instruments.

AMERICAN DEPOSITARY RECEIPTS ("ADRS")
ADRs are certificates issued by a United States bank or trust company and represent the right to receive securities of a foreign issuer deposited in a domestic bank or foreign branch of a United States bank. ADRs in which a Fund may invest may be sponsored or unsponsored. There may be less information available about foreign issuers of unsponsored ADRs.

ASSET-BACKED SECURITIES
Asset-backed securities are bonds or notes that are normally supported by a specific property. If the issuer fails to pay the interest or return the principal when the bond matures, then the issuer must give the property to the bondholders or noteholders.

All of the Funds may invest in asset-backed securities. Examples of assets supporting asset-backed securities include credit card receivables, retail installment loans, home equity loans, auto loans, and manufactured housing loans.

DERIVATIVES
Unlike stocks and bonds that represent actual ownership of that stock or bond, derivatives are investments which "derive" their value from securities issued by a company, government, or government agency, such as futures and options. In certain cases, derivatives may be purchased for non-speculative investment purposes or to protect ("hedge") against a change in the price of the underlying security. There are some investors who take higher risk ("speculate") and buy derivatives to profit from a change in price of the underlying security. We may purchase derivatives to hedge the investment portfolios and to earn additional income in order to help achieve the Funds' objectives. Generally, we do not buy derivatives to speculate.

Futures contracts and options may not always be successful hedges; their prices can be highly volatile; using them could lower fund total return; and the potential loss from the use of futures can exceed a fund's initial investment in such contracts.

All of the Funds except Money Market may buy derivatives.

DIVERSIFICATION
Each Fund's diversification policy limits the amount that the Fund may invest in certain securities. Each Fund's diversification policy is also designed to comply with the diversification requirements of the Internal Revenue Code (the "Code") as well as the 1940 Act.

All of the Funds except Health Sciences, International Government and Nasdaq-100(R) Index are diversified under the 1940 Act.

EQUITY SECURITIES
Equity securities represent an ownership position in a company. The prices of equity securities fluctuate based on changes in the financial condition of the issuing company and on market and economic conditions. If you own an equity security, you own a part of the company that issued it. Companies sell equity securities to get the money they need to grow.

Stocks are one type of equity security. Generally, there are three types of stocks:

Common stock -- Each share of common stock represents a part of the ownership of the company. The holder of common stock participates in the growth of the company through increasing stock price and receipt of dividends. If the company runs into difficulty, the stock price can decline and dividends may not be paid.

Preferred stock -- Each share of preferred stock allows the holder to get a set dividend before the common stock shareholders receive any dividends on their shares.

Convertible preferred stock -- A stock with a set dividend which the holder may exchange for a certain amount of common stock.

All of the Funds except Money Market in this prospectus may invest in common, preferred, and convertible preferred stock in accordance with their investment strategies.

Stocks are not the only type of equity security. Other equity securities include but are not limited to convertible securities, depositary receipts, warrants, rights and partially paid shares, investment company securities, real estate securities, convertible bonds and ADRs, European Depositary Receipts and Global Depositary Receipts ("EDRs" and "GDRs"). More information about these equity securities is included elsewhere in this Prospectus or contained in the Statement of Additional Information.

EXCHANGE TRADED FUNDS ("ETFS")
These are a type of index fund bought and sold on a securities exchange. An ETF trades like common stock and represents a fixed portfolio of securities designed to track a particular market index. Funds purchase an ETF to temporarily gain exposure to a portion of the U.S. or a foreign market while awaiting purchase of underlying securities. The risks of owning an ETF generally reflect the risks of owning the underlying securities they are designed to track, although the lack of liquidity on an ETF could result in it being more volatile. Additionally, ETFs have management fees which increase their cost. All of the funds may invest in ETFs, with the same percentage limitations as investments in registered investment companies.

FIXED INCOME SECURITIES
Fixed income securities include a broad array of short, medium and long-term obligations, including notes and bonds. Fixed income securities may have fixed, variable, or floating rates of interest, including rates of interest that vary inversely at a multiple of a designated or floating rate, or that vary according to changes in relative values of currencies. Fixed income securities generally involve an obligation of the issuer to pay interest on either a current basis or at the maturity of the security and to repay the principal amount of the security at maturity.

All of the Funds may invest in fixed income securities.

Bonds are one type of fixed income security and are sold by governments on the local, state, and federal levels, and by companies. There are many different kinds of bonds. For example, each bond issue has specific terms. U.S. Government bonds are guaranteed to pay interest and principal by the federal government. Revenue bonds are usually only paid from the revenue of the issuer. An example of that would be an airport revenue bond. Debentures are a very common type of corporate bond (a bond sold by a company). Payment of interest and return of principal is subject to the company's ability to pay. Convertible bonds are corporate bonds that can be exchanged for stock. The types of bonds the Funds may invest in are as follows: U.S. Government bonds and investment grade corporate bonds (Capital Conservation and Income & Growth may also invest in below investment grade bonds).

Investing in a bond is like making a loan for a fixed period of time at a fixed interest rate. During the fixed period, the bond pays interest on a regular basis. At the end of the fixed period, the bond matures and the investor usually gets back the principal amount of the bond. Fixed periods to maturity are categorized as short term (generally less than 12 months), intermediate (one to 10 years), and long term (10 years or more).

Bonds that are rated Baa by Moody's or BBB by S&P have speculative characteristics. Bonds that are unrated or rated below Baa3 by Moody's or BBB- by S&P (commonly referred to as high yield, high risk or "junk bonds") are regarded, on balance, as predominantly speculative. Changes in economic conditions or other circumstances are more likely to weaken the issuer's capacity to pay interest and principal in accordance with the terms of the obligation than is the case with higher rated bonds. While such bonds may have some quality and protective characteristics, these are outweighed by uncertainties or risk exposures to adverse conditions. Lower rated bonds may be more susceptible to real or perceived adverse economic and individual corporate developments than would investment grade bonds.

For example, a projected economic downturn or the possibility of an increase in interest rates could cause a decline in high-yield, high-risk bond prices because such an event might lessen the ability of highly leveraged high yield issuers to meet their principal and interest payment obligations, meet projected business goals, or obtain additional financing. In addition, the secondary trading market for lower-medium and lower-quality bonds may be less liquid than the market for investment grade bonds. This potential lack of liquidity may make it more difficult to accurately value certain of these lower-grade portfolio securities.

Bonds are not the only type of fixed income security. Other fixed income securities include but are not limited to U.S. and foreign corporate fixed income securities, including convertible securities (bonds, debentures, notes and other similar instruments) and corporate commercial paper, mortgage-related and other asset-backed securities; inflation-indexed bonds issued by both governments and corporations; structured notes, including hybrid or "indexed" securities, preferred or preference stock, catastrophe bonds, and loan participations; bank certificates of deposit, fixed time deposits and bankers' acceptances; repurchase agreements and reverse repurchase agreements; fixed income securities issued by states or local governments and their agencies, authorities and other instrumentalities; obligations of foreign governments or their subdivisions, agencies and instrumentalities; and obligations of international agencies or supranational entities. Commercial paper is a specific type of corporate or short term note. In fact, it's very short term, being paid in less than 270 days. Most commercial paper matures in 50 days or less. Fixed income securities may be acquired with warrants attached. For more information about specific income securities see the Statement of Additional Information.

FOREIGN CURRENCY
All of the Funds, except Government Securities and Money Market, may buy and sell foreign currencies the same way they buy and sell other investments. Funds buy foreign currencies when they believe the value of the currency will increase. If it does increase, they sell the currency for a profit. If it decreases they will experience a loss. Funds may also buy foreign currencies to pay for foreign securities bought for the Fund.

The Funds, except Government Securities and Money Market, may purchase forward foreign currency exchange contracts to protect against a decline in the value of the U.S. dollar.

FOREIGN SECURITIES
All of the Funds may invest in securities of foreign issuers. Such foreign securities may be denominated in foreign currencies, except with respect to the Government Securities and the Money Market which may only invest in U.S. dollar-denominated securities of foreign issuers. Securities of foreign issuers include obligations of foreign branches of U.S. banks and of foreign banks, common and preferred stocks, fixed income securities issued by foreign governments, corporations and supranational organizations, and GDRs and EDRs.

There is generally less publicly available information about foreign companies, and they are generally not subject to uniform accounting, auditing and financial reporting standards, practices and requirements comparable to those applicable to U.S. companies.

ILLIQUID SECURITIES
An illiquid security is one that may not be frequently traded or cannot be disposed of promptly within seven days and in the usual course of business without taking a materially reduced price. Illiquid securities include, but are not limited to, time deposits and repurchase agreements not maturing within seven days and restricted securities.

A restricted security is one that has not been registered with the SEC and, therefore, cannot be sold in the public market. Securities eligible for sale under Rule 144A and commercial paper offered pursuant to Section 4(2) of the Securities Act of 1933, as amended, are not deemed by VALIC or the Fund's sub-adviser to be illiquid solely by reason of being restricted. Instead, VALIC or the sub-adviser will determine whether such securities are liquid based on trading markets and pursuant to guidelines adopted by the Series Company's Board of Directors. If VALIC or the sub-adviser concludes that a security is not liquid, that investment will be included within the Fund's limitation on illiquid securities.

All the Funds may buy illiquid securities, but are restricted as to how much money they may invest in them.

LENDING PORTFOLIO SECURITIES
Each Fund may lend a portion of its total assets to broker-dealers and other financial institutions to earn more money for the Fund.

A risk of lending portfolio investments is that there may be a delay in the Fund getting its investments back when a loaned security is sold.

The Funds will only make loans to broker-dealers and other financial institutions approved by its custodian, as monitored by VALIC and authorized by the Board of Directors. State Street Bank and Trust Company (the "Custodian") holds the cash and portfolio securities of the Series Company as Custodian.

LOAN PARTICIPATIONS
A loan participation is an investment in a loan made to a U.S. company that is secured by the company's assets. The assets must be, at all times, worth enough money to cover the balance due on the loan. Major national and regional banks make loans to companies and then sell the loans to investors. These banks don't guarantee the companies will pay the principal and interest due on the loans.

All the Funds in this prospectus may invest in loan participations.

MONEY MARKET SECURITIES
All of the Funds may invest part of their assets in high quality money market securities payable in U.S. dollars. A money market security is high quality when it is rated in one of the two highest credit categories by Moody's or S&P or another nationally recognized rating service or if unrated, deemed high quality by VALIC.

These high quality money market securities include:

- Securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities.

- Certificates of deposit and other obligations of domestic banks having total assets in excess of $1 billion.

- Commercial paper sold by corporations and finance companies.

- Corporate debt obligations with remaining maturities of 13 months or less.

- Repurchase agreements, money market securities of foreign issuers if payable in U.S. dollars, asset-backed securities, loan participations, and adjustable rate securities, variable rate demand notes.

MORTGAGE-RELATED SECURITIES
Mortgage-related securities include, but are not limited to, mortgage pass-through securities, collateralized mortgage obligations and commercial mortgage-backed securities. All Funds may invest in mortgage-related securities.

Mortgage pass-through securities are securities representing interests in "pools" of mortgage loans secured by residential or commercial real property. Payments of interest and principal on these securities are generally made monthly, in effect "passing through" monthly payments made by the individual borrowers on the mortgage loans which underlie the securities (net of fees paid to the issuer or guarantor of the securities). Mortgage-related securities are subject to interest rate risk and prepayment risk.

Payment of principal and interest on some mortgage pass-through securities may be guaranteed by the full faith and credit of the U.S. Government (i.e., securities guaranteed by GNMA); or guaranteed by agencies or instrumentalities of the U.S. Government (i.e., securities guaranteed by FNMA or the Federal Home Loan Mortgage Corporation ("FHLMC"), which are supported only by the discretionary authority of the U.S. Government to purchase the agency's obligations). Mortgage-related securities created by non-governmental issuers (such as commercial banks, private mortgage insurance companies and other secondary market issuers) may be supported by various forms of insurance or guarantees, including individual loan, title, pool and hazard insurance and letters of credit, which may be issued by governmental entities, private insurers or the mortgage poolers.

Collateralized Mortgage Obligations ("CMOs") are hybrid mortgage-related instruments. CMOs may be collateralized by whole mortgage loans or by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or FNMA. CMOs are structured into multiple classes, with each class bearing a different stated maturity. CMOs that are issued or guaranteed by the U.S. Government or by any of its agencies or instrumentalities will be considered U.S. Government securities by the Funds, while other CMOs, even if collateralized by

U.S. Government securities, will have the same status as other privately issued securities for purposes of applying a Fund's diversification tests.

Commercial Mortgage-Backed Securities include securities that reflect an interest in, and are secured by, mortgage loans on commercial real property. Many of the risks of investing in commercial mortgage-backed securities reflect the risks of investing in the real estate securing the underlying mortgage loans. These risks reflect the effects of local and other economic conditions on real estate markets, the ability of tenants to make loan payments, and the ability of a property to attract and retain tenants. Commercial mortgage-backed securities may be less liquid and exhibit greater price volatility than other types of mortgage-related or asset-backed securities. Mortgage-Related Securities include mortgage pass-through securities described above and securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property, such as mortgage dollar rolls, CMO residuals or stripped mortgage-backed securities. These securities may be structured in classes with rights to receive varying proportions of principal and interest.

REPURCHASE AGREEMENTS
A repurchase agreement requires the seller of the security to buy it back at a set price at a certain time. If a Fund enters into a repurchase agreement, it is really making a short term loan (usually for one day to one week). The Funds may enter into repurchase agreements only with well-established securities dealers or banks that are members of the Federal Reserve System. All the Funds in this prospectus may invest in repurchase agreements.

The risk in a repurchase agreement is the failure of the seller to be able to buy the security back. If the value of the security declines, the Fund may have to sell at a loss.

REVERSE REPURCHASE AGREEMENTS, DOLLAR ROLLS AND BORROWINGS
A reverse repurchase agreement involves the sale of a security by a Fund and its agreement to repurchase the instrument at a specified time and price. Under a reverse repurchase agreement, the Fund continues to receive any principal and interest payments on the underlying security during the term of the agreement. Blue Chip Growth, Core Equity, Health Sciences and Science & Technology may enter into Reverse Repurchase Agreements.

Asset Allocation, Capital Conservation, and Government Securities Funds also may enter into dollar rolls. In a dollar roll transaction, a Fund sells mortgage-backed or other securities for delivery in the current month and simultaneously contracts to purchase substantially similar securities on a specified future date. The time period from the date of sale to the date of purchase under a dollar roll is known as the roll period. A Fund foregoes principal and interest paid during the roll period on the securities sold in a dollar roll. However, a Fund receives an amount equal to the difference between the current sales price and the lower price for the future purchase as well as by any interest earned on the proceeds of the securities sold.

If a Fund's positions in reverse repurchase agreements, dollar rolls or similar transactions are not covered by liquid assets, such transactions would be subject to the Funds' limitations on borrowings. Apart from such transactions, a Fund will not borrow money, except as provided in its investment restrictions. See "Investment Restrictions" in the Statement of Additional Information for a complete listing of each Fund's investment restrictions.

TEMPORARY DEFENSIVE INVESTMENT STRATEGY
From time to time, the Funds may take temporary defensive positions that are inconsistent with their principal investment strategies, in attempting to respond to adverse market, economic, political, or other conditions. There is no limit on Fund investments in money market reserves for temporary defensive purposes. If the Funds take such a temporary defensive position, they may not achieve their investment objectives.

VARIABLE RATE DEMAND NOTES
All Funds may invest in variable rate demand notes ("VRDNs"). VRDNs are either taxable or tax-exempt obligations containing a floating or variable interest rate adjustment formula, together with an unconditional right to demand payment of the unpaid principal balance plus accrued interest upon a short notice period, generally not to exceed seven days. Money Market also may invest in participation VRDNs, which provide the Fund with an undivided interest in underlying VRDNs held by major investment banking institutions. Any purchase of VRDNs will meet applicable diversification and concentration requirements, and with respect to Money Market, the conditions established by the SEC under which such securities may be considered to have remaining maturities of 397 days or less.

WHEN-ISSUED SECURITIES
When-issued securities are those investments that have been announced by the issuer and will be on the market soon. The Funds negotiate the price with a broker before it goes on the market. If the security ends up selling on the market at a lower price than negotiated, the Funds may have a loss. If it sells at a higher price, the Funds may have a profit.

All of the Funds except Money Market may buy when-issued securities in accordance with their investment strategy.

ABOUT PORTFOLIO TURNOVER

Portfolio turnover occurs when a Fund sells its investments and buys new ones. In some Funds, high portfolio turnover occurs when these Funds sell and buy investments as part of their investment strategy. In other Funds, like the Index Funds, portfolio turnover is lower because the make up of the index stays fairly constant.

High portfolio turnover may cause a Fund's expenses to increase. For example, a Fund may have to pay brokerage fees and other related expenses. A portfolio turnover rate over 100% a year is higher than the rates of many other mutual fund companies. A high rate may increase a Fund's transaction costs and expenses.

The Financial Highlights tables show the portfolio turnover rate for each of the Funds, other than Money Market, during prior fiscal years.

ABOUT THE SERIES COMPANY'S MANAGEMENT

INVESTMENT ADVISER
VALIC is a stock life insurance company which has been in the investment advisory business since 1960 and is the investment adviser for all the Funds. VALIC is a registered investment adviser with the SEC. On August 29, 2001, American International Group, Inc. ("AIG") acquired American General, the parent company of VALIC (the "Merger"). As a result of the Merger, VALIC became a subsidiary of AIG. AIG is a holding company which through its subsidiaries is engaged in a broad range of insurance and insurance-related activities and financial services in the United States and abroad.

VALIC serves as investment adviser through an Investment Advisory Agreement with the Series Company. This agreement is renewed each year by the Series Company Board of Directors. As Investment Adviser, VALIC oversees the day to day operations of each Fund, supervises the purchase and sale of Fund investments, and may perform the cash management function. VALIC employs Investment Sub-Advisers who make investment decisions for the Funds, including Blue Chip Growth, Core Equity, Health Sciences, Income & Growth, International Growth, Large Cap Growth, Nasdaq-100(R) Index, Putnam Opportunities, Science & Technology, and Small Cap.

The investment advisory agreement between VALIC and the Series Company provides for the Series Company to pay all expenses not specifically assumed by VALIC. Examples of the expenses paid by the Series Company include transfer agency fees, custodial fees, the fees of outside legal and auditing firms, the costs of reports to shareholders and expenses of servicing shareholder accounts. These expenses are allocated to each Fund in a manner approved by the Board of Directors.

Investment decisions for Asset Allocation, Capital Conservation, Government Securities, Growth & Income, International Equities and Social Awareness are made by a team. The team meets regularly to review portfolio holdings and discuss purchase and sale activity.

For more information on these agreements, see the "Investment Adviser" section in the Statement of Additional Information.

The Series Company relies upon an exemptive order from the Securities and Exchange Commission which permits VALIC, subject to certain conditions, to select new sub-advisers or replace existing sub-advisers without first obtaining shareholder approval for the change. The Board of Directors, including a majority of the independent Directors, must approve each new sub-advisory agreement. This allows VALIC to act more quickly to change sub-advisers when it determines that a change is beneficial by avoiding the delay of calling and holding shareholder meetings to approve each change. In accordance with the exemptive order, the Series Company will provide investors with information about each new sub-adviser and its sub-advisory agreement within 90 days of hiring the new sub-adviser. VALIC is responsible for selecting, monitoring, evaluating and allocating assets to the sub-advisers and oversees the sub- advisers' compliance with the relevant Fund's investment objective, policies and restrictions.

Important Note: On July 16-17, 2001, due to the impending acquisition, the Series Company Board of Directors approved an interim advisory agreement and a new investment advisory agreement between the Series Company, on behalf of each Fund, and VALIC. New agreements are required because the acquisition is considered a change of control under the 1940 Act, which terminates the previous agreements. The interim advisory agreement will cover the period from August 29th through the date of shareholder approval of the new investment advisory agreement, when the new investment advisory agreement will take effect. The new investment advisory agreement is the same in all material respects as the current investment advisory agreement, except that the fees will be lower for the Large Cap Growth Fund. The new investment advisory agreement will be submitted to shareholders for approval at a meeting that is currently scheduled to be held in mid-December 2001. Please be sure to vote when you receive your proxy notice and call of shareholder meeting this fall.

INVESTMENT SUB-ADVISERS
For some of the Funds, VALIC works with Investment sub-advisers, financial service companies that specialize in certain types of investing. However, VALIC still retains ultimate responsibility for managing the Funds. The sub-adviser's role is to make investment decisions for the Funds according to each Fund's investment objectives and restrictions.

These financial services companies act as Investment sub-advisers through an agreement each entered into with VALIC. For more information on these agreements and on these sub-advisers, see the "Investment Sub-Advisers" section in the Statement of Additional Information.

THE SUB-ADVISERS ARE:

American Century Investment Management, Inc. American General Investment Management, L.P. Founders Asset Management LLC
Putnam Investment Management, LLC
T. Rowe Price Associates, Inc.
Wellington Management Company, LLP

North American -- American Century Income & Growth Fund North American -- American Century International Growth Fund

AMERICAN CENTURY INVESTMENT MANAGEMENT, INC. ("AMERICAN CENTURY")
4500 Main Street, Kansas City, Missouri 64111

American Century has been managing mutual funds since 1958. It managed over $93 billion in assets under management as of June 30, 2001.

The daily management of the North American -- American Century Income & Growth Fund and the North American -- American Century International Growth Fund is directed by a

team of portfolio managers. Team members meet regularly to review portfolio holdings and discuss purchase and sale activity. Team members buy and sell securities for the Fund as they see fit, guided by the Fund's investment objective and strategy.

PRIOR PERFORMANCE OF THE AMERICAN CENTURY INCOME & GROWTH FUND
(as excerpted from the American Century Income & Growth Fund prospectus)

North American -- American Century Income & Growth Fund's investment objective, policies, and strategies are substantially similar to those employed by American Century for the American Century Income & Growth Fund.

The historical performance information shown below is for a similar mutual fund, the Investor Class of the retail American Century Income & Growth Fund (since its inception in December of 1990), and not that of the North American -- American Century Income & Growth Fund. The North American -- American Century Income & Growth Fund is sold in an annuity product only to registered and unregistered separate accounts of VALIC and its affiliates, while the retail American Century Income & Growth Fund is sold to the general public. The returns shown reflect investment management fees and other expenses of the retail American Century Income & Growth Fund, and do not reflect any charges included in the annuity contract or variable life insurance policy for mortality and expenses guarantees, administrative fees or surrender charges.

Investments made by the North American -- American Century Income & Growth Fund may not be the same as those made by the retail American Century Income & Growth Fund. Notwithstanding the similarity in the name, objective, investment strategies, techniques and characteristics, the American Century Income & Growth Fund and the North American -- American Century Income & Growth Fund are separate mutual funds that will have different investment performance. This is due to factors such as the cash flow in and out, different fees and expenses, and diversity in portfolio size and positions. Even with the differences, however, the investment management of the Fund would not have been materially different. Past performance shown below is no guarantee of similar future performance for the North American -- American Century Income & Growth Fund.

(BAR CHART)

Best quarter: 22.18%, quarter ended December 31, 1998

Worst quarter: -11.29%, quarter ended September 30, 1998

The table below compares the performance of the American Century Income & Growth Fund to that of the S&P 500 Index. The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value weighted index (stock price times number of shares outstanding), with each stock's weight in the Index proportionate to its market value. No sales charges have been applied to the S&P 500 Index, and an investor cannot invest directly in it. As noted above, past performance is no guarantee of similar future performance for the North American -- American Century Income & Growth Fund.

AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/2000

---------------------------------------------------------------
                                   1 YEAR    5 YEARS   10 YEARS
                                   -------   -------   --------
American Century Income & Growth
  Fund Investor Class              -10.54%   17.60%     17.73%
S&P 500 Index                       -9.10%   18.33%     17.46%
---------------------------------------------------------------

PRIOR PERFORMANCE OF THE AMERICAN CENTURY INTERNATIONAL GROWTH FUND
(as excerpted from the American Century International Growth Fund prospectus)

North American -- American Century International Growth Fund's investment objective, policies, and strategies are substantially similar to those employed by American Century for the American Century International Growth Fund.

The historical performance information shown below is for a similar mutual fund, the Investor Class of the retail American Century International Growth Fund, and not that of the North American -- American Century International Growth Fund. The North American -- American Century International Growth Fund is sold in an annuity product only to registered and unregistered separate accounts of VALIC and its affiliates, while the American Century International Growth Fund is sold to the

general public. The returns shown reflect investment management fees and other expenses of the retail American Century International Growth Fund, and do not reflect any charges included in the annuity contract or variable life insurance policy for mortality and expenses guarantees, administrative fees or surrender charges.

Investments made by the North American -- American Century International Growth Fund may not be the same as those made by the retail American Century International Growth Fund. Notwithstanding the similarity in the name, objective, investment strategies, techniques and characteristics, the American Century International Growth Fund and the North American -- American Century International Growth Fund are separate mutual funds that will have different investment performance. This is due to factors such as the cash flow in and out, different fees and expenses, and diversity in portfolio size and positions. Even with the differences, however, the investment management of the Fund would not have been materially different. Past performance shown below is no guarantee of similar future performance for the North American -- American Century International Growth Fund.

(BAR CHART)

Best quarter: 48.19%, quarter ended December 31, 1999

Worst quarter: -17.94%, quarter ended September 30, 1998

The table below compares the performance of the American Century International Growth Fund to that of the Morgan Stanley Capital International, Europe, Australasia and the Far East Index ("MSCI EAFE") Index. The MSCI EAFE Index includes about 1,000 stocks from Europe, Australia and the Far East and is commonly used as a measure of international stock performance. No sales charges have been applied to the MSCI EAFE Index, and an investor cannot invest directly in it. As noted above, past performance is no guarantee of similar future performance for the North American -- American Century International Growth Fund.

AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/2000

----------------------------------------------------------------
                                                         SINCE
                                                       INCEPTION
                                                        MAY 9,
                                   1 YEAR    5 YEARS     1991
                                   -------   -------   ---------
American Century International
  Growth Fund Investor Class       -15.01%   17.91%     15.46%
MSCI EAFE Index                    -14.17%    7.13%      7.63%
----------------------------------------------------------------

North American -- AG Nasdaq-100(R) Index Fund

AMERICAN GENERAL INVESTMENT MANAGEMENT, L.P. ("AGIM")
2929 Allen Parkway, Houston, Texas 77019

AGIM was formed in 1998 as a successor to the investment management division of American General Corporation, and is an indirect wholly-owned subsidiary of AIG. AGIM also provides investment management and advisory services to pension and profit sharing plans, financial institutions and other investors. As of June 30, 2001, AGIM had $69 billion in assets under management.

Investment decisions for the Fund are made by a team, chaired by Magali E. Azema-Barac. The team meets regularly to review portfolio holdings and discuss purchase and sale activity. Ms. Azema-Barac joined American General in September, 1999. From 1995 to 1999, she worked on the equity desk of USWest Investment Management Company in Englewood, Colorado, where she incepted and managed an enhanced equity portfolio.

Important Note: On July 16-17, 2001, due to the impending acquisition, the Series Company Board of Directors approved an interim sub-advisory agreement and a new investment sub-advisory agreement between the Nasdaq-100(R) Index Fund and American General Investment Management, L.P. ("AGIM"), or an affiliate of American International Group, Inc. ("AIG"). AGIM may be reorganized or merged into an affiliate. New agreements are required because the acquisition is considered a change of control under the 1940 Act, which terminates the previous agreements. The interim advisory agreement will cover the period from August 29th through the date of shareholder approval of the new investment sub-advisory agreement, when the new investment sub-advisory agreement will take effect. The new investment sub-advisory agreement is the same in all material respects as the current investment sub-advisory agreement, including the fees charged, except that it may be with AGIM or an affiliate. The new investment sub-advisory agreement will be submitted to shareholders for approval at a meeting that is currently scheduled to be held in mid-December 2001. Please be sure to vote when you receive your proxy notice and call of shareholder meeting this fall.

North American -- Founders Large Cap Growth Fund North American -- Founders/T. Rowe Price Small Cap Fund

FOUNDERS ASSET MANAGEMENT LLC ("FOUNDERS")
2930 East Third Avenue, Denver, Colorado 80206

Founders and its predecessor companies have operated as investment advisors since 1938, and serve a number of investment companies and private accounts. Founders is the growth specialist affiliate of The Dreyfus Corporation. As of June 30, 2001, Founders had more than $5.65 billion in its mutual fund portfolios.

Founders is the sub-adviser for a portion of the North American -- Founders/T. Rowe Price Small Cap Fund, and uses a manager and team system for day-to-day management of its portion. The team is composed of members of the investment department, including a portfolio manager, portfolio traders, and research analysts. Daily decisions on security selection for the Founders portion of the Fund are made by Robert T. Ammann, Vice President of Investments. Mr. Ammann is a Chartered Financial Analyst who has been portfolio manager of the Dreyfus Founders Discovery Fund since 1997. He also served as portfolio manager of Founders Frontier Fund from February 1999 until its merger with Discovery Fund in August 1999. Mr. Ammann joined Founders in 1993 as a research analyst, and became a senior research analyst in 1996. Mr. Ammann graduated from Colorado State University with a B.B.A., concentration in finance.

Founders uses a team system for day-to-day management of the North American -- Founders Large Cap Growth Fund. The team is composed of members of the investment department, including lead portfolio managers, portfolio traders, and research analysts. Daily decisions on security selection for the Fund are made by Thomas M. Arrington, Vice President of Investments, and Scott A. Chapman, Vice President of Investments. They use a "bottom-up approach" to make Fund purchases. This means that they analyze the fundamentals of individual companies, such as financial ratios, rather than focusing on broader market themes. Messrs. Arrington and Chapman are Chartered Financial Analysts, and have co-managed the Dreyfus Founders Growth Fund since December 1998.

In July 1999 Mr. Arrington was named as a co-manager of the Dreyfus Founders Worldwide Growth Fund. Mr. Arrington has also served as a portfolio manager for The Dreyfus Corporation since March 1999. In addition, he manages or co-manages several institutional growth and growth and income accounts. Prior to joining Founders, Mr. Arrington was a vice president and director of income equity strategy for HighMark Capital Management, Inc., a subsidiary of Union BanCal Corp. His educational background includes an MBA in business information systems from San Francisco State University, and a BA in economics from the University of California at Los Angeles.

Scott A. Chapman joined Founders in December 1998 as co-portfolio manager of Dreyfus Founders Growth Fund. He has also served as a portfolio manager for The Dreyfus Corporation since February 1999. In July 1999, Mr. Chapman began co-managing the domestic portion of Dreyfus Founders Worldwide Growth Fund with Mr. Arrington. In December 1999, Mr. Chapman began managing Dreyfus Founders Focus Fund. Mr. Chapman was previously a vice president and director of growth strategy for San Francisco-based HighMark Capital Management, Inc., a subsidiary of Union BanCal Corp. Mr. Chapman joined HighMark in 1991 and managed the HighMark Growth Fund. Mr. Chapman has an MBA in finance from Golden Gate University and a BS in accounting from Santa Clara University.

North American -- Putnam Opportunities Fund

PUTNAM INVESTMENT MANAGEMENT, LLC ("PUTNAM")
One Post Office Square, Boston, Massachusetts 02109

Putnam has managed mutual funds since 1937, and, as of June 30, 2001, has over $339.3 billion in assets under management.

Day-to-day decisions and management of the Fund's portfolio are made by C. Beth Cotner, CFA, Managing Director, Jeffrey R. Lindsey, CFA, Managing Director and Richard B. England, Senior Vice President. Ms. Cotner has been Managing Director of Putnam Investments and Manager of the Putnam Growth Opportunities Fund since 1998, and has been employed by Putnam since 1995. Mr. Lindsey has been employed by Putnam since 1994, and has worked with the Putnam Growth Opportunities Fund since 1996. Mr. England joined Putnam in 1992, and became part of the Putnam Growth Opportunities team in 1996.

PRIOR PERFORMANCE OF THE PUTNAM GROWTH OPPORTUNITIES FUND (as excerpted from the
Putnam Growth Opportunities Fund prospectus)

North American -- Putnam Opportunities Fund's investment objective, policies, and strategies are substantially similar to those employed by Putnam for the Putnam Growth Opportunities Fund.

The historical performance information shown below is for a similar mutual fund, Class A of the retail Putnam Growth Opportunities Fund, and not that of the North American -- Putnam Opportunities Fund. The North American -- Putnam Opportunities Fund is sold in an annuity product only to registered and unregistered separate accounts of VALIC and its affiliates, while the retail Putnam Growth Opportunities Fund is sold to the general public. The returns shown reflect investment management fees and other expenses of the retail Putnam Growth Opportunities Fund, and do not reflect any charges included in the annuity contract or variable life insurance policy for mortality and expenses guarantees, administrative fees or surrender charges.
Investments made by the North American -- Putnam Opportunities Fund may not be the same as those made by the retail Putnam Growth Opportunities Fund. Notwithstanding the similarity in the name, objective, investment strategies, techniques and characteristics, the North American-Putnam Opportunities Fund and the Putnam Growth Opportunities Fund are separate mutual funds that will have different investment performance. This is due to factors such as the cash flow in and out, different fees and expenses, and diversity in portfolio size and positions. Even with the differences, however, the investment management of the Fund would not have been materially different. Past performance shown below is no guarantee of similar future performance for the North American -- Putnam Opportunities Fund.

(BAR CHART)

Best quarter: 30.68%, quarter ended 12/31/1998

Worst quarter: -27.27%, quarter ended 3/31/2001

The table below compares the performance of the Putnam Growth Opportunities Fund to that of the S&P 500 Index and the Russell 1000 Growth Index. The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value weighted index (stock price times number of shares outstanding), with each stock's weight in the Index proportionate to its market value. The Russell 1000 Growth Index is an unmanaged index composed of the 1,000 largest companies in the Russell 3000 Index, representing approximately 89% of the Russell 3000 total market capitalization. The Russell 3000 Index is composed of the 3,000 largest U.S. companies ranked by total market capitalization, representing approximately 98% of the U.S. investable equity market. No sales charges have been applied to either index, and an investor cannot invest directly in them. As noted above, past performance is no guarantee of similar future performance for the North American -- Putnam Opportunities Fund.

AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/2000

---------------------------------------------------------------------
                                                      SINCE INCEPTION
                                 ONE YEAR   5 YEARS      (10/2/95)
                                 --------   -------   ---------------
Putnam Growth Opportunities
  Fund, Class A                  -30.82%    20.37%        21.13%
S&P 500 Index                     -9.10%    18.32%        18.81%
Russell 1000 Growth Index        -22.42%    18.14%        18.36%
---------------------------------------------------------------------

North American -- Founders/T. Rowe Price Small Cap Fund North American -- T. Rowe Price Blue Chip Growth Fund North American -- T. Rowe Price Health Sciences Fund North American -- T. Rowe Price Science & Technology Fund

T. ROWE PRICE ASSOCIATES, INC. ("T. ROWE PRICE")
100 East Pratt Street, Baltimore, Maryland 21202

T. Rowe Price, which was founded by Thomas Rowe Price, Jr. in 1937, is one of the pioneers of the growth stock theory of investing. The firm is one of the nation's leading no-load fund managers, and its affiliates manage over $158.6 billion of assets as of June 30, 2001. Its approach to managing money is based on proprietary research and a strict investment discipline developed over six decades.

Since May 1, 1994, T. Rowe Price has been the sub-adviser for the Science & Technology Fund. The Science & Technology Fund is managed by an investment advisory committee chaired by Charles A. Morris, CFA. He has been chairman of this committee since it was started in 1994. Mr. Morris joined T. Rowe Price in 1987 as an investment analyst. He has been managing investments since 1991.

T. Rowe Price is responsible for sub-advising a portion of the North American -- Founders/T. Rowe Price Small Cap Fund. This portion is managed by an investment advisory committee, chaired by Gregory A. McCrickard, CFA. He has been the chairman of the investment advisory committee for the T. Rowe Price Small-Cap Stock Fund since 1992. Mr. McCrickard joined T. Rowe Price in 1986 and has been managing investments since

1991. He has a B.A. from the University of Virginia and an M.B.A. from Dartmouth College.

The North American -- T. Rowe Price Blue Chip Growth Fund is managed by an investment advisory committee, chaired by Larry J. Puglia, CFA. The committee chairman has day-to-day responsibility for managing the Fund and works with the committee in developing and executing the Fund's investment program. Mr. Puglia has been the chairman of the investment advisory committee for the retail T. Rowe Price Blue Chip Growth Fund since 1996. Mr. Puglia joined T. Rowe Price in 1990 and has been a portfolio manager since 1993. He has a B.A. from the University of Notre Dame (Summa cum laude) and an M.B.A. from Darden Graduate School of Business Administration at the University of Virginia (Shermet Scholar, highest honors).

The North American -- T. Rowe Price Health Sciences Fund is managed by an investment advisory committee, chaired by Kris H. Jenner, M.D., D. Phil. The committee chairman has day-to-day responsibility for managing the Fund and works with the committee in developing and executing the Fund's investment program. Dr. Jenner was elected chairman of the retail T. Rowe Price Health Sciences Fund committee in 2000. Dr. Jenner joined T. Rowe Price as an analyst in 1997 and has been managing investments since 1998. From 1995-1997, while on leave from the general surgery residency program at the Johns Hopkins Hospital, he was a post-doctoral fellow at the Brigham and Women's Hospital, Harvard Medical School. Dr. Jenner earned a B.S. from the University of Illinois (Summa cum laude), an M.D. from the Johns Hopkins School of Medicine, and a D. Phil. from Oxford University.

PRIOR PERFORMANCE OF SIMILAR FUNDS -- BLUE CHIP
North American -- T. Rowe Price Blue Chip Growth Fund's investment objective, policies, and strategies are substantially similar to those employed by T. Rowe Price for its retail T. Rowe Price Blue Chip Growth Fund, and two other variable annuity products, the Fortis Series Fund, Inc. Blue Chip Stock Series and the Manufacturers Investment Trust Blue Chip Growth Trust. T. Rowe Price Associates, Inc. is the investment adviser for the retail T. Rowe Price Blue Chip Growth Fund, and the investment sub-adviser for the North American -- T. Rowe Price Blue Chip Growth Fund, the Fortis Series Fund, Inc. Blue Chip Stock Series and the Manufacturers Investment Trust Blue Chip Growth Trust.

The historical performance information shown below has been excerpted from the prospectus of each of the above-mentioned products, and is not that of the Fund, North American -- T. Rowe Price Blue Chip Growth Fund. The North American -- T. Rowe Price Blue Chip Growth Fund, the Fortis Series Fund, Inc. Blue Chip Stock Series and the Manufacturers Investment Trust Blue Chip Growth Trust are each sold as an annuity only to registered and unregistered separate accounts of insurance companies, while the retail T. Rowe Price Blue Chip Growth Fund is sold to the general public. The returns shown for the Fortis Series Fund, Inc. Blue Chip Stock Series and the Manufacturers Investment Trust Blue Chip Growth Trust do not reflect any charges included in the annuity contract or variable life insurance policy for mortality and expenses guarantees, administrative fees or surrender charges. These additional charges would have lowered the returns shown.

The returns shown for the retail T. Rowe Price Blue Chip Growth Fund reflect investment management fees and other expenses of the retail fund and do not reflect any charges included in the annuity contract or variable life insurance policy for mortality and expenses guarantees, administrative fees or surrender charges. These additional charges would have lowered the returns shown.

Investments made by the North American -- T. Rowe Price Blue Chip Growth Fund may not be the same as the similar funds. Each of the Funds will have different performance results due to factors such as the cash flow in and out, different fees and expenses, and diversity in portfolio size and positions. Even with the differences, however, the investment management of the Fund would not have been materially different. Past performance shown below is no guarantee of similar future performance for the North American -- T. Rowe Price Blue Chip Growth Fund.

T. ROWE PRICE BLUE CHIP GROWTH FUND

(A fund that is similar to but not the same as the North American -- T. Rowe Price Blue Chip Growth Fund)

(BAR CHART)

Best quarter: 24.71%, quarter ended December 31, 1998

Worst quarter: -12.05%, quarter ended September 30, 1998

The table below compares the performance of the T. Rowe Price Blue Chip Growth Fund to that of the S&P 500 Index and the Lipper Large-Cap Core Funds Average. The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value weighted index (stock price times number of shares outstanding), with each stock's weight in the Index proportionate to its market value. No charges have been applied to the S&P 500 Index, and an investor cannot invest directly in it. As noted above, past performance is no guarantee of similar future performance for the North American -- T. Rowe Price Blue Chip Growth Fund.

AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/2000

---------------------------------------------------------------
                                                        SINCE
                                                      INCEPTION
                                 ONE YEAR   5 YEARS   (6/30/93)
                                 --------   -------   ---------
T. Rowe Price Blue Chip Growth
  Fund                            -2.53%    19.68%     19.90%
S&P 500 Index                     -9.11%    18.33%     17.69%
Lipper Large-Cap Growth Funds
  Average                        -16.25%    18.10%     16.54%
---------------------------------------------------------------

FORTIS SERIES FUND, INC. BLUE CHIP STOCK SERIES

(A fund that is similar to but not the same as the North American -- T. Rowe Price Blue Chip Growth Fund)

(BAR CHART)

Best quarter: 24.38%, quarter ended December 31, 1998

Worst quarter: -11.94%, quarter ended September 30, 1998

The table below compares the performance of the Fortis Series Fund, Inc. Blue Chip Stock Series to that of the S&P 500 Index. No charges have been applied to the S&P 500 Index, and an investor cannot invest directly in it. As noted above, past performance is no guarantee of similar future performance for the North American -- T. Rowe Price Blue Chip Growth Fund.

AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/2000

----------------------------------------------------------------
                                                 SINCE INCEPTION
                                      ONE YEAR     (5/1/1996)
                                      --------   ---------------
Fortis Series Fund, Inc. Blue Chip
  Stock Series                         -2.47%        18.53%
S&P 500 Index                          -9.10%        18.04%
----------------------------------------------------------------

MANUFACTURERS INVESTMENT TRUST BLUE CHIP GROWTH TRUST

(A fund that is similar to but not the same as the North American -- T. Rowe Price Blue Chip Growth Fund)

(BAR CHART)

Best quarter: 24.80%, quarter ended December 31, 1998

Worst quarter: -12.12%, quarter ended September 30, 1998

The table below compares the performance of the Manufacturers Investment Trust Blue Chip Growth Trust to that of the S&P 500 Index. No charges have been applied to the S&P 500 Index, and an investor cannot invest directly in it. As noted above, past performance is no guarantee of similar future performance for the North American -- T. Rowe Price Blue Chip Growth Fund.

AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/2000

---------------------------------------------------------------
                                                      SINCE
                                                    INCEPTION
                              ONE YEAR   5 YEARS   (12/11/1992)
                              --------   -------   ------------
Manufacturers Investment
  Trust Blue Chip Growth
  Trust                        -2.76%    18.98%       13.34%
S&P 500 Index                  -9.11%    18.35%       17.18%
---------------------------------------------------------------

PRIOR PERFORMANCE OF A SIMILAR FUND -- HEALTH SCIENCES (as excerpted from the T.
Rowe Price Health Sciences Fund prospectus)

North American -- T. Rowe Price Health Sciences Fund's investment objective, policies, and strategies are substantially similar to those employed by T. Rowe Price for the T. Rowe Price Health Sciences Fund. T. Rowe Price Associates, Inc. is the investment adviser for the retail T. Rowe Price Health Sciences Fund, and the investment sub-adviser for the North American -- T. Rowe Price Health Sciences Fund.

The historical performance information shown below is for a similar mutual fund, the retail T. Rowe Price Health Sciences Fund, and not that of the Fund, North American -- T. Rowe Price Health Sciences Fund. The North American -- T. Rowe Price Health Sciences Fund is sold as an annuity only to registered and unregistered separate accounts of VALIC and its affiliates, while the retail T. Rowe Price Health Sciences Fund is sold to the general public. The returns shown reflect investment management fees and other expenses of the retail fund, T. Rowe Price Health Sciences Fund, and do not reflect any charges included in the annuity contract or variable life insurance policy for mortality and expenses guarantees, administrative fees or surrender charges. These additional charges would have lowered the returns shown.

Investments made by the North American -- T. Rowe Price Health Sciences Fund may not be the same as those made by the T. Rowe Price Health Sciences Fund. Each of the Funds will have different performance results due to factors such as the cash flow in and out, different fees and expenses, and diversity in portfolio size and positions. Even with the differences, however, the investment management of the Fund would not have been materially different. Past performance shown below is no guarantee of similar future performance for the North American -- T. Rowe Price Health Sciences Fund.

T. ROWE PRICE HEALTH SCIENCES FUND

(A fund that is similar to but not the same as the North American -- T. Rowe Price Health Sciences Fund)

[BAR CHART]

Best quarter: 20.03%, quarter ended June 30, 2000

Worst quarter: -7.05%, quarter ended September 30, 1998

The table below compares the performance of the T. Rowe Price Health Sciences Fund to that of the S&P 500 Index and the Lipper Health Biotech Fund Index. The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value weighted index (stock price times number of shares outstanding), with each stock's weight in the Index proportionate to its market value. No charges have been applied to the S&P 500 Index, and an investor cannot invest directly in it. As noted above, past performance is no guarantee of similar future performance for the North American -- T. Rowe Price Health Sciences Fund.

AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/2000

-----------------------------------------------------------------
                                                  SINCE INCEPTION
                               1 YEAR   5 YEARS    (12/29/1995)
                               ------   -------   ---------------
T. Rowe Price Health Sciences
  Fund                         52.19%    24.93%       24.90%
S&P 500 Index                  -9.11%    18.33%       18.31%
Lipper Health/Biotechnology
  Fund Index                   43.67%    22.15%       22.15%
-----------------------------------------------------------------

North American Core Equity Fund

WELLINGTON MANAGEMENT COMPANY, LLP ("WELLINGTON MANAGEMENT")
75 State Street, Boston, Massachusetts 02109

Since September 1, 1999, Wellington Management has been the sub-adviser for Core Equity. Wellington Management is an independent partnership owned entirely by 68 partners. As of June 30, 2001, Wellington Management managed approximately $295 billion of client assets in a broad range of investment styles for institutional investors, mutual fund sponsors and high net-worth individuals. The firm and its affiliates have offices in

Boston, Atlanta, Radnor, San Francisco, London, Singapore, Sydney and Tokyo.

Matthew E. Megargel, Senior Vice President of Wellington Management, is a chartered financial analyst who serves as the portfolio manager for several funds. He has managed the North American Core Equity Fund since May 2001. Mr. Megargel joined Wellington Management in 1983 as a research analyst and took on additional responsibilities as a fund manager in 1988. In 1991, he became solely a fund manager with Wellington Management.

HOW VALIC IS PAID FOR ITS SERVICES

Each Fund pays VALIC a fee based on its average daily net asset value. A Fund's net asset value is the total value of the Fund's assets minus any money it owes for operating expenses, such as the fee paid to its Custodian to safeguard the Fund's investments.

Here is a list of the percentages each Fund pays:

                                   ADVISORY FEE PAID
                                   (AS A PERCENTAGE OF AVERAGE
            FUND NAME              DAILY NET ASSETS)
            ---------              ---------------------------
Asset Allocation Fund                         0.50%
Blue Chip Growth Fund                         0.80%
Capital Conservation Fund                     0.50%
Core Equity Fund                              0.80%
Government Securities Fund                    0.50%
Growth & Income Fund                          0.75%
Health Sciences Fund                          1.00%
Income & Growth                               0.77%
International Equities Fund              (1)
International Government Bond Fund            0.50%
International Growth                          1.00%
Large Cap Growth                              1.00%
MidCap Index Fund                        (1)
Money Market Fund                             0.50%
Nasdaq-100(R) Index                           0.40%
Putnam Opportunities                          0.95%
Science & Technology Fund                     0.90%
Small Cap                                     0.90%
Small Cap Index Fund                     (1)
Social Awareness Fund                         0.50%
Stock Index Fund                         (1)

(1) 0.35% on the first $500 million; 0.25% on assets over $500 million.

The Investment Advisory Agreements we entered into with each Fund do not limit how much the Funds pay in monthly expenses each year. However, we voluntarily limit the Funds' monthly expenses as follows: If a Fund's average monthly expenses, when annualized, are more than 2% of the Fund's estimated average daily net assets, we will pay the difference. As a result the Fund's yield or total return will increase. If VALIC decides to stop voluntarily reducing a Fund's expenses, it may do so by giving 30 days' notice, in writing, to the Series Company. To date, VALIC has not had to reduce expenses of any Fund as a result of this 2% voluntary reduction.

In addition to the limitations above, VALIC has voluntarily agreed to cap certain Fund expenses by waiving a portion of its advisory fee or reimbursing certain expenses, as shown below. Expense caps are net of any expense reduction realized through the use of directed brokerage commissions.

Fund expenses shall be limited for the Funds shown below (expressed as a percentage of average annual net assets) through May 31, 2002 (through December 8, 2002 for those marked with an asterisk):

                                              MAXIMUM
                    FUND                      FUND EXPENSE
                    ----                      ------------
Core Equity Fund                                 0.85%
Growth & Income Fund                             0.85%
Income and Growth Fund*                          0.83%
International Growth Fund*                       1.06%
Large Cap Growth Fund*                           1.06%
Money Market Fund                                0.60%
Science & Technology Fund                        1.00%
Small Cap Fund                                   0.95%

ACCOUNT INFORMATION

SERIES COMPANY SHARES
The Series Company is an open-end mutual fund and may offer shares of the Funds for sale at any time. However, the Series Company offers shares of the Funds only to registered and unregistered separate accounts of VALIC and its affiliates, or employee thrift plans maintained by VALIC or an affiliate.

BUYING AND SELLING SHARES
As a participant, you do not directly buy shares of the Funds that make up the Series Company. Instead, you buy units in either a registered or unregistered separate account of VALIC or of its affiliates. When you buy these units, you specify the Funds in which you want the separate account to invest your money. The separate account, in turn, buys the shares of the Funds according to your instructions. After you invest in a Fund, you participate in Fund earnings or losses in proportion to the amount of money you invest. See your Contract prospectus for more information on the separate account associated with your contract. When the separate accounts buy, sell, or transfer shares of the Funds, they do not pay any charges related to these transactions. The value of such separate account transactions is based on the next calculation of net asset value after its order is placed with the Fund.

Although the Series Company normally redeems Fund shares for cash, the Series Company has the right to pay separate account assets other than cash for redemption amounts exceeding, in any 90-day period, $250,000 or 1% of the net asset value of the affected Fund, whichever is less.

None of the Funds currently foresees any disadvantages to participants arising out of the fact that it may offer its shares to separate accounts of various insurance companies to serve as the investment medium for their variable annuity and variable life insurance contracts. Nevertheless, the Board of Directors intends to monitor events in order to identify any material irreconcilable conflicts which may possibly arise and to determine what action, if any, should be taken in response to such conflicts. If such a conflict were to occur, one or more insurance companies' separate accounts might be required to withdraw their investments in one or more Funds and shares of another Fund may be substituted. This might force a Fund to sell portfolio securities at disadvantageous prices. In addition, the Board of Directors may refuse to sell shares of any Fund to any separate account or may suspend or terminate the offering of shares of any Fund if such action is required by law or regulatory authority or is in the best interests of the shareholders of the Fund.

HOW SHARES ARE VALUED
The prices of the shares for each Fund is based on net asset value ("NAV"). NAV is computed by adding the value of a Fund's holdings plus other assets, subtracting liabilities, and then dividing the result by the number of shares outstanding.

Portfolio securities and other assets are valued based on market price quotations. If market price quotations are not readily available, securities are valued by a method that reflects fair market value. If a Fund's portfolio includes investments that are not sold often or are not sold on any exchanges, the Series Company's Board of Directors or its delegate will, in good faith, estimate fair market value of these investments. Some foreign exchanges trade on weekends or other days when the Funds do not price their shares. For Funds with substantial investments in those markets, the net asset value of the Fund's shares may change on days when the separate account may not be able to purchase or redeem Fund shares. The amortized cost method is used to determine the values of all the Money Market Fund's investments and of any other Fund's short-term securities maturing within 60 days. The amortized cost method approximates fair market value.

The Series Company calculates the net asset value of each Fund's shares at approximately 4pm EST each day the New York Stock Exchange is open. The New York Stock Exchange is open Monday through Friday but is closed on certain federal and other holidays.

DIVIDENDS AND CAPITAL GAINS

Dividends from Net Investment Income
Net investment income generally includes stock dividends received and bond interest earned less expenses paid by the Fund. Each Fund pays dividends from net investment income occasionally. Dividends from net investment income are automatically reinvested for you into additional shares of the Fund. The Money Market Fund pays dividends daily and all other Funds pay dividends once a month.

Distributions from Capital Gains
When a Fund sells a security for more than it paid for that security, a capital gain results. Once a year, each Fund pays distributions from capital gains, as long as total capital gains exceed total capital losses. Distributions from capital gains are automatically reinvested for you into additional shares of the Fund.

TAX CONSEQUENCES
As the owner of a Contract or a participant under your employer's Contract, you will not be directly affected by the federal income tax consequences of distributions, sales or redemptions of Fund shares. You should consult the prospectus for your Contract for further information concerning the federal income tax consequences to you of investing in the Funds.

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand each Fund's financial performance for the past 5 years. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by Ernst & Young LLP, Independent Auditors for the Series Company, whose report is included in the Statement of Additional Information, which is available upon request.

Per share data assumes that you held each share from the beginning to the end of each fiscal year. Total return assumes that you bought additional shares with dividends paid by the Fund. Total returns for periods of less than one year are not annualized.

ASSET ALLOCATION FUND(1)

                                                                               FISCAL YEAR ENDED MAY 31,
                                                              ------------------------------------------------------------
                                                                2001         2000         1999         1998         1997
                                                              --------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $  14.68     $  14.43     $  14.02     $  12.57     $  12.55
                                                              ------------------------------------------------------------
Investment Operations
  Net investment income                                           0.43         0.44         0.40         0.41         0.77
  Net realized & unrealized gain (loss)                          (0.79)        0.51         1.26         2.24         1.44
                                                              ------------------------------------------------------------
  Total from investment operations                               (0.36)        0.95         1.66         2.65         2.21
                                                              ------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.43)       (0.44)       (0.40)       (0.41)       (0.78)
  Net realized gains                                             (1.18)       (0.26)       (0.85)       (0.79)       (1.41)
                                                              ------------------------------------------------------------
  Total distributions to shareholders                            (1.61)       (0.70)       (1.25)       (1.20)       (2.19)
                                                              ------------------------------------------------------------
Net Asset Value, end of period                                $  12.71     $  14.68     $  14.43     $  14.02     $  12.57
                                                              ------------------------------------------------------------
TOTAL RETURN                                                     (2.46)%       6.65%       12.23%       21.94%       15.89%
                                                              ------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.58%        0.55%        0.57%        0.54%        0.57%
  Net investment income to average net assets                     3.10%        2.98%        2.81%        3.02%        3.26%
  Portfolio turnover rate                                          112%         162%         160%          24%         103%
  Net assets at end of year (000's)                           $208,369     $236,804     $248,473     $200,099     $177,347

(1) The Asset Allocation Fund was formerly known as the Timed Opportunity Fund.

BLUE CHIP GROWTH FUND

                                                             NOVEMBER 1, 2000
                                                                    TO
                                                               MAY 31, 2001
                                                             ----------------
NET ASSET VALUE
Net asset value, beginning of period                             $  10.00
                                                             ----------------
Investment Operations
  Net investment income                                              0.02
  Net realized & unrealized gain (loss)                             (1.43)
                                                             ----------------
  Total from investment operations                                  (1.41)
                                                             ----------------
Distributions to Shareholders From:
  Net investment income                                             (0.02)
  Net realized gains                                                   --
                                                             ----------------
  Total distributions to shareholders                               (0.02)
                                                             ----------------
Net Asset Value, end of period                                   $   8.57
                                                             ----------------
TOTAL RETURN                                                       (14.14)%
                                                             ----------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                     0.88%
  Net investment income to average net assets                        0.31%
  Portfolio turnover rate                                              70%
  Net assets at end of year (000's)                              $ 14,592

CAPITAL CONSERVATION FUND

                                                                               FISCAL YEAR ENDED MAY 31,
                                                              ------------------------------------------------------------
                                                                2001         2000         1999         1998         1997
                                                              --------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $   8.78     $   9.39     $   9.68     $   9.31     $   9.23
                                                              ------------------------------------------------------------
Investment Operations
  Net investment income                                           0.58         0.62         0.60         0.61         0.62
  Net realized & unrealized gain (loss)                           0.56        (0.61)       (0.29)        0.37         0.08
                                                              ------------------------------------------------------------
  Total from investment operations                                1.14         0.01         0.31         0.98         0.70
                                                              ------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.58)       (0.62)       (0.60)       (0.61)       (0.62)
  Net realized gains                                                --           --           --           --           --
                                                              ------------------------------------------------------------
  Total distributions to shareholders                            (0.58)       (0.62)       (0.60)       (0.61)       (0.62)
                                                              ------------------------------------------------------------
Net Asset Value, end of period                                $   9.34     $   8.78     $   9.39     $   9.68     $   9.31
                                                              ------------------------------------------------------------
TOTAL RETURN                                                     13.35%        0.13%        3.25%       10.76%        7.75%
                                                              ------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.58%        0.55%        0.60%        0.54%        0.57%
  Net investment income to average net assets                     6.35%        6.73%        6.24%        6.32%        6.59%
  Portfolio turnover rate                                          418%         144%          41%          14%          45%
  Net assets at end of year (000's)                           $ 56,560     $ 50,525     $ 63,131     $ 63,654     $ 66,747

CORE EQUITY FUND

                                                                                  FISCAL YEAR ENDED MAY 31,
                                                              ------------------------------------------------------------------
                                                                2001          2000           1999           1998          1997
                                                              --------     ----------     ----------     ----------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $  23.31     $    24.12     $    22.08     $    17.62     $  16.49
                                                              -----------------------------------------------------------------
Investment Operations
  Net investment income (loss)                                    0.04             --          (0.08)         (0.02)        0.02
  Net realized & unrealized gain (loss)                          (2.54)          0.20           3.13           4.82         1.45
                                                              -----------------------------------------------------------------
  Total from investment operations                               (2.50)          0.20           3.05           4.80         1.47
                                                              -----------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.04)            --             --          (0.01)       (0.01)
  Net realized gains                                             (7.41)         (1.01)         (1.01)         (0.33)       (0.33)
                                                              -----------------------------------------------------------------
  Total distributions to shareholders                            (7.45)         (1.01)         (1.01)         (0.34)       (0.34)
                                                              -----------------------------------------------------------------
Net Asset Value, end of period                                $  13.36     $    23.31     $    24.12     $    22.08     $  17.62
                                                              -----------------------------------------------------------------
TOTAL RETURN                                                    (11.62)%         0.96%         14.20%         27.41%        9.00%
                                                              -----------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.86%          0.85%          0.86%          0.84%        0.86%
  Expenses to average net assets before expense reductions        0.88%          0.85%          0.86%          0.84%        0.86%
  Net investment income to average net assets                     0.24%          0.02%         (0.36)%        (0.11)%       0.09%
  Portfolio turnover rate                                           71%           134%            42%            43%          40%
  Net assets at end of year (000's)                           $913,980     $1,135,083     $1,271,034     $1,100,137     $747,654

GOVERNMENT SECURITIES FUND

                                                                                  FISCAL YEAR ENDED MAY 31,
                                                              ------------------------------------------------------------------
                                                                2001          2000           1999           1998          1997
                                                              --------     ----------     ----------     ----------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $   9.51     $     9.90     $    10.09     $     9.67     $   9.61
                                                              -----------------------------------------------------------------
Investment Operations
  Net investment income                                           0.58           0.55           0.55           0.58         0.59
  Net realized & unrealized gain (loss)                           0.56          (0.39)         (0.19)          0.42         0.06
                                                              -----------------------------------------------------------------
  Total from investment operations                                1.14           0.16           0.36           1.00         0.65
                                                              -----------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.58)         (0.55)         (0.55)         (0.58)       (0.59)
  Net realized gains                                                --             --             --             --           --
                                                              -----------------------------------------------------------------
  Total distributions to shareholders                            (0.58)         (0.55)         (0.55)         (0.58)       (0.59)
                                                              -----------------------------------------------------------------
Net Asset Value, end of period                                $  10.07     $     9.51     $     9.90     $    10.09     $   9.67
                                                              -----------------------------------------------------------------
TOTAL RETURN                                                     12.23%          1.74%          3.58%         10.60%        6.94%
                                                              -----------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.58%          0.55%          0.59%          0.54%        0.56%
  Net investment income to average net assets                     5.83%          5.68%          5.46%          5.82%        6.11%
  Portfolio turnover rate                                           84%           132%            39%            24%          38%
  Net assets at end of year (000's)                           $119,514     $  100,648     $  107,425     $   92,120     $ 83,827

GROWTH & INCOME FUND

                                                                               FISCAL YEAR ENDED MAY 31,
                                                              ------------------------------------------------------------
                                                                2001         2000         1999         1998         1997
                                                              --------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $  21.04     $  21.53     $  19.91     $  16.87     $  14.78
                                                              ------------------------------------------------------------
Investment Operations
  Net investment income                                           0.11         0.15         0.06         0.08         0.10
  Net realized & unrealized gain (loss)                          (2.39)        1.96         3.17         3.25         2.38
                                                              ------------------------------------------------------------
  Total from investment operations                               (2.28)        2.11         3.23         3.33         2.48
                                                              ------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.11)       (0.14)       (0.08)       (0.08)       (0.10)
  Net realized gains                                             (3.81)       (2.46)       (1.53)       (0.21)       (0.29)
                                                              ------------------------------------------------------------
  Total distributions to shareholders                            (3.92)       (2.60)       (1.61)       (0.29)       (0.39)
                                                              ------------------------------------------------------------
Net Asset Value, end of period                                $  14.84     $  21.04     $  21.53     $  19.91     $  16.87
                                                              ------------------------------------------------------------
TOTAL RETURN                                                    (10.91)%       9.67%       16.92%       19.87%       17.08%
                                                              ------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.82%        0.80%        0.82%        0.80%        0.81%
  Expenses to average net assets before expense reductions        0.83%        0.80%        0.82%        0.80%        0.81
  Net investment income to average net assets                     0.62%        0.70%        0.29%        0.43%        0.70%
  Portfolio turnover rate                                           65%          89%         102%          78%          45%
  Net assets at end of year (000's)                           $267,487     $329,588     $296,885     $271,159     $209,545

HEALTH SCIENCES FUND

                                                             NOVEMBER 1, 2000
                                                                    TO
                                                               MAY 31, 2001
                                                             ----------------
NET ASSET VALUE
Net asset value, beginning of period                             $  10.00
                                                                 --------
Investment Operations
  Net investment income                                              0.01
  Net realized & unrealized gain (loss)                             (1.07)
                                                                 --------
  Total from investment operations                                  (1.06)
                                                                 --------
Distributions to Shareholders From:
  Net investment income                                             (0.01)
  Net realized gains                                                   --
                                                                 --------
  Total distributions to shareholders                               (0.01)
                                                                 --------
Net Asset Value, end of period                                   $   8.93
                                                                 --------
TOTAL RETURN                                                       (10.60)%
                                                                 --------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                     1.08%
  Net investment income to average net assets                       (0.03)%
  Portfolio turnover rate                                             158%
  Net assets at end of year (000's)                              $ 23,965

INCOME & GROWTH FUND

                                                            DECEMBER 11, 2000
                                                                   TO
                                                              MAY 31, 2001
                                                            -----------------
NET ASSET VALUE
Net asset value, beginning of period                            $  10.00
                                                                --------
Investment Operations
  Net investment income                                             0.04
  Net realized & unrealized gain (loss)                            (0.40)
                                                                --------
  Total from investment operations                                 (0.36)
                                                                --------
Distributions to Shareholders From:
  Net investment income                                            (0.03)
  Net realized gains                                                  --
                                                                --------
  Total distributions to shareholders                              (0.03)
                                                                --------
Net Asset Value, end of period                                  $   9.61
                                                                --------
TOTAL RETURN                                                       (3.60)%
                                                                --------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                    0.83%
  Expenses to average net assets before expense reductions          0.87%
  Net investment income to average net assets                       0.79%
  Portfolio turnover rate                                             72%
  Net assets at end of year (000's)                             $261,303

INTERNATIONAL EQUITIES FUND

                                                                               FISCAL YEAR ENDED MAY 31,
                                                              ------------------------------------------------------------
                                                                2001         2000         1999         1998         1997
                                                              --------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $  12.55     $  11.32     $  11.95     $  11.44     $  11.15
                                                              ------------------------------------------------------------
Investment Operations
  Net investment income                                           0.12         0.15         0.22         0.23         0.20
  Net realized & unrealized gain (loss)                          (2.46)        1.90         0.30         0.85         0.63
                                                              ------------------------------------------------------------
  Total from investment operations                               (2.34)        2.05         0.52         1.08         0.83
                                                              ------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.09)       (0.14)       (0.25)       (0.24)       (0.19)
  Net realized gains                                             (1.34)       (0.68)       (0.90)       (0.33)       (0.35)
                                                              ------------------------------------------------------------
  Total distributions to shareholders                            (1.43)       (0.82)       (1.15)       (0.57)       (0.54)
                                                              ------------------------------------------------------------
Net Asset Value, end of period                                $   8.78     $  12.55     $  11.32     $  11.95     $  11.44
                                                              ------------------------------------------------------------
TOTAL RETURN                                                    (19.59)%      18.01%        4.43%        9.92%        7.74%
                                                              ------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.42%        0.41%        0.43%        0.40%        0.42%
  Net investment income to average net assets                     1.08%        1.20%        1.89%        1.92%        1.75%
  Portfolio turnover rate                                           45%          25%           8%           9%          12%
  Net assets at end of year (000's)                           $118,524     $162,840     $142,108     $155,469     $181,437

INTERNATIONAL GOVERNMENT BOND FUND

                                                                               FISCAL YEAR ENDED MAY 31,
                                                              ------------------------------------------------------------
                                                                2001         2000         1999         1998         1997
                                                              --------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $  10.88     $  11.62     $  11.42     $  11.33     $  11.79
                                                              ------------------------------------------------------------
Investment Operations
  Net investment income                                           0.43         0.48         0.51         0.56         0.63
  Net realized & unrealized gain (loss)                          (0.91)       (0.98)        0.24        (0.26)       (0.49)
                                                              ------------------------------------------------------------
  Total from investment operations                               (0.48)       (0.50)        0.75         0.30         0.14
                                                              ------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.26)       (0.23)       (0.48)       (0.20)       (0.58)
  Net realized gains                                             (0.04)       (0.01)       (0.07)       (0.01)       (0.02)
                                                              ------------------------------------------------------------
  Total distributions to shareholders                            (0.30)       (0.24)       (0.55)       (0.21)       (0.60)
                                                              ------------------------------------------------------------
  Net Asset Value, end of period                              $  10.10     $  10.88     $  11.62     $  11.42     $  11.33
                                                              ------------------------------------------------------------
TOTAL RETURN                                                     (4.47)%      (4.43)%       6.40%        2.65%        1.13%
                                                              ------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.58%        0.52%        0.57%        0.55%        0.56%
  Net investment income to average net assets                     3.82%        4.07%        4.27%        4.70%        5.13%
  Portfolio turnover rate                                           72%          15%          22%          17%           4%
  Net assets at end of year (000's)                           $ 99,977     $130,978     $158,509     $155,783     $177,709

INTERNATIONAL GROWTH FUND

                                                            DECEMBER 11, 2000
                                                                   TO
                                                              MAY 31, 2001
                                                            -----------------
NET ASSET VALUE
Net asset value, beginning of period                            $  10.00
                                                                --------
Investment Operations
  Net investment income                                             0.05
  Net realized & unrealized gain (loss)                            (1.70)
                                                                --------
  Total from investment operations                                 (1.65)
                                                                --------
Distributions to Shareholders From:
  Net investment income                                            (0.04)
  Net realized gains                                                  --
                                                                --------
  Total distributions to shareholders                              (0.04)
                                                                --------
Net Asset Value, end of period                                  $   8.31
                                                                --------
TOTAL RETURN                                                       (3.60)%
                                                                --------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                    1.06%
  Expenses to average net assets before expense reduction           1.10%
  Net investment income to average net assets                       0.99%
  Portfolio turnover rate                                            183%
  Net assets at end of year (000's)                             $533,368

LARGE CAP GROWTH FUND

                                                              DECEMBER 11, 2000
                                                                     TO
                                                                MAY 31, 2001
                                                              -----------------
NET ASSET VALUE
Net asset value, beginning of period                              $  10.00
                                                                  --------
Investment Operations
  Net investment income                                              (0.01)
  Net realized & unrealized gain (loss)                              (2.56)
                                                                  --------
  Total from investment operations                                   (2.57)
                                                                  --------
Distributions to Shareholders From:
  Net investment income                                                 --
  Net realized gains                                                    --
                                                                  --------
  Total distributions to shareholders                                   --
                                                                  --------
Net Asset Value, end of period                                    $   7.43
                                                                  --------
TOTAL RETURN                                                        (25.70)%
                                                                  --------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                      1.06%
  Expenses to average net assets before expense reductions            1.10%
  Net investment income to average net assets                        (0.27)%
  Portfolio turnover rate                                               94%
  Net assets at end of year (000's)                               $624,700

MIDCAP INDEX FUND

                                                                                FISCAL YEAR ENDED MAY 31,
                                                              --------------------------------------------------------------
                                                                 2001          2000         1999         1998         1997
                                                              ----------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $    23.73     $  25.64     $  25.27     $  20.83     $  19.09
                                                              --------------------------------------------------------------
Investment Operations
  Net investment income                                             0.19         0.22         0.23         0.23         0.24
  Net realized & unrealized gain                                    1.74         4.49         2.54         5.80         2.95
                                                              --------------------------------------------------------------
  Total from investment operations                                  1.93         4.71         2.77         6.03         3.19
                                                              --------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                            (0.19)       (0.22)       (0.23)       (0.23)       (0.24)
  Net realized gains                                               (5.65)       (6.40)       (2.17)       (1.36)       (1.21)
                                                              --------------------------------------------------------------
  Total distributions to shareholders                              (5.84)       (6.62)       (2.40)       (1.59)       (1.45)
                                                              --------------------------------------------------------------
Net Asset Value, end of period                                $    19.82     $  23.73     $  25.64     $  25.27     $  20.83
                                                              --------------------------------------------------------------
TOTAL RETURN                                                       10.11%       21.36%       11.91%       29.62%       17.48%
                                                              --------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                    0.38%        0.36%        0.38%        0.36%        0.40%
  Net investment income to average net assets                       0.84%        0.90%        0.92%        0.95%        1.24%
  Portfolio turnover rate                                             34%          41%          41%          26%          19%
  Net assets at end of year (000's)                           $1,047,680     $922,679     $817,573     $804,318     $607,061

MONEY MARKET FUND

                                                                               FISCAL YEAR ENDED MAY 31,
                                                              ------------------------------------------------------------
                                                                2001         2000         1999         1998         1997
                                                              --------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $   1.00     $   1.00     $   1.00     $   1.00     $   1.00
                                                              ------------------------------------------------------------
Investment Operations
  Net investment income                                           0.06         0.05         0.05         0.05         0.05
                                                              ------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.06)       (0.05)       (0.05)       (0.05)       (0.05)
                                                              ------------------------------------------------------------
Net Asset Value, end of period                                $   1.00     $   1.00     $   1.00     $   1.00     $   1.00
                                                              ------------------------------------------------------------
TOTAL RETURN                                                      5.77%        5.21%        4.84%        5.25%        5.02%
                                                              ------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.57%        0.56%        0.57%        0.54%        0.57%
  Expenses to average net assets before expense reductions        0.58%        0.56%        0.57%        0.54%        0.57%
  Net investment income to average net assets                     5.59%        5.13%        4.66%        5.14%        4.95%
  Net assets at end of year (000's)                           $579,507     $484,934     $347,394     $190,975     $128,125

NASDAQ-100(R) INDEX FUND

                                                              OCTOBER 2, 2000
                                                                    TO
                                                               MAY 31, 2001
                                                              ---------------
NET ASSET VALUE
Net asset value, beginning of period                             $  10.00
                                                                 --------
Investment Operations
  Net investment income                                              0.01
  Net realized & unrealized gain (loss)                             (4.91)
                                                                 --------
  Total from investment operations                                  (4.90)
                                                                 --------
Distributions to Shareholders From:
  Net investment income                                             (0.01)
  Net realized gains                                                   --
                                                                 --------
  Total distributions to shareholders                               (0.01)
                                                                 --------
Net Asset Value, end of period                                   $   5.09
                                                                 --------
TOTAL RETURN                                                       (49.01)%
                                                                 --------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                     0.52%
  Net investment income to average net assets                        0.31%
  Portfolio turnover rate                                              19%
  Net assets at end of year (000's)                              $ 19,005

PUTNAM OPPORTUNITIES FUND

                                                        OCTOBER 2, 2000
                                                              TO
                                                         MAY 31, 2001
                                                        ---------------
NET ASSET VALUE
Net asset value, beginning of period                      $    10.00
                                                          ----------
Investment Operations
  Net investment income                                        (0.01)
  Net realized & unrealized gain (loss)                        (3.53)
                                                          ----------
  Total from investment operations                             (3.54)
                                                          ----------
Distributions to Shareholders From:
  Net investment income                                           --
  Net realized gains                                              --
                                                          ----------
  Total distributions to shareholders                             --
                                                          ----------
Net Asset Value, end of period                            $     6.46
                                                          ----------
TOTAL RETURN                                                  (35.40)%
                                                          ----------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                1.02%
  Net investment income to average net assets                  (0.27)%
  Portfolio turnover rate                                         51%
  Net assets at end of year (000's)                       $    3,945

SCIENCE & TECHNOLOGY FUND

                                                                                  FISCAL YEAR ENDED MAY 31,
                                                             --------------------------------------------------------------------
                                                                2001           2000           1999           1998          1997
                                                             ----------     ----------     ----------     ----------     --------
NET ASSET VALUE
Net asset value, beginning of period                         $    41.14     $    29.95     $    22.07     $    19.88     $  20.48
                                                             -------------------------------------------------------------------
Investment Operations
  Net investment income (loss)                                    (0.17)         (0.11)         (0.10)         (0.09)          --
  Net realized & unrealized gain (loss)                          (15.86)         16.37          10.36           2.28         0.33
                                                             -------------------------------------------------------------------
  Total from investment operations                               (16.03)         16.26          10.26           2.19         0.33
                                                             -------------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                              --             --             --             --           --
  Net realized gains                                              (7.83)         (5.07)         (2.38)            --        (0.93)
                                                             -------------------------------------------------------------------
  Total distributions to shareholders                             (7.83)         (5.07)         (2.38)            --        (0.93)
                                                             -------------------------------------------------------------------
Net Asset Value, end of period                               $    17.28     $    41.14     $    29.95     $    22.07     $  19.88
                                                             -------------------------------------------------------------------
TOTAL RETURN                                                     (42.24)%        52.65%         48.34%         10.85%        1.81%
                                                             -------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                   0.98%          0.96%          0.96%          0.95%        0.96%
  Net investment income to average net assets                     (0.66)%        (0.40)%        (0.46)%        (0.46)%      (0.29)%
  Portfolio turnover rate                                           176%           130%           149%           128%         122%
  Net assets at end of year (000's)                          $2,015,574     $3,314,052     $1,683,585     $1,023,141     $804,982

SMALL CAP FUND

                                                              DECEMBER 11, 2000
                                                                     TO
                                                                MAY 31, 2001
                                                              -----------------
NET ASSET VALUE
Net asset value, beginning of period                              $  10.00
                                                                  --------
Investment Operations
  Net investment income                                              (0.01)
  Net realized & unrealized gain (loss)                              (0.90)
                                                                  --------
  Total from investment operations                                   (0.91)
                                                                  --------
Distributions to Shareholders From:
  Net investment income                                                 --
  Net realized gains                                                    --
                                                                  --------
  Total distributions to shareholders                                   --
                                                                  --------
Net Asset Value, end of period                                    $   9.09
                                                                  --------
TOTAL RETURN                                                         11.51%
                                                                  --------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                      0.95%
  Expenses to average net assets before expense reductions            1.00%
  Net investment income to average net assets                        (0.14)%
  Portfolio turnover rate                                              130%
  Net assets at end of year (000's)                               $714,608

SMALL CAP INDEX FUND

                                                                               FISCAL YEAR ENDED MAY 31,
                                                              ------------------------------------------------------------
                                                                2001         2000         1999         1998         1997
                                                              --------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $  15.66     $  15.84     $  17.94     $  16.18     $  16.25
                                                              ------------------------------------------------------------
Investment Operations
  Net investment income                                           0.19         0.18         0.19         0.19         0.19
  Net realized & unrealized gain (loss)                           0.40         1.43        (0.74)        3.17         0.93
                                                              ------------------------------------------------------------
  Total from investment operations                                0.59         1.61        (0.55)        3.36         1.12
                                                              ------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.19)       (0.18)       (0.19)       (0.19)       (0.19)
  Net realized gains                                             (1.95)       (1.61)       (1.36)       (1.41)       (1.00)
                                                              ------------------------------------------------------------
  Total distributions to shareholders                            (2.14)       (1.79)       (1.55)       (1.60)       (1.19)
                                                              ------------------------------------------------------------
Net Asset Value, end of period                                $  14.11     $  15.66     $  15.84     $  17.94     $  16.18
                                                              ------------------------------------------------------------
TOTAL RETURN                                                      5.23%       10.22%       (2.45)%      21.34%        7.51%
                                                              ------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.44%        0.40%        0.41%        0.39%        0.41%
  Net investment income to average net assets                     1.31%        1.12%        1.20%        1.05%        1.34%
  Portfolio turnover rate                                           57%          35%          36%          36%          42%
  Net assets at end of year (000's)                           $236,530     $228,602     $220,002     $247,183     $192,459

SOCIAL AWARENESS FUND

                                                                                 FISCAL YEAR ENDED MAY 31,
                                                           ----------------------------------------------------------------------
                                                              2001           2000           1999           1998           1997
                                                           ----------     ----------     ----------     ----------     ----------
NET ASSET VALUE
Net asset value, beginning of period                       $    24.77     $    24.11     $    22.16     $    17.90     $    15.49
                                                           ---------------------------------------------------------------------
Investment Operations
  Net investment income                                          0.20           0.20           0.21           0.23           0.24
  Net realized & unrealized gain (loss)                         (3.23)          1.61           4.08           5.07           4.19
                                                           ---------------------------------------------------------------------
  Total from investment operations                              (3.03)          1.81           4.29           5.30           4.43
                                                           ---------------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                         (0.20)         (0.18)         (0.22)         (0.23)         (0.24)
  Net realized gains                                            (0.53)         (0.97)    $    (2.12)         (0.81)         (1.78)
                                                           ---------------------------------------------------------------------
  Total distributions to shareholders                           (0.73)         (1.15)         (2.34)         (1.04)         (2.02)
                                                           ---------------------------------------------------------------------
Net Asset Value, end of period                             $    21.01     $    24.77     $    24.11     $    22.16     $    17.90
                                                           ---------------------------------------------------------------------
TOTAL RETURN                                                   (12.33)%         7.49%         20.05%         30.34%         30.48%
                                                           ---------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
  Expenses to average net assets                                 0.58%          0.55%          0.57%          0.54%          0.56%
  Net investment income to average net assets                    0.85%          0.79%          0.93%          1.17%          1.53%
  Portfolio turnover rate                                          29%            40%            49%           120%           109%
  Net assets at end of year (000's)                        $  489,982     $  582,403     $  521,965     $  334,167     $  155,349

STOCK INDEX FUND

                                                                                 FISCAL YEAR ENDED MAY 31,
                                                           ----------------------------------------------------------------------
                                                              2001           2000           1999           1998           1997
                                                           ----------     ----------     ----------     ----------     ----------
NET ASSET VALUE
Net asset value, beginning of period                       $    42.98     $    39.73     $    33.38     $    26.09     $    20.69
                                                           ---------------------------------------------------------------------
Investment Operations
  Net investment income                                          0.35           0.41           0.40           0.40           0.39
  Net realized & unrealized gain (loss)                         (4.99)          3.59           6.51           7.44           5.57
                                                           ---------------------------------------------------------------------
  Total from investment operations                              (4.64)          4.00           6.91           7.84           5.96
                                                           ---------------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                         (0.35)         (0.39)         (0.41)         (0.40)         (0.39)
  Net realized gains                                            (1.10)         (0.36)         (0.15)         (0.15)         (0.17)
                                                           ---------------------------------------------------------------------
  Total distributions to shareholders                           (1.45)         (0.75)         (0.56)         (0.55)         (0.56)
                                                           ---------------------------------------------------------------------
Net Asset Value, end of period                             $    36.89     $    42.98     $    39.73     $    33.38     $    26.09
                                                           ---------------------------------------------------------------------
TOTAL RETURN                                                   (10.87)%        10.10%         20.85%         30.30%         29.24%
                                                           ---------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                 0.34%          0.31%          0.32%          0.31%          0.34%
  Net investment income to average net assets                    0.86%          0.97%          1.13%          1.33%          1.76%
  Portfolio turnover rate                                           7%             6%             2%             3%             3%
  Net assets at end of year (000's)                        $4,839,632     $5,373,192     $4,637,628     $3,482,655     $2,444,200

INTERESTED IN LEARNING MORE?

The Statement of Additional Information incorporated by reference into this prospectus contains additional information about the Series Company's operations.

Further information about the Funds' investments is available in the Series Company's annual and semi-annual reports to shareholders. The Series Company's annual report discusses market conditions and investment strategies that significantly affected the Series Company's performance results during its last fiscal year.

VALIC can provide you with a free copy of these materials or other information about the Series Company. You may reach VALIC by calling 1-800-448-2542 or by writing to 2929 Allen Parkway, Houston, Texas 77019.

The Securities and Exchange Commission also maintains copies of these documents:

- To view information online: Access the SEC's web site at http://www.sec.gov.

- To review a paper filing or to request that documents be mailed to you, contact: SEC Public Reference Room, Washington, D.C. 20549-6009, 1-800-SEC-0330

A duplicating fee will be assessed for all copies provided.

Investment Company Act filing number 811-8912.

VA 9017 VER 10/01

NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES I
2929 Allen Parkway
Houston, Texas 77019

October 1, 2001
Prospectus

North American Funds Variable Product Series I (the "Series Company") is a mutual fund made up of 21 separate Funds (the "Funds"). Each of the Funds has a different investment objective. This Prospectus offers four of the Funds. Each Fund is explained in more detail on its Fact Sheet contained in this Prospectus.

FUND NAMES ("SHORT" NAMES)

- NORTH AMERICAN -- AG INTERNATIONAL EQUITIES FUND (INTERNATIONAL EQUITIES FUND)

- NORTH AMERICAN -- AG MIDCAP INDEX FUND (MIDCAP INDEX FUND)

- NORTH AMERICAN -- AG 1 MONEY MARKET FUND (MONEY MARKET FUND)

- NORTH AMERICAN -- AG STOCK INDEX FUND (STOCK INDEX FUND)

TABLE OF CONTENTS

TOPIC                                                          PAGE
-----                                                          ----
COVER PAGE
WELCOME                                                          3
ABOUT THE FUNDS                                                  3
FUND FACT SHEETS                                                 4
  International Equities Fund                                    4
  MidCap Index Fund                                              6
  Money Market Fund                                              8
  Stock Index Fund                                               9
MORE ABOUT PORTFOLIO INVESTMENTS                                11
  American Depositary Receipts                                  11
  Asset-Backed Securities                                       11
  Derivatives                                                   11
  Diversification                                               11
  Equity Securities                                             11
  Exchange Traded Funds                                         11
  Fixed Income Securities                                       12
  Foreign Currency                                              12
  Foreign Securities                                            12
  Illiquid Securities                                           13
  Lending Portfolio Securities                                  13
  Loan Participations                                           13
  Money Market Securities                                       13
  Mortgage-Related Securities                                   13
  Repurchase Agreements                                         14
  Reverse Repurchase Agreements, Dollar Rolls and Borrowings    14
  Temporary Defensive Investment Strategy                       14
  Variable Rate Demand Notes                                    14
  When-Issued Securities                                        14
ABOUT PORTFOLIO TURNOVER                                        15
ABOUT THE SERIES COMPANY'S MANAGEMENT                           16
  Investment Adviser                                            16
ACCOUNT INFORMATION                                             18
  Series Company Shares                                         18
  Buying and Selling Shares                                     18
  How Shares are Valued                                         18
  Dividends and Capital Gains                                   18
  Tax Consequences                                              18
FINANCIAL HIGHLIGHTS                                            19

WELCOME

All inquiries regarding annuity contracts or variable life policies issued by American General Life Insurance Company (AGL) should be directed to the AGL Annuity Administration Department, 2727-A Allen Parkway, Houston, Texas 77019-2191 or call 1-800-813-5065.

ABOUT THE FUNDS

The investment objective and strategies for each of the Funds in this prospectus are non-fundamental and may be changed by the Series Company's Board of Directors without investor approval.

NORTH AMERICAN -- AG
INTERNATIONAL EQUITIES
FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

Market Risk: The Fund's share price can fall because of weakness in the broad market, a particular industry, or specific holdings. The market as a whole can decline for many reasons, including adverse political or economic developments here or abroad, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, the sub-adviser's assessment of companies held in the Fund may prove incorrect, resulting in losses or poor performance even in a rising market. Finally, the Fund's investment approach could fall out of favor with the investing public, resulting in lagging performance versus other comparable funds.

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the EAFE Index. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was -14.63%.

Best quarter: 21.36%, quarter ending December 31, 1998

Worst quarter: -15.01%, quarter ending September 30, 1998

INTERNATIONAL EQUITIES FUND

This table compares the Fund's average annual returns to the returns of the EAFE Index for the periods shown.

---------------------------------------------------------------
                                   1 YEAR    5 YEARS   10 YEARS
                                   -------   -------   --------
The Fund                           -17.30%    6.73%     7.55%
EAFE Index                         -14.17%    7.13%     8.24%
---------------------------------------------------------------

The EAFE Index is comprised of the 21 Morgan Stanley Capital International country indices and measures the performance of approximately 1,000 large-cap stocks.

NORTH AMERICAN -- AG
MIDCAP INDEX
FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the S&P MidCap 400 Index. Prior to October 1, 1999, the Fund was sub-advised by Bankers Trust Company. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

This chart illustrates the Fund's annual returns for each full calendar year since the inception of the Fund. Charges imposed by the Contracts that invest in the Fund are not included in the calculations of return in this bar chart, and if those charges

MIDCAP INDEX FUND

were included, the returns would have been less than those shown below.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was 0.79%.

Best quarter: 28.22%, quarter ending December 31, 1998

Worst quarter: -14.54%, quarter ending September 30, 1998

This table compares the Fund's average annual returns to the returns of the S&P MidCap 400 Index for the periods shown.

-----------------------------------------------------------------
                                                  SINCE INCEPTION
                               1 YEAR   5 YEARS     (10/1/1991)
                               ------   -------   ---------------
The Fund                       16.58%   20.06%        17.23%
S&P MidCap 400 Index           17.51%   20.42%        17.87%
-----------------------------------------------------------------

NORTH AMERICAN -- AG 1
MONEY MARKET FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT OBJECTIVE
The Fund seeks liquidity, protection of capital and current income through investments in short-term money market instruments.

The investments this Fund may buy include:

- Securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities

- Certificates of deposit and other obligations of domestic banks that have total assets in excess of $1 billion

- Commercial paper sold by corporations and finance companies

- Corporate debt obligations with remaining maturities of 13 months or less

- Repurchase agreements

- Money market instruments of foreign issuers payable in U.S. dollars (limited to no more than 20% of the Fund's net assets)

- Asset-backed securities

- Loan participations

- Adjustable rate securities

- Variable rate demand notes

- Illiquid securities (limited to 10% of the Fund's net assets) INVESTMENT RISK Because of the following principal risks the value of your investment may fluctuate and you could lose money:

- The rate of income varies daily depending on short-term interest rates

- A significant change in interest rates or a default on a security held by the Fund could cause the value of your investment to decline

- An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency

- Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of 30 Day Certificate of Deposit Primary Offering Rate by New York City Banks ("30 Day CD Rate"). How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was 2.36%.

Best quarter: 1.54%, quarter ending December 31, 2000

Worst quarter: 0.66%, quarter ending March 31, 1993

This table compares the Fund's average annual returns to the returns of the 30 Day CD Rate for the periods shown.

----------------------------------------------------------------
                                     1 YEAR   5 YEARS   10 YEARS
                                     ------   -------   --------
The Fund                             5.99%     5.21%     4.68%
30 Day CD Rate                       4.83%     4.66%     4.30%
----------------------------------------------------------------

For more current yield and return information, please call 1-800-448-2542.

NORTH AMERICAN -- AG
STOCK INDEX FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the S&P 500 Index. Prior to October 1, 1999, the Fund was sub-advised by Bankers Trust Company. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

STOCK INDEX FUND

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was -6.9%.

Best quarter: 21.21%, quarter ending December 31, 1998

Worst quarter: -11.97%, quarter ending March 31, 2001

This table compares the Fund's average annual returns to the returns of the S&P 500 Index for the periods shown.

                                    1 YEAR   5 YEARS   10 YEARS
                                    ------   -------   --------
The Fund                            -9.35%   18.05%     16.97%
S&P 500 Index                       -9.10%   18.33%     17.46%
---------------------------------------------------------------

MORE ABOUT PORTFOLIO INVESTMENTS

All of the Funds except Money Market may buy derivatives.

All of the Funds except Health Sciences, International Government and Nasdaq-100(R) Index are diversified under the 1940 Act.

Stocks are one type of equity security. Generally, there are three types of stocks:

Preferred stock -- Each share of preferred stock allows the holder to get a set dividend before the common stock shareholders receive any dividends on their shares.

Convertible preferred stock -- A stock with a set dividend which the holder may exchange for a certain amount of common stock.

All of the Funds except Money Market in this prospectus may invest in common, preferred, and convertible preferred stock in accordance with their investment strategies.

All of the Funds may invest in fixed income securities.

The Funds, except Government Securities and Money Market, may purchase forward foreign currency exchange contracts to protect against a decline in the value of the U.S. dollar.

All the Funds may buy illiquid securities, but are restricted as to how much money they may invest in them.

LENDING PORTFOLIO SECURITIES
Each Fund may lend a portion of its total assets to broker-dealers and other financial institutions to earn more money for the Fund.

A risk of lending portfolio investments is that there may be a delay in the Fund getting its investments back when a loaned security is sold.

All the Funds in this prospectus may invest in loan participations.

These high quality money market securities include:

- Securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities.

- Certificates of deposit and other obligations of domestic banks having total assets in excess of $1 billion.

- Commercial paper sold by corporations and finance companies.

- Corporate debt obligations with remaining maturities of 13 months or less.

privately issued securities for purposes of applying a Fund's diversification tests.

The risk in a repurchase agreement is the failure of the seller to be able to buy the security back. If the value of the security declines, the Fund may have to sell at a loss.

All of the Funds except Money Market may buy when-issued securities in accordance with their investment strategy.

ABOUT PORTFOLIO TURNOVER

The Financial Highlights tables show the portfolio turnover rate for each of the Funds, other than Money Market, during prior fiscal years.

ABOUT THE SERIES COMPANY'S MANAGEMENT

For more information on these agreements, see the "Investment Adviser" section in the Statement of Additional Information.

HOW VALIC IS PAID FOR ITS SERVICES

Here is a list of the percentages each Fund pays:

                                   ADVISORY FEE PAID
                                   (AS A PERCENTAGE OF AVERAGE
            FUND NAME              DAILY NET ASSETS)
            ---------              ---------------------------
International Equities Fund              (1)
MidCap Index Fund                        (1)
Money Market Fund                             0.50%
Stock Index Fund                         (1)

(1) 0.35% on the first $500 million; 0.25% on assets over $500 million.

Fund expenses shall be limited for the Funds shown below (expressed as a percentage of average annual net assets) through May 31, 2002:

                                              MAXIMUM
                    FUND                      FUND EXPENSE
                    ----                      ------------
Money Market Fund                                0.60%

ACCOUNT INFORMATION

DIVIDENDS AND CAPITAL GAINS

FINANCIAL HIGHLIGHTS

INTERNATIONAL EQUITIES FUND

                                                                               FISCAL YEAR ENDED MAY 31,
                                                              ------------------------------------------------------------
                                                                2001         2000         1999         1998         1997
                                                              --------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $  12.55     $  11.32     $  11.95     $  11.44     $  11.15
                                                              ------------------------------------------------------------
Investment Operations
  Net investment income                                           0.12         0.15         0.22         0.23         0.20
  Net realized & unrealized gain (loss)                          (2.46)        1.90         0.30         0.85         0.63
                                                              ------------------------------------------------------------
  Total from investment operations                               (2.34)        2.05         0.52         1.08         0.83
                                                              ------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.09)       (0.14)       (0.25)       (0.24)       (0.19)
  Net realized gains                                             (1.34)       (0.68)       (0.90)       (0.33)       (0.35)
                                                              ------------------------------------------------------------
  Total distributions to shareholders                            (1.43)       (0.82)       (1.15)       (0.57)       (0.54)
                                                              ------------------------------------------------------------
Net Asset Value, end of period                                $   8.78     $  12.55     $  11.32     $  11.95     $  11.44
                                                              ------------------------------------------------------------
TOTAL RETURN                                                    (19.59)%      18.01%        4.43%        9.92%        7.74%
                                                              ------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.42%        0.41%        0.43%        0.40%        0.42%
  Net investment income to average net assets                     1.08%        1.20%        1.89%        1.92%        1.75%
  Portfolio turnover rate                                           45%          25%           8%           9%          12%
  Net assets at end of year (000's)                           $118,524     $162,840     $142,108     $155,469     $181,437

MIDCAP INDEX FUND

                                                                                FISCAL YEAR ENDED MAY 31,
                                                              --------------------------------------------------------------
                                                                 2001          2000         1999         1998         1997
                                                              ----------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $    23.73     $  25.64     $  25.27     $  20.83     $  19.09
                                                              --------------------------------------------------------------
Investment Operations
  Net investment income                                             0.19         0.22         0.23         0.23         0.24
  Net realized & unrealized gain                                    1.74         4.49         2.54         5.80         2.95
                                                              --------------------------------------------------------------
  Total from investment operations                                  1.93         4.71         2.77         6.03         3.19
                                                              --------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                            (0.19)       (0.22)       (0.23)       (0.23)       (0.24)
  Net realized gains                                               (5.65)       (6.40)       (2.17)       (1.36)       (1.21)
                                                              --------------------------------------------------------------
  Total distributions to shareholders                              (5.84)       (6.62)       (2.40)       (1.59)       (1.45)
                                                              --------------------------------------------------------------
Net Asset Value, end of period                                $    19.82     $  23.73     $  25.64     $  25.27     $  20.83
                                                              --------------------------------------------------------------
TOTAL RETURN                                                       10.11%       21.36%       11.91%       29.62%       17.48%
                                                              --------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                    0.38%        0.36%        0.38%        0.36%        0.40%
  Net investment income to average net assets                       0.84%        0.90%        0.92%        0.95%        1.24%
  Portfolio turnover rate                                             34%          41%          41%          26%          19%
  Net assets at end of year (000's)                           $1,047,680     $922,679     $817,573     $804,318     $607,061

MONEY MARKET FUND

                                                                               FISCAL YEAR ENDED MAY 31,
                                                              ------------------------------------------------------------
                                                                2001         2000         1999         1998         1997
                                                              --------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $   1.00     $   1.00     $   1.00     $   1.00     $   1.00
                                                              ------------------------------------------------------------
Investment Operations
  Net investment income                                           0.06         0.05         0.05         0.05         0.05
                                                              ------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.06)       (0.05)       (0.05)       (0.05)       (0.05)
                                                              ------------------------------------------------------------
Net Asset Value, end of period                                $   1.00     $   1.00     $   1.00     $   1.00     $   1.00
                                                              ------------------------------------------------------------
TOTAL RETURN                                                      5.77%        5.21%        4.84%        5.25%        5.02%
                                                              ------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.57%        0.56%        0.57%        0.54%        0.57%
  Expenses to average net assets before expense reductions        0.58%        0.56%        0.57%        0.54%        0.50%
  Net investment income to average net assets                     5.59%        5.13%        4.66%        5.14%        4.95%
  Net assets at end of year (000's)                           $579,507     $484,934     $347,394     $190,975     $128,125

STOCK INDEX FUND

                                                                                 FISCAL YEAR ENDED MAY 31,
                                                           ----------------------------------------------------------------------
                                                              2001           2000           1999           1998           1997
                                                           ----------     ----------     ----------     ----------     ----------
NET ASSET VALUE
Net asset value, beginning of period                       $    42.98     $    39.73     $    33.38     $    26.09     $    20.69
                                                           ---------------------------------------------------------------------
Investment Operations
  Net investment income                                          0.35           0.41           0.40           0.40           0.39
  Net realized & unrealized gain (loss)                         (4.99)          3.59           6.51           7.44           5.57
                                                           ---------------------------------------------------------------------
  Total from investment operations                              (4.64)          4.00           6.91           7.84           5.96
                                                           ---------------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                         (0.35)         (0.39)         (0.41)         (0.40)         (0.39)
  Net realized gains                                            (1.10)         (0.36)         (0.15)         (0.15)         (0.17)
                                                           ---------------------------------------------------------------------
  Total distributions to shareholders                           (1.45)         (0.75)         (0.56)         (0.55)         (0.56)
                                                           ---------------------------------------------------------------------
Net Asset Value, end of period                             $    36.89     $    42.98     $    39.73     $    33.38     $    26.09
                                                           ---------------------------------------------------------------------
TOTAL RETURN                                                   (10.87)%        10.10%         20.85%         30.30%         29.24%
                                                           ---------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                 0.34%          0.31%          0.32%          0.31%          0.34%
  Net investment income to average net assets                    0.86%          0.97%          1.13%          1.33%          1.76%
  Portfolio turnover rate                                           7%             6%             2%             3%             3%
  Net assets at end of year (000's)                        $4,839,632     $5,373,192     $4,637,628     $3,482,655     $2,444,200

INTERESTED IN LEARNING MORE?

The Statement of Additional Information incorporated by reference into this prospectus contains additional information about the Series Company's operations.

The Securities and Exchange Commission also maintains copies of these documents:

- To view information online: Access the SEC's web site at http://www.sec.gov.

- To review a paper filing or to request that documents be mailed to you, contact: SEC Public Reference Room, Washington, D.C. 20549-6009, 1-800-SEC-0330

A duplicating fee will be assessed for all copies provided.

Investment Company Act filing number 811-8912.

VA-9017-AGL4

NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES I
2929 Allen Parkway
Houston, Texas 77019

October 1, 2001
Prospectus

North American Funds Variable Product Series I (the "Series Company") is a mutual fund made up of 21 separate Funds (the "Funds"). Each of the Funds has a different investment objective. This Prospectus offers seven of the Funds. Each Fund is explained in more detail on its Fact Sheet contained in this Prospectus.

FUND NAMES ("SHORT" NAMES)

- NORTH AMERICAN -- AG INTERNATIONAL EQUITIES FUND (INTERNATIONAL EQUITIES FUND)

- NORTH AMERICAN -- AG MIDCAP INDEX FUND (MIDCAP INDEX FUND)

- NORTH AMERICAN -- AG 1 MONEY MARKET FUND (MONEY MARKET FUND)

- NORTH AMERICAN -- AG NASDAQ-100(R) INDEX FUND (NASDAQ-100(R) INDEX FUND)

- NORTH AMERICAN -- T. ROWE PRICE SCIENCE & TECHNOLOGY FUND (SCIENCE & TECHNOLOGY FUND)

- NORTH AMERICAN -- AG SMALL CAP INDEX FUND (SMALL CAP INDEX FUND)

- NORTH AMERICAN -- AG STOCK INDEX FUND (STOCK INDEX FUND)

TABLE OF CONTENTS

TOPIC                                                          PAGE
-----                                                          ----
COVER PAGE
WELCOME                                                          3
ABOUT THE FUNDS                                                  3
FUND FACT SHEETS                                                 4
  International Equities Fund                                    4
  MidCap Index Fund                                              6
  Money Market Fund                                              8
  Nasdaq-100(R) Index Fund                                       9
  Science & Technology Fund                                     11
  Small Cap Index Fund                                          13
  Stock Index Fund                                              15
MORE ABOUT PORTFOLIO INVESTMENTS                                17
  American Depositary Receipts                                  17
  Asset-Backed Securities                                       17
  Derivatives                                                   17
  Diversification                                               17
  Equity Securities                                             17
  Exchange Traded Funds                                         17
  Fixed Income Securities                                       18
  Foreign Currency                                              18
  Foreign Securities                                            18
  Illiquid Securities                                           19
  Lending Portfolio Securities                                  19
  Loan Participations                                           19
  Money Market Securities                                       19
  Mortgage-Related Securities                                   19
  Repurchase Agreements                                         20
  Reverse Repurchase Agreements, Dollar Rolls and Borrowings    20
  Temporary Defensive Investment Strategy                       20
  Variable Rate Demand Notes                                    20
  When-Issued Securities                                        20
ABOUT PORTFOLIO TURNOVER                                        21
ABOUT THE SERIES COMPANY'S MANAGEMENT                           22
  Investment Adviser                                            22
  Investment Sub-Advisers                                       22
     American General Investment Management, L.P.               22
     T. Rowe Price Associates, Inc.                             23
ACCOUNT INFORMATION                                             24
  Series Company Shares                                         24
  Buying and Selling Shares                                     24
  How Shares are Valued                                         24
  Dividends and Capital Gains                                   24
  Tax Consequences                                              24
FINANCIAL HIGHLIGHTS                                            25

WELCOME

ABOUT THE FUNDS

The investment objective and strategies for each of the Funds in this prospectus are non-fundamental and may be changed by the Series Company's Board of Directors without investor approval.

NORTH AMERICAN -- AG
INTERNATIONAL EQUITIES
FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

Market Risk: The Fund's share price can fall because of weakness in the broad market, a particular industry, or specific holdings. The market as a whole can decline for many reasons, including adverse political or economic developments here or abroad, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, the sub-adviser's assessment of companies held in the Fund may prove incorrect, resulting in losses or poor performance even in a rising market. Finally, the Fund's investment approach could fall out of favor with the investing public, resulting in lagging performance versus other comparable funds.

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the EAFE Index. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was -14.63%.

Best quarter: 21.36%, quarter ending December 31, 1998

Worst quarter: -15.01%, quarter ending September 30, 1998

INTERNATIONAL EQUITIES FUND

This table compares the Fund's average annual returns to the returns of the EAFE Index for the periods shown.

---------------------------------------------------------------
                                   1 YEAR    5 YEARS   10 YEARS
                                   -------   -------   --------
The Fund                           -17.30%    6.73%     7.55%
EAFE Index                         -14.17%    7.13%     8.24%
---------------------------------------------------------------

The EAFE Index is comprised of the 21 Morgan Stanley Capital International country indices and measures the performance of approximately 1,000 large-cap stocks.

NORTH AMERICAN -- AG
MIDCAP INDEX
FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the S&P MidCap 400 Index. Prior to October 1, 1999, the Fund was sub-advised by Bankers Trust Company. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

This chart illustrates the Fund's annual returns for each full calendar year since the inception of the Fund. Charges imposed by the Contracts that invest in the Fund are not included in the

MIDCAP INDEX FUND

calculations of return in this bar chart, and if those charges were included, the returns would have been less than those shown below.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was 0.79%.

Best quarter: 28.22%, quarter ending December 31, 1998

Worst quarter: -14.54%, quarter ending September 30, 1998

This table compares the Fund's average annual returns to the returns of the S&P MidCap 400 Index for the periods shown.

-----------------------------------------------------------------
                                                  SINCE INCEPTION
                               1 YEAR   5 YEARS     (10/1/1991)
                               ------   -------   ---------------
The Fund                       16.58%   20.06%        17.23%
S&P MidCap 400 Index           17.51%   20.42%        17.87%
-----------------------------------------------------------------

NORTH AMERICAN -- AG 1
MONEY MARKET FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT OBJECTIVE
The Fund seeks liquidity, protection of capital and current income through investments in short-term money market instruments.

The investments this Fund may buy include:

- Securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities

- Certificates of deposit and other obligations of domestic banks that have total assets in excess of $1 billion

- Commercial paper sold by corporations and finance companies

- Corporate debt obligations with remaining maturities of 13 months or less

- Repurchase agreements

- Money market instruments of foreign issuers payable in U.S. dollars (limited to no more than 20% of the Fund's net assets)

- Asset-backed securities

- Loan participations

- Adjustable rate securities

- Variable rate demand notes

- Illiquid securities (limited to 10% of the Fund's net assets) INVESTMENT RISK Because of the following principal risks the value of your investment may fluctuate and you could lose money:

- The rate of income varies daily depending on short-term interest rates

- A significant change in interest rates or a default on a security held by the Fund could cause the value of your investment to decline

- An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency

- Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of 30 Day Certificate of Deposit Primary Offering Rate by New York City Banks ("30 Day CD Rate"). How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was 2.36%.

Best quarter: 1.54%, quarter ending December 31, 2000

Worst quarter: 0.66%, quarter ending March 31, 1993

This table compares the Fund's average annual returns to the returns of the 30 Day CD Rate for the periods shown.

----------------------------------------------------------------
                                     1 YEAR   5 YEARS   10 YEARS
                                     ------   -------   --------
The Fund                             5.99%     5.21%     4.68%
30 Day CD Rate                       4.83%     4.66%     4.30%
----------------------------------------------------------------

For more current yield and return information, please call 1-800-448-2542.

NORTH AMERICAN --
AG NASDAQ-100
INDEX(R) FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT SUB-ADVISER

American General Investment Management L.P.

INVESTMENT OBJECTIVE
The Fund seeks long-term capital growth through investments in the stocks that are included in the Nasdaq-100 Index(R).

The Fund is a non-diversified fund. This means that it may invest more than 5% of its assets in the stock of a single company. However, this increases the risk of the Fund, since the economic and/or stock performance of that one company impacts a greater percentage of the Fund's investments. The Fund will, however, comply with diversification requirements imposed by the Internal Revenue Code of 1986 in order to pass on the maximum tax benefits associated with the income earned to each investor.

The Fund may concentrate its investments (invest more than 25% of its assets) in the technology sector, in the proportion consistent with the industry weightings in the Index.

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

Market Risk: The Fund's share price can fall because of weakness in the broad market, a particular industry, or specific holdings. The market as a whole can decline for many reasons, including adverse political or economic developments here or abroad, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, the sub-adviser's assessment of companies held in the Fund may prove incorrect, resulting in losses or poor performance even in a rising market. Finally, the Fund's investment approach could fall out of favor with the investing public, resulting in lagging performance versus other comparable funds.

NASDAQ-100
INDEX(R) FUND

PERFORMANCE INFORMATION
Performance information is not shown since the Fund does not have a full year of performance.

NORTH AMERICAN --
T. ROWE PRICE
SCIENCE & TECHNOLOGY FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT SUB-ADVISER
T. Rowe Price Associates, Inc.

INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.

- electronics, including hardware, software, and components;

- communications;

- e-commerce (companies doing business through the Internet);

- information services;

- media;

- life sciences and health care;

- environmental services;

- chemicals and synthetic materials; and

- defense and aerospace.

The Fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or re-deploy assets into more promising opportunities.

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

PERFORMANCE INFORMATION

SCIENCE & TECHNOLOGY FUND

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was -27.19%.

Best quarter: 48.04%, quarter ending December 31, 1998

Worst quarter: -37.73%, quarter ending March 31, 2001

This table compares the Fund's average annual returns to the returns of the S&P 500 Index for the periods shown.

----------------------------------------------------------------
                                                 SINCE INCEPTION
                             1 YEAR    5 YEARS     (4/29/1994)
                             -------   -------   ---------------
The Fund                     -34.13%   17.05%        25.13%
S&P 500 Index                 -9.10%   18.33%        19.71%
----------------------------------------------------------------

NORTH AMERICAN -- AG
SMALL CAP INDEX
FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

SMALL CAP INDEX FUND

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the Russell 2000(R) Index. Prior to October 1, 1999, the Fund was sub-advised by Bankers Trust Company. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was 6.61%.

Best quarter: 18.58%, quarter ending December 31, 1999

Worst quarter: -19.75%, quarter ending September 30, 1998

This table compares the Fund's average annual returns to the returns of the Russell 2000(R) Index for the periods shown.

------------------------------------------------------------------
                                                   SINCE INCEPTION
                               1 YEAR    5 YEARS     (5/1/1992)
                               ------    -------   ---------------
The Fund                       -3.38%     10.42%        11.69%
Russell 2000(R) Index          -3.02%     10.31%        12.59%
------------------------------------------------------------------

NORTH AMERICAN -- AG
STOCK INDEX FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the S&P 500 Index. Prior to October 1, 1999, the Fund was sub-advised by Bankers Trust Company. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

STOCK INDEX FUND

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was -6.9%.

Best quarter: 21.21%, quarter ending December 31, 1998

Worst quarter: -11.97%, quarter ending March 31, 2001

This table compares the Fund's average annual returns to the returns of the S&P 500 Index for the periods shown.

                                    1 YEAR   5 YEARS   10 YEARS
                                    ------   -------   --------
The Fund                            -9.35%   18.05%     16.97%
S&P 500 Index                       -9.10%   18.33%     17.46%
---------------------------------------------------------------

MORE ABOUT PORTFOLIO INVESTMENTS

All of the Funds except Money Market may buy derivatives.

All of the Funds except Health Sciences, International Government and Nasdaq-100(R) Index are diversified under the 1940 Act.

Stocks are one type of equity security. Generally, there are three types of stocks:

Preferred stock -- Each share of preferred stock allows the holder to get a set dividend before the common stock shareholders receive any dividends on their shares.

Convertible preferred stock -- A stock with a set dividend which the holder may exchange for a certain amount of common stock.

All of the Funds except Money Market in this prospectus may invest in common, preferred, and convertible preferred stock in accordance with their investment strategies.

All of the Funds may invest in fixed income securities.

The Funds, except Government Securities and Money Market, may purchase forward foreign currency exchange contracts to protect against a decline in the value of the U.S. dollar.

All the Funds may buy illiquid securities, but are restricted as to how much money they may invest in them.

LENDING PORTFOLIO SECURITIES
Each Fund may lend a portion of its total assets to broker-dealers and other financial institutions to earn more money for the Fund.

A risk of lending portfolio investments is that there may be a delay in the Fund getting its investments back when a loaned security is sold.

All the Funds in this prospectus may invest in loan participations.

These high quality money market securities include:

- Securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities.

- Certificates of deposit and other obligations of domestic banks having total assets in excess of $1 billion.

- Commercial paper sold by corporations and finance companies.

- Corporate debt obligations with remaining maturities of 13 months or less.

privately issued securities for purposes of applying a Fund's diversification tests.

The risk in a repurchase agreement is the failure of the seller to be able to buy the security back. If the value of the security declines, the Fund may have to sell at a loss.

All of the Funds except Money Market may buy when-issued securities in accordance with their investment strategy.

ABOUT PORTFOLIO TURNOVER

The Financial Highlights tables show the portfolio turnover rate for each of the Funds, other than Money Market, during prior fiscal years.

ABOUT THE SERIES COMPANY'S MANAGEMENT

For more information on these agreements, see the "Investment Adviser" section in the Statement of Additional Information.

THE SUB-ADVISERS ARE:

American General Investment Management, L.P. T. Rowe Price Associates, Inc.

AMERICAN GENERAL INVESTMENT MANAGEMENT, L.P. ("AGIM")
2929 Allen Parkway, Houston, Texas 77019

Important Note: On July 16-17, 2001, due to the impending acquisition, the Series Company Board of Directors approved an interim sub-advisory agreement and a new investment sub-advisory agreement between the Nasdaq-100(R) Index Fund and American General Investment Management, L.P. ("AGIM"), or an affiliate of American International Group, Inc. ("AIG"). AGIM may be reorganized or merged into an affiliate. New agreements are required because the acquisition is considered a change of control under the 1940 Act, which terminates the previous agreements. The interim advisory agreement will cover the period from August 29th through the date of shareholder approval of the new investment sub-advisory agreement, when the new investment sub-advisory agreement will take effect. The new investment sub-advisory agreement is the same in all material respects as the current investment sub-advisory agreement, including the fees charged, except that it may be with AGIM or an affiliate. The new investment sub-advisory agreement will be submitted to shareholders for approval at a meeting that is currently scheduled to be held in mid-December 2001. Please be sure to vote when you receive your proxy notice and call of shareholder meeting this fall.

North American -- T. Rowe Price Science & Technology Fund

T. ROWE PRICE ASSOCIATES, INC. ("T. ROWE PRICE")
100 East Pratt Street, Baltimore, Maryland 21202

HOW VALIC IS PAID FOR ITS SERVICES

Here is a list of the percentages each Fund pays:

                                   ADVISORY FEE PAID
                                   (AS A PERCENTAGE OF AVERAGE
            FUND NAME              DAILY NET ASSETS)
            ---------              ---------------------------
International Equities Fund              (1)
MidCap Index Fund                        (1)
Money Market Fund                      0.50%
Nasdaq-100(R) Index                    0.40%
Science & Technology Fund              0.90%
Small Cap Index Fund                     (1)
Stock Index Fund                         (1)

(1) 0.35% on the first $500 million; 0.25% on assets over $500 million.

Fund expenses shall be limited for the Funds shown below (expressed as a percentage of average annual net assets) through May 31, 2002.

                                              MAXIMUM
                    FUND                      FUND EXPENSE
                    ----                      ------------
Money Market Fund                                0.60%
Science & Technology Fund                        1.00%

ACCOUNT INFORMATION

DIVIDENDS AND CAPITAL GAINS

FINANCIAL HIGHLIGHTS

INTERNATIONAL EQUITIES FUND

                                                                               FISCAL YEAR ENDED MAY 31,
                                                              ------------------------------------------------------------
                                                                2001         2000         1999         1998         1997
                                                              --------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $  12.55     $  11.32     $  11.95     $  11.44     $  11.15
                                                              ------------------------------------------------------------
Investment Operations
  Net investment income                                           0.12         0.15         0.22         0.23         0.20
  Net realized & unrealized gain (loss)                          (2.46)        1.90         0.30         0.85         0.63
                                                              ------------------------------------------------------------
  Total from investment operations                               (2.34)        2.05         0.52         1.08         0.83
                                                              ------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.09)       (0.14)       (0.25)       (0.24)       (0.19)
  Net realized gains                                             (1.34)       (0.68)       (0.90)       (0.33)       (0.35)
                                                              ------------------------------------------------------------
  Total distributions to shareholders                            (1.43)       (0.82)       (1.15)       (0.57)       (0.54)
                                                              ------------------------------------------------------------
Net Asset Value, end of period                                $   8.78     $  12.55     $  11.32     $  11.95     $  11.44
                                                              ------------------------------------------------------------
TOTAL RETURN                                                    (19.59)%      18.01%        4.43%        9.92%        7.74%
                                                              ------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.42%        0.41%        0.43%        0.40%        0.42%
  Net investment income to average net assets                     1.08%        1.20%        1.89%        1.92%        1.75%
  Portfolio turnover rate                                           45%          25%           8%           9%          12%
  Net assets at end of year (000's)                           $118,524     $162,840     $142,108     $155,469     $181,437

MIDCAP INDEX FUND

                                                                                FISCAL YEAR ENDED MAY 31,
                                                              --------------------------------------------------------------
                                                                 2001          2000         1999         1998         1997
                                                              ----------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $    23.73     $  25.64     $  25.27     $  20.83     $  19.09
                                                              --------------------------------------------------------------
Investment Operations
  Net investment income                                             0.19         0.22         0.23         0.23         0.24
  Net realized & unrealized gain                                    1.74         4.49         2.54         5.80         2.95
                                                              --------------------------------------------------------------
  Total from investment operations                                  1.93         4.71         2.77         6.03         3.19
                                                              --------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                            (0.19)       (0.22)       (0.23)       (0.23)       (0.24)
  Net realized gains                                               (5.65)       (6.40)       (2.17)       (1.36)       (1.21)
                                                              --------------------------------------------------------------
  Total distributions to shareholders                              (5.84)       (6.62)       (2.40)       (1.59)       (1.45)
                                                              --------------------------------------------------------------
Net Asset Value, end of period                                $    19.82     $  23.73     $  25.64     $  25.27     $  20.83
                                                              --------------------------------------------------------------
TOTAL RETURN                                                       10.11%       21.36%       11.91%       29.62%       17.48%
                                                              --------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                    0.38%        0.36%        0.38%        0.36%        0.40%
  Net investment income to average net assets                       0.84%        0.90%        0.92%        0.95%        1.24%
  Portfolio turnover rate                                             34%          41%          41%          26%          19%
  Net assets at end of year (000's)                           $1,047,680     $922,679     $817,573     $804,318     $607,061

MONEY MARKET FUND

                                                                               FISCAL YEAR ENDED MAY 31,
                                                              ------------------------------------------------------------
                                                                2001         2000         1999         1998         1997
                                                              --------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $   1.00     $   1.00     $   1.00     $   1.00     $   1.00
                                                              ------------------------------------------------------------
Investment Operations
  Net investment income                                           0.06         0.05         0.05         0.05         0.05
                                                              ------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.06)       (0.05)       (0.05)       (0.05)       (0.05)
                                                              ------------------------------------------------------------
Net Asset Value, end of period                                $   1.00     $   1.00     $   1.00     $   1.00     $   1.00
                                                              ------------------------------------------------------------
TOTAL RETURN                                                      5.77%        5.21%        4.84%        5.25%        5.02%
                                                              ------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.57%        0.56%        0.57%        0.54%        0.57%
  Expenses to average net assets before expense reductions        0.58%        0.56%        0.57%        0.54%        0.50%
  Net investment income to average net assets                     5.59%        5.13%        4.66%        5.14%        4.95%
  Net assets at end of year (000's)                           $579,507     $484,934     $347,394     $190,975     $128,125

NASDAQ-100(R) INDEX FUND

                                                              OCTOBER 2, 2000
                                                                    TO
                                                               MAY 31, 2001
                                                              ---------------
NET ASSET VALUE
Net asset value, beginning of period                             $  10.00
                                                                 --------
Investment Operations
  Net investment income                                              0.01
  Net realized & unrealized gain (loss)                             (4.91)
                                                                 --------
  Total from investment operations                                  (4.90)
                                                                 --------
Distributions to Shareholders From:
  Net investment income                                             (0.01)
  Net realized gains                                                   --
                                                                 --------
  Total distributions to shareholders                               (0.01)
                                                                 --------
Net Asset Value, end of period                                   $   5.09
                                                                 --------
TOTAL RETURN                                                       (49.01)%
                                                                 --------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                     0.52%
  Net investment income to average net assets                        0.31%
  Portfolio turnover rate                                              19%
  Net assets at end of year (000's)                              $ 19,005

SCIENCE & TECHNOLOGY FUND

                                                                                  FISCAL YEAR ENDED MAY 31,
                                                             --------------------------------------------------------------------
                                                                2001           2000           1999           1998          1997
                                                             ----------     ----------     ----------     ----------     --------
NET ASSET VALUE
Net asset value, beginning of period                         $    41.14     $    29.95     $    22.07     $    19.88     $  20.48
                                                             -------------------------------------------------------------------
Investment Operations
  Net investment income (loss)                                    (0.17)         (0.11)         (0.10)         (0.09)          --
  Net realized & unrealized gain (loss)                          (15.86)         16.37          10.36           2.28         0.33
                                                             -------------------------------------------------------------------
  Total from investment operations                               (16.03)         16.26          10.26           2.19         0.33
                                                             -------------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                              --             --             --             --           --
  Net realized gains                                              (7.83)         (5.07)         (2.38)            --        (0.93)
                                                             -------------------------------------------------------------------
  Total distributions to shareholders                             (7.83)         (5.07)         (2.38)            --        (0.93)
                                                             -------------------------------------------------------------------
Net Asset Value, end of period                               $    17.28     $    41.14     $    29.95     $    22.07     $  19.88
                                                             -------------------------------------------------------------------
TOTAL RETURN                                                     (42.24)%        52.65%         48.34%         10.85%        1.81%
                                                             -------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                   0.98%          0.96%          0.96%          0.95%        0.96%
  Net investment income to average net assets                     (0.66)%        (0.40)%        (0.46)%        (0.46)%      (0.29)%
  Portfolio turnover rate                                           176%           130%           149%           128%         122%
  Net assets at end of year (000's)                          $2,015,574     $3,314,052     $1,683,585     $1,023,141     $804,982

SMALL CAP INDEX FUND

                                                                               FISCAL YEAR ENDED MAY 31,
                                                              ------------------------------------------------------------
                                                                2001         2000         1999         1998         1997
                                                              --------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $  15.66     $  15.84     $  17.94     $  16.18     $  16.25
                                                              ------------------------------------------------------------
Investment Operations
  Net investment income                                           0.19         0.18         0.19         0.19         0.19
  Net realized & unrealized gain (loss)                           0.40         1.43        (0.74)        3.17         0.93
                                                              ------------------------------------------------------------
  Total from investment operations                                0.59         1.61        (0.55)        3.36         1.12
                                                              ------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.19)       (0.18)       (0.19)       (0.19)       (0.19)
  Net realized gains                                             (1.95)       (1.61)       (1.36)       (1.41)       (1.00)
                                                              ------------------------------------------------------------
  Total distributions to shareholders                            (2.14)       (1.79)       (1.55)       (1.60)       (1.19)
                                                              ------------------------------------------------------------
Net Asset Value, end of period                                $  14.11     $  15.66     $  15.84     $  17.94     $  16.18
                                                              ------------------------------------------------------------
TOTAL RETURN                                                      5.23%       10.22%       (2.45)%      21.34%        7.51%
                                                              ------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.44%        0.40%        0.41%        0.39%        0.41%
  Net investment income to average net assets                     1.31%        1.12%        1.20%        1.05%        1.34%
  Portfolio turnover rate                                           57%          35%          36%          36%          42%
  Net assets at end of year (000's)                           $236,530     $228,602     $220,002     $247,183     $192,459

STOCK INDEX FUND

                                                                                 FISCAL YEAR ENDED MAY 31,
                                                           ----------------------------------------------------------------------
                                                              2001           2000           1999           1998           1997
                                                           ----------     ----------     ----------     ----------     ----------
NET ASSET VALUE
Net asset value, beginning of period                       $    42.98     $    39.73     $    33.38     $    26.09     $    20.69
                                                           ---------------------------------------------------------------------
Investment Operations
  Net investment income                                          0.35           0.41           0.40           0.40           0.39
  Net realized & unrealized gain (loss)                         (4.99)          3.59           6.51           7.44           5.57
                                                           ---------------------------------------------------------------------
  Total from investment operations                              (4.64)          4.00           6.91           7.84           5.96
                                                           ---------------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                         (0.35)         (0.39)         (0.41)         (0.40)         (0.39)
  Net realized gains                                            (1.10)         (0.36)         (0.15)         (0.15)         (0.17)
                                                           ---------------------------------------------------------------------
  Total distributions to shareholders                           (1.45)         (0.75)         (0.56)         (0.55)         (0.56)
                                                           ---------------------------------------------------------------------
Net Asset Value, end of period                             $    36.89     $    42.98     $    39.73     $    33.38     $    26.09
                                                           ---------------------------------------------------------------------
TOTAL RETURN                                                   (10.87)%        10.10%         20.85%         30.30%         29.24%
                                                           ---------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                 0.34%          0.31%          0.32%          0.31%          0.34%
  Net investment income to average net assets                    0.86%          0.97%          1.13%          1.33%          1.76%
  Portfolio turnover rate                                           7%             6%             2%             3%             3%
  Net assets at end of year (000's)                        $4,839,632     $5,373,192     $4,637,628     $3,482,655     $2,444,200

INTERESTED IN LEARNING MORE?

The Statement of Additional Information incorporated by reference into this prospectus contains additional information about the Series Company's operations.

The Securities and Exchange Commission also maintains copies of these documents:

- To view information online: Access the SEC's web site at http://www.sec.gov.

- To review a paper filing or to request that documents be mailed to you, contact: SEC Public Reference Room, Washington, D.C. 20549-6009, 1-800-SEC-0330

A duplicating fee will be assessed for all copies provided.

Investment Company Act filing number 811-8912.

VA 9017-AGL 7

NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES I
2929 Allen Parkway
Houston, Texas 77019

October 1, 2001
Prospectus

North American Funds Variable Product Series I (the "Series Company") is a mutual fund made up of 21 separate Funds (the "Funds"). Each of the Funds has a different investment objective. The North American -- AG 1 Money Market Fund is offered in this Prospectus. The Fund is explained in more detail on its Fact Sheet contained in this Prospectus.

FUND NAMES ("SHORT" NAMES)

- NORTH AMERICAN -- AG 1 MONEY MARKET FUND (MONEY MARKET FUND)

TABLE OF CONTENTS

TOPIC                                                          PAGE
-----                                                          ----
COVER PAGE
WELCOME                                                          3
ABOUT THE FUNDS                                                  3
FUND FACT SHEETS                                                 4
  Money Market Fund                                              4
MORE ABOUT PORTFOLIO INVESTMENTS                                 5
  American Depositary Receipts                                   5
  Asset-Backed Securities                                        5
  Derivatives                                                    5
  Diversification                                                5
  Equity Securities                                              5
  Exchange Traded Funds                                          5
  Fixed Income Securities                                        6
  Foreign Currency                                               6
  Foreign Securities                                             6
  Illiquid Securities                                            7
  Lending Portfolio Securities                                   7
  Loan Participations                                            7
  Money Market Securities                                        7
  Mortgage-Related Securities                                    7
  Repurchase Agreements                                          8
  Reverse Repurchase Agreements, Dollar Rolls and Borrowings     8
  Temporary Defensive Investment Strategy                        8
  Variable Rate Demand Notes                                     8
  When-Issued Securities                                         8
ABOUT THE SERIES COMPANY'S MANAGEMENT                            9
  Investment Adviser                                             9
ACCOUNT INFORMATION                                             10
  Series Company Shares                                         10
  Buying and Selling Shares                                     10
  How Shares are Valued                                         10
  Dividends and Capital Gains                                   10
  Tax Consequences                                              10
FINANCIAL HIGHLIGHTS                                            11

WELCOME

All inquiries regarding annuity contracts issued by American General Annuity Insurance Company should be directed to the Annuity Service Center, 205 E. 10th Avenue, P.O. Box 871, Amarillo, Texas 79105-0871, or call 1-800-424-4990.

ABOUT THE FUNDS

The investment objective and strategies for each of the Funds in this prospectus are non-fundamental and may be changed by the Series Company's Board of Directors without investor approval.

NORTH AMERICAN -- AG 1
MONEY MARKET FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT OBJECTIVE
The Fund seeks liquidity, protection of capital and current income through investments in short-term money market instruments.

The investments this Fund may buy include:

- Securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities

- Certificates of deposit and other obligations of domestic banks that have total assets in excess of $1 billion

- Commercial paper sold by corporations and finance companies

- Corporate debt obligations with remaining maturities of 13 months or less

- Repurchase agreements

- Money market instruments of foreign issuers payable in U.S. dollars (limited to no more than 20% of the Fund's net assets)

- Asset-backed securities

- Loan participations

- Adjustable rate securities

- Variable rate demand notes

- Illiquid securities (limited to 10% of the Fund's net assets)

INVESTMENT RISK
Because of the following principal risks the value of your investment may fluctuate and you could lose money:

- The rate of income varies daily depending on short-term interest rates

- A significant change in interest rates or a default on a security held by the Fund could cause the value of your investment to decline

- An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency

- Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of 30 Day Certificate of Deposit Primary Offering Rate by New York City Banks ("30 Day CD Rate"). How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was 2.36%.

Best quarter: 1.54%, quarter ending December 31, 2000

Worst quarter: 0.66%, quarter ending March 31, 1993

This table compares the Fund's average annual returns to the returns of the 30 Day CD Rate for the periods shown.

----------------------------------------------------------------
                                     1 YEAR   5 YEARS   10 YEARS
                                     ------   -------   --------
The Fund                             5.99%     5.21%     4.68%
30 Day CD Rate                       4.83%     4.66%     4.30%
----------------------------------------------------------------

For more current yield and return information, please call 1-800-448-2542.

MORE ABOUT PORTFOLIO INVESTMENTS

All of the Funds except Money Market may buy derivatives.

All of the Funds except Health Sciences, International Government and Nasdaq-100(R) Index are diversified under the 1940 Act.

Stocks are one type of equity security. Generally, there are three types of stocks:

Preferred stock -- Each share of preferred stock allows the holder to get a set dividend before the common stock shareholders receive any dividends on their shares.

Convertible preferred stock -- A stock with a set dividend which the holder may exchange for a certain amount of common stock.

All of the Funds except Money Market in this prospectus may invest in common, preferred, and convertible preferred stock in accordance with their investment strategies.

All of the Funds may invest in fixed income securities.

The Funds, except Government Securities and Money Market, may purchase forward foreign currency exchange contracts to protect against a decline in the value of the U.S. dollar.

All the Funds may buy illiquid securities, but are restricted as to how much money they may invest in them.

LENDING PORTFOLIO SECURITIES
Each Fund may lend a portion of its total assets to broker-dealers and other financial institutions to earn more money for the Fund.

A risk of lending portfolio investments is that there may be a delay in the Fund getting its investments back when a loaned security is sold.

All the Funds in this prospectus may invest in loan participations.

These high quality money market securities include:

- Securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities.

- Certificates of deposit and other obligations of domestic banks having total assets in excess of $1 billion.

- Commercial paper sold by corporations and finance companies.

- Corporate debt obligations with remaining maturities of 13 months or less.

privately issued securities for purposes of applying a Fund's diversification tests.

The risk in a repurchase agreement is the failure of the seller to be able to buy the security back. If the value of the security declines, the Fund may have to sell at a loss.

All of the Funds except Money Market may buy when-issued securities in accordance with their investment strategy.

ABOUT THE SERIES COMPANY'S MANAGEMENT

For more information on these agreements, see the "Investment Adviser" section in the Statement of Additional Information.

The Series Company relies upon an exemptive order from the Securities and Exchange Commission which permits VALIC, subject to certain conditions, to select new sub-advisers or replace existing sub-advisers without first obtaining shareholder approval for the change. The Board of Directors, including a majority of the independent Directors, must approve each new sub-advisory agreement. This allows VALIC to act more quickly to change sub-advisers when it determines that a change is beneficial by avoiding the delay of calling and holding shareholder meetings to approve each change. In accordance with the exemptive order, the Series Company will provide investors with information about each new sub-adviser and its sub-advisory agreement within 90 days of hiring the new sub-adviser. VALIC is responsible for selecting, monitoring, evaluating and allocating assets to the sub-advisers and oversees the sub-advisers' compliance with the relevant Fund's investment objective, policies and restrictions.

HOW VALIC IS PAID FOR ITS SERVICES

The Money Market Fund pays VALIC a fee of 0.50% annually, based on its average daily net asset value. The Fund's net asset value is the total value of the Fund's assets minus any money it owes for operating expenses, such as the fee paid to its Custodian to safeguard the Fund's investments.

Fund expenses shall be limited for the Funds shown below (expressed as a percentage of average annual net assets) through May 31, 2002.

                                              MAXIMUM
                    FUND                      FUND EXPENSE
                    ----                      ------------
Money Market Fund                                0.60%

ACCOUNT INFORMATION

DIVIDENDS AND CAPITAL GAINS

FINANCIAL HIGHLIGHTS

MONEY MARKET FUND

                                                                               FISCAL YEAR ENDED MAY 31,
                                                              ------------------------------------------------------------
                                                                2001         2000         1999         1998         1997
                                                              --------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $   1.00     $   1.00     $   1.00     $   1.00     $   1.00
                                                              ------------------------------------------------------------
Investment Operations
  Net investment income                                           0.06         0.05         0.05         0.05         0.05
                                                              ------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.06)       (0.05)       (0.05)       (0.05)       (0.05)
                                                              ------------------------------------------------------------
Net Asset Value, end of period                                $   1.00     $   1.00     $   1.00     $   1.00     $   1.00
                                                              ------------------------------------------------------------
TOTAL RETURN                                                      5.77%        5.21%        4.84%        5.25%        5.02%
                                                              ------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.57%        0.56%        0.57%        0.54%        0.57%
  Expenses to average net assets before expense reductions        0.58%        0.56%        0.57%        0.54%        0.50%
  Net investment income to average net assets                     5.59%        5.13%        4.66%        5.14%        4.95%
  Net assets at end of year (000's)                           $579,507     $484,934     $347,394     $190,975     $128,125

INTERESTED IN LEARNING MORE?

The Statement of Additional Information incorporated by reference into this prospectus contains additional information about the Series Company's operations.

The Securities and Exchange Commission also maintains copies of these documents:

- To view information online: Access the SEC's web site at http://www.sec.gov.

- To review a paper filing or to request that documents be mailed to you, contact: SEC Public Reference Room, Washington, D.C. 20549-6009, 1-800-SEC-0330

A duplicating fee will be assessed for all copies provided.

Investment Company Act filing number 811-8912.

VA 9017-MMF VER 10/01

NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES I
2929 Allen Parkway
Houston, Texas 77019

October 1, 2001
Prospectus

North American Funds Variable Product Series I (the "Series Company") is a mutual fund made up of 21 separate Funds (the "Funds"). Each of the Funds has a different investment objective. Seven Funds are offered in this Prospectus. Each Fund is explained in more detail on its Fact Sheet contained in this Prospectus.

FUND NAMES ("SHORT" NAMES)

- NORTH AMERICAN -- AG GOVERNMENT SECURITIES FUND (GOVERNMENT SECURITIES FUND)

- NORTH AMERICAN -- AG GROWTH & INCOME FUND (GROWTH & INCOME FUND)

- NORTH AMERICAN -- AG INTERNATIONAL EQUITIES FUND (INTERNATIONAL EQUITIES FUND)

- NORTH AMERICAN -- AG 1 MONEY MARKET FUND (MONEY MARKET FUND)

- NORTH AMERICAN -- PUTNAM OPPORTUNITIES FUND (PUTNAM OPPORTUNITIES FUND)

- NORTH AMERICAN -- T. ROWE PRICE SCIENCE & TECHNOLOGY FUND (SCIENCE & TECHNOLOGY FUND)

- NORTH AMERICAN -- AG STOCK INDEX FUND (STOCK INDEX FUND)

TABLE OF CONTENTS

TOPIC                                                          PAGE
-----                                                          ----
COVER PAGE                                                       1
WELCOME                                                          3
ABOUT THE FUNDS                                                  3
FUND FACT SHEETS                                                 4
  Government Securities Fund                                     4
  Growth & Income Fund                                           5
  International Equities Fund                                    7
  Money Market Fund                                              9
  Putnam Opportunities Fund                                     10
  Science & Technology Fund                                     11
  Stock Index Fund                                              13
MORE ABOUT PORTFOLIO INVESTMENTS                                15
  American Depositary Receipts                                  15
  Asset-Backed Securities                                       15
  Derivatives                                                   15
  Diversification                                               15
  Equity Securities                                             15
  Exchange Traded Funds                                         15
  Fixed Income Securities                                       16
  Foreign Currency                                              16
  Foreign Securities                                            16
  Illiquid Securities                                           17
  Lending Portfolio Securities                                  17
  Loan Participations                                           17
  Money Market Securities                                       17
  Mortgage-Related Securities                                   17
  Repurchase Agreements                                         18
  Reverse Repurchase Agreements, Dollar Rolls and Borrowings    18
  Temporary Defensive Investment Strategy                       18
  Variable Rate Demand Notes                                    18
  When-Issued Securities                                        18
ABOUT PORTFOLIO TURNOVER                                        19
ABOUT THE SERIES COMPANY'S MANAGEMENT                           20
  Investment Adviser                                            20
  Investment Sub-Advisers                                       20
     Putnam Investment Management, LLC                          20
     T. Rowe Price Associates, Inc.                             21
ACCOUNT INFORMATION                                             23
  Series Company Shares                                         23
  Buying and Selling Shares                                     23
  How Shares are Valued                                         23
  Dividends and Capital Gains                                   23
  Tax Consequences                                              23
FINANCIAL HIGHLIGHTS                                            24

WELCOME

ABOUT THE FUNDS

The investment objective and strategies for each of the Funds in this prospectus are non-fundamental and may be changed by the Series Company's Board of Directors without investor approval.

NORTH AMERICAN -- AG
GOVERNMENT SECURITIES
FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT OBJECTIVE
The Fund seeks high current income and protection of capital through investments in intermediate and long-term U.S. Government debt securities.

Interest Rate Risk: The risk that fluctuations in interest rates may affect the value of the Fund's interest-paying fixed income securities.

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the Lehman Brothers Government Bond Index. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was 2.01%.

Best quarter: 6.47%, quarter ending September 30, 1991

Worst quarter: -3.75%, quarter ending March 31, 1994

This table compares the Fund's average annual returns to the returns of the Lehman Brothers Government Bond Index for the periods shown.

----------------------------------------------------------------
                                     1 YEAR   5 YEARS   10 YEARS
                                     ------   -------   --------
The Fund                             12.90%    5.83%     7.34%
Lehman Bros. Govt. Bond Index        13.24%    6.49%     7.92%
----------------------------------------------------------------

The Lehman Brothers Government Bond Index is a market-value weighted index of U.S. government and government agency securities (other than mortgage securities) with maturities of one year or more.

NORTH AMERICAN -- AG
GROWTH & INCOME
FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT OBJECTIVE
The Fund seeks to provide long-term growth of capital and, secondarily, current income through investment in common stocks and equity-related securities.

The Fund generally invests 90% to 95% of total assets, at the time of purchase, in common stocks and equity-related securities, bonds, preferred stocks, convertible stocks and warrants.

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the S&P 500 Index. Prior to February 22, 1999, the Fund was sub-advised by Value Line, Inc. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was -5.54%.

Best quarter: 23.67%, quarter ending December 31, 1998

Worst quarter: -15.68%, quarter ending September 30, 1998

This table compares the Fund's average annual returns to the returns of the S&P 500 Index for the periods shown.

----------------------------------------------------------------
                                                 SINCE INCEPTION
                             1 YEAR    5 YEARS     (4/29/1994)
                             -------   -------   ---------------
The Fund                     -10.86%   13.88%        14.90%
S&P 500 Index                 -9.10%   18.33%        19.71%
----------------------------------------------------------------

GROWTH & INCOME FUND

NORTH AMERICAN -- AG
INTERNATIONAL EQUITIES
FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

Market Risk: The Fund's share price can fall because of weakness in the broad market, a particular industry, or specific holdings. The market as a whole can decline for many reasons, including adverse political or economic developments here or abroad, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, the sub-adviser's assessment of companies held in the Fund may prove incorrect, resulting in losses or poor performance even in a rising market. Finally, the Fund's investment approach could fall out of favor with the investing public, resulting in lagging performance versus other comparable funds.

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the EAFE Index. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was -14.63%.

Best quarter: 21.36%, quarter ending December 31, 1998

Worst quarter: -15.01%, quarter ending September 30, 1998

INTERNATIONAL EQUITIES FUND

This table compares the Fund's average annual returns to the returns of the EAFE Index for the periods shown.

---------------------------------------------------------------
                                   1 YEAR    5 YEARS   10 YEARS
                                   -------   -------   --------
The Fund                           -17.30%    6.73%     7.55%
EAFE Index                         -14.17%    7.13%     8.24%
---------------------------------------------------------------

The EAFE Index is comprised of the 21 Morgan Stanley Capital International country indices and measures the performance of approximately 1,000 large-cap stocks.

NORTH AMERICAN -- AG 1
MONEY MARKET FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT OBJECTIVE
The Fund seeks liquidity, protection of capital and current income through investments in short-term money market instruments.

The investments this Fund may buy include:

- Securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities

- Certificates of deposit and other obligations of domestic banks that have total assets in excess of $1 billion

- Commercial paper sold by corporations and finance companies

- Corporate debt obligations with remaining maturities of 13 months or less

- Repurchase agreements

- Money market instruments of foreign issuers payable in U.S. dollars (limited to no more than 20% of the Fund's net assets)

- Asset-backed securities

- Loan participations

- Adjustable rate securities

- Variable rate demand notes

- Illiquid securities (limited to 10% of the Fund's net assets)

INVESTMENT RISK
Because of the following principal risks the value of your investment may fluctuate and you could lose money:

- The rate of income varies daily depending on short-term interest rates

- A significant change in interest rates or a default on a security held by the Fund could cause the value of your investment to decline

- An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency

- Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of 30 Day Certificate of Deposit Primary Offering Rate by New York City Banks ("30 Day CD Rate"). How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was 2.36%.

Best quarter: 1.54%, quarter ending December 31, 2000

Worst quarter: 0.66%, quarter ending March 31, 1993

This table compares the Fund's average annual returns to the returns of the 30 Day CD Rate for the periods shown.

----------------------------------------------------------------
                                     1 YEAR   5 YEARS   10 YEARS
                                     ------   -------   --------
The Fund                             5.99%     5.21%     4.68%
30 Day CD Rate                       4.83%     4.66%     4.30%
----------------------------------------------------------------

For more current yield and return information, please call 1-800-448-2542.

NORTH AMERICAN --
PUTNAM OPPORTUNITIES
FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT SUB-ADVISER
Putnam Investment Management, LLC

INVESTMENT OBJECTIVE
The Fund seeks capital appreciation through investments in common stocks.

Market Risk: The Fund's share price can fall because of weakness in the broad market, a particular industry, or specific holdings. The market as a whole can decline for many reasons, including adverse political or economic developments here or abroad, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, the sub-adviser's assessment of companies held in the Fund may prove incorrect, resulting in losses or poor performance even in a rising market. Finally, the Fund's investment approach could fall out of favor with the investing public, resulting in lagging performance versus other comparable funds.

PERFORMANCE INFORMATION
Performance information is not shown since the Fund does not have a full year of performance.

NORTH AMERICAN --
T. ROWE PRICE
SCIENCE & TECHNOLOGY FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT SUB-ADVISER
T. Rowe Price Associates, Inc.

INVESTMENT OBJECTIVE
The Fund seeks long-term capital appreciation.

- electronics, including hardware, software, and components;

- communications;

- e-commerce (companies doing business through the Internet);

- information services;

- media;

- life sciences and health care;

- environmental services;

- chemicals and synthetic materials; and

- defense and aerospace.

The Fund may sell securities for a variety of reasons, such as to secure gains, limit losses, or re-deploy assets into more promising opportunities.

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

PERFORMANCE INFORMATION

SCIENCE & TECHNOLOGY FUND

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was -27.19%.

Best quarter: 48.04%, quarter ending December 31, 1998

Worst quarter: -37.73%, quarter ending March 31, 2001

This table compares the Fund's average annual returns to the returns of the S&P 500 Index for the periods shown.

----------------------------------------------------------------
                                                 SINCE INCEPTION
                             1 YEAR    5 YEARS     (4/29/1994)
                             -------   -------   ---------------
The Fund                     -34.13%   17.05%        25.13%
S&P 500 Index                 -9.10%   18.33%        19.71%
----------------------------------------------------------------

NORTH AMERICAN -- AG
STOCK INDEX FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

Derivatives Risk: Investments in futures and options, if any, are subject to additional volatility and potential losses.

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of the S&P 500 Index. Prior to October 1, 1999, the Fund was sub-advised by Bankers Trust Company. How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

STOCK INDEX FUND

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was -6.9%.

Best quarter: 21.21%, quarter ending December 31, 1998

Worst quarter: -11.97%, quarter ending March 31, 2001

This table compares the Fund's average annual returns to the returns of the S&P 500 Index for the periods shown.

                                    1 YEAR   5 YEARS   10 YEARS
                                    ------   -------   --------
The Fund                            -9.35%   18.05%     16.97%
S&P 500 Index                       -9.10%   18.33%     17.46%
---------------------------------------------------------------

MORE ABOUT PORTFOLIO INVESTMENTS

All of the Funds except Money Market may buy derivatives.

All of the Funds except Health Sciences, International Government and Nasdaq-100(R) Index are diversified under the 1940 Act.

Stocks are one type of equity security. Generally, there are three types of stocks:

Preferred stock -- Each share of preferred stock allows the holder to get a set dividend before the common stock shareholders receive any dividends on their shares.

Convertible preferred stock -- A stock with a set dividend which the holder may exchange for a certain amount of common stock.

All of the Funds except Money Market in this prospectus may invest in common, preferred, and convertible preferred stock in accordance with their investment strategies.

All of the Funds may invest in fixed income securities.

The Funds, except Government Securities and Money Market, may purchase forward foreign currency exchange contracts to protect against a decline in the value of the U.S. dollar.

All the Funds may buy illiquid securities, but are restricted as to how much money they may invest in them.

LENDING PORTFOLIO SECURITIES
Each Fund may lend a portion of its total assets to broker-dealers and other financial institutions to earn more money for the Fund.

A risk of lending portfolio investments is that there may be a delay in the Fund getting its investments back when a loaned security is sold.

All the Funds in this prospectus may invest in loan participations.

These high quality money market securities include:

- Securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities.

- Certificates of deposit and other obligations of domestic banks having total assets in excess of $1 billion.

- Commercial paper sold by corporations and finance companies.

- Corporate debt obligations with remaining maturities of 13 months or less.

privately issued securities for purposes of applying a Fund's diversification tests.

The risk in a repurchase agreement is the failure of the seller to be able to buy the security back. If the value of the security declines, the Fund may have to sell at a loss.

All of the Funds, except Money Market, may buy when-issued securities in accordance with their investment strategy.

ABOUT PORTFOLIO TURNOVER

The Financial Highlights tables show the portfolio turnover rate for each of the Funds, other than Money Market, during prior fiscal years.

ABOUT THE SERIES COMPANY'S MANAGEMENT

For more information on these agreements, see the "Investment Adviser" section in the Statement of Additional Information.

THE SUB-ADVISERS ARE:

Putnam Investment Management, LLC

T. Rowe Price Associates, Inc.

North American -- Putnam Opportunities Fund

PUTNAM INVESTMENT MANAGEMENT, LLC ("PUTNAM")
One Post Office Square, Boston, Massachusetts 02109

Putnam has managed mutual funds since 1937, and, as of June 30, 2001, has over $339.3 billion in assets under management.

PRIOR PERFORMANCE OF THE PUTNAM GROWTH OPPORTUNITIES FUND (as excerpted from the
Putnam Growth Opportunities Fund prospectus)

North American -- Putnam Opportunities Fund's investment objective, policies, and strategies are substantially similar to those employed by Putnam for the Putnam Growth Opportunities Fund.

Investments made by the North American -- Putnam Opportunities Fund may not be the same as those made by the retail Putnam Growth Opportunities Fund. Notwithstanding the similarity in the name, objective, investment strategies, techniques and characteristics, the North American-Putnam Opportunities Fund and the Putnam Growth Opportunities Fund are separate mutual funds that will have different investment performance. This is due to factors such as the cash flow in and out, different fees and expenses, and diversity in portfolio size and positions. Even with the differences, however, the investment management of the Fund would not have been materially different. Past performance shown below is no guarantee of similar future performance for the North American -- Putnam Opportunities Fund.

(BAR CHART)

Best quarter: 30.68%, quarter ended 12/31/1998

Worst quarter: -27.27%, quarter ended 3/31/2001

AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/2000

---------------------------------------------------------------------
                                                      SINCE INCEPTION
                                 ONE YEAR   5 YEARS      (10/2/95)
                                 --------   -------   ---------------
Putnam Growth Opportunities
  Fund, Class A                  -30.82%    20.37%        21.13%
S&P 500 Index                     -9.10%    18.32%        18.81%
Russell 1000 Growth Index        -22.42%    18.14%        18.36%
---------------------------------------------------------------------

North American -- T. Rowe Price Science & Technology Fund

T. ROWE PRICE ASSOCIATES, INC. ("T. ROWE PRICE")
100 East Pratt Street, Baltimore, Maryland 21202

HOW VALIC IS PAID FOR ITS SERVICES

Here is a list of the percentages each Fund pays:

                                   ADVISORY FEE PAID
                                   (AS A PERCENTAGE OF AVERAGE
            FUND NAME              DAILY NET ASSETS)
            ---------              ---------------------------
Government Securities Fund                    0.50%
Growth & Income Fund                          0.75%
International Equities Fund              (1)
Money Market Fund                             0.50%
Putnam Opportunities                          0.95%
Science & Technology Fund                     0.90%
Stock Index Fund                         (1)

(1) 0.35% on the first $500 million; 0.25% on assets over $500 million.

Fund expenses shall be limited for the Funds shown below (expressed as a percentage of average annual net assets) through May 31, 2002:

                                              MAXIMUM
                    FUND                      FUND EXPENSE
                    ----                      ------------
Growth & Income Fund                             0.85%
Money Market Fund                                0.60%
Science & Technology Fund                        1.00%

ACCOUNT INFORMATION

DIVIDENDS AND CAPITAL GAINS

FINANCIAL HIGHLIGHTS

GOVERNMENT SECURITIES FUND

                                                                              FISCAL YEAR ENDED MAY 31,
                                                              ----------------------------------------------------------
                                                                2001         2000         1999        1998        1997
                                                              --------     --------     --------     -------     -------
NET ASSET VALUE
Net asset value, beginning of period                          $   9.51     $   9.90     $  10.09     $  9.67     $  9.61
                                                              ----------------------------------------------------------
Investment Operations
  Net investment income                                           0.58         0.55         0.55        0.58        0.59
  Net realized & unrealized gain (loss)                           0.56        (0.39)       (0.19)       0.42        0.06
                                                              ----------------------------------------------------------
  Total from investment operations                                1.14         0.16         0.36        1.00        0.65
                                                              ----------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.58)       (0.55)       (0.55)      (0.58)      (0.59)
  Net realized gains                                                --           --           --          --          --
                                                              ----------------------------------------------------------
  Total distributions to shareholders                            (0.58)       (0.55)       (0.55)      (0.58)      (0.59)
                                                              ----------------------------------------------------------
Net Asset Value, end of period                                $  10.07     $   9.51     $   9.90     $ 10.09     $  9.67
                                                              ----------------------------------------------------------
TOTAL RETURN                                                     12.23%        1.74%        3.58%      10.60%       6.94%
                                                              ----------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.58%        0.55%        0.59%       0.54%       0.56%
  Net investment income to average net assets                     5.83%        5.68%        5.46%       5.82%       6.11%
  Portfolio turnover rate                                           84%         132%          39%         24%         38%
  Net assets at end of year (000's)                           $119,514     $100,648     $107,425     $92,120     $83,827

GROWTH & INCOME FUND

                                                                               FISCAL YEAR ENDED MAY 31,
                                                              ------------------------------------------------------------
                                                                2001         2000         1999         1998         1997
                                                              --------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $  21.04     $  21.53     $  19.91     $  16.87     $  14.78
                                                              ------------------------------------------------------------
Investment Operations
  Net investment income                                           0.11         0.15         0.06         0.08         0.10
  Net realized & unrealized gain (loss)                          (2.39)        1.96         3.17         3.25         2.38
                                                              ------------------------------------------------------------
  Total from investment operations                               (2.28)        2.11         3.23         3.33         2.48
                                                              ------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.11)       (0.14)       (0.08)       (0.08)       (0.10)
  Net realized gains                                             (3.81)       (2.46)       (1.53)       (0.21)       (0.29)
                                                              ------------------------------------------------------------
  Total distributions to shareholders                            (3.92)       (2.60)       (1.61)       (0.29)       (0.39)
                                                              ------------------------------------------------------------
Net Asset Value, end of period                                $  14.84     $  21.04     $  21.53     $  19.91     $  16.87
                                                              ------------------------------------------------------------
TOTAL RETURN                                                    (10.91)%       9.67%       16.92%       19.87%       17.08%
                                                              ------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.82%        0.80%        0.82%        0.80%        0.81%
  Expenses to average net assets before expense reductions        0.83%        0.80%        0.82%        0.80%        0.81
  Net investment income to average net assets                     0.62%        0.70%        0.29%        0.43%        0.70%
  Portfolio turnover rate                                           65%          89%         102%          78%          45%
  Net assets at end of year (000's)                           $267,487     $329,588     $296,885     $271,159     $209,545

INTERNATIONAL EQUITIES FUND

                                                                               FISCAL YEAR ENDED MAY 31,
                                                              ------------------------------------------------------------
                                                                2001         2000         1999         1998         1997
                                                              --------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $  12.55     $  11.32     $  11.95     $  11.44     $  11.15
                                                              ------------------------------------------------------------
Investment Operations
  Net investment income                                           0.12         0.15         0.22         0.23         0.20
  Net realized & unrealized gain (loss)                          (2.46)        1.90         0.30         0.85         0.63
                                                              ------------------------------------------------------------
  Total from investment operations                               (2.34)        2.05         0.52         1.08         0.83
                                                              ------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.09)       (0.14)       (0.25)       (0.24)       (0.19)
  Net realized gains                                             (1.34)       (0.68)       (0.90)       (0.33)       (0.35)
                                                              ------------------------------------------------------------
  Total distributions to shareholders                            (1.43)       (0.82)       (1.15)       (0.57)       (0.54)
                                                              ------------------------------------------------------------
Net Asset Value, end of period                                $   8.78     $  12.55     $  11.32     $  11.95     $  11.44
                                                              ------------------------------------------------------------
TOTAL RETURN                                                    (19.59)%      18.01%        4.43%        9.92%        7.74%
                                                              ------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.42%        0.41%        0.43%        0.40%        0.42%
  Net investment income to average net assets                     1.08%        1.20%        1.89%        1.92%        1.75%
  Portfolio turnover rate                                           45%          25%           8%           9%          12%
  Net assets at end of year (000's)                           $118,524     $162,840     $142,108     $155,469     $181,437

MONEY MARKET FUND

                                                                               FISCAL YEAR ENDED MAY 31,
                                                              ------------------------------------------------------------
                                                                2001         2000         1999         1998         1997
                                                              --------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $   1.00     $   1.00     $   1.00     $   1.00     $   1.00
                                                              ------------------------------------------------------------
Investment Operations
  Net investment income                                           0.06         0.05         0.05         0.05         0.05
                                                              ------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.06)       (0.05)       (0.05)       (0.05)       (0.05)
                                                              ------------------------------------------------------------
Net Asset Value, end of period                                $   1.00     $   1.00     $   1.00     $   1.00     $   1.00
                                                              ------------------------------------------------------------
TOTAL RETURN                                                      5.77%        5.21%        4.84%        5.25%        5.02%
                                                              ------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.57%        0.56%        0.57%        0.54%        0.57%
  Expenses to average net assets before expense reductions        0.58%        0.56%        0.57%        0.54%        0.50%
  Net investment income to average net assets                     5.59%        5.13%        4.66%        5.14%        4.95%
  Net assets at end of year (000's)                           $579,507     $484,934     $347,394     $190,975     $128,125

PUTNAM OPPORTUNITIES FUND

                                                              OCTOBER 2, 2000
                                                                    TO
                                                               MAY 31, 2001
                                                              ---------------
NET ASSET VALUE
Net asset value, beginning of period                             $  10.00
                                                                 --------
Investment Operations
  Net investment income                                             (0.01)
  Net realized & unrealized gain (loss)                             (3.53)
                                                                 --------
  Total from investment operations                                  (3.54)
                                                                 --------
Distributions to Shareholders From:
  Net investment income                                                --
  Net realized gains                                                   --
                                                                 --------
  Total distributions to shareholders                                  --
                                                                 --------
Net Asset Value, end of period                                   $   6.46
                                                                 --------
TOTAL RETURN                                                       (35.40)%
                                                                 --------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                     1.02%
  Net investment income to average net assets                       (0.27)%
  Portfolio turnover rate                                              51%
  Net assets at end of year (000's)                              $  3,945

SCIENCE & TECHNOLOGY FUND

                                                                                 FISCAL YEAR ENDED MAY 31,
                                                           ----------------------------------------------------------------------
                                                              2001           2000           1999           1998           1997
                                                           ----------     ----------     ----------     ----------     ----------
NET ASSET VALUE
Net asset value, beginning of period                       $    41.14     $    29.95     $    22.07     $    19.88     $    20.48
                                                           ---------------------------------------------------------------------
Investment Operations
  Net investment income (loss)                                  (0.17)         (0.11)         (0.10)         (0.09)            --
  Net realized & unrealized gain (loss)                        (15.86)         16.37          10.36           2.28           0.33
                                                           ---------------------------------------------------------------------
  Total from investment operations                             (16.03)         16.26          10.26           2.19           0.33
                                                           ---------------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                            --             --             --             --             --
  Net realized gains                                            (7.83)         (5.07)         (2.38)            --          (0.93)
                                                           ---------------------------------------------------------------------
  Total distributions to shareholders                           (7.83)         (5.07)         (2.38)            --          (0.93)
                                                           ---------------------------------------------------------------------
Net Asset Value, end of period                             $    17.28     $    41.14     $    29.95     $    22.07     $    19.88
                                                           ---------------------------------------------------------------------
TOTAL RETURN                                                   (42.24)%        52.65%         48.34%         10.85%          1.81%
                                                           ---------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                 0.98%          0.96%          0.96%          0.95%          0.96%
  Net investment income to average net assets                   (0.66)%        (0.40)%        (0.46)%        (0.46)%        (0.29)%
  Portfolio turnover rate                                         176%           130%           149%           128%           122%
  Net assets at end of year (000's)                        $2,015,574     $3,314,052     $1,683,585     $1,023,141     $  804,982

STOCK INDEX FUND

                                                                                 FISCAL YEAR ENDED MAY 31,
                                                           ----------------------------------------------------------------------
                                                              2001           2000           1999           1998           1997
                                                           ----------     ----------     ----------     ----------     ----------
NET ASSET VALUE
Net asset value, beginning of period                       $    42.98     $    39.73     $    33.38     $    26.09     $    20.69
                                                           ---------------------------------------------------------------------
Investment Operations
  Net investment income                                          0.35           0.41           0.40           0.40           0.39
  Net realized & unrealized gain (loss)                         (4.99)          3.59           6.51           7.44           5.57
                                                           ---------------------------------------------------------------------
  Total from investment operations                              (4.64)          4.00           6.91           7.84           5.96
                                                           ---------------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                         (0.35)         (0.39)         (0.41)         (0.40)         (0.39)
  Net realized gains                                            (1.10)         (0.36)         (0.15)         (0.15)         (0.17)
                                                           ---------------------------------------------------------------------
  Total distributions to shareholders                           (1.45)         (0.75)         (0.56)         (0.55)         (0.56)
                                                           ---------------------------------------------------------------------
Net Asset Value, end of period                             $    36.89     $    42.98     $    39.73     $    33.38     $    26.09
                                                           ---------------------------------------------------------------------
TOTAL RETURN                                                   (10.87)%        10.10%         20.85%         30.30%         29.24%
                                                           ---------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                 0.34%          0.31%          0.32%          0.31%          0.34%
  Net investment income to average net assets                    0.86%          0.97%          1.13%          1.33%          1.76%
  Portfolio turnover rate                                           7%             6%             2%             3%             3%
  Net assets at end of year (000's)                        $4,839,632     $5,373,192     $4,637,628     $3,482,655     $2,444,200

INTERESTED IN LEARNING MORE?

The Statement of Additional Information incorporated by reference into this prospectus contains additional information about the Series Company's operations.

The Securities and Exchange Commission also maintains copies of these documents:

- To view information online: Access the SEC's web site at http://www.sec.gov.

- To review a paper filing or to request that documents be mailed to you, contact: SEC Public Reference Room, Washington, D.C. 20549-6009, 1-800-SEC-0330

A duplicating fee will be assessed for all copies provided.

Investment Company Act filing number 811-8912.

VA 9017-AGA VER 10/01

NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES I
2929 Allen Parkway
Houston, Texas 77019

October 1, 2001
Prospectus

North American Funds Variable Product Series I (the "Series Company") is a mutual fund made up of 21 separate Funds (the "Funds"). Each of the Funds has a different investment objective. Two Funds are offered in this Prospectus. Each Fund is explained in more detail on its Fact Sheet contained in this Prospectus.

FUND NAMES ("SHORT" NAMES)

- NORTH AMERICAN -- AG 1 MONEY MARKET FUND (MONEY MARKET FUND)

- NORTH AMERICAN -- PUTNAM OPPORTUNITIES FUND (PUTNAM OPPORTUNITIES FUND)

TABLE OF CONTENTS

TOPIC                                                          PAGE
-----                                                          ----
COVER PAGE
WELCOME                                                          3
ABOUT THE FUNDS                                                  3
FUND FACT SHEETS                                                 4
  Money Market Fund                                              4
  Putnam Opportunities Fund                                      5
MORE ABOUT PORTFOLIO INVESTMENTS                                 6
  American Depositary Receipts                                   6
  Asset-Backed Securities                                        6
  Derivatives                                                    6
  Diversification                                                6
  Equity Securities                                              6
  Exchange Traded Funds                                          6
  Fixed Income Securities                                        7
  Foreign Currency                                               7
  Foreign Securities                                             7
  Illiquid Securities                                            8
  Lending Portfolio Securities                                   8
  Loan Participations                                            8
  Money Market Securities                                        8
  Mortgage-Related Securities                                    8
  Repurchase Agreements                                          9
  Reverse Repurchase Agreements, Dollar Rolls and Borrowings     9
  Temporary Defensive Investment Strategy                        9
  Variable Rate Demand Notes                                     9
  When-Issued Securities                                         9
ABOUT PORTFOLIO TURNOVER                                        10
ABOUT THE SERIES COMPANY'S MANAGEMENT                           11
  Investment Adviser                                            11
  Investment Sub-Advisers                                       11
     Putnam Investment Management, LLC                          11
ACCOUNT INFORMATION                                             14
  Series Company Shares                                         14
  Buying and Selling Shares                                     14
  How Shares are Valued                                         14
  Dividends and Capital Gains                                   14
  Tax Consequences                                              14
FINANCIAL HIGHLIGHTS                                            15

WELCOME

ABOUT THE FUNDS

The investment objective and strategies for each of the Funds in this prospectus are non-fundamental and may be changed by the Series Company's Board of Directors without investor approval.

NORTH AMERICAN -- AG 1
MONEY MARKET FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT OBJECTIVE
The Fund seeks liquidity, protection of capital and current income through investments in short-term money market instruments.

The investments this Fund may buy include:

- Securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities

- Certificates of deposit and other obligations of domestic banks that have total assets in excess of $1 billion

- Commercial paper sold by corporations and finance companies

- Corporate debt obligations with remaining maturities of 13 months or less

- Repurchase agreements

- Money market instruments of foreign issuers payable in U.S. dollars (limited to no more than 20% of the Fund's net assets)

- Asset-backed securities

- Loan participations

- Adjustable rate securities

- Variable rate demand notes

- Illiquid securities (limited to 10% of the Fund's net assets)

INVESTMENT RISK
Because of the following principal risks the value of your investment may fluctuate and you could lose money:

- The rate of income varies daily depending on short-term interest rates

- A significant change in interest rates or a default on a security held by the Fund could cause the value of your investment to decline

- An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency

- Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund

PERFORMANCE INFORMATION

The performance information presented below is intended to help you evaluate the potential risks and rewards of an investment in the Fund by showing changes in the Fund's performance and comparing the Fund's performance with the performance of 30 Day Certificate of Deposit Primary Offering Rate by New York City Banks ("30 Day CD Rate"). How the Fund performed in the past is not necessarily an indication of how the Fund will perform in the future. The Fund's annual report contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal year.

(BAR CHART)

For the year-to-date through June 30, 2001, the Fund's return was 2.36%.

Best quarter: 1.54%, quarter ending December 31, 2000

Worst quarter: 0.66%, quarter ending March 31, 1993

This table compares the Fund's average annual returns to the returns of the 30 Day CD Rate for the periods shown.

----------------------------------------------------------------
                                     1 YEAR   5 YEARS   10 YEARS
                                     ------   -------   --------
The Fund                             5.99%     5.21%     4.68%
30 Day CD Rate                       4.83%     4.66%     4.30%
----------------------------------------------------------------

For more current yield and return information, please call 1-800-448-2542.

NORTH AMERICAN --
PUTNAM OPPORTUNITIES
FUND
Fact Sheet

INVESTMENT ADVISER
VALIC

INVESTMENT SUB-ADVISER
Putnam Investment Management, LLC

INVESTMENT OBJECTIVE
The Fund seeks capital appreciation through investments in common stocks.

Market Risk: The Fund's share price can fall because of weakness in the broad market, a particular industry, or specific holdings. The market as a whole can decline for many reasons, including adverse political or economic developments here or abroad, changes in investor psychology, or heavy institutional selling. The prospects for an industry or company may deteriorate because of a variety of factors, including disappointing earnings or changes in the competitive environment. In addition, the sub-adviser's assessment of companies held in the Fund may prove incorrect, resulting in losses or poor performance even in a rising market. Finally, the Fund's investment approach could fall out of favor with the investing public, resulting in lagging performance versus other comparable funds.

PERFORMANCE INFORMATION
Performance information is not shown since the Fund does not have a full year of performance.

MORE ABOUT PORTFOLIO INVESTMENTS

All of the Funds except Money Market may buy derivatives.

All of the Funds except Health Sciences, International Government and Nasdaq-100(R) Index are diversified under the 1940 Act.

Stocks are one type of equity security. Generally, there are three types of stocks:

Preferred stock -- Each share of preferred stock allows the holder to get a set dividend before the common stock shareholders receive any dividends on their shares.

Convertible preferred stock -- A stock with a set dividend which the holder may exchange for a certain amount of common stock.

All of the Funds except Money Market in this prospectus may invest in common, preferred, and convertible preferred stock in accordance with their investment strategies.

All of the Funds may invest in fixed income securities.

The Funds, except Government Securities and Money Market, may purchase forward foreign currency exchange contracts to protect against a decline in the value of the U.S. dollar.

All the Funds may buy illiquid securities, but are restricted as to how much money they may invest in them.

LENDING PORTFOLIO SECURITIES
Each Fund may lend a portion of its total assets to broker-dealers and other financial institutions to earn more money for the Fund.

A risk of lending portfolio investments is that there may be a delay in the Fund getting its investments back when a loaned security is sold.

All the Funds in this prospectus may invest in loan participations.

These high quality money market securities include:

- Securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities.

- Certificates of deposit and other obligations of domestic banks having total assets in excess of $1 billion.

- Commercial paper sold by corporations and finance companies.

- Corporate debt obligations with remaining maturities of 13 months or less.

privately issued securities for purposes of applying a Fund's diversification tests.

The risk in a repurchase agreement is the failure of the seller to be able to buy the security back. If the value of the security declines, the Fund may have to sell at a loss.

All of the Funds, except Money Market, may buy when-issued securities in accordance with their investment strategy.

ABOUT PORTFOLIO TURNOVER

The Financial Highlights tables show the portfolio turnover rate for each of the Funds, other than Money Market, during prior fiscal years.

ABOUT THE SERIES COMPANY'S MANAGEMENT

For more information on these agreements, see the "Investment Adviser" section in the Statement of Additional Information.

The Series Company relies upon an exemptive order from the Securities and Exchange Commission which permits VALIC, subject to certain conditions, to select new sub-advisers or replace existing sub-advisers without first obtaining shareholder approval for the change. The Board of Directors, including a majority of the independent Directors, must approve each new sub-advisory agreement. This allows VALIC to act more quickly to change sub-advisers when it determines that a change is beneficial by avoiding the delay of calling and holding shareholder meetings to approve each change. In accordance with the exemptive order, the Series Company will provide investors with information about each new sub-adviser and its sub-advisory agreement within 90 days of hiring the new sub-adviser. VALIC is responsible for selecting, monitoring, evaluating and allocating assets to the sub-advisers and oversees the sub-advisers' compliance with the relevant Fund's investment objective, policies and restrictions.

THE SUB-ADVISERS ARE:

Putnam Investment Management, LLC

North American -- Putnam Opportunities Fund

PUTNAM INVESTMENT MANAGEMENT, LLC ("PUTNAM")
One Post Office Square, Boston, Massachusetts 02109

Putnam has managed mutual funds since 1937, and, as of June 30, 2001, has over $339.3 billion in assets under management.

PRIOR PERFORMANCE OF THE PUTNAM GROWTH OPPORTUNITIES FUND (as excerpted from the
Putnam Growth Opportunities Fund prospectus)

North American -- Putnam Opportunities Fund's investment objective, policies, and strategies are substantially similar to those employed by Putnam for the Putnam Growth Opportunities Fund.

(BAR CHART)

Best quarter: 30.68%, quarter ended 12/31/1998

Worst quarter: -27.27%, quarter ended 3/31/2001

AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/2000

---------------------------------------------------------------------
                                                      SINCE INCEPTION
                                 ONE YEAR   5 YEARS      (10/2/95)
                                 --------   -------   ---------------
Putnam Growth Opportunities
  Fund, Class A                  -30.82%    20.37%        21.13%
S&P 500 Index                     -9.10%    18.32%        18.81%
Russell 1000 Growth Index        -22.42%    18.14%        18.36%
---------------------------------------------------------------------

HOW VALIC IS PAID FOR ITS SERVICES

Here is a list of the percentages each Fund pays:

                                   ADVISORY FEE PAID
                                   (AS A PERCENTAGE OF AVERAGE
            FUND NAME              DAILY NET ASSETS)
            ---------              ---------------------------
Money Market Fund                             0.50%
Putnam Opportunities                          0.95%

In addition to the limitations above, VALIC has voluntarily agreed to cap certain Fund expenses by waiving a portion of its advisory fee or reimbursing certain expenses, as shown below.

Expense caps are net of any expense reduction realized through the use of directed brokerage commissions.

Fund expenses shall be limited for the Funds shown below (expressed as a percentage of average annual net assets) through May 31, 2002:

                                              MAXIMUM
                    FUND                      FUND EXPENSE
                    ----                      ------------
Money Market Fund                                0.60%

ACCOUNT INFORMATION

DIVIDENDS AND CAPITAL GAINS

FINANCIAL HIGHLIGHTS

MONEY MARKET FUND

                                                                               FISCAL YEAR ENDED MAY 31,
                                                              ------------------------------------------------------------
                                                                2001         2000         1999         1998         1997
                                                              --------     --------     --------     --------     --------
NET ASSET VALUE
Net asset value, beginning of period                          $   1.00     $   1.00     $   1.00     $   1.00     $   1.00
                                                              ------------------------------------------------------------
Investment Operations
  Net investment income                                           0.06         0.05         0.05         0.05         0.05
                                                              ------------------------------------------------------------
Distributions to Shareholders From:
  Net investment income                                          (0.06)       (0.05)       (0.05)       (0.05)       (0.05)
                                                              ------------------------------------------------------------
Net Asset Value, end of period                                $   1.00     $   1.00     $   1.00     $   1.00     $   1.00
                                                              ------------------------------------------------------------
TOTAL RETURN                                                      5.77%        5.21%        4.84%        5.25%        5.02%
                                                              ------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                  0.57%        0.56%        0.57%        0.54%        0.57%
  Expenses to average net assets before expense reductions        0.58%        0.56%        0.57%        0.54%        0.50%
  Net investment income to average net assets                     5.59%        5.13%        4.66%        5.14%        4.95%
  Net assets at end of year (000's)                           $579,507     $484,934     $347,394     $190,975     $128,125

PUTNAM OPPORTUNITIES FUND

                                                        OCTOBER 2, 2000
                                                              TO
                                                         MAY 31, 2001
                                                        ---------------
NET ASSET VALUE
Net asset value, beginning of period                      $    10.00
                                                          ----------
Investment Operations
  Net investment income                                        (0.01)
  Net realized & unrealized gain (loss)                        (3.53)
                                                          ----------
  Total from investment operations                             (3.54)
                                                          ----------
Distributions to Shareholders From:
  Net investment income                                           --
  Net realized gains                                              --
                                                          ----------
  Total distributions to shareholders                             --
                                                          ----------
Net Asset Value, end of period                            $     6.46
                                                          ----------
TOTAL RETURN                                                  (35.40)%
                                                          ----------
RATIOS AND SUPPLEMENTAL DATA
  Expenses to average net assets                                1.02 %
  Net investment income to average net assets                  (0.27)%
  Portfolio turnover rate                                         51 %
  Net assets at end of year (000's)                       $    3,945

INTERESTED IN LEARNING MORE?

The Statement of Additional Information incorporated by reference into this prospectus contains additional information about the Series Company's operations.

The Securities and Exchange Commission also maintains copies of these documents:

- To view information online: Access the SEC's web site at http://www.sec.gov.

- To review a paper filing or to request that documents be mailed to you, contact: SEC Public Reference Room, Washington, D.C. 20549-6009, 1-800-SEC-0330

A duplicating fee will be assessed for all copies provided.

Investment Company Act filing number 811-8912.

VA 9017-OMM VER 10/01

NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES I

NORTH AMERICAN - AG ASSET ALLOCATION FUND
NORTH AMERICAN - AG CAPITAL CONSERVATION FUND
NORTH AMERICAN - AG GOVERNMENT SECURITIES FUND
NORTH AMERICAN - AG GROWTH & INCOME FUND
NORTH AMERICAN - AG INTERNATIONAL EQUITIES FUND
NORTH AMERICAN - AG INTERNATIONAL GOVERNMENT BOND FUND
NORTH AMERICAN - AG MIDCAP INDEX FUND
NORTH AMERICAN - AG 1 MONEY MARKET FUND
NORTH AMERICAN - AG NASDAQ-100(R) INDEX FUND
NORTH AMERICAN - AG SMALL CAP INDEX FUND
NORTH AMERICAN - AG SOCIAL AWARENESS FUND
NORTH AMERICAN - AG STOCK INDEX FUND
NORTH AMERICAN CORE EQUITY FUND
NORTH AMERICAN - AMERICAN CENTURY INCOME & GROWTH FUND
NORTH AMERICAN - AMERICAN CENTURY INTERNATIONAL GROWTH FUND
NORTH AMERICAN - FOUNDERS LARGE CAP GROWTH FUND
NORTH AMERICAN - FOUNDERS/T. ROWE PRICE SMALL CAP FUND
NORTH AMERICAN - PUTNAM OPPORTUNITIES FUND
NORTH AMERICAN - T. ROWE PRICE BLUE CHIP GROWTH FUND
NORTH AMERICAN - T. ROWE PRICE HEALTH SCIENCES FUND
NORTH AMERICAN - T. ROWE PRICE SCIENCE & TECHNOLOGY FUND

STATEMENT OF ADDITIONAL INFORMATION

FORM N-1A PART B

OCTOBER 1, 2001

This Statement of Additional Information is not a prospectus and contains information in addition to that in the Prospectus for North American Funds Variable Product Series Company I (the "Series Company"). It should be read in conjunction with the Prospectus. The Statement of Additional Information and the related Prospectus are both dated October 1, 2001. For an individual interested in a variable annuity contract issued by The Variable Annuity Life Insurance Company ("VALIC"), a Prospectus may be obtained by calling 1-800-448-2542 or writing the Series Company or The Variable Annuity Marketing Company (the "Distributor") at 2929 Allen Parkway, Houston, Texas, 77019.

TABLE OF CONTENTS

Page

General Information and History
Additional Information Regarding Certain Funds Asset Allocation Fund
Capital Conservation Fund
Government Securities Fund

Performance and Yield Information
Calculation of Yield for the Money Market Fund Investment Restrictions
Fundamental Investment Restrictions
Non-Fundamental Investment Restrictions Investment Practices
Adjustable Rate Securities
American Depositary Receipts ("ADRs") Asset-Backed Securities
Bank Obligations
Convertible Securities
Emerging Markets
Euro Conversion
Eurodollar Obligations
Fixed Income Securities
Foreign Securities
Foreign Currency Exchange Transactions and Forward Contracts Illiquid Securities
Lending Portfolio Securities
Loan Participations
Lower Rated Debt Securities
Mortgage-Related Securities
Options and Futures Contracts
Real Estate Securities and Real Estate Investment Trusts ("REITs") Repurchase Agreements
Reverse Repurchase Agreements
Rule 144A Securities
Standard and Poor's Depositary Receipts Swap Agreements
Warrants
When Issued Securities
Investment Adviser
Code of Ethics
Investment Sub-Advisers
Service Agreements
Portfolio Transactions and Brokerage
Offering, Purchase, and Redemption of Fund Shares Determination of Net Asset Value
Accounting and Tax Treatment
Calls and Puts
Financial Futures Contracts
Subchapter M of the Internal Revenue Code of 1986
Section 817(h) of the Code
Other Information
Shareholder Reports
Voting and Other Rights
Custody of Assets

Page

Index Funds
Description of Corporate Bond Ratings Description of Commercial Paper Ratings Independent Auditors

Management of the Series Company

Compensation of Non-affiliated Directors

FUND NAMES

OFFICIAL NAME                                                           "SHORT" NAME
-------------                                                           ------------
North American - AG Asset Allocation Fund                               Asset Allocation Fund
North American - AG Capital Conservation Fund                           Capital Conservation Fund
North American - AG Government Securities Fund                          Government Securities Fund
North American - AG Growth & Income Fund                                Growth & Income Fund
North American - AG International Equities Fund                         International Equities Fund
North American - AG International Government Bond Fund                  International Government Bond Fund
North American - AG MidCap Index Fund                                   MidCap Index Fund
North American - AG 1 Money Market Fund                                 Money Market Fund
North American - AG Nasdaq-100(R) Index Fund                            Nasdaq-100(R) Index Fund
North American - AG Small Cap Index Fund                                Small Cap Index Fund
North American - AG Social Awareness Fund                               Social Awareness Fund
North American - AG Stock Index Fund                                    Stock Index Fund
North American Core Equity Fund                                         Core Equity Fund
North American - American Century Income & Growth Fund                  Income & Growth Fund
North American - American Century International Growth Fund             International Growth Fund
North American - Founders Large Cap Growth Fund                         Large Cap Growth Fund
North American - Founders/T. Rowe Price Small Cap Fund                  Small Cap Fund
North American - Putnam Opportunities Fund                              Putnam Opportunities Fund
North American - T. Rowe Price Blue Chip Growth Fund                    Blue Chip Growth Fund
North American - T. Rowe Price Health Sciences Fund                     Health Sciences Fund
North American - T. Rowe Price Science & Technology Fund                Science & Technology Fund

GENERAL INFORMATION AND HISTORY

The Series Company was incorporated in Maryland on December 7, 1984, by VALIC and is registered under the Investment Company Act of 1940, as amended, (the "1940 Act") as an open-end, management investment company. Pursuant to Investment Advisory Agreements with the Series Company and subject to the authority of the Series Company's Board of Directors, VALIC serves as the Series Company's investment adviser and conducts the business and affairs of the Series Company. Additionally, VALIC has engaged an investment sub-adviser to provide investment sub-advisory services for the Blue Chip Growth Fund, Core Equity Fund, Health Sciences Fund, Income & Growth Fund, International Growth Fund, Large Cap Growth Fund, Nasdaq-100(R) Index Fund, Putnam Opportunities Fund, Science & Technology Fund and the Small Cap Fund, subject to VALIC's control, direction and supervision. The Series Company consists of separate investment portfolios (hereinafter collectively referred to as the "Funds" or individually as a "Fund"), each of which is, in effect, a separate mutual fund issuing its own separate class of common stock. Each of the Funds, except the Health Sciences, the International Government Bond and the Nasdaq-100(R) Index, is "diversified" as the term is used in the 1940 Act. The Series Company issues shares of common stock of each Fund to registered and unregistered separate accounts of VALIC and its affiliates to fund variable annuity contracts (the "Contracts"). Currently, the Series Company acts as an investment vehicle for assets of separate accounts sponsored by VALIC and its affiliates. Additionally, retirement plans maintained by VALIC and its affiliates may own shares of certain of the Funds.

The MidCap Index Fund and the Asset Allocation Fund are the successors to Capital Accumulation Fund, Inc. and Timed Opportunity Fund, Inc., respectively, which were separately registered open-end diversified management investment companies under the 1940 Act, pursuant to a reorganization entered into on September 25, 1985. The MidCap Index Fund effected a change in its name and investment objective, investment program and one of its restrictions as of October 1, 1991. The Asset Allocation Fund effected a change in its name from the Timed Opportunity Fund, effective as of October 1, 1997. In addition, the Quality Growth Fund was combined into the Stock Index Fund, by means of a reclassification of its shares, effective May 1, 1992.

ADDITIONAL INFORMATION REGARDING CERTAIN FUNDS

The following disclosures supplement disclosures set forth in the Prospectus and do not, standing alone, present a complete explanation of the matters disclosed. Please refer also to the Prospectus for a complete presentation of these matters.

CAPITAL CONSERVATION FUND

The Fund may acquire common stocks by conversion of income-bearing securities or by exercising warrants attached to income-bearing securities. The Fund may hold up to 10% of its assets, valued at the time of acquisition, in common stocks.

GOVERNMENT SECURITIES FUND

The Government Securities Fund may invest in intermediate and long-term debt instruments issued or guaranteed by the U.S. Government, its agencies or instrumentalities. U.S. Government securities in which the Fund may invest include: (1) U.S. Treasury bills, notes, and bonds; (2) obligations issued or guaranteed by U.S. Government agencies and instrumentalities which are supported by any of the following: (a) the full faith and credit of the U.S. Government (e.g., Government National Mortgage Association ("GNMA") Certificates); (b) the right of the issuer to borrow an amount limited to a specific line of credit from the U.S. Treasury (e.g., debt of each of the Federal Home Loan banks); (c) the discretionary authority of the U.S. Government or GNMA to purchase certain financial obligations of the agency or instrumentality (e.g., Federal National Mortgage Association); or (d) the credit of the issuing agency or instrumentality (e.g., Federal Land Banks, Farmers Home Administration or Student Loan Marketing Association); and (3) collateralized mortgage obligations ("CMOs") that are issued by governmental or non-governmental entities and collateralized by U.S. Treasury obligations or by U.S. Government agency or instrumentality securities. No assurance can be given that the U.S. Government will provide support to such U.S. Government sponsored agencies or instrumentalities in the future, since it is not required to do so by law.

PERFORMANCE AND YIELD INFORMATION

The Series Company may compute the total return of a Fund ("Average Annual Total Return"), total return of a Fund before expenses ("Portfolio Total Return"), and compare Portfolio Total Return or Average Annual Total Return to the total return of the Fund's benchmark index ("Index Total Return"). The difference between Portfolio Total Return or Average Annual Total Return and Index Total Return is referred to as "tracking difference." Tracking difference represents the amount that the return on the investment portfolio (which results from VALIC's investment selection) deviates from its benchmark's Index Total Return. Fund performance does not reflect contract charges or separate account charges which will reduce Fund values which are available to Participants. Information about separate account performance is available in the applicable contract prospectus.

AVERAGE ANNUAL TOTAL RETURN

Average Annual Total Return quotations for periods of 1, 5, and 10 years, or, since inception of the Fund, are calculated according to the following formula:

P (1+T)n = ERV

Where:
      P     =     A hypothetical initial Purchase Payment of $1,000.
      T     =     Average annual total return.
      N     =     Number of years.
      ERV   =     Ending redeemable value of a hypothetical $1,000
                  Purchase Payment made at the beginning of the first
                  period.

Average Annual Total Return reflects the deduction of Fund expenses and assumes that all dividends and distributions are reinvested when paid.

PORTFOLIO TOTAL RETURN

Portfolio Total Return quotations for periods of 1, 5, and 10 years or since inception are calculated by adding to the Average Total Annual Return (described above) the expenses of the Fund. Expenses of the Fund are calculated at the end of each Fund's fiscal year and are expressed as a percentage of average net assets. Expenses as a percentage of average net assets are prorated equally over the months in the fiscal year in which the ratio was calculated when determining expenses for periods crossing over fiscal years.

INDEX TOTAL RETURN

Index Total Return quotations for periods of 1, 3, 5, and 10 years or since inception, are calculated by determining the percentage change in value of the benchmark index over the applicable period including reinvestment of dividends and interest as applicable. Index Total Return is calculated according to the formula described above for Average Annual Total Return, however it does not include an expense component; if an expense component were included the return would be lower.

SEVEN DAY YIELDS

The Money Market Fund may quote a Seven Day Current Yield and a Seven Day Effective Yield. The Seven Day Current Yield is calculated by determining the total return for the current seven day period ("base period return") and annualizing the base period return by dividing by seven days, then multiplying the result by 365 days. The Seven Day Effective Yield annualizes the base period return while compounding weekly the base period return according to the following formula:

Seven Day Effective Yield = [(Base Period Return + 1)365/7 - 1]

30 DAY CURRENT YIELD

The Capital Conservation Fund, Government Securities Fund, and the International Government Bond Fund may quote a 30 Day Current Yield which is determined based on the current 30 day period, according to the following standardized formula:

Yield = 2[(1 + NII )6 - 1]
S x NAV

Where:
      NII   =     Net investment income (interest income, plus dividend
                  income, plus other income, less fund expenses).
      S     =     Average daily shares outstanding.
      NAV   =     Net asset value per share on the last day of the
                  period.

DISTRIBUTION RATE CALCULATION

The Funds may advertise a non-standardized distribution rate. The distribution rate may be calculated as frequently as daily, based on the latest normal dividend paid. The latest normal dividend is annualized by multiplying the dividend by a factor based on the dividend frequency (12 for monthly or 4 for quarterly). The result is then divided by the higher of the current net asset value or the maximum offering price. For example, a bond fund may pay a monthly dividend of 0.04536. This is multiplied by 12 since it is a monthly dividend. The result, 0.54432, is divided by the offering price of $9.89. That equals a distribution rate of 5.50%.

The distribution rate measures the level of the ordinary income, including short-term capital gains, that is actually paid out to investors. This is different from fund yield, which is a measure of the income earned by a fund's investments, but which may not be directly paid out to investors. Total return measures the income earned, as does the yield, but also measures the effect of any realized or unrealized appreciation or depreciation of the fund's investments.

CALCULATION OF YIELD FOR THE MONEY MARKET FUND

The yield of the Money Market Fund is its net income expressed as a percentage of assets on an annualized basis for a seven day period. Rule 482 under the Securities Act of 1933 requires that a yield quotation set forth in an advertisement for a money market fund be computed by a standardized method based on an historical seven calendar day period. The current yield is computed by determining the net change (exclusive of realized gains and losses from the sale of securities and unrealized appreciation and depreciation) in the value of a hypothetical pre-existing account having a balance of one share at the beginning of the period, and then dividing the net change in account value by the value of the account at the beginning of the base period to obtain the base period return. The base period return is then multiplied by (365/7) to annualize the yield figure. The determination of net change in account value reflects the value of additional shares purchased with dividends from the original share, dividends declared on both the original share and such additional shares, and any fees that are charged to all shareholder accounts, in proportion to the length of the base period and the Money Market Fund's average account size. The Money Market Fund may also calculate its compound effective yield by compounding the unannualized base period return (calculated as described above) by adding one to the base period return, raising the sum to a power equal to 365 divided by 7, and subtracting one.

The yield quoted by the Money Market Fund at any time represents the amount being earned on a current basis for the indicated period and is a function of the types of instruments in the Money Market Fund's portfolio, their quality and length of maturity, and the Money Market Fund's operating expenses. The length of maturity for the portfolio is the average dollar weighted maturity of the portfolio. In other words, the portfolio has an average maturity for all of its issues, stated in numbers of days and weighted according to the relative value of each investment.

The yield fluctuates daily as the income earned on the investments of the Money Market Fund fluctuates. Accordingly, neither the Series Company nor VALIC can assure the yield quoted on any given occasion will remain constant for any period of time. For example, the Money Market Fund's yield will change if it experiences a net

inflow of new assets which it then invests in securities whose yield is higher or lower than that being currently earned on investments. Investments in the Money Market Fund are not insured and investors comparing results of the Money Market Fund with investment results and yields from other sources such as banks or savings and loan associations should understand this distinction. In addition, other money market funds as well as banks and savings and loan associations may calculate their yields on a different basis and the yield quoted by the Money Market Fund from time-to-time could vary upwards or downwards if another method of calculation or base period were used.

PERFORMANCE RETURNS AS OF MAY 31, 2001

                                                  Inception                                        Since
                                                     Date      1 Year     5 Years     10 Years   Inception
--------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY INCOME & GROWTH FUND            12/08/00
     Average Annual Total Return                                  N/A         N/A          N/A      -3.60% (B)
     Portfolio Total Return                                       N/A         N/A          N/A      -3.21% (B)
     S&P 500 Index                                                N/A         N/A          N/A      -7.78% (B)
--------------------------------------------------------------------------------------------------------------
AMERICAN CENTURY INTERNATIONAL GROWTH FUND       12/08/00
     Average Annual Total Return                                  N/A         N/A          N/A     -16.55% (B)
     Portfolio Total Return                                       N/A         N/A          N/A     -16.11% (B)
     MSCI EAFE Index                                              N/A         N/A          N/A     -10.23% (B)
--------------------------------------------------------------------------------------------------------------
ASSET ALLOCATION FUND                            09/06/83
     Average Annual Total Return                               -2.46%      10.53%        9.39%         N/A
     Portfolio Total Return                                    -1.92%      11.15%       10.10%         N/A
     Blended Benchmark (A)                                     -1.00%      11.76%       11.53%         N/A
--------------------------------------------------------------------------------------------------------------
CAPITAL CONSERVATION FUND                        01/16/86
     Average Annual Total Return                               13.35%       6.94%        7.52%         N/A
     Portfolio Total Return                                    13.97%       7.54%        8.19%         N/A
     Lehman Brothers Aggregate Index                           13.11%       7.68%        7.82%         N/A
--------------------------------------------------------------------------------------------------------------
CORE EQUITY FUND                                 04/29/94
     Average Annual Total Return                              -11.62%       7.19%          N/A      13.13%
     Portfolio Total Return                                   -10.85%       8.10%          N/A      14.10%
     S&P 500 Index                                            -10.55%      15.13%          N/A      17.71%
--------------------------------------------------------------------------------------------------------------
FOUNDERS LARGE CAP GROWTH FUND                   12/08/00
     Average Annual Total Return                                  N/A         N/A          N/A     -25.70% (B)
     Portfolio Total Return                                       N/A         N/A          N/A     -25.30% (B)
     S&P 500 Index                                                N/A         N/A          N/A      -7.78% (B)
--------------------------------------------------------------------------------------------------------------
FOUNDERS/T. ROWE PRICE SMALL CAP FUND            12/08/00
     Average Annual Total Return                                  N/A         N/A          N/A      -9.10% (B)
     Portfolio Total Return                                       N/A         N/A          N/A      -8.68% (B)
     Russell 2000 Index                                           N/A         N/A          N/A       4.38% (B)

PERFORMANCE RETURNS AS OF MAY 31, 2001, CONTINUED

                                                  Inception                                         Since
                                                     Date      1 Year     5 Years     10 Years    Inception
--------------------------------------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND                       01/16/86
     Average Annual Total Return                               12.23%       6.94%        7.23%         N/A
     Portfolio Total Return                                    12.84%       7.54%        7.90%         N/A
     Lehman US Government Index                                11.79%       7.54%        7.72%         N/A
--------------------------------------------------------------------------------------------------------------
GROWTH & INCOME FUND                             04/29/94
     Average Annual Total Return                              -10.91%       9.90%          N/A      13.30%
     Portfolio Total Return                                   -10.18%      10.78%          N/A      14.23%
     S&P 500 Index                                            -10.55%      15.13%          N/A      17.71%
--------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITIES FUND                      10/02/89
     Average Annual Total Return                              -19.59%       3.25%        5.46%         N/A
     Portfolio Total Return                                   -19.25%       3.68%        5.94%         N/A
     MSCI EAFE Index                                          -17.46%       3.81%        5.99%         N/A
--------------------------------------------------------------------------------------------------------------
INTERNATIONAL GOVERNMENT BOND FUND               10/01/91
     Average Annual Total Return                               -4.47%       0.17%          N/A       4.87%
     Portfolio Total Return                                    -3.97%       0.72%          N/A       5.32%
     Salomon Brothers Non U.S. Govt                            -3.63%       0.77%          N/A       5.65%
     Blended Index                                              5.69%       6.56%          N/A     N/A (C)
--------------------------------------------------------------------------------------------------------------
MIDCAP INDEX FUND                                10/01/91
     Average Annual Total Return                               10.11%      17.89%          N/A      16.58%
     Portfolio Total Return                                    10.51%      18.34%          N/A      17.07%
     S&P MidCap 400 Index                                      10.92%      18.28%          N/A      17.21%
--------------------------------------------------------------------------------------------------------------
MONEY MARKET FUND                                01/16/86
     Average Annual Total Return                                5.77%       5.22%        4.64%         N/A
     Portfolio Total Return                                     6.36%       5.81%        5.26%         N/A
     NYC 30 Day Primary CD Rate                                 4.43%       4.59%        4.20%         N/A
--------------------------------------------------------------------------------------------------------------
NASDAQ-100(R) INDEX FUND                          10/01/00
     Average Annual Total Return                                  N/A         N/A          N/A     -49.01% (B)
     Portfolio Total Return                                       N/A         N/A          N/A     -48.82% (B)
     Nasdaq-100 Index(R)                                          N/A         N/A          N/A     -49.57% (B)
--------------------------------------------------------------------------------------------------------------
PUTNAM OPPORTUNITIES FUND                        10/01/00
     Average Annual Total Return                                  N/A         N/A          N/A     -35.40% (B)
     Portfolio Total Return                                       N/A         N/A          N/A     -34.94% (B)
     S&P 500 Index                                                N/A         N/A          N/A     -11.85% (B)
--------------------------------------------------------------------------------------------------------------
SMALL CAP INDEX FUND                             05/01/92
     Average Annual Total Return                                5.23%       8.10%          N/A      11.51%
     Portfolio Total Return                                     5.65%       8.53%          N/A      11.99%
     Russell 2000 Index                                         5.69%       7.95%          N/A      12.38%
--------------------------------------------------------------------------------------------------------------
SOCIAL AWARENESS FUND                            10/02/89
     Average Annual Total Return                              -12.33%      13.98%       13.51%         N/A
     Portfolio Total Return                                   -11.84%      14.61%       14.09%         N/A
     S&P 500 Index                                            -10.55%      15.13%       14.85%         N/A
--------------------------------------------------------------------------------------------------------------
STOCK INDEX FUND                                 04/20/87
     Average Annual Total Return                              -10.87%      14.84%       14.43%         N/A
     Portfolio Total Return                                   -10.59%      15.21%       14.88%         N/A
     S&P 500 Index                                            -10.55%      15.13%       14.85%         N/A
--------------------------------------------------------------------------------------------------------------
T. ROWE PRICE BLUE CHIP GROWTH FUND              11/01/00
     Average Annual Total Return                                  N/A         N/A          N/A     -14.14% (B)
     Portfolio Total Return                                       N/A         N/A          N/A     -13.70% (B)
     S&P 500 Index                                                N/A         N/A          N/A     -11.48% (B)
--------------------------------------------------------------------------------------------------------------
T. ROWE PRICE HEALTH SCIENCES FUND               11/01/00
     Average Annual Total Return                                  N/A         N/A          N/A     -10.60% (B)
     Portfolio Total Return                                       N/A         N/A          N/A     -10.03% (B)
     S&P 500 Index                                                N/A         N/A          N/A     -11.48% (B)
--------------------------------------------------------------------------------------------------------------
T. ROWE PRICE SCIENCE & TECHNOLOGY FUND          04/29/94
     Average Annual Total Return                              -42.24%       8.10%          N/A      18.92%
     Portfolio Total Return                                   -41.64%       9.14%          N/A      20.06%
     S&P 500 Index                                            -10.55%      15.13%          N/A      17.71%

(A) Benchmark for the Asset Allocation Fund consists of 55% S&P 500 Index, 35% Lehman Aggregate (prior to 10/01/00 ML Corp & Gov't Master Index), and 10% NYC 30 Day Primary CD Rate.
(B) Cumulative returns, not annualized. These Funds do not yet have a full year of operations.
(C) The indices in the blended index were not incepted until 12/31/1993 so information from the fund inception is not available.

INVESTMENT RESTRICTIONS

The Funds have each adopted certain fundamental investment restrictions which, unlike the other investment objective(s), policies, and investment program of each Fund, may only be changed for each Fund with the consent of a majority of the outstanding voting securities of the particular Fund. The 1940 Act defines such a majority as the lesser of (1) 67% or more of the voting securities present in person or by proxy at a shareholders' meeting, if the holders of more than 50% of the outstanding voting securities of a Fund are present or represented by proxy, or (2) more than 50% of a Fund's outstanding voting securities.

In addition, certain of the Funds have non-fundamental investment restrictions which have been approved by the Series Company's Board of Directors. Non-fundamental investment restrictions and operating policies may be changed by the Board of Directors without shareholder approval.

The fundamental and non-fundamental, investment restrictions of each Fund are listed below. The percentage limitations referenced in some of the restrictions are to be determined at the time of purchase. However, percentage limitations for illiquid securities and borrowings apply at all times. Calculation of each Fund's total assets for compliance with any of the investment restrictions will not include cash collateral held in connection with securities lending activities.

In applying the limitations on investments in any one industry (concentration), the Funds may use industry classifications based, where applicable, on industry classification guides such as Baseline, Bridge Information Systems, Reuters, or S & P Stock Guide, information obtained from Bloomberg L.P. and Moody's International, or Barra, and/ or the prospectus of the issuing company. Further, regarding the securities of one or more issuers conducting their principal business activities in the same industry: (a) there is no limitation with respect to obligations issued or guaranteed by the U.S. government, any state, territory or possession of the United States, the District of Columbia or any of their authorities, agencies, instrumentalities or political subdivisions and repurchase agreements secured by such instruments, (b) wholly owned finance companies will be considered to be in the industries of their parents if their activities are primarily related to financing the activities of the parents, (c) utilities will be divided according to their services, for example, gas, gas transmission, electric and gas, electric and telephone will each be considered a separate industry, and (d) personal credit and business credit businesses will be considered separate industries.

FUNDAMENTAL INVESTMENT RESTRICTIONS

ASSET ALLOCATION FUND
CAPITAL CONSERVATION FUND
GOVERNMENT SECURITIES FUND
GROWTH & INCOME FUND
INTERNATIONAL EQUITIES FUND
INTERNATIONAL GOVERNMENT BOND FUND
MIDCAP INDEX FUND
MONEY MARKET FUND
SMALL CAP INDEX FUND
SOCIAL AWARENESS FUND
STOCK INDEX FUND

Each Fund may not:

1. Except for International Government Bond Fund, invest more than 5% of the value of its total assets in the securities of any one issuer or purchase more than 10% of the outstanding voting securities, or any other class of securities, of any one issuer. For purposes of this restriction, all outstanding debt securities of an issuer are considered as one class, and all preferred stock of an issuer is considered as one class. This restriction does not apply to obligations issued or guaranteed by the U.S. Government, its agencies, or instrumentalities. As a matter of operating policy, the Series Company will not consider repurchase agreements subject to the 5% limitation if the collateral underlying the repurchase agreements are U.S. Government securities.

2. Issue senior securities except in connection with investments in options and futures contracts; or borrow money except as a temporary measure for extraordinary or emergency purposes (such as to meet redemption requests which might otherwise require the disadvantageous sale of portfolio securities) and then not in excess of 5% of the Fund's total assets. No Fund may mortgage, pledge or hypothecate more than 5% of the value of its total assets, and then only to secure borrowings made under this restriction.

3. Acquire more than 3% of the voting securities of any single other investment company or invest more than 10% of (the value of) the Fund's assets in the securities of other investment companies (5% in the case of each such other company). Additionally, investment company securities will only be purchased on the open market or from brokers or dealers receiving customary commissions.

4. Acquire real estate or real estate contracts, although a Fund may acquire obligations that are secured by real estate or securities issued by companies investing in real estate, such as real estate investment trusts.

5. Underwrite securities of other issuers except where the sale of restricted portfolio securities constitutes an underwriting under the federal securities laws.

6. Acquire securities for the purpose of influencing the management of, or exercising control over, the issuer.

7. Effect short sales of securities or purchase securities on margin, except in connection with investments in options and futures contracts. Each Fund may use short-term credits when necessary to clear transactions.

8. Lend money, except by purchasing debt obligations in which a Fund may invest consistent with its investment objective(s) and policies or by purchasing securities subject to repurchase agreements.

9. Purchase or sell commodities (except in connection with investments in options and futures contracts) or invest in oil, gas or mineral exploration programs.

10. Make loans to other persons, except that a Fund may lend its portfolio securities to broker-dealers and other financial institutions in an amount up to 30% of the value of the Fund's total assets.

11. (Money Market Fund Only) Purchase any security which matures more than 13 months from the date of purchase.

12. (Money Market Fund Only) Purchase or sell commodity contracts.

13. (Money Market Fund Only) Invest in warrants, or write, purchase or sell puts, calls, straddles, spreads or combinations thereof.

14. (Money Market Fund Only) Invest more than 25% of the value of its total assets in the securities of issuers primarily engaged in any one industry, except investments in obligations issued or guaranteed by the U.S. Government, its agencies, or instrumentalities.

15. (Asset Allocation Fund, Capital Conservation Fund, Government Securities Fund, Stock Index Fund, International Equities Fund, MidCap Index Fund, Small Cap Index Fund Only) Enter into a financial futures contract (by exercise of any option or otherwise) or acquire any options thereon, if, immediately thereafter, the total of the initial margin deposits required with respect to all open futures positions, at the time such positions were established, plus the sum of the premiums paid for all unexpired options on futures contracts would exceed 5% of the value of its total assets.

16. (Asset Allocation Fund, Capital Conservation Fund, Government Securities Fund, Growth & Income Fund, International Government Bond Fund, Social Awareness, Stock Index Fund, International Equities Fund, MidCap Index Fund and Small Cap Index Fund Only) Invest more than 25% of the value of its total assets in the securities of issuers primarily engaged in any one industry.

17. (Social Awareness Fund Only) Enter into financial futures contracts (by exercise of any option or otherwise) or acquire any options thereon, if, immediately thereafter, the total of the initial margin deposits required with respect to all open futures positions at the time such positions were established plus the sum of the premiums paid for all unexpired options on futures contracts would exceed 5% of the value of its total assets.

18. (International Government Bond Fund Only) With respect to 50% of its total assets, invest more than 5% of its total assets in securities of any one issuer or purchase more than 10% of the outstanding voting securities of any one issuer. With respect to the remaining 50% of its total assets, invest more than 25% of its total assets in the securities of any one issuer. This restriction does not apply to obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities.

19. (International Government Bond Fund Only) Enter into a financial futures contract (by exercise of any option or otherwise) or acquire any options thereon, if, immediately thereafter, the total of the initial margin deposits required with respect to all open futures positions, at the time such positions were established, plus the sum of the premiums paid for all unexpired options on futures contracts would exceed 5% of the value of its total assets.

CORE EQUITY FUND
SCIENCE & TECHNOLOGY FUND

Each Fund may not:

1. Borrow money except that the Funds may (i) borrow for non-leveraging, temporary or emergency purposes and (ii) engage in reverse repurchase agreements and make other investments or engage in other transactions, which may involve a borrowing, in a manner consistent with the Funds' investment objective and program, provided that the combination of (i) and (ii) shall not exceed 33 1/3% of the value of the Funds' total assets (including the amount borrowed) less liabilities (other than borrowings) or such other percentage permitted by law. Any borrowings which come to exceed this amount will be reduced in accordance with applicable law. The Funds may borrow from banks, or other persons to the extent permitted by applicable law.

2. Purchase the securities of any issuer, if, as a result, more than 25% of the value of the Funds' total assets would be invested in the securities of issuers having their principal business activities in the same industry.

3. Make loans, although the Funds may (i) lend portfolio securities, provided that no such loan may be made if, as a result, the aggregate of such loans would exceed 33 1/3% of the value of the Funds' total assets; (ii) purchase money market securities and enter into repurchase agreements; and (iii) acquire publicly-distributed or privately-placed debt securities and purchase debt.

4. Purchase a security if, as a result, with respect to 75% of the Funds' total assets, more than 5% of the value of its total assets would be invested in the securities of a single issuer or more than 10% of the outstanding voting securities of any issuer would be held by the Funds, except securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities.

5. Purchase or sell physical commodities, except that it may enter into futures contracts and options thereon. The Funds do not consider forward foreign currency contracts or hybrid investments to be commodities.

6. Purchase or sell real estate, including limited partnership interests therein, unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Funds from investing in securities or other instruments backed by real estate or securities of companies engaged in the real estate business).

7. Issue senior securities except in compliance with the 1940 Act.

8. Underwrite securities issued by other persons, except to the extent that the Funds may be deemed to be an underwriter within the meaning of the Securities Act of 1933, as amended (the "1933 Act"), in connection with the purchase and sale of its portfolio securities in the ordinary course of pursuing its investment program.

BLUE CHIP GROWTH FUND
HEALTH SCIENCES FUND (FUNDAMENTAL RESTRICTIONS 4 THROUGH 9 ONLY) INCOME & GROWTH FUND
INTERNATIONAL GROWTH FUND
LARGE CAP GROWTH FUND
NASDAQ-100(R) INDEX FUND (FUNDAMENTAL RESTRICTIONS 4 THROUGH 9 ONLY) OPPORTUNITIES FUND
SMALL CAP FUND

Each Fund may not:

1. Concentrate its investments in securities of issuers in a particular industry (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities).

2. With respect to 75% of its total assets, or as allowed by federal law, invest in securities of any issuer if, immediately after such investment, more than 5% of the total assets of the Fund (taken at current value) would be invested in the securities of such issuer, provided that this limitation does not apply to obligations issued or guaranteed as to interest or principal by the U.S. government or its political subdivisions.

3. With respect to 75% of its total assets, or as allowed by federal law, acquire more than 10% of the voting securities of any issuer.

4. Borrow money, except to the extent permitted under the 1940 Act, which currently limits borrowing to no more than 33 1/3% of the value of a Fund's total assets.

5. Act as an underwriter of securities issued by others, except to the extent a Fund may be deemed an underwriter under the Securities Act of 1933, as amended, in connection with the disposition of its portfolio securities.

6. Issue any security which may be senior to a Fund's shares, except as permitted under the 1940 Act and except to the extent that the activities permitted by a Fund's other investment restrictions may be deemed to give rise to a senior security.

7. Lend any security or make any other loan if, as a result, more than 33 1/3% of a Fund's total assets would be lent to other parties, except, (i) through the purchase of debt securities in accordance with its investment objective, policies and limitations; or (ii) by engaging in repurchase agreements with respect to portfolio securities.

8. Invest in physical commodities or commodity contracts unless acquired as a result of ownership of securities or other instruments, except that a Fund may purchase and sell foreign currency, options, forward contracts, futures contracts (including those relating to indices) options on futures contracts or indices, and other financial instruments, and may invest in securities of issuers which are backed by physical commodities or which invest in physical commodities or such instruments.

9. Invest in real estate, real estate mortgage loans or other illiquid interests in real estate, including limited partnership interests therein, although it may purchase securities of issuers which deal in real estate, securities which are secured by interests in real estate, and securities which represent interests in real estate, and it may acquire and dispose of real estate or interests in real estate acquired through the exercise of its rights as a holder of debt obligations secured by real estate or interests therein. A Fund may also invest in readily marketable interests in real estate investment trusts.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS

The following restrictions apply to each Fund unless noted otherwise:

1. Control of Companies. Each Fund may not invest in companies for the purpose of exercising management control or influence, except that a Fund may purchase securities of other investment companies to the extent permitted by (i) the 1940 Act, as amended from time to time, (ii) the rules and regulations promulgated thereunder,

as amended from time to time, or (iii) an exemption or similar relief from the provisions of the 1940 Act. (See Operating Policies 3, 4 and 5 below for additional information on investment company security investment restrictions.)

2. Illiquid Securities. Each Fund may not invest more than 15% (10% for the Money Market Fund) of its net assets in illiquid securities, including repurchase agreements with maturities in excess of seven days, stripped mortgage securities and inverse floaters, but excluding variable amount master demand notes and liquid Rule 144A securities. This restriction on illiquid securities is applicable at all times.

3. Foreign Securities. To the extent consistent with their respective investment objectives, each of the Funds as noted in the Limitation List below may invest in foreign securities. ADRs and U.S. dollar-denominated securities of foreign issuers are excluded from such percentage limitation for each Fund.

100%
International Equities Fund
International Government Bond Fund
International Growth Fund

35%
Asset Allocation Fund
Core Equity Fund
Growth & Income Fund
Health Sciences Fund
Income & Growth Fund
MidCap Index Fund
Nasdaq-100(R) Index Fund
Putnam Opportunities Fund
Small Cap Index Fund
Stock Index Fund

30%
Large Cap Growth Fund
Science & Technology Fund
Small Cap Fund

20%
Blue Chip Growth Fund
Capital Conservation Fund
Government Securities Fund
Money Market Fund (payable in U.S. Dollars) Socially Responsible Fund

4. Margin. Each Fund may not purchase securities on margin, except that a Fund may obtain such short-term credits as may be necessary for the clearance of purchases and sales of portfolio securities. The payment by a Fund of initial or variation margin in connection with futures or related options transactions will not be considered the purchase of a security on margin.

5. Investment Companies. Each Fund may invest in securities issued by other investment companies to the extent permitted by (i) the 1940 Act, as amended from time to time, (ii) the rules and regulations promulgated by the SEC under the 1940 Act, as amended from time to time, or (iii) an exemption or other relief from the provisions of the 1940 Act. (See Operating Policies 3,4 and 5 below for additional information on investment company security investment restrictions.)

OPERATING POLICIES

1. Asset-Backed Securities. A Fund will only invest in fixed-income asset-backed securities rated, at the time of purchase, in the same quality range as its other permissible investments.

2. Single Investment Companies. Unless otherwise permitted by the 1940 Act, no Fund other than Blue Chip Growth Fund, Health Sciences Fund, Science & Technology and the portion of Small Cap Fund sub-advised by T. Rowe Price may invest more than 5% of total assets in a single investment company.

3. Total Investment Company Investment. Unless otherwise permitted by the 1940 Act, no Fund other than Blue Chip Growth Fund, Health Sciences Fund, Science & Technology and the portion of Small Cap Fund sub-advised by T. Rowe Price may invest more than 10% of total assets in investment company securities.

4. Single Investment Company Voting Securities. Unless otherwise permitted by the 1940 Act, no Fund other than Blue Chip Growth Fund, Health Sciences Fund, Science & Technology and the portion of Small Cap Fund sub-advised by T. Rowe Price may invest more than 3% of total assets in the voting securities of a single investment company.

5. Certificates of Deposit and Bankers Acceptances. The Funds limit investments in U.S. certificates of deposit and bankers acceptances to obligations of U.S. banks (including foreign branches) which have more than $1 billion in total assets at the time of investment and are members of the Federal Reserve System or are examined by the Comptroller of the Currency or where deposits are insured by the Federal Deposit Insurance Corporation. A Fund may also invest in certificates of deposit of savings and loan associations (federally or state chartered and federally insured) having total assets in excess of $1 billion.

6. Futures Contracts - Initial Margin Deposits. To the extent that a Fund holds positions in futures contracts and related options that do not fall within the definition of bona fide hedging transactions, the aggregate initial margins and premiums required to establish such positions will not exceed 5% of the fair market value of the Fund's net assets, after taking into account unrealized profits and unrealized losses on any such contracts it has entered into.

7. Purchasing on Margin and Short Sales. Blue Chip Growth Fund, Core Equity Fund, Health Sciences Fund, Large Cap Growth Fund, Nasdaq-100(R) Index Fund, Science & Technology Fund and Small Cap Fund. Each Fund may not purchase securities on margin or effect short sales of securities, except in connection with investments in options and futures contracts. Short-term credits may be used when necessary to clear transactions, and margin deposits may be made in connection with forward contracts, futures contracts (including those relating to indices), options on futures contracts or indices, and other financial instruments, and to the extent necessary to effect transactions in foreign jurisdictions.

BLUE CHIP GROWTH FUND, HEALTH SCIENCES FUND, SCIENCE & TECHNOLOGY FUND, AND SMALL CAP FUND

As noted in the prospectus, T. Rowe Price Associates, Inc. ("T. Rowe Price") is the Sub-Adviser for the Blue Chip Growth Fund, Health Sciences Fund, Science & Technology Fund, and a portion of the assets of the Small Cap Fund. T. Rowe Price offers a diversified and cost-effective investment vehicle for the cash reserves of client accounts. Therefore, T. Rowe Price may choose to invest any available cash reserves in a money market fund established for the exclusive use of the T. Rowe Price family of mutual funds and other T. Rowe Price clients. Currently, two such money market funds are in operation -- T. Rowe Price Reserve Investment Fund ("RIF") and T. Rowe Price Government Reserve Investment Fund ("GRF"), each a series of the T. Rowe Price Reserve Investment Funds, Inc. Additional series may be created in the future. These funds were created and operate under an Exemptive Order issued by the SEC (Investment Company Act Release No. IC-22770, July 29, 1997).

As noted in the operating policies above, the Funds sub-advised by T. Rowe Price may invest up to 25% of total assets in the RIF. RIF and GRF must comply with the requirements of Rule 2a-7 under the 1940 Act governing money market funds. RIF invests at least 95% of its total assets in prime money market instruments receiving the highest credit rating. The GRF invests primarily in a portfolio of U.S. government backed securities, primarily U.S.

Treasuries and repurchase agreements thereon. The funds do not pay an advisory fee to the Investment Manager at T. Rowe Price, but will incur other expenses. However, RIF and GRF are expected by T. Rowe Price to operate at very low expense ratios. The Funds will only invest in RIF or GRF to the extent it is consistent with their objectives and programs. RIF and GRF are neither insured nor guaranteed by the U.S. government, and there is no assurance they will maintain a stable net asset value of $1.00 per share.

INVESTMENT PRACTICES

ADJUSTABLE RATE SECURITIES

Each of the Funds may invest in adjustable rate money market securities. Adjustable rate securities (i.e., variable rate and floating rate instruments) are securities that have interest rates that are adjusted periodically, according to a set formula. The maturity of some adjustable rate securities may be shortened under certain special conditions described more fully below.

Variable rate instruments are obligations (usually certificates of deposit) that provide for the adjustment of their interest rates on predetermined dates or whenever a specific interest rate changes. A variable rate instrument whose principal amount is scheduled to be paid in 13 months or less is considered to have a maturity equal to the period remaining until the next readjustment of the interest rate. Many variable rate instruments are subject to demand features which entitle the purchaser to resell such securities to the issuer or another designated party, either (1) at any time upon notice of usually 30 days or less, or (2) at specified intervals, not exceeding 13 months, and upon 30 days' notice. A variable rate instrument subject to a demand feature is considered to have a maturity equal to the longer of the period remaining until the next readjustment of the interest rate or the period remaining until the principal amount can be recovered through demand.

Floating rate instruments (generally corporate notes, bank notes, or Eurodollar certificates of deposit) have interest rate reset provisions similar to those for variable rate instruments and may be subject to demand features like those for variable rate instruments. The maturity of a floating rate instrument is considered to be the period remaining until the principal amount can be recovered through demand.

AMERICAN DEPOSITARY RECEIPTS ("ADRS")

ADRs are certificates issued by a United States bank or trust company and represent the right to receive securities of a foreign issuer deposited in a domestic bank or foreign branch of a United States bank and traded on a United States exchange or in an over-the-counter market. Generally, ADRs are in registered form. Investment in ADRs has certain advantages over direct investment in the underlying foreign securities since: (i) ADRs are U.S. dollar-denominated investments that are easily transferable and for which market quotations are readily available, and (ii) issuers whose securities are represented by ADRs are generally subject to auditing, accounting and financial reporting standards similar to those applied to domestic issuers. This limits the Funds' exposure to foreign exchange risk. All of the Funds, except Money Market, may purchase ADRs.

ASSET-BACKED SECURITIES

Each of the Funds may invest in asset-backed securities (unrelated to first mortgage loans) that represent fractional interests in pools of retail installment loans, both secured (such as certificates for automobile receivables) and unsecured, and leases, or revolving credit receivables both secured and unsecured (such as credit card receivable securities). These assets are generally held by a trust and payments of principal and interest, or interest only are passed through monthly or quarterly to certificate holders and may be guaranteed up to certain amounts by letters of credit issued by a financial institution affiliated or unaffiliated with the trustee or originator of the trust.

Underlying automobile sales contracts, leases or credit card receivables are subject to prepayment, which may reduce the overall return to certificate holders. Nevertheless, principal repayment rates tend not to vary much with interest rates and the short-term nature of the underlying loans, leases, or receivables tends to dampen the impact of any change in the prepayment level. Certificate holders may also experience delays in payment on the certificates if the full amounts due on underlying loans, leases or receivables are not realized by the trust because of unanticipated legal or administrative costs of enforcing the contracts or because of depreciation or damage to the collateral

(usually automobiles) securing certain contracts, or other factors. If consistent with its investment objective(s) and policies, a Fund may invest in other asset-backed securities that may be developed in the future.

BANK OBLIGATIONS

Each Fund may invest in bank obligations. Bank obligations in which the Funds may invest include certificates of deposit, bankers' acceptances, and fixed time deposits. Certificates of deposit are negotiable certificates issued against funds deposited in a commercial bank for a definite period of time and earning a specified return. Bankers' acceptances are negotiable drafts or bills of exchange, normally drawn by an importer or exporter to pay for specific merchandise, which are "accepted" by a bank, meaning, in effect, that the bank unconditionally agrees to pay the face value of the instrument on maturity. Fixed time deposits are bank obligations payable at a stated maturity date and bearing interest at a fixed rate. Fixed time deposits may be withdrawn on demand by the investor, but may be subject to early withdrawal penalties which vary depending upon market conditions and the remaining maturity of the obligation. There are no contractual restrictions on the right to transfer a beneficial interest in a fixed time deposit to a third party, although there is no market for such deposits. A Fund will not invest in fixed time deposits which (1) are not subject to prepayment or (2) provide for withdrawal penalties upon prepayment (other than overnight deposits) if, in the aggregate, more than 10% of its net assets (15% in the case of Core Equity Fund, Growth & Income Fund, Science & Technology Fund and Small Cap Fund) would be invested in such deposits, repurchase agreements maturing in more than seven days and other illiquid assets.

The Funds limit investments in United States bank obligations to obligations of United States banks (including foreign branches) which have more than $1 billion in total assets at the time of investment and are members of the Federal Reserve System or are examined by the Comptroller of the Currency or whose deposits are insured by the Federal Deposit Insurance Corporation. A Fund also may invest in certificates of deposit of savings and loan associations (federally or state chartered and federally insured) having total assets in excess of $1 billion.

The Funds limit investments in foreign bank obligations to United States dollar- or foreign currency-denominated obligations of foreign banks (including United States branches of foreign banks) which at the time of investment (i) have more than $10 billion, or the equivalent in other currencies, in total assets; (ii) in terms of assets are among the 75 largest foreign banks in the world; (iii) have branches or agencies (limited purpose offices which do not offer all banking services) in the United States; and (iv) in the opinion of VALIC or a Sub-Adviser, are of an investment quality comparable to obligations of United States banks in which the Funds may invest. The Government Securities Fund may invest in the same types of bank obligations as the other Funds, but they must be U.S. dollar-denominated. Subject to a Fund's limitation on concentration in the securities of issuers in a particular industry, there is no limitation on the amount of a Fund's assets which may be invested in obligations of foreign banks which meet the conditions set forth herein.

Obligations of foreign banks involve somewhat different investment risks than those affecting obligations of United States banks, including the possibility that their liquidity could be impaired because of future political and economic developments, that their obligations may be less marketable than comparable obligations of United States banks, that a foreign jurisdiction might impose withholding taxes on interest income payable on those obligations, that foreign deposits may be seized or nationalized, that foreign governmental restrictions such as exchange controls may be adopted which might adversely affect the payment of principal and interest on those obligations and that the selection of those obligations may be more difficult because there may be less publicly available information concerning foreign banks or the accounting, auditing and financial reporting standards, practices and requirements applicable to foreign banks may differ from those applicable to United States banks. Foreign banks are not generally subject to examination by any U.S. Government agency or instrumentality.

CONVERTIBLE SECURITIES

The Asset Allocation Fund, Blue Chip Growth Fund, Capital Conservation Fund, Core Equity Fund, Growth & Income Fund, Health Sciences, Income & Growth Fund, International Growth Fund, International Equities Fund, Science and Technology Fund, Small Cap Fund and Social Awareness Fund may invest in convertible securities of foreign or domestic issues. A convertible security is a security (a bond or preferred stock) which may be converted at a stated price within a specified period of time into a certain quantity of the common stock of the same or a different issuer. Convertible securities are senior to common stocks in a corporation's capital structure but are

usually subordinated to similar nonconvertible securities. Convertible securities provide, through their conversion feature, an opportunity to participate in capital appreciation resulting from a market price advance in a convertible security's underlying common stock. The price of a convertible security is influenced by the market value of the underlying common stock and tends to increase as the market value of the underlying stock rises, whereas it tends to decrease as the market value of the underlying stock declines.

A Fund may be required to permit the issuer of a convertible security to redeem the security, convert it into the underlying common stock, or sell it to a third party. Thus, a Fund may not be able to control whether the issuer of a convertible security chooses to convert that security. If the issuer chooses to do so, this action could have an adverse effect on a Fund's ability to achieve its investment objectives.

EMERGING MARKETS

Investments in companies domiciled in emerging market countries may be subject to additional risks. Specifically, volatile social, political and economic conditions may expose investments in emerging or developing markets to economic structures that are generally less diverse and mature. Emerging market countries may have less stable political systems than those of more developed countries. As a result, it is possible that recent favorable economic developments in certain emerging market countries may be suddenly slowed or reversed by unanticipated political or social events in such countries. Moreover, the economies of individual emerging market countries may differ favorably or unfavorably from the U.S. economy in such respects as the rate of growth in gross domestic product, the rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position.

Another risk is that the small current size of the markets for such securities and the currently low or nonexistent volume of trading can result in a lack of liquidity and in greater price volatility. Until recently, there has been an absence of a capital market structure or market-oriented economy in certain emerging market countries. If a Fund's securities will generally be denominated in foreign currencies, the value of such securities to the Fund will be affected by changes in currency exchange rates and in exchange control regulations. A change in the value of a foreign currency against the U.S. dollar will result in a corresponding change in the U.S. dollar value of a Fund's securities. In addition, some emerging market countries may have fixed or managed currencies which are not free-floating against the U.S. dollar. Further, certain emerging market currencies may not be internationally traded. Certain of these currencies have experienced a steady devaluation relative to the U.S. dollar. Many emerging market countries have experienced substantial, and in some periods extremely high, rates of inflation for many years. Inflation and rapid fluctuations in inflation rates have had, and may continue to have, negative effects on the economies and securities markets of certain emerging market countries.

A further risk is that the existence of national policies may restrict a Fund's investment opportunities and may include restrictions on investment in issuers or industries deemed sensitive to national interests. Also, some emerging market countries may not have developed structures governing private or foreign investment and may not allow for judicial redress for injury to private property.

EURO CONVERSION

Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, The Netherlands, Portugal, and Spain are members of the European Economic and Monetary Union (the "EMU"). The EMU has established a common European currency for participating countries which is known as the "euro." Each participating country supplemented its existing currency with the euro on January 1, 1999, and will replace its existing currency with the euro on July 1, 2002. Any other European country which is a member of the EMU may elect to participate in the EMU and may supplement its existing currency with the euro.

The ongoing introduction of the euro presents unique risks and uncertainties, including whether the payment and operational systems of banks and other financial institutions will function properly; how outstanding financial contracts will be treated; the establishment of exchange rates for existing currencies and the euro; and the creation of suitable clearing and settlement systems for the euro. These and other factors could cause market disruptions and could adversely affect the value of securities held by certain of the Funds.

EURODOLLAR OBLIGATIONS

All Funds, in accordance with their investment objective(s), policies, and investment program, may invest in Eurodollar obligations, including Eurodollar bonds and Eurodollar certificates of deposit. A Eurodollar obligation is a security denominated in U.S. dollars and originated principally in Europe, giving rise to the term Eurodollar.

Such securities are not registered with the Securities and Exchange Commission ("SEC") and generally may only be sold to U.S. investors after the initial offering and cooling-off periods. The market for Eurodollar securities is dominated by foreign-based investors and the primary trading market for these securities is London.

Eurodollar obligations, including Eurodollar bonds and Eurodollar certificates of deposit, are principally obligations of foreign branches of U.S. banks. These instruments represent the loan of funds actually on deposit in the U.S. The Series Company believes that the U.S. bank would be liable in the event that its foreign branch failed to pay on its U.S. dollar denominated obligations. Nevertheless, the assets supporting the liability could be expropriated or otherwise restricted if located outside the U.S. Exchange controls, taxes, or political and economic developments also could affect liquidity or repayment. Due to possibly conflicting laws or regulations, the foreign branch of the U.S. bank could maintain and prevail that the liability is solely its own, thus exposing a Fund to a possible loss. Such U.S. dollar denominated obligations of foreign branches of Federal Deposit Insurance Corporation ("FDIC") member U.S. banks are not covered by the usual $100,000 of FDIC insurance if they are payable only at an office of such a bank located outside the U.S., Puerto Rico, Guam, American Samoa, and the Virgin Islands.

Moreover, there may be less publicly available information about foreign issuers whose securities are not registered with the SEC and such foreign issuers may not be subject to the accounting, auditing, and financial reporting standards applicable to issuers registered domestically. In addition, foreign issuers, stock exchanges, and brokers generally are subject to less government regulation. There are, however, no risks of currency fluctuation since the obligations are U.S. dollar denominated.

All Funds also may purchase and sell Eurodollar futures contracts, which enable purchasers to obtain a fixed rate for the lending of funds and sellers to obtain a fixed rate for borrowings. A Fund might use Eurodollar futures contracts and options thereon to hedge against changes in a foreign prime lending interest rate to which many interest swaps and fixed income securities are linked.

FIXED INCOME SECURITIES

Debt securities are considered high-quality if they are rated at least Aa by Moody's or its equivalent by any other NRSRO or, if unrated, are determined to be of equivalent investment quality. High-quality debt securities are considered to have a very strong capacity to pay principal and interest. Debt securities are considered investment grade if they are rated, for example, at least Baa3 by Moody's or BBB- by S&P or their equivalent by any other NRSRO or, if not rated, are determined to be of equivalent investment quality. Investment grade debt securities are regarded as having an adequate capacity to pay principal and interest. Lower-medium and lower-quality securities rated, for example, Ba and B by Moody's or its equivalent by any other NRSRO are regarded on balance as high risk and predominantly speculative with respect to the issuer's continuing ability to meet principal and interest payments. The Adviser or Sub-Advisers will not necessarily dispose of an investment grade security that has been downgraded to below investment grade. See the section below regarding "Description of Corporate Bond Ratings" for a description of each rating category and a more complete description of lower-medium and lower-quality debt securities and their risks.

The maturity of debt securities may be considered long (ten plus years), intermediate (one to ten years), or short-term (thirteen months or less). In general, the principal values of longer-term securities fluctuate more widely in response to changes in interest rates than those of shorter-term securities, providing greater opportunity for capital gain or risk of capital loss. A decline in interest rates usually produces an increase in the value of debt securities, while an increase in interest rates generally reduces their value.

FOREIGN SECURITIES

All Funds may invest in foreign securities. The Capital Conservation Fund focuses on foreign bonds that are of the same quality as other bonds purchased by the Fund. The Government Securities Fund focuses on high-quality foreign government securities and high-quality money market securities payable in U.S. dollars. The MidCap Index Fund, Small Cap Index Fund and Stock Index Fund focus on the foreign securities included in their respective indices.

A foreign security includes corporate debt securities of foreign issuers (including preferred or preference stock), certain foreign bank obligations (see "Bank Obligations") and U.S. dollar or foreign currency-denominated obligations of foreign governments or their subdivisions, agencies and instrumentalities, international agencies and supranational entities. A foreign security is a security issued by an entity domiciled or incorporated outside of the United States.

In addition, all the Funds, except the Government Securities Fund and the Money Market Fund, may invest in non-U.S. dollar-denominated foreign securities, in accordance with their specific investment objective(s), investment programs, policies, and restrictions. Investing in foreign securities may involve advantages and disadvantages not present in domestic investments. There may be less publicly available information about securities not registered domestically, or their issuers, than is available about domestic issuers or their domestically registered securities. Stock markets outside the U.S. may not be as developed as domestic markets, and there may also be less government supervision of foreign exchanges and brokers. Foreign securities may be less liquid or more volatile than U.S. securities. Trade settlements may be slower and could possibly be subject to failure. In addition, brokerage commissions and custodial costs with respect to foreign securities may be higher than those for domestic investments. Accounting, auditing, financial reporting and disclosure standards for foreign issuers may be different than those applicable to domestic issuers. Non-U.S. dollar-denominated foreign securities may be affected favorably or unfavorably by changes in currency exchange rates and exchange control regulations (including currency blockage) and a Fund may incur costs in connection with conversions between various currencies. Foreign securities may also involve risks due to changes in the political or economic conditions of such foreign countries, the possibility of expropriation of assets or nationalization, and possible difficulty in obtaining and enforcing judgments against foreign entities.

Money Market Securities of Foreign Issuers

Each Fund, except Money Market, may also, in accordance with its specific investment objective(s) and investment program, policies and restrictions purchase U.S. dollar-denominated money market securities of foreign issuers. Such money market securities may be registered domestically and traded on domestic exchanges or in the over-the-counter market (e.g., Yankee securities) or may be (1) registered abroad and traded exclusively in foreign markets or (2) registered domestically and issued in foreign markets (e.g., Eurodollar securities).

Foreign money market instruments utilized by the Funds will be limited to: (i) obligations of, or guaranteed by, a foreign government, its agencies or instrumentalities; (ii) certificates of deposit, bankers' acceptances, short-term notes, negotiable time deposits and other obligations of the ten largest banks in each foreign country, measured in terms of net assets; and
(iii) other short-term unsecured corporate obligations (usually 1 to 270 day commercial paper) of foreign companies. For temporary purposes or in light of adverse foreign political or economic conditions, the Funds may invest in short- term high quality foreign money market securities without limitation.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS AND FORWARD CONTRACTS

All of the Funds, except Government Securities and Money Market, may purchase forward foreign currency exchange contracts to protect against a decline in the value of the U.S. dollar. A Fund may conduct foreign currency transactions on a spot basis (i.e., cash) or forward basis (i.e., by entering into forward currency exchange contracts, currency options and futures transactions to purchase or sell foreign currencies). Although foreign exchange dealers generally do not charge a fee for such transactions, they do realize a profit based on the difference between the prices at which they are buying and selling various currencies.

Forward contracts are customized transactions that require a specific amount of a currency to be delivered at a specific exchange rate on a specific date or range of dates in the future. Forward contracts are generally traded in an interbank market directly between currency traders (usually larger commercial banks) and their customers. The parties to a forward contract may agree to offset or terminate the contract before its maturity, or may hold the contract to maturity and complete the contemplated currency exchange.

The following summarizes the principal currency management strategies involving forward contracts. A Fund may also use swap agreements, indexed securities, and options and futures contracts relating to foreign currencies for the same purposes.

1. Settlement Hedges or Transaction Hedges. When the Adviser or Sub-Adviser(s) wish to lock in the U.S. dollar price of a foreign currency denominated security when a Fund is purchasing or selling the security, the Fund may enter into a forward contract. This type of currency transaction, often called a "settlement hedge" or "transaction hedge," protects the Fund against an adverse change in foreign currency values between the date a security is purchased or sold and the date on which payment is made or received (i.e., "settled). Forward contracts to purchase or sell a foreign currency may also be used by a Fund in anticipation of future purchases or sales of securities denominated in foreign currency, even if the specific investments have not yet been selected by the Adviser or Sub-Adviser(s). This strategy is often referred to as "anticipatory hedging."

2. Position Hedges. When the Adviser or Sub-Adviser(s) believe that the currency of a particular foreign country may suffer substantial decline against the U.S. dollar, a Fund may enter into a forward contract to sell foreign currency for a fixed U.S. dollar amount approximating the value of some or all of its portfolio securities either denominated in, or whose value is tied to, such foreign currency. This use of a forward contract is sometimes referred to as a "position hedge." For example, if a Fund owned securities denominated in Euros, it could enter into a forward contract to sell Euros in return for U.S. dollars to hedge against possible declines in the Euro's value. This hedge would tend to offset both positive and negative currency fluctuations, but would not tend to offset changes in security values caused by other factors.

A Fund could also hedge the position by entering into a forward contract to sell another currency expected to perform similarly to the currency in which the Fund's existing investments are denominated. This type of hedge, often called a "proxy hedge," could offer advantages in terms of cost, yield or efficiency, but may not hedge currency exposure as effectively as a simple position hedge against U.S. dollars. This type of hedge may result in losses if the currency used to hedge does not perform similarly to the currency in which the hedged securities are denominated.

The precise matching of forward contracts in the amounts and values of securities involved generally would not be possible because the future values of such foreign currencies will change as a consequence of market movements in the values of those securities between the date the forward contract is entered into and the date it matures. Predicting short-term currency market movements is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain. Normally, consideration of the prospect for currency parities will be incorporated into the long-term investment decisions made with respect to overall diversification strategies. However, the Adviser or Sub-Adviser(s) each believe that it is important to have flexibility to enter into such forward contracts when they determine that a Fund's best interests may be served.

At the maturity of the forward contract, the Fund may either sell the portfolio security and make delivery of the foreign currency, or it may retain the security and terminate the obligation to deliver the foreign currency by purchasing an "offsetting" forward contract with the same currency trader obligating the Fund to purchase, on the same maturity date, the same amount of the foreign currency.

It is impossible to forecast with absolute precision the market value of portfolio securities at the expiration of the forward contract. Accordingly, it may be necessary for a Fund to purchase additional foreign currency on the spot market (and bear the expense of such purchase) if the market value of the security is less than the amount of foreign currency the Fund is obligated to deliver and if a decision is made to sell the security and make delivery of the foreign currency the Fund is obligated to deliver.

Shifting Currency Exposure: A Fund may also enter into forward contracts to shift its investment exposure from one currency into another. This may include shifting exposure from U.S. dollars to foreign currency, or from one foreign currency to another foreign currency. This strategy tends to limit exposure to the currency sold, and increase exposure to the currency that is purchased, much as if a Fund had sold a security denominated in one currency and purchased an equivalent security denominated in another currency. For example, if the Adviser or Sub-Adviser(s) believed that the U.S. dollar may suffer a substantial decline against the Euro, they could enter into a forward contract to purchase Euros for a fixed amount of U.S. dollars. This transaction would protect against losses resulting from a decline in the value of the U.S. dollar, but would cause the Fund to assume the risk of fluctuations in the value of the Euro.

Successful use of currency management strategies will depend on the Fund management team's skill in analyzing currency values. Currency management strategies may substantially change a Fund's investment exposure to changes in currency rates and could result in losses to a fund if currencies do not perform as the Adviser or Sub-Adviser(s) anticipate. For example, if a currency's value rose at a time when the Adviser or Sub-Adviser(s) hedged a Fund by selling the currency in exchange for U.S. dollars, the Fund would not participate in the currency's appreciation. Similarly, if the Adviser or Sub-Adviser(s) increase a Fund's exposure to a currency and that currency's value declines, the Fund will sustain a loss. There is no assurance that the use of foreign currency management strategies will be advantageous to a Fund or that the Adviser or Sub-Adviser(s) will hedge at appropriate times.

The Funds will cover outstanding forward contracts by maintaining liquid portfolio securities denominated in, or whose value is tied to, the currency underlying the forward contract or the currency being hedged. To the extent that a Fund is not able to cover its forward currency positions with underlying portfolio securities, the Custodian will segregate cash or other liquid assets having a value equal to the aggregate amount of the Fund's commitments under forward contracts entered into with respect to position hedges, settlement hedges and anticipatory hedges.

ILLIQUID SECURITIES

Pursuant to their investment restrictions, the Funds may invest a limited percentage of assets in securities or other investments that are illiquid or not readily marketable (including repurchase agreements with maturities exceeding seven days). Securities received as a result of a corporate reorganization or similar transaction affecting readily-marketable securities already held in the portfolio of a Fund will not be considered securities or other investments that are not readily marketable. However, the Funds will attempt, in an orderly fashion, to dispose of any securities received under these circumstances, to the extent that such securities are considered not readily marketable, and together with other illiquid securities, exceed the percentage of the value of a Fund's net assets as shown in the non-fundamental investment restrictions.

LENDING PORTFOLIO SECURITIES

For purposes of realizing additional income, each Fund may make secured loans of its portfolio securities as shown in the fundamental investment restrictions. Securities loans are made to broker-dealers and other financial institutions approved by State Street Bank and Trust Company ("State Street" or "Custodian"), custodian to the Funds and pursuant to agreements requiring that the loans be continuously secured by collateral at least equal at all times to the loaned securities marked to market on a daily basis. The collateral received will consist of cash, U.S. government securities, letters of credit or such other collateral as permitted by interpretations or rules of the SEC. While the securities are on loan, the Funds will continue to receive the equivalent of the interest or dividends paid by the issuer on the securities, as well as interest on the investment of the collateral or a fee from the borrower.

Any loan of portfolio securities by any Fund will be callable at any time by the lending Fund upon notice of five business days. When voting or consent rights which accompany loaned securities pass to the borrower, the lending Fund will call the loan, in whole or in part as appropriate, to permit the exercise of such rights if the matters involved would have a material effect on that Fund's investment in the securities being loaned. If the borrower fails to maintain the requisite amount of collateral, the loan will automatically terminate, and the lending Fund will be permitted to use the collateral to replace the securities while holding the borrower liable for any excess of replacement cost over collateral. As with any extensions of credit, there are risks of delay in receiving additional collateral or in the recovery of the securities or, in some cases, even loss of rights in the collateral should the

borrower of the securities fail financially. However, these loans of portfolio securities will be made only when State Street considers the borrowing broker-dealers or financial institutions to be creditworthy and of good standing and the interest earned from such loans to justify the attendant risks. On termination of the loan, the borrower will be required to return the securities to the lending Fund. Any gain or loss in the market price during the loan would inure to the lending Fund. The lending Fund may pay reasonable finders', administrative, and custodial fees in connection with a loan of its securities.

LOAN PARTICIPATIONS

Loan participations are debt obligations of corporations and are usually purchased from major money center banks, selected regional banks, and major foreign banks with branches in the U.S. which are regulated by the Federal Reserve System or appropriate state regulatory authorities. VALIC and the Sub-Advisers believe that the credit standards imposed by such banks are comparable to the standards such banks use in connection with loans originated by them and in which they intend to maintain a full interest. The financial institutions offering loan participations do not guarantee principal or interest on the loan participations which they offer. VALIC and the Sub-Advisers will not purchase such securities for the Funds unless they believe that the collateral underlying the corporate loans is adequate and the corporation will be able, in a timely fashion, to pay scheduled interest and principal amounts.

LOWER RATED DEBT SECURITIES

Issuers of lower rated or non-rated securities ("high yield" securities, commonly known as "junk bonds") may be highly leveraged and may not have available to them more traditional methods of financing. Therefore, the risks associated with acquiring the securities of such issuers generally are greater than is the case with higher rated securities. For example, during an economic downturn or a sustained period of rising interest rates, issuers of high yield securities may be more likely to experience financial stress, especially if such issuers are highly leveraged. During such periods, such issuers may not have sufficient revenues to meet their interest payment obligations. The issuer's ability to service its debt obligations also may be adversely affected by specific issuer developments, or the issuer's inability to meet specific projected business forecasts, or the unavailability of additional financing. The risk of loss due to default by the issuer is significantly greater for the holders of lower rated securities because such securities may be unsecured and may be subordinated to other creditors of the issuer.

Lower rated securities frequently have call or redemption features which would permit an issuer to repurchase the security from a Fund. If a call were exercised by the issuer during a period of declining interest rates, a Fund likely would have to replace such called security with a lower yielding security, thus decreasing the net investment income to a Fund and dividends to shareholders.

A Fund may have difficulty disposing of certain lower rated securities because there may be a thin trading market for such securities. The secondary trading market for high yield securities is generally not as liquid as the secondary market for higher rated securities. Reduced secondary market liquidity may have an adverse impact on market price and a Fund's ability to dispose of particular issues when necessary to meet a Fund's liquidity needs or in response to a specific economic event such as a deterioration in the creditworthiness of the issuer.

Adverse publicity and investor perceptions, which may not be based on fundamental analysis, also may decrease the value and liquidity of lower rated securities, particularly in a thinly traded market. Factors adversely affecting the market value of lower rated securities are likely to adversely affect a Fund's net asset value. In addition, a Fund may incur additional expenses to the extent it is required to seek recovery upon a default on a portfolio holding or participate in the restructuring of the obligation.

Finally, there are risks involved in applying credit ratings as a method for evaluating lower rated fixed income securities. For example, credit ratings evaluate the safety of principal and interest payments, not the market risks involved in lower rated fixed income securities. Since credit rating agencies may fail to change the credit ratings in a timely manner to reflect subsequent events, VALIC or a Sub-Adviser will monitor the issuers of lower rated fixed income securities in a Fund to determine if the issuers will have sufficient cash flow and profits to meet required principal and interest payments, and to assure the debt securities' liquidity within the parameters of the Fund's

investment policies. VALIC and the Sub-Advisers will not necessarily dispose of a portfolio security when its ratings have been changed.

MORTGAGE-RELATED SECURITIES

Mortgage-related securities are interests in pools of residential or commercial mortgage loans, including mortgage loans made by savings and loan institutions, mortgage bankers, commercial banks and others. Pools of mortgage loans are assembled as securities for sale to investors by various governmental, government-related and private organizations. See "Mortgage Pass-Through Securities." The Asset Allocation Fund, Capital Conservation Fund and Government Securities Fund may also invest in fixed income securities which are secured with collateral consisting of mortgage-related securities (see "Collateralized Mortgage Obligations"), and in other types of mortgage-related securities. Blue Chip Growth Fund, Health Sciences Fund and Science & Technology Fund may not invest in mortgage-related securities.

Mortgage Pass-Through Securities

Interests in pools of mortgage-related securities differ from other forms of fixed income securities, which normally provide for periodic payment of interest in fixed amounts with principal payments at maturity or specified call dates. Instead, these securities provide a monthly payment which consists of both interest and principal payments. In effect, these payments are a "pass-through" of the monthly payments made by the individual borrowers on their residential or commercial mortgage loans, net of any fees paid to the issuer or guarantor of such securities. Additional payments are caused by repayments of principal resulting from the sale of the underlying property, refinancing or foreclosure, net of fees or costs which may be incurred. Some mortgage-related securities (such as securities issued by GNMA) are described as "modified pass-through." These securities entitle the holder to receive all interest and principal payments owed on the mortgage pool, net of certain fees, at the scheduled payment dates regardless of whether or not the mortgagor actually makes the payment.

The rate of prepayments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may have the effect of shortening or extending the effective maturity of the security beyond what was anticipated at the time of purchase. To the extent that unanticipated rates of prepayment on underlying mortgages increase the effective maturity of a mortgage-related security, the volatility of such security can be expected to increase.

The principal governmental guarantor of mortgage-related securities are GNMA, Federal National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC"). GNMA is a wholly owned United States Government corporation within the Department of Housing and Urban Development. GNMA is authorized to guarantee, with the full faith and credit of the United States Government, the timely payment of principal and interest on securities issued by institutions approved by GNMA (such as savings and loan institutions, commercial banks and mortgage bankers) and backed by pools of mortgages insured by the Federal Housing Administration (the "FHA"), or guaranteed by the Department of Veterans Affairs (the "VA").

Government-related guarantors (i.e., not backed by the full faith and credit of the United States Government) include FNMA and FHLMC. FNMA is a government-sponsored corporation owned entirely by private stockholders. It is subject to general regulation by the Secretary of Housing and Urban Development. FNMA purchases conventional (i.e., not insured or guaranteed by any government agency) residential mortgages from a list of approved seller/servicers which include state and federally chartered savings and loan associations, mutual savings banks, commercial banks and credit unions and mortgage bankers. Pass-through securities issued by FNMA are guaranteed as to timely payment of principal and interest by FNMA but are not backed by the full faith and credit of the United States Government. FHLMC was created by Congress in 1970 for the purpose of increasing the availability of mortgage credit for residential housing. It is a government-sponsored corporation formerly owned by the twelve Federal Home Loan Banks and now owned entirely by private stockholders. FHLMC issues Participation Certificates ("PCs") which represent interests in conventional mortgages from FHLMC's national portfolio. FHLMC guarantees the timely payment of interest and ultimate collection of principal, but PCs are not backed by the full faith and credit of the United States Government.

Commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers also create pass-through pools of conventional residential mortgage loans. Such

issuers may, in addition, be the originators and/or servicers of the underlying mortgage loans as well as the guarantors of the mortgage-related securities. Pools created by such non-governmental issuers generally offer a higher rate of interest than government and government-related pools because there are no direct or indirect government or agency guarantees of payments in the former pools. However, timely payment of interest and principal of these pools may be supported by various forms of insurance or guarantees, including individual loan, title, pool and hazard insurance and letters of credit. The insurance and guarantees are issued by governmental entities, private insurers and the mortgage poolers. Such insurance and guarantees and the creditworthiness of the issuers thereof will be considered in determining whether a mortgage-related security meets the Series Company's investment quality standards. There can be no assurance that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. Certain Funds may buy mortgage-related securities without insurance or guarantees if, through an examination of the loan experience and practices of the originator/servicers and poolers, VALIC or a Sub-Adviser determines that the securities meet the Series Company's quality standards. Although the market for such securities is becoming increasingly liquid, securities issued by certain private organizations may not be readily marketable.

Mortgage-backed securities that are issued or guaranteed by the U.S. Government, its agencies or instrumentalities, are not subject to the Funds' industry concentration restrictions, set forth above under "Investment Restrictions," by virtue of the exclusion from that test available to all U.S. Government securities. In the case of privately issued mortgage-related securities, the Funds take the position that mortgage-related securities do not represent interests in any particular "industry" or group of industries. The assets underlying such securities may be represented by a portfolio of first lien residential mortgages (including both whole mortgage loans and mortgage participation interests) or portfolios of mortgage pass-through securities issued or guaranteed by GNMA, FNMA or FHLMC. Mortgage loans underlying a mortgage-related security may in turn be insured or guaranteed by the FHA or the VA. In the case of private issue mortgage-related securities whose underlying assets are neither U.S. Government securities nor U.S. Government-insured mortgages, to the extent that real properties securing such assets may be located in the same geographical region, the security may be subject to a greater risk of default than other comparable securities in the event of adverse economic, political or business developments that may affect such region and, ultimately, the ability of residential homeowners to make payments of principal and interest on the underlying mortgages.

Collateralized Mortgage Obligations (CMOs)

A CMO is a hybrid between a mortgage-backed bond and a mortgage pass-through security. Similar to a bond, interest and prepaid principal is paid, in most cases, monthly. CMOs may be collateralized by whole mortgage loans, but are more typically collateralized by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or FNMA, and their income streams.

CMOs are structured in multiple classes, each bearing a different stated maturity. Actual maturity and average life will depend upon the prepayment experience of the collateral. CMOs provide for a modified form of call protection through a de facto breakdown of the underlying pool of mortgages according to how quickly the loans are repaid. Monthly payment of principal received from the pool of underlying mortgages, including prepayments, is first returned to investors holding the shortest maturity class. Investors holding the longer maturity classes receive principal only after the first class has been retired. An investor is partially guarded against a sooner than desired return of principal because of the sequential payments.

Commercial Mortgage-Backed Securities

Commercial mortgage-backed securities include securities that reflect an interest in, and are secured by, mortgage loans on commercial real property. Many of the risks of investing in commercial mortgage-backed securities reflect the risks of investing in the real estate securing the underlying mortgage loans. These risks reflect the effects of local and other economic conditions on real estate markets, the ability of tenants to make loan payments, and the ability of a property to attract and retain tenants. Commercial mortgage-backed securities may be less liquid and exhibit greater price volatility than other types of mortgage- or asset-backed securities.

Other Mortgage-Related Securities

Other mortgage-related securities include securities other than those described above that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property, including mortgage dollar rolls, CMO residuals or stripped mortgage-backed securities ("SMBS"). Other mortgage-related securities may be equity or fixed income securities issued by agencies or instrumentalities of the U.S. Government or by private originators of, or investors in, mortgage loans, including savings and loan associations, homebuilders, mortgage banks, commercial banks, investment banks, partnerships, trusts and special purpose entities of the foregoing.

CMO Residuals

CMO residuals are mortgage securities issued by agencies or instrumentalities of the U.S. Government or by private originators of, or investors in, mortgage loans, including savings and loan associations, homebuilders, mortgage banks, commercial banks, investment banks and special purpose entities of the foregoing.

The cash flow generated by the mortgage assets underlying a series of CMOs is applied first to make required payments of principal and interest on the CMOs and second to pay the related administrative expenses of the issuer. The residual in a CMO structure generally represents the interest in any excess cash flow remaining after making the foregoing payments. Each payment of such excess cash flow to a holder of the related CMO residual represents income and/or a return of capital. The amount of residual cash flow resulting from a CMO will depend on, among other things, the characteristics of the mortgage assets, the coupon rate of each class of CMO, prevailing interest rates, the amount of administrative expenses and the prepayment experience on the mortgage assets. In particular, the yield to maturity on CMO residuals is extremely sensitive to prepayments on the related underlying mortgage assets, in the same manner as an interest-only ("IO") class of stripped mortgage-backed securities. See "Other Mortgage-Related Securities -- Stripped Mortgage-Backed Securities." In addition, if a series of a CMO includes a class that bears interest at an adjustable rate, the yield to maturity on the related CMO residual will also be extremely sensitive to changes in the level of the index upon which interest rate adjustments are based. As described below with respect to stripped mortgage-backed securities, in certain circumstances a Fund may fail to recoup fully its initial investment in a CMO residual.

CMO residuals are generally purchased and sold by institutional investors through several investment banking firms acting as brokers or dealers. Transactions in CMO residuals are generally completed only after careful review of the characteristics of the securities in question. In addition, CMO residuals may, or pursuant to an exemption therefrom, may not have been registered under the Securities Act of 1933, as amended (the "1933 Act"). CMO residuals, whether or not registered under the 1933 Act, may be subject to certain restrictions on transferability, and may be deemed "illiquid" and subject to a Fund's limitations on investment in illiquid securities.

Stripped Mortgage-Backed Securities (SMBS)

SMBS are derivative multi-class mortgage securities. SMBS may be issued by agencies or instrumentalities of the U.S. Government, or by private originators of, or investors in, mortgage loans, including savings and loan associations, mortgage banks, commercial banks, investment banks and special purpose entities of the foregoing.

SMBS are usually structured with two classes that receive different proportions of the interest and principal distributions on a pool of mortgage assets. A common type of SMBS will have one class receiving some of the interest and most of the principal from the mortgage assets, while the other class will receive most of the interest and the remainder of the principal. In the most extreme case, one class will receive all of the interest (the "IO" class), while the other class will receive all of the principal (the principal-only or "PO" class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including prepayments) on the related underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on a Fund's yield to maturity from these securities. If the underlying mortgage assets experience greater than anticipated prepayments of principal, a Fund may fail to recoup some or all of its initial investment in these securities even if the security is in one of the highest rating categories.

Although SMBS are purchased and sold by institutional investors through several investment banking firms acting as brokers or dealers, these securities were only recently developed. As a result, established trading markets have not yet developed and, accordingly, these securities may be deemed "illiquid" and subject to a Fund's limitations on investment in illiquid securities.

Mortgage Dollar Rolls

The Asset Allocation Fund, Capital Conservation Fund and Government Securities Fund may invest in mortgage dollar rolls. In a "dollar roll" transaction, a Fund sells a mortgage-related security, such as a security issued by the Government National Mortgage Association, to a dealer and simultaneously agrees to repurchase a similar security (but not the same security) in the future at a pre-determined price. A "dollar roll" can be viewed as a collateralized borrowing in which a Fund pledges a mortgage-related security to a dealer to obtain cash. The dealer with which a Fund enters into a dollar roll transaction is not obligated to return the same securities as those originally sold by the Fund, but only securities which are "substantially identical." To be considered "substantially identical," the securities returned to a Fund generally must: (1) be collateralized by the same types of underlying mortgages; (2) be issued by the same agency and be part of the same program; (3) have a similar original stated maturity; (4) have identical net coupon rates; (5) have similar market yields (and therefore price); and (6) satisfy "good delivery" requirements, meaning that the aggregate principal amounts of the securities delivered and received must be within 1.0% of the initial amount delivered.

A Fund's obligations under a dollar roll agreement may be covered by segregated liquid assets equal in value to the securities subject to repurchase by the Fund. To the extent that positions in dollar roll agreements are not covered by segregated liquid assets at least equal to the amount of any forward purchase commitment, such transactions would be subject to the Funds' limitations on borrowings. Dollar roll transactions for terms exceeding three months may be deemed "illiquid" and subject to a Fund's overall limitations on investments in illiquid securities.

OPTIONS AND FUTURES CONTRACTS

Options on Securities and Securities Indices

Each Fund, other than the Money Market Fund, may write covered call and put options on securities and securities indices. As a matter of operating policy, the Growth & Income Fund will only write covered call options on securities. The International Equities Fund and the International Government Bond Fund may also write covered call and put options on foreign currencies that correlate with the Fund's portfolio of foreign securities. A call option is a contract that gives to the holder the right to buy a specified amount of the underlying security or currency at a fixed or determinable price (called the exercise or "strike" price) upon exercise of the option. A put option is a contract that gives the holder the right to sell a specified amount of the underlying security or currency at a fixed or determinable price upon exercise of the option.

To "cover" a call option written, a Fund may, for example, identify and have available for sale the specific portfolio security, group of securities, or foreign currency to which the option relates. To cover a put option written, a Fund may, for example, establish a segregated asset account with its custodian containing cash or liquid assets that, when added to amounts deposited with its broker or futures commission merchant ("FCM") as margin, equals the market value of the instruments underlying the put option written.

Each of these Funds may write options on securities and securities indices and the International Equities Fund and the International Government Bond Fund may write options on currencies for the purpose of increasing the Funds' return on such securities or its entire portfolio of securities or to protect the value of the entire portfolio. Such investment strategies will not be used for speculation. If a Fund writes an option which expires unexercised or is closed out by the Fund at a profit, it will retain the premium received for the option, which will increase its gross income. If the price of the underlying security or currency moves adversely to the Fund's position, the option may be exercised and the Fund, as the writer of the option, will be required to sell or purchase the underlying security or currency at a disadvantageous price, which may only be partially offset by the amount of premium received.

Options on stock indices are similar to options on stock, except that all settlements are made in cash rather than by delivery of stock, and gains or losses depend on price movements in the stock market generally (or in a particular

industry or segment of the market represented by the index) rather than price movements of individual stocks. When a Fund writes an option on a securities index, and the underlying index moves adversely to the Fund's position, the option may be exercised. Upon such exercise, the Fund, as the writer of the option, will be required to pay in cash an amount equal to the difference between the exercise settlement value of the underlying index and the exercise price of the option, multiplied by a specified index "multiplier."

Call or put options on a stock index may be written at an exercise or "strike" price which is either below or above the current value of the index. If the exercise price at the time of writing the option is below the current value of the index for a call option or above the current value of the index for a put option the option is considered to be "in the money." In such a case, the Fund will cover such options written by segregating with its custodian or pledging to its commodity broker as collateral cash, U.S. Government or other high-grade, short-term debt obligations equal in value to the amount by which the option written is in the money, times the multiplier, times the number of contracts.

Stock indices for which options are currently traded include the S&P 500 Index, Value Line Index, National OTC Index, Major Market Index, Computer Technology Index, Oil Index, NYSE Options Index, Technology Index, Gold/Silver Index, Institutional Index and NYSE Beta Index. The Funds may also use options on such other indices as may now or in the future be available.

Each Fund, except the Money Market Fund, may also purchase put or call options on securities and securities indices in order to (i) hedge against anticipated changes in interest rates or stock prices that may adversely affect the prices of securities that the Fund intends to purchase at a later date, (ii) hedge its investments against an anticipated decline in value, or (iii) attempt to reduce the risk of missing a market or industry segment advance. As a matter of operating policy, the Growth & Income Fund will only purchase call options on securities to close out open positions for covered call options it has written. The International Equities Fund and the International Government Bond Fund also may purchase put options on foreign currencies that correlate with the Fund's portfolio securities in order to minimize or hedge against anticipated declines in the exchange rate of the currencies in which the Fund's securities are denominated and may purchase call options on foreign currencies that correlate with its portfolio securities to take advantage of anticipated increases in exchange rates. In the event that the anticipated changes in interest rates, stock prices, or exchange rates occur, the Fund may be able to offset the resulting adverse effect on the Fund, in whole or in part, through the options purchased.

The premium paid for a put or call option plus any transaction costs will reduce the benefit, if any, realized by the Fund upon exercise or liquidation of the option, and, unless the price of the underlying security, securities index, or currency changes sufficiently, the option may expire without value to the Fund. To close option positions purchased by the Funds, the Funds may sell put or call options identical to options previously purchased, which could result in a net gain or loss depending on whether the amount received on the sale is more or less than the premium and other transaction costs paid on the put or call option purchased.

Options used by the Funds may be traded on the national securities exchanges or in the over-the-counter market. Only the Capital Conservation Fund, the Government Securities Fund, the International Equities Fund, the International Government Bond Fund and the Science and Technology Fund may use over-the-counter options. Options traded in the over-the-counter market may not be as actively traded as those on an exchange. Accordingly, it may be more difficult to value such options. In addition, it may be more difficult to enter into closing transactions with respect to options traded over-the-counter. In this regard, the Funds may enter into contracts with the primary dealers with whom they write over-the-counter options. The contracts will provide that each Fund has the absolute right to repurchase an option it writes at any time at a repurchase price which represents the fair market value of such option, as determined in good faith through negotiations between the parties, but which in no event will exceed a price determined pursuant to a formula contained in the contract. Although the specific details of the formula may vary between contracts with different primary dealers, the formula will generally be based on a multiple of the premium received by each Fund for writing the option, plus the amount, if any, of the option's intrinsic value (i.e., the amount the option is "in-the-money"). The formula will also include a factor to account for the difference between the price of the security and the strike price of the option if the option is written "out-of-the-money." Although the specific details of the formula may vary with different primary dealers, each contract will provide a formula to determine the maximum price at which each Fund can repurchase the option at any time. The Funds have established standards of creditworthiness for these primary dealers.

Writing Covered Call and Put Options and Purchasing Call and Put Options

All of the Funds, except the Money Market Fund, may write exchange-traded covered call and put options on or relating to specific securities in order to earn additional income or, in the case of a call written, to minimize or hedge against anticipated declines in the value of the Fund's securities. As a matter of operating policy, the Core Equity Fund, the Science & Technology Fund and the Small Cap Fund will not write a covered option if, as a result, the aggregate market value of all portfolio securities or currencies covering put or call options exceeds 25% of the market value of that Fund's net assets. The Growth & Income Fund as a matter of operating policy will only write covered call options on securities. The International Equities Fund and the International Government Bond Fund may also write covered call and put options on foreign currencies that correlate with its portfolio securities in order to earn additional income or in the case of call options written to minimize or hedge against anticipated declines in the exchange rate of the currencies in which the Fund's securities are denominated. To "cover" an option means, for example, to identify and make available for sale the specific portfolio security or foreign currency to which the option relates. Through the writing of a covered call option a Fund receives premium income but obligates itself to sell to the purchaser of such an option the particular security or foreign currency underlying the option at a specified price at any time prior to the expiration of the option period, regardless of the market value of the security or the exchange rate for the foreign currency during this period. Through the writing of a covered put option a Fund receives premium income but obligates itself to purchase a particular security or foreign currency underlying the option at a specified price at any time prior to the expiration of the option period, regardless of market value or exchange rate during the option period.

The Funds, in accordance with their investment objective(s) and investment programs, may also write exchange-traded covered call and put options on stock indices and may purchase call and put options on stock indices that correlate with the Fund's portfolio securities. These Funds may engage in such transactions for the same purposes as they may engage in such transactions with respect to individual portfolio securities or foreign currencies; that is, to generate additional income or as a hedging technique to minimize anticipated declines in the value of the Fund's portfolio securities or the exchange rate of the securities in which the Fund invested. In economic effect, a stock index call or put option is similar to an option on a particular security, except that the value of the option depends on the weighted value of the group of securities comprising the index, rather than a particular security, and settlements are made in cash rather than by delivery of a particular security.

Each Fund, other than the Money Market Fund, may also purchase exchange-traded call and put options with respect to securities and stock indices that correlate with that Fund's particular portfolio securities. As a matter of operating policy, the Growth & Income Fund will only purchase call options on securities to close out open positions for covered call options written by it. The International Equities Fund and the International Government Bond Fund may also purchase call and put options on foreign currencies that correlate with the currencies in which the Fund's securities are denominated.

A Fund may purchase put options for defensive purposes in order to protect against an anticipated decline in the value of its portfolio securities or currencies. As the holder of a put option with respect to individual securities or currencies, the Fund has the right to sell the securities or currencies underlying the options and to receive a cash payment at the exercise price at any time during the option period. As the holder of a put option on an index, a Fund has the right to receive, upon exercise of the option, a cash payment equal to a multiple of any excess of the strike price specified by the option over the value of the index.

A Fund may purchase call options on individual securities, currencies or stock indices in order to take advantage of anticipated increases in the price of those securities or currencies by purchasing the right to acquire the securities or currencies underlying the option or, with respect to options on indices, to receive income equal to the value of such index over the strike price. As the holder of a call option with respect to individual securities or currencies, a Fund obtains the right to purchase the underlying securities or currencies at the exercise price at any time during the option period. As the holder of a call option on a stock index, a Fund obtains the right to receive, upon exercise of the option, a cash payment equal to the multiple of any excess of the value of the index on the exercise date over the strike price specified in the option.

Unlisted options may be used by the Capital Conservation Fund, the Government Securities Fund, the International Equities Fund, the International Government Bond Fund, the Science & Technology Fund and the Small Cap

Fund. Such options are not traded on an exchange and may not be as actively traded as listed securities, making the valuation of these securities more difficult. In addition, an unlisted option entails a risk not found in connection with listed options that the party on the other side of the option transaction will default. This may make it impossible to close out an unlisted option position in some cases, and profits may be lost thereby. Such unlisted, over-the-counter options, unless otherwise indicated, will be considered illiquid securities. The Funds will engage in such transactions only with firms of sufficient credit to minimize these risks. In instances in which a Fund has entered into agreements with primary dealers with respect to the unlisted, over-the-counter options it has written, and such agreements would enable the Fund to have an absolute right to repurchase, at a pre-established formula price, the over-the-counter options written by it, the Fund will treat as illiquid only the amount equal to the formula price described above less the amount by which the option is "in-the-money."

Although these investment practices will be used to generate additional income and to attempt to reduce the effect of any adverse price movement in the securities or currencies subject to the option, they do involve certain risks that are different in some respects from investment risks associated with similar funds which do not engage in such activities. These risks include the following: writing covered call options -- the inability to effect closing transactions at favorable prices and the inability to participate in the appreciation of the underlying securities or currencies above the exercise price; writing covered put options -- the inability to effect closing transactions at favorable prices and the obligation to purchase the specified securities or currencies or to make a cash settlement on the stock index at prices which may not reflect current market values or exchange rates; and purchasing put and call options -- possible loss of the entire premium paid. In addition, the effectiveness of hedging through the purchase or sale (writing) of stock index options will depend upon the extent to which price movements in the portion of a Fund's portfolio being hedged correlate with price movements in the selected stock index. Perfect correlation may not be possible because the securities held or to be acquired by a Fund may not exactly match the composition of the stock index on which options are purchased or written. If the forecasts of VALIC regarding movements in securities prices, currencies or interest rates are incorrect, a Fund's investment results may have been better without the hedge.

Financial Futures Contracts

Each Fund, except the Money Market Fund, in accordance with its investment objective(s), investment program, policies, and restrictions may purchase and sell exchange-traded financial futures contracts as a hedge to protect against anticipated changes in prevailing interest rates, overall stock prices or currency rates, or to efficiently and in a less costly manner implement either increases or decreases in exposure to the equity or bond markets. The Funds may also write covered call options and purchase put and call options on financial futures contracts for the same purposes or to earn additional income. Blue Chip Growth Fund, Core Equity Fund, Growth & Income Fund, Health Sciences, Science & Technology Fund and Small Cap Fund may also write covered put options on stock index futures contracts. Blue Chip Growth Fund, Health Sciences Fund, International Equities Fund, International Government Bond Fund and Science & Technology Fund may utilize currency futures contracts and both listed and unlisted financial futures contracts and options thereon.

Financial futures contracts consist of interest rate futures contracts, single stock futures contracts, stock index futures contracts, and currency futures contracts. An interest rate futures contract is a contract to buy or sell specified debt securities at a future time for a fixed price. A single stock futures contract is based on a single stock. A stock index futures contract is similar in economic effect, except that rather than being based on specific securities, it is based on a specified index of stocks and not the stocks themselves. A currency futures contract is a contract to buy or sell a specific foreign currency at a future time for a fixed price.

An interest rate futures contract binds the seller to deliver to the purchaser on a specified future date a specified quantity of one of several listed financial instruments, against payment of a settlement price specified in the contract. A public market currently exists for futures contracts covering a number of indices as well as financial instruments and foreign currencies, including: U.S. Treasury bonds; U.S. Treasury notes; GNMA Certificates; three-month U.S. Treasury bills; 90-day commercial paper; bank certificates of deposit; Eurodollar certificates of deposit; the Australian dollar; the Canadian dollar; the British pound; the German mark; the Japanese yen; the French franc; the Swiss franc; the Mexican peso; and certain multinational currencies, such as the Euro. It is expected that other futures contracts will be developed and traded in the future.

Single stock futures contracts or stock index futures contracts bind purchaser and seller to deliver, at a future date specified in the contract, a cash amount equal to a multiple of the difference between the value of a single stock or a specified stock index on that date and the settlement price specified by the contract. That is, the seller of the futures contract must pay and the purchaser would receive a multiple of any excess of the value of the stock or index over the settlement price, and conversely, the purchaser must pay and the seller would receive a multiple of any excess of the settlement price over the value of the stock or index. Single stock futures are due to start trading in the U.S. on December 21, 2001. A public market currently exists for stock index futures contracts based on the S&P 500 Index, the New York Stock Exchange Composite Index, the Value Line Stock Index, and the Major Market Index. It is expected that financial instruments related to broad-based indices, in addition to those for which futures contracts are currently traded, will in the future be the subject of publicly-traded futures contracts, and the Funds may use any of these, which are appropriate, in its hedging strategies.

A financial futures contract is an agreement to buy or sell a security (or deliver a final cash settlement price, in the case of a contract relating to an index or otherwise not calling for physical delivery of a specified security) for a set price in the future. Exchange-traded futures contracts are designated by boards of trade which have been designated "contracts markets" by the Commodity Futures Trading Commission ("CFTC").

Positions taken in the futures markets are not normally held until delivery or cash settlement is required, but instead are liquidated through offsetting transactions which may result in a gain or a loss. While futures positions taken by a Fund will usually be liquidated in this manner, the Fund may instead make or take delivery of underlying securities whenever it appears economically advantageous to the Fund to do so. A clearing organization associated with the relevant exchange assumes responsibility for closing out transactions and guarantees that, as between the clearing members of an exchange, the sale and purchase obligations will be performed with regard to all positions that remain open at the termination of the contract.

Unlisted financial futures contracts, which may be purchased or sold only by the International Equities Fund and the International Government Bond Fund, like unlisted options, are not traded on an exchange and, generally, are not as actively traded as listed futures contracts or listed securities. Such financial futures contracts generally do not have the following elements: standardized contract terms, margin requirements relating to price movements, clearing organizations that guarantee counter-party performance, open and competitive trading in centralized markets, and public price dissemination. These elements in listed instruments serve to facilitate their trading and accurate valuation. As a result, the accurate valuation of unlisted financial futures contracts may be difficult. In addition, it may be difficult or even impossible, in some cases, to close out an unlisted financial futures contract, which may, in turn, result in significant losses to the Fund. Such unlisted financial futures contracts will be considered by the Fund to be illiquid securities and together with other illiquid securities will be limited to no more than 10% (15% in the case of the Core Equity Fund, the Growth & Income Fund, the Science & Technology Fund and the Small Cap Fund) of the value of such Fund's total assets. In making such determination, the value of unlisted financial futures contracts will be based upon the "face amount" of such contracts. The International Equities Fund and the International Government Bond Fund will engage in such transactions only with securities firms having sufficient credit or other resources to minimize certain of these risks.

When financial futures contracts are entered into by a Fund or subadviser, either as the purchaser or the seller of such contracts, the Fund is required to deposit with its custodian or subadviser or other broker-dealer in a segregated account in the name of the FCM an initial margin of cash or U.S. Treasury bills equaling as much as 5% to 10% or more of the contract settlement price. The nature of initial margin requirements in futures transactions differs from traditional margin payments made in securities transactions in that initial margins for financial futures contracts do not involve the borrowing of funds by the customer to finance the transaction. Instead, a customer's initial margin on a financial futures contract represents a good faith deposit securing the customer's contractual obligations under the financial futures contract. The initial margin deposit is returned, assuming these obligations have been met, when the financial futures contract is terminated. In addition, subsequent payments to and from the FCM, called "variation margin," are made on a daily basis as the price of the underlying security, stock index, or currency fluctuates, reflecting the change in value in the long (purchase) or short
(sale) positions in the financial futures contract, a process known as "marking to market."

A Fund, as an internal operating policy, may not hold financial futures contracts in an amount greater than 33% of the Fund's net assets. A Fund may not adhere to this internal operating policy in circumstances where the Fund is required to invest a large cash infusion.

Financial futures contracts generally are not entered into to acquire the underlying asset and generally are not held to term. Prior to the contract settlement date, the Funds will normally close all futures positions by entering into an offsetting transaction which operates to cancel the position held, and which usually results in a profit or loss.

Options on Financial Futures Contracts

For bona fide hedging purposes, each Fund, except the Money Market Fund, may also purchase call and put options on financial futures contracts and write call options on financial futures contracts of the type which the particular Fund is authorized to enter into. Except for options on currency futures contracts used by the International Equities Fund and the International Government Bond Fund, options on financial future contracts used by the Funds are traded on exchanges that are licensed and regulated by the CFTC. A call option on a financial futures contract gives the purchaser the right in return for the premium paid, to purchase a financial futures contract (assume a "long" position) at a specified exercise price at any time before the option expires. A put option gives the purchaser the right, in return for the premium paid, to sell a financial futures contract (assume a "short" position), for a specified exercise price, at any time before the option expires.

Unlike entering into financial futures contracts, purchasing options on financial futures contracts allows a Fund to decline to exercise the option, thereby avoiding any loss beyond foregoing the purchase price (or "premium") paid for the options. Therefore, the purchase of options on financial futures contracts may be a preferable hedging strategy when a Fund desires maximum flexibility. Whether, in order to achieve a particular objective, a Fund enters into a financial futures contract, on the one hand, or an option contract, on the other, will depend on all the circumstances, including the relative costs, liquidity, availability and capital requirements of such financial futures and options contracts. Also, the Funds will consider the relative risks involved, which may be quite different. These factors, among others, will be considered in light of market conditions and the particular objective to be achieved.

Certain Additional Risks of Options and Financial Futures Contracts

The use of options and financial futures contracts may entail the following risks. First, although such instruments when used by the Funds are intended to correlate with the Funds' portfolio securities or currencies, in many cases the options or financial futures contracts used may be based on securities, currencies, or stock indices the components of which are not identical to the portfolio securities owned or intended to be acquired by the Funds. Second, due to supply and demand imbalances and other market factors, the price movements of financial futures contracts, options thereon, currency options, and stock index options may not necessarily correspond exactly to the price movements of the securities, currencies, or stock indices on which such instruments are based. Accordingly, there is a risk that a Fund's transactions in those instruments will not in fact offset the impact on the Fund of adverse market developments in the manner or to the extent contemplated or that such transactions will result in losses to the Fund which are not offset by gains with respect to corresponding portfolio securities owned or to be purchased by that Fund.

To some extent, these risks can be minimized by careful management of hedging activities. For example, where price movements in a financial futures or option contract are expected to be less volatile than price movements in the related portfolio securities owned or intended to be acquired by a Fund, it may, in order to compensate for this difference, use an amount of financial futures or option contracts which is greater than the amount of such portfolio securities. Similarly, where the price movement of a financial futures or option contract is anticipated to be more volatile, a Fund may use an amount of such contracts which is smaller than the amount of portfolio securities to which such contracts relate.

The risk that the hedging technique used will not actually or entirely offset an adverse change in a Fund's portfolio securities is particularly relevant to financial futures contracts and options written on stock indices and currencies. A Fund, in entering into a futures purchase contract, potentially could lose any or all of the contract's settlement price. In entering into a futures sale contract, a Fund could potentially lose a sum equal to the excess of the contract's value (marked to market daily) over the contract's settlement price. In writing options on stock indices or currencies a

Fund could potentially lose a sum equal to the excess of the value of the index or currency (marked to market daily) over the exercise price. In addition, because financial futures contracts require delivery at a future date of either a specified security or currency, or an amount of cash equal to a multiple of the difference between the value of a specified stock index on that date and the settlement price, an algebraic relationship exists between any price movement in the underlying security or currency or index and the potential cost of settlement to a Fund. A small increase or decrease in the value of the underlying security or currency or stock index can, therefore, result in a much greater increase or decrease in the cost to the Fund.

Stock index call options written also pose another risk as hedging tools. Because exercises of stock index options are settled in cash, there is an inherent timing risk that the value of a Fund's portfolio securities "covering" a stock index call option written by it may decline during the time between exercise of the option by the option holder and notice to the Fund of such exercise (usually one day or more) thereby requiring the Fund to use additional assets to settle the transaction. This risk is not present in the case of covered call options on individual securities, which are settled by delivery of the actual securities.

There are also special risks in using currency options including the following:
(i) settlement of such options must occur in the country issuing the currency in conformity with foreign regulations for such delivery, including the possible imposition of additional costs and taxes, (ii) no systematic reporting of "last sale" information for foreign currencies, and (iii) the need to use "odd lot" transactions for underlying currencies at prices less favorable than those for "round lot" transactions.

Although the Funds intend to establish positions in these instruments only when there appears to be an active market, there is no assurance that a liquid market for such instruments will exist when a Fund seeks to "close out" (i.e. terminate) a particular financial futures contract or option position. This is particularly relevant for over-the-counter options and financial futures contracts, as previously noted. Trading in such instruments could be interrupted, for example, because of a lack of either buyers or sellers. In addition, the futures and options exchanges may suspend trading after the price of such instruments has risen or fallen more than the maximum amount specified by the exchange. Exercise of options could also be restricted or delayed because of regulatory restrictions or other factors. A Fund may be able, by adjusting investment strategy in the cash or other contract markets, to offset to some extent any adverse effects of being unable to liquidate a hedge position. Nevertheless, in some cases, a Fund may experience losses as a result of such inability. Therefore, it may have to liquidate other more advantageous investments to meet its cash needs.

In addition, FCMs or brokers in certain circumstances will have access to a Fund's assets posted as margin in connection with these transactions as permitted under the 1940 Act. See "Other Information, Custody of Assets" in this Statement of Additional Information. The Funds will use only FCMs or brokers in whose reliability and financial soundness they have full confidence and have adopted certain other procedures and limitations to reduce the risk of loss with respect to any assets which brokers hold or to which they may have access. Nevertheless, in the event of a broker's insolvency or bankruptcy, it is possible that a Fund could experience a delay or incur costs in recovering such assets or might recover less than the full amount due. Also the value of such assets could decline by the time a Fund could effect such recovery.

The success of a Fund in using hedging techniques depends, among other things, on VALIC's ability to predict the direction and volatility of price movements in both the futures and options markets as well as the securities markets and on VALIC's ability to select the proper type, time, and duration of hedges. There can be no assurance that these techniques will produce their intended results. VALIC and the Sub-Advisers will not speculate. However, purchasing futures to efficiently invest cash may be considered more risky than to invest the cash in equities over time. Hedging transactions also, of course, may be more, rather than less, favorable to a Fund than originally anticipated.

Limitations

No Fund will enter into any financial futures contract or purchase any option thereon if immediately thereafter the total amount of its assets required to be on deposit as initial margin to secure its obligations under financial futures contracts, plus the amount of premiums paid by it for outstanding options to purchase futures contracts, exceeds 5% of the market value of its net assets; provided, however, that in the case of an option that is in-the-money at the time

of purchase, the in-the-money amount may be excluded in calculating the 5% limitation. This is a policy of each Fund that is permitted to use options and financial futures contracts.

In addition, each Fund has an operating policy which provides that it will not enter into financial futures contracts or write put or call options with respect to financial futures contracts unless such transactions are either "covered" or subject to segregation requirements considered appropriate by the SEC staff. Further, each Fund has an operating policy which provides that it will not enter into custodial arrangements with respect to initial or variation margin deposits or marked-to-market amounts unless the custody of such initial and variation margin deposits and marked-to-market amounts are in compliance with current SEC staff interpretive positions or no-action letters or rules adopted by the SEC.

REAL ESTATE SECURITIES AND REAL ESTATE INVESTMENT TRUSTS ("REITS")

Each Fund may invest in real estate securities. Real estate securities are equity securities consisting of (i) common stocks, (ii) rights or warrants to purchase common stocks, (iii) securities convertible into common stocks and (iv) preferred stocks issued by real estate companies. A real estate company is one that derives at least 50% of its revenues from the ownership, construction, financing, management or sale of commercial, industrial, or residential real estate or that has at least 50% of its assets invested in real estate.

All Funds except the Stock Index Fund also may invest in REITs. REITs are pooled investment vehicles which invest primarily in income producing real estate or real estate related loans or interest. REITs are generally classified as equity REITs, mortgage REITs or a combination of equity and mortgage REITs. Equity REITs invest the majority of their assets directly in real property and derive income primarily from the collection of rents. Equity REITs can also realize capital gains by selling properties that have appreciated in value. Mortgage REITs invest the majority of their assets in real estate mortgages and derive income from the collection of interest payments. Like regulated investment companies such as the Funds, REITs are not taxed on income distributed to shareholders provided they comply with certain requirements under the Internal Revenue Code (the "Code"). A Fund will indirectly bear its proportionate share of any expenses paid by REITs in which it invests in addition to the expenses paid by a Fund.

Investing in REITs involves certain unique risks. Equity REITs may be affected by changes in the value of the underlying property owned by such REITs, while mortgage REITs may be affected by the quality of any credit extended. REITs are dependent upon management skills, are not diversified (except to the extent the Code requires), and are subject to the risks of financing projects. REITs are subject to heavy cash flow dependency, default by borrowers, self-liquidation, and the possibilities of failing to qualify for the exemption from tax for distributed income under the Code and failing to maintain their exemptions from the 1940 Act. REITs (especially mortgage REITs) are also subject to interest rate risks.

REPURCHASE AGREEMENTS

Each Fund may hold commercial paper, certificates of deposits, and government obligations (including government guaranteed obligations) subject to repurchase agreements with certain well established domestic banks and certain broker-dealers, including primary government securities dealers, approved as creditworthy by the Board of Directors. The underlying security must be a high-quality domestic money market security (except for the International Equities Fund and International Government Bond Fund which utilize foreign money market securities) and the seller must be a well-established securities dealer or bank that is a member of the Federal Reserve System. For the Money Market Fund, the underlying security must be a U.S. Government security or a security rated in the highest rating category by the requisite NRSROs (Nationally Recognized Statistical Rating Organization) and must be determined to present minimal credit risk. Repurchase agreements are generally for short periods, usually less than a week. Repurchase agreements typically obligate a seller, at the time it sells securities to a Fund, to repurchase the securities at a specific future time and price. The price for which the Fund resells the securities is calculated to exceed the price the Fund initially paid for the same securities, thereby determining the yield during the Fund's holding period. This results in a fixed market rate of interest, agreed upon by that Fund and the seller, which is accrued as ordinary income. Most repurchase agreements mature within seven days although some may have a longer duration. The underlying securities constitute collateral for these repurchase agreements, which are considered loans under the 1940 Act.

The Funds do not intend to sell the underlying securities subject to a repurchase agreement (except to the seller upon maturity of the agreement). During the term of the repurchase agreement, the Funds (i) retain the securities subject to the repurchase agreement as collateral securing the seller's obligation to repurchase the securities, (ii) monitor on a daily basis the market value of the securities subject to the repurchase agreement, and (iii) require the seller to deposit with the Series Company's custodian collateral equal to any amount by which the market value of the securities subject to the repurchase agreement falls below the resale amount provided under the repurchase agreement. In the event that a seller defaults on its obligation to repurchase the securities, the Funds must hold the securities until they mature or may sell them on the open market, either of which may result in a loss to a Fund if, and to the extent that, the values of the securities decline. Additionally, the Funds may incur disposition expenses when selling the securities. Bankruptcy proceedings by the seller may also limit or delay realization and liquidation of the collateral by a Fund and may result in a loss to that Fund. The Board of Directors of the Series Company will evaluate the creditworthiness of all banks and broker-dealers with which the Series Company proposes to enter into repurchase agreements. The Funds will not invest in repurchase agreements that do not mature within seven days if any such investment, together with any illiquid assets held by a Fund, exceeds 10% of the value of that Fund's total assets (15% in the case of Core Equity Fund, Growth & Income Fund, Science & Technology Fund and Small Cap Fund).

REVERSE REPURCHASE AGREEMENTS

Blue Chip Growth Fund, Core Equity Fund, Health Sciences Fund and Science & Technology Fund may enter into reverse repurchase agreements. A reverse repurchase agreement involves the sale of a portfolio-eligible security by the Fund, coupled with its agreement to repurchase the instrument at a specified time and price. Under a reverse repurchase agreement, the Fund continues to receive any principal and interest payments on the underlying security during the term of the agreement. The Fund typically will segregate assets determined to be liquid by VALIC or a Sub-Adviser, equal (on a daily mark-to-market basis) to its obligations under reverse repurchase agreements. However, reverse repurchase agreements involve the risk that the market value of securities retained by the Fund may decline below the repurchase price of the securities sold by the Fund which it is obligated to repurchase. To the extent that positions in reverse repurchase agreements are not covered through the segregation of liquid assets at least equal to the amount of any forward purchase commitment, such transactions would be subject to the Fund's limitations on borrowings.

RULE 144A SECURITIES

Each Fund may purchase securities which, while privately placed, are eligible for purchase and sale pursuant to Rule 144A under the Securities Act of 1933 (the "1933 Act"). This Rule permits certain qualified institutional buyers, such as the Funds, to trade in privately placed securities even though such securities are not registered under the 1933 Act. The Series Company, under the supervision of the Board of Directors, will consider whether securities purchased under Rule 144A are illiquid and thus subject to the Funds' non-fundamental investment restriction concerning illiquidity. Determination of whether a Rule 144A security is liquid or not is a question of fact. In making this determination the Series Company will consider the trading markets for the specific security taking into account the unregistered nature of a Rule 144A security. In addition the Series Company could consider (i) frequency of trades and quotes, (ii) number of dealers and potential purchasers, (iii) dealer undertakings to make a market, and (iv) nature of the security and market place trades (for example, the time needed to dispose of the security, the method of soliciting offers and the mechanics of transfer). The liquidity of Rule 144A securities will also be monitored by the Series Company and, if, as a result of changed conditions, it is determined that a Rule 144A security is no longer liquid, the Funds' holding of illiquid securities will be reviewed to determine what, if any, action is required to assume that the Funds do not exceed their illiquidity limitations. Investing in Rule 144A securities could have the effect of increasing the amount of the Funds' investments in illiquid securities if qualified institutional buyers are unwilling to purchase such securities. Each Fund may invest in Rule 144A securities (in accordance with each Fund's investment restrictions as listed in the prospectus) that have been determined to be liquid by Board approved guidelines.

STANDARD AND POOR'S DEPOSITARY RECEIPTS

Asset Allocation Fund, Blue Chip Growth Fund, Health Sciences Fund, Income & Growth Fund, International Growth Fund, International Equities Fund, Core Equity Fund, Growth & Income Fund, MidCap Index Fund,

Science & Technology Fund, Small Cap Fund, Small Cap Index Fund, Social Awareness Fund and Stock Index Fund may each, consistent with its investment strategies, purchase Standard & Poor's Depositary Receipts ("SPDR's"). SPDRs are American Stock Exchange-traded securities that represent ownership in the SPDR Trust, a trust which has been established to accumulate and hold a portfolio of common stocks that is intended to track the price performance and dividend yield of the S&P 500. This trust is sponsored by a subsidiary of the American Stock Exchange. SPDRs may be used for several reasons, including but not limited to facilitating the handling of cash flows or trading, or reducing transaction costs. The use of SPDRs would introduce additional risk to the Funds as the price movement of the instrument does not perfectly correlate with the price action of the underlying index.

SWAP AGREEMENTS

Asset Allocation Fund, Capital Conservation Fund, Government Securities Fund and International Government Bond Fund may enter into interest rate, index and currency exchange rate swap agreements. These transactions are entered into in an attempt to obtain a particular return when it is considered desirable to do so, possibly at a lower cost to the Fund than if the Fund had invested directly in an instrument that yielded that desired return. Swap agreements are two party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard "swap" transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments, which may be adjusted for an interest factor. The gross returns to be exchanged or "swapped" between the parties are generally calculated with respect to a "notional amount," i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a "basket" of securities representing a particular index. Forms of swap agreements include interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or "cap"; interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified rate, or "floor"; and interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding minimum or maximum levels.

Most swap agreements entered into by the Funds would calculate the obligations of the parties to the agreement on a "net basis." Consequently, a Fund's current obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the "net amount"). A Fund's current obligations under a swap agreement will be accrued daily (offset against any amounts owing to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by the segregation of assets determined to be liquid by VALIC or a Sub-Adviser to avoid any potential leveraging of a Fund's portfolio. Obligations under swap agreements so covered will not be construed to be "senior securities" for purposes of the Fund's investment restriction concerning senior securities. A Fund will not enter into a swap agreement with any single party if the net amount owed or to be received under existing contracts with that party would exceed 5% of the Fund's assets.

Whether a Fund's use of swap agreements will be successful in furthering its investment objective of total return will depend on VALIC or a Sub-Adviser's ability to predict correctly whether certain types of investments are likely to produce greater returns than other investments. Because they are two party contracts and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid. Moreover, a Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. The Funds will enter into swap agreements only with counterparties that meet certain standards of creditworthiness (generally, such counterparties would have to be eligible counterparties under the terms of the Fund's repurchase agreement guidelines). Certain restrictions imposed on the Funds by the Internal Revenue Code may limit the Funds' ability to use swap agreements. The swaps market is a relatively new market and is largely unregulated. It is possible that developments in the swaps market, including potential government regulation, could adversely affect a Fund's ability to terminate existing swap agreements or to realize amounts to be received under such agreements.

Certain swap agreements are exempt from most provisions of the Commodity Exchange Act ("CEA") and, therefore, are not regulated as futures or commodity option transactions under the CEA, pursuant to regulations approved by the CFTC effective February 22, 1993. To qualify for this exemption, a swap agreement must be entered into by "eligible participants," which include the following, provided the participants' total assets exceed established levels:

a bank or trust company, savings association or credit union, insurance company, investment company subject to regulation under the 1940 Act, commodity pool, corporation, partnership, proprietorship, organization, trust or other entity, employee benefit plan, governmental entity, broker-dealer, futures commission merchant, natural person, or regulated foreign person. To be eligible, natural persons and most other entities must have total assets exceeding $10 million; commodity pools and employee benefit plans must have assets exceeding $5 million. In addition, an eligible swap transaction must meet three conditions. First, the swap agreement may not be part of a fungible class of agreements that are standardized as to their material economic terms. Second, the creditworthiness of parties with actual or potential obligations under the swap agreement must be a material consideration in entering into or determining the terms of the swap agreement, including pricing, cost or credit enhancement terms. Third, swap agreements may not be entered into and traded on or through a multilateral transaction execution facility.

This exemption is not exclusive, and participants may continue to rely on existing exclusions for swaps, such as the Policy Statement issued in July 1989 which recognized a safe harbor for swap transactions from regulation as futures or commodity option transactions under the CEA or its regulations. The Policy Statement applies to swap transactions settled in cash that (1) have individually tailored terms, (2) lack exchange-style offset and the use of a clearing organization or margin system, (3) are undertaken in conjunction with a line of business, and (4) are not marketed to the public. When a Fund in invested in this manner, it may not be able to achieve its investment objective.

WARRANTS

All Funds, except Money Market and International Government Bond Fund, may invest in or acquire warrants to purchase equity or fixed income securities. Bonds with warrants attached to purchase equity securities have many characteristics of convertible bonds and their prices may, to some degree, reflect the performance of the underlying stock. Bonds also may be issued with warrants attached to purchase additional fixed income securities at the same coupon rate. A decline in interest rates would permit a Fund to buy additional bonds at the favorable rate or to sell the warrants at a profit. If interest rates rise, the warrants would generally expire with no value. Warrants do not entitle a holder to dividends or voting rights with respect to the underlying securities and do not represent any rights in the assets of the issuing company. In addition, the value of warrants does not, necessarily, in all cases change to the same extent as the value of the underlying securities to which they relate. Warrants cease to have value if they are not exercised prior to the expiration date. These factors can make warrants more speculative than other types of investments.

WHEN-ISSUED SECURITIES

Each of the Funds, except the Money Market Fund, may purchase securities on a when-issued or delayed delivery basis. When such transactions are negotiated, the price of such securities is fixed at the time of commitment, but delivery and payment for the securities may take place a month or more after the date of the commitment to purchase. The securities so purchased are subject to market fluctuation, and no interest accrues to the purchaser during this period. Forward commitments involve a risk of loss if the value of the security to be purchased declines prior to the settlement date. VALIC does not believe that a Fund's net asset value or income will be adversely affected by the purchase of securities on a when-issued basis.

INVESTMENT ADVISER

VALIC serves as investment adviser to all the Funds, pursuant to an investment advisory agreement originally dated September 30, 1987. The agreement has been amended each time a new fund has been added.

VALIC is a stock life insurance company organized on August 20, 1968, under the Texas Insurance Code as a successor to The Variable Annuity Life Insurance Company of America, a District of Columbia insurance company organized in 1955. VALIC's sole business consists of offering fixed and variable (and combinations thereof) retirement annuity contracts. VALIC is an indirect wholly-owned subsidiary of American International Group, Inc.

Pursuant to the Investment Advisory Agreements, the Series Company retains VALIC to manage the investment of the assets of each Fund, maintain a trading desk, and place orders for the purchase and sale of portfolio securities. As investment adviser, VALIC obtains and evaluates as appropriate economic, statistical, and financial information in order to formulate and implement investment programs in furtherance of each Fund's investment objective(s) and investment program. Pursuant to the Investment Advisory Agreements, VALIC provides other services including furnishing the services of the President and such other executives and clerical personnel as the Series Company requires to conduct its day-to-day operations, to prepare the various reports and statements required by law, and to conduct any other recurring or nonrecurring activity which the Series Company may need to continue operations. The Investment Advisory Agreement provides that the Series Company pay all expenses not specifically assumed by VALIC under the Agreements. Examples of the expenses paid by the Series Company include transfer agency fees, custodial fees, the fees of outside legal and auditing firms, the costs of reports to shareholders, expenses of servicing shareholder accounts (e.g., daily calculation of the net asset value). The Series Company allocates advisory fees, SEC filing fees, interest expenses and state filing fees, if any, to the Fund that incurs such charges and allocates all other expenses among the Funds based on the net assets of each Fund in relation to the net assets of the Series Company.

Investment advisory fees paid by the Series Company for the last three fiscal years are shown in the table below; however, no fees are shown for the fiscal periods in which the new Funds did not exist.

                                                     INVESTMENT ADVISORY FEES PAID FOR FISCAL
                                                                 YEAR ENDED MAY 31,
-----------------------------------------------------------------------------------------------
FUND NAME                                               2001            2000            1999
-----------------------------------------------------------------------------------------------
Asset Allocation Fund                               $1,121,125      $1,254,274       $1,106,792
Blue Chip Growth Fund                                   38,263             N/A              N/A
Capital Conservation Fund                              262,895         287,542          327,092
Core Equity Fund                                     8,220,974       9,575,104        9,178,668
Government Securities Fund                             547,091         509,656          537,883
Growth & Income Fund                                 2,232,908       2,428,870        2,053,954
Health Sciences Fund                                    63,797             N/A              N/A
Income & Growth Fund                                   938,779             N/A              N/A
International Equities Fund                            493,297         570,981          509,578
International Government Bond Fund                     559,732         703,610          810,795
International Growth Fund                            2,800,107             N/A              N/A
Large Cap Growth Fund                                3,252,656             N/A              N/A
MidCap Index Fund                                    2,982,039       2,636,451        2,426,931
Money Market Fund                                    2,713,690       2,266,773        1,301,265
Nasdaq-100(R)Index Fund                                 32,370             N/A              N/A
Putnam Opportunities Fund                               26,116             N/A              N/A
Small Cap Fund                                         806,532             N/A              N/A
Science & Technology Fund                           26,813,049      25,760,947       11,204,880
Small Cap Index Fund                                 3,050,218         805,325          752,025
Social Awareness Fund                                2,722,149       2,883,456        2,076,498
Stock Index Fund                                    13,473,997      13,283,779       10,367,253

VALIC has voluntarily agreed to cap certain Fund expenses by waiving a portion of its advisory fee or reimbursing certain expenses, as shown below. Expense caps are net of any expense reduction realized through the use of directed brokerage commissions. Fund expenses shall be limited for the Funds shown below (expressed as a percentage of average annual net assets) through May 31, 2002 (through December 8, 2002 for those marked with an asterisk):

                                                     MAXIMUM
                                                      FUND
                                                     EXPENSE
FUND
Core Equity Fund                                      0.85%
Growth & Income Fund                                  0.85%
Income & Growth Fund *                                0.83%
International Growth Fund *                           1.06%
Large Cap Growth Fund *                               1.06%
Money Market Fund                                     0.60%
Science & Technology Fund                             1.00%
Small Cap Fund                                        0.95%

The Investment Advisory Agreements require that VALIC's advisory fee be reduced by any commissions, tender and exchange offer solicitation fees and other fees, or similar payments (less any direct expenses incurred) received by VALIC or its affiliates in connection with the purchase and sale of portfolio investments of the Funds. In this regard, the Investment Advisory Agreements require VALIC to use its best efforts to recapture tender and exchange solicitation offer fees for each Fund's benefits, and to advise the Series Company's Board of Directors of any other fees, or similar payments that it (or any of its affiliates) may receive in connection with each Fund's portfolio transactions or of other arrangements that may benefit any of the Funds or the Series Company.

The Investment Advisory Agreements may be continued with respect to any Fund if specifically approved at least annually by (a)(i) the Series Company's Board of Directors or (ii) a majority of that Fund's outstanding voting securities (as defined by the 1940 Act), and (b) the affirmative vote of a majority of the directors who are not parties to the agreement or "interested persons" of any such party (as defined by the 1940 Act) by votes cast in person at a meeting called for this purpose. The Investment Advisory Agreements also provide that they shall terminate automatically if assigned. The Investment Advisory Agreements may be terminated as to any Fund at any time by the Series Company's Board of Directors, by vote of a majority of the Fund's outstanding voting securities, or by VALIC, on not more than 60 days' written notice, nor less than 30 days' written notice, or upon such shorter notice as may be mutually agreed upon, without the payment of any penalty. Additionally, under either Investment Advisory Agreement, VALIC shall not be liable to the Series Company, or any shareholder in the Series Company, for any act or omission in rendering services under the Agreement, or for any losses sustained in the purchase, holding, or sale of any portfolio security, so long as there has been no willful misfeasance, bad faith, negligence, or reckless disregard of obligations or duties on the part of VALIC.

CODE OF ETHICS

The Series Company and VALIC have adopted an Investment Company Code of Ethics in compliance with the 1940 Act and the Investment Advisers Act of 1940, as amended, (the "Advisers Act"). This Code of Ethics is designed to detect and prevent violations of the Advisers Act and the 1940 Act through established procedures and restrictions concerning certain employee personal investment trading activities.

INVESTMENT SUB-ADVISERS

Subject to the control, supervision and direction of VALIC, sub-advisory services are provided as follows:

FUND NAME                     SUB-ADVISER NAME
---------                     ----------------
Blue Chip Growth Fund         T. Rowe Price Associates, Inc. ("T. Rowe Price")
Core Equity Fund              Wellington Management Company, LLP ("Wellington")
Health Sciences Fund          T. Rowe Price
Income & Growth Fund          American Century Investment Management, Inc. ("American Century")
International Growth Fund     American Century
Large Cap Growth Fund         Founders Asset Management LLC ("Founders")
Nasdaq-100(R) Index Fund      American General Investment Management, L.P. ("AGIM")
Putnam Opportunities Fund     Putnam Investment Management, LLC ("Putnam")
Science & Technology Fund     T. Rowe Price
Small Cap Fund                Founders and T. Rowe Price

Pursuant to the Investment Sub-Advisory Agreements VALIC has with each of the Sub-Advisers and subject to VALIC's control, supervision and direction, the Sub-Advisers will manage the investment and reinvestment of the assets of the sub-advised Funds, including the evaluation of pertinent economic, statistical, financial and other data, and the determination of industries and companies to be represented in the sub-advised Funds. Further, the Sub-Advisers will maintain a trading desk and place orders for the purchase and sale of portfolio investments for the sub-advised Funds, establish accounts with brokers and dealers selected by the Sub-Advisers, or arrange for any other entity to provide a trading desk and to place orders with brokers and dealers selected by the Sub-Advisers and VALIC.

For the fiscal years ended May 31, 2001, 2000 and 1999, respectively, VALIC paid the investment sub-advisers fees for the services rendered and expenses paid by the sub-advisers as shown below; however, no fees are shown for the fiscal periods in which the new Funds did not exist.

-------------------------------------------------------------------------------------------------------------------
FUND NAME                            SUB-ADVISER NAME                       2001             2000              1999
-------------------------------------------------------------------------------------------------------------------
Blue Chip Growth Fund                T. Rowe Price                       $29,932              N/A               N/A
-------------------------------------------------------------------------------------------------------------------
Core Equity Fund                     Wellington, from                  1,391,010       $1,970,116               N/A
                                     9/1/1999 to present

                                     T. Rowe  Price,  prior to               N/A        1,500,348        $5,397,109
                                     9/1/1999
-------------------------------------------------------------------------------------------------------------------
Health Sciences Fund                 T. Rowe Price                        73,923              N/A               N/A
-------------------------------------------------------------------------------------------------------------------
Income & Growth Fund                 American Century                    727,350              N/A               N/A
-------------------------------------------------------------------------------------------------------------------
International Growth Fund            American Century                  2,166,787              N/A               N/A
-------------------------------------------------------------------------------------------------------------------
Large Cap Growth Fund                Founders                          1,838,012              N/A               N/A
-------------------------------------------------------------------------------------------------------------------
Nasdaq-100(R) Index Fund             AGIM                                 17,134              N/A               N/A
-------------------------------------------------------------------------------------------------------------------
Putnam Opportunities Fund            Putnam                               14,367              N/A               N/A
-------------------------------------------------------------------------------------------------------------------
Science & Technology Fund            T. Rowe Price                     7,415,473       12,352,442         5,520,780
-------------------------------------------------------------------------------------------------------------------
Small Cap Fund                       Founders and T. Rowe              2,534,152              N/A               N/A
                                     Price
-------------------------------------------------------------------------------------------------------------------

The sub-advisory fee paid to T. Rowe Price may be discounted based on total subadvised domestic equity assets. The discount ranges from 5% to 10% for total assets over $750 million to assets over $3 billion.

The Investment Sub-Advisory Agreements may be continued with respect to any of the Funds if approved at least annually by the vote of the Series Company's Board of Directors who are not parties to the Investment Sub-Advisory Agreements or interested persons of any such parties, cast in person at a meeting called for the purpose of voting on such approval and by a vote of a majority of the Series Company's Board of Directors or a majority of the relevant Fund's outstanding voting securities.

The Investment Sub-Advisory Agreements will automatically terminate in the event of assignment or in the event of termination of the Investment Advisory Agreement between VALIC and the Series Company as it relates to the relevant sub-advised Fund. The Investment Sub-Advisory Agreements may be terminated at any time by VALIC, the relevant Sub-Adviser, the Series Company's Board of Directors, or by vote of a majority of the outstanding voting securities of the relevant sub-advised Fund, generally, on not more than 60 days' nor less than 30 days' written notice. Such termination shall be without the payment of any penalty.

The Investment Sub-Advisory Agreements provide that the Sub-Advisers shall not be liable to VALIC, the Series Company or to any shareholder of the Series Company for any act or omission in rendering services under the Investment Sub-Advisory Agreements or for any losses sustained in the purchase, holding or sale of any portfolio security, so long as there has been no willful misfeasance, bad faith, negligence or reckless disregard of obligations or duties on the part of the Sub-Advisers.

SERVICE AGREEMENTS

The Series Company has service agreements with VALIC to provide certain accounting and administrative services to the Funds and to provide transfer agent services. Transfer agent services also include shareholder servicing and dividend disbursements.

Pursuant to the Accounting Services Agreement, the Series Company will pay to VALIC (or an affiliate) an annual fee of 0.07% based on average daily net assets. Prior to May 1, 2001, the fee was 0.03%. The Transfer Agent Agreement states that all transfer agent services will be provided to the Series Company at cost.

For the fiscal years ended May 31, 2001, 2000 and 1999, respectively, the Funds paid VALIC the following accounting and administrative services fees. No fees are shown for the fiscal periods in which the new funds did not exist.

-----------------------------------------------------------------------------------------------
FUND NAME                                                2001            2000            1999
-----------------------------------------------------------------------------------------------
Asset Allocation Fund                                 $  74,397       $  75,256       $  39,549
-----------------------------------------------------------------------------------------------
Blue Chip Growth Fund                                        94              --              --
-----------------------------------------------------------------------------------------------
Capital Conservation Fund                                17,699          17,253          11,178
-----------------------------------------------------------------------------------------------
Core Equity Fund                                        339,795         359,066         202,205
-----------------------------------------------------------------------------------------------
Government Securities Fund                               36,910          30,579          18,827
-----------------------------------------------------------------------------------------------
Growth & Income Fund                                     98,501          97,155          49,387
-----------------------------------------------------------------------------------------------
Health Sciences Fund                                        128              --              --
-----------------------------------------------------------------------------------------------
Income & Growth Fund                                     45,056              --              --
-----------------------------------------------------------------------------------------------
International Equities Fund                              42,210          50,347          25,429
-----------------------------------------------------------------------------------------------
International Government Bond Fund                       33,528          43,870          28,713
-----------------------------------------------------------------------------------------------
International Growth Fund                               101,547              --              --
-----------------------------------------------------------------------------------------------
Large Cap Growth Fund                                   118,048              --              --
-----------------------------------------------------------------------------------------------
MidCap Index Fund                                       333,305         135,722         103,094
-----------------------------------------------------------------------------------------------
Money Market Fund                                       182,835         150,983          47,447
-----------------------------------------------------------------------------------------------
Nasdaq-100(R) Index Fund                                  3,082              --              --
-----------------------------------------------------------------------------------------------
Putnam Opportunities Fund                                   962              --              --
-----------------------------------------------------------------------------------------------
Small Cap Fund                                          124,825              --              --
-----------------------------------------------------------------------------------------------
Science & Technology Fund                               968,086         858,698         225,428
-----------------------------------------------------------------------------------------------
Small Cap Index Fund                                     77,147          69,028          38,011
-----------------------------------------------------------------------------------------------
Social Awareness Fund                                   180,144         173,007          75,764
-----------------------------------------------------------------------------------------------
Stock Index Fund                                      1,723,036       1,534,054         713,451
-----------------------------------------------------------------------------------------------

PORTFOLIO TRANSACTIONS AND BROKERAGE

As investment adviser to the Series Company, VALIC has responsibility for placing (and deciding when to place) orders for the purchase and sale of investments for the portfolio of each Fund, selecting brokers or dealers to handle these transactions, and negotiating commissions on these transactions. The Sub-Advisers may employ affiliated brokers or indirectly related brokers for portfolio transactions under circumstances described in the Prospectus.

Virtually all of the over-the-counter transactions by the Asset Allocation Fund, the Money Market Fund, the Capital Conservation Fund, the Government Securities Fund, the International Government Bond Fund and the Growth & Income Fund are principal transactions with issuers and dealers at net prices which entail no brokerage commissions. The MidCap Index Fund, the Stock Index Fund, the International Equities Fund, the Small Cap Index Fund, and the Social Awareness Fund, each purchase and sell most of their portfolio securities on a national securities exchange on an agency basis. The Core Equity Fund and the Science & Technology Fund engage in over-the-counter transactions with principals and transactions with national securities exchanges on an agency basis. The Series Company normally enters into principal transactions directly with the issuer or the market-maker.

When the Series Company purchases or sells securities or financial futures contracts on an exchange, it pays a commission to any FCM or broker executing the transaction. When the Series Company purchases securities from the issuer, an underwriter usually receives a commission or "concession" paid by the issuer. When the Series Company purchases securities from a market-maker, it pays no commission, but the price includes a "spread" or "mark-up" (between the bid and asked price) earned by the market-making dealer on the transaction.

In purchasing and selling each Fund's portfolio securities, it is the policy of VALIC and the Sub-Advisers (collectively, the "Advisers") to seek the best execution at the most favorable price through responsible broker-dealers and, in the case of agency transactions, at competitive commission rates. When selecting brokers or dealers, and in negotiating prices and commissions, the Advisers consider such factors as: the broker or dealer's reliability; the quality of the broker or dealer's execution services on a continuing basis; the rate of the commission; the size and difficulty of the order and the timeliness of execution; the reliability, integrity, financial condition, general execution, and operational capabilities of that firm and competing broker-dealers. In over-the-counter transactions, the Advisers place orders directly with the principal market-maker unless they believe the Series Company can obtain a better price (or receive better execution of orders) from a broker on an agency basis. In transactions

executed on securities or commodities exchanges, the Advisers seek the best overall price and execution at the most favorable commission rate (except when higher brokerage commissions are paid to obtain brokerage and research services, as explained below). When the Advisers believe that more than one firm meets these criteria the Advisers may prefer brokers who provide the Advisers or the Series Company with brokerage and research services, described below.

The Advisers may cause a Fund to pay a broker-dealer a commission (for executing a securities transaction) that is greater than the commission another broker-dealer would have received for executing the same transaction, if the Advisers determine in good faith that the greater commission paid to the first broker-dealer is reasonable in relation to the value of brokerage and research services provided to the Advisers viewed in terms of either that particular transaction or the overall responsibilities of the Advisers. The Advisers receive a wide range of research services from broker-dealers, including:
information on securities markets, the economy and individual companies; statistical information; accounting and tax law interpretations; technical market action; pricing and appraisal services; and credit analyses. Research services are received by the Advisers primarily in the form of written reports, telephone contacts, personal meetings with securities analysts, corporate and industry spokespersons, and access to various computer-generated data. The Advisers have no agreements or understandings with broker-dealers by which specific amounts of transactions or commissions are directed to specific broker-dealers.

The Advisers evaluate whether such research services provide lawful and appropriate assistance to them in the performance of their investment decision-making responsibilities, for the Series Company. The Advisers will not cause the Series Company to pay higher commissions without first determining, in good faith, that the cost is reasonable considering the brokerage and research services provided, with respect to either the particular transaction or the Advisers' overall responsibilities with respect to accounts for which they exercise investment discretion. The Advisers receive research services at no cost and cannot assign any specific monetary value to them; nevertheless, the Advisers believe these supplemental investment research services are essential to the Advisers' ability to provide high quality portfolio management to the Funds. Research services furnished by broker-dealers through whom a Fund effects securities transactions may be used by the Advisers in servicing all of the Funds, and the Advisers may not use all such services in managing the Funds.

The amount of brokerage commissions paid, the quality of execution, the nature and quality of research services provided, and the amount of commissions paid to firms providing research services are reviewed quarterly by the Series Company's Board of Directors.

The following table lists brokerage commissions paid by each Fund on portfolio transactions for the fiscal years ended May 31, 2001, 2000 and 1999. Unless otherwise noted, the Funds paid no brokerage commissions to brokers for research services provided to the Advisers or to VALIC.

---------------------------------------------------------------------------
FUND NAME                                2001          2000          1999
---------------------------------------------------------------------------
Asset Allocation Fund                $    7,236    $   23,687    $   26,092
---------------------------------------------------------------------------
Blue Chip Growth Fund                     8,072            --            --
---------------------------------------------------------------------------
Capital Conservation Fund                    --            --            --
---------------------------------------------------------------------------
Core Equity Fund (1)                  1,255,383     2,716,829     1,251,907
---------------------------------------------------------------------------
Government Securities Fund                  975            --            --
---------------------------------------------------------------------------
Growth & Income Fund                    211,136       256,743       347,994
---------------------------------------------------------------------------
Health Sciences Fund                     16,449            --            --
---------------------------------------------------------------------------
Income & Growth Fund                    207,531       151,396        68,659
---------------------------------------------------------------------------
International Equities Fund             253,656            --            --
---------------------------------------------------------------------------
International Government Bond Fund           --            --            --
---------------------------------------------------------------------------
International Growth Fund             3,237,284            --            --
---------------------------------------------------------------------------
Large Cap Growth Fund                   846,629            --            --
---------------------------------------------------------------------------
MidCap Index Fund                       195,042       216,686       201,597
---------------------------------------------------------------------------
Money Market Fund                            --            --            --
---------------------------------------------------------------------------
Nasdaq-100(R) Index Fund                  8,053            --            --
---------------------------------------------------------------------------
Putnam Opportunities Fund                 4,392            --            --
---------------------------------------------------------------------------

---------------------------------------------------------------------------
Science & Technology Fund (2)         3,496,789     2,340,193     1,460,178
---------------------------------------------------------------------------
Small Cap Fund                          736,024            --            --
---------------------------------------------------------------------------
Small Cap Index Fund                    124,760        40,751        42,873
---------------------------------------------------------------------------
Social Awareness Fund                   156,856       224,333       297,390
---------------------------------------------------------------------------
Stock Index Fund                        213,055       223,557       123,942
---------------------------------------------------------------------------

(1) For the Fiscal year ended May 31, 2001, the Core Equity Fund paid $333,717 in brokerage commissions on transactions totaling $351,459,129, to brokers selected on the basis of the quality of the execution together with research services provided to the Advisers.

(2) For the Fiscal year ended May 31, 2001, the Science & Technology Fund paid $13,248,690 in brokerage commissions on transactions totaling $3,103,406,097, to brokers selected on the basis of the quality of the execution together with research services provided to the Advisers.

Trades for the Funds are not executed through affiliated broker-dealers. Occasions may arise when one or more of the Funds or other accounts that may be considered affiliated persons of the Funds under the 1940 Act desire to purchase or sell the same portfolio security at approximately the same time. On those occasions when such simultaneous purchase and sale transactions are made such transaction will be allocated in an equitable manner according to written procedures approved by the Series Company's Board of Directors. Specifically, such written procedures provide that in allocating purchase and sale transactions made on a combined basis the parties will seek to achieve the same net unit price of securities for each Fund or other account and to allocate as nearly as practicable, such transactions on a pro-rata basis substantially in proportion to the amounts ordered to be purchased and sold by each Fund or other account. In some cases, this procedure could have an adverse effect on the price or quantity of securities available to the Funds. However, the Funds may, alternatively, benefit from lower broker's commissions and/or correspondingly lower costs for brokerage and research services by engaging in such combined transactions. In the Advisers' opinion, the results of this procedure will, on the whole, be in the best interest of each Fund.

OFFERING, PURCHASE, AND REDEMPTION OF FUND SHARES

Pursuant to a distribution agreement, the Distributor acts without remuneration as the Series Company's agent in the distribution of Fund shares on a "best efforts" basis to the separate accounts.

The distribution agreement between the Distributor and the Series Company provides that it shall continue in force from year to year, provided that such continuance is approved at least annually (a)(i) by the Board of Directors of the Series Company, or (ii) by vote of a majority of the Series Company's outstanding voting securities (as defined in the 1940 Act) and (b) by the affirmative vote of a majority of the Series Company's Directors who are not 'interested persons' (as defined in the 1940 Act) of the Series Company by votes cast in person at a meeting called for such purpose. The distribution agreement may be terminated at any time, without penalty, by a vote of the Board of Directors of the Series Company or by a vote of a majority of the outstanding voting securities of the Series Company, or by the Distributor, on sixty days' written notice to the other party. The distribution agreement also provides that it shall automatically terminate in the event of its assignment.

Shares of the Funds are sold in a continuous offering. Pursuant to the distribution agreement, the Distributor pays promotional and advertising expenses and the cost of printing prospectuses used to offer and sell shares of the Series Company (after typesetting and printing the copies required for regulatory filings by the Series Company). Promotional and advertising expenses include any expense related to distribution of shares of the Funds or attributable to any activity primarily intended to result in the sale of shares, including, for example, the preparation, printing, and distribution of advertising and sales literature (including reports to shareholders used as sales literature). VALIC reimburses the Distributor for these expenses. Thus all such expenses incurred by the Distributor are passed directly on to VALIC, its parent. The Series Company pays all expenses related to the registration of Fund shares under federal and state laws, including registration and filing fees, the cost of preparing the prospectus for such purpose, and related expenses of outside legal and auditing firms.

As explained in the prospectus for the Contracts, payments of surrender values, as well as lump sum payments available under the annuity options of the Contracts, may be suspended or postponed at any time when redemption

of shares is suspended. Normally, the Series Company redeems Fund shares within seven days when the request is received in good order, but may postpone redemptions beyond seven days when: (1) the New York Stock Exchange is closed for other than weekends and customary holidays, or trading on the New York Stock Exchange becomes restricted; (2) an emergency exists making disposal or valuation of a Fund's assets not reasonably practicable; or (3) the Securities and Exchange Commission has so permitted by order for the protection of the Series Company's shareholders.

The Series Company normally redeems Fund shares for cash. Although the Series Company, with respect to each Fund, may make full or partial payment by assigning to the separate accounts investing in the Series Company portfolio securities at their value used in determining the redemption price (i.e. by redemption-in-kind), the Series Company, pursuant to Rule 18f-1 under the 1940 Act, has filed a notification of election on Form 18f-1. Pursuant to this election, the Series Company has committed itself to pay the separate accounts, in cash, all redemptions made during any 90 day period, up to the lesser of $250,000 or 1% of the Series Company's net asset value. The securities to be paid in-kind to the separate accounts will be selected in such manner as the Board of Directors deems fair and equitable. In such cases, the separate accounts would incur brokerage expenses should they wish to liquidate these portfolio securities.

All shares are offered for sale and redeemed at net asset value. Net asset value per share is determined by dividing the net assets of a Fund by the number of that Fund's outstanding shares at such time.

DETERMINATION OF NET ASSET VALUE

Equity investments (including common stocks, preferred stocks, convertible securities, and warrants) and call options written on all portfolio investments listed or traded on a national exchange are valued at their last sale price on that exchange prior to the time when assets are valued. In the absence of any exchange sales on that day and for unlisted equity securities, such securities and call options written on portfolio securities are valued at the last sale price on the NASDAQ (National Association of Securities Dealers Automated Quotations) National Market System. In the absence of any National Market System sales on that day, equity securities are valued at the last reported bid price and call options written on all portfolio securities for which other over-the- counter market quotations are readily available are valued at the last reported asked price.

U.S. Treasury securities and other obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities, are valued at representative quoted prices. Such quotations generally are obtained from government securities pricing services; however, in circumstances where it is deemed appropriate to do so, quotations may be obtained from dealers in government securities.

Publicly-traded corporate bonds are valued at prices obtained from third party pricing services.

Short-term debt securities for which market quotations are readily available are valued at the last reported bid price, except for those with a remaining maturity of 60 days or less which are valued by the amortized cost method (unless, due to special circumstances, the use of such a method with respect to any security would result in a valuation which does not approximate fair market value).

Convertible bonds are valued at prices obtained from one or more of the major dealers in such bonds. Where there is a discrepancy between dealers or when no quotes are readily available, values may be adjusted based on a combination of yields and premium spreads to the underlying common stock.

Portfolio securities that are primarily traded on foreign securities exchanges are generally valued at the last sale price on the exchange where such security is primarily traded. All foreign securities traded on the over-the-counter market are valued at the last sale quote, if market quotations are available, or the last closing bid price, if there is no active trading in a particular security for a given day. Where market quotations are not readily available for such foreign over-the-counter securities, then such securities will be valued in good faith by a method that the Series Company's Board of Directors, or its delegates, believes accurately reflects fair value. Quotations of foreign securities in foreign currencies are converted, at current exchange rates, to their U.S. dollar equivalents in order to determine their current value. In addition, because of the need to value foreign securities (other than ADRs) as of the close of trading on various exchanges and over-the-counter markets throughout the world, the calculation of the net

asset value of Funds investing in such foreign securities may not take place contemporaneously with the valuation of such foreign securities in those Funds' portfolios.

Options purchased by the Funds (including options on financial futures contracts, stock indices, foreign currencies, and securities) listed on national securities exchanges are valued on the exchange where such security is primarily traded.

Over-the-counter options purchased or sold by the Funds are valued based upon prices provided by market-makers in such securities or dealers in such currencies.

Exchange-traded financial futures contracts (including interest rate futures contracts, single stock futures contracts, stock index futures contracts, and currency futures contracts) are valued at the settlement price for such contracts established each day by the board of trade or exchange on which such contracts are traded. Unlisted financial futures contracts are valued based upon prices provided by market-makers in such financial futures contracts.

All of the assets of the Money Market Fund are valued on the basis of amortized cost. Under the amortized cost method of valuation, securities are valued at a price on a given date, and thereafter a constant accretion of any discount or amortization of any premium to maturity is assumed, regardless of the impact of fluctuating interest rates on the market value of the security. While this method provides certainty in valuation it may result in periods in which value as determined by amortized cost is higher or lower than the price a Fund would receive if it sold the security. During such periods, the yield to investors may differ somewhat from that obtained by a similar fund or portfolio which uses available market quotations to value all of its portfolio securities. The Series Company's Board of Directors has established procedures reasonably designed, taking into account current market conditions and Money Market Fund's investment objective, to stabilize the net asset value per share for purposes of sales and redemptions at $1.00. These procedures include review by the Board, at such intervals as it deems appropriate, to determine the extent, if any, to which the net asset value per share calculated by using available market quotations deviates from $1.00 per share. In the event such deviation should exceed one half of one percent, the Board will promptly consider initiating corrective action. If the Board believes that the extent of any deviation from a $1.00 amortized cost price per share may result in material dilution or other unfair results to new or existing shareholders, it will take such steps as it considers appropriate to eliminate or reduce these consequences to the extent reasonably practicable. Such steps may include: selling portfolio securities prior to maturity; shortening the average maturity of the portfolio; withholding or reducing dividends; or utilizing a net asset value per share determined from available market quotations. Even if these steps were taken, the Money Market Fund's net asset value might still decline.

ACCOUNTING AND TAX TREATMENT

CALLS AND PUTS

When a Fund writes a call or put option, an amount equal to the premium received by it is included in that Fund's Statement of Assets and Liabilities as an asset and as an equivalent liability. The amount of the liability is subsequently "marked to market" to reflect the current market value of the option written. The current market value of a written option is the last sale price on the principal Exchange on which such option is traded. If a call option which a Fund has written either expires on its stipulated expiration date, or if a Fund enters into a closing purchase transaction, it realizes a gain (or loss if the cost of the closing transaction exceeds the premium received when the option was sold) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a call option which a Fund has written is exercised, the Fund realizes a capital gain or loss from the sale of the underlying security and proceeds from such sale are increased by the premium originally received.

The premium paid by a Fund for the purchase of a put option is included in the asset section of its Statement of Assets and Liabilities as an investment and subsequently adjusted daily to the current market value of the option. For example, if the current market value of the option exceeds the premium paid, the excess would be unrealized appreciation and, conversely, if the premium exceeds the current market value, such excess would be unrealized depreciation. The current market value of a purchased option is the last sale price on the principal Exchange on which such option is traded. If a put option which a Fund has purchased expires unexercised it realizes a capital loss

equal to the cost of the option. If a Fund exercises a put option, it realizes a capital gain or loss from the sale of the underlying security and the proceeds from such sale will be decreased by the premium originally paid.

FINANCIAL FUTURES CONTRACTS

Accounting for financial futures contracts will be in accordance with generally accepted accounting principles. Initial margin deposits made upon entering into financial futures contracts will be recognized as assets due from the FCM (the Fund's agent in acquiring the futures position). During the period the financial futures contract is open, changes in the value of the contract will be recognized as unrealized gains or losses by "marking-to-market" on a daily basis to reflect the market value of the contract at the end of each day's trading. Variation (or maintenance) margin payments will be made or received, depending upon whether gains or losses are incurred. Financial futures contracts held by a Fund at the end of each fiscal year will be required to be "marked to market" for federal income tax purposes (that is, treated as having been sold at market value).

SUBCHAPTER M OF THE INTERNAL REVENUE CODE OF 1986

Each Fund of the Series Company intends to qualify annually as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). A Fund must meet several requirements to obtain and maintain its status as a regulated investment company. Among these requirements are that: (i) at least 90% of a Fund's gross income be derived from dividends, interest, payments with respect to securities loans and gains from the sale or disposition of securities; and (ii) at the close of each quarter of a Fund's taxable year (a) at least 50% of the value of the Fund's assets consist of cash, government securities, securities of other regulated investment companies and other securities (such other securities of any one issuer being not greater than 5% of the value of a Fund and the Fund holding not more than 10% of the outstanding voting securities of any such issuer) and (b) not more than 25% of the value of a Fund's assets be invested in the securities of any one issuer (other than United States government securities or securities of other regulated investment companies). Each Fund of the Series Company is treated as a separate entity for federal income tax purposes.

The Internal Revenue Service ("Service") has ruled publicly that an exchange-traded call option is a security for purposes of the 50% of assets test and that its issuer is the issuer of the underlying security, not the writer of the option, for purposes of the diversification requirements. It has ruled privately (at the request of a taxpayer other than the Series Company) that income from closing financial futures contracts is considered gain from a disposition of securities for purposes of the 90% of gross income test. However, since taxpayers other than the taxpayer requesting a particular private ruling are not entitled to rely on such ruling, the Series Company intends to keep its Funds' activity in futures contracts and options at a low enough volume such that gains from closing futures contracts will not exceed 10% of a Fund's gross income until the Service rules publicly on the issues or the Series Company is otherwise satisfied that those gains are qualifying income.

If a Fund fails to qualify as a regulated investment company or fails to satisfy the 90% distribution requirement in any taxable year, the Fund would be taxed as an ordinary corporation on its taxable income. To qualify again as a regulated investment company in a subsequent year, the Fund may be required to pay an interest charge of 50% of its earnings and profits attributable to non-regulated investment company years and would be required to distribute such earnings and profits to shareholders (less any interest charge). In addition, if the Fund failed to qualify as a regulated investment company for its first taxable year or, if immediately after qualifying as a regulated investment company for any taxable year, it failed to qualify for a period greater than one taxable year, the Fund would be required to recognize any net built-in gains (the excess of aggregate gains, including items of income, over aggregate losses that would have been realized if it had been liquidated in order to qualify as a regulated investment company in a subsequent year.

SECTION 817(h) OF THE CODE

Each of the Funds intends to comply with Section 817(h) of the Code and the regulations issued thereunder. Section 817(h) of the Code and Treasury Department regulations thereunder impose certain diversification requirements on variable annuity contracts based upon segregated asset accounts. These requirements are in addition to the diversification requirements of Subchapter M and the 1940 Act and may affect the securities in which a Fund may

invest. Failure to meet the requirements of Section 817(h) could result in immediate taxation of the Contract Owner to the extent of appreciation on investment under the Contract.

The Section 817(h) diversification requirements do not apply to pension plan contracts. "Pension plan contracts" for these purposes generally means annuity contracts issued with respect to plans qualified under Section 401(a) or 403(a) of the Code, Section 403(b) annuities, Individual Retirement Accounts, Individual Retirement Annuities and annuities issued with respect to Section 457 plans.

The Secretary of the Treasury may, in the future, issue additional regulations that will prescribe the circumstances in which a Contract Owner's control of the investments of the separate accounts investing in the Series Company may cause the Contract Owner to be taxable with respect to assets allocated to the separate account, before distributions are actually received under the Contract.

In order to comply with the requirements of Section 817(h) and the regulations thereunder, the Series Company may find it necessary to take action to ensure that a Contract funded by the Series Company continues to qualify as such under federal tax laws. The Series Company, for example, may be required to alter the investment objectives of a Fund or Funds, or substitute the shares of one Fund for those of another. No such change of investment objectives or substitution of securities will take place without notice to the shareholders of the affected Fund, and the approval of a majority of such shareholders (as defined in the 1940 Act) and without prior approval of the SEC, to the extent legally required.

It is not feasible to comment on all of the federal income tax consequences concerning the Funds. Each owner of a Contract funded by the Series Company should consult a qualified tax adviser for more complete information. The reader should refer to the appropriate prospectus related to his or her Contracts for a more complete description of the taxation of the separate account and of the owner of the particular Contract.

OTHER INFORMATION

SHAREHOLDER REPORTS

Annual Reports containing audited financial statements of the Series Company and Semiannual Reports containing unaudited financial statements, as well as proxy materials, are sent to Contract Owners, annuitants, or beneficiaries as appropriate. The Annual Report is incorporated by reference into this Statement of Additional Information.

VOTING AND OTHER RIGHTS

The Series Company has an authorized capitalization of 21 billion shares of common stock, $0.01 par value per share. The shares are authorized to be issued in 21 classes comprising 1 billion shares each. Each of the 21 classes of stock corresponds to one of the Funds and represents an ownership interest in that Fund. See "Voting and Other Rights" in the Prospectus for a discussion of the manner in which shares of the Fund are voted.

Each outstanding share has one vote on all matters that shareholders vote on. Participants vote on these matters indirectly by voting their units. The way participants vote their units depends on their contract. See the contract prospectus for specific details. When a matter comes up for vote, the separate account will vote its shares in the same proportion as the unit votes it actually receives. If VALIC determines that it may, under the current interpretation of the 1940 Act, vote shares directly instead of voting through its units, it may decide to vote that way.

Maryland law does not require the Series Company to hold regular, annual shareholder meetings. However, the Series Company must hold shareholder meetings on the following matters: (a) to approve certain agreements as required by the 1940 Act; (b) to change fundamental investment objectives in the Diversification section and to change fundamental investment restrictions, above; (c) to fill vacancies on the Series Company's Board of Directors if the shareholders have elected less than a majority of the Directors.

Shareholders may call a meeting to remove a Director from the Board if at least 10% of the outstanding shares vote to have this meeting. Then, at the meeting, at least 67% of all the outstanding shares of all the Funds must vote in favor of removing the Director.

The Series Company will assist in shareholder communications.

VALIC's ownership of more than 25% of the outstanding shares may result in VALIC's being deemed a controlling entity of each of those Funds as that term is defined in the 1940 Act. Such control will dilute the effect of the votes of other shareholders and contract owners.

At May 31, 2001, VALIC, American General Annuity Insurance Company ("AGA"), and American General Life Insurance Company ("AGL"), through their insurance company separate accounts, owned over five percent of the outstanding shares of the following Funds (an asterisk denotes less than 5% ownership):

--------------------------------------------------------------------------------
                                                 VALIC          AGA          AGL
--------------------------------------------------------------------------------
Stock Index Fund                                 93.98%           *            *
--------------------------------------------------------------------------------
MidCap Index Fund                                97.33%           *            *
--------------------------------------------------------------------------------
Small Cap Index Fund                             99.81%           *            *
--------------------------------------------------------------------------------
International Equities Fund                      93.81%           *            *
--------------------------------------------------------------------------------
Core Equity Fund                                 97.55%           *            *
--------------------------------------------------------------------------------
Growth & Income Fund                             91.82%       8.18%            *
--------------------------------------------------------------------------------
Science & Technology Fund                        99.95%           *            *
--------------------------------------------------------------------------------
Social Awareness Fund                            99.99%           *            *
--------------------------------------------------------------------------------
Asset Allocation Fund                            99.94%           *            *
--------------------------------------------------------------------------------
Capital Conservation Fund                       100.00%           *            *
--------------------------------------------------------------------------------
Government Securities Fund                       82.59%      17.41%            *
--------------------------------------------------------------------------------
International Government Bond Fund              100.00%           *            *
--------------------------------------------------------------------------------
Money Market Fund                                84.14%           *       13.51%
--------------------------------------------------------------------------------
Nasdaq-100(R) Index Fund                         96.34%           *            *
--------------------------------------------------------------------------------
Putnam Opportunities Fund                        97.63%           *            *
--------------------------------------------------------------------------------
Blue Chip Growth Fund                           100.00%           *            *
--------------------------------------------------------------------------------
Health Sciences Fund                            100.00%           *            *
--------------------------------------------------------------------------------
Income & Growth Fund                            100.00%           *            *
--------------------------------------------------------------------------------
International Growth Fund                       100.00%           *            *
--------------------------------------------------------------------------------
Small Cap Fund                                  100.00%           *            *
--------------------------------------------------------------------------------
Large Cap Growth Fund                           100.00%           *            *
--------------------------------------------------------------------------------

As of May 31, 2001, the other shareholders of the Funds included separate accounts sponsored by VALIC and its affiliates, American General Corporation Thrift Plan and VALIC Agents' and Managers' Thrift Plan. None of these other shareholders owned of record more than 5% of any Fund's outstanding shares.

CUSTODY OF ASSETS

Pursuant to a Custodian Contract with the Series Company, State Street, 225 Franklin Street, Boston, Massachusetts 02110, holds the cash and portfolio securities of the Series Company as custodian.

State Street is responsible for holding all securities and cash of each Fund, receiving and paying for securities purchased, delivering against payment securities sold, receiving and collecting income from investments, making all payments covering expenses of the Series Company, and performing other administrative duties, all as directed by persons authorized by the Series Company. State Street does not exercise any supervisory function in such matters

as the purchase and sale of portfolio securities, payment of dividends, or payment of expenses of the Funds or the Series Company. Portfolio securities of the Funds purchased domestically are maintained in the custody of State Street and may be entered into the book entry systems of securities depositories approved by the Board of Directors. Pursuant to the Custodian Contract, portfolio securities purchased outside the United States will be maintained in the custody of various foreign branches of State Street and such other custodians, including foreign banks and foreign securities depositories, as are approved by the Board of Directors, in accordance with regulations under the 1940 Act.

State Street holds securities of the Funds on which call options have been written and certain assets of the Funds constituting margin deposits with respect to financial futures contracts at the disposal of the FCMs through which such transactions are effected. The Funds may also be required to post margin deposits with respect to covered call and put options written on stock indices and for this purpose certain assets of those Funds may be held by the custodian pursuant to similar arrangements with the brokers involved.

This arrangement regarding margin deposits essentially consists of State Street creating a separate segregated account into which it transfers (upon the Series Company's instructions) assets from a Fund's general (regular) custodial account. The custody agreement for such arrangement provides that FCMs or brokers will have access to the funds in the segregated accounts when and if the FCMs or brokers represent that the Series Company has defaulted on its obligation to the FCMs or brokers and that the FCMs or brokers have met all the conditions precedent to their right to receive such funds under the agreement between the Series Company and the FCMs or brokers. The Series Company has an agreement with each FCM or broker which provides (1) that the assets of any Fund held by the FCM or broker will be in the possession of State Street until released or sold or otherwise disposed of in accordance with or under the terms of such agreement, (2) that such assets would not otherwise be pledged or encumbered by the FCM or broker, (3) that when requested by the Series Company the FCM or broker will cause State Street to release to its general custodial account any assets to which a Fund is entitled under the terms of such agreement, and (4) that the assets in the segregated account shall otherwise be used only to satisfy the Series Company's obligations to the FCM or broker under the terms of such agreement.

If on any day a Fund experiences net realized or unrealized gains with respect to financial futures contracts or covered options on stock indices held through a given FCM or broker, it is entitled immediately to receive from the FCM or broker, and usually will receive by the next business day, the net amount of such gains. Thereupon, such assets will be deposited in its general or segregated account with State Street, as appropriate.

INDEX FUNDS

The Small Cap Index Fund is not promoted, sponsored or endorsed by, nor in any way affiliated with Frank Russell Company. Frank Russell Company is not responsible for and has not reviewed the Fund nor any associated literature or publications and Frank Russell Company makes no representation or warranty, express or implied, as to their accuracy, or completeness, or otherwise.

Frank Russell Company reserves the right, at any time and without notice, to alter, amend, terminate or in any way change its Index(es). Frank Russell Company has no obligation to take the needs of any particular fund or its participants or any product or person into consideration in determining, comprising or calculating the Index(es).

Frank Russell Company's publication of the Index(es) in no way suggests or implies an opinion by Frank Russell Company as to the attractiveness or appropriateness of investment in any or all securities upon which the Index(es) is (are) based. FRANK RUSSELL COMPANY MAKES NO REPRESENTATION, WARRANTY, OR GUARANTEE AS TO THE ACCURACY, COMPLETENESS, RELIABILITY, OR OTHERWISE OF THE INDEX(ES) OR ANY DATA INCLUDED IN THE INDEX(ES). FRANK RUSSELL COMPANY MAKES NO REPRESENTATION OR WARRANTY REGARDING THE USE, OR THE RESULTS OF USE, OF THE INDEX(ES) OR ANY DATA INCLUDED THEREIN, OR ANY SECURITY (OR COMBINATION THEREOF) COMPRISING THE INDEX(ES). FRANK RUSSELL COMPANY MAKES NO OTHER EXPRESS OR IMPLIED WARRANTY, AND EXPRESSLY DISCLAIMS ANY WARRANTY, OF ANY KIND, INCLUDING WITHOUT MEANS OR LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE INDEX(ES) OR ANY DATA OR ANY SECURITY (OR COMBINATION THEREOF) INCLUDED THEREIN.

The Stock Index Fund and the MidCap Index Fund are not sponsored, endorsed, sold or promoted by Standard & Poor's Corporation ("S&P"). S&P makes no representation or warranty, express or implied, to the Series Company or its participants regarding the advisability of investing in securities generally or in the Stock Index Fund or MidCap Index Fund particularly or the ability of the S&P Index or the S&P MidCap 400 Index Fund to track general stock market performance. S&P has no obligation to take the need of the Series Company or the Series Company's participants into consideration in determining, composing or calculating the S&P 500 Index or S&P MidCap 400 Index. S&P is not responsible for and has not participated in the determination of the prices and amount of the Stock Index Fund or MidCap Index Fund or the timing of the issuance or sale of such Funds or in the determination or calculation of the equation by which such Funds are to be converted into cash. S&P has no obligation or liability in connection with the administration, marketing or trading of the Funds.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500 INDEX OR S&P MIDCAP 400 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE SERIES COMPANY FROM THE USE OF THE S&P 500 INDEX OR S&P MIDCAP 400 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX OR S&P MIDCAP 400 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

The Nasdaq-100(R), Nasdaq-100 Index(R), and Nasdaq(R) are trade or service marks of The Nasdaq Stock Market, Inc. (which with its affiliates are the Corporations) and are licensed for use by the Series Company. The product(s) have not been passed on by the Corporations as to their legality or suitability. The product(s) are not issued, endorsed, sold, or promoted by the Corporations.
THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE PRODUCT(S).

DESCRIPTION OF CORPORATE BOND RATINGS

Moody's Investors Service, Inc.'s corporate bond ratings are as follows:

Aaa -- Bonds which are rated Aaa are judged to be of the best quality and carry the smallest degree of investment risk. Interest payments are protected by a large or by an exceptionally stable margin, and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.

Aa -- Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities.

A -- Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment some time in the future.

Baa -- Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.

Ba -- Bonds which are rated Ba are judged to have speculative elements and their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well

safe-guarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.

B -- Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.

Caa -- Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca -- Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

Standard & Poor's Corporation classifications are as follows:

AAA -- This is the highest rating assigned by Standard & Poor's to a financial obligation and indicates an extremely strong capacity to meet its financial commitment.

AA -- An obligation rated "AA" differs from the highest rated obligations only in small degree. The obligor's capacity to meet its financial commitment on the obligation is strong.

A -- An obligation rated "A" is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rated categories. However, the obligor's capacity to meet its financial commitment on the obligation is still strong.

BBB -- Obligations rated "BBB" exhibit adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.

BB-B-CCC-CC -- Obligations rated "BB", "B", "CCC" and "CC" are regarded as having significant speculative characteristics. "BB" indicates the least degree of speculation and "CC" a higher degree of speculation. While such obligations will likely have some quality and protective characteristics, they may be outweighed by large uncertainties or major exposures to adverse conditions.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

A and Prime Commercial Paper Ratings.

Commercial paper rated A by S&P has the following characteristics: Liquidity ratios are adequate to meet cash requirements. Long-term senior debt is rated "A" or better, although, in some cases "BBB" credits may be allowed. The issuer has access to at least two additional channels of borrowing. Basic earnings and cash flow have an upward trend with allowance made for unusual circumstances. Typically, the issuer's industry is well established and the issuer has a strong position within the industry. The reliability and quality of management are unquestioned. The rating is described by S&P as the investment grade category, the highest rating classification. Relative strength or weakness of the above factors determine whether the issuer's commercial paper is rated A-1, A-2 or A-3.

Among the factors considered by Moody's in assigning commercial paper ratings are the following: (1) evaluation of the management of the issuer; (2) economic evaluation of the issuer's industry or industries and an appraisal of speculative-type risks which may be inherent in certain areas; (3) evaluation of the issuer's products in relation to competition and customer acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over a period of ten years; (7) financial strength of a parent company and the relationships which exist with the issuer; and (8) recognition by the management of obligations which may be present or may arise as a result of public interest questions and preparations to meet such obligations. Relative differences in strengths and weaknesses in respect of these criteria establish a rating in one of three classifications. The rating Prime-1 is the highest commercial paper rating assigned by Moody's. Its other two ratings, Prime-2 and Prime-3 are designated Higher Quality and High Quality, respectively.

INDEPENDENT AUDITORS

Ernst & Young LLP, One Houston Center, 1221 McKinney, Suite 2400, Houston, Texas 77010, serve as independent auditors of the Series Company.

MANAGEMENT OF THE SERIES COMPANY

The Board of Directors manages the business activities of the Series Company in accordance with Maryland law. The Board elects officers who are responsible for the day-to-day operations of the Series Company and who execute policies formulated by the Board. The names and ages of the Directors and officers of the Series Company, their addresses, present positions and principal occupations during the past five years are set forth below. Each person is a Director or Trustee of the Series Company and North American Funds Variable Product Series II ("NAFVPS II"), each an open-end investment company for which VALIC serves as the investment adviser.

-------------------------------------------------------------------------------------------------------------------
   NAME, DATE OF BIRTH AND        POSITION(S) HELD
           ADDRESS                 WITH REGISTRANT             PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
-------------------------------------------------------------------------------------------------------------------
Dr. Judith L. Craven            Director since 1998    Retired Administrator. Director, Compaq Computer
10/06/45                                               Corporation (1992-Present); Director, A.G. Belo
3212 Ewing Street                                      Corporation, a media company (1992-Present); Director,
Houston, Texas 77004                                   Sysco Corporation, a food marketing and distribution
                                                       company (1996-Present); Director, Luby's, Inc., a
                                                       restaurant chain (1998-Present); Director, University of
                                                       Texas Board of Regents (2001-Present). Formerly, Director,
                                                       CypressTree Senior Floating Rate Fund, Inc. (2000-2001);
                                                       President, United Way of the Texas Gulf Coast, a not for
                                                       profit organization (1992-1998); Director, Houston Branch
                                                       of the Federal Reserve Bank of Dallas (1992-2000).(3)
-------------------------------------------------------------------------------------------------------------------
Dr. Timothy J. Ebner            Director since 1998    Professor and Head, Department of Neuroscience, and
07/15/49                                               Visscher Chair of Physiology, University of Minnesota
321 Church Street SE                                   (1999-Present). Formerly, Director, Graduate Program in
Minneapolis, Minnesota 55455                           Neuroscience, University of Minnesota (1995-1999);
                                                       Professor of Neurosurgery, University of Minnesota
                                                       (1980-1999); Consultant to EMPI Inc. (manufacturer of
                                                       medical products) (1994-1995); and Medtronic Inc.
                                                       (manufacturer of medical products) (1997-1998).(3)
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
   NAME, DATE OF BIRTH AND        POSITION(S) HELD
           ADDRESS                 WITH REGISTRANT             PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
-------------------------------------------------------------------------------------------------------------------
Judge Gustavo E.                Director since 1998    Municipal Court Judge, Dallas, Texas (1995-Present);
Gonzales, Jr.                                          Director, Downtown Dallas YMCA Board (1996-2000) and Dallas
07/27/40                                               Easter Seals Society (1997-2000). Formerly, private
2014 Main, Suite 210                                   attorney (litigation) (1980-1995).(3)
Dallas, Texas 75201
-------------------------------------------------------------------------------------------------------------------
Dr. Norman Hackerman            Director since 1984    Chairman - Scientific Advisory Board for The Robert A.
03/02/12                                               Welch Foundation (1983-Present); Director, Electrosource,
3 Woodstone Square                                     Inc. (develops, manufactures and markets energy storage
Austin, Texas 78703                                    products); President Emeritus, Rice University, Houston,
                                                       Texas (1985-Present).(1)(2)(3)
-------------------------------------------------------------------------------------------------------------------
Dr. John Wm. Lancaster          Director since 1984    Pastor Emeritus and Director of Planned Giving, First
12/15/23                                               Presbyterian Church, Houston, Texas (1997- Present).(3)
4624 Braeburn
Bellaire, Texas 77401
-------------------------------------------------------------------------------------------------------------------
Ben H. Love                     Director since 1991    Retired. Formerly, Director, Mid-American Waste, Inc.
09/26/30                                               (waste products) (1993-1997) and Chief Executive, Boy
4407 Eaton Circle                                      Scouts of America (1985-1993).(3)
Colleyville, Texas 76034
-------------------------------------------------------------------------------------------------------------------
Dr. John E. Maupin, Jr.         Director since 1998    President, Meharry Medical College, Nashville, Tennessee
10/28/46                                               (1994-Present); Nashville Advisory Board Member; Director,
1005 DB Todd Building                                  Monarch Dental Corporation (1997-Present); LifePoint
Nashville, Tennessee 37208                             Hospitals, Inc. (1998-1999); and Pinnacle Financial
                                                       Partners, Inc. (2000-Present).(3)
-------------------------------------------------------------------------------------------------------------------
Dr. F. Robert Paulsen           Director since 1985    Dean and Professor Emeritus, University of Arizona, Tucson,
07/05/22                                               Arizona (1983-Present).(1)(2)(3)
2801 North Indian Ruins
Tucson, Arizona 85715
-------------------------------------------------------------------------------------------------------------------

(1) Retired Managing Partner of Van Kampen American Capital Exchange Fund.

(2) Retired Trustee of Van Kampen American Capital Bond Fund, Inc., Van Kampen American Capital Income Trust, Van Kampen American Capital Convertible Securities Fund, Inc. and the Common Sense Trust.

(3) Members of the Board receive an annual retainer of $20,000, $1,000 for each Board meeting attended in person and $250 for each Board meeting conducted by telephone. Audit Committee and Nominating Committee members receive an additional $250 for each committee meeting attended. Committee chairs receive an additional $250 for each committee meeting chaired.

Listed below are the Series Company's officers and their principal occupations. All are affiliates of VALIC and are located at 2929 Allen Parkway, Houston, Texas, 77019, unless otherwise noted. Each officer serves until his or her successor is elected and shall qualify.

-------------------------------------------------------------------------------------------------------------------
     NAME AND DATE OF BIRTH           POSITION(S) WITH FUND          BUSINESS EXPERIENCE DURING THE LAST 5 YEARS
-------------------------------------------------------------------------------------------------------------------
Evelyn M. Curran                  Vice President since 2001       Vice  President, American General Fund Group
06/04/65                                                          (1999-Present). Formerly, Senior Attorney,
                                                                  American General Corporation (1997-1999); Senior
                                                                  Attorney, Western National Life Insurance
                                                                  Company (1994-1997).
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
     NAME AND DATE OF BIRTH           POSITION(S) WITH FUND          BUSINESS EXPERIENCE DURING THE LAST 5 YEARS
-------------------------------------------------------------------------------------------------------------------
Nori L. Gabert                    Secretary since 2000 and Vice   Senior Counsel, American General Financial Group
08/15/53                          President since 1998            (1997-Present); Vice  President and Secretary of
                                                                  NAFV I and NAFV II (2000-Present). Formerly,
                                                                  Vice President and Assistant Secretary of NAFV I
                                                                  (1997-2000); Vice President and Assistant
                                                                  Secretary of NAFV II  (1998-2000); Of Counsel,
                                                                  Winstead Sechrest & Minick P.C. (1997); Vice
                                                                  President and Associate General Counsel of
                                                                  VanKampen, Inc. (1981-1996).
-------------------------------------------------------------------------------------------------------------------
Steven Guterman                   Vice President and Senior       Executive Vice President, Head of Institutional
08/07/53                          Investment Officer since 1999   Asset Management, AGIM (1998-Present). Formerly,
390 Park Avenue                                                   Managing Director and Head of U.S. Fixed Income
New York, New York 10022                                          Portfolio Management, Salomon Brothers Asset
                                                                  Management (1990-1998).
-------------------------------------------------------------------------------------------------------------------
Gregory R. Kingston               Treasurer since 2000 and        Vice President, Fund Accounting, AGIM
01/18/66                          Assistant Treasurer since 1999  (1999-Present). Formerly, Assistant Treasurer,
                                                                  First Investor Management Company (1994-1999).
-------------------------------------------------------------------------------------------------------------------
Todd L. Spillane                  Chief Compliance Officer        Chief Compliance Officer, AGIM (1999-Present).
12/20/58                          since 2000                      Formerly, Chief Compliance Officer, Nicholas
                                                                  Applegate Capital Management (1994-1999).
-------------------------------------------------------------------------------------------------------------------

The officers conduct and supervise the daily business operations of the Series Company, while the directors, in addition to their functions set forth under "Investment Adviser," review such actions and decide on general policy.

The Series Company has an Audit Committee. The Series Company's Audit Committee consists of Messrs. Lancaster, Hackerman, Paulsen, Maupin and Love. The Audit Committee recommends to the Board the selection of independent auditors for the Series Company and reviews with such independent auditors the scope and results of the annual audit, reviews the performance of the accounts, and considers any comments of the independent auditors regarding the Series Company's financial statements or books of account. The Series Company has a Nominating Committee. The Series Company's Nominating Committee consists of Messrs. Love, Gonzales and Hackerman, and Ms. Craven. The Nominating Committee recommends to the Board nominees for independent trustee membership, reviews governance procedures and Board composition, and periodically reviews trustee compensation. The Series Company does not have a standing compensation committee.

The directors of the Series Company who are not affiliated with VALIC are each paid annual directors' fees and are reimbursed for certain out-of-pocket expenses by the Series Company. The directors and officers of the Series Company and members of their families as a group, beneficially owned less than 1% of the common stock of each Fund outstanding as of May 31, 2001.

COMPENSATION OF NON-AFFILIATED DIRECTORS

The following table sets forth information regarding compensation and benefits earned by the Directors who are not affiliated with VALIC for the fiscal year ending May 31, 2001.

COMPENSATION TABLE
FISCAL YEAR ENDING MAY 31, 2001

------------------------------------------------------------------------------------------------------------------
                                                            PENSION OR                               TOTAL
                                                            RETIREMENT                         COMPENSATION FROM
                                         AGGREGATE       BENEFITS ACCRUED   ESTIMATED ANNUAL     FUND AND FUND
                                     COMPENSATION FROM   AS PART OF FUND      BENEFITS UPON     COMPLEX PAID TO
      NAME OF PERSON, POSITION              FUND             EXPENSES          RETIREMENT         DIRECTORS(3)
------------------------------------------------------------------------------------------------------------------
Dr. Judith L. Craven, Director            $32,683              $ 0                 (2)              $53,813
------------------------------------------------------------------------------------------------------------------
Dr. Timothy J. Ebner, Director            $30,240              $ 0                 (2)              $50,575
------------------------------------------------------------------------------------------------------------------
Judge Gustavo E. Gonzales, Jr.,           $30,229              $ 0                 (2)              $48,995
Director
------------------------------------------------------------------------------------------------------------------
Dr. Norman Hackerman, Director            $32,997            $41,858               (2)              $54,527
------------------------------------------------------------------------------------------------------------------
Dr. John Wm. Lancaster, Director          $32,982            $42,000               (2)              $54,490
------------------------------------------------------------------------------------------------------------------
Ben H. Love, Director                     $33,257            $24,825               (2)              $54,895
------------------------------------------------------------------------------------------------------------------
Dr. John E. Maupin, Jr., Director         $31,691              $ 0                 (2)              $51,070
------------------------------------------------------------------------------------------------------------------
Dr. F. Robert Paulsen, Director           $31,491            $39,205               (2)              $50,670
------------------------------------------------------------------------------------------------------------------

(1) The total present value of accumulated benefits as of May 31, 2001, under expense assumptions to be used for the fiscal year ending May 31, 2002 for Messrs. Hackerman, Lancaster, Love, and Paulsen is $741,824.

(2) All current directors would earn ten or more years of service as of their normal retirement date. Complete years of service earned as of May 31, 2001, are as follows: Messrs. Hackerman, Lancaster, Love, and Paulsen - 10 or greater; Dr. Craven and Messrs. Ebner, Gonzales and Maupin - approximately 3 years.

(3) Includes all investment companies managed by VALIC.

PENSION TABLE -- ESTIMATED BENEFITS AT NORMAL RETIREMENT

                                                   YEARS OF SERVICE AT RETIREMENT
------------------------------------------------------------------------------------------------------------------
 COMPENSATION AT       5 YEARS                                                                          10 OR MORE
   RETIREMENT         AND UNDER         6 YEARS         7 YEARS          8 YEARS          9 YEARS          YEARS
------------------------------------------------------------------------------------------------------------------
     $20,000           $10,000          $12,000         $14,000          $16,000          $18,000         $20,000
------------------------------------------------------------------------------------------------------------------
     $30,000           $15,000          $18,000         $21,000          $24,000          $27,000         $30,000
------------------------------------------------------------------------------------------------------------------
     $40,000           $20,000          $24,000         $28,000          $32,000          $36,000         $40,000
------------------------------------------------------------------------------------------------------------------
     $50,000           $25,000          $30,000         $35,000          $40,000          $45,000         $50,000
------------------------------------------------------------------------------------------------------------------
     $60,000           $30,000          $36,000         $42,000          $48,000          $54,000         $60,000
------------------------------------------------------------------------------------------------------------------

To determine the estimated benefits at retirement, first find the amount of compensation at retirement (on the left) and then follow that line to the years of service at retirement. For example, a Director earning $40,000 upon retirement with 8 years of service would receive an estimated benefit of $32,000 per year for a ten-year period.

PART C. OTHER INFORMATION

ITEM 23. EXHIBITS

a.     (1)                  Articles of Incorporation (8)
       (2)                  Articles Supplementary to the Articles of Incorporation, effective April 10, 1990 (8)
       (3)                  Articles Supplementary to the Articles of Incorporation, effective September 28, 1990 (8)
       (4)                  Amendment One to the Articles of Incorporation, effective October 1, 1991 (8)
       (5)                  Amendment Two to the Articles of Incorporation, effective May 1, 1992 (8)
       (6)                  Articles Supplementary to the Articles of Incorporation, effective May 1, 1992 (8)
       (7)                  Articles Supplementary to the Articles of Incorporation, effective January 20, 1994 (8)
       (8)                  Articles Supplementary to the Articles of Incorporation, effective February 4, 1994 (8)
       (9)                  Articles Supplementary to the Articles of Incorporation, effective February 4, 1994 (8)
       (10)                 Articles Supplementary to the Articles of Incorporation, effective May 1, 1995 (8)
       (11)                 Articles of Amendment to the Articles of Incorporation, effective October 1, 1997 (7)

b.                          By-Laws as amended and restated October 29, 1991 (8)

c.                          Not Applicable

d.     (1)                  Interim Investment Sub-Advisory Agreement between The Variable Annuity Life Insurance Company and
                            American General Investment Management, L.P. dated August 29, 2001. Filed herewith.
       (2)                  Investment Sub-Advisory Agreement between The Variable Annuity Life Insurance Company and American
                            Century Investment Management, Inc. dated August 29, 2001. Filed herewith.
       (3)                  Investment Sub-Advisory Agreement between The Variable Annuity Life Insurance Company and Founders Asset
                            Management LLC dated August 29, 2001. Filed herewith.
       (4)                  Investment Sub-Advisory Agreement between The Variable Annuity Life Insurance Company and Putnam
                            Investment Management, Inc. dated August 29, 2001. Filed herewith.
       (5)                  Interim Investment Sub-Advisory Agreement between The Variable Annuity Life Insurance Company and T.
                            Rowe Price Associates, Inc. (Science & Technology Fund) dated August 29, 2001. Filed herewith.
       (6)                  Investment Sub-Advisory Agreement between The Variable Annuity Life Insurance Company and T. Rowe Price
                            Associates, Inc. (Founders/T. Rowe Small Cap Fund) dated August 29, 2001. Filed herewith.
       (7)                  Investment Sub-Advisory Agreement between The Variable Annuity Life Insurance Company and Wellington
                            Management Company LLP dated August 29, 2001. Filed herewith.
       (8)                  Interim Investment Advisory Agreement between The Variable Annuity Life Insurance Company and North
                            American Funds Variable Product Series I, dated August 29, 2001. Filed herewith.

e.                          Distribution Agreement between Registrant and The Variable Annuity

C-1

                            Marketing Company, dated August 29, 2001. Filed herewith.

f.                          Not Applicable

g.     (1)    (a)           Custodian Contract between Registrant and State Street Bank and Trust Company (8)
              (b)           Custodian Fee Schedule between Registrant and State Street Bank and Trust Company (7)
              (c)           Amendment to Custodian Contract between Registrant and State Street Bank and Trust Company (7)
              (d)           Custodian Fee Schedule between Registrant and State Street Bank and Trust Company (7)
              (e)           Amendment to Custodian Contract dated October 18, 2000. Filed herewith.
       (2)                  Securities Lending Authorization Agreement as Amended between Registrant and State Street Bank and Trust
                            Company (8)
       (3)    (a)           Canada Sub-Custodial Agreement between State Street Bank and Trust Company and Canada Trust Company (2)
              (b)           Sub-Custodial Agreements between State Street Bank and Trust Company and: (1)
                    (i)     Den Danske Bank -- Copenhagen
                    (ii)    Sumitomo Trust and Banking Co., Ltd. -- Tokyo
                    (iii)   State Street Bank and Trust Company -- London
              (c)           Additional Sub-Custodial Agreements between State Street Bank and Trust Company and (3)
                    (i)     Westpac Banking Corporation -- Sydney
                    (ii)    GiroCredit Bank Aktiengesellschaft der Sparkassen -- Vienna
                    (iii)   Generale Bank -- Brussels
                    (iv)    Canada Trustco Mortgage Company -- Toronto
                    (v)     Merita Bank Limited
                    (vi)    Banque Paribas -- Paris
                    (vii)   Standard Chartered Bank -- Hong Kong
                    (viii)  Bank of Ireland -- Dublin
                    (ix)    Standard Chartered Bank Malaysia Berhad
                    (x)     MeesPierson N.V. -- Amsterdam
                    (xi)    ANZ Banking Group (New Zealand) Limited -- Wellington
                    (xii)   Christiania Bank of Kreditkasse -- Oslo
                    (xiii)  The Development Bank of Singapore Ltd. -- Singapore
                    (xiv)   Banco Santander, S.A. -- Madrid
                    (xv)    Skandinaviska Enskilda Banken -- Stockholm
                    (xvi)   Union Bank of Switzerland -- Zurich
              (d)           Additional Sub-Custodial Agreement between State Street Bank and Trust Company and Citibank, N.A.,
                            Mexico -- Mexico City (4)
              (e)           Additional Sub-Custodial Agreements between State Street Bank and Trust Company and (6)
                     (i)    Dresdner Bank AG -- Frankfurt
                     (ii)   Banque Paribas -- Milan
                     (iii)  The Fuji Bank, Limited -- Tokyo
                     (iv)   The Daiwa Bank, Limited -- Tokyo
              (f)           Additional Sub-Custodial Agreement between State Street Bank and Trust Company and Banco Commercial
                            Portugues -- Lisbon (8)

h.     (1)                  Amended and Restated Transfer Agency and Service Agreement between Registrant and The Variable Annuity
                            Life Insurance Company. Filed herewith.
       (2)                  Amended and Restated Accounting Services Agreement between Registrant and The Variable Annuity Life
                            Insurance Company effective May 1, 2001. Filed herewith.

C-2

i. Legal Opinion. Filed herewith.

j. Consent of Auditors, filed herewith.

k. Not Applicable

l. (1) Subscription Agreement between the Registrant and The Variable Annuity Life Insurance Company regarding the initial capitalization of Growth Fund(8)

(2) Subscription Agreement between the Registrant and The Variable Annuity Life Insurance Company regarding the initial capitalization of Growth & Income Fund(8)

(3) Subscription Agreement between the Registrant and The Variable Annuity Life Insurance Company regarding the initial capitalization of Science & Technology Fund(8)

m. Not Applicable

n. Not Applicable

o. Reserved

p. (1) Code of Ethics - American General Investment Management, L.P./ The Variable Annuity Life Insurance Company. Filed herewith.

(2) Code of Ethics - American Century Investment Management, Inc. Filed herewith.

(3) Code of Ethics - Founders Asset Management LLC. (Mellon) Filed herewith.

(4) Code of Ethics - Putnam Investment Management, Inc. Filed herewith.

(5) Code of Ethics - T Rowe Price Associates, Inc. Filed herein.

(6) Code of Ethics - Wellington Management Company LLP. Filed herewith.

Copies of manually signed powers of attorney for North American Funds Variable Products Series I, Directors: Dr. Judith L. Craven, Dr. Timothy J. Ebner, Judge Gustavo E. Gonzales, Jr., Dr. Norman Hackerman, Dr. John W. Lancaster, Ben H. Love, Dr. John E. Maupin, Jr. and Dr. F. Robert Paulsen. Filed herewith.

Footnotes:

1. Incorporated herein by reference to the Company's Form N-14 registration statement filed with the Securities and Exchange Commission on January 27, 1992 (File No. 33-45217).

2. Incorporated herein by reference to Post-Effective Amendment Number 15 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on August 2, 1990 (File No. 2-83631/811-3738).

3. Incorporated herein by reference to Post-Effective Amendment Number 19 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on July 30, 1993 (File No. 2-83631/811-3738).

4. Incorporated herein by reference to Post-Effective Amendment Number 23 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on August 2, 1994 (File No. 2-83631/811-3738).

C-3

5. Incorporated herein by reference to Post-Effective Amendment Number 7 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on September 25, 1986 (File No. 2-83631/811-3738).

6. Incorporated herein by reference to Post-Effective Amendment Number 24 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on September 17, 1996 (File No. 2-83631/811-3738).

7. Incorporated herein by reference to Post-Effective Amendment Number 25 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on July 31, 1997 (File No. 2-83631/811-3738).

8. Incorporated herein by reference to Post-Effective Amendment Number 26 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on September 22, 1998 (File No. 2-83631/811-3738).

9. Incorporated herein by reference to Post-Effective Amendment Number 27 to the Company's Form N-1A registration statement filed with the Securities and Exchange Commission on August 2, 1999 (File No. 2-83631/811-3738).

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

There are no persons controlled by or under common control with the Registrant.

ITEM 25. INDEMNIFICATION

Incorporated herein by reference to Post-Effective Amendment Number 20 to the Company's Form N-1A Registration Statement filed with the Securities and Exchange Commission on February 20, 1994 (File No. 2-83631/811-3738).

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER

The principal business address of VALIC, American General Annuity Insurance Company ("AGAIC") and American General Corporation ("AG Corporation") is 2929 Allen Parkway, Houston, Texas, 77019.

NAME                 TITLE
John A. Graf         Chairman, Director and Chief Executive Officer - VALIC &
                     AGAIC; Senior Vice Chairman, Asset Accumulation - AG
                     Corporation
Bruce R. Abrams      Director - VALIC; President - AGAIC
Robert P. Condon     Director and President - VALIC
M. Kathleen Adamson  Director - VALIC; Executive Vice President, Operations
                     Administration - VALIC & AGAIC
Michael J. Akers     Director - VALIC; Senior Vice President and Chief Actuary -
                     VALIC & AGAIC
Rebecca G. Campbell  Director - VALIC; Senior Vice President, Human Resources -
                     VALIC & AGAIC
Mary L. Cavanaugh    Director, Executive Vice President, General Counsel and
                     Secretary - VALIC & AGAIC; Deputy General Counsel and
                     Assistant Secretary - AG Corporation
David W. Entrekin    Director, Executive Vice President and Chief Financial
                     Officer - VALIC & AGAIC; Executive Vice President,
                     Strategic Development - AG Corporation
John V. LaGrasse     Executive Vice President, Technology - VALIC & AGAIC;
                     Executive Vice President and Chief Technology Officer -
                     AG Corporation
Richard L. Bailey    Senior Vice President, Planning and Expense Management -
                     VALIC & AGAIC
Jeff Carlson         Senior Vice President, Systems - VALIC
Jennifer D. Cobbs    Senior Vice President, Field Sales Development - VALIC

C-4

NAME                     TITLE

Kenneth E. Coffey        Senior Vice President and National Marketing Director
                         - VALIC
David H. denBoer         Senior Vice President and Chief Compliance Officer
                         - VALIC & AGAIC
Sharla A. Jackson        Senior Vice President, Customer Service (Amarillo)
                         - VALIC & AGAIC
Stephen G. Kellison      Senior Vice President, Product Management - VALIC
Richard J. Lindsay       Senior Vice President, Marketing - VALIC
Rosalia Nolon            Senior Vice President, Institutional Services - VALIC
Thomas G. Norwood        Senior Vice President, Broker/Dealer Operations
                         - VALIC & AGAIC
Larry Robinson           Senior Vice President, Product Development - VALIC
Robert E. Steele         Senior Vice President, Specialty Products - VALIC &
                         AGAIC
Mary C. Birmingham       Vice President, Group Plan Services and Annuity
                         Compensation - VALIC
James D. Bonsall         Vice President, Financial Systems - VALIC
Gregory S. Broer         Vice President, Actuarial - VALIC & AGAIC
Richard A. Combs         Vice President, Actuarial - VALIC & AGAIC
Neil J. Davidson         Vice President, Actuarial - VALIC & AGAIC
Jill A. Etta             Vice President, Variable Annuity Sales - VALIC & AGAIC
Terry B. Festervand      Vice President and Treasurer - VALIC & AGAIC
Daniel Fritz             Vice President, Actuarial - VALIC & AGAIC
Michael D. Gifford       Vice President, Case Development - VALIC
Joseph P. Girgenti       Vice President, Sales Support - VALIC
Albert J. Guiterrez      Vice President and Investment Officer - VALIC & AGAIC
Joan M. Keller           Vice President, Client Service Processing - VALIC
Calvin King              Vice President, North Houston Customer Care Center
                         - VALIC
Traci P. Langford        Vice President, Account Management - VALIC
Jerry L. Livers          Vice President, PPGA Sales - VALIC & AGAIC
Edward P. Millay         Vice President and Controller - VALIC & AGAIC
Cindy Moore              Vice President, Budget and Expense Management - VALIC &
                         AGAIC
Deanna Osmonson          Vice President, Insurance Sales Practices Compliance
                         - VALIC & AGAIC
Rembert R. Owen, Jr.     Vice President and Assistant Secretary - VALIC & AGAIC
Steven D. Rubinstein     Vice President, Financial Planning and Reporting
                         - VALIC & AGAIC
Keith Schlosser          Vice President, Sales Executive Administration - VALIC
Richard W. Scott         Vice President and Chief Investment Officer - VALIC &
                         AGAIC
Gary N. See              Vice President, Group Actuarial - VALIC & AGAIC
Nancy K. Shumbera        Vice President, Business Solutions Development
                         - VALIC & AGAIC
Brenda Simmons           Vice President, Client Contribution Services - VALIC
Paula F. Snyder          Vice President, AGRS Marketing Communications - VALIC &
                         AGAIC
James P. Steele          Vice President, Specialty Products - VALIC & AGAIC
Brian R. Toldan          Vice President and General Auditor - VALIC & AGAIC
Julia S. Tucker          Vice President and Investment Officer - VALIC & AGAIC
Krien Verberkmoes        Vice President, Sales Compliance - VALIC & AGAIC
William A. Wilson        Vice President, Government Affairs - VALIC & AGAIC
Roger E. Hahn            Investment Officer - VALIC & AGAIC
C. Scott Inglis          Investment Officer - VALIC & AGAIC
Gordon S. Massie         Investment Officer - VALIC & AGAIC
Craig R. Mitchell        Investment Officer - VALIC & AGAIC
W. Lary Mask             Real Estate Investment Officer and Assistant Secretary
                         - VALIC & AGAIC; Vice President, Real Estate Management
                         - AG Corporation
D. Lynne Walters         Tax Officer - VALIC & AGAIC; Senior Vice President,
                         Taxes - AG Corporation
Kurt Bernlohr            Assistant Secretary - VALIC & AGAIC
Pauletta P. Cohn         Assistant Secretary - VALIC & AGAIC; Deputy General
                         Counsel and Assistant Secretary - AG Corporation
Lauren W. Jones          Assistant Secretary - VALIC & AGAIC
Christine W. McGinnis    Assistant Secretary - VALIC & AGAIC
Connie E. Pritchett      Assistant Secretary - VALIC & AGAIC
Daniel R. Cricks         Assistant Tax Officer - VALIC & AGAIC

C-5

NAME                        TITLE

Bonnie Finley               Assistant Treasurer -- VALIC & AGAIC
Paul Hoepfl                 Assistant Treasurer -- VALIC & AGAIC
Louis McNeal                Assistant Treasurer -- VALIC & AGAIC
Kristy L. McWilliams        Assistant Treasurer -- VALIC & AGAIC
William H. Murray           Assistant Treasurer -- VALIC & AGAIC
Tara S. Rock                Assistant Treasurer -- VALIC & AGAIC
Carolyn Roller              Assistant Treasurer -- VALIC & AGAIC
Diana Smirl                 Assistant Treasurer -- VALIC & AGAIC
Marylyn S. Zlotnick         Assistant Controller -- VALIC & AGAIC
Robert A. Demchak           Administrative Officer -- VALIC & AGAIC
Ted D. Hennis               Administrative Officer -- VALIC & AGAIC
William R. Keller, Jr       Administrative Officer -- VALIC
Fred M. Lowery              Administrative Officer -- VALIC
Michael E. Mead             Administrative Officer -- VALIC & AGAIC
Kathryn T. Smith            Administrative Officer -- VALIC

ITEM 27. PRINCIPAL UNDERWRITERS

(a) The Variable Annuity Marketing Company ("VAMCO")(the "Distributor") acts as distributor and principal underwriter of the Registrant and as principal underwriter for VALIC Separate Account A, North American Variable Product Series I and North American Variable Product Series II. The principal business address for all the officers and directors shown below is 2929 Allen Parkway, Houston, TX 77019.

(b) The following information is furnished with respect to each officer and director of the Distributor.

NAME AND PRINCIPAL     POSITIONS AND OFFICES               POSITIONS AND OFFICES
BUSINESS ADDRESS       WITH DISTRIBUTOR                    WITH THE REGISTRANT

Robert P. Condon       Director, Chairman of the           None
                       Board, Chief Executive Officer
                       and President
Mary Cavanaugh         Director and Secretary              None
David H. denBoer       Director, Senior Vice President     None
                       and Chief Compliance Officer
Jennifer Cobbs         Executive Vice President,           None
                       Marketing
Steven P. Boero        Senior Vice President               None
Thomas N. Lange        Senior Vice President               None
Edward Baum            Vice President                      None
Edward K. Boero        Vice President                      None
Joe H. Connell         Vice President                      None
Jay Jorgensen          Vice President                      None
Richard J. Lindsay     Vice President, Marketing           None
                       Administration
David R. Lyle          Vice President                      None
John R. Mactavish      Vice President                      None
Joe C. Osborne         Vice President                      None
Keith A. Poch          Vice President                      None
Fred L. Roberts        Vice President                      None
Ron Sanchies           Vice President                      None
Paula K. Snyder        Vice President, Marketing           None
                       Communications
Donald R. Van Putten   Vice President                      None
Krien Verberkmoes      Vice President, Sales Practices;    None
                       Chief Financial/Operations Officer

C-6

                                   and Treasurer
Donna M. Zucchi                    Vice President                          None
Robyn Galerston                    Assistant Vice President, Sales         None
                                   Literature Review
Pauletta P. Cohn                   Assistant Secretary                     None
Lauren W. Jones                    Assistant Secretary                     None
D. Lynne Walters                   Tax Officer                             None
Dennis Cohen                       Assistant Tax Officer                   None
Terry B. Festervand                Assistant Treasurer                     None
Tara S. Rock                       Assistant Treasurer                     None

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

The books or other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder will be in the physical possession of either:

THE DEPOSITOR:
The Variable Annuity Life Insurance Company 2929 Allen Parkway
Houston, Texas 77019

THE PRINCIPAL UNDERWRITER:
The Variable Annuity Marketing Company
2929 Allen Parkway
Houston, Texas 77019

THE CUSTODIAN:
The State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110

INVESTMENT SUB-ADVISERS:

American Century Investment Management, Inc. 4500 Main Street
Kansas City, Missouri 64111

American General Investment Management, L.P. 2929 Allen Parkway
Houston, Texas 77019

Founders Asset Management LLC
2930 East Third Avenue
Denver, Colorado 80206

Putnam Investment Management, LLC
One Post Office Square
Boston, Massachusetts 02109

T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, Maryland 21202

Wellington Management Company, LLP

C-7

75 State Street
Boston, Massachusetts 02109

ITEM 29. MANAGEMENT SERVICES

There is no management-related service contract not discussed in Parts A or B of this Form N-1A

ITEM 30. UNDERTAKINGS

Not Applicable

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, North American Funds Variable Product Series I, certifies that it meets all of the requirements for effectiveness of this registration statement under Rule 485(b) under the Securities Act of 1933 and has duly caused this registration statement to be signed on its behalf by the undersigned, duly authorized, in the City of Houston, and State of Texas, on the 27th day of September, 2001.

North American Funds Variable Product Series I

/s/ Nori Gabert
Nori Gabert, Vice President and Secretary

Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the date indicated.

SIGNATURE                          TITLE                      DATE

     *                             Director                   September 27, 2001
----------------------
Judith Craven

     *                             Director                   September 27, 2001
----------------------
Timothy J. Ebner

     *                             Director                   September 27, 2001
----------------------
Gustavo E. Gonzales, Jr.

     *                             Director                   September 27, 2001
----------------------
Norman Hackerman

     *                             Director                   September 27, 2001
----------------------
John Wm. Lancaster

     *                             Director                   September 27, 2001
----------------------
Ben H. Love

     *                             Director                   September 27, 2001
----------------------
John E. Maupin, Jr.

     *                             Director                   September 27, 2001
----------------------
F. Robert Paulsen


* By: /s/ NORI L. GABERT

  ------------------------
  Nori L. Gabert
  Attorney-in-Fact

EXHIBIT INDEX

d. (1)    Interim Investment Sub-Advisory Agreement between The Variable Annuity
          Life Insurance Company and American General Investment Management,
          L.P. dated August 29, 2001. Filed herewith.

   (2)    Investment Sub-Advisory Agreement between The Variable Annuity Life
          Insurance Company and American Century Investment Management, Inc.
          dated August 29, 2001. Filed herewith.

   (3)    Investment Sub-Advisory Agreement between The Variable Annuity Life
          Insurance Company and Founders Asset Management LLC dated August 29,
          2001. Filed herewith.

   (4)    Investment Sub-Advisory Agreement between The Variable Annuity Life
          Insurance Company and Putnam Investment Management, Inc. dated August
          29, 2001. Filed herewith.

   (5)    Interim Investment Sub-Advisory Agreement between The Variable Annuity
          Life Insurance Company and T. Rowe Price Associates, Inc. (Science &
          Technology Fund) dated August 29, 2001. Filed herewith.

   (6)    Investment Sub-Advisory Agreement between The Variable Annuity Life
          Insurance Company and T. Rowe Price Associates, Inc. (Founders/T. Rowe
          Small Cap Fund) dated August 29, 2001. Filed herewith.

   (7)    Investment Sub-Advisory Agreement between The Variable Annuity Life
          Insurance Company and Wellington Management Company LLP dated August
          29, 2001. Filed herewith.

   (8)    Interim Investment Advisory Agreement between The Variable Annuity
          Life Insurance Company and North American Funds Variable Product
          Series I, dated August 29, 2001. Filed herewith.

e.        Distribution Agreement between Registrant and The Variable Annuity
          Marketing Company, dated August 29, 2001. Filed herewith.

g. (1)(e) Amendment to Custodian Contract dated October 18, 2001. Filed herewith.

h.  (1)   Amended and Restated Transfer Agency and Services Agreement between
          Registrant and the Variable Annuity Life Insurance Company.
          Filed herewith.

     (2)  Amended and Restated Accounting Services Agreement between Registrant
          and The Variable Annuity Life Insurance Company effective May 1, 2001.
          Filed herewith.

i.        Legal Opinion. Filed herewith.

j.        Consent of Auditors. Filed herewith.

p. (1) Code of Ethics - American General Investment Management, L.P/The Variable Annuity Life Insurance Company. Filed herewith.
(2) Code of Ethics - American Century Investment Management, Inc. Filed herewith.
(3) Code of Ethics - Founders Asset Management LLC. (Mellon) Filed herewith.
(4) Code of Ethics - Putnam Investment Management, Inc. Filed herewith.
(5) Code of Ethics - T Rowe Price Associates, Inc. Filed herein.
(6) Code of Ethics - Wellington Management Company LLP. Filed herewith.

Copies of manually signed powers of attorney for North American Funds Variable Product Series I, Directors: Dr. Judith L. Craven, Dr. Timothy J. Ebner, Judge Gustavo E. Gonzales, Jr., Dr. Norman Hackerman, Dr. John W. Lancaster, Ben H. Love, Dr. John E. Maupin, Jr. and Dr. F. Robert Paulsen.
Filed herewith

Exhibit d(1)

INTERIM INVESTMENT SUB-ADVISORY AGREEMENT

This AGREEMENT made this 29th day of August, 2001, by and between THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," and AMERICAN GENERAL INVESTMENT MANAGEMENT, L.P., or its affiliate, hereinafter referred to as the "SUB-ADVISER."

VALIC and the SUB-ADVISER recognize the following:

(a) VALIC is a life insurance company organized under Chapter 3 of the Texas Insurance Code and an investment adviser registered under the Investment Advisers Act of 1940, as amended ("Advisers Act").

(b) VALIC is engaged as the investment adviser of North American Funds Variable Product Series I ("NAFV I") pursuant to an Interim Investment Advisory Agreement of even date herewith between VALIC and NAFV I. NAFV I is an investment company organized under the general corporation laws of Maryland, as a series type of investment company issuing separate classes (or series) of stock and is registered as an open-end, management investment company under the Investment Company Act of 1940 (the "1940 Act"). The 1940 Act prohibits any person from acting as an investment adviser of a registered investment company except pursuant to a written contract.

(c) NAFV I currently consists of twenty-one portfolios ("Funds"):
North American - AG Asset Allocation Fund North American - AG Capital Conservation Fund North American - AG Government Securities Fund North American - AG Growth & Income Fund North American - AG International Equities Fund North American - AG International Government Bond Fund
North American - AG Large Cap Growth Fund North American - AG MidCap Index Fund North American - AG 1 Money Market Fund North American - AG Nasdaq-100(R) Index Fund North American - AG Small Cap Index Fund North American - AG Social Awareness Fund North American - AG Stock Index Fund North American - American Century Income & Growth Fund
North American - American Century International Growth Fund
North American Core Equity Fund North American - Founders/T. Rowe Price Small Cap Fund
North American - Putnam Opportunities Fund North American - T. Rowe Price Blue Chip Growth Fund North American - T. Rowe Price Health Sciences Fund North American - T. Rowe Price Science & Technology Fund

In accordance with the NAFV I Agreement and Articles of Incorporation (the "Articles"), new Funds may be added to NAFV I upon approval of the Board of Directors without the approval of shareholders. This Agreement will apply only to the Fund(s) set forth on the attached Schedule A ("Covered Fund(s)").

(d) The SUB-ADVISER is engaged principally in the business of rendering investment advisory services and is registered as an investment adviser under the Advisers Act.

(e) VALIC desires to enter into an Investment Sub-Advisory Agreement with the SUB-ADVISER for all or a portion of the assets of the Covered Fund(s) which VALIC determines from time to time to assign to the SUB-ADVISER.

VALIC and the SUB-ADVISER AGREE AS FOLLOWS:

1. SERVICES RENDERED AND EXPENSES PAID BY THE SUB-ADVISER

The SUB-ADVISER, subject to the control, direction, and supervision of VALIC and the NAFV I Board of Directors and in material conformity with the 1940 Act, all applicable laws and regulations thereunder, all other applicable federal and state securities and tax laws and regulations, including section 817(h) and Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), the NAFV I Articles, Bylaws, registration statements, prospectus and stated investment objectives, policies and restrictions and any applicable procedures adopted by the NAFV I Board of Directors and provided to the SUB-ADVISER shall:

(a) manage the investment and reinvestment of the assets of the Covered Fund(s) including, for example, the evaluation of pertinent economic, statistical, financial, and other data, the determination of the industries and companies to be represented in each Covered Fund's portfolio, and the formulation and implementation of investment programs.

(b) maintain a trading desk and place orders for the purchase and sale of portfolio investments (including futures contracts and options thereon) for each Covered Fund's account with brokers or dealers (including futures commission merchants) selected by the SUB-ADVISER, or arrange for any other entity to provide a trading desk and to place orders with brokers and dealers (including futures commission merchants) selected by the SUB-ADVISER, subject to the SUB-ADVISER's control, direction, and supervision, which brokers or dealers may include brokers or dealers (including futures commission merchants) affiliated with the SUB-ADVISER, subject to applicable law.

In performing the services described in paragraph (b) above, the SUB-ADVISER shall use its best efforts to obtain for the Covered Fund(s) the best execution of portfolio transactions. Subject to approval by the NAFV I Board of Directors of appropriate policies and procedures, the SUB-ADVISER may cause the Covered Fund(s) to pay to a broker a commission, for effecting a portfolio transaction, in excess of the commission another broker would have charged for effecting the same transaction, if the first broker provided brokerage and/or research services to the SUB-ADVISER. The SUB-ADVISER shall not be deemed to have acted unlawfully, or to have breached any duty created by this Agreement, or otherwise, solely by reason of acting in accordance with such authorization.

The SUB-ADVISER shall maintain records adequately demonstrating compliance with its obligations under this Agreement and report periodically to VALIC and the NAFV I Board of Directors regarding the performance of its services under this Agreement. The SUB-ADVISER will make available to VALIC and NAFV I promptly upon their reasonable written request each of the Covered Fund's investment records and ledgers to assist VALIC and NAFV I in compliance with respect to each Covered Fund's securities transactions as required by the 1940 Act and the Advisers Act, as well as other applicable laws. The SUB-ADVISER will furnish the Board of Directors such periodic and special reports as VALIC and the NAFV I Board of Directors may reasonably request. The SUB-ADVISER will furnish to regulatory authorities any information or reports in connection with such services which may be requested in order to ascertain whether the operations of the Covered Fund(s) are being conducted in a manner consistent with applicable laws and regulations. The SUB-ADVISER will not disclose or use any records or information obtained pursuant to this Agreement in any manner whatsoever except as expressly authorized in this Agreement, and will keep confidential any non-public information obtained directly as a result of this service relationship, and the SUB-ADVISER shall disclose such non-public information only if VALIC or the Board of Directors has authorized such disclosure, or if such

information is or hereafter otherwise is known by the SUB-ADVISER or has been disclosed, directly or indirectly, by VALIC or NAFV I to others becomes ascertainable from public or published information or trade sources, or if such disclosure is expressly required or requested by applicable federal or state regulatory authorities, or to the extent such disclosure is reasonably required by auditors or attorneys of the SUB-ADVISER in connection with the performance of their professional services. Notwithstanding the foregoing, the SUB-ADVISER may disclose the total return earned by the Covered Fund(s) and may include such total return in the calculation of composite performance information without prior approval by VALIC or the NAFV I Board of Directors.

Should VALIC at any time make any definite determination as to any investment policy and notify the SUB-ADVISER in writing of such determination, the SUB-ADVISER shall be bound by such determination for the period, if any, specified in such notice or until similarly notified that such determination has been revoked, provided such determination will permit SUB-ADVISER to comply with the first paragraph of this Section.

The SUB-ADVISER will not hold money or investments on behalf of the Fund. The money and investments will be held by the Custodian of the Fund. The SUB-ADVISER will arrange for the transmission to the Custodian for the Fund, on a daily basis, such confirmation, trade tickets and other documents as may be necessary to enable it to perform its administrative responsibilities with respect to the Covered Fund(s). The SUB-ADVISER further shall have the authority to instruct the custodian of the Fund (i) to pay cash for securities and other property delivered to the Custodian for the Fund (ii) to deliver securities and other property against payment for the Fund, and (iii) to transfer assets and funds to such brokerage accounts as the SUB-ADVISER may designate, all consistent with the powers, authorities and limitations set forth herein. The SUB-ADVISER shall not have the authority to cause the Custodian to deliver securities and other property except as expressly provided for in this Agreement.

The SUB-ADVISER may aggregate sales and purchase orders of securities held by the Fund with similar orders being made simultaneously for other accounts managed by the SUB-ADVISER or with accounts of the affiliates of the SUB-ADVISER, if in the SUB-ADVISER's reasonable judgment such aggregation shall result in an overall economic benefit to the Fund considering the advantageous selling or purchase price, brokerage commission and other expenses. In accounting for such aggregated order price, commission and other expenses shall be averaged on a per bond or share basis daily. VALIC acknowledges that the determination of such economic benefit to the Fund by the SUB-ADVISER is subjective and represents the SUB-ADVISER's evaluation that the Fund is benefited by relatively better purchase or sales prices, lower commission expenses and beneficial timing of transactions or a combination of these and other factors.

The SUB-ADVISER shall for all purposes herein be deemed to be an independent contractor and shall, unless otherwise provided or authorized, have no authority to act or represent VALIC or NAFV I other than in furtherance of the SUB-ADVISER's duties and responsibilities as set forth in this Agreement.

Except as otherwise agreed, or as otherwise provided herein, the SUB-ADVISER shall bear the expense of discharging its responsibilities hereunder and VALIC shall pay, or arrange for others to pay, all VALIC's expenses, except that VALIC shall in all events pay the compensation described in Section 2 of the Agreement.

2. COMPENSATION OF THE SUB-ADVISER

VALIC shall pay to the SUB-ADVISER, as compensation for the services rendered and expenses paid by the SUB-ADVISER, a monthly fee or fees based on each Covered Fund's average monthly net asset value computed for each Covered Fund as provided for herein and in the fee schedule attached hereto as Schedule A. Schedule A may be amended from time to time, provided that amendments are made in conformity with applicable laws and regulations and the NAFV I Articles and Bylaws. Any change in Schedule A pertaining to any new or existing Fund shall not be deemed to affect the interest of any other Fund and shall not require the approval of shareholders of any other Fund.

The average monthly net asset value shall be determined by taking the mean average of all of the determinations of net asset value, made in the manner provided in the NAFV I Articles, for each business day during a given calendar month. VALIC shall pay this fee for each calendar month as soon as practicable after the end of that month, but in any event no later than ten (10) days following the end of the month.

If the SUB-ADVISER serves for less than a whole month, the foregoing compensation shall be prorated.

The payment of advisory fees related to the services of the SUB-ADVISER under this Agreement shall be the sole responsibility of VALIC and shall not be the responsibility of the Fund.

During the term of this Agreement, the following conditions apply:

a. The fee shall be held in an interest-bearing escrow account with State Street Bank and Trust Company;

b. If a majority of a Covered Fund's outstanding voting securities approve a new investment sub-advisory agreement (the "New Sub-Advisory Agreement") with the SUB-ADVISER within 150 days after the date hereof, the amount in the escrow account (including interest earned thereon) with respect to such Covered Fund shall be paid to the SUB-ADVISER; and

c. If a majority of a Covered Fund's outstanding voting securities do not approve a New Sub-Advisory Agreement with the SUB-ADVISER within such 150-day period, the SUB-ADVISER shall be paid from the escrow account, the lesser of an amount equal to

(i) any costs incurred in performing this Agreement (plus interest earned on that amount in the escrow account); or

(ii) the total amount in the escrow account (plus interest earned thereon).

3. SCOPE OF THE SUB-ADVISER'S ACTIVITIES

VALIC understands that the SUB-ADVISER and its affiliates now act, will continue to act and may act in the future as investment adviser to fiduciary and other managed accounts and as investment adviser to other investment companies, and VALIC has no objection to the SUB-ADVISER so acting, provided that whenever a Covered Fund and one or more other accounts or investment companies advised by the SUB-ADVISER have available funds for investment, investments suitable and appropriate for each will be allocated in accordance with a methodology believed to be equitable to each entity. The SUB-ADVISER similarly agrees to allocate opportunities to sell securities. VALIC recognizes that, in some cases, this procedure may limit the size of the position that may be acquired or sold for a Covered Fund. In addition, VALIC understands that the persons employed by the SUB-ADVISER to assist in the performance of the SUB-ADVISER's duties hereunder will not devote their full time to such service and nothing contained herein shall be deemed to limit or restrict the right of the SUB-ADVISER or any affiliate of the SUB-ADVISER to engage in and devote time and attention to other business or to render services of whatever kind or nature.

Except as otherwise required by the 1940 Act, any of the shareholders, directors, officers and employees of VALIC may be a shareholder, director, officer or employee of, or be otherwise interested in, the SUB-ADVISER, and in any person controlling, controlled by or under common control with the SUB-ADVISER; and the SUB-ADVISER, and any person controlling, controlled by or under common control with the SUB-ADVISER, may have an interest in VALIC.

The SUB-ADVISER shall not be liable to VALIC, NAFV I, the Fund, or to any shareholder in the Fund, and VALIC shall indemnify the SUB-ADVISER, for any act or omission in rendering services under this Agreement, or for any losses sustained in connection with the matters to which this agreement relates, so long

as there has been no willful misfeasance, bad faith, gross negligence, or reckless disregard of obligations or duties on the part of the SUB-ADVISER in performing its duties under this Agreement.

VALIC shall perform quarterly and annual tax compliance tests and promptly furnish reports of such tests to the SUB-ADVISER after each quarter end to ensure that the Fund is in compliance with Subchapter M of the Code and Section 817(h) of the Code. VALIC shall apprise the SUB-ADVISER promptly after each quarter end of any potential non-compliance with the diversification requirements in such Code provisions. If so advised, the SUB-ADVISER shall take prompt action so that NAFV I(s) comply with such Code diversification provisions, as directed by VALIC.

4. REPRESENTATIONS OF THE SUB-ADVISER AND VALIC

The SUB-ADVISER represents, warrants, and agrees as follows:

(a) The SUB-ADVISER (i) is registered as an investment adviser under the Advisers Act and will continue to be so registered for so long as this Agreement remains in effect: (ii) is not prohibited by the 1940 Act or the Advisers Act from performing the services contemplated by this Agreement; (iii) has met, and will continue to meet for so long as this Agreement remains in effect, any applicable federal or state requirements, or the applicable requirements of any regulatory or industry self-regulatory agency, necessary to be met in order to perform the services contemplated by this Agreement,
(iv) has the authority to enter into and perform the services contemplated by this Agreement, and (v) will immediately notify VALIC of the occurrence of any event that would disqualify the SUB-ADVISER from serving as an investment adviser of an investment company pursuant to Section 9(a) of the 1940 Act or otherwise.

(b) The SUB-ADVISER has adopted a written code of ethics complying with the requirements of Rule 17j-1 under the 1940 Act and if it has not already done so, will provide VALIC with a copy of such code of ethics together with evidence of its adoption.

(c) The SUB-ADVISER has provided VALIC with a copy of its Form ADV as most recently filed with the SEC and will promptly after filing any amendment to its Form ADV with the SEC, furnish a copy of such amendment to VALIC.

VALIC represents, warrants, and agrees as follows:

VALIC: (i) is registered as an investment adviser under the Advisers Act and will continue to be so registered for so long as this Agreement remains in effect: (ii) is not prohibited by the 1940 Act or the Advisers Act from performing the services contemplated by this Agreement; (iii) has met, and will continue to meet for so long as this Agreement remains in effect, any applicable federal or state requirements, or the applicable requirements of any regulatory or industry self-regulatory agency, necessary to be met in order to perform the services contemplated by this Agreement, (iv) has the authority to enter into and perform the services contemplated by this Agreement, and (v) will immediately notify the SUB-ADVISER of the occurrence of any event that would disqualify VALIC from serving as an investment adviser of an investment company pursuant to Section 9(a) of the 1940 Act or otherwise.

5. TERM OF AGREEMENT

This Agreement shall become effective as to the Covered Fund(s) as of the date hereof and will continue in effect as to a Covered Fund until a new Investment Sub-advisory Agreement is approved by shareholders of the Fund(s) or for 150 days, whichever is less.

it relates to any Covered Fund. The Agreement may be terminated as to any Covered Fund at any time, without the payment of any penalty, by vote of NAFV I's Board of Directors or by vote of a majority of that Covered Fund's outstanding voting securities on not more than ten calendar days' prior written notice to the SUB-ADVISER. This Agreement may also be terminated by VALIC: (i) on 30-60 days' prior written notice to the SUB-ADVISER, without the payment of any penalty; or (ii) if the SUB-ADVISER becomes unable to discharge its duties and obligations under this Agreement. The SUB-ADVISER may terminate this Agreement at any time, or preclude its renewal without the payment of any penalty, on at least 60 days' prior written notice to VALIC.

6. OTHER MATTERS

The SUB-ADVISER may from time to time employ or associate with itself any person or persons believed to be particularly fit to assist in its performance of services under this Agreement, provided no such person serves or acts as an investment adviser separate from the SUB-ADVISER so as to require a new written contract pursuant to the 1940 Act. The compensation of any such persons will be paid by the SUB-ADVISER, and no obligation will be incurred by, or on behalf of, VALIC or the Fund with respect to them.

The SUB-ADVISER agrees that all books and records which it maintains for the Fund are the Fund's property. The SUB-ADVISER also agrees upon request of VALIC or the Fund, to promptly surrender the books and records in accordance with the 1940 Act and rules thereunder. The SUB-ADVISER further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1 under the 1940 Act.

VALIC has herewith furnished the SUB-ADVISER copies of the Fund's Prospectus, Statement of Additional Information, Articles and Bylaws as currently in effect and agrees during the continuance of this Agreement to furnish the SUB-ADVISER copies of any amendments or supplements thereto before or at the time the amendments or supplements become effective. Until VALIC delivers any amendments or supplements to the SUB-ADVISER, the SUB-ADVISER shall be fully protected in relying on the documents previously furnished to it.

The SUB-ADVISER is authorized to honor and act on any notice, instruction or confirmation given by VALIC on behalf of the Fund in writing signed or sent by any of the persons whose names, addresses and specimen signatures will be provided by VALIC from time to time. The SUB-ADVISER shall not be liable for so acting in good faith upon such instructions, confirmation or authority, notwithstanding that it shall subsequently be shown that the same was not given or signed or sent by an authorized person.

VALIC agrees to furnish the SUB-ADVISER at its principal office prior to use thereof, copies of all prospectuses, proxy statements, reports to shareholders, sales literature, or other material prepared for distribution to interest holders of the Fund or the public that refer in any way to the SUB-ADVISER, and not to use such material if the SUB-ADVISER reasonably objects in writing within ten (10) business days (or such other time as may be mutually agreed) after receipt thereof. In the event of termination of this agreement, VALIC will continue to furnish to the SUB-ADVISER copies of any of the above-mentioned materials that refer in any way to the SUB-ADVISER. VALIC shall furnish or otherwise make available to the SUB-ADVISER such other information relating to the business affairs of VALIC and the Fund as the SUB-ADVISER at any time, or from time to time, may reasonably request in order to discharge obligations hereunder. Subject to provisions of this paragraph, SUB-ADVISER grants VALIC and the Fund a non-exclusive right to use the "American General Investment Management" name in connection with the SUB-ADVISER's management of the Fund (i) for so long as this Agreement, any other investment management agreement between VALIC and SUB-ADVISER with respect to NAFV I, or to any extension, renewal or amendment thereof, remain in effect, and (ii) for subsequent periods as long as required by law, rule or regulation or to the extent necessary to refer to or illustrate the historical performance of the Fund.

terms of this Investment Sub-Advisory Agreement, or (ii) as the result of any untrue statement of a material fact or any omission to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which they were made, not misleading in any registration statements, proxy materials, reports, advertisements, sales literature, or other materials pertaining to the Fund, except insofar as any such statement or omission was specifically made in reliance on written information provided by the SUB-ADVISER to VALIC.

The SUB-ADVISER agrees to indemnify VALIC for losses and claims which arise (i) as a result of a failure by SUB-ADVISER to provide the services or furnish the materials required under the terms of this Investment Sub-Advisory Agreement, or (ii) as the result of any untrue statement of a material fact or any omission to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which they were made, not misleading in any registration statements, proxy materials, reports, advertisements, sales literature, or other materials pertaining to the Fund, but only to the extent that such statement or omission was specifically made in reliance on written information provided by the SUB-ADVISER to VALIC. Provided, however, that the SUB-ADVISER's responsibility, if any, to provide VALIC with indemnification pursuant to this paragraph or any other provision of this Agreement for any failure on the SUB-ADVISER's part to comply with the diversification requirements specified in
Section 817(h) of the Code or the qualification standards of Subchapter M of the Code shall not for any Covered Fund exceed the lesser of $1 million or 2% of the Covered Fund's net assets (measured as of the end of the first calendar quarter during which non-compliance with Section 817(h) or Subchapter M of the Code first occurred).

7. APPLICABILITY OF FEDERAL SECURITIES LAWS

This Agreement shall be interpreted in accordance with the laws of the State of Texas and applicable federal securities laws and regulations, including definitions therein and such exemptions as may be granted to VALIC or the SUB-ADVISER by the Securities and Exchange Commission or such interpretive positions as may be taken by the Commission or its staff. To the extent that the applicable law of the State of Texas, or any of the provisions herein, conflict with applicable provisions of the federal securities laws, the latter shall control.

8. AMENDMENT AND WAIVER

Provisions of this Agreement may be amended, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. The Agreement may be amended by mutual written consent of the parties, subject to the requirements of the 1940 Act and the rules and regulations promulgated and orders granted thereunder.

9. NOTICES

All notices hereunder shall be given in writing (and shall be deemed to have been duly given upon receipt) by delivery in person, by facsimile, by registered or certified mail or by overnight delivery (postage prepaid, return receipt requested) to VALIC and to SUB-ADVISER at the address of each set forth below:

If to VALIC:

Attn: Nori L. Gabert, Esq.
2929 Allen Parkway
Houston, Texas 77019

Tel: (713) 831-5165
Fax: (713) 831-2258

If to SUB-ADVISER:

Steven Guterman
American General Investment Management, L.P.

390 Park Avenue
New York, New York 10022

The parties hereto have each caused this Agreement to be signed in duplicate on its behalf by its duly authorized officer on the above date.

THE VARIABLE ANNUITY LIFE INSURANCE COMPANY

By:

Name:

Title:

ATTEST:

AMERICAN GENERAL INVESTMENT MANAGEMENT, L.P.

By:

Name:

Title:

ATTEST:

Exhibit d(2)

INVESTMENT SUB-ADVISORY AGREEMENT

This AGREEMENT made this 29th day of August, 2001, by and between THE VARIABLE ANNUITY LIFE INSURANCE COMPANY ("VALIC"), and AMERICAN CENTURY INVESTMENT MANAGEMENT, INC. ("American Century"), hereinafter referred to as the "SUB-ADVISER."

VALIC and the SUB-ADVISER recognize the following:

(b) VALIC is engaged as the investment adviser of North American Funds Variable Product Series I ("NAF Variable") (formerly known as American General Series Portfolio Company), pursuant to an Investment Advisory Agreement between VALIC and NAF Variable, an investment company organized under the general corporate laws of Maryland as a series type of investment company issuing separate classes (or series) of shares of common stock. NAF Variable is registered as an open-end, management investment company under the Investment Company Act of 1940, as amended ("1940 Act"). The 1940 Act prohibits any person from acting as an investment adviser of a registered investment company except pursuant to a written contract.

(c) NAF Variable currently consists of twenty-one portfolios ("Funds"):
North American - AG Asset Allocation Fund North American - AG Capital Conservation Fund North American - AG Government Securities Fund North American - AG Growth & Income Fund North American - AG International Equities Fund North American - AG International Government Bond Fund
North American - AG Large Cap Growth Fund North American - AG MidCap Index Fund North American - AG 1 Money Market Fund North American - AG Nasdaq-100(R) Index Fund North American - AG Small Cap Index Fund North American - AG Social Awareness Fund North American - AG Stock Index Fund North American - American Century Income & Growth Fund
North American - American Century International Growth Fund
North American Core Equity Fund North American - Founders/T. Rowe Price Small Cap Fund
North American - Putnam Opportunities Fund North American - T. Rowe Price Blue Chip Growth Fund North American - T. Rowe Price Health Sciences Fund North American - T. Rowe Price Science & Technology Fund

In accordance with NAF Variable's Articles of Incorporation (the "Articles"), new Funds may be added to NAF Variable upon approval of NAF Variable's Board of Directors without the approval of Fund shareholders. This Agreement will apply only to Funds set forth on the attached Schedule A, and any other Funds as may be added or deleted by amendment to the attached Schedule A ("Covered Funds").

(d) The SUB-ADVISER is engaged principally in the business of rendering investment advisory services and is registered as an investment adviser under the Advisers Act.

(e) VALIC desires to enter into an Investment Sub-Advisory Agreement with the SUB-ADVISER for the assets of the Covered Funds.

VALIC and the SUB-ADVISER agree as follows:

1. SERVICES RENDERED AND EXPENSES PAID BY THE SUB-ADVISER

The SUB-ADVISER, subject to the control, direction, and supervision of VALIC and NAF Variable's Board of Directors and in material conformity with the 1940 Act, all applicable laws and regulations thereunder, all other applicable federal and state securities and tax laws and regulations, including section 817(h) and Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), NAF Variable's Articles, Bylaws, registration statements, prospectus and stated investment objectives, policies and restrictions and any applicable procedures adopted by NAF Variable's Board of Directors and provided to the SUB-ADVISER in writing shall:

(a) manage the investment and reinvestment of the assets of the Covered Funds, including, for example, the evaluation of pertinent economic, statistical, financial, and other data, the determination of the industries and companies to be represented in each Covered Fund's portfolio, and the formulation and implementation of investment programs;

The SUB-ADVISER will assist the Covered Funds and their agents in determining whether prices obtained for valuation purposes accurately reflect the prices on the SUB-ADVISER's portfolio records relating to the assets of the Covered Funds for which the SUB-ADVISER has responsibility on a quarterly basis (unless otherwise agreed upon by the parties hereto) and at such other times as VALIC shall reasonably request.

In performing the services described in paragraph (b) above, the SUB-ADVISER shall use its best efforts to obtain for the Covered Funds the best execution of portfolio transactions. The SUB-ADVISER is responsible for decisions to buy and sell securities for the Covered Funds, broker-dealer selection, and negotiation of brokerage commission rates. Subject to approval by NAF Variable's Board of Directors of appropriate policies and procedures, the SUB-ADVISER may cause the Covered Funds to pay to a broker a commission, for effecting a portfolio transaction, in excess of the commission another broker would have charged for effecting the same transaction, if the first broker provided brokerage and/or research services to the SUB-ADVISER. The SUB-ADVISER shall not be deemed to have acted unlawfully, or to have breached any duty created by this Agreement, or otherwise, solely by reason of acting in accordance with such authorization. Notwithstanding the above, nothing shall require the SUB-ADVISER to use a broker that provides research services or to use a particular broker recommended by VALIC.

The SUB-ADVISER may aggregate, or, if appropriate, cross sales and purchase orders of securities held by the Covered Funds with similar orders being made simultaneously for other accounts managed by the SUB-ADVISER or with accounts of the affiliates of the SUB-ADVISER, if in the SUB-ADVISER's reasonable judgment such aggregation shall result in an overall economic benefit to the Covered Funds considering the advantageous selling or purchase price, brokerage commission and other expenses. In accounting for such aggregated order price, commission and other expenses shall be averaged on a per bond or share basis daily. If any trades are crossed, SUB-ADVISER may charge the Covered Funds for reasonable expenses incurred in such cross-trades, excluding brokerage commissions, fees (other than customary transfer fees), or other remuneration paid in connection with the transaction. A transaction fee charged by a brokerage or a custodial bank will be considered a customary transfer fee for purposes of this Agreement. VALIC acknowledges that

the determination of such economic benefit to the Covered Funds by the SUB-ADVISER is subjective and represents the SUB-ADVISER's evaluation that the Covered Funds are benefited by relatively better purchase or sales prices, lower commission expenses and beneficial timing of transactions or a combination of these and other factors.

VALIC authorizes and empowers the SUB-ADVISER to direct the Covered Funds' Custodian to open and maintain brokerage accounts for securities and other property, including financial and commodity futures and commodities and options thereon (all such accounts hereinafter called "brokerage accounts") for and in the name of the Covered Funds and to execute for each Covered Fund as its agent and attorney-in-fact standard customer agreements with such broker or brokers as the SUB-ADVISER shall select as provided above. With respect to brokerage accounts for financial and commodity futures and commodities and options thereon, the SUB-ADVISER shall select such brokers, as approved by VALIC, prior to the establishment of such brokerage account. The SUB-ADVISER may, using such of the securities and other property in the Covered Funds as the SUB-ADVISER deems necessary or desirable, direct the Covered Funds' Custodian to deposit for the Covered Funds original and maintenance brokerage and margin deposits and otherwise direct payments of cash, cash equivalents and securities and other property into such brokerage accounts and to such brokers as the SUB-ADVISER deems desirable or appropriate.

The SUB-ADVISER shall maintain records adequately demonstrating compliance with its obligations under this Agreement and report quarterly to VALIC and NAF Variable's Board of Directors regarding the performance of its services under this Agreement. The SUB-ADVISER will make available to VALIC and NAF Variable promptly upon their reasonable written request all of the Covered Funds' investment records and ledgers to assist VALIC and NAF Variable in compliance with respect to each Covered Fund's securities transactions as required by the 1940 Act and the Advisers Act, as well as other applicable laws. The SUB-ADVISER will furnish NAF Variable's Board of Directors such quarterly and special reports as VALIC and NAF Variable's Board of Directors may reasonably request, in a format to be agreed upon by VALIC and the SUB-ADVISER. The SUB-ADVISER will furnish to regulatory authorities any information or reports in connection with such services which may be requested by such regulatory authorities in order to ascertain whether the operations of the Covered Funds are being conducted in a manner consistent with applicable laws and regulations.

The SUB-ADVISER will not disclose or use any records or information obtained pursuant to this Agreement in any manner whatsoever except as expressly authorized in this Agreement, and will keep confidential any non-public information obtained directly as a result of this service relationship, and the SUB-ADVISER shall disclose such non-public information only if VALIC or the Board of Directors of NAF Variable has authorized such disclosure, or if such information is or hereafter otherwise is known by the SUB-ADVISER or has been disclosed, directly or indirectly, by VALIC or the Fund to others becomes ascertainable from public or published information or trade sources, or if such disclosure is expressly required or requested by applicable federal or state regulatory authorities, or to the extent such disclosure is reasonably required by auditors or attorneys of the SUB-ADVISER in connection with the performance of their professional services. Notwithstanding the foregoing, the SUB-ADVISER may disclose the total return earned by the Covered Funds and may include such total return in the calculation of composite performance information without prior approval by VALIC or the Board of Directors of NAF Variable.

Should VALIC at any time make any definite determination as to a change in any investment policy and notify the SUB-ADVISER in writing of such determination, the SUB-ADVISER shall be bound by such determination for the period, if any, specified in such notice or until similarly notified that such determination has been revoked, provided such determination will permit SUB-ADVISER to comply with the first paragraph of this Section.

(i) to pay cash for securities and other property delivered, or to be delivered, to the Custodian for NAF Variable (ii) to deliver securities and other property against payment for NAF Variable, and (iii) to transfer assets and funds to such brokerage accounts as the SUB-ADVISER may designate, all consistent with the powers, authorities and limitations set forth herein. The SUB-ADVISER shall not have the authority to cause the Custodian to deliver securities and other property except as expressly provided for in this Agreement.

The SUB-ADVISER shall for all purposes herein be deemed to be an independent contractor and shall, unless otherwise provided or authorized, have no authority to act or represent VALIC or the Fund other than in furtherance of the SUB-ADVISER's duties and responsibilities as set forth in this Agreement.

2. COMPENSATION OF THE SUB-ADVISER

VALIC shall pay to the SUB-ADVISER, as compensation for the services rendered and expenses paid by the SUB-ADVISER, a monthly fee or fees based on each Covered Fund's average daily net asset value computed for each Covered Fund as provided for herein and in the fee schedule attached hereto as Schedule A. Schedule A may be amended from time to time, provided that amendments are made in conformity with applicable laws and regulations and the Articles and Bylaws of NAF Variable. Any change in Schedule A pertaining to any new or existing Fund shall not be deemed to affect the interest of any other Fund and shall not require the approval of shareholders of any other Fund.

The average daily net asset value shall be determined by taking the mean average of all of the determinations of net asset value, made in the manner provided in NAF Variable's Declaration, for each business day during a given calendar month. VALIC shall pay this fee to the SUB-ADVISER for each calendar month as soon as practicable after the end of that month, but in any event no later than ten (10) business days following the end of the month, and shall include or be supplemented by such supporting documentation as SUB-ADVISER shall reasonably request. Wire instructions are attached as Schedule B to this Agreement.

If the SUB-ADVISER serves for less than a whole month, the foregoing compensation shall be prorated.

The payment of advisory fees related to the services of the SUB-ADVISER under this Agreement shall be the sole responsibility of VALIC and shall not be the responsibility of NAF Variable.

3. SCOPE OF THE SUB-ADVISER'S ACTIVITIES

VALIC understands that the SUB-ADVISER and its affiliates now act, will continue to act and may act in the future as investment adviser to fiduciary and other managed accounts and as investment adviser to other investment companies, and VALIC has no objection to the SUB-ADVISER so acting, provided that whenever a Covered Fund and one or more other accounts or investment companies advised by the SUB-ADVISER have available funds for investment, investments suitable and appropriate for each will be allocated in accordance with the SUB-ADVISER's allocation policy. The SUB-ADVISER similarly agrees to allocate opportunities to sell securities. VALIC recognizes that, in some cases, this procedure may limit the size of the position that may be acquired or sold for a Covered Fund. In addition, VALIC understands that the persons employed by the SUB-ADVISER to assist in the performance of the SUB-ADVISER's duties hereunder will not devote their full time to such service and nothing contained herein shall be deemed to limit or restrict the right of the SUB-ADVISER or any affiliate of the SUB-ADVISER to engage in and devote time and attention to other business or to render services of whatever kind or nature.

and the SUB-ADVISER, and any person controlling, controlled by or under common control with the SUB-ADVISER, may have an interest in VALIC.

The SUB-ADVISER shall not be liable to VALIC, NAF Variable, or to any shareholder in a Covered Fund, and VALIC shall indemnify the SUB-ADVISER, for any act or omission in rendering services under this Agreement, or for any losses sustained in connection with the matters to which this agreement relates, so long as there has been no willful misfeasance, bad faith, gross negligence, or reckless disregard of obligations or duties on the part of the SUB-ADVISER in performing its duties under this Agreement.

VALIC shall perform quarterly and annual tax compliance tests and promptly furnish reports of such tests to the SUB-ADVISER after each quarter end to ensure that a Covered Fund is in compliance with Subchapter M of the Code and Section 817(h) of the Code. VALIC shall apprise the SUB-ADVISER promptly after each quarter end of any potential non-compliance with the diversification requirements in such Code provisions. If so advised, the SUB-ADVISER shall take prompt action so that the Covered Funds complies with such Code diversification provisions, as directed by VALIC.

4. REPRESENTATIONS OF THE SUB-ADVISER AND VALIC

The SUB-ADVISER represents, warrants, and agrees as follows:

(b) The SUB-ADVISER has adopted a written code of ethics complying with the requirements of Rule 17j-1 under the 1940 Act and if it has not already done so, will provide VALIC and NAF Variable with a copy of such code of ethics together with evidence of its adoption.

(c) The SUB-ADVISER has provided VALIC and NAF Variable with a copy of its Form ADV as most recently filed with the SEC and will promptly after filing its annual update to its Form ADV with the SEC, furnish a copy of such amendment to VALIC.

VALIC represents, warrants, and agrees as follows:

5. TERM OF AGREEMENT

This Agreement shall become effective as to the Covered Funds set forth on Schedule A on the date hereof and as to any other Fund on the date of the Amendment to Schedule A adding such Fund in accordance with this Agreement. Unless sooner terminated as provided herein, this Agreement shall continue in effect for two years from its effective date. Thereafter, this Agreement shall continue in effect, but with respect to any Covered Fund, subject to the termination provisions and all other terms and conditions hereof, only so long as such continuance is approved at least annually by the vote of a majority of NAF Variable's directors who are not parties to this Agreement or interested persons of any such parties, cast in person at a meeting called for the purpose of voting on such approval, and by a vote of a majority of NAF Variable's Board of Directors or a majority of a Covered Fund's outstanding voting securities.

This Agreement shall automatically terminate in the event of its assignment as that term is defined in the 1940 Act, or in the event of the termination of the Investment Advisory Agreement between VALIC and NAF Variable as it relates to any Covered Funds; provided that the termination of an Interim Investment Advisory Agreement between NAF Variable and VALIC, pursuant to Rule 15a-4 under the 1940 Act upon shareholder approval of a definitive Investment Advisory Agreement with respect to a Covered Fund, shall not result in the termination of this Agreement as to such Covered Fund. The Agreement may be terminated as to any Covered Funds at any time, without the payment of any penalty, by vote of NAF Variable's Board of Directors or by vote of a majority of that Covered Fund's outstanding voting securities on not more than 60 days' nor less than 30 days' written notice to the SUB-ADVISER, or upon such shorter notice as may be mutually agreed upon by the parties. This Agreement may also be terminated by VALIC: (i) on not more than 60 days' nor less than 30 days' written notice to the SUB-ADVISER, or upon such shorter notice as may be mutually agreed upon by the parties, without the payment of any penalty; or (ii) if the SUB-ADVISER becomes unable to discharge its duties and obligations under this Agreement. The SUB-ADVISER may terminate this Agreement at any time, or preclude its renewal without the payment of any penalty, on not more than 60 days' nor less than 30 days' written notice to VALIC, or upon such shorter notice as may be mutually agreed upon by the parties.

6. OTHER MATTERS

The SUB-ADVISER agrees that all books and records which it maintains for the Covered Funds are the Covered Funds' property. The SUB-ADVISER also agrees upon request of VALIC or NAF Variable, to promptly surrender the books and records in accordance with the 1940 Act and rules thereunder, provided that VALIC reimburses the SUB-ADVISER for its reasonable expenses in making duplicate copies of such books and records for SUB-ADVISER's files. The SUB-ADVISER further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1 under the 1940 Act.

VALIC has herewith furnished the SUB-ADVISER copies of NAF Variable's Prospectus, Statement of Additional Information, Articles and Bylaws, investment objectives, policies and restrictions, and any applicable procedures adopted by NAF Variable's Board of Directors, as currently in effect and agrees during the continuance of this Agreement to furnish the SUB-ADVISER copies of any amendments or supplements thereto before or at the time the amendments or supplements become effective. Until VALIC delivers any amendments or supplements to the SUB-ADVISER, the SUB-ADVISER shall be fully protected in relying on the documents previously furnished to it. VALIC will inform SUB-ADVISER of any anticipated changes to the investment objectives and/or restrictions of the Covered Funds as soon as reasonably practicable.

The SUB-ADVISER is authorized to honor and act on any notice, instruction or confirmation given by VALIC on behalf of the Covered Funds in writing signed or sent by any of the persons whose names, addresses and specimen signatures will be provided by VALIC from time to time. The SUB-ADVISER shall not be liable for

so acting in good faith upon such instructions, confirmation or authority, notwithstanding that it shall subsequently be shown that the same was not given or signed or sent by an authorized person.

VALIC agrees to indemnify the SUB-ADVISER for losses, costs, fees, expenses and claims which arise directly or indirectly (i) as a result of a failure by VALIC to provide the services or furnish materials required under the terms of this Investment Sub-Advisory Agreement, or
(ii) as the result of any untrue statement of a material fact or any omission to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which they were made, not misleading in any registration statements, proxy materials, reports, advertisements, sales literature, or other materials pertaining to the Covered Funds, except insofar as any such statement or omission was specifically made in reliance on written information provided by the SUB-ADVISER to VALIC specifically for inclusion in such documents.

The SUB-ADVISER agrees to indemnify VALIC for losses and claims which arise (i) as a result of a failure by SUB-ADVISER to provide the services or furnish the materials required under the terms of this Investment Sub-Advisory Agreement, to the extent of and as a result of the willful misconduct, bad faith, gross negligence or reckless disregard of obligations or duties by the SUB-ADVISER, any of SUB-ADVISER's employees or representatives; or (ii) as the result of any untrue statement of a material fact or any omission to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which they were made, not misleading in any registration statements, proxy materials, reports, advertisements, sales literature, or other materials pertaining to the Covered Funds to the extent any such statement or omission was made in reliance on information provided by the SUB-ADVISER to VALIC specifically for inclusion in such documents.

7. INVALID PROVISION

The invalidity or enforceability of any particular provision of this Agreement shall not affect the other provisions, and this Agreement shall be construed in all respects as if such provision were omitted.

8. AMENDMENT AND WAIVER

9. NOTICES

If to VALIC:

Attn: Nori L. Gabert, Esq.

2929 Allen Parkway
Houston, Texas 77019
Tel: (713) 831-5165
Fax: (713) 831-2258

If to SUB-ADVISER:

4500 Main Street
9th Floor
Kansas City, MO 64111

Attn: Janet Nash, Corporate Counsel

The parties hereto have each caused this Agreement to be signed in duplicate on its behalf by its duly authorized officer on the above date.

THE VARIABLE ANNUITY LIFE INSURANCE COMPANY

By:

Name:

Title:
ATTEST:

American Century Investment Management, Inc.

By:

Name:

Title:
ATTEST:

SCHEDULE B
Wire Instructions for Fee Payments

In accordance with Section 2, Compensation of the SUB-ADVISER, VALIC will send payment as follows:

Bank Routing Number: 101000019 Bank Account Number: 2781779 For Further Credit: VALIC Sub-Advisory Fees for Month/Year

Exhibit d(3)

INVESTMENT SUB-ADVISORY AGREEMENT

This AGREEMENT made this 29th day of August, 2001, by and between THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," and FOUNDERS ASSET MANAGEMENT LLC, hereinafter referred to as the "SUB-ADVISER."

VALIC and the SUB-ADVISER recognize the following:

(d) The SUB-ADVISER is engaged principally in the business of rendering investment advisory services and is registered as an investment adviser under the Advisers Act.

VALIC and the SUB-ADVISER agree as follows:

1. SERVICES RENDERED AND EXPENSES PAID BY THE SUB-ADVISER

The SUB-ADVISER will assist the Covered Fund(s) and its agents in determining whether prices obtained for valuation purposes accurately reflect the prices on the SUB-ADVISER's portfolio records relating to the assets of the Covered Fund(s) for which the SUB-ADVISER has responsibility on a monthly basis (unless otherwise agreed upon by the parties hereto) and at such other times as VALIC shall reasonably request.

In performing the services described in paragraph (b) above, the SUB-ADVISER shall use its best efforts to obtain for the Covered Fund(s) the best execution of portfolio transactions. Subject to approval by NAF Variable's Board of Directors of appropriate policies and procedures, the SUB-ADVISER may cause the Covered Fund(s) to pay to a broker a commission, for effecting a portfolio transaction, in excess of the commission another broker would have charged for effecting the same transaction, if the first broker provided brokerage and/or research services to the SUB-ADVISER. The SUB-ADVISER shall not be deemed to have acted unlawfully, or to have breached any duty created by this Agreement, or otherwise, solely by reason of acting in accordance with such authorization.

The SUB-ADVISER may aggregate sales and purchase orders of securities held by the Covered Fund(s) with similar orders being made simultaneously for other accounts managed by the SUB-ADVISER or with accounts of the affiliates of the SUB-ADVISER, if in the SUB-ADVISER's reasonable judgment such aggregation shall result in an overall economic benefit to the Covered Fund considering the advantageous selling or purchase price, brokerage commission and other expenses. In accounting for such aggregated order price, commission and other expenses shall be averaged on a per bond or share basis daily. VALIC acknowledges that the determination of such economic benefit to the Covered Fund(s) by the SUB-ADVISER is subjective and represents the SUB-ADVISER's evaluation that the Covered Fund(s) is benefited by relatively better purchase or sales prices, lower commission expenses and beneficial timing of transactions or a combination of these and other factors.

VALIC may direct the SUB-ADVISER to use a particular broker or dealer for one or more trades if, in the sole opinion of VALIC, it is in the best interest of the Covered Fund to do so. Any such direction shall be in writing and in a form satisfactory to SUB-ADVISER.

VALIC authorizes and empowers the SUB-ADVISER to direct the Covered Fund's Custodian to open and maintain brokerage accounts for securities and other property, including financial and commodity futures and commodities and options thereon (all such accounts hereinafter called "brokerage accounts") for and in the name of the Covered Fund(s) and to execute for the Covered Fund(s) as its agent and attorney-in-fact standard customer agreements with such broker or brokers as the SUB-ADVISER shall select as provided above. With respect to brokerage accounts for financial and commodity futures and commodities and options thereon, the SUB-ADVISER shall select such brokers, as approved by VALIC, prior to the establishment of such brokerage account. The SUB-ADVISER may, using such of the securities and other property in the Covered Fund as the SUB-ADVISER deems necessary or desirable, direct the Covered Fund's Custodian to deposit for the Covered Fund original and maintenance brokerage and margin deposits and otherwise direct payments of cash, cash equivalents and securities and other property into such brokerage accounts and to such brokers as the SUB-ADVISER deems desirable or appropriate.

The SUB-ADVISER shall maintain records adequately demonstrating compliance with its obligations under this Agreement and report periodically to VALIC and NAF Variable's Board of Directors regarding the performance of its services under this Agreement. The SUB-ADVISER will make available to VALIC and NAF Variable promptly upon their reasonable written request all of the Covered Fund(s)' investment records and ledgers to assist VALIC and NAF Variable in compliance with respect to each Covered Fund's securities transactions as required by the 1940 Act and the Advisers Act, as well as other applicable laws. The SUB-ADVISER will furnish NAF Variable's Board of Directors such periodic and special reports as VALIC and NAF Variable's Board of Directors may reasonably request. The SUB-ADVISER will furnish to regulatory authorities any information or reports in connection with such services which may be requested in order to ascertain whether the operations of the Covered Fund(s) are being conducted in a manner consistent with applicable laws and regulations. The SUB-ADVISER will not disclose or use any records or information obtained pursuant to this Agreement in any manner whatsoever except as expressly authorized in this Agreement, and will keep confidential any non-public information obtained directly as a result of this service relationship, and the SUB-ADVISER shall disclose such non-public information only if VALIC or the Board of Directors of NAF Variable has authorized such disclosure, or if such information is or hereafter otherwise is known by the SUB-ADVISER or has been disclosed, directly or indirectly, by VALIC or NAF Variable to others becomes ascertainable from public or published information or trade sources, or if such disclosure is expressly required or requested by applicable federal or state regulatory authorities, or to the extent such disclosure is reasonably required by auditors or attorneys of the SUB-ADVISER in connection with the performance of their professional services. Notwithstanding the foregoing, the SUB-ADVISER may disclose the total return earned by the Covered Fund(s) and may include such total return in the calculation of composite performance information without prior approval by VALIC or the Board of Directors of NAF Variable.

The SUB-ADVISER will not hold money or investments on behalf of NAF Variable. The money and investments will be held by the Custodian of NAF Variable. The SUB-ADVISER will arrange for the transmission to the Custodian for NAF Variable, on a daily basis, such confirmation, trade tickets and other documents as may be necessary to enable it to perform its administrative responsibilities with respect to the Covered Fund(s). The SUB-ADVISER further shall have the authority to instruct the Custodian of NAF Variable (i) to pay cash for securities and other property delivered, or to be delivered, to the Custodian for NAF Variable (ii) to deliver securities and other property against payment for NAF Variable, and (iii) to transfer assets and funds to such brokerage accounts as the SUB-ADVISER may designate, all consistent with the powers, authorities and limitations set forth herein. The SUB-ADVISER shall not have the authority to cause the Custodian to deliver securities and other property except as expressly provided for in this Agreement.

The SUB-ADVISER shall for all purposes herein be deemed to be an independent contractor and shall, unless otherwise provided or authorized, have no authority to act or represent VALIC or NAF Variable other than in furtherance of the SUB-ADVISER's duties and responsibilities as set forth in this Agreement.

2. COMPENSATION OF THE SUB-ADVISER

If the SUB-ADVISER serves for less than a whole month, the foregoing compensation shall be prorated.

The payment of advisory fees related to the services of the SUB-ADVISER under this Agreement shall be the sole responsibility of VALIC and shall not be the responsibility of NAF Variable.

3. SCOPE OF THE SUB-ADVISER'S ACTIVITIES

VALIC understands that the SUB-ADVISER and its affiliates now act, will continue to act and may act in the future as investment adviser to fiduciary and other managed accounts and as investment adviser to other investment companies, and VALIC has no objection to the SUB-ADVISER so acting, provided that whenever a Covered Fund(s) and one or more other accounts or investment companies advised by the SUB-ADVISER have available funds for investment, investments suitable and appropriate for each will be allocated in accordance with a methodology believed by the SUB-ADVISER to be equitable to each entity. The SUB-ADVISER similarly agrees to allocate opportunities to sell securities. VALIC recognizes that, in some cases, this procedure may limit the size of the position that may be acquired or sold for a Covered Fund(s). In addition, VALIC understands that the persons employed by the SUB-ADVISER to assist in the performance of the SUB-ADVISER's duties hereunder will not devote their full time to such service and nothing contained herein shall be deemed to limit or restrict the right of the SUB-ADVISER or any affiliate of the SUB-ADVISER to engage in and devote time and attention to other business or to render services of whatever kind or nature.

The SUB-ADVISER shall not be liable to VALIC, NAF Variable, or to any shareholder in the Covered Fund(s), and VALIC shall indemnify the SUB-ADVISER, for any act or omission in rendering services under this Agreement, or for any losses sustained in connection with the matters to which this agreement relates, so long as there has been no willful misfeasance, bad faith, gross negligence, or reckless disregard of obligations or duties on the part of the SUB-ADVISER in performing its duties under this Agreement.

VALIC shall perform quarterly and annual tax compliance tests and promptly furnish reports of such tests to the SUB-ADVISER after each quarter end to ensure that the Covered Fund(s) is in compliance with Subchapter M of the Code and Section 817(h) of the Code. VALIC shall apprise the SUB-ADVISER promptly after each quarter end of any potential non-compliance with the diversification requirements in such Code provisions. If so advised, the SUB-ADVISER shall take prompt action so that the Covered Fund complies with such Code diversification provisions, as directed by VALIC.

4. REPRESENTATIONS OF THE SUB-ADVISER AND VALIC

The SUB-ADVISER represents, warrants, and agrees as follows:

(a) The SUB-ADVISER (i) is registered as an investment adviser under the Advisers Act and will continue to be so registered for so long as this Agreement remains in effect: (ii) is not prohibited by the 1940 Act or the Advisers Act from performing the services contemplated by this Agreement; (iii) has met, and will continue to meet for so long as this Agreement remains in effect, any applicable federal or state requirements, or the applicable requirements of any regulatory or industry self-regulatory agency, necessary to be met in order to perform the services contemplated by this Agreement, (iv) has the authority to enter into and perform the services contemplated by this Agreement, and (v) will immediately notify VALIC of the occurrence of any event that would disqualify the SUB-ADVISER from serving as an investment adviser of an investment company pursuant to Section 9(a) of the 1940 Act or otherwise.

VALIC represents, warrants, and agrees as follows:

5. TERM OF AGREEMENT

This Agreement shall become effective as to the Covered Fund(s) set forth on Schedule A on the date hereof and as to any other Fund on the date of the Amendment to Schedule A adding such Fund in accordance with this Agreement. Unless sooner terminated as provided herein, or as otherwise noted on Schedule A, this Agreement shall continue in effect for two years from its effective date. Thereafter, this Agreement shall continue in effect, but with respect to any Covered Fund, subject to the termination provisions and all other terms and conditions hereof, only so long as such continuance is approved at least annually by the vote of a majority of NAF Variable's directors who are not parties to this Agreement or interested persons of any such

parties, cast in person at a meeting called for the purpose of voting on such approval, and by a vote of a majority of NAF Variable's Board of Directors or a majority of that Covered Fund's outstanding voting securities.

This Agreement shall automatically terminate in the event of its assignment as that term is defined in the 1940 Act, or in the event of the termination of the Investment Advisory Agreement between VALIC and NAF Variable as it relates to any Covered Fund(s); provided that the termination of an Interim Investment Advisory Agreement between NAF Variable and VALIC, pursuant to Rule 15a-4 under the 1940 Act upon shareholder approval of a definitive Investment Advisory Agreement with respect to a Covered Fund, shall not result in the termination of this Agreement as to such Covered Fund. The Agreement may be terminated as to any Covered Fund at any time, without the payment of any penalty, by vote of NAF Variable's Board of Directors or by vote of a majority of that Covered Fund's outstanding voting securities on not more than 60 days' nor less than 30 days' written notice to the SUB-ADVISER, or upon such shorter notice as may be mutually agreed upon by the parties. This Agreement may also be terminated by VALIC: (i) on not more than 60 days' nor less than 30 days' written notice to the SUB-ADVISER, or upon such shorter notice as may be mutually agreed upon by the parties, without the payment of any penalty; or (ii) if the SUB-ADVISER becomes unable to discharge its duties and obligations under this Agreement. The SUB-ADVISER may terminate this Agreement at any time, or preclude its renewal without the payment of any penalty, on not more than 60 days' nor less than 30 days' written notice to VALIC, or upon such shorter notice as may be mutually agreed upon by the parties.

6. OTHER MATTERS

The SUB-ADVISER agrees that all books and records which it maintains for the Covered Fund(s) are the Covered Fund's property. The SUB-ADVISER also agrees upon request of VALIC or NAF Variable, to promptly surrender the books and records in accordance with the 1940 Act and rules thereunder, provided that VALIC reimburses the SUB-ADVISER for its reasonable expenses in making duplicate copies of such books and records for SUB-ADVISER's files. The SUB-ADVISER further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1 under the 1940 Act.

The SUB-ADVISER is authorized to honor and act on any notice, instruction or confirmation given by VALIC on behalf of the Covered Fund in writing signed or sent by any of the persons whose names, addresses and specimen signatures will be provided by VALIC from time to time. The SUB-ADVISER shall not be liable for so acting in good faith upon such instructions, confirmation or authority, notwithstanding that it shall subsequently be shown that the same was not given or signed or sent by an authorized person.

refer in any way to the SUB-ADVISER. VALIC shall furnish or otherwise make available to the SUB-ADVISER such other information relating to the business affairs of VALIC and the Covered Fund as the SUB-ADVISER at any time, or from time to time, may reasonably request in order to discharge obligations hereunder.

VALIC agrees to indemnify the SUB-ADVISER for losses, costs, fees, expenses and claims which arise directly or indirectly (i) as a result of a failure by VALIC to provide the services or furnish materials required under the terms of this Investment Sub-Advisory Agreement, or
(ii) as the result of any untrue statement of a material fact or any omission to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which they were made, not misleading in any registration statements, proxy materials, reports, advertisements, sales literature, or other materials pertaining to the Covered Fund, except insofar as any such statement or omission was specifically made in reliance on written information provided by the SUB-ADVISER to VALIC.

The SUB-ADVISER agrees to indemnify VALIC for losses and claims which arise (i) as a result of the willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties by the SUB-ADVISER; or (ii) as the result of any untrue statement of a material fact or any omission to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which they were made, not misleading in any registration statements, proxy materials, reports, advertisements, sales literature, or other materials pertaining to the Covered Fund to the extent any such statement or omission was made in reliance on written information provided by the SUB-ADVISER to VALIC.

7. APPLICABILITY OF FEDERAL SECURITIES LAWS

8. AMENDMENT AND WAIVER

9. NOTICES

If to VALIC:

Attn: Nori L. Gabert, Esq.
2929 Allen Parkway
Houston, Texas 77019

Tel: (713) 831-5165
Fax: (713) 831-2258

If to SUB-ADVISER:

2930 East Third Avenue
Denver, CO 80206

Attn: General Counsel

The parties hereto have each caused this Agreement to be signed in duplicate on its behalf by its duly authorized officer on the above date.

THE VARIABLE ANNUITY LIFE INSURANCE COMPANY

By:

Name:
Title:

ATTEST:

Attest:
Name:
Title:

FOUNDERS ASSET MANAGEMENT LLC

By:

Name:
Title:

ATTEST:

Attest:
Name:
Title:

Exhibit d(4)

INVESTMENT SUB-ADVISORY AGREEMENT

This AGREEMENT made this 29th day of August, 2001, by and between THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," and PUTNAM INVESTMENT MANAGEMENT, LLC, hereinafter referred to as the "SUB-ADVISER."

VALIC and the SUB-ADVISER recognize the following:

(d) The SUB-ADVISER is engaged principally in the business of rendering investment advisory services and is registered as an investment adviser under the Advisers Act.

VALIC and the SUB-ADVISER agree as follows:

1. SERVICES RENDERED AND EXPENSES PAID BY THE SUB-ADVISER

The SUB-ADVISER, subject to the control, direction, and supervision of VALIC and NAF Variable's Board of Directors and in material conformity with the 1940 Act, all applicable laws and regulations thereunder, all other applicable federal and state securities and tax laws and regulations, including section 817(h) and Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), NAF Variable's Articles, Bylaws, registration statements, prospectuses and stated investment objectives, policies and restrictions and any applicable procedures adopted by NAF Variable's Board of Directors and provided to the SUB-ADVISER shall:

The SUB-ADVISER shall not be responsible for the administrative affairs of the Covered Fund(s), including pricing the Covered Fund(s). The SUB-ADVISER will provide reasonable assistance to VALIC to assist in pricing securities where market or broker quotations are not readily available.

In performing the services described in paragraph (b) above, the SUB-ADVISER shall use its best efforts to obtain for the Covered Fund(s) the best execution of portfolio transactions. If NAF Variable's Board of Directors approves appropriate policies and procedures, the SUB-ADVISER may cause the Covered Fund(s) to pay to a broker a commission for effecting a portfolio transaction, in excess of the commission another broker would have charged for effecting the same transaction, if the first broker provided brokerage and/or research services to the SUB-ADVISER. The SUB-ADVISER shall not be deemed to have acted unlawfully, or to have breached any duty created by this Agreement, or otherwise, solely by reason of acting in accordance with such authorization.

The SUB-ADVISER may aggregate sales and purchase orders of securities held by the Covered Fund(s) with similar orders being made simultaneously for other accounts managed by the SUB-ADVISER or with accounts of the affiliates of the SUB-ADVISER, if in the SUB-ADVISER's reasonable judgment such aggregation shall result in an overall economic benefit to the Covered Fund(s) considering the advantageous selling or purchase price, brokerage commission and other expenses. In accounting for such aggregated order price, commission and other expenses shall be averaged on a per bond or share basis daily. VALIC acknowledges that the determination of such economic benefit to the Covered Fund by the SUB-ADVISER is subjective and represents the SUB-ADVISER's evaluation that the Covered Fund is benefited by relatively better purchase

or sales prices, lower commission expenses and beneficial timing of transactions or a combination of these and other factors.

VALIC may direct the SUB-ADVISER to use a particular broker or dealer for one or more trades if, in the sole opinion of VALIC, it is in the best interest of the Covered Fund(s) to do so. Any such direction shall be in writing and in a form satisfactory to SUB-ADVISER.

VALIC authorizes and empowers the SUB-ADVISER to direct the Covered Fund's Custodian to open and maintain brokerage accounts for securities and other property, including financial and commodity futures and commodities and options thereon (all such accounts hereinafter called "brokerage accounts") for and in the name of the Covered Fund(s) and to execute for the Covered Fund(s) as its agent and attorney-in-fact standard customer agreements with such broker or brokers as the SUB-ADVISER shall select as provided above. With respect to brokerage accounts for financial and commodity futures and commodities and options thereon, the SUB-ADVISER shall select such brokers, as approved by VALIC, prior to the establishment of such brokerage account. The SUB-ADVISER may, using such of the securities and other property in the Covered Fund(s) as the SUB-ADVISER deems necessary or desirable, direct the Covered Fund's Custodian to deposit for the Covered Fund(s) original and maintenance brokerage and margin deposits and otherwise direct payments of cash, cash equivalents and securities and other property into such brokerage accounts and to such brokers as the SUB-ADVISER deems desirable or appropriate.

Variable (i) to pay cash for securities and other property delivered, or to be delivered, to the Custodian for NAF Variable (ii) to deliver securities and other property against payment for NAF Variable, and
(iii) to transfer assets and funds to such brokerage accounts as the SUB-ADVISER may designate, all consistent with the powers, authorities and limitations set forth herein. The SUB-ADVISER shall not have the authority to cause the Custodian to deliver securities and other property except as expressly provided for in this Agreement.

The SUB-ADVISER shall for all purposes herein be deemed to be an independent contractor and shall, unless otherwise provided or authorized, have no authority to act or represent VALIC or NAF Variable other than in furtherance of the SUB-ADVISER's duties and responsibilities as set forth in this Agreement.

2. COMPENSATION OF THE SUB-ADVISER

VALIC shall pay to the SUB-ADVISER, as compensation for the services rendered and expenses paid by the SUB-ADVISER, a monthly fee or fees based on each Covered Fund's average daily net assets computed for each Covered Fund as provided for herein and in the fee schedule attached hereto as Schedule A. Schedule A may be amended from time to time by mutual agreement of the parties, provided that amendments are made in conformity with applicable laws and regulations and the Articles and Bylaws of NAF Variable. Any change in Schedule A pertaining to any new or existing Fund shall not be deemed to affect the interest of any other Fund and shall not require the approval of shareholders of any other Fund.

The average daily net assets shall be determined by taking the average of all of the determinations of net assets, made in the manner provided in NAF Variable's Declaration, for each business day during a given calendar month. VALIC shall pay this fee for each calendar month as soon as practicable after the end of that month, but in any event no later than ten (10) business days following the end of the month.

If the SUB-ADVISER serves for less than a whole month, the foregoing compensation shall be prorated.

The payment of advisory fees related to the services of the SUB-ADVISER under this Agreement shall be the sole responsibility of VALIC and shall not be the responsibility of NAF Variable.

3. SCOPE OF THE SUB-ADVISER'S ACTIVITIES

and the SUB-ADVISER, and any person controlling, controlled by or under common control with the SUB-ADVISER, may have an interest in VALIC.

VALIC shall perform quarterly and annual tax compliance tests and promptly furnish reports of such tests to the SUB-ADVISER after each quarter end to ensure that the Covered Fund is in compliance with Subchapter M of the Code and Section 817(h) of the Code. VALIC shall apprise the SUB-ADVISER promptly after each quarter end of any potential non-compliance with the diversification requirements in such Code provisions. If so advised, the SUB-ADVISER shall take prompt action so that the Covered Fund complies with such Code diversification provisions, as directed by VALIC. VALIC acknowledges that the SUB-ADVISER will base its compliance with such provisions of the Code on accurate and timely portfolio information, including tax lot allocation, from VALIC.

4. REPRESENTATIONS OF THE SUB-ADVISER AND VALIC

The SUB-ADVISER represents, warrants, and agrees as follows:

VALIC represents, warrants, and agrees as follows:

5. TERM OF AGREEMENT

This Agreement shall become effective as to the Covered Fund(s) set forth on Schedule A on the date hereof and as to any other Fund on the date of the Amendment to Schedule A adding such Fund in accordance with this Agreement. Unless sooner terminated as provided herein, this Agreement shall continue in effect for two years from its effective date. Thereafter, this Agreement shall continue in effect, but with respect to any Covered Fund, subject to the termination provisions and all other terms and conditions hereof, only so long as such continuance is approved at least annually by the vote of a majority of NAF Variable's directors who are not parties to this Agreement or interested persons of any such parties, cast in person at a meeting called for the purpose of voting on such approval, and by a vote of a majority of NAF Variable's Board of Directors or a majority of that Covered Fund's outstanding voting securities.

This Agreement shall automatically terminate in the event of its assignment as that term is defined in the 1940 Act, or in the event of the termination of the Investment Advisory Agreement between VALIC and NAF Variable as it relates to any Covered Fund; provided that the termination of an Interim Investment Advisory Agreement between NAF Variable and VALIC, pursuant to Rule 15a-4 under the 1940 Act upon shareholder approval of a definitive Investment Advisory Agreement with respect to a Covered Fund, shall not result in the termination of this Agreement as to such Covered Fund. The Agreement may be terminated as to any Covered Fund at any time, without the payment of any penalty, by vote of NAF Variable's Board of Directors or by vote of a majority of that Covered Fund's outstanding voting securities on not more than 60 days' nor less than 30 days' written notice to the SUB-ADVISER, or upon such shorter notice as may be mutually agreed upon by the parties. This Agreement may also be terminated by VALIC: (i) on not more than 60 days' nor less than 30 days' written notice to the SUB-ADVISER, or upon such shorter notice as may be mutually agreed upon by the parties, without the payment of any penalty; or (ii) if the SUB-ADVISER becomes unable to discharge its duties and obligations under this Agreement. The SUB-ADVISER may terminate this Agreement at any time, or preclude its renewal without the payment of any penalty, on not more than 60 days' nor less than 30 days' written notice to VALIC, or upon such shorter notice as may be mutually agreed upon by the parties.

6. OTHER MATTERS

The SUB-ADVISER agrees that, upon request of VALIC or NAF Variable, it will promptly provide VALIC or NAF Variable with copies of all books and records relating to the Covered Fund, in accordance with the 1940 Act and rules thereunder.

VALIC has herewith furnished the SUB-ADVISER copies of NAF Variable's Prospectus, Statement of Additional Information, Articles and Bylaws as currently in effect and agrees during the continuance of this Agreement to furnish the SUB-ADVISER copies of any amendments or supplements thereto before or at the time the amendments or supplements become effective. Until VALIC delivers any amendments or supplements to the SUB-ADVISER, the SUB-ADVISER shall be fully protected in relying on the documents previously furnished to it.

The SUB-ADVISER is authorized to honor and act on any notice, instruction or confirmation given by VALIC on behalf of the Covered Fund(s) in writing signed or sent by any of the persons whose names, addresses and specimen signatures will be provided by VALIC from time to time. The SUB-ADVISER shall not be liable for so acting in good faith upon such instructions, confirmation or authority, notwithstanding that it shall subsequently be shown that the same was not given or signed or sent by an authorized person.

VALIC agrees to indemnify the SUB-ADVISER for losses, costs, fees, expenses and claims which arise directly or indirectly (i) as a result of a failure by VALIC to provide the services or furnish materials required under the terms of this Investment Sub-Advisory Agreement, or
(ii) as the result of any untrue statement of a material fact or any omission to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which they were made, not misleading in any registration statements, proxy materials, reports, advertisements, sales literature, or other materials pertaining to the Covered Fund, except insofar as any such statement or omission was specifically made in reliance on written information provided to VALIC by the SUB-ADVISER for use in such material and which was specifically reviewed and approved by SUB-ADVISER.

The SUB-ADVISER agrees to indemnify VALIC for losses and claims which arise (i) as a result of the willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties by the SUB-ADVISER; or (ii) as the result of any untrue statement of a material fact or any omission to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which they were made, not misleading in any registration statements, proxy materials, reports, advertisements, sales literature, or other materials pertaining to the Covered Fund to the extent any such statement or omission was made in reliance on information provided to VALIC by the SUB-ADVISER for use in such material and which was specifically reviewed and approved by SUB-ADVISER.

7. APPLICABILITY OF FEDERAL SECURITIES LAWS

8. AMENDMENT AND WAIVER

9. NOTICES

If to VALIC:

Attn: Nori L. Gabert, Esq.
2929 Allen Parkway
Houston, Texas 77019

Tel: (713) 831-5165
Fax: (713) 831-2258

If to SUB-ADVISER:

Putnam Investment Management, LLC

Attn: Client Administration One Post Office Square, 13th Floor Boston, Massachusetts 02109 Tel: (617) 760-8943
Fax: (617) 760-8834

The parties hereto have each caused this Agreement to be signed in duplicate on its behalf by its duly authorized officer on the above date.

THE VARIABLE ANNUITY LIFE INSURANCE COMPANY

By:

Name:
Title:

ATTEST:

Attest:
Name:
Title:

PUTNAM INVESTMENT MANAGEMENT, LLC

By:

Name:
Title:

ATTEST:

Attest:
Name:
Title:

Exhibit d(5)

INTERIM INVESTMENT SUB-ADVISORY AGREEMENT

This AGREEMENT made this 29th day of August, 2001, by, between and among THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," T. ROWE PRICE ASSOCIATES, INC., hereinafter referred to as the "SUB-ADVISER," and NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES I, hereinafter referred to as the "FUND."

VALIC and the SUB-ADVISER recognize the following:

(b) VALIC is engaged as the investment adviser of the FUND, an investment company organized under the general corporation laws of Maryland, as a series type of investment company issuing separate classes (or series) of shares of common stock and is registered as an open-end, management investment company under the Investment Company Act of 1940, as amended ("1940 Act"). The 1940 Act prohibits any person from acting as an investment adviser of a registered investment company except pursuant to a written contract.

(c) The FUND currently consists of twenty-one portfolios ("Funds"), including the North American - T. Rowe Price Science & Technology Fund (the "Covered Fund").

(d) The SUB-ADVISER is engaged principally in the business of rendering investment advisory services and is registered as an investment adviser under the Advisers Act.

(e) VALIC desires to enter into an Interim Investment Sub-Advisory Agreement with the SUB-ADVISER for all or a portion of the assets of the Covered Fund which VALIC determines from time to time to assign to the SUB-ADVISER.

VALIC and the SUB-ADVISER AGREE AS FOLLOWS:

1. SERVICES RENDERED AND EXPENSES PAID BY THE SUB-ADVISER

The SUB-ADVISER, subject to the control, direction, and supervision of VALIC and the FUND's Board of Trustees and in conformity with the 1940 Act, all applicable laws and regulations thereunder, all other applicable federal and state laws and regulations, including the diversification requirements pursuant to section 817(h) and Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), the FUND's Declaration, Bylaws, registration statements, prospectus and stated investment objectives, policies and restrictions and any applicable procedures (which procedures to the extent they govern transactions involving affiliates, will identify any affiliate of VALIC or the Fund) adopted by the FUND's Board of Trustees (provided that (i) the FUND or VALIC has provided the SUB-ADVISER with copies of all applicable provisions of the foregoing FUND documents which relate to the investment and management of the FUND and promptly notifies the SUB-ADVISER of any changes in such FUND documents and (ii) VALIC informs the SUB-ADVISER of all applicable state insurance laws relating to the investment and management of the FUND, including restrictions or limitations on investments in the Fund, and promptly notifies the SUB-ADVISER of any changes in such laws or restrictions) shall:

(a) manage the investment and reinvestment of the assets of the Covered Fund including, for example, the evaluation of pertinent economic, statistical, financial, and other data, the determination of the

industries and companies to be represented in each Covered Fund's portfolio, and the formulation and implementation of investment programs.

In performing the services described in paragraph (b) above, the SUB-ADVISER shall use its best efforts to obtain for the Covered Fund the most favorable overall price and execution. Subject to approval by the FUND's Board of Trustees of appropriate policies and procedures, the SUB-ADVISER may cause the Covered Fund to pay to a broker a commission, for effecting a portfolio transaction, in excess of the commission another broker would have charged for effecting the same transaction, if the first broker provided brokerage and/or research services, including statistical data, to the SUB-ADVISER. The SUB-ADVISER shall not be deemed to have acted unlawfully, or to have breached any duty created by this Agreement, or otherwise, solely by reason of acting according to such authorization.

The SUB-ADVISER will make available to VALIC and the FUND promptly upon their request all of the Covered Fund' investment records and ledgers to assist VALIC and the FUND in compliance with respect to each Covered Fund's securities transactions as required by the 1940 Act and the Advisers Act, as well as other applicable laws. The SUB-ADVISER will furnish the FUND's Board of Trustees such periodic and special reports as VALIC and the FUND's Board of Trustees may reasonably request. The SUB-ADVISER will furnish to regulatory authorities any information or reports in connection with such services which may be requested in order to ascertain whether the operations of the Covered Fund are being conducted in a manner consistent with applicable laws and regulations. VALIC and the SUB-ADVISER will not disclose or use any records or information obtained pursuant to this Agreement (excluding investment research and investment advice) in any manner whatsoever except as expressly authorized in this Agreement, or in the ordinary course of business of performing the services described herein and will keep confidential any information obtained pursuant to this service relationship, and disclose such information only if VALIC and the SUB-ADVISER or the Board of Trustees of the FUND has authorized such disclosure, or if such information is or hereafter becomes ascertainable from public or published information or trade sources, or if such disclosure is expressly required or requested by applicable federal or state authorities or as may be required by the legal process or in connection with any litigation arising out of this Agreement.

Should VALIC at any time make any definite determination as to investment policy and notify the SUB-ADVISER of such determination, the SUB-ADVISER shall be bound by such determination for the period, if any, specified in such notice or until similarly notified that such determination has been revoked.

The SUB-ADVISER will not hold money or investments on behalf of the FUND. The money and investments will be held by the Custodian of the FUND. The SUB-ADVISER will arrange for the transmission to the Custodian for the FUND, on a daily basis, such confirmation, trade tickets and other documents as may be necessary to enable it to perform its administrative responsibilities with respect to the Covered Fund.

The SUB-ADVISER shall for all purposes herein be deemed to be an independent contractor and shall, unless otherwise provided or authorized, have no authority to act for or represent VALIC or the FUND other than in furtherance of the SUB-ADVISER's duties and responsibilities as set forth in this Agreement.

The SUB-ADVISER may on occasion when the purchase or sale of a security is deemed to be in the best interest of the FUND as well as any other investment advisory clients, to the extent permitted by applicable laws and regulations, but shall not be obligated to aggregate the securities sold or purchased with those of its other

clients where such aggregation is not inconsistent with the policies set forth in the FUND's registration statement.

2. COMPENSATION OF THE SUB-ADVISER

The FUND, out of the assets of the Covered Fund, shall pay to the SUB-ADVISER, as compensation for the services rendered and expenses paid by the SUB-ADVISER, a monthly fee or fees based on the Covered Fund's average monthly net asset value computed for the Covered Fund as provided for herein and in the fee schedule attached hereto as Schedule
A.

The average monthly net asset value shall be determined by taking the mean average of all of the determinations of net asset value, made in the manner provided in the FUND's Declaration, for each business day during a given calendar month. The FUND, our of the assets of the Covered Fund, shall pay this fee for each calendar month as soon as practicable after the end of that month, but in any event no later than thirty (30) days following the end of the month.

If the SUB-ADVISER serves for less than a whole month, the foregoing compensation shall be prorated.

VALIC hereby agrees that it shall not be entitled to any fees from the FUND in respect of the Covered Fund to the extent of any fees paid hereunder directly to the SUB-ADVISER.

3. SCOPE OF THE SUB-ADVISER'S ACTIVITIES

The SUB-ADVISER, and any person controlled by or under common control with the SUB-ADVISER, shall remain free to provide similar investment advisory services to other persons or engage in any other business or activity which does not impair the services which the SUB-ADVISER renders to the Covered Fund.

The SUB-ADVISER shall not be liable to VALIC, the FUND, or to any shareholder in the FUND, and VALIC shall indemnify the SUB-ADVISER, for any act or omission in rendering services under this Agreement, or for any losses sustained in connection with the matters to which this agreement relates, so long as there has been no willful misfeasance, bad faith, gross negligence, or reckless disregard of obligations or duties on the part of the SUB-ADVISER.

VALIC shall perform quarterly and annual tax compliance tests and promptly furnish reports of such tests to the SUB-ADVISER after each quarter end to ensure that the Fund is in compliance with Subchapter M of the Code and Section 817(h) of the Code. VALIC shall apprise the SUB-ADVISER promptly after each quarter end of any potential non-compliance with the diversification requirements in such Code provisions. If so advised, the SUB-ADVISER shall take prompt action so that the Fund(s) comply with such Code diversification provisions, as directed by VALIC.

4. REPRESENTATIONS OF THE SUB-ADVISER AND VALIC

The SUB-ADVISER represents, warrants, and agrees as follows:

(a) The SUB-ADVISER (i) is registered as an investment adviser under the Advisers Act and will continue to be so registered for so long as this Agreement remains in effect: (ii) is not prohibited by the 1940 Act or the Advisers Act from performing the services contemplated by this Agreement; (iii) has met, and will continue to meet for so long as this Agreement remains in effect, any applicable federal or state requirements, or the applicable requirements of any regulatory or industry self-regulatory agency, necessary to be met in order to perform the services contemplated by this Agreement, (iv) has the authority to enter into and perform the services contemplated by this Agreement, and (v) will immediately notify VALIC of the occurrence of any event that would disqualify the SUB-ADVISER from serving as an investment adviser of an investment company pursuant to Section 9(a) of the 1940 Act or otherwise.

(b) The SUB-ADVISER has adopted a written code of ethics complying with the requirements of Rule 17j-1 under the 1940 Act and if it has not already done so, will provide VALIC and the FUND with a copy of such code of ethics together with evidence of its adoption.

(c) The SUB-ADVISER has provided VALIC and the FUND with a copy of its Form ADV as most recently filed with the SEC and will promptly after filing any amendment to its Form ADV with the SEC, furnish a copy of such amendment to VALIC.

VALIC represents, warrants, and agrees as follows:

5. TERM OF AGREEMENT

This Agreement shall become effective as to the Covered Fund as of the date hereof and will continue in effect until a new Investment Sub-Advisory Agreement is approved by shareholders of the Covered Fund or for 150 days, whichever is less.

This Agreement shall automatically terminate in the event of its assignment, as that term is defined in the 1940 Act, or in the event of the termination of the Investment Advisory Agreement between VALIC and the FUND as it relates to the Covered Fund. The Agreement may be terminated as to the Covered Fund at any time, without the payment of any penalty, by vote of the FUND's Board of Directors or by vote of a majority of the Covered Fund's outstanding voting securities on at least 60 days' prior written notice to the SUB-ADVISER. This Agreement may also be terminated by VALIC: (i) on at least 60 days' prior written notice to the SUB-ADVISER, without the payment of any penalty; or (ii) if the SUB-ADVISER becomes unable to discharge its duties and obligations under this Agreement. The SUB-ADVISER may terminate this Agreement at any time, or preclude its renewal without the payment of any penalty, on at least 60 days' prior written notice to VALIC.

6. OTHER MATTERS

pursuant to the 1940 Act. The compensation of any such persons will be paid by the SUB-ADVISER, and no obligation will be incurred by, or on behalf of, VALIC or the FUND with respect to them.

The SUB-ADVISER agrees that all books and records which it maintains for the FUND are the FUND's property. The SUB-ADVISER also agrees upon request of VALIC or the FUND, to promptly surrender the books and records in accordance with the 1940 Act and rules thereunder. The SUB-ADVISER further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1 under the 1940 Act.

VALIC has herewith furnished the SUB-ADVISER copies of the FUND's Prospectus, Statement of Additional Information, Declaration and Bylaws as currently in effect and agrees during the continuance of this Agreement to furnish SUB-ADVISER copies of any amendments or supplements thereto before or at the time the amendments or supplements become effective. Until VALIC delivers any amendments or supplements to the SUB-ADVISER, the SUB-ADVISER shall be fully protected in relying on the documents previously furnished to it.

The SUB-ADVISER is authorized to honor and act on any notice, instruction or confirmation given by VALIC on behalf of the FUND by any of the persons whose names, addresses and specimen signatures will be provided by VALIC from time to time. The SUB-ADVISER shall not be liable for so acting in good faith upon such instructions, confirmation or authority, notwithstanding that it shall subsequently be shown that the same was not given or signed or sent by an authorized person.

VALIC agrees to furnish the SUB-ADVISER at its principal office prior to use thereof, copies of all prospectuses, proxy statements, reports to shareholders, sales literature, or other material prepared for distribution to interest holders of the FUND or the public that refer in any way to the SUB-ADVISER, and not to use such material if the SUB-ADVISER reasonably objects in writing within ten (10) business days (or such other time as may be mutually agreed) after receipt thereof. It is understood that the name "T. Rowe Price" or "T. Rowe" or any derivative thereof, any trade name, trade device, service mark, symbol or logo associated with the names are the valuable property of the SUB-ADVISER and that VALIC has the right to use such name (or simulation or logo), in offering materials of the Fund with the prior written approval of the SUB-ADVISER and for so long as the SUB-ADVISER is a SUB-ADVISER to the Fund. Upon termination of this Agreement between the Fund, VALIC and the SUB-ADVISER, the Fund and VALIC shall forthwith cease to use such name (or simulation or logo). In the event of termination of this agreement, VALIC will continue to furnish to the SUB-ADVISER copies of any of the above-mentioned materials that refer in any way to the SUB-ADVISER. VALIC shall furnish or otherwise make available to the SUB-ADVISER such other information relating to the business affairs of VALIC and the FUND as the SUB-ADVISER at any time, or from time to time, may reasonably request in order to discharge obligations hereunder.

VALIC agrees to indemnify the SUB-ADVISER for losses and claims which arise (i) as a result of a failure by VALIC to provide the services or furnish materials required under the terms of this Investment Sub-Advisory Agreement, or (ii) as the result of any untrue statement of a material fact or any omission to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which they were made, not misleading in any registration statements, proxy materials, reports, advertisements, sales literature, or other materials pertaining to the FUND, except insofar as any such statement or omission was made in reliance on information provided by the SUB-ADVISER or its affiliates.

The SUB-ADVISER agrees to indemnify VALIC for losses and claims which arise (i) as a result of a failure by the SUB-ADVISER to provide the services or furnish the materials required under the terms of this Investment Sub-Advisory Agreement, including actions which may be based upon any willful malfeasance, bad faith, or gross negligence of or by reckless disregard of, the SUB-ADVISER's obligations and/or duties under this Agreement by the SUB-ADVISER or (ii) as the result of any untrue statement of a material fact or any omission to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which they were made, not misleading in any registration statements, proxy materials,

reports, advertisements, sales literature, or other materials pertaining to the FUND to the extent any such statement or omission was made in reliance on information provided by the SUB-ADVISER or its affiliates.

7. APPLICABILITY OF FEDERAL SECURITIES LAWS

The parties hereto have each caused this Agreement to be signed in duplicate on its behalf by its duly authorized officer on the above date.

THE VARIABLE ANNUITY LIFE INSURANCE COMPANY

By:____________________________________________
Name: Mary Cavanaugh
Title: Senior Vice President, General Counsel
and Secretary

ATTEST:

T. ROWE PRICE ASSOCIATES, INC.

By:____________________________________________
Name:
Title:

ATTEST:

NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES I

By:____________________________________________
Name:
Title:

ATTEST:

EXHIBIT d(6)

INVESTMENT SUB-ADVISORY AGREEMENT

This AGREEMENT made this 29th day of August, 2001, by and between THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," and T. ROWE PRICE ASSOCIATES, INC., hereinafter referred to as the "SUB-ADVISER."

VALIC and the SUB-ADVISER recognize the following:

(d) The SUB-ADVISER is engaged principally in the business of rendering investment advisory services and is registered as an investment adviser under the Advisers Act.

(e) VALIC desires to enter into an Investment Sub-Advisory Agreement with the SUB-ADVISER for all or a portion of the assets of the Covered Funds which VALIC determines from time to time to assign to the SUB-ADVISER.

(f) This Agreement supercedes all previous agreements for any of the Covered Funds shown on Schedule A.

VALIC and the SUB-ADVISER agree as follows:

1. SERVICES RENDERED AND EXPENSES PAID BY THE SUB-ADVISER

(a) manage the investment and reinvestment of the assets of the Covered Funds including, for example, the evaluation of pertinent economic, statistical, financial, and other data, the determination of the industries and companies to be represented in each Covered Fund's portfolio, and the formulation and implementation of investment programs.

The SUB-ADVISER will assist the Covered Funds and its agents in determining whether prices obtained for valuation purposes accurately reflect the prices on the SUB-ADVISER's portfolio records relating to the assets of the Covered Funds for which the SUB-ADVISER has responsibility on a monthly basis (unless otherwise agreed upon by the parties hereto) and at such other times as VALIC shall reasonably request.

In performing the services described in paragraph (b) above, the SUB-ADVISER shall use its best efforts to obtain for the Covered Funds the best execution of portfolio transactions. Subject to approval by NAF Variable's Board of Directors of appropriate policies and procedures, the SUB-ADVISER may cause the Covered Funds to pay to a broker a commission, for effecting a portfolio transaction, in excess of the commission another broker would have charged for effecting the same transaction, if the first broker provided brokerage and/or research services to the SUB-ADVISER. The SUB-ADVISER shall not be deemed to have acted unlawfully, or to have breached any duty created by this Agreement, or otherwise, solely by reason of acting in accordance with such authorization.

The SUB-ADVISER may aggregate sales and purchase orders of securities held by the Covered Funds with similar orders being made simultaneously for other accounts managed by the SUB-ADVISER or with accounts of the affiliates of the SUB-ADVISER, if in the SUB-ADVISER's reasonable judgment such aggregation shall result in an overall economic benefit to the Covered Funds considering the advantageous selling or purchase price, brokerage commission and other expenses. In accounting for such aggregated order price, commission and other expenses shall be averaged on a per bond or share basis daily. VALIC acknowledges that the determination of such economic benefit to the Covered Funds by the SUB-ADVISER is subjective and represents the SUB-ADVISER's evaluation that the Covered Funds is

benefited by relatively better purchase or sales prices, lower commission expenses and beneficial timing of transactions or a combination of these and other factors.

VALIC may direct the SUB-ADVISER to use a particular broker or dealer for one or more trades if, in the sole opinion of VALIC, it is in the best interest of the Covered Funds to do so. Any such direction shall be in writing and in a form satisfactory to SUB-ADVISER.

VALIC authorizes and empowers the SUB-ADVISER to direct the Covered Funds' Custodian to open and maintain brokerage accounts for securities and other property, including financial and commodity futures and commodities and options thereon (all such accounts hereinafter called "brokerage accounts") for and in the name of the Covered Funds and to execute for the Covered Funds as its agent and attorney-in-fact standard customer agreements with such broker or brokers as the SUB-ADVISER shall select as provided above. With respect to brokerage accounts for financial and commodity futures and commodities and options thereon, the SUB-ADVISER shall select such brokers, as approved by VALIC, prior to the establishment of such brokerage account. The SUB-ADVISER may, using such of the securities and other property in the Covered Funds as the SUB-ADVISER deems necessary or desirable, direct the Covered Funds' Custodian to deposit for the Covered Funds original and maintenance brokerage and margin deposits and otherwise direct payments of cash, cash equivalents and securities and other property into such brokerage accounts and to such brokers as the SUB-ADVISER deems desirable or appropriate.

The SUB-ADVISER shall maintain records adequately demonstrating compliance with its obligations under this Agreement and report periodically to VALIC and NAF Variable's Board of Directors regarding the performance of its services under this Agreement. The SUB-ADVISER will make available to VALIC and NAF Variable promptly upon their reasonable written request all of the Covered Funds' investment records and ledgers to assist VALIC and NAF Variable in compliance with respect to each Covered Funds' securities transactions as required by the 1940 Act and the Advisers Act, as well as other applicable laws. The SUB-ADVISER will furnish NAF Variable's Board of Directors such periodic and special reports as VALIC and NAF Variable's Board of Directors may reasonably request. The SUB-ADVISER will furnish to regulatory authorities any information or reports in connection with such services which may be requested in order to ascertain whether the operations of the Covered Funds are being conducted in a manner consistent with applicable laws and regulations. The SUB-ADVISER will not disclose or use any records or information obtained pursuant to this Agreement in any manner whatsoever except as expressly authorized in this Agreement, and will keep confidential any non-public information obtained directly as a result of this service relationship, and the SUB-ADVISER shall disclose such non-public information only if VALIC or the Board of Directors of NAF Variable has authorized such disclosure, or if such information is or hereafter otherwise is known by the SUB-ADVISER or has been disclosed, directly or indirectly, by VALIC or NAF Variable to others becomes ascertainable from public or published information or trade sources, or if such disclosure is expressly required or requested by applicable federal or state regulatory authorities, or to the extent such disclosure is reasonably required by auditors or attorneys of the SUB-ADVISER in connection with the performance of their professional services. Notwithstanding the foregoing, the SUB-ADVISER may disclose the total return earned by the Covered Funds and may include such total return in the calculation of composite performance information without prior approval by VALIC or the Board of Directors of NAF Variable.

NAF Variable (ii) to deliver securities and other property against payment for NAF Variable, and (iii) to transfer assets and funds to such brokerage accounts as the SUB-ADVISER may designate, all consistent with the powers, authorities and limitations set forth herein. The SUB-ADVISER shall not have the authority to cause the Custodian to deliver securities and other property except as expressly provided for in this Agreement.

The SUB-ADVISER will perform cash management services for the Covered Funds. The SUB-ADVISER may invest cash or cash equivalents in the Reserve Investment Funds, Inc., which are internally managed money market funds that are for the exclusive use of the T. Rowe Price mutual funds and clients of T. Rowe Price.

The SUB-ADVISER will not have proxy voting responsibilities. The proxy voting function will be performed by VALIC.

The SUB-ADVISER shall for all purposes herein be deemed to be an independent contractor and shall, unless otherwise provided or authorized, have no authority to act or represent VALIC or NAF Variable other than in furtherance of the SUB-ADVISER's duties and responsibilities as set forth in this Agreement.

2. COMPENSATION OF THE SUB-ADVISER

VALIC shall pay to the SUB-ADVISER, as compensation for the services rendered and expenses paid by the SUB-ADVISER, a monthly fee or fees based on each Covered Funds' average daily net asset value computed for each Covered Funds as provided for herein and in the fee schedule attached hereto as Schedule A. Schedule A may be amended from time to time, provided that amendments are made in conformity with applicable laws and regulations and the Articles and Bylaws of NAF Variable. Any change in Schedule A pertaining to any new or existing Fund shall not be deemed to affect the interest of any other Fund and shall not require the approval of shareholders of any other Fund.

If the SUB-ADVISER serves for less than a whole month, the foregoing compensation shall be prorated.

The payment of advisory fees related to the services of the SUB-ADVISER under this Agreement shall be the sole responsibility of VALIC and shall not be the responsibility of NAF Variable.

3. SCOPE OF THE SUB-ADVISER'S ACTIVITIES

VALIC understands that the SUB-ADVISER and its affiliates now act, will continue to act and may act in the future as investment adviser to fiduciary and other managed accounts and as investment adviser to other investment companies, and VALIC has no objection to the SUB-ADVISER so acting, provided that whenever a Covered Funds and one or more other accounts or investment companies advised by the SUB-ADVISER have available funds for investment, investments suitable and appropriate for each will be allocated in accordance with a methodology believed to be equitable to each entity. The SUB-ADVISER similarly agrees to allocate opportunities to sell securities. VALIC recognizes that, in some cases, this procedure may limit the size of the position that may be acquired or sold for a Covered Funds. In addition, VALIC understands that the persons employed by the SUB-ADVISER to assist in the performance of the SUB-ADVISER's duties hereunder will not devote their full time to such service and nothing contained

herein shall be deemed to limit or restrict the right of the SUB-ADVISER or any affiliate of the SUB-ADVISER to engage in and devote time and attention to other business or to render services of whatever kind or nature.

The SUB-ADVISER shall not be liable to VALIC, NAF Variable, or to any shareholder in the Covered Funds, and VALIC shall indemnify the SUB-ADVISER, for any act or omission in rendering services under this Agreement, or for any losses sustained in connection with the matters to which this agreement relates, so long as there has been no willful misfeasance, bad faith, gross negligence, or reckless disregard of obligations or duties on the part of the SUB-ADVISER in performing its duties under this Agreement.

VALIC shall perform quarterly and annual tax compliance tests and promptly furnish reports of such tests to the SUB-ADVISER after each quarter end to ensure that the Covered Funds is in compliance with Subchapter M of the Code and Section 817(h) of the Code. VALIC shall apprise the SUB-ADVISER promptly after each quarter end of any potential non-compliance with the diversification requirements in such Code provisions. If so advised, the SUB-ADVISER shall take prompt action so that the Covered Funds complies with such Code diversification provisions, as directed by VALIC.

4. REPRESENTATIONS OF THE SUB-ADVISER AND VALIC

The SUB-ADVISER represents, warrants, and agrees as follows:

VALIC represents, warrants, and agrees as follows:

VALIC from serving as an investment adviser of an investment company pursuant to Section 9(a) of the 1940 Act or otherwise.

5. TERM OF AGREEMENT

This Agreement shall become effective as to the Covered Fund(s) set forth on Schedule A on the date hereof and as to any other Fund on the date of the Amendment to Schedule A adding such Fund in accordance with this Agreement. Unless sooner terminated as provided herein, this Agreement shall continue in effect for two years from its effective date. Thereafter, this Agreement shall continue in effect, but with respect to any Covered Funds, subject to the termination provisions and all other terms and conditions hereof, only so long as such continuance is approved at least annually by the vote of a majority of NAF Variable's directors who are not parties to this Agreement or interested persons of any such parties, cast in person at a meeting called for the purpose of voting on such approval, and by a vote of a majority of NAF Variable's Board of Directors or a majority of that Covered Funds' outstanding voting securities.

This Agreement shall automatically terminate in the event of its assignment as that term is defined in the 1940 Act, or in the event of the termination of the Investment Advisory Agreement between VALIC and NAF Variable as it relates to any Covered Funds; provided that the termination of an Interim Investment Advisory Agreement between NAF Variable and VALIC, pursuant to Rule 15a-4 under the 1940 Act upon shareholder approval of a definitive Investment Advisory Agreement with respect to a Covered Fund, shall not result in the termination of this Agreement as to such Covered Fund. The Agreement may be terminated as to any Covered Funds at any time, without the payment of any penalty, by vote of NAF Variable's Board of Directors or by vote of a majority of that Covered Funds' outstanding voting securities on not more than 60 days' nor less than 30 days' written notice to the SUB-ADVISER, or upon such shorter notice as may be mutually agreed upon by the parties. This Agreement may also be terminated by VALIC: (i) on not more than 60 days' nor less than 30 days' written notice to the SUB-ADVISER, or upon such shorter notice as may be mutually agreed upon by the parties, without the payment of any penalty; or (ii) if the SUB-ADVISER becomes unable to discharge its duties and obligations under this Agreement. The SUB-ADVISER may terminate this Agreement at any time, or preclude its renewal without the payment of any penalty, on not more than 60 days' nor less than 30 days' written notice to VALIC, or upon such shorter notice as may be mutually agreed upon by the parties.

6. OTHER MATTERS

The SUB-ADVISER agrees that all books and records which it maintains for the Covered Funds are the Covered Funds' property. The SUB-ADVISER also agrees upon request of VALIC or NAF Variable, to promptly surrender the books and records in accordance with the 1940 Act and rules thereunder. The SUB-ADVISER further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1 under the 1940 Act.

The SUB-ADVISER is authorized to honor and act on any notice, instruction or confirmation given by VALIC on behalf of the Covered Funds in writing signed or sent by any of the persons whose names,

addresses and specimen signatures will be provided by VALIC from time to time. The SUB-ADVISER shall not be liable for so acting in good faith upon such instructions, confirmation or authority, notwithstanding that it shall subsequently be shown that the same was not given or signed or sent by an authorized person.

The SUB-ADVISER agrees to indemnify VALIC for losses and claims which arise (i) as a result of a failure by SUB-ADVISER to provide the services or furnish the materials required under the terms of this Investment Sub-Advisory Agreement, including a negligent failure whether unintentional or in good faith or otherwise, to comply with the diversification requirements specified in section 817(h), and the qualification standards of Subchapter M of the Code, as amended, and the regulations thereunder, (other than a failure which is subsequently timely corrected by the SUB-ADVISER in accordance with applicable law and regulations such that no loss is incurred by VALIC or a Covered Funds) or (ii) as the result of any untrue statement of a material fact or any omission to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which they were made, not misleading in any registration statements, proxy materials, reports, advertisements, sales literature, or other materials pertaining to the Covered Funds to the extent any such statement or omission was made in reliance on information provided by the SUB-ADVISER or its affiliates.

7. CHOICE OF LAW

This Agreement shall be interpreted in accordance with the laws of the State of Texas and all questions concerning its validity, construction, or otherwise, shall be determined under the laws of the State of Texas.

8. INVALID PROVISION

9. AMENDMENT AND WAIVER

10. NOTICES

If to VALIC:

Attn: Nori L. Gabert, Esq.
2929 Allen Parkway
Houston, Texas 77019

Tel: (713) 831-5165
Fax: (713) 831-2258

If to SUB-ADVISER:

100 East Pratt Street
Baltimore, Maryland 21202

Attn: General Counsel

The parties hereto have each caused this Agreement to be signed in duplicate on its behalf by its duly authorized officer on the above date.

THE VARIABLE ANNUITY LIFE INSURANCE
COMPANY

By:

Name:
Title:

ATTEST:

Attest:
Name:
Title:

T. Rowe Price Associates, Inc.

By:

Name:
Title:

ATTEST:

Attest:
Name:
Title:

EXHIBIT d(7)

INVESTMENT SUB-ADVISORY AGREEMENT

This AGREEMENT made this 29th day of August, 2001, by and between THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," and WELLINGTON MANAGEMENT COMPANY, LLP, hereinafter referred to as the "SUB-ADVISER."

VALIC and the SUB-ADVISER recognize the following:

(b) VALIC is engaged as the investment adviser of North American Funds Variable Product Series I ("NAF Variable") pursuant to an Investment Advisory Agreement between VALIC and NAF Variable, a Maryland corporation. NAF Variable is a series type of investment company issuing separate classes (or series) of shares and is registered as an open-end, management investment company under the Investment Company Act of 1940, as amended ("1940 Act"). The 1940 Act prohibits any person from acting as an investment adviser of a registered investment company except pursuant to a written contract.

(c) The FUND currently consists of twenty-one portfolios ("Funds"):
North American - AG Asset Allocation Fund North American - AG Capital Conservation Fund North American - AG Government Securities Fund North American - AG Growth & Income Fund North American - AG International Equities Fund North American - AG International Government Bond Fund
North American - AG Large Cap Growth Fund North American - AG MidCap Index Fund North American - AG 1 Money Market Fund North American - AG Nasdaq-100(R) Index Fund North American - AG Small Cap Index Fund North American - AG Social Awareness Fund North American - AG Stock Index Fund North American - American Century Income & Growth Fund
North American - American Century International Growth Fund
North American Core Equity Fund North American - Founders/T. Rowe Price Small Cap Fund
North American - Putnam Opportunities Fund North American - T. Rowe Price Blue Chip Growth Fund North American - T. Rowe Price Health Sciences Fund North American - T. Rowe Price Science & Technology Fund

(d) The SUB-ADVISER is engaged principally in the business of rendering investment advisory services and is registered as an investment adviser under the Advisers Act.

VALIC and the SUB-ADVISER AGREE AS FOLLOWS:

1. SERVICES RENDERED AND EXPENSES PAID BY THE SUB-ADVISER

The SUB-ADVISER, subject to the control, direction, and supervision of VALIC and NAF Variable's Board of Directors and in conformity with the 1940 Act, all applicable laws and regulations thereunder, all other applicable federal and state laws and regulations, including section 817(h) of the Internal Revenue Code of 1986, as amended (the "Code"), NAF Variable's Articles, Bylaws, registration statements, prospectus and stated investment objectives, policies and restrictions and any applicable procedures adopted by NAF Variable's Board of Directors shall:

In performing the services described in paragraph (b) above, the SUB-ADVISER shall use its best efforts to obtain for the Covered Fund(s) the most favorable overall price and execution. Subject to approval by NAF Variable's Board of Directors of appropriate policies and procedures, the SUB-ADVISER may cause the Covered Fund(s) to pay to a broker a commission, for effecting a portfolio transaction, in excess of the commission another broker would have charged for effecting the same transaction, if the first broker provided brokerage and/or research services, including statistical data, to the SUB-ADVISER. Furthermore, on occasions when the SUB-ADVISER deems the purchase or sale of a security to be in the best interest of one or more of the Covered Fund(s) as well as other clients of the SUB-ADVISER, it may allocate such transactions in the manner it considers to be the most equitable and consistent with its fiduciary obligation to the Covered Fund(s) and to such other clients. The SUB-ADVISER shall not be deemed to have acted unlawfully, or to have breached any duty created by this Agreement, or otherwise, solely by reason of acting according to such authorization.

SUB-ADVISER will not disclose or use any records or information obtained pursuant to this Agreement in any manner whatsoever except as expressly authorized in this Agreement, and will keep confidential any information obtained pursuant to this service relationship, and disclose such information only if VALIC or the Board of Directors of NAF Variable has authorized such disclosure, or if such information is or hereafter becomes ascertainable from public or published information or trade sources, or if such disclosure is expressly required or requested by applicable federal or state authorities.

The SUB-ADVISER shall for all purposes herein be deemed to be an independent contractor and shall, unless otherwise provided or authorized, have no authority to act for or represent VALIC or NAF Variable other than in furtherance of the SUB-ADVISER's duties and responsibilities as set forth in this Agreement.

2. COMPENSATION OF THE SUB-ADVISER

VALIC shall pay to the SUB-ADVISER, as compensation for the services rendered and expenses paid by the SUB-ADVISER, a monthly fee or fees based on each Covered Fund's average monthly net asset value computed for each Covered Fund as provided for herein and in the fee schedule attached hereto as Schedule A. Schedule A may be amended from time to time, by written agreement executed by both Parties, provided that amendments are made in conformity with applicable laws and regulations and the Articles and Bylaws of NAF Variable. Any change in Schedule A pertaining to any new or existing Fund shall not be deemed to affect the interest of any other Fund and shall not require the approval of shareholders of any other Fund.

The average monthly net asset value shall be determined by taking the mean average of all of the determinations of net asset value, made in the manner provided in NAF Variable's Articles, for each business day during a given calendar month. VALIC shall pay this fee for each calendar month as soon as practicable after the end of that month, but in any event no later than thirty (30) days following the end of the month.

If the SUB-ADVISER serves for less than a whole month, the foregoing compensation shall be prorated.

The payment of advisory fees related to the services of the SUB-ADVISER under this Agreement shall be the sole responsibility of VALIC and shall not be the responsibility of NAF Variable.

3. SCOPE OF THE SUB-ADVISER'S ACTIVITIES

ADVISER, and in any person controlling, controlled by or under common control with the SUB-ADVISER; and the SUB-ADVISER, and any person controlling, controlled by or under common control with the SUB-ADVISER, may have an interest in VALIC.

The SUB-ADVISER shall not be liable to VALIC, NAF Variable, or to any shareholder in NAF Variable, and VALIC shall indemnify the SUB-ADVISER, for any act or omission in rendering services under this Agreement, or for any losses sustained in connection with the matters to which this agreement relates, so long as there has been no willful misfeasance, bad faith, gross negligence, or reckless disregard of obligations or duties on the part of the SUB-ADVISER.

4. REPRESENTATIONS OF THE SUB-ADVISER AND VALIC

The SUB-ADVISER represents, warrants, and agrees as follows:

(c) The SUB-ADVISER has provided VALIC and NAF Variable with a copy of its Form ADV as most recently filed with the SEC and will promptly after filing any amendment to its Form ADV with the SEC, furnish a copy of such amendment to VALIC.

VALIC represents, warrants, and agrees as follows:

VALIC (i) is registered as an investment adviser under the Advisers Act and will continue to be so registered for so long as this Agreement remains in effect, (ii) is not prohibited by the 1940 Act or the Advisers Act from performing the services contemplated by this Agreement, (iii) has met, and will continue to meet for so long as this Agreement remains in effect, any applicable federal or state requirements, or the applicable requirements of any regulatory or industry self-regulatory agency, necessary to be met in order to perform the services contemplated by this Agreement, (iv) has the authority to enter into and perform the services contemplated by this Agreement, and (v) will immediately notify the SUB-ADVISER of the occurrence of any event that would disqualify VALIC from serving as an investment adviser of an investment company pursuant to Section 9(a) of the 1940 Act or otherwise.

5. TERM OF AGREEMENT

This Agreement shall become effective as to the Fund(s) set forth on Schedule A on the date hereof and as to any other Fund on the date of the Amendment to Schedule A adding such Fund in accordance with this Agreement. Unless sooner terminated as provided herein, this Agreement shall continue in effect for two years from its effective date. Thereafter, this Agreement shall continue in effect, but with respect to any Covered Fund, subject to the termination provisions and all other terms and conditions hereof, only so long as such

continuance is approved at least annually by the vote of a majority of NAF Variable's directors who are not parties to this Agreement or interested persons of any such parties, cast in person at a meeting called for the purpose of voting on such approval, and by a vote of a majority of NAF Variable's Board of Directors or a majority of that Fund's outstanding voting securities.

This Agreement shall automatically terminate in the event of its assignment as that term is defined in the 1940 Act, or in the event of the termination of the Investment Advisory Agreement between VALIC and NAF Variable as it relates to any Covered Fund(s); provided that the termination of an Interim Investment Advisory Agreement between NAF Variable and VALIC, pursuant to Rule 15a-4 under the 1940 Act upon shareholder approval of a definitive Investment Advisory Agreement with respect to a Covered Fund, shall not result in the termination of this Agreement as to such Covered Fund. The Agreement may be terminated as to any Covered Fund at any time, without the payment of any penalty, by vote of NAF Variable's Board of Directors or by vote of a majority of that Covered Fund's outstanding voting securities on at least 60 days' prior written notice to the SUB-ADVISER, or upon such shorter notice as may be mutually agreed upon by the parties. This Agreement may also be terminated by VALIC: (i) on at least 60 days' prior written notice to the SUB-ADVISER, or upon such shorter notice as may be mutually agreed upon by the parties, without the payment of any penalty; or (ii) if the SUB-ADVISER becomes unable to discharge its duties and obligations under this Agreement. The SUB-ADVISER may terminate this Agreement at any time, or preclude its renewal without the payment of any penalty, on at least 60 days' prior written notice to VALIC, or upon such shorter notice as may be mutually agreed upon by the parties.

6. OTHER MATTERS

The SUB-ADVISER may from time to time employ or associate with itself any person or persons believed to be particularly fitted to assist in its performance of services under this Agreement, provided no such person serves or acts as an investment adviser separate from the SUB-ADVISER so as to require a new written contract pursuant to the 1940 Act. The compensation of any such persons will be paid by the SUB-ADVISER, and no obligation will be incurred by, or on behalf of, VALIC or NAF Variable with respect to them.

The SUB-ADVISER agrees that all books and records which it maintains for NAF Variable are NAF Variable's property. The SUB-ADVISER also agrees upon request of VALIC or NAF Variable, to promptly surrender the books and records in accordance with the 1940 Act and rules thereunder. The SUB-ADVISER further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records required to be maintained by subparagraphs (b)(5), (6), (7), (9), (10), (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.

The SUB-ADVISER is authorized to honor and act on any notice, instruction or confirmation given by VALIC on behalf of NAF Variable in writing signed or sent by any of the persons whose names, addresses and specimen signatures will be provided by VALIC from time to time. The SUB-ADVISER shall not be liable for so acting in good faith upon such instructions, confirmation or authority, notwithstanding that it shall subsequently be shown that the same was not given or signed or sent by an authorized person.

refer in any way to the SUB-ADVISER. VALIC shall furnish or otherwise make available to the SUB-ADVISER such other information relating to the business affairs of VALIC and NAF Variable as the SUB-ADVISER at any time, or from time to time, may reasonably request in order to discharge obligations hereunder. The provisions of this paragraph shall survive the termination of this Agreement.

VALIC agrees to indemnify the SUB-ADVISER for losses and claims which arise (i) as a result of a failure by VALIC to provide the services or furnish materials required under the terms of this Agreement, or (ii) as the result of any untrue statement of a material fact or any omission to state a material fact required to be stated or necessary to make the statements, in light of the circumstances under which they were made, not misleading in any registration statements, proxy materials, reports, advertisements, sales literature, or other materials pertaining to NAF Variable, except insofar as any such statement or omission was made in reliance on information provided by the SUB-ADVISER or its affiliates. The provisions of this paragraph shall survive the termination of this Agreement.

7. APPLICABILITY OF FEDERAL SECURITIES LAWS

8. AMENDMENT AND WAIVER

9. NOTICES

If to VALIC:

Attn: Nori L. Gabert, Esq.
2929 Allen Parkway
Houston, Texas 77019

Tel: (713) 831-5165
Fax: (713) 831-2258

If to SUB-ADVISER:

The parties hereto have each caused this Agreement to be signed in duplicate on its behalf by its duly authorized officer on the above date.

THE VARIABLE ANNUITY LIFE INSURANCE
COMPANY

By:

Name:
Title:
ATTEST:

WELLINGTON MANAGEMENT COMPANY, LLP

By:

Name:
Title:
ATTEST:

EXHIBIT d(8)

INTERIM INVESTMENT ADVISORY AGREEMENT

This AGREEMENT made as of this 29th day of August, 2001, by and between THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as the "ADVISER," and NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES I, hereinafter referred to as "NAFV I."

The ADVISER and NAFV I recognize the following:

(a) The ADVISER is a life insurance company organized under Chapter 3 of the Texas Insurance Code and an investment adviser registered under the Investment Advisers Act of 1940.

(b) NAFV I is an investment company organized under the general corporation laws of Maryland, as a series type of investment company issuing separate classes (or series) of stock and is registered as an open-end, management investment company under the Investment Company Act of 1940 (the "1940 Act"). The 1940 Act prohibits any person from acting as an investment adviser of a registered investment company except pursuant to a written contract.

In accordance with NAFV I's Articles of Incorporation (the "Articles") and Bylaws, new Funds may be added to NAFV I upon approval of NAFV I's Board of Directors without approval of NAFV I's shareholders. This Agreement will apply only to the Fund(s) and any other Fund as may be added or deleted by amendment to the attached Schedule A ("Covered Funds").

The ADVISER and NAFV I AGREE AS FOLLOWS:

1. SERVICES RENDERED AND EXPENSES PAID BY ADVISER

The ADVISER, subject to the control, direction, and supervision of NAFV I's Board of Directors and in conformity with the 1940 Act, all applicable laws and regulations thereunder, all other applicable federal and state laws and regulations, including 817(b) of the Internal Revenue Code of 1986, as amended (the "Code"),

NAFV I's Articles, Bylaws, registration statements, prospectus and stated investment objectives, policies and restrictions shall:

(b) maintain a trading desk and place all orders for the purchase and sale of portfolio investments for each Covered Fund's account with brokers or dealers selected by the ADVISER, or arrange for any other entity to provide a trading desk and to place orders with brokers and dealers selected by the ADVISER, subject to the ADVISER's control, direction, and supervision.

(c) furnish to the Covered Funds office space, facilities, equipment and personnel adequate to provide the services described above and pay the compensation to NAFV I's Directors and officers who are interested persons of the ADVISER.

In performing the services described in paragraph (b) above, the ADVISER shall use its best efforts to obtain for the Covered Funds the most favorable overall price and execution. The ADVISER shall also use its best efforts to obtain for the Covered Funds any tender and exchange offer solicitation fees, other fees, and similar payments available in connection with the portfolio transactions of the Covered Funds. Subject to prior authorization by NAFV I's Board of Directors of appropriate policies and procedures, the ADVISER may cause the Covered Funds to pay to a broker a commission, for effecting a portfolio transaction, in excess of the commission another broker would have charged for effecting the same transaction, if the first broker provided brokerage and/or research services, including statistical data, to the ADVISER. The ADVISER shall not be deemed to have acted unlawfully, or to have breached any duty created by this Agreement, or otherwise, solely by reason of acting according to such authorization.

The ADVISER shall maintain records adequately demonstrating compliance with its obligations under this Agreement and report periodically to NAFV I's Board of Directors regarding the performance of services under this Agreement.

Except as otherwise agreed, or as otherwise provided herein, the ADVISER shall bear the expense of discharging its responsibilities hereunder and NAFV I shall pay, or arrange for others to pay, all its expenses other than those which part 2 of this Agreement expressly states are payable to the ADVISER. Expenses payable by NAFV I include, but are not limited to, (i) interest and taxes; (ii) brokerage commissions and other expenses of purchasing and selling portfolio investments; (iii) compensation of its Directors and officers other than those persons who are interested persons of the ADVISER; (iv) fees of outside counsel to and of independent auditors of NAFV I selected by the Board of Directors; (v) fees for accounting services; (vi) custodial, registration, and transfer agency fees; (vii) expenses related to the repurchase or redemption of its shares including expenses related to a program of periodic repurchases or redemptions;
(viii) expenses related to issuance of its shares against payment therefor by, or on behalf of, the subscribers thereto; (ix) fees and related expenses of registering and qualifying NAFV I and its shares for distribution under state and federal securities laws; (x) expenses of printing and mailing to existing shareholders of registration statements, prospectuses, reports, notices and proxy solicitation materials of NAFV I; (xi) all other expenses incidental to holding meetings of NAFV I's shareholders including proxy solicitations therefor; (xii) expenses for servicing shareholder accounts; (xiii) insurance premiums for fidelity coverage and errors and omissions insurance; (xiv) dues for NAFV I's membership in trade associations approved by the Board of Directors; and (xv) such non-recurring expenses as may arise, including those associated with actions, suits, or proceedings to which NAFV I is a party and the legal obligation which NAFV I may have to indemnify its officers, Directors and employees with respect thereto. NAFV I shall allocate the foregoing expenses among the Covered Funds and, to the extent that any of the foregoing expenses are allocated between the Covered Funds and any other Funds or entities, such allocations shall be made pursuant to methods approved by the Board of Directors.

2. COMPENSATION OF ADVISER

NAFV I shall pay to the ADVISER, as compensation for the services rendered, facilities furnished and expenses paid by the ADVISER, a monthly fee based on each Covered Fund's average monthly net asset value computed for each Covered Fund as provided for in the fee schedule attached hereto as Schedule A. Schedule A may be amended from time to time, provided that amendments are made in conformity with applicable laws and regulations and the Articles and Bylaws of NAFV I. Any change in Schedule A pertaining to any existing or new Fund shall not be deemed to affect the interest of any other Fund and shall not require the approval of shareholders of any other Fund.

The average monthly net asset value shall be determined by taking the mean average of all of the determinations of net asset value, made in the manner provided in NAFV I's Articles, for each business day during a given calendar month. NAFV I shall pay this fee for each calendar month as soon as practicable after the end of that month.

The ADVISER shall promptly reduce its monthly fee by the amount of any commissions, tender and exchange offer solicitation fees, other fees, or similar payments received by the ADVISER, or any affiliated person of the ADVISER, in connection with any Covered Fund's portfolio transactions, less the amount of any direct expenses incurred by the ADVISER, or any affiliated person of the ADVISER, in obtaining such commissions, fees, or payments.

If the ADVISER serves for less than a whole month, the foregoing compensation shall be prorated.

During the term of this Agreement, the following conditions apply:

(a) The fee shall be held in an interest-bearing escrow account with State Street Bank and Trust Company;

(b) If a majority of a Covered Fund's outstanding voting securities approve a new investment advisory agreement (the "New Agreement") with the ADVISER within 150 days after the date hereof, the amount in the escrow account (including interest earned thereon) with respect to such Covered Fund shall be paid to the ADVISER; and

(c) If a majority of a Covered Fund's outstanding voting securities do not approve a New Agreement with the ADVISER within such 150-day period, the ADVISER shall be paid from the escrow account, the lesser of an amount equal to

(i) any costs incurred in performing this Agreement (plus interest earned on that amount in the escrow account); or

(ii) the total amount in the escrow account (plus interest earned thereon).

The Adviser's fees hereunder in respect of a Covered Fund shall be reduced to the extent that any fees are paid by such Covered Fund directly to its investment subadviser pursuant to an Interim Investment Sub-Advisory Agreement of even date herewith.

3. SCOPE OF ADVISER'S DUTIES

The ADVISER, and any person controlling, controlled by or under common control with the ADVISER, shall remain free to provide similar investment advisory services to other persons or engage in any other business or activity which does not impair the services which the ADVISER renders to the Covered Funds.

Except as otherwise required by the 1940 Act, any of the shareholders, Directors, officers and employees of NAFV I may be a shareholder, director, officer or employee of, or be otherwise interested in, the ADVISER, and in any person controlling, controlled by or under common control with the ADVISER; and the ADVISER,

and any person controlling, controlled by or under common control with the ADVISER, may have an interest in NAFV I.

The ADVISER shall not be liable to NAFV I, or to any shareholder in NAFV I, for any act or omission in rendering services under this Agreement, or for any losses sustained in the purchase, holding, or sale of any portfolio security, so long as there has been no willful misfeasance, bad faith, negligence, or reckless disregard of obligations or duties on the part of the ADVISER.

The ADVISER may from time to time employ or associate with itself any person or persons believed to be particularly fitted to assist in its performance of services under this Agreement, provided that any such person who serves or acts as an investment adviser separate from the ADVISER will do so pursuant to a sub-advisory agreement as provided in the following paragraph. The compensation of any such persons will be paid by the ADVISER, and no obligation will be incurred by, or on behalf of, NAFV I with respect to them.

Notwithstanding any other provision of this Agreement, NAFV I hereby authorizes the ADVISER to employ an investment sub-adviser for any one or more of the Covered Funds for the purpose of providing investment management services with respect to such Covered Funds, provided that
(a) the compensation to be paid to such investment sub-adviser shall be the sole responsibility of the ADVISER, (b) the duties and responsibilities of the investment sub-adviser shall be as set forth in a sub-advisory agreement including the ADVISER and the investment sub-adviser as parties, (c) such sub-advisory agreement shall be adopted and approved in conformity with applicable laws and regulations, and (d) such sub-advisory agreement may be terminated at any time, on not more than 60 days' written notice, by the ADVISER on notice to the sub-adviser and NAFV I, by the sub-adviser on notice to the ADVISER and NAFV I, and by NAFV I's Board of Directors or by a majority vote of the Covered Fund's outstanding voting securities on notice to the sub-adviser and the ADVISER.

4. DURATION OF AGREEMENT

This Agreement shall become effective as to the Covered Funds set forth on Schedule A on the date hereof and will continue in effect as to a Covered Fund until a New Agreement is approved by shareholders of such Covered Fund or for 150 days, whichever is less.

This Agreement shall automatically terminate in the event of its assignment. This Agreement may be terminated, without the payment of any penalty, as to any Covered Fund at any time by NAFV I's Board of Directors or by vote of a majority of that Covered Fund's outstanding voting securities, on not more than ten calendar days' written notice to the ADVISER, or by the ADVISER, on not more than 60 days' nor less than 30 days' written notice, or upon such shorter notice as may be mutually agreed upon.

5. APPLICABILITY OF FEDERAL SECURITIES LAWS

This Agreement shall be interpreted in accordance with applicable federal securities laws and regulations, including definitions therein and such exemptions as may be granted to the ADVISER or NAFV I by the Securities and Exchange Commission (the "Commission") or such interpretive positions as may be taken by the Commission or its staff. To the extent that the applicable law of the State of Texas, or any of the provisions herein, conflict with applicable provisions of the federal securities laws, the latter shall control.

6. MISCELLANEOUS PROVISIONS

For the purposes of this Agreement, the terms "affiliated person," "assignment," "interested person," and "majority of outstanding voting securities" shall have their respective meanings defined in the 1940 Act and the Rules and Regulations thereunder, subject, however, to such exemptions as may be granted to either the ADVISER or NAFV I by the Commission, or such interpretive positions as may be taken by the Commission or its staff, under the 1940 Act, and the term "brokerage and research services" shall have the meaning given in the Securities Exchange Act of 1934 and the Rules and Regulations thereunder.

The parties hereto have each caused this Agreement to be signed in duplicate on its behalf by its duly authorized officer on the above date.

NORTH AMERICAN FUNDS
VARIABLE PRODUCT SERIES I

By:

Name:

Title:

ATTEST:

Secretary

THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY

By:

Name:

Title:

ATTEST:

Secretary

NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES I

SCHEDULE A
to Investment Advisory Agreement
(Effective August 29, 2001)

Annual Fee computed at the following annual rate, based on average monthly net assets value and payable monthly:

MidCap Index Fund                           0.35% on the first $500 million;
                                            0.25% on assets over $500 million

Stock Index Fund                            0.35% on the first $500 million;
                                            0.25% on assets over $500 million

Small Cap Index Fund                        0.35% on the first $500 million;
                                            0.25% on assets over $500 million

Science & Technology Fund                   0.90%

Growth and Income Fund                      0.75%

Core Equity Fund                            0.80%

North American - Founders                   1.00%
   Large Cap Growth Fund

North American - American                   0.77%
Century Income & Growth Fund

North American - Putnam                     0.95%
     Opportunities Fund

North American - Founders/                  0.90%
     T. Rowe Price Small Cap Fund

North American - American                   1.00%
     Century International Growth Fund

North American - AG                         0.40%
     Nasdaq-100 Index Fund

North American - T. Rowe                    0.80%
     Price Blue Chip Growth Fund

AG Asset Allocation Fund                    0.50%

Money Market Fund                           0.50%

Capital Conservation Fund                   0.50%

Government Securities Fund                  0.50%

Social Awareness Fund                       0.50%

International Government                    0.50%
     Bond Fund

International Equities Fund                 0.35% on the first $500 million
                                            0.25% on assets over $500 million

North American - T. Rowe                    1.00%
    Price Health Sciences Fund

Exhibit e

DISTRIBUTION AGREEMENT

Between

NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES I
and
THE VARIABLE ANNUITY MARKETING COMPANY

THIS AGREEMENT made this 29th day of August, 2001, by and between NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES I, a Maryland corporation, hereafter referred to as the "Fund" and THE VARIABLE ANNUITY MARKETING COMPANY, a Texas corporation hereafter referred to as the "Distributor."

THE FUND AND THE DISTRIBUTOR RECOGNIZE THE FOLLOWING:

1. The Fund is registered as a diversified, open-end management investment company under the Investment Company Act of 1940 (the "1940 Act"). The Fund consists of a number of investment portfolios, as may now exist and may hereinafter be established ("Portfolios"). The Fund intends to continuously offer the shares of its various Portfolios for sale to The Variable Annuity Life Insurance Company Separate Account A, other separate accounts of VALIC, separate accounts of life insurance companies that are affiliated with VALIC, employee thrift plans maintained by VALIC or its affiliates, separate accounts of life insurance companies that are not affiliated with VALIC and, subject to applicable law, the public (all eligible purchasers of such shares being referred to collectively as the "Purchasers"). The Fund also intends that the Purchasers may provide certain beneficial ownership rights to individuals under variable annuity and variable life insurance contracts, employee thrift plans or other such arrangements (such individuals together with any Purchasers who retain all beneficial ownership rights being referred to collectively as the "Participants"). The Fund may suspend sales of the shares of any one or more Portfolios at any time, and may resume sales of any such Portfolio(s) at a later date.

2. The Distributor is registered as a broker-dealer under the Securities Exchange Act of 1934 and is currently a member of the National Association of Securities Dealers, Inc. (the "NASD").

THE FUND AND THE DISTRIBUTOR AGREE AS FOLLOWS:

1. The Fund hereby appoints the Distributor as principal underwriter and distributor to sell to the Purchasers the shares of the Portfolios (hereinafter "its shares" or "the Fund's shares"). The appointment of the Distributor hereunder shall not preclude the Fund from selling its shares directly to the Purchasers.

2. The Distributor accepts such appointment. The Distributor shall offer the Fund's shares only on the terms set forth in the Fund's then current registration statement or related prospectus.

3. The Fund has no load or redemption charge and the Distributor will receive no compensation for acting in such capacity. Notwithstanding this, the Distributor assumes and will pay, from its own resources, all expenses related to distribution of the Fund's shares and will bear all other costs and expenses attributable to any activity primarily intended to result in the sale of shares.

4. Allocation of Expenses.

(a) The Fund will pay (or will enter into arrangements providing that persons other than the Fund will pay) for all expenses of the offering of its shares incurred in connection with:

(1) The registration of the Fund or the registration or qualification of the Fund's shares for offer or sale under the federal securities laws and the securities laws of any state or other jurisdiction in which the Distributor may arrange for the sale of the Fund's shares; and

(2) The printing and distribution of the Fund's prospectuses to existing Participants as may be required under the federal securities laws and the applicable securities laws of any state or other jurisdiction; and

(3) The preparation, printing and distribution of any proxy statements, notices and reports, and the performance of any acts required to be performed by the Fund by and under the federal securities laws and the applicable securities laws of any state or other jurisdiction; and

(4) The issuance of the Fund's shares, including any share issue and transfer taxes.

(b) The Distributor will pay from its own resources (or will enter into arrangements providing that persons other than the Distributor or the Fund shall pay), or promptly reimburse the Fund, for all expenses in connection with:

(1) The printing and distribution of the Fund's prospectuses utilized in the marketing of the Portfolios to eligible Purchasers;

(2) The preparation, printing and distribution of advertising and sales literature for use in the offering of the Fund's shares and printing and distribution of reports to Purchasers and/or Participants used as sales literature;

(3) The qualification of the Distributor as a distributor or broker or dealer under any applicable federal or state securities laws;

(4) Any investment program of the Fund, including the reinvestment of dividends and capital gains distributions, to the extent such expenses exceed the Fund's normal costs of issuing its shares; and

(5) All other expenses in connection with offering for sale and sale of the Fund's shares which have not been herein specifically allocated to the Fund.

5. Duties of the Distributor.

(a) The Distributor shall devote reasonable time and effort to effect sales of the Fund's shares, but it shall not be obligated to sell any specific number of shares.

(b) The Distributor shall use its best efforts in all respects duly to conform with the requirements of all federal and state laws and regulations and the regulations of the NASD, in relating to the sale of such securities. Neither the Distributor nor any other person is authorized by the Fund to give any information or to make any representations, other than those contained in the Fund's then current registration statement or related prospectus and any sales literature authorized by responsible officers of the Distributor.

(c) The Distributor shall act as an independent contractor and nothing herein contained shall constitute the Distributor, its agents or representatives, or any employees thereof as employees of the Fund in connection with the sale of the Fund's shares.

The Distributor is responsible for its own conduct and the employment, control and conduct of its agents and employees and for injury to such agents or employees or to others through its agents or employees. The Distributor assumes full responsibility for its agents and employees under applicable statutes and agrees to pay all employer taxes thereunder.

6. Sale and Redemption of the Fund's Shares

(a) Orders for the purchase and redemption of the Fund's shares
(and payment for the Fund's shares, in the case of a purchase) shall be transmitted directly from the Purchaser to the Fund or its agent.

(b) The Fund shall have the right to suspend the redemption of the Fund's shares pursuant to the conditions set forth in the Fund's then current registration statement or related prospectus. The Fund shall also have the right to suspend the sale of the Fund's shares at any time.

(c) The Fund will give the Distributor prompt notice of any such suspension and shall promptly furnish such other information in connection with the sale and redemption of the Fund's shares as the Distributor reasonably requests.

(d) The Fund (or its agent) will make appropriate book entries upon receipt by the Fund (or its agent) of orders and payments for the Fund's shares or requests for redemption thereof, and will issue and redeem the Fund's shares and confirm such transactions in accordance with applicable laws and regulations.

7. Indemnification.

The Distributor agrees to indemnify, defend and hold the Fund, its officers and trustees (or former officers and trustees) and any person who controls the Fund within the meaning of
Section 15 of the Securities Act of 1933 (the "1933 Act") (collectively, "Indemnities") free and harmless from and against any and all claims, demands, liabilities and expenses (including the cost of investigating or defending such claims, demands or liabilities and any counsel fees incurred in connection therewith) incurred by any Indemnitee under the 1933 Act or under common law or otherwise, which arise out of or are based upon (1) any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact in information furnished by the Distributor to the Fund's registration statement or related prospectus, (2) any misrepresentation or omission or alleged misrepresentation or omission to state a material fact on the part of the Distributor or any agent or employee of the Distributor or any other person for whose acts the Distributor is responsible or is alleged to be responsible, unless such misrepresentation or omission or alleged misrepresentation or omission was made in reliance on written information furnished by the Fund, or (3) the willful misconduct or failure to exercise reasonable care and diligence on the part of any such persons with respect to services rendered under this Agreement. The foregoing rights of indemnification shall be in addition to any other rights to which any Indemnitee may be entitled as a matter of law. The Fund agrees promptly to notify the Distributor of any action brought against any Indemnitee, such notification being given to the Distributor by letter or telegram addressed to the Distributor at its principal business office, and the Distributor's agreement to indemnify the Indemnities pursuant to this paragraph is expressly conditioned upon such notification.

The Fund agrees to indemnify, defend and hold the Distributor, its officers and trustees (or former officers and trustees) and any person who controls the Distributor within the meaning of Section 15 of the 1933 Act (collectively, "Indemnities") free and harmless from and against any and all claims, demands, liabilities and expenses (including the cost of investigating or defending such claims, demands or liabilities and any counsel fees incurred in connection therewith) incurred by any Indemnitee under the 1933 Act or under common law or otherwise, arising out of or based upon any alleged untrue statement of a material fact contained in the Fund's registration statement or related prospectus arising out of or based upon any alleged omission to state a material fact required to be stated or necessary to make the Fund's registration statement or related prospectus not misleading, provided that in no event shall anything contained in this Agreement be construed so as to protect the Distributor

against any liability to the Fund, the Purchasers or the Participants to which the Distributor would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance of its duties, or by reason of its reckless disregard of its obligations and duties under this Agreement, and further provided that the Fund shall not indemnify the Distributor for any claims, demands, liabilities and expenses arising out of or based upon any alleged untrue statement of a material fact or omission to state a material fact in information furnished by the Distributor to the Fund's registration statement or related prospectus.

8. This Agreement is effective as of August 29, 2001, and shall continue in force from year-to-year thereafter, provided that such continuance for more than two years is specifically approved at least annually
(a)(I) by the Board of Trustees of the Fund, or (ii) by vote of a majority of the Fund's outstanding voting securities (as defined in
Section 2(a)(42) of the 1940 Act), and (b) by the affirmative vote of a majority of the Trustees who are not interested persons (as defined in
Section 2(a)(19) of the 1940 Act) of the Fund by votes cast in person at a meeting called for such purpose.

9. (a) This Agreement may be terminated at any time, without penalty, by a vote of the Board of Trustees of the Fund or by a vote of a majority of the outstanding voting securities of the Fund, or by the Distributor, on sixty (60) days' written notice to the other party.

(b) This Agreement shall automatically terminate in the event of its assignment, as defined in Section 2(a)(4) of the 1940 Act.

10. Each party shall mail (postage paid) or deliver, in writing, all notices to the other party, at an address designated for this purpose by the other party. Until changed, this address for both parties is:
2929 Allen Parkway, Houston, Texas 77019.

11. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES HERETO SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF TEXAS WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS.

IN WITNESS WHEREOF, the parties hereto execute this Agreement on the date above.

NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES I
on behalf of the Portfolios:

                                            By:      __________________________
                                            Name:    __________________________
                                            Title:   __________________________

ATTEST:

______________________________
Name:   ______________________
Title:  ______________________

THE VARIABLE ANNUITY MARKETING COMPANY

By:      __________________________
Name:    __________________________
Title:   __________________________

Name: ______________________
Title: ______________________

EXHIBIT g(1)(e)

AMENDMENT TO CUSTODIAN CONTRACT

This Amendment to the Custodian Contract is made as of October 18, 2000 by and between North American Funds Variable Product Series I (formerly known as American General Series Portfolio Company) (the "Fund") and State Street Bank and Trust Company (the "Custodian"). Capitalized terms used in this Amendment without definition shall have the respective meanings given to such terms in the Custodian Contract referred to below.

WHEREAS, the Fund and the Custodian entered into a Custodian Contract dated as of August 26, 1998 (as amended and in effect from time to time, the "Contract"); and

WHEREAS, the Fund is authorized to issue shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets, and the Fund has made each such series subject to the Contract (each such series, together with all other series subsequently established by the Fund and made subject to the Contract in accordance with the terms thereof, shall be referred to as a "Portfolio", and, collectively, the "Portfolios"); and

WHEREAS, the Fund and the Custodian desire to amend certain provisions of the Contract to reflect revisions to Rule 17f-5 ("Rule 17f-5") and the adoption of Rule 17f-7 ("Rule 17f-7") promulgated under the Investment Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, the Fund and the Custodian desire to amend and restate certain other provisions of the Contract relating to the custody of assets of each of the Portfolios held outside of the United States.

NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter contained, the parties hereby agree to amend the Contract, pursuant to the terms thereof, as follows:

I. Article 3 of the Contract is hereby deleted, and Articles 4 through 19 of the Contract are hereby renumbered, as of the effective date of this Amendment, as Articles 5 through 20, respectively.

II. New Articles 3 and 4 of the Contract are hereby added, as of the effective date of this Amendment, as set forth below.

3. PROVISIONS RELATING TO RULES 17f-5 AND 17f-7

3.1. DEFINITIONS. Capitalized terms in this Amendment shall have the following meanings: "Country Risk" means all factors reasonably related to the systemic risk of holding Foreign Assets in a particular country including, but not limited to, such country's political environment, economic and financial infrastructure (including any Eligible Securities Depository operating in the country), prevailing or developing custody and settlement practices, and laws and regulations applicable to the safekeeping and recovery of Foreign Assets held in custody in that country.

"Eligible Foreign Custodian" has the meaning set forth in section (a)(1) of Rule 17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as defined in Rule 17f-5), a bank holding company meeting the requirements of an Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate action of the U.S. Securities and Exchange Commission (the "SEC")), or a foreign branch of a Bank (as defined in Section 2(a)(5) of the 1940 Act) meeting the requirements of a custodian under Section 17(f) of the 1940 Act; the term does not include any Eligible Securities Depository.

"Eligible Securities Depository" has the meaning set forth in section (b)(1) of Rule 17f-7.

"Foreign Assets" means any of the Portfolios' investments (including foreign currencies) for which the primary market is outside the United States and such cash and cash equivalents as are reasonably necessary to effect the Portfolios' transactions in such investments.

"Foreign Custody Manager" has the meaning set forth in section (a)(3) of Rule 17f-5.

3.2. THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.

3.2.1 DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY MANAGER. The Fund, by resolution adopted by its Board of Trustees (the "Board"), hereby delegates to the Custodian, subject to Section (b) of Rule 17f-5, the responsibilities set forth in this Section 3.2 with respect to Foreign Assets of the Portfolios held outside the United States, and the Custodian hereby accepts such delegation as Foreign Custody Manager with respect to the Portfolios.

3.2.2 COUNTRIES COVERED. The Foreign Custody Manager shall be responsible for performing the delegated responsibilities defined below only with respect to the countries and custody arrangements for each such country listed on Schedule A to this Contract, which list of countries may be amended from time to time by the Fund with the agreement of the Foreign Custody Manager. The Foreign Custody Manager shall list on Schedule A the Eligible Foreign Custodians selected by the Foreign Custody Manager to maintain the assets of the Portfolios, which list of Eligible Foreign Custodians may be amended from time to time in the sole discretion of the Foreign Custody Manager. The Foreign Custody Manager will provide amended versions of Schedule A in accordance with
Section 3.2.5 hereof.

Upon the receipt by the Foreign Custody Manager of Proper Instructions to open an account or to place or maintain Foreign Assets in a country listed on Schedule A, and the fulfillment by the Fund, on behalf of the Portfolios, of the applicable account opening requirements for such country, the Foreign Custody Manager shall be deemed to have been delegated by the Board on behalf of the Portfolios responsibility as Foreign Custody Manager with respect to that country and to have accepted such delegation. Execution of this Amendment by the Fund shall be deemed to be a Proper Instruction to open an account, or to place or maintain Foreign Assets, in each country listed on Schedule A in which the Custodian has previously placed or currently maintains Foreign Assets pursuant to the terms of the Contract. Following the receipt of Proper Instructions directing the Foreign Custody Manager to close the account of a Portfolio with the Eligible Foreign Custodian selected by the Foreign Custody Manager in a designated country, the delegation by the Board on behalf of the Portfolios to the Custodian as Foreign Custody Manager

for that country shall be deemed to have been withdrawn and the Custodian shall immediately cease to be the Foreign Custody Manager of the Portfolios with respect to that country.

The Foreign Custody Manager may withdraw its acceptance of delegated responsibilities with respect to a designated country upon written notice to the Fund. Thirty days (or such longer period to which the parties agree in writing) after receipt of any such notice by the Fund, the Custodian shall have no further responsibility in its capacity as Foreign Custody Manager to the Fund with respect to the country as to which the Custodian's acceptance of delegation is withdrawn.

3.2.3 SCOPE OF DELEGATED RESPONSIBILITIES:

(a) SELECTION OF ELIGIBLE FOREIGN CUSTODIANS. Subject to the provisions of this Section 3.2, the Foreign Custody Manager may place and maintain the Foreign Assets in the care of the Eligible Foreign Custodian selected by the Foreign Custody Manager in each country listed on Schedule A, as amended from time to time. In performing its delegated responsibilities as Foreign Custody Manager to place or maintain Foreign Assets with an Eligible Foreign Custodian, the Foreign Custody Manager shall determine that the Foreign Assets will be subject to reasonable care, based on the standards applicable to custodians in the country in which the Foreign Assets will be held by that Eligible Foreign Custodian, after considering all factors relevant to the safekeeping of such assets, including, without limitation the factors specified in Rule 17f-5(c)(1).

(b) CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS. The Foreign Custody Manager shall determine that the contract governing the foreign custody arrangements with each Eligible Foreign Custodian selected by the Foreign Custody Manager will satisfy the requirements of Rule 17f-5(c)(2).

(c) MONITORING. In each case in which the Foreign Custody Manager maintains Foreign Assets with an Eligible Foreign Custodian selected by the Foreign Custody Manager, the Foreign Custody Manager shall establish a system to monitor (i) the appropriateness of maintaining the Foreign Assets with such Eligible Foreign Custodian and (ii) the contract governing the custody arrangements established by the Foreign Custody Manager with the Eligible Foreign Custodian. In the event the Foreign Custody Manager determines that the custody arrangements with an Eligible Foreign Custodian it has selected are no longer appropriate, the Foreign Custody Manager shall notify the Board in accordance with Section 3.2.5 hereunder.

3.2.4 GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For purposes of this Section 3.2, the Board shall be deemed to have considered and determined to accept such Country Risk as is incurred by placing and maintaining the Foreign Assets in each country for which the Custodian is serving as Foreign Custody Manager of the Portfolios.

3.2.5 REPORTING REQUIREMENTS. The Foreign Custody Manager shall report the withdrawal of the Foreign Assets from an Eligible Foreign Custodian and the placement of such Foreign Assets with another Eligible Foreign Custodian by providing to the Board an amended Schedule A at the end of the calendar quarter in which an amendment to such Schedule has

occurred. The Foreign Custody Manager shall make written reports notifying the Board of any other material change in the foreign custody arrangements of the Portfolios described in this Section 3.2 after the occurrence of the material change.

3.2.6 STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF A PORTFOLIO. In performing the responsibilities delegated to it, the Foreign Custody Manager agrees to exercise reasonable care, prudence and diligence such as a person having responsibility for the safekeeping of assets of management investment companies registered under the 1940 Act would exercise.

3.2.7 REPRESENTATIONS WITH RESPECT TO RULE 17f-5. The Foreign Custody Manager represents to the Fund that it is a U.S. Bank as defined in section
(a)(7) of Rule 17f-5. The Fund represents to the Custodian that the Board has determined that it is reasonable for the Board to rely on the Custodian to perform the responsibilities delegated pursuant to this Contract to the Custodian as the Foreign Custody Manager of the Portfolios.

3.2.8 EFFECTIVE DATE AND TERMINATION OF THE CUSTODIAN AS FOREIGN CUSTODY MANAGER. The Board's delegation to the Custodian as Foreign Custody Manager of the Portfolios shall be effective as of the date hereof and shall remain in effect until terminated at any time, without penalty, by written notice from the terminating party to the non-terminating party. Termination will become effective thirty (30) days after receipt by the non-terminating party of such notice. The provisions of Section 3.2.2 hereof shall govern the delegation to and termination of the Custodian as Foreign Custody Manager of the Portfolios with respect to designated countries.

3.3 ELIGIBLE SECURITIES DEPOSITORIES.

3.3.1 ANALYSIS AND MONITORING. The Custodian shall (a) provide the Fund (or its duly-authorized investment manager or investment adviser) with an analysis of the custody risks associated with maintaining assets with the Eligible Securities Depositories set forth on Schedule B hereto in accordance with section (a)(1)(i)(A) of Rule 17f-7, and (b) monitor such risks on a continuing basis, and promptly notify the Fund (or its duly-authorized investment manager or investment adviser) of any material change in such risks, in accordance with section (a)(1)(i)(B) of Rule 17f-7.

3.3.2 STANDARD OF CARE. The Custodian agrees to exercise reasonable care, prudence and diligence in performing the duties set forth in Section 3.3.1.

4. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE PORTFOLIOS HELD OUTSIDE THE UNITED STATES.

4.1 DEFINITIONS. Capitalized terms in this Article 4 shall have the following meanings:

"Foreign Securities System" means an Eligible Securities Depository listed on Schedule B hereto.

"Foreign Sub-Custodian" means a foreign banking institution serving as an Eligible Foreign Custodian.

4.2. HOLDING SECURITIES. The Custodian shall identify on its books as belonging to the Portfolios the foreign securities held by each Foreign Sub-Custodian or Foreign Securities System. The Custodian may hold foreign securities for all of its customers, including the Portfolios, with any Foreign Sub-Custodian in an account that is identified as belonging to the Custodian for the benefit of its customers, provided however, that (i) the records of the Custodian with respect to foreign securities of the Portfolios which are maintained in such account shall identify those securities as belonging to the Portfolios and (ii), to the extent permitted and customary in the market in which the account is maintained, the Custodian shall require that securities so held by the Foreign Sub-Custodian be held separately from any assets of such Foreign Sub-Custodian or of other customers of such Foreign Sub-Custodian.

4.3. FOREIGN SECURITIES SYSTEMS. Foreign securities shall be maintained in a Foreign Securities System in a designated country through arrangements implemented by the Custodian or a Foreign Sub-Custodian, as applicable, in such country.

4.4. TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.

4.4.1. DELIVERY OF FOREIGN ASSETS. The Custodian or a Foreign Sub-Custodian shall release and deliver foreign securities of the Portfolios held by the Custodian or such Foreign Sub-Custodian, or in a Foreign Securities System account, only upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases:

(i) upon the sale of such foreign securities for the Portfolio in accordance with commercially reasonable market practice in the country where such foreign securities are held or traded, including, without limitation: (A) delivery against expectation of receiving later payment; or (B) in the case of a sale effected through a Foreign Securities System, in accordance with the rules governing the operation of the Foreign Securities System;

(ii) in connection with any repurchase agreement related to foreign securities;

(iii) to the depository agent in connection with tender or other similar offers for foreign securities of the Portfolios;

(iv) to the issuer thereof or its agent when such foreign securities are called, redeemed, retired or otherwise become payable;

(v) to the issuer thereof, or its agent, for transfer into the name of the Custodian (or the name of the respective Foreign Sub-Custodian or of any nominee of the Custodian or such Foreign Sub-Custodian) or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units;

(vi) to brokers, clearing banks or other clearing agents for examination or trade execution in accordance with market custom; provided that in any such case the

Foreign Sub-Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Foreign Sub-Custodian's own negligence or willful misconduct;

(vii) for exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement;

(viii) in the case of warrants, rights or similar foreign securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities;

(ix) for delivery as security in connection with any borrowing by the Portfolios requiring a pledge of assets by the Portfolios;

(x) in connection with trading in options and futures contracts, including delivery as original margin and variation margin;

(xi) in connection with the lending of foreign securities; and

(xii) for any other purpose, but only upon receipt of Proper Instructions specifying the foreign securities to be delivered and naming the person or persons to whom delivery of such securities shall be made.

4.4.2. PAYMENT OF PORTFOLIO MONIES. Upon receipt of Proper Instructions, which may be continuing instructions when deemed appropriate by the parties, the Custodian shall pay out, or direct the respective Foreign Sub-Custodian or the respective Foreign Securities System to pay out, monies of a Portfolio in the following cases only:

(i) upon the purchase of foreign securities for the Portfolio, unless otherwise directed by Proper Instructions, by (A) delivering money to the seller thereof or to a dealer therefor (or an agent for such seller or dealer) against expectation of receiving later delivery of such foreign securities; or (B) in the case of a purchase effected through a Foreign Securities System, in accordance with the rules governing the operation of such Foreign Securities System;

(ii) in connection with the conversion, exchange or surrender of foreign securities of the Portfolio;

(iii) for the payment of any expense or liability of the Portfolio, including but not limited to the following payments: interest, taxes, investment advisory fees, transfer agency fees, fees under this Contract, legal fees, accounting fees, and other operating expenses;

(iv) for the purchase or sale of foreign exchange or foreign exchange contracts for the Portfolio, including transactions executed with or through the Custodian or its Foreign Sub-Custodians;

(v) in connection with trading in options and futures contracts, including delivery as original margin and variation margin;

(vi) for payment of part or all of the dividends received in respect of securities sold short;

(vii) in connection with the borrowing or lending of foreign securities; and

(viii) for any other purpose, but only upon receipt of Proper Instructions specifying the amount of such payment and naming the person or persons to whom such payment is to be made.

4.4.3. MARKET CONDITIONS. Notwithstanding any provision of this Contract to the contrary, settlement and payment for Foreign Assets received for the account of the Portfolios and delivery of Foreign Assets maintained for the account of the Portfolios may be effected in accordance with the customary established securities trading or processing practices and procedures in the country or market in which the transaction occurs, including, without limitation, delivering Foreign Assets to the purchaser thereof or to a dealer therefor (or an agent for such purchaser or dealer) with the expectation of receiving later payment for such Foreign Assets from such purchaser or dealer.

The Custodian shall provide to the Board the information with respect to custody and settlement practices in countries in which the Custodian employs a Foreign Sub-Custodian described on Schedule C hereto at the time or times set forth on such Schedule. The Custodian may revise Schedule C from time to time, provided that no such revision shall result in the Board being provided with substantively less information than had been previously provided hereunder.

4.5. REGISTRATION OF FOREIGN SECURITIES. The foreign securities maintained in the custody of a Foreign Sub-Custodian (other than bearer securities) shall be registered in the name of the applicable Portfolio or in the name of the Custodian or in the name of any Foreign Sub-Custodian or in the name of any nominee of the foregoing, and the Fund on behalf of such Portfolio agrees to hold any such nominee harmless from any liability as a holder of record of such foreign securities. The Custodian or a Foreign Sub-Custodian shall not be obligated to accept securities on behalf of a Portfolio under the terms of this Contract unless the form of such securities and the manner in which they are delivered are in accordance with reasonable market practice.

4.6 BANK ACCOUNTS. The Custodian shall identify on its books as belonging to the Fund cash (including cash denominated in foreign currencies) deposited with the Custodian. Where the Custodian is unable to maintain, or market practice does not facilitate the maintenance of, cash on the books of the Custodian, a bank account or bank accounts shall be opened and maintained outside the United States on behalf of a Portfolio with a Foreign Sub-Custodian. All accounts referred to in this Section shall be subject only to draft or order by the Custodian (or, if applicable, such Foreign Sub-Custodian) acting pursuant to the terms of this Agreement to hold cash received by or from or for the account of the Portfolio. Cash maintained on the books of the Custodian (including its branches, subsidiaries and affiliates), regardless of currency denomination, is maintained in bank accounts established under, and subject to the laws of, The Commonwealth of Massachusetts.

4.7. COLLECTION OF INCOME. The Custodian shall use reasonable commercial efforts to collect all income and other payments with respect to the Foreign Assets held hereunder to which the Portfolios shall be entitled and shall credit such income, as collected, to the applicable Portfolio. In the event that extraordinary measures are required to collect such income, the Fund and the Custodian shall consult as to such measures and as to the compensation and expenses of the Custodian relating to such measures.

4.8 SHAREHOLDER RIGHTS. With respect to the foreign securities held pursuant to this Article 4, the Custodian will use reasonable commercial efforts to facilitate the exercise of voting and other shareholder rights, subject always to the laws, regulations and practical constraints that may exist in the country where such securities are issued. The Fund acknowledges that local conditions, including lack of regulation, onerous procedural obligations, lack of notice and other factors may have the effect of severely limiting the ability of the Fund to exercise shareholder rights.

4.9. COMMUNICATIONS RELATING TO FOREIGN SECURITIES. The Custodian shall transmit promptly to the Fund written information with respect to materials received by the Custodian via the Foreign Sub-Custodians from issuers of the foreign securities being held for the account of the Portfolios (including, without limitation, pendency of calls and maturities of foreign securities and expirations of rights in connection therewith). With respect to tender or exchange offers, the Custodian shall transmit promptly to the Fund written information with respect to materials so received by the Custodian from issuers of the foreign securities whose tender or exchange is sought or from the party (or its agents) making the tender or exchange offer. The Custodian shall not be liable for any untimely exercise of any tender, exchange or other right or power in connection with foreign securities or other property of the Portfolios at any time held by it unless (i) the Custodian or the respective Foreign Sub-Custodian is in actual possession of such foreign securities or property and (ii) the Custodian receives Proper Instructions with regard to the exercise of any such right or power, and both (i) and (ii) occur at least three business days prior to the date on which the Custodian is to take action to exercise such right or power.

4.10. LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which the Custodian employs a Foreign Sub-Custodian shall, to the extent possible, require the Foreign Sub-Custodian to exercise reasonable care in the performance of its duties, and to indemnify, and hold harmless, the Custodian from and against any loss, damage, cost, expense, liability or claim arising out of or in connection with the Foreign Sub-Custodian's performance of such

obligations. At the Fund's election, the Portfolios shall be entitled to be subrogated to the rights of the Custodian with respect to any claims against a Foreign Sub-Custodian as a consequence of any such loss, damage, cost, expense, liability or claim if and to the extent that the Portfolios have not been made whole for any such loss, damage, cost, expense, liability or claim.

4.11. TAX LAW. The Custodian shall have no responsibility or liability for any obligations now or hereafter imposed on the Fund, the Portfolios or the Custodian as custodian of the Portfolios by the tax law of the United States or of any state or political subdivision thereof. It shall be the responsibility of the Fund to notify the Custodian of the obligations imposed on the Fund with respect to the Portfolios or the Custodian as custodian of the Portfolios by the tax law of countries other than those mentioned in the above sentence, including responsibility for withholding and other taxes, assessments or other governmental charges, certifications and governmental reporting. The sole responsibility of the Custodian with regard to such tax law shall be to use reasonable efforts to assist the Fund with respect to any claim for exemption or refund under the tax law of countries for which the Fund has provided such information.

4.12. LIABILITY OF CUSTODIAN. Except as may arise from the Custodian's own negligence or willful misconduct or the negligence or willful misconduct of a Sub-Custodian, the Custodian shall be without liability to the Fund for any loss, liability, claim or expense resulting from or caused by anything which is part of Country Risk. The Custodian shall be liable for the acts or omissions of a Foreign Sub-Custodian to the same extent as set forth with respect to sub-custodians generally in the Contract and, regardless of whether assets are maintained in the custody of a Foreign Sub-Custodian or a Foreign Securities System, the Custodian shall not be liable for any loss, damage, cost, expense, liability or claim resulting from nationalization, expropriation, currency restrictions, or acts of war or terrorism, or any other loss where the Sub-Custodian has otherwise acted with reasonable care.

III. Except as specifically superseded or modified herein, the terms and provisions of the Contract shall continue to apply with full force and effect. In the event of any conflict between the terms of the Contract prior to this Amendment and this Amendment, the terms of this Amendment shall prevail. If the Custodian is delegated the responsibilities of Foreign Custody Manager pursuant to the terms of Article 3 hereof, in the event of any conflict between the provisions of Articles 3 and 4 hereof, the provisions of Article 3 shall prevail.

IN WITNESS WHEREOF, each of the parties has caused this Amendment to be executed in its name and behalf by its duly authorized representative as of the date first above written.

WITNESSED BY: STATE STREET BANK AND TRUST COMPANY

*[name]                      By:   ____________________________________________
[title]                      Name:
                             Title:


WITNESSED BY:                NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES I


_______________

*[name] By: ____________________________________________
[title] Name:

Title:

Exhibit h(1)

AMENDED AND RESTATED

TRANSFER AGENCY and SERVICE AGREEMENT

BETWEEN

THE VARIABLE ANNUITY LIFE INSURANCE COMPANY

AND

NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES I
(Formerly AMERICAN GENERAL SERIES PORTFOLIO COMPANY)

AMENDED AND RESTATED
TRANSFER AGENCY AND SERVICE AGREEMENT
as of October 17, 2000

AGREEMENT made as of the 17th day of October, 2000, by and between North American Funds Variable Product Series I (formerly American General Series Portfolio Company), a Maryland corporation, having its principal office and place of business at Houston, Texas (the "Fund"), and The Variable Annuity Life Insurance Company, a stock life insurance company organized under the Texas Insurance Code having its principal office and place of business at Houston, Texas (the "Transfer Agent").

WHEREAS, the Fund desires to appoint the Transfer Agent as its transfer agent, dividend disbursing agent and agent in connection with certain other activities, and the Transfer Agent desires to accept such appointments;

NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows:

Article 1.        Terms of Appointment; Duties of the Transfer Agent.

1.01     Subject to the terms and conditions set forth in this Agreement, the
         Fund hereby employs and appoints the Transfer Agent as its transfer
         agent, dividend disbursing agent and agent in connection with any
         accumulation, open-account or similar plans provided to the
         shareholders of the Fund ("Shareholders") and set forth in the
         currently effective prospectus of the Fund.

1.02     The Transfer Agent hereby accepts such employment and appointment and
         agrees that on and after the effective date of this Agreement it will
         act as the Fund's transfer agent, dividend disbursing agent and agent
         in connection with the other activities described in paragraph 1.01
         hereof, on the terms and conditions set forth herein.

1.03     The Transfer Agent agrees that its duties and obligations hereunder
         will be performed in a competent, efficient and workman-like manner
         with due diligence in accordance with reasonable industry practice, and
         that the necessary facilities, equipment and personnel for such
         performance will be provided.

Article 2.        Compensation.

2.01     The Fund agrees to reimburse the Transfer Agent monthly for the cost of
         providing services to the shareholders as described herein.

Article 3.        Expenses.

3.01     The Fund agrees to reimburse the Transfer Agent promptly for its
         reasonable costs of performing its duties and obligations under this
         Agreement, including overhead and out-of-pocket expenses or advances
         paid by the Transfer Agent for postage, envelopes, checks, drafts,
         continuous forms, reports and statements, telephone, telegraph, cost of
         outside mailing firms, necessary outside record storage costs, media
         for storage of records (e.g., microfile, microfiche, computer tapes)
         and printing costs incurred due to special requirements of the Fund. In
         addition, any other costs or special out-of-pocket expenses paid by the
         Transfer Agent at the specific request of the Fund will be promptly
         reimbursed by the Fund. Any postage for mailings of dividends, proxies,
         Fund reports and other mailings to all Shareholder accounts shall be
         advanced to the Transfer Agent three business days prior to the mailing
         date of such materials.

Article 4.        Representations and Warranties of the Transfer Agent.

         The Transfer Agent represents and warrants to the Fund that:

4.01     It is a stock life insurance company duly organized and existing and in
         good standing under the laws of the State of Texas.

4.02     It is duly qualified to carry on its business in the State of Texas.

4.03     It is empowered under applicable laws and by its charter and bylaws to
         enter into and perform this Agreement.

4.04     All requisite corporate proceedings have been taken to authorize it to
         enter into and perform this Agreement.

4.05     It has and will continue to have during the term of this Agreement
         access to the necessary facilities, equipment and personnel to perform
         its duties and obligations hereunder.

Article 5.        Representations and Warranties of the Fund.

5.01     It is duly organized and existing and in good standing under the laws
         of the State of Maryland.

5.02     It is empowered under applicable laws and regulations any by its
         charter and bylaws to enter into and perform this Agreement.

5.03     All requisite corporate proceedings have been taken to authorize it to
         enter into and perform this Agreement.

5.04     It is an open-end diversified management investment company registered
         under the Investment Company Act of 1940.

5.05     A registration statement under the Securities Act of 1933 is currently
         effective and will remain effective, and appropriate state securities
         laws filing have been made and will continue to be made, with respect
         to all shares of the Fund being offered for sale.

Article 6.        Indemnification.

6.01     The Transfer Agent shall not be responsible and the Fund shall
         indemnify and hold the Transfer Agent harmless from and against any and
         all losses, damages, costs, charges, reasonable counsel fees, payments,
         expenses and liability arising out of or attributable to:

         (a)      All actions of the Transfer Agent required to be taken by the
                  Transfer Agent pursuant to this Agreement, provided the
                  Transfer Agent has acted in good faith with due diligence and
                  without negligence or willful misconduct.

         (b)      The reasonable reliance by the Transfer Agent on, or
                  reasonable use of the Transfer Agent of, information, records
                  and documents which have been prepared or maintained by or on
                  behalf of the Fund or have been furnished to the Transfer
                  Agent or on behalf of the Fund.

         (c)      The reasonable reliance by the Transfer Agent on, or the
                  carrying out by the Transfer Agent of, any instructions or
                  requests of the Fund.

         (d)      The offer or sale of Fund shares in violation of any
                  requirement under the Federal securities laws or regulations
                  or the securities laws or regulations of any state or in
                  violation of any stop order or other determination or ruling
                  by any Federal agency or any state with respect to the offer
                  or sale of such shares in such state unless such violation
                  results from any failure by the Transfer Agent to comply with

                  written instructions of the Fund that no offers or sales of
                  Fund shares be made in general or to the residents of a
                  particular state.

         (e)      The Fund's refusal or failure to comply with the terms of this
                  Agreement, or the Fund's lack of good faith, negligence or
                  willful misconduct or the breach of any representative or
                  warranty of the Fund hereunder.

6.02     The Transfer Agent shall indemnify and hold the Fund harmless from and
         against any and all losses, damages, costs, charges, reasonable counsel
         fees, payments, expenses and liability arising out of or attributable
         to the Transfer Agent's refusal or failure with the terms of this
         agreement, or the Transfer Agent's lack of good faith, negligence or
         willful misconduct, or the breach of any representation or warranty of
         the Transfer Agent hereunder.

6.03     At any time the Transfer Agent may apply to any authorized officer of
         the Fund for instructions, and may consult with the Fund's legal
         counsel, at the expense of the Fund, with respect to any matter arising
         in connection with the services to be performed by the Transfer Agent
         under this Agreement, and the Transfer Agent shall not be liable and
         shall be indemnified by the Fund for any action taken or omitted by it
         in good faith in reasonable reliance upon such instructions or upon the
         opinion of such counsel. The Transfer Agent shall be protected and
         indemnified in acting upon any paper or document reasonably believed by
         the Transfer Agent to be genuine and to have been signed by the proper
         person or persons and shall not be held to have notice of any change of
         authority of any person, until receipt of written notice thereof from
         the Fund. The Transfer Agent shall also be protected and indemnified in
         recognizing stock certificates which the Transfer Agent reasonably
         believes to bear the proper manual or facsimile signatures of the
         officers of the Fund, and the proper countersignature of any former
         transfer agent or registrar, or of a co-transfer agent or co-registrar.

6.04     In the event either party is unable to perform its obligations under
         the terms of this Agreement because of acts of God, strikes, equipment
         or transmission failure or damage, or other causes reasonably beyond
         its control, such party shall not be liable for damages to the other
         for any damages resulting from such failure to perform or otherwise
         from such causes.

6.05     In no event and under no circumstances shall either party to this
         Agreement be liable to the other party for consequential damages under
         any provision of this Agreement or for any act or failure to act
         hereunder.

6.06     In order that the indemnification provisions contained in this Article
         5 shall apply, upon the assertion of a claim for which either party may
         be required to indemnify the other, the party seeking indemnification
         shall promptly notify the other party of such assertion, and shall keep
         the other party advised with respect to all developments concerning
         such claim. The party who may be required to indemnify shall have the
         option to participate with the party seeking indemnification in the
         defense of such claim. The party seeking indemnification shall in no
         case confess any claim or make any compromise in any case in which the
         other party may be required to indemnify it except with the other
         party's prior written consent.

Article 7.        Covenants of the Fund and the Transfer Agent.

7.01     The Fund shall promptly furnish to the Transfer Agent the following:

         (a)      A certified copy of the resolution of the Board of Directors
                  of the Fund authorizing the appointment of the Transfer Agent
                  and the execution and delivery of this Agreement.

         (b)      A certified copy of the charter and bylaws of the Fund and all
                  amendments thereto.

7.02     The Transfer Agent hereby agrees to establish and maintain facilities
         and procedures reasonably acceptable to the Fund for safekeeping of
         stock certificates, check forms and facsimile signature imprinting
         devices, if any; and for the preparation or use and for keeping account
         of, such certificates, forms and devices.

7.03     The Transfer Agent shall keep records relating to the services to be
         performed hereunder, in the form and manner as it may deem advisable;
         provided, however, that all accounts, books and other records of the
         Fund (hereinafter referred to as "Fund Records") prepared or maintained
         by the Transfer Agent hereunder shall be maintained and kept current in
         compliance with Section 31 of the Investment company Act of 1940 and
         the Rules thereunder (such Section and Rules being hereinafter referred
         to as the "1940 Act Requirements"). To the extent required by the 1940
         Act Requirements, the Transfer Agent agrees that all Fund Records
         prepared or maintained by the Transfer Agent hereunder are the property
         of the Fund and shall be preserved and made available in accordance
         with the 1940 Act Requirements, and shall be surrendered promptly to
         the Fund on its request. The Transfer Agent agrees at such reasonable
         times as may be requested by the Board of Directors of the Fund and at
         least semiannually to provide (i) written confirmation to such Board
         that all Fund Records are maintained and kept current in accordance
         with the 1940 Act Requirements, and (ii) such other reports regarding
         its performance hereunder as may be reasonably requested by such Board.

7.04     The Transfer Agent and the Fund agree that all books, records,
         information and data pertaining to the business of the other party
         which are exchanged or received pursuant to the negotiation or the
         carrying out of this Agreement shall remain confidential, and shall not
         be voluntarily disclosed to any other person, except as may be required
         by law.

7.05     In case of any requires or demands for the inspection of the
         Shareholder records of the Fund, the Transfer Agent will endeavor to
         notify the Fund and to secure instructions from an authorized officer
         of the Fund as to such inspection. The Transfer Agent reserves the
         right, however, to exhibit the Shareholder records to any person
         whenever it is advised by its counsel that it may be held liable for
         the failure to exhibit the Shareholder records to such person.

Article 8.        Term and Termination of Agreement.

8.01     This Agreement shall remain in effect until terminated as hereinafter
         provided. This Agreement may be terminated by the Fund at any time by
         giving written notice to the Transfer Agent at least 120 days prior to
         the date on which such termination is to be effective; and provided,
         further, that this Agreement may be terminated by the Transfer Agent
         for good and reasonable cause at any time by giving written notice to
         the Fund at least 120 days prior to the date on which such termination
         is to be effective. Any reimbursable expenses payable to the Transfer
         Agent shall be due on any such termination date. The Transfer Agent
         agrees to use its best efforts to cooperate with the Fund and the
         successor transfer agent in accomplishing an orderly transition.

Article 9.        Miscellaneous.

9.01     Neither this Agreement nor any rights or obligations hereunder may be
         assigned by either party without the written consent of the other;
         provided, however, that no consent shall be required for any merger of
         the Fund with, or any sale of all or substantially all the assets of
         the Fund to, another investment company.

9.02     This Agreement shall inure to the benefit of and be binding upon the
         parties and their respective permitted successors and assigns.

9.03     This Agreement constitutes the entire agreement between the parties
         hereto with respect to the subject matter hereof, and supersedes any
         prior agreement with respect thereto, whether oral or written and this
         agreement may not be modified except by written instrument executed by
         both parties.

IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be executed in their names and on their behalf under their seals by any through their duly authorized officers, as of the date first above written.

THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY

By:

Mary Cavanaugh Senior Vice President, General Counsel and Secretary
ATTEST:

NORTH AMERICAN FUNDS VARIABLE
PRODUCT SERIES I

By:

Nori L. Gabert Vice President and Secretary
ATTEST:

EXHIBIT h(2)

AMENDED AND RESTATED
ACCOUNTING SERVICES AGREEMENT

THIS AGREEMENT, dated as of the 1st day of May, 2001, made by and between North American Funds Variable Product Series I (the "Company"), a corporation operating as an open end investment company, duly organized and existing under the laws of the State of Maryland, and The Variable Annuity Life Insurance Company ("VALIC"), a stock insurance company duly organized and existing under the laws of the State of Texas:

WITNESSETH THAT:

WHEREAS, The Company desires to appoint VALIC as its Administrative Services Agent to maintain and keep current the books, accounts, records, journals or other records of original entry relating to the business of the Company as set forth in Section 1 of this Agreement (the "Accounts and Records") and to perform certain daily functions in connection with such Accounts and Records; and

WHEREAS, VALIC is authorized to contract on behalf of the Company with service providers for the purpose of daily valuation of the Company portfolios; and

WHEREAS, VALIC is willing to perform such functions upon the terms and conditions set forth below; and

NOW, THEREFORE, In consideration of the premises and mutual covenants herein contained, the parties hereto, intending to be legally bound, do hereby agree as follows:

Section 1.

VALIC, upon receipt of necessary information and written or verbal instructions from the Company, shall maintain and keep current the following books: Accounts and Records, journals or other records of original entry relating to the business of the Company, and necessary or advisable for compliance with applicable regulations, including Rules 31(a)-1 and 31(a)-2 of the Investment Company Act of 1940, as amended, in such form as may be mutually agreed to between the Company and VALIC:

(a) Cash Receipts
(b) Cash Disbursements
(c) Dividend Record
(d) Purchase and Sales of Portfolio Securities
(e) Subscription and Redemption Journals
(f) Security Ledgers
(g) Broker Ledger
(h) General Ledger

(i) Daily Expense Accruals
(j) Securities and Monies borrowed or loaned and collateral therefor
(k) Daily Trial Balances

It shall be the responsibility of the Company to furnish or cause to be furnished to VALIC, the declaration, record, payment dates and amounts of any dividends or income and any other special actions required on or concerning each of its portfolio securities.

Section 2.

Upon receipt by VALIC of written or verbal instructions, VALIC shall make the proper accounting entries in accordance therewith and notify the Company of all cash and securities. VALIC, as Investment Adviser, shall direct that the broker-dealer, or other person through whom a transaction has occurred, send a confirmation to VALIC. VALIC shall verify this confirmation against the written or verbal instructions when received from the Company.

Section 3.

VALIC shall calculate the Company's net asset value in accordance with the Company's currently effective Registration Statement, once daily.

VALIC shall calculate the daily dividend rate for the Money Market Fund in accordance with the prospectus of the Money Market Fund and with resolutions of the Company's Board of Directors. VALIC shall prepare and maintain a daily evaluation of securities and other investments for which market quotations are available by VALIC's approved pricing services; all other securities or investments shall be evaluated in accordance with the Company's written instructions.

Section 4.

For all purposes under this Agreement, VALIC is authorized to act upon receipt of any written or verbal instructions it receives from the Company.

Section 5.

VALIC shall supply daily and periodic reports to the Company as requested by the Company and agreed upon by VALIC.

Section 6.

VALIC shall compile daily reports of share purchases, redemptions, and total shares outstanding. Reports of purchases and redemptions so received shall be deemed to be share orders to the Company and shall be deemed to be orders accepted by the Company when so received.

Section 7.

The accounts and records, in the agreed upon format, maintained by VALIC shall be the property of the Company, and shall be made available to the Company within a reasonable period of time, upon proper demand. VALIC shall assist the Company's independent auditors, or upon approval of the Company, or upon demand, any regulatory body, in any requested review of the Company's accounts and records but shall be reimbursed for all expenses and employee time invested in such review outside of routine and normal periodic reviews. Upon receipt from the Company of the necessary information VALIC shall supply the necessary data for the Company or accountant's completion of any necessary tax return, questionnaires, periodic reports to shareholders and such other reports and information requests as the Company and VALIC shall agree upon from time to time.

Section 8.

VALIC and the Company may from time to time adopt such procedures as they agree upon, and VALIC may conclusively assume that any procedure approved in writing by the Company or directed in writing by the Company, does not conflict with or violate any requirements of its prospectus, Articles of Incorporation, By-Laws, or any rule or regulation of any body or governmental agency. The Company shall be responsible for notifying VALIC of any changes in regulations or rules which might necessitate changes in VALIC's procedures.

Section 9.

VALIC may rely on information reasonably believed by it to be accurate and reliable. Except as may otherwise be required by the 1940 Act and the rules thereunder, neither VALIC nor its shareholders, officers, directors, employees, agents, control persons or affiliates of any thereof shall be subject to any liability for, or any damages, expenses or losses incurred by the Company in connection with, any error of judgment, mistake of law, any act or omission connected with or arising out of any services rendered under or payments made pursuant to this Agreement or any other matter to which this Agreement relates, except by reason of willful misfeasance, bad faith or gross negligence on the part of any of such persons in the performance of the duties of VALIC under the Agreement or by reason of reckless disregard by any of such persons of the obligations and duties of VALIC under this Agreement.

Section 10.

The Company agrees to pay VALIC monthly compensation for its services as set forth in Schedule A, which is hereby attached and made a part of this Agreement.

Section 11.

Nothing contained in this Agreement is intended to or shall require VALIC, in any capacity

hereunder, to perform any functions or duties on any holiday, day of special observance or any other day on which VALIC or the New York Stock Exchange is closed. Functions or duties normally scheduled to be performed on such days shall be performed on the next succeeding business day on which both the New York Stock Exchange and VALIC are open.

Section 12.

VALIC may from time to time in its sole discretion delegate some or all of its duties hereunto to an entity designated by VALIC, which entity shall perform such functions as the agent of VALIC. To the extent of such delegation, the term "VALIC" in this Agreement shall be deemed to refer to both VALIC and to such entity designated by VALIC, or to either of them, as the context may indicate.

Section 13.

The following terms used in this Agreement, or in any amendment or supplement hereto, shall have the meanings herein specified unless the context otherwise requires.

VALIC: The term "VALIC" shall mean The Variable Annuity Life Insurance Company and if used in connection with or relative to any act or omission involving an entity designated by VALIC, the term shall refer to The Variable Annuity Life Insurance Company and such designated entity.

Verbal Instruction: The term "verbal instruction" shall mean an authorization, instruction, approval, item or set of data, or information of any kind transmitted to VALIC in person or by facsimile, telephone, telegram, telecopy, or other mechanical, electronic or documentary means lacking original signature, by a person or persons believed in good faith by VALIC to be a person or persons authorized by a resolution of the Board of Directors of the Company to give verbal instructions on behalf of the Company.

Shares: The term "shares" shall mean the issued and outstanding shares of common stock of the Company.

Written Instruction: The term "written instruction" shall mean an authorization, instruction, approval, item or set of data, or information of any kind transmitted to VALIC in original writing containing original signatures believed in good faith by VALIC to be the signature of a person authorized by a resolution of the Board of Directors of the Company to give written instructions on behalf of the Company.

Section 14.

The Company shall from time to time file with VALIC a certified copy of each resolution of its Board of Directors authorizing the transmittal of verbal instructions and specifying the person or persons authorized to give verbal instructions in accordance with the Agreement. If the certifying officer is authorized to give verbal instructions, the certification also shall be signed by a second

officer of the Company. Upon transmitting any verbal instruction, the Company shall promptly forward to VALIC a written instruction confirming the authorization, instruction or approval transmitted by such verbal instruction.

Section 15.

Either the Company or VALIC may give written notice to the other of the termination of this Agreement, such termination to take effect at the time specified in the notice not less than sixty (60) days after the giving of the notice.

Section 16.

This Agreement shall be governed by the laws of the State of Texas.

WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their duly authorized officers and their corporate seals hereunto duly affixed and attested, as of the day of year first above written.

NORTH AMERICAN FUNDS
VARIABLE PRODUCT SERIES I

By:________________________________________
Title:

Witness:____________________________

THE VARIABLE ANNUITY
LIFE INSURANCE COMPANY

By:________________________________________
Title:

Witness:____________________________

SCHEDULE A
Accounting Services Compensation Schedule
(Effective May 1, 2001)

The Accounting Services Fee of 7 basis points is an annual fee payable monthly based on average daily net assets.

EXHIBIT i

September 27, 2001

Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: North American Funds Variable Product Series I File Numbers 2-83631 and 811-3738

Dear Sir or Madam:

As counsel to North American Funds Variable Product Series I (the "Registrant"), it is my opinion that the securities being registered by this Post-Effective Amendment No. 32 will be legally issued, fully paid and non-assessable when sold. My opinion is based on an examination of documents related to the Registrant, including its Articles of Incorporation, its By-laws, other records, documents, papers, statutes, and authorities as deemed necessary to form the basis of this opinion. Therefore, I consent to filing this opinion of counsel with the Securities and Exchange Commission as an Exhibit to the Registrant's Registration Statement.

Sincerely,

/s/ Nori Gabert

Nori L. Gabert
Vice President and Secretary

EXHIBIT j

CONSENT OF INDEPENDENT AUDITORS

We consent to the references to our firm under the caption "Financial Highlights" in the Prospectus and "Independent Auditors" in the Statement of Additional Information and to the incorporation by reference and use of our report dated July 19, 2001, on the financial statements and financial highlights of the North American Funds Variable Product Series I (comprised of North American - AG Asset Allocation Fund, North American - T. Rowe Price Blue Chip Growth Fund, North American - AG Capital Conservation Fund, North American - Core Equity Fund, North American - AG Government Securities Fund, North American
- AG Growth & Income Fund, North American - T. Rowe Price Health Sciences Fund, North American - American Century Income & Growth Fund, North American - AG International Equities Fund, North American - AG International Government Bond Fund, North American - American Century International Growth Fund, North American - Founders Large Cap Growth Fund, North American - AG MidCap Index Fund, North American - AG 1 Money Market Fund, North American - AG Nasdaq 100 Index Fund, North American - Putnam Opportunities Fund, North American - T. Rowe Price Science & Technology Fund, North American Founders/T. Rowe Price Small Cap Fund, North American - AG Small Cap Index Fund, North American - AG Social Awareness Fund, and North American - AG Stock Index Fund) in Post-Effective Amendment Number 32 to the Registration Statement (Form N-1A No. 2-83631).

ERNST & YOUNG LLP

Houston, Texas
September 21, 2001

Exhibit p(1)

AMERICAN GENERAL INVESTMENT MANAGEMENT, L. P.
AMERICAN GENERAL ASSET MANAGEMENT CORPORATION
NORTH AMERICAN FUNDS
CODE OF ETHICS

AMERICAN GENERAL INVESTMENT MANAGEMENT, L.P.
AMERICAN GENERAL ASSET MANAGEMENT CORPORATION
NORTH AMERICAN FUNDS

INVESTMENT COMPANY
CODE OF ETHICS

I. APPLICABILITY

This Code of Ethics (the "Code") is applicable to all persons designated as "Access Persons" as defined herein of the subsidiary firms of American General Corporation ("AGC") that are registered as investment advisers ("AGC Investment Advisers") with the Securities and Exchange Commission (the "SEC"), and Access Persons of any Investment Company advised by such AGC Investment Advisers (collectively, "Covered Persons"). This Code is supplemented by a number of other AGC published compliance policies, including the Insider Trading Policy as discussed below.

II. OVERVIEW OF REGULATORY FRAMEWORK

The AGC Investment Advisers supervise the investment portfolios of registered investment company accounts ("Investment Companies") and other investment advisory client accounts (collectively, "Advisory Clients"). Pursuant to investment advisory agreements with the Advisory Clients, the AGC Investment Advisers are authorized to take all actions necessary and appropriate to carry out the investment objectives and investment policies established for each Advisory Client, including, but not limited to, the purchase and sale of securities on each Advisory Client's behalf. In carrying out these contractual obligations, the AGC Investment Advisers acknowledge that they have a fiduciary duty to the Advisory Clients and that this duty is recognized under federal securities laws and regulations. In particular, the Investment Advisers Act of 1940, as amended (the "Advisers Act"), establishes as a matter of federal law the fiduciary status of investment advisers and regulates the relationship between investment advisers and their advisory clients. The Advisers Act, among other things, prohibits advisers from engaging in practices that constitute fraud or deceit upon advisory clients, including the practice of an adviser or an employee of an adviser trading privately in securities for personal benefit at the same time that its advisory clients are caused to trade in the same securities.

The Investment Company Act of 1940, as amended (the "1940 Act"), regulates and controls the relationship between the AGC Investment Advisers and the Investment Companies that they manage. The 1940 Act specifically prohibits certain types of financial transactions, either directly or indirectly, involving both the Investment Company and the Investment Adviser, or officers and employees of the adviser, unless prior written approval is obtained from the SEC. The 1940 Act also requires every investment company and each investment adviser for such investment company to adopt a written code of ethics.

The AGC Investment Advisers and each Investment Company have adopted this Code in compliance with both the Advisers Act and the 1940 Act. This Code, together with the compliance policies of the AGC Investment Advisers, is designed to detect and prevent violations of the Advisers Act, the 1940 Act and the rules thereunder.

The Insider Trading and Securities Fraud Enforcement Act of 1988 (the "Insider Trading Act") requires all investment advisers to establish, maintain and enforce written policies and procedures designed to detect and prevent both insider trading and the misuse of material, nonpublic information. The AGC Investment Advisers have adopted policies and procedures designed to detect and prevent insider trading pursuant to the Insider Trading Act. Covered Persons should examine this Code in conjunction with the provisions of the Insider Trading Policy adopted by the AGC Investment Advisers.

All personal securities transactions must be conducted consistent with the Code of Ethics and in a manner to avoid any actual or potential conflict of interest or any abuse of a Covered Person's position of trust and responsibility. In conducting personal securities transactions, Covered Persons must not take inappropriate advantage of their positions and must at all times place the interest of Advisory Clients first.

Although the AGC Investment Advisers respect the personal freedom and privacy of their Covered Persons, they believe that, in the regulatory environment in which they operate, these considerations are outweighed in certain circumstances by the need to carry out their fiduciary duties to the fullest extent possible. Therefore, the AGC Investment Advisers have adopted the standards outlined below to prevent potential conflicts of interest between Covered Persons' personal business activities and the investment activities of Advisory Clients.

III. DEFINITIONS

The following definitions are applicable to terms used in the Code:

1. ACCESS PERSON. Means (i) any director, trustee, officer or general partner of an AGC Investment Adviser or Advisory Client, (ii) any employee of an AGC Investment or Advisory Client (or of any company in a control relationship to such AGC Investment Adviser or Advisory Client) who, in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of a Security by an Advisory Client, or whose functions relate to the making of any recommendations with respect to such purchases or sales; and (iii) any natural person in a control relationship to an AGC Investment Adviser or an Advisory Client who obtains information concerning recommendations made to such Advisory Client with regard to the purchase or sale of a Security by such Advisory Client.

2. BENEFICIAL OWNERSHIP. The term "Beneficial Ownership" includes accounts of a spouse or domestic partner, minor children and relatives living in an Access Person's home, as well as accounts of any other person if by reason of any contract, understanding, relationship, agreement or other arrangement the Access Person obtains benefits substantially equivalent to those of ownership, including benefits associated with survivorship or inheritance. For purposes of this Code, a prohibition or requirement applicable to any Access Person applies also to transactions in securities for any account for which the Access Person has a Beneficial Ownership, including transactions executed by the Access Person's spouse or relatives living in the Access Person's household, unless such account is specifically exempted from such requirement by the Chief Compliance Officer. A copy of a Release issued by the SEC on the meaning of the term "Beneficial Ownership" is available upon request, and should be studied carefully by any Access Person concerned with this definition before preparing any report.

3. COMPLIANCE OFFICER. The term "Compliance Officer" means a member of the Compliance Department of an AGC Investment Adviser who is responsible for monitoring compliance with regulatory requirements and this Code of Ethics, and any person designated by the Chief Compliance Officer who assists in performing the above described duties.

4. CONSIDERED FOR PURCHASE OR SALE. A security is being considered for Purchase or Sale when a recommendation to purchase or sell the security has been made and communicated by an authorized Access Person in the course of his or her duties. With respect to the person making the recommendation, a security is being considered for Purchase or Sale when the person seriously considers making such a recommendation.

5. CONTROL. The term "Control" has the same meaning as in Section 2(a)(9) of the 1940 Act (i.e., the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company). Any person who owns beneficially, either directly or through one or more controlled companies, more than 25% of the voting securities of a company shall be presumed to control such company.

6. EXEMPT OFFICERS, DIRECTORS AND TRUSTEES. The phrase "Exempt Officers, Directors and Trustees" means an officer, director or trustee who is not an "interested person" of an Investment Company within the meaning of Section 2(a)(19) of the 1940 Act. The determination as to the exempt status of any officer, director, or trustee shall be made by the Chief Compliance Officer.

7. INVESTMENT COMPANY. The term "Investment Company" means an investment company affiliate of AGC which is registered with the SEC.

8. INVESTMENT PERSONNEL. Means (i) any employee of an AGC Investment Adviser or Advisory Client (or of any company in a control relationship to such AGC Investment Adviser or Advisory Client) who, in connection with his or her regular

functions or duties, makes or participates in making recommendations regarding the purchase or sale of securities by such an Advisory Client, or (ii) any natural person who controls an AGC Investment Adviser or Advisory Client and who obtains information concerning recommendations made to such Advisory Client regarding the purchase or sale of securities by such Advisory Client.

9. PORTFOLIO MANAGER. The term "Portfolio Manager" means a person with the direct responsibility and authority to make investment decisions affecting an Advisory Client, including, but not limited to, private placement, Investment Company and private account Portfolio Managers.

10. SECURITY OR SECURITIES. The term "Security" shall have the same meaning as set forth in Section 2(a)(36) of the 1940 Act, except that it shall not include shares of registered open-end investment companies, securities issued or guaranteed by the U.S. Government, banker's acceptances, bank certificates of deposit, and commercial paper. Any prohibition or reporting obligation relating to a Security shall apply equally to any option, warrant or right to purchase or sell the Security and to any Security convertible into or exchangeable for such Security (i.e., a "Related Security").

IV. STANDARDS OF CONDUCT

1. Consistent with Rule 17j-1 under the 1940 Act, Access Persons, Investment Personnel and other affiliated persons of any Advisory Client shall not, in connection with the purchase or sale by such persons of a security held or to be acquired by any Advisory Client:

(1) Employ a device, scheme or artifice to defraud the Advisory Client;

(2) Make any untrue statement of a material fact to the Advisory Client or omit to state a material fact necessary in order to make the statements made to the Advisory Client, in light of the circumstances under which they are made, not misleading;

(3) Engage in any act, practice or course of business that operates or would operate as a fraud or deceit upon the Advisory Client; or

(4) Engage in any manipulative practice with respect to the Advisory Client.

2. No Covered Person may engage, directly or indirectly, in any business transaction or arrangement for personal profit that is inconsistent with the best interests of Advisory Clients; nor shall he or she make use of any confidential information gained by reason of his or her affiliation with the AGC Investment Advisers or their affiliates in order to derive a personal profit for himself or herself or for any beneficial interest, in violation of the fiduciary duty owed by the AGC Investment Advisers and their affiliates to Advisory Clients.

3. No Access Person shall purchase or sell, directly or indirectly, any Security (or Related Security) in which he or she has, or by reason of the transaction acquires, any direct or indirect beneficial ownership and that he or she knows or should have

known, at the time of purchase or sale: (i) is being Considered for Purchase or Sale for an Advisory Client; or (ii) is being purchased or sold for an Advisory Client. Securities purchased or sold through basket trades for index-based accounts may be exempted from this prohibition with the approval of a Compliance Officer.

4. Access Persons and any other AGC employee may not trade in market options (puts or calls), warrants or other derivative instruments of AGC securities. Options granted to employees by AGC are not considered market options.

5. Access Persons who are senior officers (i.e., senior vice presidents and above) of an AGC Investment Adviser may not engage in market transactions involving AGC securities (including stock and stock options) from the last day of each fiscal quarter until three business days after AGC releases its earnings for that quarter.

6. When a Security in which a Portfolio Manager has Beneficial Ownership is recommended to his/her client for purchase, the Portfolio Manager's interest (including dates of acquisition and costs) must be disclosed to a Compliance Officer prior to the recommendation being made. Securities purchased or sold through basket trades for index-based accounts may be exempted from this requirement with the approval of a Compliance Officer.

7. No Covered Person may use material, nonpublic information when engaging in Securities transactions. For example, Covered Persons who are directors of closed-end Investment Companies may not purchase the closed-end Investment Company's Securities prior to a dividend distribution of which he or she has knowledge. Any Access Person who obtains material, confidential information

(a) by reason of his or her employment;

(b) by entering into a special confidential relationship in the conduct of his or her duties; or

shall immediately report the receipt of such information to a Compliance Officer. A person trades on the basis of material, nonpublic information if he is "aware" of the material, nonpublic information when making the purchase or sale. It is also possible for a person to trade on the basis of material, nonpublic information by breaching a family or other nonpublic relationship. These types of circumstances should be brought to the attention of a Compliance Officer.

8. Without obtaining prior written approval from a Compliance Officer, no Access Person shall dispense any reports, recommendations, or other information concerning Securities holdings or Securities transactions for Advisory Clients to anyone outside or inside the AGC Investment Advisers, unless such persons have a business need for this information as a part of their normal duties and activities. However, Access Persons may disclose this information

(a) where there is a public report containing the same information;

(b) when the information is dispensed in accordance with compliance procedures established to prevent conflicts of interest between the AGC Investment Advisers and their Advisory Clients; or

(c) when the information is reported to directors or trustees of Advisory Clients or to administrators or other fiduciaries of Advisory Clients and when these persons receive the information in the course of carrying out their fiduciary duties.

NOTE: No such information may be dispensed without the prior approval of a Compliance Officer.

9. No Access Person shall accept directly or indirectly from a broker/dealer or any other person who transacts business with the AGC Investment Advisers or their Advisory Clients gifts, gratuities, preferential treatment, valuable consideration or favors that are excessive in value or frequency which might reasonably be expected to interfere with or influence the exercise of independent and objective judgment in carrying out such Access Person's duties as a fiduciary. Additional limitations and prohibitions on the receipt of gifts or entertainment can be found in AGC's Gift and Entertainment Policy.

10. No Access Person shall join an investment club, or enter into an investment partnership (including hedge funds) without obtaining prior written approval from a Compliance Officer.

11. Portfolio Managers are prohibited from buying or selling a Security, directly or indirectly, within seven calendar days before and after any Advisory Client trades in that same Security. All Access Persons are prohibited from buying or selling a Security, directly or indirectly, within seven calendar days after any Advisory Client trade and seven calendar days before any anticipated trade for an Advisory Client in that same Security. With the prior written approval of the Chief Compliance Officer, securities purchased or sold through basket trades for index-based accounts may be exempted from this prohibition.

12. Access Persons are prohibited from profiting, directly or indirectly, in the purchase and sale, or selling short and re-selling, the same (or equivalent) Securities within 60 calendar days. Securities exempted from the prior clearance requirement as outlined in Section 1 of Article V below are also exempt from this prohibition.

13. Access Persons shall not purchase, directly or indirectly, any Securities, or by reason of a transaction, acquire direct or indirect beneficial ownership of Securities, in an initial public offering.

14. Research Analysts are required to obtain prior approval from a Compliance Officer prior to purchasing or selling an equity Security in an industry he or she follows unless the analyst has communicated his or her idea to the appropriate Portfolio Manager or Trader.

NOTE: The prohibitions outlined in sections 2, 10, 11, and 12 above do not apply to accounts over which a broker or Power of Attorney has full investment discretion, although the Compliance Department must be notified of such accounts in writing and must receive duplicate account statements and confirmations.

V. PRIOR CLEARANCE REQUIREMENTS

1. No Access Person shall purchase or sell any Security without obtaining prior written clearance from a Compliance Officer. This includes direct or indirect purchases of the Security (e.g., purchases by an Access Person's spouse, purchases for investment club accounts, etc.). The following Securities are exempt from the prior clearance requirements (but not from personal trading reporting requirements): commodities and commodity futures, DRIPs or stock purchase plans sponsored by AGC or USLIFE Income Fund, Inc., other corporate DRIPs, index-based securities, transactions for thrift and/or incentive plans sponsored by AGC and (subject to applicable blackout periods) common stock of AGC. Any Exempt Officer, Director or Trustee may at his or her option request preclearance for any proposed purchase or sale.

2. Preclearance is effective only until the close of trading on the day it is granted, although "after-hours" Internet trades are permitted with proper pre-clearance, provided that the transaction is effected prior to midnight on the day it is granted.

3. Limit Orders must be pre-cleared on the day the order is placed with a broker, prior to the opening of the order. Limit orders are required to be pre-cleared on subsequent days so long as the order remains open.

4. No Access Person shall acquire directly or indirectly any Beneficial Ownership of Securities in a private placement without obtaining prior written approval of the Chief Compliance Officer.

5. No Access Person shall serve on the board of directors of a publicly traded company without obtaining prior written clearance from a Compliance Officer.

6. No Access Person shall: (i) act as an investment adviser to any other person or entity for compensation; or (ii) obtain a significant interest in a broker/dealer.

VI. EXEMPT PURCHASES AND SALES

The prohibitions of Article V shall not apply to:

1. Purchases or sales effected in any account over which the Access Person has no direct or indirect influence or control.

2. Transactions in employee benefit plans or employer-sponsored investment programs.

3. Purchases which are part of an automatic dividend reinvestment plan.

4. Purchases or sales effected upon the exercise of rights issued by the issuer pro rata to all holders of a class of its Securities, to the extent the rights were acquired from such issuer.

5. Purchases or sales effected for accounts for which a broker or Power of Attorney has full investment discretion. The Compliance Department must be notified of such accounts in writing and must receive duplicate account statements and confirmations.

6. Other purchases or sales which are non-volitional (e.g., inherited securities or Corporate Actions).

VII. EXCEPTIONS

1. Exceptions to this Code of Ethics will be granted only in rare circumstances, and then only with the prior written approval of the Chief Compliance Officer. Exceptions may be granted only when the Chief Compliance Officer believes that the potential for conflict is remote. Copies of all written approvals will be maintained by the Compliance Department and will describe the circumstances surrounding and the justification for granting the exception. For exceptions involving Covered Persons of an Investment Company, the Board of Directors of the Investment Company will be notified at least annually regarding any exceptions that have been granted pursuant to this provision.

2. The exceptions to the policies and procedures described in this Code of Ethics should not be viewed as necessarily applicable to the other codes or written standards of business conduct adopted by AGC or its subsidiaries which may also be applicable to Access Persons covered under this Code. Exceptions to these other requirements must be obtained independently.

VIII. REPORTING

1. REPORTING OBLIGATION. Every Access Person shall report to a Compliance Officer the information described in Section 3 below with respect to transactions in any Security in which such Access Person has, or by reason of such transaction acquires, any direct or indirect Beneficial Ownership in the Security (e.g., purchases or sales by an Access Person's spouse).

2. EXEMPT OFFICERS, DIRECTORS AND TRUSTEES. An Exempt Officer, Director or Trustee shall report a transaction in a Security if such Officer, Director or Trustee, at the time of the transaction, knew or, in the ordinary course of fulfilling his or her official duties as an Exempt Officer, Director or Trustee, should have known that, during the 15-day period immediately preceding or after the date of the transaction in a Security by the Officer, Director or Trustee, such Security was purchased or sold for an Advisory Client or was considered by such Advisory Client for purchase or sale.

3. REPORTING.

A. Subject to the exceptions provided by Section 2, each Access Person shall file with the Compliance Officer the following reports:

i. INITIAL HOLDINGS REPORT. No later than 10 days after the person becomes an Access Person, the Access Person shall file a report (an "Initial Holdings Report") with the Compliance Officer including the following information:

(1) The title, number of shares and principal amount of each Security in which the Access Person had any direct or indirect beneficial ownership when the person became an Access Person;

(2) The name of any broker, dealer or bank with whom the Access Person maintained an account in which any securities were held for the direct or indirect benefit of the Access Person as of the date the person became an Access Person; and

(3) The date that the report is submitted by the Access Person.

ii QUARTERLY REPORT OF SECURITIES TRANSACTIONS. No later
than 10 days after the end of a calendar quarter, the
Access Person shall file a report (a "Quarterly
Report of Securities Transactions") with the
Compliance Officer including the following
information:

(1) With respect to any transaction during the quarter in a Security in which the Access Person had any direct or indirect beneficial ownership:

(a) The date of the transaction, the title, the interest rate and maturity date (if applicable), the number of shares and the principal amount of each Security involved;

(b) The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);

(d) The name of the broker, dealer or bank with or through whom the transaction was effected; and

(e) The date that the report is submitted by the Access Person.

(2) With respect to any account established by the Access Person in which Securities were held during the quarter for the direct or indirect benefit of the Access Person:

(a) The name of the broker, dealer or bank with whom the Access Person established the account;

(b) The date the account was established; and

iii. ANNUAL HOLDING REPORTS. Annually, each Access Person shall provide a report (a "Personal Securities Holdings Disclosure") to the Compliance Officer including the following information (which information must be current as of a date no more than 30 days before the report is submitted):

(1) The title, number of shares and principal amount of each Security in which the Access Person had any direct or indirect beneficial ownership;

(2) The name of any broker, dealer or bank with whom the Access Person maintains an account in which any securities are held for the direct or indirect benefit of the Access Person; and

(3) The date the report is submitted by the Access Person.

4. DISCLAIMER OF BENEFICIAL OWNERSHIP. Quarterly reports of securities transactions shall not be construed as an admission by the person making the report that he or she has any direct or indirect Beneficial Ownership in the Security to which the report relates.

5. NOTIFICATION OF REPORTING OBLIGATION. The quarterly report of securities transactions is designed to comply with the requirements of the SEC under the Advisers Act and the 1940 Act. Every Access Person has a continuing obligation to file such reports in a timely manner. Information supplied on the reports is available for inspection by the SEC at any time.

6. DISCLOSURE OF PERSONAL HOLDINGS. All Access Persons must disclose all personal Securities holdings upon commencement of employment and thereafter on an annual basis.

7. DISCLOSURE OF INTEREST IN TRANSACTION. No Covered Person shall recommend any securities transaction for any Advisory Client without having disclosed his or her interest, if any, in such Securities or the issuer thereof, including without limitation: (a) his or her direct or indirect Beneficial Ownership of any Securities of such issuer; (b) any contemplated transaction by such person in such Securities; (c) any position with the issuer or its affiliates; (d) any present or proposed business relationship between the issuer or its affiliates and such person or any party in which such person has a significant interest; and (e) any factors about the transaction that are potentially relevant to a conflicts of interest analysis.

8. CONFIDENTIALITY. All information obtained from any Covered Persons hereunder shall be kept in strict confidence, except that reports of securities transactions will be made available to the SEC or any other regulatory or self-regulatory organization to the extent required by law or regulation.

9. The Compliance Officer shall, with respect to each Investment Company, annually furnish a written report to the board of trustees of such Investment Company (i) describing rising under this Code since the last report to the board, including information about material violations of the Code, sanctions imposed in response to

such material violations, changes made to the Code, and any proposed changes to the Code; and (ii) certifying that the AGC Investment Adviser has adopted such procedures as are reasonably necessary to prevent Access Persons from violating the Code. In addition, all material changes to this Code shall be submitted for approval to the board of trustees of each Investment Company no later than three months after such material change has been adopted by the AGC Investment Adviser, which approval must be obtained no later than six months after such adoption.

IX CERTIFICATIONS

1. All Access Persons, within 10 days of becoming an Access Person, shall certify that they have: (a) received a copy of this Code; (b) read and understood the provisions of this Code; and (c) agreed to serve the Advisory Clients in accordance with the terms of this Code.

2. All Access Persons shall annually certify that they have: (a) read and understood this Code; (b) complied with the principles of this Code; and (c) disclosed or reported all personal securities transactions which are required by the Code to be disclosed or reported.

X. RECORDS OF SECURITIES TRANSACTIONS

Every Access Person shall direct his or her broker to supply the Chief Compliance Officer, on a timely basis, with duplicate copies of confirmations of all personal Securities transactions and copies of periodic statements for brokerage accounts.

RECORDS

A. Each AGC Investment Adviser shall maintain records in the manner and to the extent set forth below, which records shall be available for appropriate examination by representatives of the Securities and Exchange Commission.

i. A copy of this Code and any other Code which is, or at any time within the past five years has been, in effect shall be maintained in an easily accessible place.

ii. A record of any violation of this Code and of any action taken as a result of such violation shall be maintained in an easily accessible place for a period of not less than five years following the end of the fiscal year in which the violation occurs.

iii. A copy of each report made pursuant to this Code by any Access Person shall be maintained for a period of not less than five years from the end of the fiscal year in which it is made, the first two years in an easily accessible place.

iv. A list of all persons who are, or within the past five years have been, required to make reports pursuant to this Code, or who are or were responsible for reviewing these reports, shall be maintained in an easily accessible place.

v. A copy of each report furnished to an Investment Company shall be maintained for a period of not less than five years following the end of the fiscal year in which the violation occurred, the first two years in an easily accessible place.

vi. A record of any decision, and the reasons supporting such decision, to approve the acquisition by Investment Personnel of any Security for a period of not less than five years following the end of the fiscal year in which such approval is granted.

XI. SANCTIONS

1. Any violation of this Code of Ethics shall be reported to and considered by the Chief Compliance Officer and, in his or her discretion, by senior management of the relevant AGC Investment Adviser. Such individuals or bodies shall impose sanctions as deemed appropriate in the circumstances, and may include disgorging of profits and termination of employment of the violator.

2. With respect to any Investment Company, the Chief Compliance Officer shall furnish annually to the Investment Company's Board of Directors/Trustees a report regarding the administration of this Code of Ethics, including any material violations, and summarizing any reports filed hereunder. If the report indicates that any changes are advisable, the Board of Directors/Trustees shall make an appropriate recommendation to the Chief Compliance Officer.

Exhibit p(2)

[AMERICAN CENTURY LOGO] AMERICAN CENTURY INVESTMENTS

WORKING WITH INTEGRITY...

CODE OF ETHICS

Terms that are in BOLD ITALICS in the text are defined in Appendix 1.

I. PURPOSE OF CODE.

The Code of Ethics establishes rules that govern personal investment activities of American Century employees, officers and directors, including members of their immediate family.(1) The Directors of American Century's registered investment companies (our "Fund Clients"(2)) who are not "interested persons" (the "Independent Directors") are covered under a separate Code applicable only to them.

II. WHY DO WE HAVE A CODE OF ETHICS?

A. INVESTORS HAVE PLACED THEIR TRUST IN AMERICAN CENTURY.

American Century is entrusted with the money of other people for investment purposes. These investors are our "Clients"; our Fund Clients are simply our biggest Client group. We cannot afford to breach this trust. The Code of Ethics is one safeguard, which helps us to ensure that we will not breach our Clients' trust in us.

B. AMERICAN CENTURY WANTS TO PROTECT ITS CLIENTS.

We have a duty to place the interests of our Clients first and to avoid even the appearance of a conflict of interest. This is how we earn and keep our Clients' trust. We must conduct ourselves and our personal SECURITIES transactions in a manner that does not create a conflict of interest with our Clients or take unfair advantage of the relationship with them. We will hold ourselves to the highest ethical standards.

C. AMERICAN CENTURY WANTS TO GIVE YOU FLEXIBLE INVESTING OPTIONS.

Management believes that American Century's mutual funds provide a broad range of investment alternatives for any investment portfolio. We therefore do not encourage active trading by our employees; we encourage employees to place their investable assets in our mutual funds. We recognize, however, that individual needs differ and that there are other attractive investment opportunities. We want to give you and your family flexibility to invest, without jeopardizing relationships with our Clients.

(1) See Appendix 2 for an explanation of the family members and others included within this Code of Ethics.

(2) See Schedule A for a listing of all of our Fund Clients.

AMERICAN CENTURY INVESTMENTS CODE OF ETHICS

D. FEDERAL LAW REQUIRES THAT WE HAVE A CODE OF ETHICS

The Investment Company Act of 1940 and the Investment Advisers Act of 1940 require that we have in place safeguards to prevent behavior and activities that might put our Clients at a disadvantage. These safeguards are embodied in this Code of Ethics.(3)

III. DOES THE CODE OF ETHICS APPLY TO YOU?

Yes! All employees and contract personnel must observe the principles contained in the Code of Ethics. However, there are different categories of restrictions on personal investing activities. The category in which you have been placed generally depends on your job function, although unique circumstances may prompt us to place you in a different category. The range of categories is as follows:

=========================================================================
Fewest Restrictions                                     Most Restrictions
-------------------------------------------------------------------------
NON-ACCESS PERSON    ACCESS PERSON  INVESTMENT PERSON    PORTFOLIO PERSON
=========================================================================

The standard profile for each of the categories is described below:

A. PORTFOLIO PERSONS.

Portfolio Persons are those employees entrusted with direct responsibility and authority to make investment decisions affecting one or more Client portfolios.

B. INVESTMENT PERSONS.

Investment Persons are financial analysts, investment analysts, traders and other employees who provide information or advice to a portfolio management team or who help execute the portfolio management team's decisions.

C. ACCESS PERSONS.

You are an Access Person if your job normally involves any of the following:

- the purchase or sale of SECURITIES for Client portfolios;

- any function that relates to the making of recommendations with respect to such purchases or sales of SECURITIES for Client portfolios; OR

- access to information regarding the purchase or sale of SECURITIES for Client portfolios.

In addition, you are an Access Person if you are any of the following:

- an officer or "interested" director of our Fund Clients; OR

(3) Rule 17j-1 under the Investment Company Act of 1940 and Rule 204-2 under the Investment Advisers Act of 1940 serve as a basis for much of what is contained in American Century's Code of Ethics.

Page 2

AMERICAN CENTURY INVESTMENTS CODE OF ETHICS

- an officer or director of American Century Investment Management, Inc.

D. NON-ACCESS PERSONS.

If you are an officer, director, employee or contractor of any of American Century's companies AND you do not fit into any of the above categories, you are a Non-Access Person. However, even if you normally do not receive confidential information about Client portfolios, as an American Century employee, you are still subject to American Century's Code of Business Conduct.

Page 3

AMERICAN CENTURY INVESTMENTS CODE OF ETHICS

IV. RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES.

As you are aware, federal law prohibits you from investing based on material nonpublic information, which you receive from any source. This includes any confidential information, which may be obtained by Portfolio, Investment and Access Persons regarding the advisability of purchasing or selling specific SECURITIES on behalf of Clients. You are expected to abide by the highest ethical and legal standards in conducting your personal SECURITIES transactions. For more information, please consult American Century's INSIDER TRADING POLICY.

A. PRECLEARANCE OF PERSONAL SECURITIES TRANSACTIONS

Before either of the following things happen:

- the purchase or sale of a SECURITY for your own account; OR

- the purchase or sale of a SECURITY for an account for which you are a BENEFICIAL OWNER

...you must follow the following preclearance procedures:

1. IS THE SECURITY A "CODE-EXEMPT SECURITY"?

Check Appendix 3 to see if the SECURITY is listed as a CODE-EXEMPT SECURITY. If it is, then you may execute the transaction. Otherwise, proceed to the next step.

2. PRECLEAR THE TRANSACTION WITH THE LEGAL DEPARTMENT'S COMPLIANCE GROUP. (IF YOU ARE THE CHIEF INVESTMENT OFFICER, YOU MUST RECEIVE YOUR APPROVAL FROM THE GENERAL COUNSEL.)

There are two ways to do this:

a. Use the "PTRA" routine in the CICS system and enter your request at the Personal Trade System screen. (If you are the Chief Investment Officer, you must receive your approval from the General Counsel.)

b. If you do not have access to "PRTA," e-mail your request to "LG-Personal Security Trades" (or "LG-Personal_Security_Trades@americancentury.com," if sending from outside American Century's Lotus Notes system), and provide the following information:

- Issuer name;

- Ticker symbol or CUSIP number;

- Type of security (stock, bond, note, etc.);

- Number of shares;

- Maximum expected dollar amount of proposed transaction; AND

- Nature of transaction (purchase or sale)

Page 4

AMERICAN CENTURY INVESTMENTS CODE OF ETHICS

3. USE THE "PTRB" ROUTINE IN THE CICS SYSTEM TO VIEW THE STATUS OF YOUR TRADE REQUESTS.

4. IF YOU RECEIVE PRECLEARANCE FOR THE TRANSACTION(4):

You have five (5) business days to execute your transaction.

B. ADDITIONAL RESTRICTIONS
[INVESTMENT AND PORTFOLIO PERSONS]

1. INITIAL PUBLIC OFFERINGS.

You cannot acquire SECURITIES issued in an INITIAL PUBLIC
OFFERING.

2. PRIVATE PLACEMENTS.

Before you acquire any SECURITIES in a PRIVATE PLACEMENT, you must obtain approval from American Century's Chief Investment Officer(5). For help with this process, first send your request to LG-Personal Security Trades. Once you receive approval, you cannot participate in any subsequent consideration of an investment in that issuer for any of our Clients.

3. SHORT-TERM TRADING PROFITS.

You cannot profit from any purchase and sale, or sale and purchase, of the same (or equivalent) SECURITIES within sixty (60) calendar days.

C. BLACKOUT PERIOD
[PORTFOLIO PERSONS]

If you are a Portfolio Person, you may not purchase or sell a SECURITY within seven (7) days before and after it has been traded as a part of a Client portfolio that you manage. PLEASE NOTE: NO DE MINIMUS EXEMPTION EXISTS FOR THE SEVEN (7) DAY BLACKOUT PERIOD.

V. REPORTING REQUIREMENTS.

A. QUARTERLY REPORT OF SECURITIES TRANSACTIONS

Each quarter you will be asked to verify purchases and/or sales of any SECURITIES in which you have direct or BENEFICIAL OWNERSHIP interest. (CODE-EXEMPT SECURITIES will generally be excluded.) This will come to you in the form of an e-mail message containing the trades about which we have been informed through your broker's duplicate confirmations. If the report contained in the e-mail to you is correct, you need only to indicate so by clicking the appropriate button in the message.

(4) How does American Century determine whether to approve or deny your preclearance request? See Appendix 4 for a description of the process.

(5) If you are the Chief Investment Officer, you must receive your approval from the General Counsel.

Page 5

AMERICAN CENTURY INVESTMENTS CODE OF ETHICS

If the message is incomplete or otherwise incorrect, you must provide the following information about each transaction omitted from the message:

- The date of the transaction, the description and number of shares, and the principal amount of each SECURITY involved;

- The nature of the transaction, that is, purchase, sale or any other type of acquisition or disposition;

- The transaction price; AND

- The name of the broker, dealer or bank through whom the transaction was effected.

B. DUPLICATE CONFIRMATIONS

You must instruct your broker-dealer to send duplicate confirmations of all transactions in such accounts to:

American Century Companies, Inc. Attention: Compliance P.O. Box 410141 Kansas City, MO 64141

Please note that "your broker-dealer" includes both of the following:

- a broker or dealer with whom you have a SECURITIES brokerage account; AND

- a broker or dealer who maintains an account for a person whose trades you must report because you are a BENEFICIAL OWNER.

C. REPORT OF SECURITIES HOLDINGS AND BROKERAGE ACCOUNTS

When you first become subject to the Code of Ethics as an Access, Investment or Portfolio Person, you must provide us with a list of all SECURITIES subject to this Code for which you are a registered owner or in which you have a BENEFICIAL OWNERSHIP interest and the financial services provider through whom they are held. You will be asked to provide a revised version of this list annually.

VI. CAN THERE BE ANY EXCEPTIONS TO THE RESTRICTIONS?

Yes. The General Counsel or his or her designee, upon consultation with your manager, may grant limited exemptions to specific provisions of the Code on a case-by-case basis.

A. HOW TO REQUEST AN EXEMPTION

E-mail a written request to "LG-Personal Security Trades" (or LG-Personal_Security_Trades@americancentury.com if sending from outside American Century's Lotus Notes system), detailing your situation.

Page 6

AMERICAN CENTURY INVESTMENTS CODE OF ETHICS

B. FACTORS CONSIDERED

In considering your request, the General Counsel or his or her designee will grant your exemption request if he or she is satisfied that:

- your request addresses an undue personal hardship imposed on you by the Code of Ethics;

- your situation is not contemplated by the Code of Ethics; and

- your exemption, if granted, would be consistent with the achievement of the objectives of the Code of Ethics.

C. EXEMPTION REPORTING

All exemptions granted must be reported to the Boards of Directors of our Fund Clients. The Boards of Directors may choose to delegate the task of receiving and reviewing reports to a Committee comprised of Independent Directors.

VII. CONFIDENTIAL INFORMATION.

All information about Clients' SECURITIES transactions, actual or contemplated, is confidential. You must not disclose, except as required by the duties of your employment, SECURITIES transactions of Clients, actual or contemplated, or the contents of any written or oral communication, study, report or opinion concerning any SECURITY. This does not apply to information which has already been publicly disclosed.

VIII. CONFLICTS OF INTEREST.

You must receive prior written approval from our Clients and/or the Independent Directors of our Fund Clients, as appropriate, to do any of the following:

- negotiate or enter into any agreement on a Client's behalf with any business concern doing or seeking to do business with the Client if you, or a person related to you, has a substantial interest in the business concern;

- enter into an agreement, negotiate or otherwise do business on the Client's behalf with a personal friend or a person related to you; OR

- serve on the board of directors of, or act as consultant to, any publicly traded corporation.

IX. WHAT HAPPENS IF YOU VIOLATE THE RULES IN THE CODE OF ETHICS?

You may be subject to serious penalties.

A. THE PENALTIES WHICH MAY BE IMPOSED INCLUDE:

- formal warning;

- restriction of trading privileges;

Page 7

AMERICAN CENTURY INVESTMENTS CODE OF ETHICS

- disgorgement of trading profits;

- fine; AND/OR

- suspension or termination of employment.

B. PENALTY FACTORS

The factors which may be considered when determining the appropriate penalty include, but are not limited to:

- the harm to Client interests;

- the extent of unjust enrichment;

- the frequency of occurrence;

- the degree to which there is personal benefit from unique knowledge obtained through employment with American Century;

- the degree of perception of a conflict of interest;

- evidence of fraud, violation of law, or reckless disregard of a regulatory requirement; AND/OR

- the level of accurate, honest and timely cooperation from the person subject to the Code.

If you have any questions about the Code, do not hesitate to ask a member of management or Compliance.

X. ANNUAL CERTIFICATION OF COMPLIANCE WITH THE CODE.

As a condition of your employment, you will be asked to certify annually:

- that you have read this Code of Ethics;

- that you understand this Code of Ethics; AND

- that you have complied with this Code of Ethics.

XI. AMERICAN CENTURY'S QUARTERLY REPORT TO FUND DIRECTORS.

American Century management will prepare a quarterly report to the Board of Directors of each Fund Client of any violation of this Code of Ethics requiring significant sanctions.

Page 8

AMERICAN CENTURY INVESTMENTS CODE OF ETHICS

APPENDIX 1: DEFINITIONS

1. "BENEFICIAL OWNERSHIP"

See "Appendix 2: What is Beneficial Ownership?".

2. "CODE-EXEMPT SECURITY"

A "code-exempt security" is a security in which you may invest without preclearing such transactions with American Century. The list of Code-Exempt Securities appears in Appendix 3.

3. "INITIAL PUBLIC OFFERING"

"Initial public offering" means an offering of securities for which a registration statement has not previously been filed with the SEC and for which there is no active public market in the shares.

4. "PRIVATE PLACEMENT"

"Private placement" means an offering of securities in which the issuer relies on an exemption from the registration provisions of the federal securities laws, and usually involves a limited number of sophisticated investors and a restriction on resale of the securities.

5. "SECURITY"

A "security" includes a great number of different investment vehicles. However, for purposes of this Code of Ethics, "security" includes any of the following:

- note,

- stock,

- treasury stock,

- bond,

- debenture,

- evidence of indebtedness,

- certificate of interest or participation in any profit-sharing agreement,

- collateral-trust certificate,

- preorganization certificate or subscription,

- transferable share,

- investment contract,

- voting-trust certificate,

- certificate of deposit for a security,

- fractional undivided interest in oil, gas or other mineral rights,

- any put, call, straddle, option, or privilege on any security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof),

- any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency,

Appendix 1-Page 1

AMERICAN CENTURY INVESTMENTS CODE OF ETHICS

- in general, any interest or instrument commonly known as a "security," or

- any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, future on or warrant or right to subscribe to or purchase, any of the foregoing.

Page 2

AMERICAN CENTURY INVESTMENTS                                      CODE OF ETHICS
--------------------------------------------------------------------------------


APPENDIX 2: WHAT IS "BENEFICIAL OWNERSHIP"?

1.     ARE SECURITIES HELD BY FAMILY MEMBERS OR DOMESTIC PARTNERS "BENEFICIALLY
       OWNED" BY ME?

Probably. As a general rule, you are regarded as the beneficial owner of SECURITIES held in the name of

- your spouse or domestic partner;

- your minor children;

- a relative who shares your home; OR

- any other person IF:

- You obtain from such SECURITIES benefits substantially similar to those of ownership. For example, if you receive or benefit from some of the income from the SECURITIES held by your spouse, you are the beneficial owner; OR

- You can obtain title to the SECURITIES now or in the future.

2. ARE SECURITIES HELD BY A COMPANY I OWN ALSO "BENEFICIALLY OWNED" BY ME?

Probably not. Owning the SECURITIES of a company does not mean you "beneficially own" the SECURITIES that the company itself owns. However, you will be deemed to "beneficially own" these SECURITIES if:

- The company is merely a medium through which you (by yourself or with others) in a small group invest or trade in SECURITIES; AND

- The company has no other substantial business.

In such cases, you and those who are in a position to control the company will be deemed to "beneficially own" the SECURITIES owned by the company.

3. ARE SECURITIES HELD IN TRUST "BENEFICIALLY OWNED" BY ME?

Maybe. You are deemed to "beneficially own" SECURITIES held in trust if any of the following is true:

- You are a trustee and either you or members of your immediate family have a vested interest in the income or corpus of the trust;

- You have a vested beneficial interest in the trust; OR

- You are settlor of the trust and you have the power to revoke the trust without obtaining the consent of all the beneficiaries.

As used in this section, the "immediate family" of a trustee means:

- A son or daughter of the trustee, or a descendent of either;

- A stepson or stepdaughter of the trustee;

Appendix 2-Page 1

AMERICAN CENTURY INVESTMENTS CODE OF ETHICS

- The father or mother of the trustee, or an ancestor of either;

- A stepfather or stepmother of the trustee; AND

- A spouse or domestic partner of the trustee.

For the purpose of determining whether any of the foregoing relationships exists, a legally adopted child of a person is considered a child of such person.

4. ARE SECURITIES IN PENSION OR RETIREMENT PLANS "BENEFICIALLY OWNED" BY ME?

Probably not. Beneficial ownership does not include indirect interest by any person in portfolio SECURITIES held by a pension or retirement plan holding SECURITIES of an issuer whose employees generally are the beneficiaries of the plan.

However, your participation in a pension or retirement plan is considered beneficial ownership of the portfolio SECURITIES if you can withdraw and trade the SECURITIES without withdrawing from the plan.

5. EXAMPLES OF BENEFICIAL OWNERSHIP

SECURITIES HELD BY FAMILY MEMBERS OR DOMESTIC PARTNERS

Example 1: Tom and Mary are married. Although Mary has an independent source of income from a family inheritance and segregates her funds from those of her husband, Mary contributes to the maintenance of the family home. Tom and Mary have engaged in joint estate planning and have the same financial adviser. Since Tom and Mary's resources are clearly significantly directed towards their common property, they shall be deemed to be the beneficial owners of each other's SECURITIES.

Example 2: Mike's adult son David lives in Mike's home. David is self-supporting and contributes to household expenses. Mike is a beneficial owner of David's SECURITIES.

Example 3: Joe's mother Margaret lives alone and is financially independent. Joe has power of attorney over his mother's estate, pays all her bills and manages her investment affairs. Joe borrows freely from Margaret without being required to pay back funds with interest, if at all. Joe takes out personal loans from Margaret's bank in Margaret's name, the interest from such loans being paid from Margaret's account. Joe is a significant heir of Margaret's estate. Joe is a beneficial owner of Margaret's estate.

Example 4: Bob and Nancy are engaged. The house they share is still in Nancy's name only. They have separate checking accounts with an informal understanding that both individuals contribute to the mortgage payments and other common expenses. Although Nancy is the only one employed by American Century, Bob is a beneficial owner and subject to the Code of Ethics.

Appendix 2-Page 2

AMERICAN CENTURY INVESTMENTS CODE OF ETHICS

SECURITIES HELD BY A COMPANY

Example 5: ABC is a holding company with five shareholders owning equal shares in the company. Although ABC Company does no business on its own, it has several wholly-owned subsidiaries which invest in SECURITIES. Stan is a shareholder of ABC Company. Stan has a beneficial interest in the SECURITIES owned by ABC Company's subsidiaries.

SECURITIES HELD IN TRUST

Example 6: John is trustee of a trust created for his two minor children. When both of John's children reach 21, each shall receive an equal share of the corpus of the trust. John is a beneficial owner of the trust.

Example 7: Jane is trustee of an irrevocable trust for her daughter. Jane is a director of the issuer of the equity SECURITIES held by the trust. The daughter is entitled to the income of the trust until she is 25 years old, and is then entitled to the corpus. If the daughter dies before reaching 25, Jane is entitled to the corpus. Jane is a beneficial owner of the trust.

Appendix 2-Page 3

AMERICAN CENTURY INVESTMENTS CODE OF ETHICS

APPENDIX 3: CODE-EXEMPT SECURITIES

Because they do not pose a possibility for abuse, some SECURITIES are exempt from American Century's Code of Ethics. In general, Code-Exempt Securities do no require preclearance or reporting. However, they are included for annual disclosure reporting purposes and require confirmations from your service providers. The following is the current list of "Code-Exempt Securities":

- Mutual funds (open-end funds)

- Closed-end funds

- Bank Certificates of Deposit

- U.S. government securities (such as Treasury notes, etc.)

- Securities which are acquired through an employer-sponsored automatic payroll deduction plan (only the acquisition of the security is exempt, NOT the sale)

- Securities purchased through dividend reinvestment programs (only the acquisition of the security is exempt, NOT the sale)

- Commercial paper

- Bankers acceptances

- Futures contracts (and option contracts) on the following:

- Standard & Poor's 500 Index; or

- Standard & Poor's 100 Index

- High quality short-term debt instruments, including repurchase agreements. A "high quality short-term debt instrument" means any instrument that has a maturity at issuance of less than 366 days and that is rated in one of the two highest rating categories by a nationally recognized rating organization; AND

- NASDAQ 100 Shares (Ticker QQQ).

We may modify this list of securities at any time, please send an e-mail to "LG-Personal Security Trades" to request the most current list.

Appendix 3-Page 1

AMERICAN CENTURY INVESTMENTS CODE OF ETHICS

APPENDIX 4: HOW DOES THE PRECLEARANCE PROCESS WORK?

After your request is entered into our mainframe system, it is then subjected to the following tests.

STEP 1: DE MINIMIS TRANSACTION TEST

- Is the security issuer's market capitalization greater than $1 billion?

- Will your proposed transaction, together with your other transactions in the security for the current calendar quarter, be less than $10,000?

- Does the security trade on a national securities exchange or market, such as the New York Stock Exchange (NYSE) or National Association of Securities Dealers Automated Quotation System (NASDAQ)?

If the answer to ALL of these questions is "YES", the system will generate a message and send it to you approving your proposed transaction.

If the answer to ANY of these questions is "NO", then your request is subject to Step 2.

STEP 2: OPEN ORDER TEST

- Is there an open order for that security for any Client?

If "YES", the system will send a message to you to DENY the personal trade request.

If "NO", then your request is subject to Step 3.

STEP 3: FOLLOW LIST TEST

- Does any account or Fund own the security?

- Does the security appear on the computerized list of stocks American Century is considering to purchase for a Client?

If the answer to BOTH of these questions is "NO", the system will send a message to you to APPROVE your proposed transaction.

If the answer to EITHER of these questions is "YES", then your request is subject to Step 4.

STEP 4: PRESENT INTENTIONS TEST

The system sends a message to our trading desk in Kansas City which identifies the security described in your preclearance request. A trading desk representative then contacts a representative from each of the portfolio management teams asks if any portfolio manager is considering buying or selling the security within the next five (5) business days.

If ALL of the portfolio management teams respond "NO", your request will be APPROVED (unless you are a Portfolio Person, see Step 5).

Appendix 4-Page 1

AMERICAN CENTURY INVESTMENTS CODE OF ETHICS

If ANY of the portfolio management teams respond "YES", your request will be
DENIED.

STEP 5: PORTFOLIO PERSONS ONLY

The General Counsel or his/her designee must approve your request before an APPROVAL or a DENIAL message is sent to you.

THE PRECLEARANCE PROCESS CAN BE CHANGED AT ANY TIME TO ENSURE THAT THE GOALS OF AMERICAN CENTURY'S CODE OF ETHICS ARE ADVANCED.

Appendix 3-Page 2

AMERICAN CENTURY INVESTMENTS                                      CODE OF ETHICS
--------------------------------------------------------------------------------


SCHEDULE A


--------------------------------------------------------------------------------
INVESTMENT MANAGER:
--------------------------------------------------------------------------------

AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.

--------------------------------------------------------------------------------
THE FUND CLIENTS:
--------------------------------------------------------------------------------

AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS

AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.

AMERICAN CENTURY GOVERNMENT INCOME TRUST

AMERICAN CENTURY INTERNATIONAL BOND FUNDS

AMERICAN CENTURY INVESTMENT TRUST

AMERICAN CENTURY MUNICIPAL TRUST

AMERICAN CENTURY MUTUAL FUNDS, INC.

AMERICAN CENTURY PREMIUM RESERVES, INC.

AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS

AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.

AMERICAN CENTURY TARGET MATURITIES TRUST

AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.

AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.


                                                               Schedule A-Page 1

AMERICAN CENTURY INVESTMENTS                                      CODE OF ETHICS
--------------------------------------------------------------------------------

Acknowledgement Page

EXHIBIT p(3)

MELLON

SECURITIES TRADING POLICY

Questions Concerning the Securities Trading Policy? Contact Corporate Compliance, (412) 234-1661 AIM 151-4340, Mellon Bank, Pittsburgh, PA 15258-0001

Dear Colleague:

At Mellon, we take great pride in our transformation over the years from a regional bank to a global financial services company. Our growth makes us better able to meet customers' changing needs, gives us greater stability during any unexpected economic downturn and affords us the opportunity to be the best performing financial services company.

This diversity of our businesses also makes us a complex organization, which is why it's more important than ever that you clearly understand Mellon's Securities Trading Policy. Mellon has long maintained strict policies regarding securities transactions, all with the same clear-cut objective: to establish and demonstrate our compliance with the high standards with which we conduct our business.

If you are new to Mellon, please take the time to fully understand the Policy and consult it whenever you are unsure about appropriate actions. If you have seen the Policy previously, I urge you to renew your understanding of the entire document and its implications for you. Only by strict adherence to the Policy can we ensure that our well-deserved reputation for integrity is preserved.

Sincerely yours,

Martin G. McGuinn

CONTENTS

                                                                                PAGE
INTRODUCTION                                                                     1

CLASSIFICATION OF EMPLOYEES                                                      2
                 -Insider Risk Employees
                 -Investment Employees
                 -Access Decision Makers
                 -Other Employees
                 -Consultants, Independent Contractors and Temporary Employees

PERSONAL SECURITIES TRADING PRACTICES                                            3

     SECTION ONE - APPLICABLE TO INSIDER RISK EMPLOYEES                          3
                 Quick Reference - Insider Risk Employees                        5
                 Standards of Conduct for Insider Risk Employees                 6
                 Restrictions on Transactions in Mellon Securities               9
                 Restrictions on Transactions in Other Securities               11
                 Protecting Confidential Information                            14

     SECTION TWO - APPLICABLE TO INVESTMENT EMPLOYEES                           17
                 Quick Reference - Investment Employees                         19
                 Standards of Conduct for Investment Employees                  20
                 Restrictions on Transactions in Mellon Securities              24
                 Restrictions on Transactions in Other Securities               26
                 Protecting Confidential Information                            29

     SECTION THREE - APPLICABLE TO OTHER EMPLOYEES                              31
                 Quick Reference - Other Employees                              33
                 Standards of Conduct for Other Employees                       34
                 Restrictions on Transactions in Mellon Securities              35
                 Restrictions on Transactions in Other Securities               37
                 Protecting Confidential Information                            39

GLOSSARY        Definitions                                                     43

                Exhibit A - Sample Letter to Broker                             49

-------------------------------------------------------------------------------
INTRODUCTION       The Securities Trading Policy (the "Policy") is designed to
------------       reinforce Mellon Financial Corporation's ("Mellon's")
                   reputation for integrity by avoiding even the appearance of
                   impropriety in the conduct of Mellon's business. The Policy
                   sets forth procedures and limitations which govern the
                   personal securities transactions of every Mellon Employee.

                   Mellon and its employees are subject to certain laws and
                   regulations governing personal securities trading. Mellon has
                   developed this Policy to promote the highest standards of
                   behavior and ensure compliance with applicable laws.

                   Employees should be aware that they may be held personally
                   liable for any improper or illegal acts committed during the
                   course of their employment, and that "ignorance of the law"
                   is not a defense. Employees may be subject to civil penalties
                   such as fines, regulatory sanctions including suspensions, as
                   well as criminal penalties.

                   Employees outside the United States are also subject to
                   applicable laws of foreign jurisdictions, which may differ
                   substantially from US law and which may subject such
                   employees to additional requirements. Such employees must
                   comply with applicable requirements of pertinent foreign laws
                   as well as with the provisions of the Policy. To the extent
                   any particular portion of the Policy is inconsistent with
                   foreign law, employees should consult the General Counsel or
                   the Manager of Corporate Compliance.

                   Any provision of this Policy may be waived or exempted at the
                   discretion of the Manager of Corporate Compliance. Any such
                   waiver or exemption will be evidenced in writing and
                   maintained in the Audit and Risk Review Department.

                   Employees must read the Policy and must comply with it.
                   Failure to comply with the provisions of the Policy may
                   result in the imposition of serious sanctions, including but
                   not limited to disgorgement of profits, dismissal,
                   substantial personal liability and referral to law
                   enforcement agencies or other regulatory agencies. Employees
                   should retain the Policy in their records for future
                   reference. Any questions regarding the Policy should be
                   referred to the Manager of Corporate Compliance or his/her
                   designee.


-------------------------------------------------------------------------------
CLASSIFICATION OF  The Policy is applicable to all employees of Mellon and all
EMPLOYEES          of its subsidiaries which are more than 50% owned by Mellon.
                   This includes all full-time, part-time, benefited and
                   non-benefited, exempt and non-exempt, domestic and
                   international employees. It does not include consultants and
                   contract or temporary employees, nor employees of
                   subsidiaries which are 50% or less owned by Mellon. Although
                   the Policy provisions generally have worldwide applicability,
                   some sections of the Policy may conflict with the laws or
                   customs of the countries in which Mellon operations are
                   located. The Policy may be amended for operations outside the
                   United States only with the approval of the Manager of
                   Corporate Compliance.

                   Employees are engaged in a wide variety of activities for
                   Mellon. In light of the nature of their activities and the
                   impact of federal and state laws and the regulations
                   thereunder, the Policy imposes different requirements and
                   limitations on employees based on the nature of their
                   activities for Mellon. To assist employees in complying with
                   the requirements and limitations imposed on them in light of
                   their activities, employees are classified into one of four
                   categories: Insider Risk Employee, Investment Employee,
                   Access Decision Maker and Other Employee. Appropriate
                   requirements and limitations are specified in the Policy
                   based upon an employee's classification.

                   Business line management, in conjunction with the Manager of
                   Corporate Compliance, will determine the classification of
                   each employee based on the following guidelines. Employees
                   should confirm their classification with their Preclearance
                   Compliance Officer or the Manager of Corporate Compliance.

INSIDER RISK       You are considered to be an Insider Risk Employee if, in the
EMPLOYEE           normal conduct of your Mellon responsibilities, you are
                   likely to receive or be perceived to possess or receive,
                   material nonpublic information concerning Mellon's commercial
                   credit or corporate finance customers. This will typically
                   include certain employees in the credit, lending and leasing
                   businesses, certain members of the Audit and Risk Review, and
                   Legal Departments, and all members of the Senior Management
                   Committee who are not Investment Employees.

INVESTMENT         You are considered to be an Investment Employee if, in the
EMPLOYEE           normal conduct of your Mellon responsibilities, you are
                   likely to receive or be perceived to possess or receive,
                   material nonpublic information concerning Mellon's trading
                   in securities for Mellon's account or for the accounts of
                   others, and/or if you provide investment advice. This will
                   typically include:

                   -  certain employees in fiduciary securities sales and
                      trading, investment management and advisory services,
                      investment research and various trust or fiduciary
                      functions;

                   -  an employee of a Mellon entity registered under the
                      Investment Advisers Act of 1940 who is also an "Access
                      Person" as defined by Rule 17j-1 of the Investment Company
                      Act of 1940 (see glossary); and

                   -  any member of Mellon's Senior Management Committee who, as
                      part of his/her usual duties, has management
                      responsibility for fiduciary activities or routinely has
                      access to information about customers' securities
                      transactions.

ACCESS DECISION    A person designated as such by the Investment Ethics
MAKER (ADM)        Committee. Generally, this will be portfolio managers
                   and research analysts who make recommendations or
                   decisions regarding the purchase or sale of equity,
                   convertible debt, and non-investment grade debt
                   securities for mutual funds and other managed accounts.
                   See further details in the Access Decision Maker edition
                   of the Policy.

OTHER              You are considered to be an Other Employee if you are an
EMPLOYEE           employee of Mellon Financial Corporation or any of
                   its direct or indirect subsidiaries who is not an Insider
                   Risk Employee, Investment Employee, or an ADM.


CONSULTANTS,       Managers should inform consultants, independent contractors

INDEPENDENT        and temporary employees of the general provisions of the
CONTRACTORS AND    Policy (such as the prohibition on trading while in
TEMPORARY          possession of material nonpublic information), but generally
EMPLOYEES          they will not be required to preclear trades or report their
                   personal securities holdings. If one of these persons would
                   be considered an Insider Risk Employee, Investment Employee
                   or Access Decision Maker if the person were a Mellon
                   employee, the person's manager should advise the Manager of
                   Corporate Compliance who will determine whether such
                   individual should be subject to the preclearance and
                   reporting requirements of the Policy.

PERSONAL SECURITIES TRADING PRACTICES

SECTION ONE - APPLICABLE TO INSIDER RISK EMPLOYEES

CONTENTS

                                                                              Page
PERSONAL SECURITIES TRADING PRACTICES
     SECTION ONE - APPLICABLE TO INSIDER RISK EMPLOYEES
                 Quick Reference - Insider Risk Employees                       5
                 Standards of Conduct for Insider Risk Employees                6
                      --Conflict of Interest                                    6
                      --Material Nonpublic Information                          6
                      --Brokers                                                 6
                      --Personal Securities Transaction Reports                 6
                      --Preclearance for Personal Securities Transactions       6
                      --Exemptions from Requirement to Preclear                 7
                      --Gifting of Securities                                   8
                      --DRIPs, DPPs and AIPs                                    8
                      --Restricted List                                         8
                      --Confidential Treatment                                  9
                 Restrictions on Transactions in Mellon Securities              9
                      --Mellon 401(k) Plan                                      10
                      --Mellon Employee Stock Options                           11
                 Restrictions on Transactions in Other Securities               11
                      --Prohibition on Investments in Securities of Financial   12
                 Services Organizations                                         13
                 Beneficial Ownership                                           13
                 Non-Mellon Employee Benefit Plans                              13
                 Protecting Confidential Information                            14
                      --Insider Trading and Tipping                             15
                      --The "Chinese Wall"
GLOSSARY         Definitions                                                    43

                 Exhibit A - Sample Letter to Broker                            49

QUICK REFERENCE - INSIDER RISK EMPLOYEES

SOME THINGS     1.  Duplicate Statements & Confirmations - Instruct your broker,
YOU MUST DO         trust account manager or other entity through which you have
                    a securities trading account to send directly to MANAGER OF
                    CORPORATE COMPLIANCE, MELLON BANK, PO BOX 3130, PITTSBURGH,
                    PA 15230-3130:

                    - Trade confirmations summarizing each transaction

                    - Periodic statements

                    Exhibit B of this Policy can be used to notify your broker.
                    This applies to all accounts in which you have a beneficial
                    interest. (See Glossary)

2. Preclearance - Before initiating a securities transaction, written preclearance must be obtained from the Manager of Corporate Compliance. This can be done by completing a Preclearance Request Form and:

- delivering the request to the Manager of Corporate Compliance, AIM 151-4340,

- faxing the request to (412) 234-1516, or

- contacting the Manager of Corporate Compliance for other available notification options.

Preclearance Request Forms can be obtained from Corporate Compliance (412) 234-1661. If preclearance approval is received the trade must be executed before the end of the 3rd business day (with the date of approval being the 1st business day), at which time the preclearance approval will expire.

3. Special Approvals

                -  Acquisition of securities in a Private Placement must be
                   precleared by the employee's Department/Entity head and the
                   Manager of Corporate Compliance.

                -  Acquisition of securities through an allocation by the
                   underwriter of an Initial Public Offering (IPO) is prohibited
                   without the approval of the Manager of Corporate Compliance.
                   Approval can be given only when the allocation is the result
                   of a direct family relationship.

--------------------------------------------------------------------------------
SOME THINGS       Mellon Securities - The following transactions in Mellon
YOU MUST NOT DO   securities are prohibited for all Mellon Employees:

                - Short sales
                - Purchasing and selling or selling and purchasing within 60
                  days
                - Purchasing or selling during a blackout period
                - Margin purchases or options other than employee options.

                Non-Mellon Securities - New investments in financial services
                organizations are prohibited for certain employees only - see
                page 12.

                Other restrictions are detailed throughout Section One.
                Read the Policy!

--------------------------------------------------------------------------------
EXEMPTIONS      Preclearance is NOT required for:
                                ---
                -  Purchases or sales of municipal bonds, non-financial
                   commodities (such as agricultural futures, metals, oil, gas,
                   etc.), currency futures, financial futures, index futures,
                   index securities, securities issued by investment companies,
                   commercial paper; CDs; bankers' acceptances; repurchase
                   agreements; and direct obligations of the government of the
                   United States.
                -  Transactions in any account over which the employee has no
                   direct or indirect control over the investment decision
                   making process.
                -  Transactions that are non-volitional on the part of an
                   employee (such as stock dividends).
                -  Changes in elections under Mellon's 401(k) Retirement Savings
                   Plan.
                -  An exercise of an employee stock option administered by Human
                   Resources.
                -  Automatic reinvestment of dividends under a DRIP or Automatic
                   Investment Plan. (Optional cash purchases under a DRIP or
                   Direct Purchase Plan do require preclearance.)
                -  Sales of securities pursuant to tender offers and sales or
                   exercises of "Rights".(see page 8).

--------------------------------------------------------------------------------
QUESTIONS?      (412) 234-1661
--------------------------------------------------------------------------------

This page is for reference purposes only. Employees are reminded they must read the Policy and comply with its provisions.

--------------------------------------------------------------------------------
STANDARDS OF    Because of their particular responsibilities, Insider Risk
CONDUCT FOR     Employees are subject to preclearance and personal securities
INSIDER RISK    reporting requirements, as discussed below.
EMPLOYEES

                Every Insider Risk Employee must follow these procedures or
                risk serious sanctions, including dismissal. If you have any
                questions about these procedures you should consult the
                Manager of Corporate Compliance. Interpretive issues that
                arise under these procedures shall be decided by, and are
                subject to the discretion of, the Manager of Corporate
                Compliance.


CONFLICT OF     No employee may engage in or recommend any securities
INTEREST        transaction that places, or appears to place, his or her own
                interests above those of any customer to whom financial
                services are rendered, including mutual funds and managed
                accounts, or above the interests of Mellon.


MATERIAL        No employee may engage in or recommend a securities
NONPUBLIC       transaction, for his or her own benefit or for the benefit
INFORMATION     of others, including Mellon or its customers, while in
                possession of material nonpublic information regarding such
                securities. No employee may communicate material nonpublic
                information to others unless it is properly within his or
                her job responsibilities to do so.

BROKERS         Trading Accounts - All Insider Risk Employees are encouraged
                to conduct their personal investing through a Mellon
                affiliate brokerage account. This will assist in the
                monitoring of account activity on an ongoing basis in order
                to ensure compliance with the Policy.


PERSONAL         Trading Accounts - All Insider Risk Employees are required
SECURITIES       to instruct their broker, trust account manager or other
TRANSACTIONS     entity through which they have a securities trading account
REPORTS          to submit directly to the Manager of Corporate Compliance
                 copies of all trade confirmations and statements relating to
                 each account of which they are a beneficial owner regardless
                 of what, if any, securities are maintained in such accounts.
                 Thus, for example, even if the brokerage account contains
                 only mutual funds or other exempt securities as that term is
                 defined by the Policy and the account has the capability to
                 have reportable securities traded in it, the Insider Risk
                 Employee maintaining such an account must arrange for
                 duplicate account statements and trade confirmations to be
                 sent by the broker to the Manager of Corporate Compliance.
                 An example of an instruction letter to a broker is contained

in Exhibit A.

PRECLEARANCE     All Insider Risk Employees must notify the Manager of
FOR PERSONAL     Corporate Compliance in writing and receive preclearance
SECURITIES       before they engage in any purchase or sale of a
TRANSACTIONS     security. Insider Risk Employees should refer
                 to the provisions under "Beneficial Ownership" below, which
                 are applicable to these provisions.

                 All requests for preclearance for a securities transaction
                 shall be submitted by completing a Preclearance Request Form
                 which can be obtained from the Manager of Corporate
                 Compliance.

                 The Manager of Corporate Compliance will notify the Insider
                 Risk Employee whether the request is approved or denied,
                 without disclosing the reason for such approval or denial.

                 Notifications may be given in writing or verbally by the
                 Manager of Corporate Compliance to the Insider Risk Employee.
                 A record of such notification will be maintained by the
                 Manager of Corporate Compliance. However, it shall be the
                 responsibility of the Insider Risk Employee to obtain a
                 written record of the Manager of Corporate Compliance's
                 notification within 24 hours of such notification. The
                 Insider Risk Employee should retain a copy of this written
                 record.


                 As there could be many reasons for preclearance being granted
                 or denied, Insider Risk Employees should not infer from the
                 preclearance response anything regarding the security for
                 which preclearance was requested.
                 Although making a preclearance request does not obligate an
                 Insider Risk Employee to do the transaction, it should be
                 noted that:

                   -  preclearance requests should not be made for a transaction
                      that the Insider Risk Employee does not intend to make.

                   -  preclearance authorization will expire at the end of the
                      third business day after it is received.  The day
                      authorization is granted is considered the first business
                      day.

                   -  Insider Risk Employees should not discuss with anyone
                      else, inside or outside Mellon, the response they received
                      to a preclearance request. If the Insider Risk Employee is
                      preclearing as beneficial owner of another's account, the
                      response may be disclosed to the other owner.

                   -  Good Until Canceled/Stop Loss Orders ("Limit Orders") must
                      be precleared, and security transactions receiving
                      preclearance authorization must be executed before the
                      preclearance expires. At the end of the three-day
                      preclearance authorization period, any unexecuted Limit

                      Order must be canceled or a new preclearance authorization
                      must be obtained.


EXEMPTIONS FROM    Preclearance by Insider Risk Employees is not required for
REQUIREMENT TO     the following transactions:
PRECLEAR
                   -  Purchases or sales of Exempt Securities (direct
                      obligations of the government of the United States; high
                      quality short-term debt instruments; bankers' acceptances;
                      CDs; commercial paper; repurchase agreements; and
                      securities issued by open-end investment companies);

                   -  Purchases or sales of municipal bonds, closed-end mutual
                      funds; non-financial commodities (such as agricultural
                      futures, metals, oil, gas, etc.), currency futures,
                      financial futures, index futures and index securities;

                   -  Purchases or sales effected in any account over which an
                      employee has no direct or indirect control over the
                      investment decision making process (e.g., discretionary
                      trading accounts). Discretionary trading accounts may only
                      be exempted from preclearance procedures, when the Manager
                      of Corporate Compliance, after a thorough review, is
                      satisfied that the account is truly discretionary;

                   -  Transactions that are non-volitional on the part of an
                      employee (such as stock dividends);

                   -  The sale of Mellon stock received upon the exercise of an
                      employee stock option if the sale is part of a "netting of
                      shares" or "cashless exercise" administered by the Human
                      Resources Department (for which the Human Resources
                      Department will forward information to the Manager of
                      Corporate Compliance);

                   -  Changes to elections in the Mellon 401(k) plan;

                   -  Purchases effected upon the exercise of rights issued by
                      an issuer pro rata to all holders of a class of
                      securities, to the extent such rights were acquired from
                      such issuer;

                   -  Sales of rights acquired from an issuer, as described
                      above; and/or

                   -  Sales effected pursuant to a bona fide tender offer.


GIFTING OF         Insider Risk Employees desiring to make a bona fide gift of
SECURITIES         securities or who receive a bona fide gift, including an
                   inheritance, of securities do not need to preclear the
                   transaction. However, Insider Risk Employees must report such
                   bona fide gifts to the Manager of Corporate Compliance. The
                   report must be made within 10 days of making or receiving the
                   gift and must disclose the following information: the name of
                   the person receiving (giving) the gift, the date of the

                   transaction, and the name of the broker through which the
                   transaction was effected. A bona fide gift is one where the
                   donor does not receive anything of monetary value in return.
                   An Insider Risk Employee who purchases a security with the
                   intention of making a gift must preclear the purchase
                   transaction.

DRIPS, DPPS AND    Certain companies with publicly traded securities establish:
AIPS
                   -  Dividend Reinvestment Plans (DRIPs) - These permit
                      shareholders to have their dividend payments channeled to
                      the purchase of additional shares of such company's stock.
                      An additional benefit offered to DRIP participants is the
                      right to buy additional shares by sending in a check
                      before the dividend reinvestment date ("optional cash
                      purchases").

                   -  Direct Purchase Plans (DPPs) - These allow purchasers to
                      buy stock by sending a check directly to the issuer,
                      without using a broker.

                   -  Automatic Investment Plans (AIPs) - These allow purchasers
                      to set up a plan whereby a fixed amount of money is
                      automatically deducted from their checking account each
                      month and used to purchase stock directly from the issuer.

                   Participation in a DRIP, DPP or AIP is voluntary.

                   Insider Risk Employees who enroll in a DRIP or AIP are not
                   required to preclear enrollment, the periodic reinvestment of
                   dividend payments into additional shares of company stock
                   through a DRIP, or the periodic investments through an AIP.

                   Insider Risk Employees must preclear all optional cash
                   purchases through a DRIP and all purchases through a DPP.
                   Insider Risk Employees must also preclear all sales through a
                   DRIP, DPP or AIP.

RESTRICTED LIST    The Manager of Corporate Compliance will maintain a list
                   (the "Restricted List") of companies whose securities are
                   deemed appropriate for implementation of trading
                   restrictions for Insider Risk Employees. The Restricted List
                   will not be distributed outside of the office of Corporate
                   Compliance. From time to time, such trading restrictions may
                   be appropriate to protect Mellon and its Insider Risk
                   Employees from potential violations, or the appearance of
                   violations, of securities laws. The inclusion of a company
                   on the Restricted List provides no indication of the
                   advisability of an investment in the company's securities or
                   the existence of material nonpublic information on the
                   company. Nevertheless, the contents of the Restricted List
                   will be treated as confidential information to avoid
                   unwarranted inferences.

                   To assist the Manager of Corporate Compliance in identifying
                   companies that may be appropriate for inclusion on the
                   Restricted List, the department/entity heads in which Insider

                   Risk Employees are employed are required to inform the
                   Manager of Corporate Compliance in writing of any companies
                   they believe should be included on the Restricted List, based
                   upon facts known or readily available to such department
                   heads. Although the reasons for inclusion on the Restricted
                   List may vary, they could typically include the following:

                   -  Mellon is involved as a lender, investor or adviser in a
                      merger, acquisition or financial restructuring involving
                      the company;

                   -  Mellon is involved as a selling shareholder in a public
                      distribution of the company's securities;

                   -  Mellon is involved as an agent in the distribution of the
                      company's securities;

                   -  Mellon has received material nonpublic information on the
                      company;

                   -  Mellon is considering the exercise of significant
                      creditors' rights against the company; or

                   - The company is a Mellon borrower in Credit Recovery.

                   Department heads of sections in which Insider Risk Employees
                   are employed are also responsible for notifying the Manager
                   of Corporate Compliance in writing of any change in
                   circumstances making it appropriate to remove a company from
                   the Restricted List.

                   The Manager of Corporate Compliance will retain copies of the
                   restricted lists for five years.

CONFIDENTIAL       The Manager of Corporate Compliance will use his or her best
TREATMENT          efforts to assure that all requests for preclearance, all
                   personal securities transaction reports and all reports of
                   securities holdings are treated as "Personal and
                   Confidential." However, such documents will be available for
                   inspection by appropriate regulatory agencies and by other
                   parties within and outside Mellon as are necessary to
                   evaluate compliance with or sanctions under this Policy.

--------------------------------------------------------------------------------
RESTRICTIONS ON    Employees who engage in transactions involving Mellon
TRANSACTIONS IN    securities should be aware of their unique responsibilities
MELLON             with respect to such transactions arising from the
SECURITIES         employment relationship and should be sensitive to even the
                   appearance of impropriety.

                   The following restrictions apply to all transactions in
                   Mellon's publicly traded securities occurring in the
                   employee's own account and in all other accounts over which
                   the employee could be presumed to exercise influence or

                   control (see provisions under "Beneficial Ownership" below
                   for a more complete discussion of the accounts to which these
                   restrictions apply). These restrictions are to be followed in
                   addition to any restrictions that apply to particular
                   officers or directors (such as restrictions under Section 16
                   of the Securities Exchange Act of 1934).

                   -  Short Sales - Short sales of Mellon securities by
                      employees are prohibited.

                   -  Short Term Trading - Employees are prohibited from
                      purchasing and selling, or from selling and purchasing,
                      Mellon securities within any 60 calendar day period.

                   -  Margin Transactions - Purchases on margin of Mellon's
                      publicly traded securities by employees is prohibited.
                      Margining Mellon securities in connection with a cashless
                      exercise of an employee stock option through the Human
                      Resources Department is exempt from this restriction.
                      Further, Mellon securities may be used to collateralize
                      loans or the acquisition of securities other than those
                      issued by Mellon.

                   -  Option Transactions - Option transactions involving
                      Mellon's publicly traded securities are prohibited.
                      Transactions under Mellon's Long-Term Incentive Plan or
                      other employee option plans are exempt from this
                      restriction.

                   -  Major Mellon Events - Employees who have knowledge of
                      major Mellon events that have not yet been announced are
                      prohibited from buying or selling Mellon's publicly traded
                      securities before such public announcements, even if the
                      employee believes the event does not constitute material
                      nonpublic information.

                   -  Mellon Blackout Period - Employees are prohibited from
                      buying or selling Mellon's publicly traded securities
                      during a blackout period. The blackout period begins the
                      16th day of the last month of each calendar quarter and
                      ends 3 business days after Mellon Financial Corporation
                      publicly announces the financial results for that quarter.
                      Thus, the blackout periods begin on March 16, June 16,
                      September 16 and December 16. The end of the blackout
                      period is determined by counting business days only, and
                      the day of the earnings announcement is day 1. The
                      blackout period ends at the end of day 3, and employees
                      can trade Mellon securities on day 4.

MELLON  401(K)     For purposes of the blackout period and the short term
PLAN               trading rule, employees' changing their existing account
                   balance allocation to increase or decrease the amount
                   allocated to Mellon Common Stock will be treated as a
                   purchase or sale of Mellon Stock, respectively. This means:


                   -  Employees are prohibited from increasing or decreasing

                      their existing account balance allocation to Mellon Common
                      Stock during the blackout period.

                   -  Employees are prohibited from increasing their existing
                      account balance allocation to Mellon Common Stock and then
                      decreasing it within 60 days. Similarly, employees are
                      prohibited from decreasing their existing account balance
                      allocation to Mellon Common Stock and then increasing it
                      within 60 days. However, changes to existing account
                      balance allocations in the 401(k) plan will not be
                      compared to transactions in Mellon securities outside the
                      401(k) for purposes of the 60-day rule. (Note: this does
                      not apply to members of the Executive Management Group,
                      who should consult with the Legal Department.)

                   Except for the above there are no other restrictions
                   applicable to the 401(k) plan. This means, for example:

                   -  Employees are not required to preclear any elections or
                      changes made in their 401(k) account.

                   -  There is no restriction on employees' changing their
                      salary deferral contribution percentages with regard to
                      either the blackout period or the 60-day rule.

                   -  The regular salary deferral contribution to Mellon Common
                      Stock in the 401(k) that takes place with each pay will
                      not be considered a purchase for the purposes of either
                      the blackout or the 60-day rule.


MELLON EMPLOYEE    Receipt - Your receipt of an employee stock option from
STOCK OPTIONS      Mellon is not deemed to be a purchase of a security.
                   Therefore, it is exempt from preclearance and reporting
                   requirements, can take place during the blackout period and
                   does not constitute a purchase for purposes of the 60-day
                   prohibition.

                   Exercises - The exercise of an employee stock option that
                   results in your holding the shares is exempt from
                   preclearance and reporting requirements, can take place
                   during the blackout period and does not constitute a purchase
                   for purposes of the 60-day prohibition.

                   "Cashless" Exercises - The exercise of an employee stock
                   option which is part of a "cashless exercise" or "netting of
                   shares" that is administered by the Human Resources
                   Department or Chase Mellon Shareholder Services is exempt
                   from the preclearance and reporting requirements and will not
                   constitute a purchase or a sale for purposes of the 60-day
                   prohibition. A "cashless exercise" or "netting of shares"
                   transaction is permitted during the blackout period for
                   ShareSuccess plan options only. They are not permitted during
                   the blackout period for any other plan options.

                   Sales - The sale of the Mellon securities that were received
                   in the exercise of an employee stock option is treated like

                   any other sale under the Policy (regardless of how little
                   time has elapsed between the option exercise and the sale).
                   Thus, such sales are subject to the preclearance and
                   reporting requirements, are prohibited during the blackout
                   period and constitute sales for purposes of the 60-day
                   prohibition.


--------------------------------------------------------------------------------
RESTRICTIONS ON    Purchases or sales by an employee of the securities of
TRANSACTIONS IN    issuers with which Mellon does business, or other third
OTHER              party issuers, could result in liability on the part of such
SECURITIES         employee. Employees should be sensitive to even the
                   appearance of impropriety in connection with their personal

securities transactions. Employees should refer to "Beneficial Ownership" below, which is applicable to the following restrictions.

The Mellon Code of Conduct contains certain restrictions on investments in parties that do business with Mellon. Employees should refer to the Code of Conduct and comply with such restrictions in addition to the restrictions and reporting requirements set forth below.

The following restrictions apply to all securities transactions by employees:

- Credit, Consulting or Advisory Relationship - Employees may not buy or sell securities of a company if they are considering granting, renewing, modifying or denying any credit facility to that company, acting as a benefits consultant to that company, or acting as an adviser to that company with respect to the company's own securities. In addition, lending employees who have assigned responsibilities in a specific industry group are not permitted to trade securities in that industry. This prohibition does not apply to transactions in open end mutual funds.

- Customer Transactions - Trading for customers and Mellon accounts should always take precedence over employees' transactions for their own or related accounts.

- Excessive Trading, Naked Options - Mellon discourages all employees from engaging in short-term or speculative trading, in trading naked options, in trading that could be deemed excessive or in trading that could interfere with an employee's job responsibilities.

- Front Running - Employees may not engage in "front running," that is, the purchase or sale of securities for their own accounts on the basis of their knowledge of Mellon's trading positions or plans.

- Initial Public Offerings - Insider Risk Employees are prohibited from acquiring securities through an allocation by the underwriter of an Initial Public Offering (IPO)

                      without the approval of the Manager of Corporate
                      Compliance. Approval can be given only when the allocation
                      comes through an employee of the issuer who is a direct
                      family relation of the Insider Risk Employee. Due to NASD
                      rules, this approval may not be available to employees of
                      registered broker/dealers.

                   -  Material Nonpublic Information - Employees possessing
                      material nonpublic information regarding any issuer of
                      securities must refrain from purchasing or selling
                      securities of that issuer until the information becomes
                      public or is no longer considered material.

                   -  Private Placements - Insider Risk Employees are prohibited
                      from acquiring any security in a private placement unless
                      they obtain the prior written approval of the Manager of
                      Corporate Compliance and the employee's department head.
                      Approval must be given by both persons for the acquisition
                      to be considered approved. After receipt of the necessary
                      approvals and the acquisition, employees are required to
                      disclose that investment if they participate in any
                      subsequent consideration of credit for the issuer, or of
                      an investment in the issuer for an advised account. Final
                      decision to acquire such securities for an advised account
                      will be subject to independent review.

                   -  Scalping - Employees may not engage in "scalping," that
                      is, the purchase or sale of securities for their own or
                      Mellon's accounts on the basis of knowledge of customers'
                      trading positions or plans.

                   -  Short Term Trading - All Employees are discouraged from
                      purchasing and selling, or from selling and purchasing,
                      the same (or equivalent) securities within any 60 calendar
                      day period.

PROHIBITION ON     You are prohibited from acquiring any security issued by a
INVESTMENTS IN     financial services organization if you are:
SECURITIES OF
FINANCIAL          -  a member of the Mellon Senior Management Committee.
SERVICES
ORGANIZATIONS      -  employed in any of the following departments:

                      -  Corporate Strategy & Development
                      -  Legal (Pittsburgh only)
                      -  Finance (Pittsburgh only)

                   -  an employee specifically designated by the Manager of
                      Corporate Compliance and informed that this prohibition is
                      applicable to you.

                   Financial Services Organizations - The term "security issued
                   by a financial services organization" includes any security
                   issued by:
                   -   Commercial Banks other than          -  Thrifts
                       Mellon                               -  Savings and Loan
                   -   Bank Holding Companies other            Associations

                       than Mellon                          -  Broker/Dealers
                   -   Insurance Companies                  -  Transfer Agents
                   -   Investment Advisory Companies        -  Other Depository
                   -   Shareholder Servicing Companies         Institutions

The term "securities issued by a financial services organization" DOES NOT INCLUDE securities issued by mutual funds, variable annuities or insurance policies. Further, for purposes of determining whether a company is a financial services organization, subsidiaries and parent companies are treated as separate issuers.

Effective Date - Securities of financial services organizations properly acquired before the employee's becoming subject to this prohibition may be maintained or disposed of at the owner's discretion consistent with this policy.

Additional securities of a financial services organization acquired through the reinvestment of the dividends paid by such financial services organization through a dividend reinvestment program (DRIP), or through an automatic investment plan (AIP) are not subject to this prohibition, provided the employee's election to participate in the DRIP or AIP predates the date of the employee's becoming subject to this prohibition. Optional cash purchases through a DRIP or direct purchase plan (DPP) are subject to this prohibition.

Securities acquired in any account over which an employee has no direct or indirect control over the investment decision making process (e.g., discretionary trading accounts) are not subject to this prohibition.

Within 30 days of becoming subject to this prohibition, all holdings of securities of financial services organizations must be disclosed in writing to the Manager of Corporate Compliance.

BENEFICIAL         The provisions of the Policy apply to transactions in the
OWNERSHIP          employee's own name and to all other accounts over which the
                   employee could be presumed to exercise influence or control,
                   including:

                   -  accounts of a spouse, minor children or relatives to whom
                      substantial support is contributed;

                   -  accounts of any other member of the employee's household
                      (e.g., a relative living in the same home);

                   -  trust or other accounts for which the employee acts as
                      trustee or otherwise exercises any type of guidance or
                      influence;

                   -  corporate accounts controlled, directly or indirectly, by
                      the employee;

                   -  arrangements similar to trust accounts that are
                      established for bona fide financial purposes and benefit
                      the employee; and

                   -  any other account for which the employee is the beneficial
                      owner (see Glossary for a more complete legal definition
                      of "beneficial owner").


NON-MELLON       The provisions discussed above do not apply to transactions

EMPLOYEE BENEFIT done under a bona fide employee benefit plan administered by an PLANS organization not affiliated with Mellon and by an employee of that organization who shares beneficial interest with a Mellon employee, and in the securities of the employing organization. This means if a Mellon employee's spouse is employed at a non-Mellon company, the Mellon employee is not required to obtain approval for transactions in the employer's securities done by the spouse as part of the spouse's employee benefit plan.

The Securities Trading Policy does not apply in such a situation. Rather, the other organization is relied upon to provide adequate supervision with respect to conflicts of interest and compliance with securities laws.

--------------------------------------------------------------------------------
PROTECTING         As an employee you may receive information about Mellon, its
CONFIDENTIAL       customers and other parties that, for various reasons,
INFORMATION        should be treated as confidential. All employees are
                   expected to strictly comply with measures necessary to
                   preserve the confidentiality of information. Employees
                   should refer to the Mellon Code of Conduct.

INSIDER TRADING    Federal securities laws generally prohibit the trading of
AND TIPPING        securities while in possession of "material nonpublic"
                   information regarding the issuer of those securities (insider
LEGAL              trading). Any person who passes along material nonpublic
PROHIBITIONS       information upon which a trade is based (tipping) may also be
                   liable.

                   Information is "material" if there is a substantial
                   likelihood that a reasonable investor would consider it
                   important in deciding whether to buy, sell or hold
                   securities. Obviously, information that would affect the
                   market price of a security would be material. Examples of
                   information that might be material include:

                   -  a proposal or agreement for a merger, acquisition or
                      divestiture, or for the sale or purchase of substantial
                      assets;

                   -  tender offers, which are often material for the party
                      making the tender offer as well as for the issuer of the
                      securities for which the tender offer is made;

                   -  dividend declarations or changes;

                   -  extraordinary borrowings or liquidity problems;

                   -  defaults under agreements or actions by creditors,
                      customers or suppliers relating to a company's credit
                      standing;

                   -  earnings and other financial information, such as large or
                      unusual write-offs, write-downs, profits or losses;

                   -  pending discoveries or developments, such as new products,
                      sources of materials, patents, processes, inventions or
                      discoveries of mineral deposits;

                   -  a proposal or agreement concerning a financial
                      restructuring;

                   -  a proposal to issue or redeem securities, or a development
                      with respect to a pending issuance or redemption of
                      securities;

                   -  a significant expansion or contraction of operations;

                   -  information about major contracts or increases or
                      decreases in orders;

                   -  the institution of, or a development in, litigation or a
                      regulatory proceeding;

                   -  developments regarding a company's senior management;

                   -  information about a company received from a director of
                      that company; and

                   -  information regarding a company's possible noncompliance
                      with environmental protection laws.

                   This list is not exhaustive. All relevant circumstances must
                   be considered when determining whether an item of information
                   is material.

                   "Nonpublic" - Information about a company is nonpublic if it
                   is not generally available to the investing public.
                   Information received under circumstances indicating that it
                   is not yet in general circulation and which may be
                   attributable, directly or indirectly, to the company or its
                   insiders is likely to be deemed nonpublic information.

                   If you obtain material non-public information you may not

trade related securities until you can refer to some public source to show that the information is generally available
(that is, available from sources other than inside sources)
and that enough time has passed to allow wide dissemination of the information. While information appearing in widely accessible sources--such as in newspapers or on the internet--becomes public very soon after publication,

information appearing in less accessible sources--such as regulatory filings, may take up to several days to be deemed public. Similarly, highly complex information might take longer to become public than would information that is easily understood by the average investor.

MELLON'S POLICY    Employees who possess material nonpublic information about a
                   company--whether that company is Mellon, another Mellon
                   entity, a Mellon customer or supplier, or other company--may
                   not trade in that company's securities, either for their own
                   accounts or for any account over which they exercise
                   investment discretion. In addition, employees may not
                   recommend trading in those securities and may not pass the
                   information along to others, except to employees who need to
                   know the information in order to perform their job
                   responsibilities with Mellon. These prohibitions remain in
                   effect until the information has become public.

                   Employees who have investment responsibilities should take
                   appropriate steps to avoid receiving material nonpublic
                   information. Receiving such information could create severe
                   limitations on their ability to carry out their
                   responsibilities to Mellon's fiduciary customers.

                   Employees managing the work of consultants and temporary
                   employees who have access to the types of confidential
                   information described in this Policy are responsible for
                   ensuring that consultants and temporary employees are aware
                   of Mellon's policy and the consequences of noncompliance.

                   Questions regarding Mellon's policy on material nonpublic
                   information, or specific information that might be subject to
                   it, should be referred to the General Counsel.


RESTRICTIONS ON    As a diversified financial services organization, Mellon
THE                faces unique challenges in complying with the prohibitions
FLOW OF            on insider trading and tipping of material non-public
INFORMATION        information, and misuse of confidential information. This is
WITHIN             because one Mellon unit might have material nonpublic
MELLON             information about a company while other Mellon units may
(THE "CHINESE      have a desire, or even a fiduciary duty, to buy or sell that
WALL)              company's securities or recommend such purchases or sales to
                   customers. To engage in such broad-ranging financial services
                   activities without violating laws or breaching Mellon's
                   fiduciary duties, Mellon has established a "Chinese Wall"
                   policy applicable to all employees. The "Chinese Wall"
                   separates the Mellon units or individuals that are likely to
                   receive material nonpublic information (Potential Insider
                   Functions) from the Mellon units or individuals that either
                   trade in securities--for Mellon's account or for the accounts
                   of others--or provide investment advice (Investment

Functions). Employees should refer to CPP 903-2(C) The Chinese Wall. have a desire, or even a fiduciary duty, to buy or sell that company's securities or recommend such purchases or sales to customers. To engage in such

broad-ranging financial services activities without violating laws or breaching Mellon's fiduciary duties, Mellon has established a "Chinese Wall" policy applicable to all employees. The "Chinese Wall" separates the Mellon units or individuals that are likely to receive material nonpublic information (Potential Insider Functions) from the Mellon units or individuals that either trade in securities--for Mellon's account or for the accounts of others--or provide investment advice (Investment Functions). Employees should refer to CPP 903-2(C) The Chinese Wall.

PERSONAL SECURITIES TRADING PRACTICES

SECTION TWO - APPLICABLE TO INVESTMENT EMPLOYEES

CONTENTS

                                                                                  Page
PERSONAL SECURITIES TRADING PRACTICES

     SECTION TWO - APPLICABLE TO INVESTMENT EMPLOYEES
               Quick Reference - Investment Employees .......................     19
               Standards of Conduct for Investment Employees ................     20
                 --Conflict of Interest .....................................     20
                 --Material Nonpublic Information ...........................     20
                 --Brokers ..................................................     20
                 --Personal Securities Transaction Reports ..................     20
                 --Preclearance for Personal Securities Transactions ........     21
                 --Blackout Policy ..........................................     22
                 --Exemptions from Requirement to Preclear ..................     22
                 --Gifting of Securities ....................................     22
                 --DRIPs, DPPs and AIPs .....................................     23
                 --Statement of Securities Accounts and Holdings ............     23
                 --Restricted List ..........................................     24
                 --Confidential Treatment ...................................     24
               Restrictions on Transactions in Mellon Securities ............     24

                 --Mellon 401(k) Plan .......................................     25
                 --Mellon Employee Stock Options ............................     26
               Restrictions on Transactions in Other Securities .............     26
                 --Prohibition on Investments in Securities of
                   Financial Services Organizations .........................     27
               Beneficial Ownership .........................................     28
               Non-Mellon Employee Benefit Plans ............................     28
               Protecting Confidential Information ..........................     29
                 --Insider Trading and Tipping ..............................     29
                 --The "Chinese Wall" .......................................     30
               Special Procedures for Access Decision Makers ................     30

GLOSSARY       Definitions ..................................................     43

               Exhibit A - Sample Letter to Broker ..........................     49

QUICK REFERENCE - INVESTMENT EMPLOYEES

SOME THINGS   1. Statement of Accounts and Holdings - Provide to your
YOU MUST DO      Preclearance Compliance Officer a statement of all
                 securities accounts and holdings within 10 days of becoming an
                 Investment Employee, and again annually on request.

              2. Duplicate Statements & Confirmations - Instruct your broker,
                 trust account manager or other entity through which you have a

securities trading account to send directly to Compliance:
- Trade confirmations summarizing each transaction
- Periodic statements Exhibit A can be used to notify your broker. Contact your designated Preclearance Compliance Officer for the correct address. This applies to all accounts in which you have a beneficial interest.

3. Preclearance - Before initiating a securities transaction, written preclearance must be obtained from the designated Preclearance Compliance Officer. This can be accomplished by completing a Preclearance Request Form and:
- delivering or faxing the request to the designated Preclearance Compliance Officer, or
- contacting the designated Preclearance Compliance Officer for other available notification options.

Preclearance Request Forms can be obtained from the designated Preclearance Compliance Officer. If preclearance approval is received the trade must be communicated to the broker on the same day, and executed before the end of the next business day, at which time the preclearance approval will expire.

4. Special Approvals
- Acquisition of securities in a Private Placement must be precleared by the employee's Department/Entity head, the Manager of Corporate Compliance and the designated Preclearance Compliance Officer.
- Acquisition of securities through an allocation by the

                 underwriter of an Initial Public Offering (IPO) is prohibited
                 without the approval of the Manager of Corporate Compliance.
                 Approval can be given only when the allocation is the result of
                 a direct family relationship.

-----------------------------------------------------------------------------
SOME THINGS   Mellon Securities - The following transactions in Mellon
YOU MUST NOT  securities are prohibited for all Mellon Employees:
DO            -     Short sales
              -     Purchasing and selling or selling and purchasing within
                    60 days
              -     Purchasing or selling during a blackout period o Margin
                    purchases or options other than employee options.

              Non-Mellon Securities
              -  Purchasing and selling or selling and purchasing within 60 days
                 is discouraged, and any profits must be disgorged.
              -  New investments in financial services organizations are
                 prohibited for certain employees only - see page 27.

              Other restrictions are detailed throughout Section Two.  Read
              the Policy!

-----------------------------------------------------------------------------
EXEMPTIONS    Preclearance is NOT required for:
              -  Purchases or sales of high quality short-term debt instruments,
                 non-financial commodities (such as agricultural futures,
                 metals, oil, gas, etc.), currency futures, financial futures,
                 index futures, index securities, open-end mutual funds,
                 non-affiliated closed-end investment companies, commercial
                 paper; CDs; bankers' acceptances; repurchase agreements; and
                 direct obligations of the government of the United States.)
              -  Transactions in any account over which the employee has no
                 direct or indirect control over the investment decision making
                 process.
              -  Transactions that are non-volitional on the part of an employee
                 (such as stock dividends).
              -  Changes in elections under Mellon's 401(k) Retirement Savings
                 Plan.
              -  An exercise of an employee stock option administered by Human
                 Resources.
              -  Automatic reinvestment of dividends under a DRIP or Automatic
                 Investment Plan. (Optional cash purchases under a DRIP or
                 Direct Purchase Plan do require preclearance.
              -  Sales of securities pursuant to tender offers and sales or
                 exercises of "Rights".(see page 22).

-----------------------------------------------------------------------------
QUESTIONS?    Contact your designated Preclearance Compliance Officer.   If
              you don't know who that is, call 412-234-1661
-----------------------------------------------------------------------------

This page is for reference purposes only. Employees are reminded they must read the Policy and comply with its provisions.

-----------------------------------------------------------------------------
STANDARDS OF    Because of their particular responsibilities, Investment
CONDUCT FOR     Employees are subject to preclearance and personal
INVESTMENT      securities reporting requirements, as discussed below.
EMPLOYEES
                Every Investment Employee must follow these procedures or risk
                serious sanctions, including dismissal. If you have any
                questions about these procedures you should consult the Manager
                of Corporate Compliance. Interpretive issues that arise under
                these procedures shall be decided by, and are subject to the
                discretion of, the Manager of Corporate Compliance.

CONFLICT OF     No employee may engage in or recommend any securities
INTEREST        transaction that places, or appears to place, his or her
                own interests above those of any customer to whom financial
                services are rendered, including mutual funds and managed
                accounts, or above the interests of Mellon.

MATERIAL        No employee may divulge the current portfolio positions, or
NONPUBLIC       current or anticipated portfolio transactions, programs or
INFORMATION     studies, of Mellon or any Mellon customer to anyone unless
                it is properly within his or her job responsibilities to do
                so.

                No employee may engage in or recommend a securities transaction,
                for his or her own benefit or for the benefit of others,
                including Mellon or its customers, while in possession of
                material nonpublic information regarding such securities. No
                employee may communicate material nonpublic information to
                others unless it is properly within his or her job
                responsibilities to do so.

BROKERS         Trading Accounts - All Investment Employees are encouraged to
                conduct their personal investing through a Mellon affiliate
                brokerage account. This will assist in the monitoring of account
                activity on an ongoing basis in order to ensure compliance with
                the Policy.


PERSONAL        Statements & Confirmations - All Investment Employees are
SECURITIES      required to instruct their broker, trust account manager or
TRANSACTIONS    other entity through which they have a securities trading
REPORTS         account to submit directly to the Manager of Corporate
                Compliance or designated Preclearance Compliance Officer copies
                of all trade confirmations and statements relating to each
                account of which they are a beneficial owner regardless of what,
                if any, securities are maintained in such accounts. Thus, for
                example, even if the brokerage account contains only mutual
                funds or other exempt securities as that term is defined by the
                Policy and the account has the capability to have reportable
                securities traded in it, the Investment Employee maintaining
                such an account must arrange for duplicate account statements
                and trade confirmations to be sent by the broker to the Manager
                of Corporate Compliance or designated Preclearance Compliance
                Officer. Exhibit A is an example of an instruction letter to a
                broker.

                Other securities transactions which were not completed through a
                brokerage account, such as gifts, inheritances, spin-offs from
                securities held outside brokerage accounts, or other transfers
                must be reported to the designated Preclearance Compliance
                Officer within 10 days.


PRECLEARANCE    All Investment Employees must notify the designated
FOR PERSONAL    Preclearance Compliance Officer in writing and receive
SECURITIES      preclearance before they engage in any purchase or sale of
TRANSACTIONS    a security for their own accounts.  Investment Employees

should refer to the provisions under "Beneficial Ownership" below, which are applicable to these provisions.

All requests for preclearance for a securities transaction shall be submitted by completing a Preclearance Request Form which can be obtained from the designated Preclearance Compliance Officer.

The designated Preclearance Compliance Officer will notify the Investment Employee whether the request is approved or denied, without disclosing the reason for such approval or denial.

Notifications may be given in writing or verbally by the designated Preclearance Compliance Officer to the Investment Employee. A record of such notification will be maintained by the designated Preclearance Compliance Officer. However, it shall be the responsibility of the Investment Employee to obtain a written record of the designated Preclearance Compliance Officer's notification within 48 hours of such notification. The Investment Employee should retain a copy of this written record.

As there could be many reasons for preclearance being granted or denied, Investment Employees should not infer from the preclearance response anything regarding the security for which preclearance was requested.

Although making a preclearance request does not obligate an Investment Employee to do the transaction, it should be noted that:

- Preclearance requests should not be made for a transaction that the Investment Employee does not intend to make.

- The order for a transaction must be placed with the broker on the same day that preclearance authorization is received. The broker must execute the trade close of business on the next business day, at which time the preclearance authorization will expire.

- Investment Employees should not discuss with anyone else, inside or outside Mellon, the response they received to a preclearance request. If the Investment Employee is preclearing as beneficial owner of another's account, the response may be disclosed to the other owner.

- Good Until Canceled/Stop Loss Orders ("Limit Orders") must be

precleared, and security transactions receiving preclearance authorization must be executed before the preclearance expires. At the end of the preclearance authorization period, any unexecuted Limit Order must be canceled or a new preclearance authorization must be obtained.

BLACKOUT POLICY Except as described below, Investment Employees will not generally be given clearance to execute a transaction in any security that is on the restricted list maintained by their Preclearance Compliance Officer, or for which there is a pending buy or sell order for an affiliated account. This provision does not apply to transactions effected or contemplated by index funds.

Exceptions - Regardless of any restrictions above, Investment Employees will generally be given clearance to execute the following transactions:
- Purchase or sale of up to $50,000 of securities of the top 200 issuers on the Russell list of largest publicly traded companies.

- Purchase or sale of up to the greater of 100 shares or

                        $10,000 of securities ranked 201 to 500 on the Russell
                        list of largest publicly traded companies.
                The Investment Employee is limited to two such trades in the
                securities of any one issuer in any calendar month.

EXEMPTIONS      Preclearance is not required for the following transactions:
FROM
REQUIREMENT TO  -  Purchases or sales of Exempt Securities (direct
PRECLEAR           obligations of the government of the United States; high
                   quality short-term debt instruments; bankers' acceptances;
                   CDs; commercial paper; repurchase agreements; and securities
                   issued by open-end investment companies);

                -  Purchases or sales of non-affiliated closed-end investment
                   companies; non-financial commodities (such as agricultural
                   futures, metals, oil, gas, etc.), currency futures, financial
                   futures, index futures and index securities;

                -  Purchases or sales effected in any account over which an
                   employee has no direct or indirect control over the
                   investment decision making process (e.g., discretionary
                   trading accounts). Discretionary trading accounts may only be
                   maintained, without being subject to preclearance procedures,
                   when the Manager of Corporate Compliance, after a thorough
                   review, is satisfied that the account is truly discretionary;

                -  Transactions that are non-volitional on the part of
                   an employee (such as stock dividends);

                -  The sale of Mellon stock received upon the exercise of an
                   employee stock option if the sale is part of a "netting of
                   shares" or "cashless exercise" administered by the Human
                   Resources Department (for which the Human Resources
                   Department will forward information to the Manager of
                   Corporate Compliance);

                -  Changes to elections in the Mellon 401(k) plan;

                -  Purchases effected upon the exercise of rights issued by an
                   issuer pro rata to all holders of a class of securities, to
                   the extent such rights were acquired from such issuer;

                -  Sales of rights acquired from an issuer, as described
                   above; and/or

                -  Sales effected pursuant to a bona fide tender offer.

GIFTING OF      Investment Employees desiring to make a bona fide gift of
SECURITIES      securities or who receive a bona fide gift of securities do
                not need to preclear the transaction. However, Investment
                Employees must report such bona fide gifts to the Manager of
                Corporate Compliance. The report must be made within 10 days of
                making or receiving the gift and must disclose the following
                information: the name of the person receiving (giving) the gift,
                the date of the transaction, and the name of the broker through
                which the transaction was effected. A bona fide gift is one
                where the donor does not receive anything of monetary value in
                return. An Investment Employee who purchases a security with the
                intention of making a gift must preclear the purchase
                transaction.

DRIPS, DPPS     Certain companies with publicly traded securities establish:
AND AIPS
                -  Dividend Reinvestment Plans (DRIPs) - These permit
                   shareholders to have their dividend payments channeled to the
                   purchase of additional shares of such company's stock. An
                   additional benefit offered to DRIP participants is the right
                   to buy additional shares by sending in a check before the
                   dividend reinvestment date ("optional cash purchases").

                -  Direct Purchase Plans (DPPs) - These allow purchasers to buy
                   stock by sending a check directly to the issuer, without
                   using a broker.

                -  Automatic Investment Plans (AIPs) - These allow purchasers to
                   set up a plan whereby a fixed amount of money is
                   automatically deducted from their checking account each month
                   and used to purchase stock directly from the issuer.

                Participation in a DRIP, DPP or AIP is voluntary.

                Investment Employees who enroll in a DRIP or AIP are not
                required to preclear enrollment, the periodic reinvestment of
                dividend payments into additional shares of company stock
                through a DRIP, or the periodic investments through an AIP.

                Investment Employees must preclear all optional cash purchases
                through a DRIP and all purchases through a DPP. Investment
                Employees must also preclear all sales through a DRIP, DPP or
                AIP.

STATEMENT OF    Within ten days of receiving this Policy and on an annual
SECURITIES      basis thereafter, all Investment Employees must submit to
ACCOUNTS AND    the Manager of Corporate Compliance:
HOLDINGS
                -  a listing of all securities trading accounts in which
                   the employee has a beneficial interest.

                -  a statement of all securities in which they presently have
                   any direct or indirect beneficial ownership other than Exempt
                   Securities, as defined in the Glossary.

                The annual report must be completed upon the request of
                Corporate Compliance, and the information submitted must be
                current within 30 days of the date the report is submitted. The
                annual statement of securities holdings contains an
                acknowledgment that the Investment Employee has read and
                complied with this Policy.

RESTRICTED LIST Each Preclearance Compliance Officer will maintain a list

                (the "Restricted List") of companies whose securities are deemed
                appropriate for implementation of trading restrictions for
                Investment Employees in their area. From time to time, such
                trading restrictions may be appropriate to protect Mellon and
                its Investment Employees from potential violations, or the
                appearance of violations, of securities laws. The inclusion of a
                company on the Restricted List provides no indication of the
                advisability of an investment in the company's securities or the
                existence of material nonpublic information on the company.
                Nevertheless, the contents of the Restricted List will be
                treated as confidential information in order to avoid
                unwarranted inferences.

                The Preclearance Compliance Officer will retain copies of the
                restricted lists for five years.

CONFIDENTIAL    The Manager of Corporate Compliance and/or Preclearance
TREATMENT       Compliance Officer will use his or her best efforts to
                assure that all requests for preclearance, all personal
                securities transaction reports and all reports of securities
                holdings are treated as "Personal and Confidential." However,
                such documents will be available for inspection by appropriate
                regulatory agencies, and by other parties within and outside
                Mellon as are necessary to evaluate compliance with or sanctions
                under this Policy. Documents received from Investment Employees
                are also available for inspection by the boards of directors of
                40-Act entities and by the boards of directors (or trustees or
                managing general partners, as applicable) of the investment
                companies managed or administered by 40-Act entities.
-----------------------------------------------------------------------------
RESTRICTIONS    Investment Employees who engage in transactions involving
ON              Mellon securities should be aware of their unique
TRANSACTIONS    responsibilities with respect to such transactions arising
IN MELLON       from the employment relationship and should be sensitive to
SECURITIES      even the appearance of impropriety.

                The following restrictions apply to all transactions in Mellon's

                publicly traded securities occurring in the employee's own
                account and in all other accounts over which the employee could
                be presumed to exercise influence or control (see provisions
                under "Beneficial Ownership" below for a more complete
                discussion of the accounts to which these restrictions apply).
                These restrictions are to be followed in addition to any
                restrictions that apply to particular officers or directors
                (such as restrictions under Section 16 of the Securities
                Exchange Act of 1934). o Short Sales - Short sales of Mellon
                securities by employees are prohibited.

                -  Short Term Trading - Investment Employees are prohibited from
                   purchasing and selling, or from selling and purchasing Mellon
                   securities within any 60 calendar day period. In addition to
                   any other sanction, any profits realized on such short term
                   trades must be disgorged in accordance with procedures
                   established by senior management.

                -  Margin Transactions - Purchases on margin of Mellon's
                   publicly traded securities by employees is prohibited.
                   Margining Mellon securities in connection with a cashless
                   exercise of an employee stock option through the Human
                   Resources Department is exempt from this restriction.
                   Further, Mellon securities may be used to collateralize loans
                   or the acquisition of securities other than those issued by
                   Mellon.

                -  Option Transactions - Option transactions involving Mellon's
                   publicly traded securities are prohibited. Transactions under
                   Mellon's Long-Term Incentive Plan or other employee option
                   plans are exempt from this restriction.

                -  Major Mellon Events - Employees who have knowledge of major
                   Mellon events that have not yet been announced are prohibited
                   from buying or selling Mellon's publicly traded securities
                   before such public announcements, even if the employee
                   believes the event does not constitute material nonpublic
                   information.

                -  Mellon Blackout Period - Employees are prohibited from buying
                   or selling Mellon's publicly traded securities during a
                   blackout period. The blackout period begins the 16th day of
                   the last month of each calendar quarter and ends 3 business
                   days after Mellon Financial Corporation publicly announces
                   the financial results for that quarter. Thus, the blackout
                   periods begin on March 16, June 16, September 16 and December
                   16. The end of the blackout period is determined by counting
                   business days only, and the day of the earnings announcement
                   is day 1. The blackout period ends at the end of day 3, and
                   employees can trade Mellon securities on day 4.


MELLON 401(K)   For purposes of the blackout period and the short term
PLAN            trading rule, employees' changing their existing account
                balance allocation to increase or decrease the amount allocated
                to Mellon Common Stock will be treated as a purchase or sale of
                Mellon Stock, respectively. This means:

                -  Employees are prohibited from increasing or decreasing their
                   existing account balance allocation to Mellon Common Stock
                   during the blackout period.

                -  Employees are prohibited from increasing their existing
                   account balance allocation to Mellon Common Stock and then
                   decreasing it within 60 days. Similarly, employees are
                   prohibited from decreasing their existing account balance
                   allocation to Mellon Common Stock and then increasing it
                   within 60 days. However:

                      - with respect to Investment Employees, any profits
                        realized on short term changes in the 401(k) will not
                        have to be disgorged.

                      - changes to existing account balance allocations in the
                        401(k) plan will not be compared to transactions in
                        Mellon securities outside the 401(k) for purposes of the
                        60-day rule. (Note: this does not apply to members of
                        the Executive Management Group, who should consult with
                        the Legal Department.)

                Except for the above there are no other restrictions applicable
                to the 401(k) plan. This means, for example:

                -  Employees are not required to preclear any elections or
                   changes made in their 401(k) account.

                -  There is no restriction on employees' changing their salary
                   deferral contribution percentages with regard to either the
                   blackout period or the 60-day rule.

                -  The regular salary deferral contribution to Mellon Common
                   Stock in the 401(k) that takes place with each pay will not
                   be considered a purchase for the purposes of either the
                   blackout or the 60-day rule.

MELLON          Receipt - Your receipt of an employee stock option from
EMPLOYEE STOCK  Mellon is not deemed to be a purchase of a security.
OPTIONS         Therefore, it is exempt from preclearance and reporting
                requirements, can take place during the blackout period and does
                not constitute a purchase for purposes of the 60-day
                prohibition.

                Exercises - The exercise of an employee stock option that
                results in your holding the shares is exempt from preclearance
                and reporting requirements, can take place during the blackout
                period and does not constitute a purchase for purposes of the
                60-day prohibition.

                "Cashless" Exercises - The exercise of an employee stock option
                which is part of a "cashless exercise" or "netting of shares"
                that is administered by the Human Resources Department or Chase
                Mellon Shareholder Services is exempt from the preclearance and
                reporting requirements and will not constitute a purchase or a
                sale for purposes of the 60-day prohibition. A "cashless

                exercise" or "netting of shares" transaction is permitted during
                the blackout period for ShareSuccess plan options only. They are
                not permitted during the blackout period for any other plan
                options.

                Sales - The sale of the Mellon securities that were received in
                the exercise of an employee stock option is treated like any
                other sale under the Policy (regardless of how little time has
                elapsed between the option exercise and the sale). Thus, such
                sales are subject to the preclearance and reporting
                requirements, are prohibited during the blackout period and
                constitute sales for purposes of the 60-day prohibition.


-----------------------------------------------------------------------------
RESTRICTIONS    Purchases or sales by an employee of the securities of
ON              issuers with which Mellon does business, or other third
TRANSACTIONS    party issuers, could result in liability on the part of
IN OTHER        such employee. Employees should be sensitive to even the
SECURITIES      appearance of impropriety in connection with their personal

securities transactions. Employees should refer to "Beneficial Ownership" below, which is applicable to the following restrictions.

The following restrictions apply to all securities transactions by employees:

- Customer Transactions - Trading for customers and Mellon accounts should always take precedence over employees' transactions for their own or related accounts.

- Initial Public Offerings - Investment Employees are prohibited from acquiring securities through an allocation by the underwriter of an Initial Public Offering (IPO) without the approval of the Manager of Corporate Compliance. Approval can be given only when the allocation comes through an employee of the issuer who is a direct family relation of the Investment Employee. Due to NASD rules, this approval may not be available to employees of registered broker/dealers.

- Material Nonpublic Information - Employees possessing material nonpublic information regarding any issuer of securities must refrain from purchasing or selling securities of that issuer until the information becomes public or is no longer considered material.

- Private Placements - Investment Employees are prohibited from acquiring any security in a private placement unless they obtain the prior written approval of the Manager of Corporate Compliance, the designated Preclearance Compliance Officer and the Investment Employee's department head. Approval must be given by all three persons for the acquisition to be considered approved. After receipt of the necessary approvals and the acquisition, Investment Employees are required to disclose that investment if they participate in any subsequent consideration of credit for the issuer, or of an investment in the issuer for an advised account. Final decision to acquire such securities for an advised account will be subject to independent review.

- Scalping - Employees may not engage in "scalping," that is, the purchase or sale of securities for their own or Mellon's accounts on the basis of knowledge of customers' trading positions or plans.

- Short Term Trading - All Employees are discouraged from purchasing and selling, or from selling and purchasing, the same (or equivalent) securities within any 60 calendar day period. With respect to Investment Employees, any profits realized on such short term trades must be disgorged in accordance with procedures established by senior management. Exception: securities may be sold pursuant to a bona fide tender offer without disgorgement under the 60-day rule.

PROHIBITION ON  You are prohibited from acquiring any security issued by a
INVESTMENTS IN  financial services organization if you are:
SECURITIES OF
FINANCIAL       - a member of the Mellon Senior Management Committee.
SERVICES

ORGANIZATIONS - employed in any of the following departments:

- Corporate Strategy & Development
- Legal (Pittsburgh only)
- Finance (Pittsburgh only)

- an employee specifically designated by the Manager of Corporate Compliance and informed that this prohibition is applicable to you.

Financial Services Organizations - The term "security issued by a financial services organization" includes any security issued by:

                   -Commercial Banks other         -    Thrifts
                    than Mellon                    -    Savings and Loan
                   -Bank Holding Companies              Associations
                    other than Mellon              -    Broker/Dealers

                   -Insurance Companies            -    Transfer Agents
                   -Investment Advisory            -    Other Depository
                    Companies                           Institutions
                   -Shareholder Servicing
                    Companies

                The term "securities issued by a financial services
                organization" DOES NOT INCLUDE securities issued by mutual
                funds, variable annuities or insurance policies. Further, for
                purposes of determining whether a company is a financial
                services organization, subsidiaries and parent companies are
                treated as separate issuers.

                Effective Date - Securities of financial services organizations
                properly acquired before the employee's becoming subject to this
                prohibition may be maintained or disposed of at the owner's
                discretion consistent with this policy.

                Additional securities of a financial services organization
                acquired through the reinvestment of the dividends paid by such
                financial services organization through a dividend reinvestment
                program (DRIP), or through an automatic investment plan (AIP)
                are not subject to this prohibition, provided the employee's
                election to participate in the DRIP or AIP predates the date of
                the employee's becoming subject to this prohibition. Optional
                cash purchases through a DRIP or direct purchase plan (DPP) are
                subject to this prohibition.

                Securities acquired in any account over which an employee has no
                direct or indirect control over the investment decision making
                process (e.g. discretionary trading accounts) are not subject to
                this prohibition.

                Within 30 days of becoming subject to this prohibition, all
                holdings of securities of financial services organizations must
                be disclosed in writing to the Manager of Corporate Compliance.

BENEFICIAL      The provisions of the Policy apply to transactions in the
OWNERSHIP       employee's own name and to all other accounts over which
                the employee could be presumed to exercise influence or
                control, including:

                -  accounts of a spouse, minor children or relatives to
                   whom substantial support is contributed;

                -  accounts of any other member of the employee's
                   household (e.g., a relative living in the same home);

                -  trust or other accounts for which the employee acts
                   as trustee or otherwise exercises any type of guidance
                   or influence;

                -  corporate accounts controlled, directly or
                   indirectly, by the employee;

                -  arrangements similar to trust accounts that are
                   established for bona fide financial purposes and benefit

                   the employee; and

                -  any other account for which the employee is the beneficial
                   owner (see Glossary for a more complete legal definition of
                   "beneficial owner").

NON-MELLON      The provisions discussed above do not apply to transactions
EMPLOYEE        done under a bona fide employee benefit plan administered
BENEFIT PLANS   by an organization not affiliated with Mellon and by an
                employee of that organization who shares beneficial interest
                with a Mellon employee, and in the securities of the employing
                organization. This means if a Mellon employee's spouse is
                employed at a non-Mellon company, the Mellon employee is not
                required to obtain approval for transactions in the employer's
                securities done by the spouse as part of the spouse's employee
                benefit plan.

                The Securities Trading Policy does not apply in such a
                situation. Rather, the other organization is relied upon to
                provide adequate supervision with respect to conflicts of
                interest and compliance with securities laws.

-----------------------------------------------------------------------------
PROTECTING      As an employee you may receive information about Mellon,
CONFIDENTIAL    its customers and other parties that, for various reasons,
INFORMATION     should be treated as confidential.  All employees are
                expected to strictly comply with measures necessary to preserve

the confidentiality of information. Employees should refer to the Mellon Code of Conduct.

INSIDER         Federal securities laws generally prohibit the trading of
TRADING AND     securities while in possession of "material nonpublic"
TIPPING         information regarding the issuer of those securities
                (insider trading). Any person who passes along material
LEGAL           nonpublic information upon which a trade is based (tipping)
PROHIBITIONS    may also be liable.

                Information is "material" if there is a substantial likelihood
                that a reasonable investor would consider it important in
                deciding whether to buy, sell or hold securities. Obviously,
                information that would affect the market price of a security
                would be material. Examples of information that might be
                material include:

                -  a proposal or agreement for a merger, acquisition or
                   divestiture, or for the sale or purchase of substantial
                   assets;

                -  tender offers, which are often material for the party making
                   the tender offer as well as for the issuer of the securities
                   for which the tender offer is made;

                -  dividend declarations or changes;

                -  extraordinary borrowings or liquidity problems;

                -  defaults under agreements or actions by creditors,

                   customers or suppliers relating to a company's credit
                   standing;

                -  earnings and other financial information, such as
                   large or unusual write-offs, write-downs, profits or
                   losses;

                -  pending discoveries or developments, such as new
                   products, sources of materials, patents, processes,
                   inventions or discoveries of mineral deposits;

                -  a proposal or agreement concerning a financial
                   restructuring;

                -  a proposal to issue or redeem securities, or a
                   development with respect to a pending issuance or
                   redemption of securities;

                -  a significant expansion or contraction of operations;

                -  information about major contracts or increases or
                   decreases in orders;

                -  the institution of, or a development in, litigation
                   or a regulatory proceeding;

                -  developments regarding a company's senior management;

                -  information about a company received from a director
                   of that company; and

                -  information regarding a company's possible
                   noncompliance with environmental protection laws.

                This list is not exhaustive. All relevant circumstances must be
                considered when determining whether an item of information is
                material.

                "Nonpublic" - Information about a company is nonpublic if it is
                not generally available to the investing public. Information
                received under circumstances indicating that it is not yet in
                general circulation and which may be attributable, directly or
                indirectly, to the company or its insiders is likely to be
                deemed nonpublic information.

                If you obtain material non-public information you may not trade

related securities until you can refer to some public source to show that the information is generally available (that is, available from sources other than inside sources) and that enough time has passed to allow wide dissemination of the information. While information appearing in widely accessible sources--such as in newspapers or on the internet--becomes public very soon after publication, information appearing in less accessible sources--such as regulatory filings, may take up to several days to be deemed public. Similarly, highly complex information might take longer to become public than would information that is easily understood by the average investor.

MELLON'S        Employees who possess material nonpublic information
POLICY          about a company--whether that company is Mellon, another Mellon
                entity, a Mellon customer or supplier, or other company--may not
                trade in that company's securities, either for their own
                accounts or for any account over which they exercise investment
                discretion. In addition, employees may not recommend trading in
                those securities and may not pass the information along to
                others, except to employees who need to know the information in
                order to perform their job responsibilities with Mellon. These
                prohibitions remain in effect until the information has become
                public.

                Employees who have investment responsibilities should take
                appropriate steps to avoid receiving material nonpublic
                information. Receiving such information could create severe
                limitations on their ability to carry out their responsibilities
                to Mellon's fiduciary customers.

                Employees managing the work of consultants and temporary
                employees who have access to the types of confidential
                information described in this Policy are responsible for
                ensuring that consultants and temporary employees are aware of
                Mellon's policy and the consequences of noncompliance.

                Questions regarding Mellon's policy on material nonpublic
                information, or specific information that might be subject to
                it, should be referred to the General Counsel.

RESTRICTIONS    As a diversified financial services organization, Mellon faces
ON THE FLOW OF  unique challenges in complying with the prohibitions on insider
INFORMATION     trading and tipping of material non-public information, and
WITHIN MELLON   misuse of confidential information. This is because one Mellon
(THE "CHINESE   unit might have material nonpublic information about a company
 WALL")         while other Mellon units may have a desire, or even a fiduciary
                duty, to buy or sell that company's securities or recommend such
                purchases or sales to customers. To engage in such broad-ranging
                financial services activities without violating laws or
                breaching Mellon's fiduciary duties, Mellon has established a
                "Chinese Wall" policy applicable to all employees. The "Chinese
                Wall" separates the Mellon units or individuals that are likely
                to receive material nonpublic information (Potential Insider
                Functions) from the Mellon units or individuals that either
                trade in securities--for Mellon's account or for the accounts of
                others--or provide investment advice (Investment Functions).
                Employees should refer to CPP 903-2(C) The Chinese Wall.

-----------------------------------------------------------------------------
SPECIAL         Certain Portfolio Managers and Research Analysts in the
PROCEDURES FOR  fiduciary businesses have been designated as Access Decision
ACCESS          Makers and are subject to additional procedures which are

DECISION MAKERS discussed in a separate edition of the Securities Trading Policy. If you have reason to believe that you may be an Access Decision Maker, contact your supervisor, designated

Preclearance Compliance Officer or the Manager of Corporate Compliance.

PERSONAL SECURITIES TRADING PRACTICES

SECTION THREE - APPLICABLE TO OTHER EMPLOYEES

CONTENTS

                                                                              Page
PERSONAL SECURITIES TRADING PRACTICES

     SECTION THREE - APPLICABLE TO OTHER EMPLOYEES
               Quick Reference - Other Employees ..........................    33
               Standards of Conduct .......................................    34
                    --Conflict of Interest ................................    34
                    --Material Nonpublic Information ......................    34
                    --Brokers .............................................    34
                    --Personal Securities Transaction Reports .............    34
                    --Brokerage Account Statements ........................    34
                    --Confidential Treatment ..............................    34
               Restrictions on Transactions in Mellon Securities ..........    35
                    --Mellon 401(k) Plan ..................................    36
                    --Mellon Employee Stock Options .......................    36
               Restrictions on Transactions in Other Securities ...........    37
                    --Prohibition on Investments in Securities of .........    38
                        Financial Services Organizations

               Beneficial Ownership .......................................    39
               Non-Mellon Employee Benefit Plans ..........................    39
               Protecting Confidential Information ........................    39
                    --Insider Trading and Tipping .........................    39
                    --The "Chinese Wall" ..................................    41

GLOSSARY       Definitions ................................................    43

               Exhibit A - Sample Letter to Broker ........................    49

QUICK REFERENCE - OTHER EMPLOYEES

SOME THINGS YOU         -       If you buy or sell Mellon Financial Corporation
MUST DO                         securities you must provide a report of the
                                trade and a copy of the broker confirmation
                                within 10 days of transaction to the Manager of
                                Corporate Compliance, AIM 151-4340. This does
                                not apply to the exercise of employee stock
                                options, or changes in elections under Mellon's
                                401(k) Retirement Savings Plan.

                        -       If you want to purchase any security in a
                                Private Placement you must first obtain the
                                approval of your Department/Entity head and the
                                Manager of Corporate Compliance. Contact the
                                Manager of Corporate Compliance at 412-234-0810.

                        -       Acquisition of securities through an allocation
                                by the underwriter of an Initial Public Offering
                                (IPO) is prohibited without the approval of the
                                Manager of Corporate Compliance. Approval can be
                                given only when the allocation is the result of
                                a direct family relationship.

                        -       For Employees who are subject to the prohibition
                                on new investments in financial services
                                organizations (certain employees only - see page
                                38), broker must send directly to MANAGER OF
                                CORPORATE COMPLIANCE, MELLON BANK, PO BOX 3130,
                                PITTSBURGH, PA 15230-3130:

                                -       Broker trade confirmations summarizing
                                        each transaction

                                -       Periodic statements

                                Exhibit A can be used to notify your broker of
                                all accounts for which your broker will be
                                responsible for sending duplicate confirmations
                                and statements.

-----------------------------------------------------------------------
SOME THINGS YOU         Mellon Securities - The following transactions in
MUST NOT DO             Mellon securities are prohibited for all Mellon

employees:

- Short sales

- Purchasing and selling or selling and purchasing within 60 days

- Purchasing or selling during a blackout period

- Margin purchases or options other than employee options.

Non-Mellon Securities

- New investments in financial services organizations (certain employees only - see page 38.)

Other restrictions are detailed throughout Section Three. Read the Policy!

QUESTIONS? (412) 234-1661

This page is for reference purposes only. Employees are reminded they must read the Policy and comply with its provisions.

STANDARDS OF    Every Other Employee must follow these procedures or risk
CONDUCT FOR     serious sanctions, including dismissal. If you have any
THER EMPLOYEES  questions about these procedures you should consult the Manager
                of Corporate Compliance. Interpretive issues that arise under
                these procedures shall be decided by, and are subject to the
                discretion of, the Manager of Corporate Compliance.


CONFLICT OF     No employee may engage in or recommend any securities
INTEREST        transaction that places, or appears to place, his or her
                own interests above those of any customer to whom financial
                services are rendered, including mutual funds and managed
                accounts, or above the interests of Mellon.

MATERIAL        No employee may engage in or recommend a securities
NONPUBLIC       transaction, for his or her own benefit or for the benefit
INFORMATION     of others, including Mellon or its customers, while in
                possession of material nonpublic information regarding such
                securities. No employee may communicate material nonpublic
                information to others unless it is properly within his or her
                job responsibilities to do so.

BROKERS         Trading Accounts - All employees are encouraged to conduct their
                personal investing through a Mellon affiliate brokerage account.

PERSONAL        Other Employees must report in writing to the Manager of
SECURITIES      Corporate Compliance within ten calendar days whenever they
TRANSACTIONS    purchase or sell Mellon securities. Purchases and sales include
REPORTS         optional cash purchases under Mellon's Dividend Reinvestment and
                Common Stock Purchase Plan (the "Mellon DRIP").


                It should be noted that the reinvestment of dividends under the
                DRIP, changes in elections under Mellon's 401(k) Retirement
                Savings Plan, the receipt of stock under Mellon's Restricted
                Stock Award Plan, and the receipt or exercise of options under
                Mellon's employee stock option plans are not considered
                purchases or sales for the purpose of this reporting
                requirement.

BROKERAGE       Certain Other Employees are subject to the restriction on
ACCOUNT         investments in financial services organizations and are
STATEMENTS      required to instruct their brokers to send statements
                directly to Corporate Compliance.  See page 38.

                An example of an instruction letter to a broker is contained in
                Exhibit A.

CONFIDENTIAL    The Manager of Corporate Compliance will use his or her
TREATMENT       best efforts to assure that all personal securities
                transaction reports and all reports of securities holdings are
                treated as "Personal and Confidential." However, such documents
                will be available for inspection by appropriate regulatory
                agencies and by other parties within and outside Mellon as are
                necessary to evaluate compliance with or sanctions under this
                Policy.
--------------------------------------------------------------------------------
RESTRICTIONS    Employees who engage in transactions involving Mellon securities
ON              should be aware of their unique responsibilities with respect to
TRANSACTIONS    such transactions arising from the employment relationship and
IN MELLON       should be sensitive to even the appearance of impropriety.
SECURITIES
                The following restrictions apply to all transactions in Mellon's
                publicly traded securities occurring in the employee's own
                account and in all other accounts over which the employee could
                be expected to exercise influence or control (see provisions
                under "Beneficial Ownership" below for a more complete
                discussion of the accounts to which these restrictions apply).
                These restrictions are to be followed in addition to any
                restrictions that apply to particular officers or directors
                (such as restrictions under Section 16 of the Securities
                Exchange Act of 1934). o Short Sales - Short sales of Mellon
                securities by employees are prohibited.

                -       Short Term Trading - Employees are prohibited from
                        purchasing and selling, or from selling and purchasing
                        Mellon securities within any 60 calendar day period.

                -       Margin Transactions - Purchases on margin of Mellon's
                        publicly traded securities by employees is prohibited.
                        Margining Mellon securities in connection with a
                        cashless exercise of an employee stock option through
                        the Human Resources Department is exempt from this
                        restriction. Further, Mellon securities may be used to
                        collateralize loans or the acquisition of securities
                        other than those issued by Mellon.

                -       Option Transactions - Option transactions involving
                        Mellon's publicly traded securities are prohibited.
                        Transactions under Mellon's Long-Term Incentive Plan or
                        other employee option plans are exempt from this
                        restriction.

                -       Major Mellon Events - Employees who have knowledge of
                        major Mellon events that have not yet been announced are
                        prohibited from buying or selling Mellon's publicly
                        traded securities before such public announcements, even
                        if the employee

                        believes the event does not constitute material
                        nonpublic information.

                -       Mellon Blackout Period - Employees are prohibited from
                        buying or selling Mellon's publicly traded securities
                        during a blackout period. The blackout period begins the
                        16th day of the last month of each calendar quarter and
                        ends 3 business days after Mellon Financial Corporation
                        publicly announces the financial results for that
                        quarter. Thus, the blackout periods begin on March 16,
                        June 16, September 16 and December 16. The end of the
                        blackout period is determined by counting business days
                        only, and the day of the earnings announcement is day 1.
                        The blackout period ends at the end of day 3, and
                        employees can trade Mellon securities on day 4.

MELLON 401(K)   For purposes of the blackout period and the short term
PLAN            trading rule, employees' changing their existing account
                balance allocation to increase or decrease the amount
                allocated to Mellon Common Stock will be treated as a
                purchase or sale of Mellon Stock, respectively. This means:

                -       Employees are prohibited from increasing or decreasing
                        their existing account balance allocation to Mellon
                        Common Stock during the blackout period.

                -       Employees are prohibited from increasing their existing
                        account balance allocation to Mellon Common Stock and
                        then decreasing it within 60 days. Similarly, employees
                        are prohibited from decreasing their existing account
                        balance allocation to Mellon Common Stock and then
                        increasing it within 60 days. However, changes to
                        existing account balance allocations in the 401(k) plan
                        will not be compared to transactions in Mellon
                        securities outside the 401(k) for purposes of the 60-day
                        rule. (Note: this does not apply to members of the
                        Executive Management Group, who should consult with the
                        Legal Department.)

                Except for the above there are no other restrictions applicable
                to the 401(k) plan. This means, for example:

                -       There is no restriction on employees' changing their
                        salary deferral contribution percentages with regard to
                        either the blackout period or the 60-day rule.

                -       The regular salary deferral contribution to Mellon
                        Common Stock in the 401(k) that takes place with each
                        pay will not be considered a purchase for the purposes
                        of either the blackout or the 60-day rule.

MELLON          Receipt - Your receipt of an employee stock option from
EMPLOYEE STOCK  Mellon is not deemed to be a purchase of a security.
OPTIONS         Therefore, it is exempt from reporting requirements, can
                take place during the blackout period and does not constitute a
                purchase for purposes of the 60-day prohibition.

                Exercises - The exercise of an employee stock option that
                results in your holding the shares is exempt from reporting
                requirements, can take place during the blackout period and does
                not constitute a purchase for purposes of the 60-day
                prohibition.

                "Cashless" Exercises - The exercise of an employee stock option
                which is part of a "cashless exercise" or "netting of shares"
                that is administered by the Human Resources Department or Chase
                Mellon Shareholder Services is exempt from the preclearance and
                reporting requirements and will not constitute a purchase or a
                sale for purposes of the 60-day prohibition. A "cashless
                exercise" or "netting of shares" transaction is permitted during
                the blackout period for ShareSuccess plan options only. They are
                not permitted during the blackout period for any other plan
                options.

                Sales - The sale of the Mellon securities that were received in
                the exercise of an employee stock option is treated like any
                other sale under the Policy (regardless of how little time has
                elapsed between the option exercise and the sale). Thus, such
                sales are subject to the reporting requirements, are prohibited
                during the blackout period and constitute sales for purposes of
                the 60-day prohibition.
--------------------------------------------------------------------------------
RESTRICTIONS    Purchases or sales by an employee of the securities of issuers
ON              with which Mellon does business, or other third party issuers,
TRANSACTIONS    could result in liability on the part of such employee.
IN OTHER        Employees should be sensitive to even the appearance of
SECURITIES      impropriety in connection with their personal securities

transactions. Employees should refer to "Beneficial Ownership" below, which is applicable to the following restrictions.

The following restrictions apply to all securities transactions by employees:

                -       Customer Transactions - Trading for customers and Mellon
                        accounts should always take precedence over employees'
                        transactions for their own or related accounts.

                -       Excessive Trading, Naked Options - Mellon discourages
                        all employees from engaging in short-term or speculative
                        trading, in trading naked options, in trading that could
                        be deemed excessive or in trading that could interfere
                        with an employee's job responsibilities.

                -       Front Running - Employees may not engage in "front
                        running," that is, the purchase or sale of securities
                        for their own accounts on the basis of their knowledge
                        of Mellon's trading positions or plans.

                -       Initial Public Offerings - Other Employees are
                        prohibited from acquiring securities through an
                        allocation by the underwriter of an Initial Public
                        Offering (IPO) without the approval of the Manager of
                        Corporate Compliance. Approval can be given only when
                        the allocation comes through an employee of the issuer
                        who is a direct family relation of the Other Employee.
                        Due to NASD rules, this approval may not be available to
                        employees of registered broker/dealers.

                -       Material Nonpublic Information - Employees possessing
                        material nonpublic information regarding any issuer of
                        securities must refrain from purchasing or selling
                        securities of that issuer until the information becomes
                        public or is no longer considered material.

                -       Private Placements - Other Employees are prohibited from
                        acquiring any security in a private placement unless
                        they obtain the prior written approval of the Manager of
                        Corporate Compliance and the employee's department head.
                        Approval must be given by both persons for the
                        acquisition to be considered approved. After receipt of
                        the necessary approvals and the acquisition, employees
                        are required to disclose that investment if they
                        participate in any subsequent consideration of credit
                        for the issuer, or of an investment in the issuer for an
                        advised account. Final decision to acquire such
                        securities for an advised account will be subject to
                        independent review.

                -       Scalping - Employees may not engage in "scalping," that
                        is, the purchase or sale of securities for their own or
                        Mellon's accounts on the basis of knowledge of
                        customers' trading positions or plans.

                -       Short Term Trading - Employees are discouraged from
                        purchasing and selling, or from selling and purchasing,
                        the same (or equivalent) securities within any 60
                        calendar day period.

PROHIBITION ON  You are prohibited from acquiring any security issued by a

INVESTMENTS IN financial services organization if you are:
SECURITIES OF

FINANCIAL - a member of the Mellon Senior Management Committee.
SERVICES
ORGANIZATIONS - employed in any of the following departments:

- Corporate Strategy & Development
- Legal (Pittsburgh only)
- Finance (Pittsburgh only)

- an employee specifically designated by the Manager of Corporate Compliance and informed that this prohibition is applicable to you.

Brokerage Accounts - All employees subject to this restriction on investments in financial services organizations are required to instruct their brokers to submit directly to the Manager of Corporate Compliance copies of all trade confirmations and statements relating to each account of which they are a beneficial owner regardless of what, if any, securities are maintained in such accounts. Thus, for example, even if the brokerage account has no reportable securities traded in it, the employee maintaining such an account must arrange for duplicate account statements and trade confirmations to be sent by the broker to the Manager of Corporate Compliance. An example of an instruction letter to a broker is contained in Exhibit A.

Financial Services Organizations - The term "security issued by a financial services organization" includes any security issued by:

- Commercial Banks other         -  Thrifts
  than Mellon                    -  Savings and Loan
                                    Associations
- Bank Holding Companies
  other than Mellon              -  Broker/Dealers

- Insurance Companies            -  Transfer Agents

- Investment Advisory            -  Other Depository
  Companies                         Institutions

- Shareholder Servicing
  Companies

                the employee's becoming subject to this prohibition. Optional
                cash purchases through a DRIP or direct purchase plan (DPP) are
                subject to this prohibition.

                Securities acquired in any account over which an employee has no
                direct or indirect control over the investment decision making
                process (e.g. discretionary trading accounts) are not subject to
                this prohibition.

                Within 30 days of becoming subject to this prohibition, all
                holdings of securities of financial services organizations must
                be disclosed in writing to the Manager of Corporate Compliance.

BENEFICIAL      The provisions of the Policy apply to transactions in the
OWNERSHIP       employee's own name and to all other accounts over which
                the employee could be presumed to exercise influence or
                control, including:

                -       accounts of a spouse, minor children or relatives to
                        whom substantial support is contributed;

                -       accounts of any other member of the employee's household
                        (e.g., a relative living in the same home);

                -       trust or other accounts for which the employee acts as
                        trustee or otherwise exercises any type of guidance or
                        influence;

                -       corporate accounts controlled, directly or indirectly,
                        by the employee;

                -       arrangements similar to trust accounts that are
                        established for bona fide financial purposes and benefit
                        the employee; and

                -       any other account for which the employee is the
                        beneficial owner (see Glossary for a more complete legal
                        definition of "beneficial owner").

NON-MELLON      The provisions discussed above do not apply to transactions done
EMPLOYEE        under a bona fide employee benefit plan administered by an
BENEFIT PLANS   organization not affiliated with Mellon and by an employee of
                that organization who shares beneficial interest with a Mellon
                employee, and in the securities of the employing organization.
                This means if a Mellon employee's spouse is employed at a
                non-Mellon company, the Mellon employee is not required to
                obtain approval for transactions in the employer's securities
                done by the spouse as part of the spouse's employee benefit
                plan.


                The Securities Trading Policy does not apply in such a
                situation. Rather, the other organization is relied upon to
                provide adequate supervision with respect to conflicts of
                interest and compliance with securities laws.
--------------------------------------------------------------------------------
PROTECTING      As an employee you may receive information about Mellon,

CONFIDENTIAL    its customers and other parties that, for various reasons,
INFORMATION     should be treated as confidential.  All employees are
                expected to strictly comply with measures necessary to preserve

the confidentiality of information. Employees should refer to the Mellon Code of Conduct.

INSIDER         Federal securities laws generally prohibit the trading of
TRADING AND     securities while in possession of "material nonpublic"
TIPPING         information regarding the issuer of those securities
                (insider trading). Any person who passes along material
LEGAL           nonpublic information upon which a trade is based (tipping)
PROHIBITIONS    may also be liable.

                Information is "material" if there is a substantial likelihood
                that a reasonable investor would consider it important in
                deciding whether to buy, sell or hold securities. Obviously,
                information that would affect the market price of a security
                would be material. Examples of information that might be
                material include:

                -       a proposal or agreement for a merger, acquisition or
                        divestiture, or for the sale or purchase of substantial
                        assets;

                -       tender offers, which are often material for the party
                        making the tender offer as well as for the issuer of the
                        securities for which the tender offer is made;

- dividend declarations or changes;

- extraordinary borrowings or liquidity problems;

- defaults under agreements or actions by creditors, customers or suppliers relating to a company's credit standing;

- earnings and other financial information, such as large or unusual write-offs, write-downs, profits or losses;

- pending discoveries or developments, such as new products, sources of materials, patents, processes, inventions or discoveries of mineral deposits;

- a proposal or agreement concerning a financial restructuring;

- a proposal to issue or redeem securities, or a development with respect to a pending issuance or redemption of securities;

- a significant expansion or contraction of operations;

- information about major contracts or increases or decreases in orders;

- the institution of, or a development in, litigation

or a regulatory proceeding;

- developments regarding a company's senior management;

- information about a company received from a director of that company; and

- information regarding a company's possible noncompliance with environmental protection laws.

This list is not exhaustive. All relevant circumstances must be considered when determining whether an item of information is material.

"Nonpublic" - Information about a company is nonpublic if it is not generally available to the investing public. Information received under circumstances indicating that it is not yet in general circulation and which may be attributable, directly or indirectly, to the company or its insiders is likely to be deemed nonpublic information.

If you obtain material non-public information you may not trade related securities until you can refer to some public source to show that the information is generally available (that is, available from sources other than inside sources) and that enough time has passed to allow wide dissemination of the information. While information appearing in widely accessible sources--such as in newspapers or on the internet--becomes public very soon after publication, information appearing in less accessible sources--such as regulatory filings, may take up to several days to be deemed public. Similarly, highly complex information might take longer to become public than would information that is easily understood by the average investor.

MELLON'S POLICY Employees who possess material nonpublic information about a company--whether that company is Mellon, another Mellon entity, a Mellon customer or supplier, or other company--may not trade in that company's securities, either for their own accounts or for any account over which they exercise investment discretion. In addition, employees may not recommend trading in those securities and may not pass the information along to others, except to employees who need to know the information in order to perform their job responsibilities with Mellon. These prohibitions remain in effect until the information has become public.

Employees who have investment responsibilities should take appropriate steps to avoid receiving material nonpublic information. Receiving such information could create severe limitations on their ability to carry out their responsibilities to Mellon's fiduciary customers.

Employees managing the work of consultants and temporary employees who have access to the types of confidential information described in this Policy are responsible for ensuring that consultants and temporary employees are aware of Mellon's policy and the consequences of noncompliance.

                Questions regarding Mellon's policy on material nonpublic
                information, or specific information that might be subject to
                it, should be referred to the General Counsel.

RESTRICTIONS    As a diversified financial services organization, Mellon faces
ON THE          unique challenges in complying with the prohibitions on insider
FLOW OF         trading and tipping of material non-public information, and
INFORMATION     misuse of confidential information. This is because one Mellon
WITHIN MELLON   unit might have material nonpublic information about a company
(THE "CHINESE   while other Mellon units may have a desire, or even a fiduciary
WALL")          duty, to buy or sell that company's securities or recommend such
                purchases or sales to customers. To engage in such broad-ranging
                financial services activities without violating laws or
                breaching Mellon's fiduciary duties, Mellon has established a
                "Chinese Wall" policy applicable to all employees. The "Chinese
                Wall" separates the Mellon units or individuals that are likely
                to receive material nonpublic information (Potential Insider
                Functions) from the Mellon units or individuals that either
                trade in securities--for Mellon's account or for the accounts of
                others--or provide investment advice (Investment Functions).

Employees should refer to CPP 903-2(C) The Chinese Wall.

GLOSSARY

DEFINITIONS     -       40-ACT ENTITY - A Mellon entity registered under the
                        Investment Company Act and/or the Investment Advisers
                        Act of 1940

                -       ACCESS DECISION MAKER - A person designated as such by
                        the Investment Ethics Committee. Generally, this will be
                        portfolio managers and research analysts who make
                        recommendations or decisions regarding the purchase or
                        sale of equity, convertible debt, and non-investment
                        grade debt securities for investment companies and other
                        managed accounts. See further details in the Access
                        Decision Maker edition of the Policy.

                -       ACCESS PERSON - As defined by Rule 17j-1 under the
                        Investment Company Act of 1940, "access person" means:

                        (A)     With respect to a registered investment company
                                or an investment adviser thereof, any director,
                                officer, general partner, or advisory person
                                (see definition below), of such investment
                                company or investment adviser;

                        (B)     With respect to a principal underwriter, any
                                director, officer, or general partner of such
                                principal underwriter who in the ordinary course
                                of his business makes, participates in or
                                obtains information regarding the purchase or
                                sale of securities for the registered investment
                                company

                                for which the principal underwriter so acts, or
                                whose functions or duties as part of the
                                ordinary course of his business relate to the
                                making of any recommendations to such investment
                                company regarding the purchase or sale of
                                securities.

                        (C)     Notwithstanding the provisions of paragraph (A)
                                hereinabove, where the investment adviser is
                                primarily engaged in a business or businesses
                                other than advising registered investment
                                companies or other advisory clients, the term
                                "access person" shall mean: any director,
                                officer, general partner, or advisory person of
                                the investment adviser who, with respect to any
                                registered investment company, makes any
                                recommendations, participates in the
                                determination of which recommendation shall be
                                made, or whose principal function or duties
                                relate to the determination of which
                                recommendation will be made, to any such
                                investment company; or who, in connection with
                                his duties, obtains any information concerning
                                securities recommendations being made by such
                                investment adviser to any registered investment
                                company.

                        (D)     An investment adviser is "primarily engaged in a
                                business or businesses other than advising
                                registered investment companies or other
                                advisory clients" when, for each of its most
                                recent three fiscal years or for the period of
                                time since its organization, whichever is less,
                                the investment adviser derived, on an
                                unconsolidated basis, more than 50 percent of
                                (i) its total sales and revenues, and (ii) its
                                income (or loss) before income taxes and
                                extraordinary items, from such other business or
                                businesses.

                -       ADVISORY PERSON of a registered investment company or an
                        investment adviser thereof means:

                        (A)     Any employee of such company or investment
                                adviser (or any company in a control
                                relationship to such investment company or
                                investment adviser) who, in connection with his
                                regular functions or duties, makes, participates
                                in, or obtains information regarding the
                                purchase or sale of a security by a registered
                                investment company, or whose functions relate to
                                the making of any recommendation with respect to
                                such purchases or sales; and

                        (B)     Any natural person in a control relationship to
                                such company or investment adviser who obtains
                                information concerning recommendations made to
                                such company with regard to the purchase or sale
                                of a security.

                -       APPROVAL - written consent or written notice of
                        non-objection.

                -       BENEFICIAL OWNERSHIP - The definition that follows
                        conforms to interpretations of the Securities and
                        Exchange Commission on this matter. Because a
                        determination of beneficial

                        ownership requires a detailed analysis of personal
                        financial circumstances that are subject to change,
                        Corporate Compliance ordinarily will not advise
                        employees on this definition. It is the responsibility
                        of each employee to read the definition and based on
                        that definition, determine whether he/she is the
                        beneficial owner of an account. If the employee
                        determines that he/she is not a beneficial owner of an
                        account and Corporate Compliance becomes aware of the
                        existence of the account, the employee will be
                        responsible for justifying his/her determination.

                        Securities owned of record or held in the employee's
                        name are generally considered to be beneficially owned
                        by the employee.

                        Securities held in the name of any other person are
                        deemed to be beneficially owned by the employee if by
                        reason of any contract, understanding, relationship,
                        agreement or other arrangement, the employee obtains
                        therefrom benefits substantially equivalent to those of
                        ownership, including the power to vote, or to direct the
                        disposition of, such securities. Beneficial ownership
                        includes securities held by others for the employee's
                        benefit (regardless of record ownership), e.g.,
                        securities held for the employee or members of the
                        employee's immediate family, defined below, by agents,
                        custodians, brokers, trustees, executors or other
                        administrators; securities owned by the employee, but
                        which have not been transferred into the employee's name
                        on the books of the company; securities which the
                        employee has pledged; or securities owned by a
                        corporation that should be regarded as the employee's
                        personal holding corporation. As a natural person,
                        beneficial ownership is deemed to include securities
                        held in the name or for the benefit of the employee's
                        immediate family, which includes the employee's spouse,
                        the employee's minor children and stepchildren and the
                        employee's relatives or the relatives of the employee's
                        spouse who are sharing the employee's home, unless
                        because of countervailing circumstances, the employee
                        does not enjoy benefits substantially equivalent to
                        those of ownership. Benefits substantially equivalent to
                        ownership include, for example, application of the
                        income derived from such securities to maintain a common
                        home, meeting expenses that such person otherwise would
                        meet from other sources, and the ability to exercise a
                        controlling influence over the purchase, sale or voting
                        of such securities. An employee is also deemed the
                        beneficial owner of securities held in the name of some
                        other person, even though the employee does not obtain
                        benefits of ownership, if the employee can vest or
                        revest title in himself at once, or at some future time.

                        In addition, a person will be deemed the beneficial
                        owner of a security if he has the right to acquire
                        beneficial ownership of such security at any time
                        (within 60 days) including but not limited to any right
                        to acquire: (1) through the exercise of any option,
                        warrant or right; (2) through the conversion of a
                        security; or (3) pursuant to the power to revoke a
                        trust, discretionary account or similar

                        arrangement.

                        With respect to ownership of securities held in trust,
                        beneficial ownership includes ownership of securities as
                        a trustee in instances where either the employee as
                        trustee or a member of the employee's "immediate family"
                        has a vested interest in the income or corpus of the
                        trust, the ownership by the employee of a vested
                        beneficial interest in the trust and the ownership of
                        securities as a settlor of a trust in which the employee
                        as the settlor has the power to revoke the trust without
                        obtaining the consent of the beneficiaries. Certain
                        exemptions to these trust beneficial ownership rules
                        exist, including an exemption for instances where
                        beneficial ownership is imposed solely by reason of the
                        employee being settlor or beneficiary of the securities
                        held in trust and the ownership, acquisition and
                        disposition of such securities by the trust is made
                        without the employee's prior approval as settlor or
                        beneficiary. "Immediate family" of an employee as
                        trustee means the employee's son or daughter (including
                        any legally adopted children) or any descendant of
                        either, the employee's stepson or stepdaughter, the
                        employee's father or mother or any ancestor of either,
                        the employee's stepfather or stepmother and the
                        employee's spouse.

                        To the extent that stockholders of a company use it as a
                        personal trading or investment medium and the company
                        has no other substantial business, stockholders are
                        regarded as beneficial owners, to the extent of their
                        respective interests, of the stock thus invested or
                        traded in. A general partner in a partnership is
                        considered to have indirect beneficial ownership in the
                        securities held by the partnership to the extent of his
                        pro rata interest in the partnership. Indirect
                        beneficial ownership is not, however, considered to
                        exist solely by reason of an indirect interest in
                        portfolio securities held by any holding company
                        registered under the Public Utility Holding Company Act
                        of 1935, a pension or retirement plan holding securities
                        of an issuer whose employees generally are beneficiaries
                        of the plan and a business trust with over 25
                        beneficiaries.

                        Any person who, directly or indirectly, creates or uses
                        a trust, proxy, power of attorney, pooling arrangement
                        or any other contract, arrangement or device with the
                        purpose or effect of divesting such person of beneficial
                        ownership as part of a plan or scheme to evade the
                        reporting requirements of the Securities Exchange Act of
                        1934 shall be deemed the beneficial owner of such
                        security.

                        The final determination of beneficial ownership is a
                        question to be determined in light of the facts of a
                        particular case. Thus, while the employee may include
                        security holdings of other members of his family, the
                        employee may nonetheless disclaim beneficial ownership
                        of such securities.

                -       "CHINESE WALL" POLICY - procedures designed to restrict
                        the flow of information within Mellon from units or
                        individuals

                        who are likely to receive material nonpublic information
                        to units or individuals who trade in securities or
                        provide investment advice.

                -       DIRECT FAMILY RELATION - employee's husband, wife,
                        father, mother, brother, sister, daughter or son.
                        Includes the preceding plus, where appropriate, the
                        following prefixes/suffix: grand-, step-, foster-, half-
                        and -in-law.

                -       DISCRETIONARY TRADING ACCOUNT - an account over which
                        the employee has no direct or indirect control over the
                        investment decision making process.

                -       EMPLOYEE - any employee of Mellon Financial Corporation
                        or its more-than-50%-owned direct or indirect
                        subsidiaries; includes all full-time, part-time,
                        benefited and non-benefited, exempt and non-exempt,
                        domestic and international employees; does not include
                        consultants and contract or temporary employees

                -       EXEMPT SECURITIES - Exempt Securities are defined as:

                        -       direct obligations of the government of the
                                United States;

- high quality short-term debt instruments;

- bankers' acceptances;

- bank certificates of deposit and time deposits;

- commercial paper;

- repurchase agreements;

- securities issued by open-end investment companies;

- FAMILY RELATION - see direct family relation.

- GENERAL COUNSEL - General Counsel of Mellon Financial Corporation or any person to whom relevant authority is delegated by the General Counsel.

- INDEX FUND - an investment company or managed portfolio which contains securities of an index in proportions designed to replicate the return of the index.

- INITIAL PUBLIC OFFERING (IPO) - the first offering of a company's securities to the public through an allocation by the underwriter.

- INVESTMENT CLUB - is a membership organization where investors make joint decisions on which securities to buy or sell. The securities are generally held in the name of the investment club. Since each member of an investment club participates in the investment decision making process,

Insider Risk Employees, Investment Employees and Access Decision Makers belonging to such investment clubs must preclear and report the securities transactions contemplated by such investment clubs. In contrast, a private investment company is an organization where the investor invests his/her money, but has no direct control over the way his/her money is invested. Insider Risk Employees, Investment Employees and Access Decision Makers investing in such a private investment company are not required to preclear any of the securities transactions made by the private investment company. Insider Risk Employees, Investment Employees and Access Decision Makers are required to report their investment in a private investment company to the Manager of Corporate Compliance and certify to the Manager of Corporate Compliance that they have no direct control over the way their money is invested.

- INVESTMENT COMPANY - a company that issues securities that represent an undivided interest in the net assets held by the company. Mutual funds are investment companies that issue and sell redeemable securities representing an undivided interest in the net assets of the company.

- INVESTMENT ETHICS COMMITTEE is composed of investment, legal, compliance, and audit management representatives of Mellon and its affiliates. The members of the Investment Ethics Committee are:

President and Chief Investment Officer of The Dreyfus Corporation (Committee Chair) General Counsel, Mellon Financial Corporation Chief Risk Management Officer, Mellon Trust Manager of Corporate Compliance, Mellon Financial Corporation Corporate Chief Auditor, Mellon Financial Corporation Chief Investment Officer, Mellon Private Asset Management Executive Officer of a Mellon investment adviser (rotating membership)

The Committee has oversight of issues related to personal securities trading and investment activity by Access Decision Makers.

- MANAGER OF CORPORATE COMPLIANCE - the employee within the Audit and Risk Review Department of Mellon Financial Corporation who is responsible for administering the Securities Trading Policy, or any person to whom relevant authority is delegated by the Manager of Corporate Compliance.

- MELLON - Mellon Financial Corporation and all of its direct and indirect subsidiaries.

- OPTION - a security which gives the investor the right, but not the obligation, to buy or sell a specific security at a specified price within a specified time. For purposes of compliance with the Policy, any Mellon employee who buys/sells an option, is deemed to have purchased/sold the underlying security when the option was purchased/sold. Four combinations are possible as described below.

Call Options

If a Mellon employee buys a call option, the employee is considered to have purchased the underlying security on the date the option was purchased.

If a Mellon employee sells a call option, the employee is considered to have sold the underlying security on the date the option was sold.

Put Options

If a Mellon employee buys a put option, the
employee is considered to have sold the
underlying security on the date the option was
purchased.

If a Mellon employee sells a put option, the employee is considered to have bought the underlying security on the date the option was sold.

Below is a table describing the above:

         ------------------------------------------------
                        Transaction Type
         ------------------------------------------------
---------------------------------------------------------
Option             Buy                     Sale
  Type
---------------------------------------------------------
---------------------------------------------------------
  Put       Sale of Underlying         Purchase of
                 Security          Underlying Security
---------------------------------------------------------
---------------------------------------------------------
  Call    Purchase of Underlying    Sale of Underlying
                 Security                Security
---------------------------------------------------------

- PRECLEARANCE COMPLIANCE OFFICER - a person designated by the Manager of Corporate Compliance and/or the Investment Ethics Committee to administer, among other things, employees' preclearance requests for a specific business unit.

- PRIVATE PLACEMENT - an offering of securities that is exempt from registration under the Securities Act of 1933 because it does not constitute a public offering. Includes limited partnerships.

- SENIOR MANAGEMENT COMMITTEE - the Senior Management Committee of Mellon Financial Corporation.

- SHORT SALE - the sale of a security that is not owned by the seller at the time of the trade.

EXHIBIT A - SAMPLE INSTRUCTION LETTER TO BROKER

Date

Broker ABC
Street Address
City, State ZIP

Re: John Smith & Mary Smith
Account No. xxxxxxxxxxxx

In connection with my existing brokerage accounts at your firm noted above, please be advised that the Compliance Department of my employer should be noted as an "Interested Party" with respect to my accounts. They should, therefore, be sent copies of all trade confirmations and account statements relating to my account.

Please send the requested documentation ensuring the account holder's name appears on all correspondence to:

Manager, Corporate Compliance          Preclearance Compliance Officer
Mellon Bank                       or   (obtain address from your
PO Box 3130 Pittsburgh, PA             designated Preclearance
15230-3130                             Compliance Officer)

Thank you for your cooperation in this request.

Sincerely yours,

Employee

cc: Manager, Corporate Compliance (151-4340) or Preclearance Compliance Officer

MELLON

SECURITIES TRADING POLICY

ACCESS DECISION MAKER EDITION

QUICK REFERENCE - ACCESS DECISION MAKERS

SOME THINGS     1.      Statement of Holdings - Provide to your Preclearance
YOU MUST DO             Compliance Officer a statement of all securities
                        holdings within 10 days of becoming an ADM, and within
                        30 days after every quarter-end thereafter.

2. Duplicate Statements & Confirmations - Instruct your broker, trust account manager or other entity through which you have a securities trading account to send directly to Compliance:

- Trade confirmations summarizing each transaction

- Periodic statements

Exhibit A can be used to notify your broker. Contact your designated Preclearance Compliance Officer for the correct address. This applies to all accounts in which you have a beneficial interest.

- delivering or faxing the request to the designated Preclearance Compliance Officer, or

- contacting the designated Preclearance Compliance Officer for other available notification options.

4. Contemporaneous Disclosure - ADMs must obtain written authorization from the ADM's CIO or other Investment Ethics Committee designee prior to making or acting upon a portfolio recommendation in a security which they own personally.

5. Private Placements - Purchases must be precleared by the Investment Ethics Committee. Prior holdings must be approved by the Investment Ethics Committee within 90 days of becoming an ADM. To initiate preclearance or approval, contact the Manager of Corporate Compliance.

6. IPOs - Acquisition of securities through an allocation by the underwriter of an Initial Public Offering (IPO) is prohibited without the approval of the Manager of Corporate Compliance.

                        Approval can be given only when the allocation is the
                        result of a direct family relationship.

                7.      Micro-Cap Securities - MCADMs are prohibited from
                        purchasing any security of an issuer with a common
                        equity market capitalization of $100 million or less at
                        the time of acquisition unless approved by the
                        Investment Ethics Committee. MCADMs must obtain on their
                        Preclearance Request Forms the written authorization of
                        their immediate supervisor and their Chief Investment
                        Officer prior to trading any security of an issuer with
                        a common equity market capitalization of more than $100
                        million but less than or equal to $250 million at the
                        time of trade. Any prior holding of such securities must
                        be approved by the CIO.

-----------------------------------------------------------------------------
SOME THINGS     Mellon Securities - The following transactions in Mellon
YOU MUST NOT    securities are prohibited for all Mellon employees:
DO

- Short sales

- Purchasing and selling or selling and purchasing within 60 days

- Purchasing or selling during a blackout period o Margin purchases or options other than employee options.

Non-Mellon Securities

- Portfolio Managers are prohibited from purchasing/selling 7 days before or after a fund or other advised account transaction.

- For all ADMs, purchasing and selling or selling and purchasing the same or equivalent security within 60 days is discouraged, and any profits must be disgorged.

Other restrictions are detailed throughout the Policy. Read the

                ------------------                                     ========
                Policy!
                =======

===============================================================================

EXEMPTIONS      Preclearance is NOT required for certain other types of
                transactions, and transactions in certain other types of
                securities. See pages 6 & 7.

QUESTIONS? Contact your designated Preclearance Compliance Officer. If you don't know who that is, call 412-234-1661

This page is for reference purposes only. Employees are reminded they must read the Policy and comply with its provisions.

Dear Colleague:

At Mellon, we take great pride in our transformation over the years from a regional bank to a global financial services company. Our growth makes us better

able to meet customers' changing needs, gives us greater stability during any unexpected economic downturn and affords us the opportunity to be the best performing financial services company.

This diversity of our businesses also makes us a complex organization, which is why it's more important than ever that you clearly understand Mellon's SECURITIES TRADING POLICY. Mellon has long maintained strict policies regarding securities transactions, all with the same clear-cut objective: to establish and demonstrate our compliance with the high standards with which we conduct our business.

If you are new to Mellon, please take the time to fully understand the POLICY and consult it whenever you are unsure about appropriate actions. If you have seen the POLICY previously, I urge you to renew your understanding of the entire document and its implications for you. Only by strict adherence to the POLICY can we ensure that our well-deserved reputation for integrity is preserved.

Sincerely yours,

Martin G. McGuinn

Questions Concerning the Securities Trading Policy? Contact Corporate Compliance, (412) 234-1661 AIM 151-4340, Mellon Bank, Pittsburgh, PA 15258-0001

CONTENTS

                                                                                PAGE

INTRODUCTION .................................................................   1

               Purpose .......................................................   1

CLASSIFICATION OF EMPLOYEES ..................................................   2

               The Investment Ethics Committee ...............................   2

PERSONAL SECURITIES TRADING PRACTICES ........................................   3

               Standards of Conduct for Access Decision Makers ...............   3
                   Conflict of Interest ......................................   3
                   Material Nonpublic Information ............................   3
                   Brokers ...................................................   3
                   Personal Securities Transaction Reports ...................   3
                   Statement of Securities Accounts and Holdings .............   4
                   Quarterly Reporting .......................................   4
                   Preclearance for Personal Securities Transactions .........   4
                   Contemporaneous Disclosure ................................   5
                   Blackout Policy ...........................................   6
                   Exemptions from Requirement to Preclear ...................   6
                   Gifting of Securities .....................................   7

                   DRIPs, DPPs, and AIPs .....................................   7
                   Restricted List ...........................................   7
                   Confidential Treatment ....................................   8
               Restrictions on Transactions in Mellon Securities .............   9
                   Mellon 401(k) Plan ........................................   9
                   Mellon Employee Stock Options ............................   10
               Restrictions on Transactions in Other Securities .............   11
                   Initial Public Offerings .................................   11
                   Micro-Cap Securities .....................................   11
                   Private Placements .......................................   12
                   Prohibition on Investments in Securities of
                   Financial Services Organizations .........................   13
                   Beneficial Ownership .....................................   14
                   Non-Mellon Employee Benefit Plans ........................   14
               Protecting Confidential Information ..........................   15
                   Insider Trading and Tipping - Legal Prohibitions .........   15
                   Insider Trading and Tipping - Mellon's Policy ............   16
                   The "Chinese Wall" .......................................   16

GLOSSARY       Definitions ..................................................   17

               Exhibit A - Sample Letter to Broker ..........................   23

INTRODUCTION    The SECURITIES TRADING POLICY (the "Policy") is designed to
                reinforce Mellon Financial Corporation's ("Mellon's") reputation
                for integrity by avoiding even the appearance of impropriety in
                the conduct of Mellon's business. The Policy sets forth
                procedures and limitations which govern the personal securities
                transactions of every Mellon Employee.

                Mellon and its employees are subject to certain laws and
                regulations governing personal securities trading. Mellon has
                developed this Policy to promote the highest standards of
                behavior and ensure compliance with applicable laws.

                Employees should be aware that they may be held personally
                liable for any improper or illegal acts committed during the
                course of their employment, and that "ignorance of the law" is
                not a defense. Employees may be subject to civil penalties such
                as fines, regulatory sanctions including suspensions, as well as
                criminal penalties.

                Employees outside the United States are also subject to
                applicable laws of foreign jurisdictions, which may differ
                substantially from US law and which may subject such employees
                to additional requirements. Such employees must comply with
                applicable requirements of pertinent foreign laws as well as
                with the provisions of the Policy. To the extent any particular
                portion of the Policy is inconsistent with foreign law,
                employees should consult the General Counsel or the Manager of

                Corporate Compliance.

                Any provision of this Policy may be waived or exempted at the
                discretion of the Manager of Corporate Compliance. Any such
                waiver or exemption will be evidenced in writing and maintained
                in the Audit and Risk Review Department.

                Employees must read the Policy and must comply with it. Failure
                to comply with the provisions of the Policy may result in the
                imposition of serious sanctions, including but not limited to
                disgorgement of profits, dismissal, substantial personal
                liability and referral to law enforcement agencies or other
                regulatory agencies. Employees should retain the Policy in their
                records for future reference. Any questions regarding the Policy
                should be referred to the Manager of Corporate Compliance or
                his/her designee.

SPECIAL EDITION This edition of the SECURITIES TRADING POLICY has been
                prepared especially for Access Decision Makers. If you believe
                you are not an Access Decision Maker, please contact your
                supervisor, designated Preclearance Compliance Officer or the
                Manager of Corporate Compliance to obtain the standard edition
                of the Policy.

PURPOSE         It is imperative that Mellon and its affiliates avoid even
                the appearance of a conflict between the personal
                securities trading of its employees and its fiduciary
                duties to investment companies and managed account
                clients.  Potential conflicts of interest are most acute
                with respect to personal securities trading by those
                employees most responsible for directing managed fund and
                account trades: portfolio managers and research analysts.
                In order to avoid even the appearance of impropriety, an
                Investment Ethics Committee has been formed.  The
                Committee, in turn, has established the following practices
                which apply to Access Decision Makers.  These practices do
                not limit the authority of any Mellon affiliate to impose
                additional restrictions or limitations.

CLASSIFICATION  Employees are engaged in a wide variety of activities for
OF EMPLOYEES    Mellon.  In light of the nature of their activities and the
                impact of federal and state laws and the regulations thereunder,
                the Policy imposes different requirements and limitations on
                employees based on the nature of their activities for Mellon. To
                assist the employees in complying with the requirements and
                limitations imposed on them in light of their activities,
                employees are classified into one or both of the following
                categories: Access Decision Maker and Micro-Cap Access Decision
                Maker. Appropriate requirements and limitations are specified in
                the Policy based upon the employee's classification.

                The Investment Ethics Committee will determine the
                classification of each employee based on the following
                guidelines.

ACCESS DECISION A person designated as such by the Investment Ethics Committee.
MAKER (ADM)     Generally, this will be portfolio managers and research
                analysts who make recommendations or decisions regarding the
                purchase or sale of equity, convertible debt, and non-investment
                grade debt securities for mutual funds and other managed
                accounts. Portfolio managers in Mellon Private Capital
                Management are generally ADMs; other personal trust officers are
                generally not ADMs unless the investment discretion they
                exercise warrants ADM designation. Traders are not ADMs.
                Portfolio managers of funds which are limited to replicating an
                index are not ADMs.

MICRO-CAP       An ADM designated as such by the Investment Ethics Committee.
ACCESS          Generally, this will be ADMs who make recommendations or
DECISION        decisions regarding the purchase or sale of any security of an
MAKERS MCADM)   issuer with a common equity market capitalization equal to or
                less than two-hundred fifty million dollars.

                MCADMs are also ADMs.

CONSULTANTS,    Managers should inform consultants, independent contractors and
INDEPENDENT     temporary employees of the general provisions of the Policy
CONTRACTORS     (such as the prohibition on trading while in possession of
AND             material nonpublic information), but generally they will not be
TEMPORARY       required to preclear trades or report their personal securities
EMPLOYEES       holdings. If one of these persons would be considered an ADM if
                the person were a Mellon employee, the person's manager should
                advise the Manager of Corporate Compliance who will determine
                whether such individual should be subject to the preclearance

THE INVESTMENT  The Investment Ethics Committee is composed of investment,
ETHICS          legal, compliance, and audit management representatives of
COMMITTEE       Mellon and its affiliates.

                The chief executive officer, senior investment officer and the
                Preclearance Compliance Officer at each Mellon investment
                affiliate, working together, will be designees of the Investment
                Ethics Committee. The Investment Ethics Committee will meet
                periodically to review the actions taken by its designees and to
                consider issues related to personal securities trading and
                investment activity by ADMs.

Personal Securities Trading Practices

STANDARDS OF    Because of their particular responsibilities, ADMs
CONDUCT FOR     are subject to preclearance and personal securities
ACCESS          reporting requirements, as discussed below.

DECISION        Every ADM must follow these procedures or risk serious
MAKERS          sanctions, including dismissal. If you have any questions about
                these procedures you should consult the Manager of Corporate
                Compliance or your Preclearance Compliance Officer. Interpretive
                issues that arise under these procedures shall be decided by,
                and are subject to the discretion of, the Manager of Corporate
                Compliance.



CONFLICT OF     No employee may engage in or recommend any securities
INTEREST        transaction that places, or appears to place, his or her own
                interests above those of any customer to whom financial services
                are rendered, including mutual funds and managed accounts, or
                above the interests of Mellon.

MATERIAL        No employee may divulge the current portfolio positions, or
NONPUBLIC       current or anticipated portfolio transactions, programs or
INFORMATION     studies, of Mellon or any Mellon customer to anyone unless it
                is properly within his or her job responsibilities to do so.

                No employee may engage in or recommend a securities transaction,
                for his or her own benefit or for the benefit of others,
                including Mellon or its customers, while in possession of
                material nonpublic information regarding such securities. No
                employee may communicate material nonpublic information to
                others unless it is properly within his or her job
                responsibilities to do so.

BROKERS         Trading Accounts - All ADMs are encouraged to conduct their
                personal investing through a Mellon affiliate brokerage account.
                This will assist in the monitoring of account activity on an
                ongoing basis in order to ensure compliance with the Policy.

PERSONAL        Statements & Confirmations - All ADMs are required to instruct
SECURITIES      their broker, trust account manager or other entity through
TRANSACTIONS    which they have a securities trading account to submit
REPORTS         directly to the Manager of Corporate Compliance or designated

                Preclearance Compliance Officer copies of all trade
                confirmations and statements relating to each account of which
                they are a beneficial owner regardless of what, if any,
                securities are maintained in such accounts. Thus, for example,
                even if the brokerage account contains only mutual funds or
                other Exempt Securities as that term is defined in the glossary
                and the account has the capability to have reportable securities
                traded in it, the ADM maintaining such an account must arrange
                for duplicate account statements and trade confirmations to be
                sent by the broker to the Manager of Corporate Compliance or
                designated Preclearance Compliance Officer. Exhibit A is an
                example of an instruction letter to a broker.

                Other securities transactions which were not completed through a
                brokerage account, such as gifts, inheritances, spin-offs from
                securities held outside brokerage accounts, or other transfers
                must be reported to the designated Preclearance Compliance
                Officer within 10 days.

STATEMENT OF       Within ten days of becoming an ADM and on an annual basis
SECURITIES         thereafter, all ADMs must submit to their designated
ACCOUNTS           Preclearance Compliance Officer:
AND HOLDINGS
                   - a listing of all securities trading accounts in which the
                     employee has a beneficial interest.

                   - a statement of all securities in which they presently have
                     any direct or indirect beneficial ownership other than
                     Exempt Securities.

                   The annual report must be completed upon the request of
                   Corporate Compliance, and the information submitted must be
                   current within 30 days of the date the report is submitted.
                   The annual statement of securities holdings contains an
                   acknowledgment that the ADM has read and complied with this
                   Policy.

QUARTERLY          ADMs are required to submit quarterly to their Preclearance
REPORTING          Compliance Officer the Quarterly Securities Report. This
                   report must be submitted within 30 days of each quarter end
                   and includes information on:

                   - securities beneficially owned at any time during the
                     quarter which were also either recommended for a
                     transaction or in the portfolio managed by the ADM during
                     the quarter.

                   - positions obtained in private placements.

                   - securities of issuers with a common equity market
                     capitalization of $250 million or less at security
                     acquisition or at the date designated by the Preclearance
                     Compliance Officer, whichever is later, which were
                     beneficially owned at any time during the quarter.

                   - Securities transactions which were not completed through a
                     brokerage account, such as gifts inheritances, spin-offs
                     from securities held outside brokerage accounts, or other
                     transfers.

                   A form for making this report can be obtained from your
                   designated Preclearance Compliance Officer or from the
                   Securities Trading Site on the Mellon intranet.

PRECLEARANCE       All ADMs must notify the designated Preclearance Compliance
FOR PERSONAL       Officer in writing and receive preclearance before they
SECURITIES         engage in any purchase or sale of a security for their own
TRANSACTIONS       accounts. ADMs should refer to the provisions under
                   "Beneficial Ownership" below, which are applicable to these
                   provisions.

                   All requests for preclearance for a securities transaction
                   shall be submitted by completing a Preclearance Request
                   Form which can be obtained from the designated Preclearance
                   Compliance Officer.

                   The designated Preclearance Compliance Officer will notify
                   the

                   ADM whether the request is approved or denied, without
                   disclosing the reason for such approval or denial.

                   Notifications may be given in writing or verbally by the
                   designated Preclearance Compliance Officer to the ADM. A
                   record of such notification will be maintained by the
                   designated Preclearance Compliance Officer. However, it
                   shall be the responsibility of the ADM to obtain a written
                   record of the designated Preclearance Compliance Officer's
                   notification within 48 hours of such notification. The ADM
                   should retain a copy of this written record for at least
                   two years.

                   As there could be many reasons for preclearance being
                   granted or denied, ADMs should not infer from the
                   preclearance response anything regarding the security for
                   which preclearance was requested.

                   Although making a preclearance request does not obligate an
                   ADM to do the transaction, it should be noted that:

                   - Preclearance requests should not be made for a transaction
                     that the ADM does not intend to make.

                   - The order for a transaction must be placed with the broker
                     on the same day that preclearance authorization is
                     received. The broker must execute the trade by 4:00 p.m.
                     Eastern Time on the next business day, at which time the
                     preclearance authorization will expire.

                   - ADMs should not discuss with anyone else, inside or outside
                     Mellon, the response they received to a preclearance
                     request. If the ADM is preclearing as beneficial owner of
                     another's account, the response may be disclosed to the
                     other owner.

                   - Good Until Canceled/Stop Loss Orders ("Limit Orders") must
                     be precleared, and security transactions receiving
                     preclearance authorization must be executed before the
                     preclearance expires. At the end of the preclearance
                     authorization period, any unexecuted Limit Order must be
                     canceled or a new preclearance authorization must be
                     obtained. There are additional pre-approval requirements
                     for initial public offerings, micro-cap securities and
                     private placements. See page 11.

CONTEMPORANEOUS    ADMs must obtain written authorization prior to making or
DISCLOSURE         acting upon a portfolio recommendation in a security which
                   they own personally. This authorization must be obtained
                   from the ADM's CIO/CEO or other Investment Ethics Committee
                   designee immediately prior to the first such portfolio
                   recommendation in a particular security in a calendar
                   month. The following personal securities holdings are
                   exempt from the requirement to obtain written authorization
                   immediately preceding a portfolio recommendation or
                   transaction:

                   - Exempt Securities (see glossary).

                   - Securities held in accounts over which the ADM has no

                     investment discretion, which are professionally managed by
                     a non-family member, and where the ADM has no actual
                     knowledge that such account is currently holding the same
                     or equivalent security at the time of the portfolio
                     recommendation.

                   - Personal holdings of equity securities of the top 200
                     issuers on the Russell list of largest publicly traded
                     companies.

                   - Personal equity holdings of securities of non-US issuers
                     with a common equity market capitalization of $20 billion
                     or more.

                   - Personal holdings of debt securities which do not have a
                     conversion feature and are rated BBB or better.

                   - Personal holdings of ADMs who are index fund managers and
                     who have no investment discretion in replicating an index.

                   - Personal holdings of Portfolio Managers in Mellon Private
                     Capital Management and Mellon Private Asset Management if
                     the Portfolio Manager exactly replicates the model or clone
                     portfolio. A disclosure form is required if the Portfolio
                     Manager recommends securities which are not in the clone or
                     model portfolio or recommends a model or clone security in
                     a different percentage than model or clone amounts.
                     Disclosure forms are also required when the Portfolio
                     Manager recommends individual securities to clients, even
                     if Mellon shares control of the investment process with
                     other parties.

                   If a personal securities holding does not fall under one of
                   these exemptions, the ADM must complete and forward a
                   disclosure form for authorization by the CIO/CEO or designee,
                   immediately prior to the first recommendation or transaction
                   in the security in the current calendar month. Disclosure
                   forms for subsequent transactions in the same security are
                   not required for the remainder of the calendar month as
                   long as purchases (or sales) in all portfolios do not
                   exceed the maximum number of shares, options, or bonds
                   disclosed on the disclosure form. If the ADM seeks to
                   effect a transaction or makes a recommendation in a
                   direction opposite to the most recent disclosure form, a
                   new disclosure form must be completed prior to the
                   transaction or recommendation.

                   Once the CIO/CEO's authorization is obtained, the ADM may
                   make the recommendation or trade the security in the
                   managed portfolio without the Preclearance Compliance
                   Officer's signature. However, the ADM must deliver the
                   authorization form to the Preclearance Compliance Officer
                   on the day of the CIO/CEO's authorization. The Preclearance
                   Compliance Officer will forward a copy of the completed
                   form for the ADM's files. The ADM is responsible for
                   following-up with the Preclearance Compliance Officer in
                   the event a completed form is not returned to the ADM
                   within 5 business days. It is recommended that the ADM
                   retain completed forms for two years.

                   A listing of Investment Ethics Committee designees, a
                   listing of the Russell 200, and the personal securities
                   disclosure forms are available on the Mellon intranet, or
                   can be

                   obtained from your designated Preclearance
                   Compliance Officer.


BLACKOUT POLICY    Except as described below, ADMs will generally not be given
                   clearance to execute a transaction in any security that is
                   on the restricted list maintained by their Preclearance
                   Compliance Officer, or for which there is a pending buy or
                   sell order for an affiliated account. This provision does
                   not apply to transactions effected or contemplated by index
                   funds.

                   In addition, portfolio managers (except index fund
                   managers) are prohibited from buying or selling a security
                   within seven calendar days before and after their
                   investment company or managed account has effected a
                   transaction in that security. In addition to other
                   appropriate sanctions, if such ADMs effect such a personal
                   transactions during that period, these individuals must
                   disgorge any and all profit realized from such
                   transactions. The amount of the disgorgement will be
                   determined by the Investment Ethics Committee.

                   Exceptions - Regardless of any restrictions above, ADMs
                   will generally be given clearance to buy or sell up to the
                   greater of 100 shares or $10,000 of securities of the top
                   500 issuers on the Russell list of largest publicly traded
                   companies. In addition, ADMs will be exempt from the 7-day
                   disgorgement for the described transactions (but not the
                   disgorgement for short-term/60-day trading). An ADM is
                   limited to two such purchases or two such sales in the
                   securities of any one issuer in any calendar month.

EXEMPTIONS FROM    Preclearance is not required for the following transactions:
REQUIREMENT TO
PRECLEAR           - purchases or sales of Exempt Securities (see Glossary);

                   - purchases or sales of securities issued by non-affiliated
                     closed-end investment companies; non-financial commodities
                     (such as agricultural futures, metals, oil, gas, etc.),
                     currency futures, financial futures, index futures and
                     index securities;

                   - purchases or sales effected in any account over which an
                     employee has no direct or indirect control over the
                     investment decision making process (e.g., discretionary
                     trading accounts). Discretionary trading accounts may be
                     maintained, without being subject to preclearance
                     procedures, only when the Manager of Corporate Compliance,
                     after a thorough review, is satisfied that the account is
                     truly discretionary;

                   - transactions that are non-volitional on the part of an
                     employee (such as stock dividends);

                   - the sale of Mellon stock received upon the exercise of an
                     employee stock option if the sale is part of a "netting of
                     shares" or "cashless exercise" administered by the Human
                     Resources Department (for which the Human Resources
                     Department will forward information to the Manager of
                     Corporate Compliance);

                   - changes to elections in the Mellon 401(k) plan;

                   - purchases effected upon the exercise of rights issued by an
                     issuer pro rata to all holders of a class of securities, to
                     the extent such rights were acquired from such issuer;

                   - sales of rights acquired from an issuer, as described
                     above; and/or

                   - sales effected pursuant to a bona fide tender offer.


GIFTING OF         ADMs desiring to make a bona fide gift of securities or who
SECURITIES         receive a bona fide gift of securities do not need to
                   preclear the transaction. However, ADMs must report such
                   bona fide gifts to the designated Preclearance Compliance
                   Officer. The report must be made within 10 days of making
                   or receiving the gift and must disclose the following
                   information: the name of the person receiving (giving) the
                   gift, the date of the transaction, and the name of the
                   broker through which the transaction was effected. A bona
                   fide gift is one where the donor does not receive anything
                   of monetary value in return. An ADM who purchases a
                   security with the intention of making a gift must preclear
                   the purchase transaction.

DRIPs, DPPs        Certain companies with publicly traded securities establish:
AND AIPs
                   - Dividend reinvestment plans (DRIPs) - These permit
                     shareholders to have their dividend payments channeled to
                     the purchase of additional shares of such company's stock.
                     An additional benefit offered by many DRIPs to DRIP
                     participants is the right to buy additional shares by
                     sending in a check before the dividend reinvestment date
                     ("optional cash purchases").

                   - Direct Purchase Plans (DPPs) - These allow purchasers to
                     buy stock by sending a check directly to the issuer,
                     without using a broker.

                   - Automatic Investment Plans (AIPs) - These allow purchasers
                     to set up a plan whereby a fixed amount of money is
                     automatically deducted from their checking account each
                     month and used to purchase stock directly from the issuer.

                   Participation in a DRIP, DPP or AIP is voluntary.

                   ADMs who enroll in a DRIP or AIP are not required to preclear
                   enrollment, the periodic reinvestment of dividend payments
                   into additional shares of company stock through a DRIP, or
                   the periodic investments through an AIP.

                   ADMs must preclear all optional cash purchases through a
                   DRIP and all purchases through a DPP. ADMs must also
                   preclear all sales through a DRIP, DPP or AIP.

RESTRICTED LIST    Each Preclearance Compliance Officer will maintain a list
                   (the

                   "Restricted List") of companies whose securities are deemed
                   appropriate for implementation of trading restrictions for
                   ADMs in their area. From time to time, such trading
                   restrictions may be appropriate to protect Mellon and its
                   ADMs from potential violations, or the appearance of
                   violations, of securities laws. The inclusion of a company
                   on the Restricted List provides no indication of the
                   advisability of an investment in the company's securities
                   or the existence of material nonpublic information on the
                   company. Nevertheless, the contents of the Restricted List
                   will be treated as confidential information in order to
                   avoid unwarranted inferences.

                   The Preclearance Compliance Officer will retain copies of
                   the restricted lists for five years.

CONFIDENTIAL       The Manager of Corporate Compliance and/or Preclearance
TREATMENT          Compliance Officer will use his or her best efforts to
                   assure that all requests for preclearance, all personal
                   securities transaction reports and all reports of
                   securities holdings are treated as "Personal and
                   Confidential." However, such documents will be available
                   for inspection by appropriate regulatory agencies, and by
                   other parties within and outside Mellon as are necessary to
                   evaluate compliance with or sanctions under this Policy.
                   Documents received from ADMs are also available for
                   inspection by the boards of directors of 40-Act entities
                   and by the boards of directors (or trustees or managing
                   general partners, as applicable) of the investment
                   companies managed or administered by 40-Act entities.

--------------------------------------------------------------------------------

RESTRICTIONS ON    Employees who engage in transactions involving Mellon
TRANSACTIONS IN    securities should be aware of their unique responsibilities
MELLON             with respect to such transactions arising from the employment
SECURITIES         relationship and should be sensitive to even the appearance
                   of impropriety. The following restrictions apply to all
                   transactions in Mellon's publicly traded securities
                   occurring in the employee's own account and in all other
                   accounts over which the employee could be presumed to
                   exercise influence or control (see provisions under
                   "Beneficial Ownership" below for a more complete discussion
                   of the accounts to which these restrictions apply). These
                   restrictions are to be followed in addition to any
                   restrictions that apply to particular officers or directors
                   (such as restrictions under Section 16 of the Securities
                   Exchange Act of 1934).

                   - Short Sales - Short sales of Mellon securities by employees
                     are prohibited.

                   - Short Term Trading - ADMs are prohibited from purchasing
                     and selling, or from selling and purchasing Mellon
                     securities within any 60 calendar day period. In addition
                     to any other sanctions, any profits realized on such short
                     term trades must be disgorged in accordance with procedures
                     established by senior management.

                   - Margin Transactions - Purchases on margin of Mellon's
                     publicly traded securities by employees is prohibited.

                     Margining Mellon securities in connection with a cashless
                     exercise of an employee stock option through the Human
                     Resources Department is exempt from this restriction.
                     Further, Mellon securities may be used to collateralize
                     loans or the acquisition of securities other than those
                     issued by Mellon.

                   - Option Transactions - Option transactions involving
                     Mellon's publicly traded securities are prohibited.
                     Transactions under Mellon's Long-Term Incentive Plan or
                     other employee option plans are exempt from this
                     restriction.

                   - Major Mellon Events - Employees who have knowledge of major
                     Mellon events that have not yet been announced are
                     prohibited from buying or selling Mellon's publicly traded
                     securities before such public announcements, even if the
                     employee believes the event does not constitute material
                     nonpublic information.

                   - Mellon Blackout Period - Employees are prohibited from
                     buying or selling Mellon's publicly traded securities
                     during a blackout period. The blackout period begins the
                     16th day of the last month of each calendar quarter and
                     ends 3 business days after Mellon Financial Corporation
                     publicly announces the financial results for that quarter.
                     Thus, the blackout periods begin on March 16, June 16,
                     September 16 and December 16. The end of the blackout
                     period is determined by counting business days only, and
                     the day of the earnings announcement is day 1. The blackout
                     period ends at the end of day 3, and employees can trade
                     Mellon securities on day 4.

MELLON 401(K)      For purposes of the blackout period and the short term
PLAN               trading rule, employees' changing their existing account
                   balance allocation to increase or decrease the amount
                   allocated to Mellon Common Stock will be treated as a
                   purchase or sale of Mellon Stock, respectively. This means:

                   - Employees are prohibited from increasing or decreasing
                     their existing account balance allocation to Mellon Common
                     Stock during the blackout period.

                   - Employees are prohibited from increasing their existing
                     account balance allocation to Mellon Common Stock and then
                     decreasing it within 60 days. Similarly, employees are
                     prohibited from decreasing their existing account balance
                     allocation to Mellon Common Stock and then increasing it
                     within 60 days. However:

                         - with respect to ADMs, any profits realized on short
                           term changes in the 401(k) will not have to be
                           disgorged.

                         - changes to existing account balance allocations in
                           the 401(k) plan will not be compared to transactions
                           in Mellon securities outside the 401(k) for purposes
                           of the 60-day rule. (Note: this does not apply to
                           members of the Executive Management Group, who
                           should consult with the Legal Department.)

                   Except for the above there are no other restrictions
                   applicable to the 401(k) plan. This means, for example:

                   - Employees are not required to preclear any elections or
                     changes made in their 401(k) account.

                   - There is no restriction on employees' changing their salary
                     deferral contribution percentages with regard to either the
                     blackout period or the 60-day rule.

                   - The regular salary deferral contribution to Mellon Common
                     Stock in the 401(k) that takes place with each pay will not
                     be considered a purchase for the purposes of either the
                     blackout or the 60-day rule.

MELLON EMPLOYEE    Receipt - Your receipt of an employee stock option from
STOCK OPTIONS      Mellon is not deemed to be a purchase of a security.
                   Therefore, it is exempt from preclearance and reporting
                   requirements, can take place during the blackout period and
                   does not constitute a purchase for purposes of the 60-day
                   prohibition.

                   Exercises - The exercise of an employee stock option that
                   results in your holding the shares is exempt from
                   preclearance and reporting requirements, can take place
                   during the blackout period and does not constitute a
                   purchase for purposes of the 60-day prohibition.

                   "Cashless" Exercises - The exercise of an employee stock
                   option which is part of a "cashless exercise" or "netting
                   of shares" that is administered by the Human Resources
                   Department or Chase Mellon Shareholder Services is exempt
                   from the preclearance and reporting requirements and will
                   not constitute a purchase or a sale for purposes of the
                   60-day prohibition. A "cashless exercise" or "netting of
                   shares" transaction is permitted during the blackout period
                   for ShareSuccess plan options only. They are not permitted
                   during the blackout period for any other plan options.

                   Sales - The sale of the Mellon securities that were
                   received in the exercise of an employee stock option is
                   treated like any other sale under the Policy (regardless of
                   how little time has elapsed between the option exercise and
                   the sale). Thus, such sales are subject to the preclearance
                   and reporting requirements, are prohibited during the
                   blackout period and constitute sales for purposes of the
                   60-day prohibition.

--------------------------------------------------------------------------------

RESTRICTIONS ON    Purchases or sales by an employee of the securities of
TRANSACTIONS IN    issuers with which Mellon does business, or other third party
OTHER              issuers, could result in liability on the part of such
SECURITIES         employee. Employees should be sensitive to even the
                   appearance of impropriety in connection with their personal

securities transactions. Employees should refer to "Beneficial Ownership" below, which is applicable to the following restrictions.

The Mellon Code of Conduct contains certain restrictions on

investments in parties that do business with Mellon. Employees should refer to the Code of Conduct and comply with such restrictions in addition to the restrictions and reporting requirements set forth below.

The following restrictions apply to all securities transactions by ADMs:

- Customer Transactions - Trading for customers and Mellon accounts should always take precedence over employees' transactions for their own or related accounts.

- Initial Public Offerings - ADMs are prohibited from acquiring securities through an allocation by the underwriter of an Initial Public Offering (IPO) without the approval of the Investment Ethics Committee. Approval can be given only when the allocation comes through an employee of the issuer who is a direct family relation of the ADM. Due to NASD rules, this approval may not be available to employees of registered broker/dealers.

- Micro-Cap Securities - Unless specifically authorized in writing by the Investment Ethics Committee, MCADMs are prohibited from voluntarily obtaining beneficial ownership of any security of an issuer with a common equity market capitalization of $100 million or less at the time of acquisition. If any MCADM involuntarily acquires such a micro-cap security through inheritance, gift, or spin-off, this fact must be disclosed in a memo to the MCADM's Preclearance Compliance Officer within 10 business days of the MCADM's knowledge of this fact. A copy of this memo should be attached to the MCADM's next Quarterly Securities Report. A form for making this report can be obtained from your designated Preclearance Compliance Officer.

MCADMs must obtain on their Preclearance Request Forms the written authorization of their immediate supervisor and their Chief Investment Officer prior to voluntarily obtaining, or disposing of, a beneficial ownership of any security of an issuer with a common equity market capitalization of more than

$100 million but less than or equal to $250 million at the time of acquisition.

MCADMs who have prior holdings of securities of an issuer with a common equity market capitalization of $250 million or less must disclose on their next Quarterly Securities Report that they have not yet received CIO/CEO authorization for these holdings. The Preclearance Compliance Officer will utilize these forms to request the appropriate authorizations.

- Private Placements - Participation in private placements is prohibited without the prior written approval of the Investment Ethics Committee. The Committee will generally not approve an ADM's acquiring, in a private placement, beneficial ownership of any security of an issuer in which any managed fund or account is authorized to invest within the ADM's fund complex.

Private placements include certain co-operative investments in real estate, co-mingled investment vehicles such as hedge funds, and investments in family owned businesses. For the purpose of this policy, time-shares and cooperative investments in real estate used as a primary or secondary residence are not considered to be private placements.

When considering requests for participation in private placements, the Investment Ethics Committee will take into account the specific facts and circumstances of the request prior to reaching a decision on whether to authorize a private placement investment by an ADM. These factors include, among other things, whether the opportunity is being offered to an individual by virtue of his or her position with Mellon or its affiliates, or his or her relationship to a managed fund or account. The Investment Ethics Committee will also consider whether a fund or account managed by the ADM is authorized to invest in securities of the issuer in which the ADM is seeking to invest. At its discretion, the Investment Ethics Committee may request any and all information and/or documentation necessary to satisfy itself that no actual or potential conflict, or appearance of a conflict, exists between the proposed private placement purchase and the interests of any managed fund or account.

ADMs who have prior holdings of securities obtained in a private placement must request the written authorization of the Investment Ethics Committee to continue holding the security. This request for authorization must be initiated within 90 days of becoming an ADM.

To request authorization for prior holdings or new proposed acquisitions of securities issued in an eligible private placement, contact the Manager of Corporate Compliance.

- Scalping - Employees may not engage in "scalping," that is, the purchase or sale of securities for their own or Mellon's accounts on the basis of knowledge of customers' trading positions or plans.

                   - Short Term Trading - ADMs are discouraged from purchasing
                     and selling, or from selling and purchasing, the same (or
                     equivalent) securities within any 60 calendar day period.
                     Any profits realized on such short term trades must be
                     disgorged in accordance with procedures established by
                     senior management. Exception: securities may be sold
                     pursuant to a bona fide tender offer without disgorgement
                     under the 60-day rule.

PROHIBITION ON     You are prohibited from acquiring any security issued by a
INVESTMENTS IN     financial services organization if you are:
SECURITIES OF
FINANCIAL          - a member of the Mellon Senior Management Committee.
SERVICES

ORGANIZATIONS - employed in any of the following departments:

- Corporate Strategy & Development

- Legal (Pittsburgh only)

- Finance (Pittsburgh only)

- an employee specifically designated by the Manager of Corporate Compliance and informed that this prohibition is applicable to you.

Financial Services Organizations - The term "security issued by a financial services organization" includes any security issued by:

- Commercial Banks other than Mellon        - Thrifts

- Bank Holding Companies other than Mellon  - Savings and Loan
                                              Associations

- Insurance Companies                       - Broker/Dealers

- Investment Advisory Companies             - Transfer Agents

- Shareholder Servicing Companies           - Other Depository
                                              Institutions

The term "securities issued by a financial services organization" does not include securities issued by mutual funds, variable annuities or insurance policies. Further, for purposes of determining whether a company is a financial services organization, subsidiaries and parent companies are treated as separate issuers.

                   Additional securities of a financial services organization
                   acquired through the reinvestment of the dividends paid by
                   such financial services organization through a dividend
                   reinvestment program (DRIP), or through an automatic
                   investment plan (AIP) are not subject to this prohibition,
                   provided the employee's election to participate in the DRIP
                   or AIP predates the date of the employee's becoming subject
                   to this prohibition. Optional cash purchases through a DRIP
                   or direct purchase plan (DPP) are subject to this
                   prohibition.

                   Securities acquired in any account over which an employee
                   has no direct or indirect control over the investment
                   decision making process (e.g. discretionary trading
                   accounts) are not subject to this prohibition.

                   Within 30 days of becoming subject to this prohibition, all
                   holdings of securities of financial services organizations
                   must be disclosed in writing to the Manager of Corporate
                   Compliance.

BENEFICIAL         The provisions of the Policy apply to transactions in the
OWNERSHIP          employee's own name and to all other accounts over which the
                   employee could be presumed to exercise influence or control,
                   including:

                   - accounts of a spouse, minor children or relatives to whom
                     substantial support is contributed;

                   - accounts of any other member of the employee's household
                     (e.g., a relative living in the same home);

                   - trust or other accounts for which the employee acts as
                     trustee or otherwise exercises any type of guidance or
                     influence;

                   - corporate accounts controlled, directly or indirectly, by
                     the employee;

                   - arrangements similar to trust accounts that are established
                     for bona fide financial purposes and benefit the employee;
                     and

                   - any other account for which the employee is the beneficial
                     owner (see Glossary for a more complete legal definition of
                     "beneficial owner").

NON-MELLON         The provisions discussed above do not apply to transactions
EMPLOYEE           done under a bona fide employee benefit plan administered by
BENEFIT PLANS      an organization not affiliated with Mellon and by an employee
                   of that organization who shares beneficial interest with a
                   Mellon employee, and in the securities of the employing
                   organization. This means if a Mellon employee's spouse is
                   employed at a non-Mellon company, the Mellon employee is
                   not required to obtain approval for transactions in the
                   employer's securities done by the spouse as part of the
                   spouse's employee benefit plan.

                   The Securities Trading Policy does not apply in such a
                   situation. Rather, the other organization is relied upon to
                   provide adequate supervision with respect to conflicts of
                   interest and compliance with securities laws.
-------------------------------------------------------------------------------

PROTECTING         As an employee you may receive information about Mellon, its
CONFIDENTIAL       customers and other parties that, for various reasons, should
INFORMATION        be treated as confidential. All employees are expected to
                   strictly comply with measures necessary to preserve the

confidentiality of information. Employees should refer to the Mellon Code of Conduct.

INSIDER TRADING    Federal securities laws generally prohibit the trading of
AND TIPPING        securities while in possession of "material nonpublic"
                   information regarding the issuer of those securities (insider
LEGAL              trading). Any person who passes along material nonpublic
PROHIBITIONS       information upon which a trade is based (tipping) may also be
                   liable.

                   Information is "material" if there is a substantial
                   likelihood that a reasonable investor would consider it
                   important in deciding whether to buy, sell or hold
                   securities. Obviously, information that would affect the
                   market price of a security would be material. Examples of
                   information that might be material include:

                   - a proposal or agreement for a merger, acquisition or
                     divestiture, or for the sale or purchase of substantial
                     assets;

                   - tender offers, which are often material for the party
                     making the tender offer as well as for the issuer of the
                     securities for which the tender offer is made;

                   - dividend declarations or changes;

                   - extraordinary borrowings or liquidity problems;

                   - defaults under agreements or actions by creditors,
                     customers or suppliers relating to a company's credit
                     standing;

                   - earnings and other financial information, such as large or
                     unusual write-offs, write-downs, profits or losses;

                   - pending discoveries or developments, such as new products,
                     sources of materials, patents, processes, inventions or
                     discoveries of mineral deposits;

                   - a proposal or agreement concerning a financial
                     restructuring;

                   - a proposal to issue or redeem securities, or a development
                     with respect to a pending issuance or redemption of
                     securities;

                   - a significant expansion or contraction of operations;

                   - information about major contracts or increases or decreases
                     in orders;

                   - the institution of, or a development in, litigation or a
                     regulatory proceeding;

                   - developments regarding a company's senior management;

                   - information about a company received from a director of
                     that company; and

                   - information regarding a company's possible noncompliance
                     with environmental protection laws.

                   This list is not exhaustive. All relevant circumstances must
                   be considered when determining whether an item of information
                   is material.

                   "Nonpublic" - Information about a company is nonpublic if
                   it is not generally available to the investing public.
                   Information received under circumstances indicating that it
                   is not yet in general circulation and which may be
                   attributable, directly or indirectly, to the company or its
                   insiders is likely to be deemed nonpublic information.

                   If you obtain material non-public information you may not
                   trade related securities until you can refer to some public
                   source to show that the information is generally available
                   (that is, available from sources other than inside sources)
                   and that enough time has passed to allow wide dissemination
                   of the information. While information appearing in widely
                   accessible sources--such as in newspapers or on the
                   internet--becomes public very soon after publication,
                   information appearing in less accessible sources--such as
                   regulatory filings, may take up to several days to be
                   deemed public. Similarly, highly complex information might
                   take longer to become public than would information that is
                   easily understood by the average investor.

MELLON'S POLICY    Employees who possess material nonpublic information about a
                   company--whether that company is Mellon, another Mellon
                   entity, a Mellon customer or supplier, or other
                   company--may not trade in that company's securities, either
                   for their own accounts or for any account over which they
                   exercise investment discretion. In addition, employees may
                   not recommend trading in those securities and may not pass
                   the information along to others, except to employees who
                   need to know the information in order to perform their job
                   responsibilities with Mellon. These prohibitions remain in
                   effect until the information has become public.

                   Employees who have investment responsibilities should take
                   appropriate steps to avoid receiving material nonpublic
                   information. Receiving such information could create severe
                   limitations on their ability to carry out their
                   responsibilities to Mellon's fiduciary customers.

                   Employees managing the work of consultants and temporary
                   employees who have access to the types of confidential
                   information described in this Policy are responsible for
                   ensuring that consultants and temporary employees are aware
                   of Mellon's policy and the consequences of noncompliance.

                   Questions regarding Mellon's policy on material nonpublic
                   information, or specific information that might be subject
                   to it, should be referred to the General Counsel.

RESTRICTIONS       As a diversified financial services organization, Mellon
ON THE FLOW OF     faces unique challenges in complying with the prohibitions on
INFORMATION        insider trading and tipping of material non-public
WITHIN MELLON      information, and misuse of confidential information. This is
(THE "CHINESE      because one Mellon unit might have material nonpublic
WALL")             information about a company while other Mellon units may have
                   a desire, or even a fiduciary duty, to buy or sell that
                   company's securities or recommend such purchases or sales
                   to customers. To engage in such broad-ranging financial
                   services activities without violating laws or breaching
                   Mellon's fiduciary duties, Mellon has established a
                   "Chinese Wall" policy applicable to all employees. The
                   "Chinese Wall" separates the Mellon units or individuals
                   that are likely to receive material nonpublic information
                   (Potential Insider Functions) from the Mellon units or
                   individuals that either trade in securities--for Mellon's
                   account or for the accounts of others--or provide
                   investment advice (Investment Functions). Employees should

refer to CPP 903-2(C) The Chinese Wall.

GLOSSARY

DEFINITIONS        - 40-ACT ENTITY - A Mellon entity registered under the
                     Investment Company Act and/or the Investment Advisers Act
                     of 1940

                   - ACCESS DECISION MAKER - A person designated as such by the
                     Investment Ethics Committee. Generally, this will be
                     portfolio managers and research analysts who make
                     recommendations or decisions regarding the purchase or sale
                     of equity, convertible debt, and non-investment grade debt
                     securities for investment companies and other managed
                     accounts.

                   - ACCESS PERSON - As defined by Rule 17j-1 under the
                     Investment Company Act of 1940, "access person" means:
                        (A) With respect to a registered investment company or
                            an investment adviser thereof, any director,
                            officer, general partner, or advisory person (see
                            definition below), of such investment company or
                            investment adviser;

                        (B) With respect to a principal underwriter, any

                            director, officer, or general partner of such
                            principal underwriter who in the ordinary course of
                            his business makes, participates in or obtains
                            information regarding the purchase or sale of
                            securities for the registered investment company for
                            which the principal underwriter so acts, or whose
                            functions or duties as part of the ordinary course
                            of his business relate to the making of any
                            recommendations to such investment company regarding
                            the purchase or sale of securities.

                        (C) Notwithstanding the provisions of paragraph (A)
                            hereinabove, where the investment adviser is
                            primarily engaged in a business or businesses other
                            than advising registered investment companies or
                            other advisory clients, the term "access person"
                            shall mean: any director, officer, general partner,
                            or advisory person of the investment adviser who,
                            with respect to any registered investment company,
                            makes any recommendations, participates in the
                            determination of which recommendation shall be made,
                            or whose principal function or duties relate to the
                            determination of which recommendation will be made,
                            to any such investment company; or who, in
                            connection with his duties, obtains any information
                            concerning securities recommendations being made by
                            such investment adviser to any registered investment
                            company.

                        (D) An investment adviser is "primarily engaged in a
                            business or businesses other than advising
                            registered investment companies or other advisory
                            clients" when, for each of its most recent three
                            fiscal years or for the period of time since its
                            organization, whichever is lesser, the investment
                            adviser derived, on an unconsolidated basis, more
                            than 50 percent of (i) its total sales and revenues,
                            and (ii) its income (or loss) before income taxes
                            and extraordinary items, from such other business or
                            businesses.

                   - ADVISORY PERSON of a registered investment company or an
                     investment adviser thereof means:
                        (A) Any employee of such company or investment adviser
                            (or any company in a control relationship to such
                            investment company or investment adviser) who, in
                            connection with his regular functions or duties,
                            makes, participates in, or obtains information
                            regarding the purchase or sale of a security by a
                            registered investment company, or whose functions
                            relate to the making of any recommendation with
                            respect to such purchases or sales; and

                        (B) Any natural person in a control relationship to such
                            company or investment adviser who obtains
                            information concerning recommendations made to such
                            company with regard to the purchase or sale of a
                            security.

                   - APPROVAL - written consent or written notice of
                     non-objection.

                   - BENEFICIAL OWNERSHIP - The definition that follows conforms
                     to interpretations of the Securities and Exchange
                     Commission

                     on this matter. Because a determination of beneficial
                     ownership requires a detailed analysis of personal
                     financial circumstances that are subject to change,
                     Corporate Compliance ordinarily will not advise employees
                     on this definition. It is the responsibility of each
                     employee to read the definition and based on that
                     definition, determine whether he/she is the beneficial
                     owner of an account. If the employee determines that he/she
                     is not a beneficial owner of an account and Corporate
                     Compliance becomes aware of the existence of the account,
                     the employee will be responsible for justifying his/her
                     determination.

Securities owned of record or held in the employee's name are generally considered to be beneficially owned by the employee.

Securities held in the name of any other person are deemed to be beneficially owned by the employee if by reason of any contract, understanding, relationship, agreement or other arrangement, the employee obtains therefrom benefits substantially equivalent to those of ownership, including the power to vote, or to direct the disposition of, such securities. Beneficial ownership includes securities held by others for the employee's benefit (regardless of record ownership), e.g., securities held for the employee or members of the employee's immediate family, defined below, by agents, custodians, brokers, trustees, executors or other administrators; securities owned by the employee, but which have not been transferred into the employee's name on the books of the company; securities which the employee has pledged; or securities owned by a corporation that should be regarded as the employee's personal holding corporation. As a natural person, beneficial ownership is deemed to include securities held in the name or for the benefit of the employee's immediate family, which includes the employee's spouse, the employee's minor children and stepchildren and the employee's relatives or the relatives of the employee's spouse who are sharing the employee's home, unless because of countervailing circumstances, the employee does not enjoy benefits substantially equivalent to those of ownership. Benefits substantially equivalent to ownership include, for example, application of the income derived from such securities to maintain a common home, meeting expenses that such person otherwise would meet from other sources, and the ability to exercise a controlling influence over the purchase, sale or voting of such securities. An employee is also deemed the beneficial owner of securities held in the name of some other person, even though the employee does not obtain benefits of ownership, if the employee can vest or revest title in himself at once, or at some future time.

In addition, a person will be deemed the beneficial owner of a security if he has the right to acquire beneficial ownership of such security at any time (within 60 days) including but not limited to any right to acquire: (1) through the exercise of any option, warrant or right; (2) through the conversion of a security; or (3) pursuant to the power to revoke a trust, nondiscretionary account or similar arrangement.

With respect to ownership of securities held in trust, beneficial ownership includes ownership of securities as a trustee in instances where either the employee as trustee or a member of the employee's "immediate family" has a vested interest in the income or corpus of the trust, the ownership by the employee of a vested beneficial interest in the trust and the ownership of securities as a settlor of a trust in which the employee as the settlor has the power to revoke the trust without obtaining the consent of the beneficiaries. Certain exemptions to these trust beneficial ownership rules exist, including an exemption for instances where beneficial ownership is imposed solely by reason of the employee being settlor or beneficiary of the securities held in trust and the ownership, acquisition and disposition of such securities by the trust is made without the employee's prior approval as settlor or beneficiary. "Immediate family" of an employee as trustee means the employee's son or daughter (including any legally adopted children) or any descendant of either, the employee's stepson or stepdaughter, the employee's father or mother or any ancestor of either, the employee's stepfather or stepmother and the employee's spouse.

To the extent that stockholders of a company use it as a personal trading or investment medium and the company has no other substantial business, stockholders are regarded as beneficial owners, to the extent of their respective interests, of the stock thus invested or traded in. A general partner in a partnership is considered to have indirect beneficial ownership in the securities held by the partnership to the extent of his pro rata interest in the partnership. Indirect beneficial ownership is not, however, considered to exist solely by reason of an indirect interest in portfolio securities held by any holding company registered under the Public Utility Holding Company Act of 1935, a pension or retirement plan holding securities of an issuer whose employees generally are beneficiaries of the plan and a business trust with over 25 beneficiaries.

Any person who, directly or indirectly, creates or uses a trust, proxy, power of attorney, pooling arrangement or any other contract, arrangement or device with the purpose or effect of divesting such person of beneficial ownership as part of a plan or scheme to evade the reporting requirements of the Securities Exchange Act of 1934 shall be deemed the beneficial owner of such security.

The final determination of beneficial ownership is a question to be determined in light of the facts of a particular case. Thus, while the employee may include security holdings of other members of his family, the employee may nonetheless disclaim beneficial ownership of such securities.

- "CHINESE WALL" POLICY - procedures designed to restrict the flow of information within Mellon from units or individuals who are likely to receive material nonpublic information to

units or individuals who trade in securities or provide investment advice.

- DIRECT FAMILY RELATION - employee's husband, wife, father, mother, brother, sister, daughter or son. Includes the preceding plus, where appropriate, the following prefixes/suffix: grand-, step-, foster-, half- and -in-law.

- DISCRETIONARY TRADING ACCOUNT - an account over which the employee has no direct or indirect control over the investment decision making process.

- EMPLOYEE - any employee of Mellon Financial Corporation or its more-than-50%-owned direct or indirect subsidiaries; includes all full-time, part-time, benefited and non-benefited, exempt and non-exempt, domestic and international employees; does not include consultants and contract or temporary employees.

- EXEMPT SECURITIES - Exempt Securities are defined as:

- direct obligations of the government of the United States;

- high quality short-term debt instruments;

- bankers' acceptances;

- bank certificates of deposit and time deposits;

- commercial paper;

- repurchase agreements;

- securities issued by open-end investment companies;

- FAMILY RELATION - see direct family relation.

- GENERAL COUNSEL - General Counsel of Mellon Financial Corporation or any person to whom relevant authority is delegated by the General Counsel.

- INDEX FUND - an investment company or managed portfolio which contains securities of an index in proportions designed to replicate the return of the index.

- INITIAL PUBLIC OFFERING (IPO) - the first offering of a company's securities to the public through an allocation by the underwriter.

must

preclear and report the securities transactions contemplated by such investment clubs. In contrast, a private investment company is an organization where the investor invests his/her money, but has no direct control over the way his/her money is invested. Insider Risk Employees, Investment Employees and Access Decision Makers investing in such a private investment company are not required to preclear any of the securities transactions made by the private investment company. Insider Risk Employees, Investment Employees and Access Decision Makers are required to report their investment in a private investment company to the Manager of Corporate Compliance and certify to the Manager of Corporate Compliance that they have no direct control over the way their money is invested.

- INVESTMENT ETHICS COMMITTEE is composed of investment, legal, compliance, and audit management representatives of Mellon and its affiliates. The members of the Investment Ethics Committee are:

President and Chief Investment Officer of The Dreyfus
Corporation (Committee Chair)
General Counsel, Mellon Financial Corporation
Chief Risk Management Officer, Mellon Trust
Manager of Corporate Compliance, Mellon Financial
Corporation
Corporate Chief Auditor, Mellon Financial Corporation
Chief Investment Officer, Mellon Private Asset
Management
Executive Officer of a Mellon investment adviser
(rotating membership)

The Committee has oversight of issues related to personal securities trading and investment activity by Access Decision Makers.

- MELLON - Mellon Financial Corporation and all of its direct and indirect subsidiaries.

- Call Options

If a Mellon employee buys a call option, the employee is considered to have purchased the underlying security on the date the option was purchased.

If a Mellon employee sells a call option, the employee is considered to have sold the underlying security on the date the option was sold.

- Put Options

If a Mellon employee buys a put option, the employee is considered to have sold the underlying security on the date the option was purchased.

If a Mellon employee sells a put option, the employee is considered to have bought the underlying security on the date the option was sold.

Below is a table describing the above:

                       Transaction Type
-----------------------------------------------------------
Option Type        Buy                     Sale
===========================================================
Put        Sale of Underlying         Purchase of
                Security          Underlying Security
===========================================================
Call     Purchase of Underlying    Sale of Underlying
                Security                Security
-----------------------------------------------------------

- PRIVATE PLACEMENT - an offering of securities that is exempt from registration under the Securities Act of 1933 because it does not constitute a public offering. Includes limited partnerships.

- SENIOR MANAGEMENT COMMITTEE - the Senior Management Committee of Mellon Financial Corporation.

- SHORT SALE - the sale of a security that is not owned by the seller at the time of the trade.

EXHIBIT A - SAMPLE INSTRUCTION LETTER TO BROKER

Date

Broker ABC
Street Address
City, State ZIP

Re: John Smith & Mary Smith
Account No. xxxxxxxxxxxx

Please send the requested documentation ensuring the account holder's name appears on all correspondence to:

Manager, Corporate Compliance          Preclearance Compliance Officer
Mellon Bank                      or    (obtain address from your
PO Box 3130 Pittsburgh, PA             designated Preclearance
15230-3130                             Compliance Officer)

Thank you for your cooperation in this request.

Sincerely yours,

Associate

cc: Manager, Corporate Compliance (151-4340) or Preclearance Compliance Officer

Securities Trading Policy

Dreyfus Nonmanagement Board Member Edition

INTRODUCTION   The Securities Trading Policy (the "Policy") is designed to
               reinforce the reputation for integrity of The Dreyfus Corporation
               and its subsidiaries (collectively, "Dreyfus") by avoiding even
               the appearance of impropriety in the conduct of their businesses.
               The Policy sets forth procedures and limitations which govern the
               personal securities transactions of every Dreyfus employee.

SPECIAL        This edition of the Policy has been prepared specifically
EDITION        for Nonmanagement Board Members of Dreyfus and the investment
               companies advised by Dreyfus (each a "Fund").

NONMANAGEMENT  You are considered to be a Nonmanagement Board Member if you are:
BOARD MEMBER
               -  a director of Dreyfus who is not also an officer or employee
                  of Dreyfus ("Dreyfus Board Member"); or

               -  a director or trustee of any Fund who is not also an officer
                    or employee of Dreyfus ("Mutual Fund Board Member").


INDEPENDENT    The term "Independent Mutual Fund Board Member" means those
MUTUAL FUND    Mutual Fund Board Members who are not deemed "interested
BOARD MEMBER   persons" of their Fund(s), as defined by the Investment
               Company Act of 1940, as amended.


STANDARDS OF   Outside Activities
CONDUCT FOR
NONMANAGEMENT  - Mutual Fund Board Members are prohibited from accepting
BOARD MEMBERS  nomination or serving as a director, trustee or managing general
               partner of an investment company not advised by Dreyfus, or
               accepting employment with or acting as a consultant to any person
               acting as a registered investment adviser to an investment
               company, without the express prior approval of the board of
               directors/trustees of the pertinent Fund(s) for which the Mutual
               Fund Board Member serves as a director/trustee. In any such
               circumstance, management of Dreyfus must be given advance notice
               by the Mutual Fund Board Member of his/her request in order to
               allow management to provide its input, if any, for the relevant
               Fund board of directors/trustees' consideration.

               - Dreyfus Board Members are prohibited from accepting nomination
                 or serving as a director, trustee or managing general partner
                 of an investment company not advised by Dreyfus, or accepting
                 employment with or acting as a consultant to any person acting
                 as a registered investment adviser to an investment company,
                 without Dreyfus's express prior approval.

               - Independent Mutual Fund Board Members are prohibited from
                 owning Mellon securities (since that would destroy his or her
                 independent status).

               - Nonmanagement Board Members are prohibited from buying or
                 selling Mellon's publicly traded securities during a blackout
                 period, which begins the 16th day of the last month of each
                 calendar quarter and ends three business days after Mellon
                 publicly announces the financial results for that quarter.


               Insider Trading and Tipping

               Federal securities laws generally prohibit the trading of
               securities while in possession of "material nonpublic"
               information regarding the issuer of those securities (insider
               trading). Any person who passes along material nonpublic
               information upon which a trade is based (tipping) may also be
               liable.

               Information is "material" if there is a substantial likelihood
               that a reasonable investor would consider it important in
               deciding whether to buy, sell or hold securities. Obviously,
               information that would affect the market price of a security
               would be material. Examples of information that might be material
               include:

               - a proposal or agreement for a merger, acquisition or
                 divestiture, or for the sale or purchase of substantial assets;

               - tender offers, which are often material for the party making
                 the tender offer as well as for the issuer of the securities
                 for which the tender offer is made;

               - dividend declarations or changes;

               - extraordinary borrowings or liquidity problems;

               - defaults under agreements or actions by creditors, customers or
                 suppliers relating to a company's credit standing;

               - earnings and other financial information, such as large or
                 unusual write-offs, write-downs, profits or losses;

               - pending discoveries or developments, such as new products,
                 sources of materials, patents, processes, inventions or
                 discoveries of mineral deposits;
               - a proposal or agreement concerning a financial restructuring;

               - a proposal to issue or redeem securities, or a development
                 with respect to a pending issuance or redemption of securities;

               - a significant expansion or contraction of operations;

               - information about major contracts or increases or decreases in
                 orders;

               - the institution of, or a development in, litigation or a
                 regulatory proceeding;

               - developments regarding a company's senior management;

               - information about a company received from a director of that
                 company; and

               - information regarding a company's possible noncompliance with
                 environmental protection laws.

               This list is not exhaustive. All relevant circumstances must be
               considered when determining whether an item of information is
               material.

               "Nonpublic"- Information about a company is nonpublic if it is
               not generally available to the investing public. Information
               received under circumstances indicating that it is not yet in
               general circulation and which may be attributable, directly or
               indirectly, to the company or its insiders is likely to be deemed

               nonpublic information.

               If you obtain material non-public information you may not trade

related securities until you can refer to some public source to show that the information is generally available (that is, available from sources other than inside sources) and that enough time has passed to allow wide dissemination of the information, While information appearing in widely accessible sources--such as in newspapers or on the internet--becomes public very soon after publication, information appearing in less accessible sources--such as regulatory filings, may take up to several days to be deemed public. Similarly, highly complex information might take longer to become public than would information that is easily understood by the average investor.

Conflict of Interest--No Nonmanagement Board Member may recommend a securities transaction for Mellon, Dreyfus or any Fund without disclosing any interest he or she has in such securities or issuer thereof (other than an interest in publicly traded securities where the total investment is less than or equal to $25,000), including:

- any direct or indirect beneficial ownership of any securities of such issuer;

- any contemplated transaction by the Nonmanagement Board Member in such securities;

- any position with such issuer or its affiliates; and

- any present or proposed business relationship between such issuer or its affiliates and the Nonmanagement Board Member or any party in which the Nonmanagement Board Member has a beneficial ownership interest (see "Beneficial Ownership" in the Glossary).

Portfolio Information--No Nonmanagement Board Member may divulge the current portfolio positions, or current or anticipated portfolio transactions, programs or studies, of Mellon, Dreyfus or any Fund, to anyone unless it is properly within his or her responsibilities as a Nonmanagement Board Member to do so.

               Material Nonpublic Information--No Nonmanagement Board Member may
               engage in or recommend any securities transaction, for his or her
               own benefit or for the benefit of others, including Mellon,
               Dreyfus or any Fund, while in possession of material nonpublic
               information. No Nonmanagement Board Member may communicate
               material nonpublic information to others unless it is properly
               within his or her responsibilities as a Nonmanagement Board
               Member to do so.

PRECLEARANCE   Nonmanagement Board Members are permitted to engage in personal
FOR            securities  transactions without obtaining prior approval
PERSONAL       from the Preclearance Compliance Officer.

SECURITIES
TRANSACTIONS

PERSONAL       - Independent Mutual Fund Board Members--Any Independent Mutual
SECURITIES       Fund Board Member, as defined above, who effects a securities
TRANSACTIONS     transaction where he or she  knew, or in the ordinary course of
REPORTS          fulfilling his or her official duties should have
                 known, that during the 15-day period immediately preceding or
                 after the date of such transaction, the same security was
                 purchased or sold, or was being considered for purchase or
                 sale by Dreyfus (including any Fund or other account managed
                 by Dreyfus), is required to report such personal securities
                 transaction. In the event a personal securities transaction
                 report is required, it must be submitted to the Preclearance
                 Compliance Officer not later than ten days after the end of
                 the calendar quarter in which the transaction to which the
                 report relates was effected. The report must include the date
                 of the transaction, the title and number of shares or
                 principal amount of the security, the nature of the
                 transaction (e.g., purchase, sale or any other type of
                 acquisition or disposition), the price at which the
                 transaction was effected and the name of the broker or other
                 entity with or through whom the transaction was effected. This
                 reporting requirement can be satisfied by sending a copy of
                 the confirmation statement regarding such transaction to the
                 Preclearance Compliance Officer within the time period
                 specified.

               - Dreyfus Board Members and "Interested" Mutual Fund Board
                 Members--Dreyfus Board Members and Mutual Fund Board Members
                 who are "interested persons" of a Fund, as defined by the
                 Investment Company Act of 1940, are required to report their
                 personal securities transactions.  Personal securities
                 transaction reports are required to be submitted to the
                 Preclearance Compliance Officer not later than ten days after
                 the end of the calendar quarter in which the transaction to
                 which the report relates was effected.  The report must include
                 the date of the transaction, the title and number of shares or
                 principal amount of the security, the nature of the
                 transaction (e.g., purchase, sale or any other type of
                 acquisition or disposition), the price at which the
                 transaction was effected and the name of the broker or other
                 entity with or through whom the transaction was effected.
                 This reporting requirement can be satisfied by sending a copy
                 of the confirmation statement regarding such transaction to
                 the Preclearance Compliance Officer within the time period
                 specified.


EXEMPTIONS FROM  Notwithstanding the foregoing, securities transaction reports
REPORTING        are not required for the following transactions purchases or
REQUIREMENTS     sales of "Exempt Securities" (see Glossary);
                 purchases or sales effected in any account over which the
                 Nonmanagement Board Member has no direct or indirect control
                 over the investment decision-making process (i.e.,
                 discretionary trading accounts); transactions which are
                 non-volitional on the part of the Nonmanagement Board Member
                 (such as stock dividends);

                 purchases which are part of an automatic reinvestment of
                 dividends under a DRIP;

                 purchases effected upon the exercise of rights issued by an
                 issuer pro rata to all holders of a class of securities, to the
                 extent such rights were acquired from such issuer; and\or

                 sales of rights acquired from an issuer, as described above.

               CONFIDENTIAL TREATMENT
               THE PRECLEARANCE COMPLIANCE OFFICER WILL USE HIS OR HER BEST
               EFFORTS TO ASSURE THAT ALL PERSONAL SECURITIES TRANSACTION
               REPORTS ARE TREATED AS "PERSONAL AND CONFIDENTIAL." HOWEVER, SUCH
               DOCUMENTS WILL BE AVAILABLE FOR INSPECTION BY APPROPRIATE
               REGULATORY AGENCIES AND OTHER PARTIES WITHIN AND OUTSIDE MELLON
               AS ARE NECESSARY TO EVALUATE COMPLIANCE WITH OR SANCTIONS UNDER
               THIS POLICY.

GLOSSARY

DEFINITIONS    - ACCESS PERSON - As defined by Rule 17j-1 under the Investment
                 Company Act of 1940, "access person" includes, with respect to
                 a registered investment company or an investment adviser
                 thereof, any director of such investment company or investment
                 adviser. Each Nonmanagement Board Member is therefore
                 considered an access person of Dreyfus or their respective
                 Funds.

               - APPROVAL - written consent or written notice of nonobjection.

               - BENEFICIAL OWNERSHIP - The definition that follows conforms to
                 interpretations of the Securities and Exchange Commission on
                 this matter.  Because a determination of beneficial ownership
                 requires a detailed analysis of personal financial
                 circumstances that are subject to change, Corporate
                 Compliance ordinarily will not advise Nonmanagement Board
                 Members ("NBM") on this definition.  It is the responsibility
                 of each NBM to read the definition, and based on that
                 definition determine whether he/she is the beneficial owner
                 of a security.

               Securities owned of record or held in the NBM's name are
               generally considered to be beneficially owned by the NBM.

               Securities held in the name of any other person are deemed to be
               beneficially owned by the NBM if by reason of any contract,
               understanding, relationship, agreement or other arrangement, the
               NBM obtains therefrom benefits substantially equivalent to those
               of ownership, including the power to vote, or to direct the
               disposition of, such securities. Beneficial ownership includes
               securities held by others for the NBM's benefit (regardless of
               record ownership), e.g., securities held for the NBM or members
               of the NBM's immediate family, defined below, by agents,
               custodians, brokers, trustees, executors or other
               administrators; securities owned by the NBM, but which have not

               been transferred into the NBM's name on the books of the
               company; securities which the NBM has pledged; or securities
               owned by a corporation that should be regarded as the NBM's
               personal holding corporation. As a natural person, beneficial
               ownership is deemed to include securities held in the name or
               for the benefit of the NBM's immediate family, which includes
               the NBM's spouse, the NBM's minor children and stepchildren and
               the NBM's relatives or the relatives of the NBM's spouse who are
               sharing the NBM's home, unless because of countervailing
               circumstances, the NBM does not enjoy benefits substantially
               equivalent to those of ownership. Benefits substantially
               equivalent to ownership include, for example, application of the
               income derived from such securities to maintain a common home,
               meeting expenses that such person otherwise would meet from
               other sources, and the ability to exercise a controlling
               influence over the purchase, sale or voting of such securities.
               An NBM is also deemed the beneficial owner of securities held in
               the name of some other person even through the NBM does not
               obtain benefits of ownership, if the NBM can vest or revest
               title in himself or herself at once, or at some future time.

               In addition, a person will be deemed the beneficial owner of a
               security if he/she has the right to acquire beneficial ownership
               of such security at any time (within 60 days) including but not
               limited to any right to acquire: (1) through the exercise of any
               option, warrant or right; (2) through the conversion of a
               security; or (3) pursuant to the power to revoke a trust,
               discretionary account or similar arrangement.

               With respect to ownership of securities held in trust,
               beneficial ownership includes ownership of securities as a
               trustee in instances where either the NBM as trustee or a member
               of the NBM's "immediate family" has a vested interest in the
               income or corpus of the trust, the ownership by the NBM of a
               vested beneficial interest in the trust and the ownership of
               securities as a settlor of a trust in which the NBM as the
               settlor has the power to revoke the trust without obtaining the
               consent of the beneficiaries. Certain exemptions to these trust
               beneficial ownership rules exist, including an exemption for
               instances where beneficial ownership is imposed solely by reason
               of the NBM being settlor or beneficiary of the securities held
               in trust and the ownership, acquisition and disposition of such
               securities by the trust is made without the NBM's prior approval
               as settlor or beneficiary. "Immediate family" of an NBM as
               trustee means the NBM's son or daughter (including any legally
               adopted children or any descendant of either), the NBM's stepson
               or stepdaughter, the NBM's father or mother or any ancestor of
               either, the NBM's stepfather or stepmother and the NBM's spouse.

               To the extent that stockholders of a company use it as a
               personal trading or investment medium and the company has no
               other substantial business, stockholders are regarded as
               beneficial owners, to the extent of their respective interests,
               of the stock thus invested or traded in. A general partner in a
               partnership is considered to have indirect beneficial ownership
               in the securities held by the partnership to the extent of his

               pro rata interest in the partnership. Indirect beneficial
               ownership is not, however, considered to exist solely by reason
               of an indirect interest in portfolio securities held by any
               holding company registered under the Public Utility Holding
               Company Act of 1935, a pension or retirement plan holding
               securities of an issuer whose employees generally are
               beneficiaries of the plan, and a business trust with over 25
               beneficiaries.

               Any person who, directly or indirectly, creates or uses a trust,
               proxy, power of attorney, pooling arrangement or any other
               contract, arrangement or device with the purpose or effect of
               divesting such person of beneficial ownership as part of a plan
               or scheme to evade the reporting requirements of the Securities
               Exchange Act of 1934 shall be deemed the beneficial owner of
               such security.

               The final determination of beneficial ownership is a question to
               be determined in light of the facts of a particular case. Thus,
               while the NBM may report the security holdings of other members
               of his family, the NBM may nonetheless disclaim beneficial
               ownership of such securities.

               - DISCRETIONARY TRADING ACCOUNT - an account over which the NBM
                 has no direct or indirect control over the investment decision
                 making process.

               - EXEMPT SECURITIES - Exempt Securities are defined as:

                    - direct obligations of the government of the United
                      States;

                    - bankers' acceptances;

                    - bank certificates of deposit and time deposits;

                    - commercial paper;

                    - high quality short-term debt instruments;

                    - repurchase agreements;

                    - securities issued by open-end investment companies.

                - INVESTMENT COMPANY - a company that issues securities that
                  represent an undivided interest in the net assets held by the
                  company. Mutual funds are investment companies that issue and
                  sell redeemable securities representing an undivided interest
                  in the net assets of the company.

                - INVESTMENT ETHICS COMMITTEE is composed of investment, legal,
                  compliance, and audit management representatives of Mellon and
                  its affiliates. The members of the Investment Ethics Committee
                  are:
                    President and Chief Investment Officer of The Dreyfus
                    Corporation (Committee Chair)
                    General Counsel, Mellon Financial Corporation

                    Chief Risk Management Officer, Mellon Trust
                    Manager of Corporate Compliance, Mellon Financial
                    Corporation
                    Corporate Chief Auditor, Mellon Financial Corporation
                    Chief Investment/Executive Officers of two
                    investment departments or affiliates (rotating memberships)

                 The Committee has oversight of issues related to personal
                 securities trading and investment activity by certain
                 employees, including those who make recommendations or
                 decisions regarding the purchase or sale of portfolio
                 securities by Funds or other managed accounts.

               - MELLON - Mellon Financial Corporation and all of its direct and
                 indirect subsidiaries.

               - PRECLEARANCE COMPLIANCE OFFICER - a person designated by the
                 Manager of Corporate Compliance and/or the Investment Ethics
                 Committee to administer, among other things, employees'
                 preclearance requests for a specific business unit.

EXHIBIT p(4)

Code of Ethics

piv
s

It is the personal responsibility of every Putnam employee to avoid any conduct that could create a conflict, or even the appearance of a conflict, with our clients, or to do anything that could damage or erode the trust our clients place in Putnam and its employees. 44156 4/2000

A     Table of Contents

      Overview       .........................................................ii

      Preamble       ..........................................................v

      Definitions:   Code of Ethics..........................................vii

      Section I.     Personal Securities Rules for All Employees...............1
                        A.         Restricted List.............................1
                        B.         Prohibited Purchases and Sales..............6
                        C.         Discouraged Transactions....................9
                        D.         Exempted Transactions......................10

      Section II.    Additional Special Rules for Personal Securities
                     Transactions of Access Persons and Certain Investment
                     Professionals............................................12

      Section III.   Prohibited Conduct for All Employees.....................17

      Section IV.    Special Rules for Officers and Employees of Putnam
                     Europe Ltd...............................................26

      Section V.     Reporting Requirements for All Employees.................28

      Section VI.    Education Requirements...................................31

      Section VII.   Compliance and Appeal Procedures.........................32

      Appendix A.    .........................................................34
                     Preamble       ..........................................35
                     Definitions:   Insider Trading...........................36
                     Section 1.     Rules Concerning Inside Information.......38
                     Section 2.     Overview of Insider Trading...............41

      Appendix B.    Policy Statement Regarding Employee Trades in Shares
                     of Putnam Closed-End Funds...............................46

      Appendix C.    Clearance Form for Portfolio Manager Sales Out of
                     Personal Account of Securities Also Held by Fund
                     (For compliance with "Contra-Trading" Rule)..............47

      Appendix D.    Procedures for Approval of New Financial Instruments.....48

      Index          .........................................................50


                                       S                                       i

A     Overview

Every Putnam employee is required, as a condition of continued employment, to read, understand, and comply with the entire Code of Ethics. This Overview is provided only as a convenience and is not intended to substitute for a careful reading of the complete document.

It is the personal responsibility of every Putnam employee to avoid any conduct that could create a conflict, or even the appearance of a conflict, with our clients, or do anything that could damage or erode the trust our clients place in Putnam and its employees. This is the spirit of the Code of Ethics. In accepting employment at Putnam, every employee accepts the absolute obligation to comply with the letter and the spirit of the Code of Ethics. Failure to comply with the spirit of the Code of Ethics is just as much a violation of the Code as failure to comply with the written rules of the Code.

The rules of the Code cover activities, including personal securities transactions, of Putnam employees, certain family members of employees, and entities (such as corporations, trusts, or partnerships) that employees may be deemed to control or influence.

Sanctions will be imposed for violations of the Code of Ethics. Sanctions may include bans on personal trading, reductions in salary increases or bonuses, disgorgement of trading profits, suspension of employment, and termination of employment.

-- Insider trading:

Putnam employees are forbidden to buy or sell any security while either Putnam or the employee is in possession of non-public information ("inside information") concerning the security or the issuer. A violation of Putnam's insider trading policies may result in criminal and civil penalties, including imprisonment and substantial fines.

-- Conflicts of interest:

The Code of Ethics imposes limits on activities of Putnam employees where the activity may conflict with the interests of Putnam or its clients. These include limits on the receipt and solicitation of gifts and on service as a fiduciary for a person or entity outside of Putnam.

For example, Putnam employees generally may not accept gifts over $50 in total value in a calendar year from any entity or any supplier of goods or services to Putnam. In addition, a Putnam employee may not serve as a director of any corporation without prior approval of the Code of Ethics Officer, and Putnam employees may not be members of investment clubs.

-- Confidentiality:

Information about Putnam clients and Putnam investment activity and research is proprietary and confidential and may not be disclosed or used by any Putnam employee outside Putnam without a valid business purpose.

ii S

-- Personal securities trading:

Putnam employees may not buy or sell any security for their own account without clearing the proposed transaction in advance with the Code of Ethics Administrator.

Certain securities are excepted from this requirement (e.g., Marsh & McLennan stock and shares of open-end (not closed-end) Putnam Funds). The Code of Ethics Officer will permit employees to purchase or sell up to 1,000 shares of stock of an issuer whose capitalization exceeds $5 billion, but such purchases or sales must still be cleared.

Clearance must be obtained in advance, between 11:30 a.m. and 4:00
p.m. EST on the day of the trade. Clearance may be obtained between 9:00 a.m. and 4:00 p.m. on the day of the trade for up to 1,000 shares of stock of an issuer whose capitalization exceeds $5 billion. A clearance is valid only for the day it is obtained. The Code also strongly discourages excessive trading by employees for their own account (i.e., more than 10 trades in any calendar quarter). Trading in excess of this level will be reviewed with the Code of Ethics Oversight Committee.

-- Short Selling:

Putnam employees are prohibited from short selling any security, whether or not it is held in a Putnam client portfolio, except that short selling against the S&P 100 and 500 indexes and "against the box" are permitted.

-- Confirmations of trading and periodic account statements:

All Putnam employees must have their brokers send confirmations of personal securities transactions, including transactions of immediate family members and accounts over which the employee has investment discretion, to the Code of Ethics Officer. Employees must contact the Code of Ethics Administrator to obtain an authorization letter from Putnam for setting up a personal brokerage account.

-- Quarterly and annual reporting:

Certain Putnam employees (so-called "Access Persons" as defined by the SEC and in the Code of Ethics) must report all their securities transactions in each calendar quarter to the Code of Ethics Officer within 10 days after the end of the quarter. All Access Persons must disclose all personal securities holdings upon commencement of employment and thereafter on an annual basis. You will be notified if these requirements apply to you. If these requirements apply to you and you fail to report as required, salary increases and bonuses will be reduced.

S iii

--    IPOs and private placements:

      Putnam employees may not buy any securities in an initial public
      offering or in a private placement, except in limited circumstances
      when prior written authorization is obtained.

--    Procedures for Approval of New Financial Instruments:

      No new types of securities or instruments may be purchased for any
      Putnam fund or other client account without the prior approval of
      the Risk Management Committee.

--    Personal securities transactions by Access Persons and certain

investment professionals:

The Code imposes several special restrictions on personal securities transactions by Access Persons and certain investment professionals, which are summarized as follows:

-- "60-Day Holding Period". No Access Person shall profit from the purchase and sale, or sale and purchase, of any security or related derivative security within 60 calendar days.

-- "7-Day" Rule. Before a portfolio manager places an order to buy a security for any portfolio he manages, he must sell from his personal account any such security or related derivative security purchased within the preceding 7 calendar days and disgorge any profit from the sale.

-- "Blackout" Rules. No portfolio manager may sell any security or related derivative security for her personal account until 7 calendar days have passed since the most recent purchase of that security or related derivative security by any portfolio she manages. No portfolio manager may buy any security or related derivative security for his personal account until 7 calendar days have passed since the most recent sale of that security or related derivative security by any portfolio he manages.

-- "Contra-Trading" Rule. No portfolio manager may sell out of her personal account any security or related derivative security that is held in any portfolio she manages unless she has received the written approval of a CIO and the Code of Ethics Officer.

-- No manager may cause a Putnam client to take action for the manager's own personal benefit.

-- SIMILAR RULES LIMIT PERSONAL SECURITIES TRANSACTIONS BY

ANALYSTS, CO-MANAGERS, AND CHIEF INVESTMENT OFFICERS. PLEASE READ THESE RULES CAREFULLY. YOU ARE RESPONSIBLE FOR UNDERSTANDING THE RESTRICTIONS.

This Overview is qualified in its entirety by the provisions of the Code of Ethics. The Code requires that all Putnam employees read, understand, and comply with the entire Code of Ethics.

iv S

A Preamble

It is the personal responsibility of every Putnam employee to avoid any conduct that would create a conflict, or even the appearance of a conflict, with our clients, or embarrass Putnam in any way. This is the spirit of the Code of Ethics. In accepting employment at Putnam, every employee also accepts the absolute obligation to comply with the letter and the spirit of the Code of Ethics. Failure to comply with the spirit of the Code of Ethics is just as much a violation of the Code as failure to comply with the written rules of the Code.

Sanctions will be imposed for violations of the Code of Ethics, including the Code's reporting requirements. Sanctions may include bans on personal trading, reductions in salary increases or bonuses, disgorgement of trading profits, suspension of employment and termination of employment.

Putnam Investments is required by law to adopt a Code of Ethics. The purpose of the law is to prevent abuses in the investment advisory business that can arise when conflicts of interest exist between the employees of an investment adviser and its clients. Having an effective Code of Ethics is good business practice, as well. By adopting and enforcing a Code of Ethics, we strengthen the trust and confidence reposed in us by demonstrating that, at Putnam, client interests come before personal interests.

Putnam has had a Code of Ethics for many years. The first Putnam Code was written more than 30 years ago by George Putnam. It has been revised periodically, and was re-drafted in its entirety in 1989 to take account of legal and regulatory developments in the investment advisory business. Since 1989, the Code has been revised regularly to reflect developments in our business.

The Code that follows represents a balancing of important interests. On the one hand, as a registered investment adviser, Putnam owes a duty of undivided loyalty to its clients, and must avoid even the appearance of a conflict that might be perceived as abusing the trust they have placed in Putnam. On the other hand, Putnam does not want to prevent conscientious professionals from investing for their own account where conflicts do not exist or are so attenuated as to be immaterial to investment decisions affecting Putnam clients.

When conflicting interests cannot be reconciled, the Code makes clear that, first and foremost, Putnam employees owe a fiduciary duty to Putnam clients. In most cases, this means that the affected employee will be required to forego conflicting personal securities transactions. In some cases, personal investments will be permitted, but only in a manner which, because of the circumstances and applicable controls, cannot reasonably be perceived as adversely affecting Putnam client portfolios or taking unfair advantage of the relationship Putnam employees have to Putnam clients.

S v

The Code contains specific rules prohibiting defined types of conflicts. Because every potential conflict cannot be anticipated in advance, the Code also contains certain general provisions prohibiting conflict situations. In view of these general provisions, it is critical that any individual who is in doubt about the applicability of the Code in a given situation seek a determination from the Code of Ethics Officer about the propriety of the conduct in advance. The procedures for obtaining such a determination are described in Section VII of the Code.

It is critical that the Code be strictly observed. Not only will adherence to the Code ensure that Putnam renders the best possible service to its clients, it will ensure that no individual is liable for violations of law.

It should be emphasized that adherence to this policy is a fundamental condition of employment at Putnam. Every employee is expected to adhere to the requirements of this Code of Ethics despite any inconvenience that may be involved. Any employee failing to do so may be subject to such disciplinary action, including financial penalties and termination of employment, as determined by the Code of Ethics Oversight Committee or the Chief Executive Officer of Putnam Investments.

vi S

A Definitions: Code of Ethics

The words given below are defined specifically for the purposes of Putnam's Code of Ethics.

Gender references in the Code of Ethics alternate.

Rule of construction regarding time periods. Unless the context indicates otherwise, time periods used in the Code of Ethics shall be measured inclusively, i.e., including the dates from and to which the measurement is made.

Access Persons. Access Persons are (i) all officers of Putnam Investment Management, Inc. (the investment manager of Putnam's mutual funds),
(ii) all employees within Putnam's Investment Division, and (iii) all other employees of Putnam who, in connection with their regular duties, have access to information regarding purchases or sales of portfolio securities by a Putnam mutual fund, or who have access to information regarding recommendations with respect to such purchases or sales.

Code of Ethics Administrator. The individual designated by the Code of Ethics Officer to assume responsibility for day-to-day, non-discretionary administration of this Code. The current Code of Ethics Administrator is Laura Rose, who can be reached at extension 11104.

Code of Ethics Officer. The Putnam officer who has been assigned the responsibility of enforcing and interpreting this Code. The Code of Ethics Officer shall be the General Counsel or such other person as is designated by the President of Putnam Investments. If the Code of Ethics Officer is unavailable, the Deputy Code of Ethics Officer (to be appointed by the Code of Ethics Officer) shall act in his stead.

Code of Ethics Oversight Committee. Has oversight responsibility for administering the Code of Ethics. Members include the Code of Ethics Officer, the Head of Investments, and other members of Putnam's senior management approved by the Chief Executive Officer of Putnam.

Immediate family. Spouse, minor children, or other relatives living in the same household as the Putnam employee.

Policy Statements. The Policy Statement Concerning Insider Trading Prohibitions attached to the Code as Appendix A and the Policy Statement Regarding Employee Trades in Shares of Putnam Closed-End Funds attached to the Code as Appendix B.

Private placement. Any offering of a security not to the public, but to sophisticated investors who have access to the kind of information which would be contained in a prospectus, and which does not require registration with the relevant securities authorities.

Purchase or sale of a security. Any acquisition or transfer of any interest in the security for direct or indirect consideration, and includes the writing of an option.

S vii

Putnam. Any or all of Putnam Investments, Inc., and its subsidiaries, any one of which shall be a "Putnam company."

Putnam client. Any of the Putnam Funds, or any advisory, trust, or other client of Putnam.

Putnam employee (or "employee"). Any employee of Putnam.

Restricted List. The list established in accordance with Rule 1 of Section I.A.

Security. Any type or class of equity or debt security and any rights relating to a security, such as put and call options, warrants, and convertible securities. Unless otherwise noted, the term "security" does not include: currencies, direct and indirect obligations of the U.S. government and its agencies, commercial paper, certificates of deposit, repurchase agreements, bankers' acceptances, any other money market instruments, shares of open-end mutual funds (including Putnam open-end mutual funds), securities of The Marsh & McLennan Companies, Inc., commodities, and any option on a broad-based market index or an exchange-traded futures contract or option thereon.

Transaction for a personal account (or "personal securities transaction").
Securities transactions: (a) for the personal account of any employee;
(b) for the account of a member of the immediate family of any employee; (c) for the account of a partnership in which a Putnam employee or immediate family member is a general partner or a partner with investment discretion; (d) for the account of a trust in which a Putnam employee or immediate family member is a trustee with investment discretion; (e) for the account of a closely-held corporation in which a Putnam employee or immediate family member holds shares and for which he has investment discretion; and (f) for any account other than a Putnam client account which receives investment advice of any sort from the employee or immediate family member, or as to which the employee or immediate family member has investment discretion.

viii S

A Section I. Personal Securities Rules for All Employees

A. Restricted List

RULE 1

No Putnam employee shall purchase or sell for his personal account any security without prior clearance obtained through Putnam's Intranet pre-clearance system or from the Code of Ethics Administrator. No clearance will be granted for securities appearing on the Restricted List. Securities shall be placed on the Restricted List in the following circumstances:

(a) when orders to purchase or sell such security have been entered for any Putnam client, or the security is being actively considered for purchase or sale for any Putnam client;

(b) with respect to voting securities of corporations in the banking, savings and loan, communications, or gaming (i.e., casinos) industries, when holdings of Putnam clients exceed 7% (for public utilities, the threshold is 4%);

(c) when, in the judgment of the Code of Ethics Officer, other circumstances warrant restricting personal transactions of Putnam employees in a particular security;

(d) the circumstances described in the Policy Statement Concerning Insider Trading Prohibitions, attached as Appendix A.

Reminder: Securities for an employee's "personal account" include securities owned by certain family members of a Putnam employee. Thus, this Rule prohibits certain trades by family members of Putnam employees. See Definitions.

Compliance with this rule does not exempt an employee from complying with any other applicable rules of the Code, such as those described in Section III. In particular, Access Persons and certain investment professionals must comply with the special rules set forth in
Section II.

EXCEPTIONS

A. "Large Cap" Exception. If a security appearing on the Restricted List is an equity security for which the issuer has a market capitalization (defined as outstanding shares multiplied by current price per share) of over $5 billion, then a Putnam employee may purchase or sell up to 1,000 shares of the security per day for his personal account. This exception does not apply if the security appears on the Restricted List in the circumstances described in subpart (b),
(c), or (d) of Rule 1.

B. Investment Grade Or Higher Fixed-Income Exception. If a security being traded or considered for trade for a Putnam client is a non-convertible fixed-income security which bears a rating of BBB (Standard & Poor's) or Baa (Moody's) or any comparable rating or

S 1

higher, then a Putnam employee may purchase or sell that security for his personal account without regard to the activity of Putnam clients. This exception does not apply if the security has been placed on the Restricted List in the circumstances described in subpart (b), (c), or (d) of Rule 1.

C. Pre-Clearing Transactions Effected by Share Subscription. The purchase and sale of securities made by subscription rather than on an exchange are limited to issuers having a market capitalization of $5 billion or more and are subject to a 1,000 share limit. The following are procedures to comply with Rule 1 when effecting a purchase or sale of shares by subscription:

(a) The Putnam employee must pre-clear the trade on the day he or she submits a subscription to the issuer, rather than on the actual day of the trade since the actual day of the trade typically will not be known to the employee who submits the subscription. At the time of pre-clearance, the employee will be told whether the purchase is permitted (in the case of a corporation having a market capitalization of $5 billion or more), or not permitted (in the case of a smaller capitalization issuer).

(b) The subscription for any purchase or sale of shares must be reported on the employee's quarterly personal securities transaction report, noting the trade was accomplished by subscription.

(c) As no brokers are involved in the transaction, the confirmation requirement will be waived for these transactions, although the Putnam employee must provide the Legal and Compliance Department with any transaction summaries or statements sent by the issuer.

2 S

SANCTION GUIDELINES

A. Failure to Pre-Clear a Personal Trade

1. First violation: One month trading ban with written warning that a future violation will result in a longer trading ban.

2. Second violation: Three month trading ban and written notice to Managing Director of the employee's division.

3. Third violation: Six month trading ban with possible longer or permanent trading ban based upon review by Code of Ethics Oversight Committee.

B. Failure to Pre-Clear Securities on the Restricted List

1. First violation: Disgorgement of any profit from the transaction, one month trading ban, and written warning that a future violation will result in a longer trading ban.

2. Second violation: Disgorgement of any profit from the transaction, three month trading ban, and written notice to Managing Director of the employee's division.

3. Third violation: Disgorgement of any profit from the transaction, and six month trading ban with possible longer or permanent trading ban based upon review by Code of Ethics Oversight Committee.

NOTE: These are the sanction guidelines for successive failures to pre-clear personal trades within a 2-year period. The Code of Ethics Oversight Committee retains the right to increase or decrease the sanction for a particular violation in light of the circumstances. The Committee's belief that an employee intentionally has violated the Code of Ethics will result in more severe sanctions than outlined in the guidelines above. The sanctions described in Paragraph B apply to Restricted List securities that are: (i) small cap stocks (i.e., stocks not entitled to the "Large Cap" exception) and
(ii) large cap stocks that exceed the daily 1,000 share maximum permitted under the "Large Cap" exception. Failure to pre-clear an otherwise permitted trade of up to 1,000 shares of a large cap security is subject to the sanctions described above in Paragraph A.

IMPLEMENTATION

A. Maintenance of Restricted List. The Restricted List shall be maintained by the Code of Ethics Administrator.

B. Consulting Restricted List. An employee wishing to trade any security for his personal account shall first obtain clearance through Putnam's Intranet pre-clearance system. The system may be accessed from your desktop computer through Internet access software and following the directions provided in the system. The current address of the

S 3

Intranet pre-clearance system can be obtained from the Code of Ethics Administrator. Employees may pre-clear all securities between 11:30 a.m. and 4:00 p.m. EST, and may pre-clear purchases or sales of up to 1,000 shares of issuers having a market capitalization of more than $5 billion between 9:00
a.m. and 4:00 p.m. EST. Requests to make personal securities transactions may not be made using the system or presented to the Code of Ethics Administrator after 4:00 p.m.

The pre-clearance system will inform the employee whether the security may be traded and whether trading in the security is subject to the "Large Cap" limitation. The response of the pre-clearance system as to whether a security appears on the Restricted List and, if so, whether it is eligible for the exceptions set forth after this Rule shall be final, unless the employee appeals to the Code of Ethics Officer, using the procedure described in Section VII, regarding the request to trade a particular security.

A CLEARANCE IS ONLY VALID FOR TRADING ON THE DAY IT IS OBTAINED. Trades in securities listed on Asian or European stock exchanges, however, may be executed WITHIN ONE BUSINESS DAY AFTER PRE-CLEARANCE IS OBTAINED.

If a security is not on the Restricted List, other classes of securities of the same issuer (e.g., preferred or convertible preferred stock) may be on the Restricted List. It is the employee's responsibility to identify with particularity the class of securities for which permission is being sought for a personal investment.

If the Intranet pre-clearance system does not recognize a security, or if an employee is unable to use the system or has any questions with respect to the system or pre-clearance, the employee may consult the Code of Ethics Administrator. The Code of Ethics Administrator shall not have authority to answer any questions about a security other than whether trading is permitted. The response of the Code of Ethics Administrator as to whether a security appears on the Restricted List and, if so, whether it is eligible for the exceptions set forth after this Rule shall be final, unless the employee appeals to the Code of Ethics Officer, using the procedure described in Section VII, regarding the request to trade a particular security.

C. Removal of Securities from Restricted List. Securities shall be removed from the Restricted List when: (a) in the case of securities on the Restricted List pursuant to Rule 1(a), they are no longer being purchased or sold for a Putnam client or actively considered for purchase or sale for a Putnam client;
(b) in the case of securities on the Restricted List pursuant to Rule 1(b), the holdings of Putnam clients fall below the applicable threshold designated in that Rule, or at such earlier time as the Code of Ethics Officer deems appropriate; or (c) in the case of securities on the Restricted List pursuant

4 S

      to Rule 1(c) or 1(d), when circumstances no longer warrant
      restrictions on personal trading.

COMMENTS

1.    Pre-Clearance. Subpart (a) of this Rule is designed to avoid
      the conflict of interest that might occur when an employee
      trades for his personal account a security that currently is
      being traded or is likely to be traded for a Putnam client.
      Such conflicts arise, for example, when the trades of an
      employee might have an impact on the price or availability of
      a particular security, or when the trades of the client might
      have an impact on price to the benefit of the employee. Thus,
      exceptions involve situations where the trade of a Putnam
      employee is unlikely to have an impact on the market.

2.    Regulatory Limits. Owing to a variety of federal statutes and
      regulations in the banking, savings and loan, communications,
      and gaming industries, it is critical that accounts of Putnam
      clients not hold more than 10% of the voting securities of any
      issuer (5% for public utilities). Because of the risk that the
      personal holdings of Putnam employees may be aggregated with
      Putnam holdings for these purposes, subpart (b) of this Rule
      limits personal trades in these areas. The 7% limit (4% for
      public utilities) will allow the regulatory limits to be
      observed.

3.    Options. For the purposes of this Code, options are treated
      like the underlying security. See Definitions. Thus, an
      employee may not purchase, sell, or "write" option contracts
      for a security that is on the Restricted List. A securities
      index will not be put on the Restricted List simply because
      one or more of its underlying securities have been put on the
      Restricted List. The exercise of an options contract (the
      purchase or writing of which was previously pre-cleared) does
      not have to be pre-cleared. Note, however, that the sale of
      securities obtained through the exercise of options must be
      pre-cleared.

4.    Involuntary Transactions. "Involuntary" personal securities
      transactions are exempted from the Code. Special attention
      should be paid to this exemption. (See Section I.D.)

5.    Tender Offers. This Rule does not prohibit an employee from
      tendering securities from his personal account in response to
      an any-and-all tender offer, even if Putnam clients are also
      tendering securities. A Putnam employee is, however,
      prohibited from tendering securities from his personal account
      in response to a partial tender offer, if Putnam clients are
      also tendering securities.

S 5

B.    Prohibited Purchases and Sales

      RULE 1

      Putnam employees are prohibited from short selling any security,
      whether or not the security is held in a Putnam client portfolio.

      EXCEPTIONS

      Short selling against the S&P 100 and 500 indexes and "against the
      box" are permitted.

      RULE 2

      No Putnam employee shall purchase any security for her personal
      account in an initial public offering.

      EXCEPTION

      Pre-existing Status Exception. A Putnam employee shall not be barred
      by this Rule or by Rule 1(a) of Section I.A. from purchasing
      securities for her personal account in connection with an initial
      public offering of securities by a bank or insurance company when
      the employee's status as a policyholder or depositor entitles her to
      purchase securities on terms more favorable than those available to
      the general public, in connection with the bank's conversion from

mutual or cooperative form to stock form, or the insurance company's conversion from mutual to stock form, provided that the employee has had the status entitling her to purchase on favorable terms for at least two years. This exception is only available with respect to the value of bank deposits or insurance policies that an employee owns before the announcement of the initial public offering. This exception does not apply, however, if the security appears on the Restricted List in the circumstances set forth in subparts (b), (c), or (d) of Section I.A., Rule 1.

IMPLEMENTATION

A. General Implementation. An employee shall inquire, before any purchase of a security for her personal account, whether the security to be purchased is being offered pursuant to an initial public offering. If the security is offered through an initial public offering, the employee shall refrain from purchasing that security for her personal account unless the exception applies.

B. Administration of Exception. If the employee believes the exception applies, she shall consult the Code of Ethics Administrator concerning whether the security appears on the Restricted List and if so, whether it is eligible for this exception.

6 S

COMMENTS

1. The purpose of this rule is twofold. First, it is designed to prevent a conflict of interest between Putnam employees and Putnam clients who might be in competition for the same securities in a limited public offering. Second, the rule is designed to prevent Putnam employees from being subject to undue influence as a result of receiving "favors" in the form of special allocations of securities in a public offering from broker-dealers who seek to do business with Putnam.

2. Purchases of securities in the immediate after-market of an initial public offering are not prohibited, provided they do not constitute violations of other portions of the Code of Ethics. For example, participation in the immediate after-market as a result of a special allocation from an underwriting group would be prohibited by Section III, Rule 3 concerning gifts and other "favors."

3. Public offerings subsequent to initial public offerings are not deemed to create the same potential for competition between Putnam employees and Putnam clients because of the pre-existence of a market for the securities.

RULE 3

No Putnam employee shall purchase any security for his personal account in a limited private offering or private placement.

COMMENTS

1. The purpose of this Rule is to prevent a Putnam employee from investing in securities for his own account pursuant to a limited private offering that could compete with or disadvantage Putnam clients, and to prevent Putnam employees from being subject to efforts to curry favor by those who seek to do business with Putnam.

2. Exemptions to the prohibition will generally not be granted where the proposed investment relates directly or indirectly to investments by a Putnam client, or where individuals involved in the offering (including the issuers, broker, underwriter, placement agent, promoter, fellow investors and affiliates of the foregoing) have any prior or existing business relationship with Putnam or a Putnam employee, or where the Putnam employee believes that such individuals may expect to have a future business relationship with Putnam or a Putnam employee.

3. An exemption may be granted, subject to reviewing all the facts and circumstances, for investments in:

(a) Pooled investment funds, including hedge funds, subject to the condition that an employee investing in a pooled investment fund would have no involvement in the

S 7

activities or decision-making process of the fund except for financial reports made in the ordinary course of the fund's business.

(b) Private placements where the investment cannot relate, or be expected to relate, directly or indirectly to Putnam or investments by a Putnam client.

4. Employees who apply for an exemption will be expected to disclose to the Code of Ethics Officer in writing all facts and relationships relating to the proposed investment.

5. Limited partnership interests are frequently sold in private placements. An employee should assume that investment in a limited partnership is barred by these rules, unless the employee has obtained, in advance of purchase, a written exemption under the ad hoc exemption set forth in Section I.D., Rule 2. The procedure for obtaining an ad hoc exemption is described in Section VII, Part 4.

6. Applications to invest in private placements will be reviewed by the Code of Ethics Oversight Committee. This review will take into account, among other factors, the considerations described in the preceding comments.

RULE 4

No Putnam employee shall purchase or sell any security for her personal account or for any Putnam client account while in possession of material, nonpublic information concerning the security or the issuer.

EXCEPTIONS

NONE. Please read Appendix A, Policy Statement Concerning Insider Trading Prohibitions.

RULE 5

No Putnam employee shall purchase from or sell to a Putnam client any securities or other property for his personal account, nor engage in any personal transaction to which a Putnam client is known to be a party, or which transaction may have a significant relationship to any action taken by a Putnam client.

EXCEPTIONS

None.

IMPLEMENTATION

It shall be the responsibility of every Putnam employee to make inquiry prior to any personal transaction sufficient to satisfy himself that the requirements of this Rule have been met.

8 S

COMMENT

This rule is required by federal law. It does not prohibit a Putnam employee from purchasing any shares of an open-end Putnam fund. The policy with respect to employee trading in closed-end Putnam funds is attached as Appendix B.

C. Discouraged Transactions

RULE 1

Putnam employees are strongly discouraged from engaging in naked option transactions for their personal accounts.

EXCEPTIONS

None.

COMMENT

Naked option transactions are particularly dangerous, because a Putnam employee may be prevented by the restrictions in this Code of Ethics from "covering" the naked option at the appropriate time. All employees should keep in mind the limitations on their personal securities trading imposed by this Code when contemplating such an investment strategy. Engaging in naked options transactions on the basis of material, nonpublic information is prohibited. See Appendix A, Policy Statement Concerning Insider Trading Prohibitions.

RULE 2

Putnam employees are strongly discouraged from engaging in excessive trading for their personal accounts.

EXCEPTIONS

None.

COMMENTS

1. Although a Putnam employee's excessive trading may not itself constitute a conflict of interest with Putnam clients, Putnam believes that its clients' confidence in Putnam will be enhanced and the likelihood of Putnam achieving better investment results for its clients over the long term will be increased if Putnam employees rely on their investment -- as opposed to trading -- skills in transactions for their own account. Moreover, excessive trading by a Putnam employee for his or her own account diverts an employee's attention from the responsibility of servicing Putnam clients, and increases the possibilities for transactions that are in actual or apparent conflict with Putnam client transactions.

S 9

2.    Although this Rule does not define excessive trading,
      employees should be aware that if their trades exceed 10
      trades per quarter the trading activity will be reviewed by
      the Code of Ethics Oversight Committee.

D. Exempted Transactions

RULE 1

Transactions which are involuntary on the part of a Putnam employee are exempt from the prohibitions set forth in Sections I.A., I.B., and I.C.

EXCEPTIONS

None.

COMMENTS

1. This exemption is based on categories of conduct that the Securities and Exchange Commission does not consider "abusive."

2. Examples of involuntary personal securities transactions include:

(a) sales out of the brokerage account of a Putnam employee as a result of bona fide margin call, provided that withdrawal of collateral by the Putnam employee within the ten days previous to the margin call was not a contributing factor to the margin call;

(b) purchases arising out of an automatic dividend reinvestment program of an issuer of a publicly traded security.

3. Transactions by a trust in which the Putnam employee (or a member of his immediate family) holds a beneficial interest, but for which the employee has no direct or indirect influence or control with respect to the selection of investments, are involuntary transactions. In addition, these transactions do not fall within the definition of "personal securities transactions." See Definitions.

4. A good-faith belief on the part of the employee that a transaction was involuntary will not be a defense to a violation of the Code of Ethics. In the event of confusion as to whether a particular transaction is involuntary, the burden is on the employee to seek a prior written determination of the applicability of this exemption. The procedures for obtaining such a determination appear in Section VII, Part 3.

RULE 2

Transactions which have been determined in writing by the Code of Ethics Officer before the transaction occurs to be no more than remotely potentially harmful to Putnam clients because

10 S

the transaction would be very unlikely to affect a highly
institutional market, or because the transaction is clearly not
related economically to the securities to be purchased, sold, or
held by a Putnam client, are exempt from the prohibitions set forth
in Sections I.A., I.B., and I.C.

EXCEPTIONS

N.A.

IMPLEMENTATION

An employee may seek an ad hoc exemption under this Rule by
following the procedures in Section VII, Part 4.

COMMENTS

1.    This exemption is also based upon categories of conduct that
      the Securities and Exchange Commission does not consider
      "abusive."

2.    The burden is on the employee to seek a prior written
      determination that the proposed transaction meets the
      standards for an ad hoc exemption set forth in this Rule.

S 11

A     Section II.    Additional Special Rules for Personal Securities
                     Transactions of Access Persons and Certain Investment
                     Professionals

Access Persons (including all Investment Professionals and other employees as defined on page ix)

RULE 1 ("60 - DAY" RULE)

No Access Person shall profit from the purchase and sale, or sale and purchase, of any security or related derivative security within 60 calendar days.

EXCEPTIONS

None, unless prior written approval from the Code of Ethics Officer is obtained. Exceptions may be granted on a case-by-case basis when no abuse is involved and the equities of the situation support an exemption. For example, although an Access Person may buy a stock as a long-term investment, that stock may have to be sold involuntarily due to unforeseen activity such as a merger.

IMPLEMENTATION

1. The 60-Day Rule applies to all Access Persons, as defined in the Definitions section of the Code.

2. Calculation of whether there has been a profit is based upon the market prices of the securities. THE CALCULATION IS NOT NET OF COMMISSIONS OR OTHER SALES CHARGES.

3. As an example, an Access Person would not be permitted to sell a security at $12 that he purchased within the prior 60 days for $10. Similarly, an Access Person would not be permitted to purchase a security at $10 that she had sold within the prior 60 days for $12. If the proposed transaction would be made at a loss, it would be permitted if the pre-clearance requirements are met. See, Section I, Rule 1.

COMMENTS

1. The prohibition against short-term trading profits by Access Persons is designed to minimize the possibility that they will capitalize inappropriately on the market impact of trades involving a client portfolio about which they might possibly have information.

2. Although Chief Investment Officers, Portfolio Managers, and Analysts may sell securities at a profit within 60 days of purchase in order to comply with the requirements of the 7-Day Rule applicable to them (described below), the profit will have to be disgorged to charity under the terms of the 7-Day Rule.

3. Access Persons occasionally make a series of transactions in securities over extended periods of time. For example, an Access Person bought 100 shares of Stock X on Day 1 at $100 per

12 S

      share and then bought 50 additional shares on Day 45 at $95 per
      share. On Day 75, the Access Person sold 20 shares at $105 per
      share. The question arises whether the Access Person violated the
      60-Day Rule. The characterization of the employee's tax basis in the
      shares sold determines the analysis. If, for personal income tax
      purposes, the Access Person characterizes the shares sold as having
      a basis of $100 per share (i.e., shares purchased on Day 1), the
      transaction would be consistent with the 60-Day Rule. However, if
      the tax basis in the shares is $95 per share (i.e., shares purchased
      on Day 45), the transaction would violate the 60-Day Rule.

Certain Investment Professionals

RULE 2 ("7-DAY" RULE)

(a)   Portfolio Managers: Before a portfolio manager places an order to
buy a security for any Putnam client portfolio that he manages, he shall
sell any such security or related derivative security purchased in a
transaction for his personal account within the preceding seven calendar
days.

(b)   Co-Managers: Before a portfolio manager places an order to buy a
security for any Putnam client he manages, his co-manager shall sell any
such security or related derivative security purchased in transaction for
his personal account within the preceding seven calendar days.

(c)   Analysts: Before an analyst makes a buy recommendation for a
security, he shall sell any such security or related derivative security
purchased in a transaction for his personal account within the preceding
seven calendar days.

(d)   Chief Investment Officers: The Chief Investment Officer of an
investment group must sell any security or related derivative security
purchased in a transaction for his personal account within the preceding
seven calendar days before any portfolio manager in the CIO's investment
group places an order to buy such security for any Putnam client account
he manages.

EXCEPTIONS

None.

COMMENTS

1.    This Rule applies to portfolio managers and Chief Investment
      Officers with respect to any purchase (no matter how small) in any
      client account managed or overseen by that portfolio manager or CIO
      (even so-called "clone accounts"). In particular, it should be noted
      that the requirements of this rule also apply with respect to
      purchases in client accounts, including "clone accounts," resulting
      from "cash flows." To comply with the requirements of this rule, it
      is the responsibility of each portfolio manager and CIO to be aware
      of the placement of all orders for purchases of a security by client
      accounts that he or she manages or oversees for 7 days following the
      purchase of that security for his or her personal account.

S 13

2. An investment professional who must sell securities to be in compliance with the 7-Day Rule must absorb any loss and disgorge to charity any profit resulting from the sale.

3. This Rule is designed to avoid even the appearance of a conflict of interest between an investment professional and a Putnam client. A more stringent rule is warranted because, with their greater knowledge and control, these investment professionals are in a better position than other employees to create an appearance of manipulation of Putnam client accounts for personal benefit.

4. "Portfolio manager" is used in this Section as a functional label, and is intended to cover any employee with authority to authorize a trade on behalf of a Putnam client, whether or not such employee bears the title "portfolio manager." "Analyst" is also used in this
Section as a functional label, and is intended to cover any employee who is not a portfolio manager but who may make recommendations regarding investments for Putnam clients.

RULE 3 ("BLACKOUT RULE")

(a) Portfolio Managers: No portfolio manager shall: (i) sell any security or related derivative security for her personal account until seven calendar days have elapsed since the most recent purchase of that security or related derivative security by any Putnam client portfolio she manages or co-manages; or (ii) purchase any security or related derivative security for her personal account until seven calendar days have elapsed since the most recent sale of that security or related derivative security from any Putnam client portfolio that she manages or co-manages.

(b) Analysts: No analyst shall: (i) sell any security or related derivative security for his personal account until seven calendar days have elapsed since his most recent buy recommendation for that security or related derivative security; or (ii) purchase any security or related derivative security for his personal account until seven calendar days have elapsed since his most recent sell recommendation for that security or related derivative security.

(c) Chief Investment Officers: No Chief Investment Officer shall: (i) sell any security or related derivative security for his personal account until seven calendar days have elapsed since the most recent purchase of that security or related derivative security by a portfolio manager in his investment group; or (ii) purchase any security or related derivative security for his personal account until seven calendar days have elapsed since the most recent sale of that security or related derivative security from any Putnam client portfolio managed in his investment group.

EXCEPTIONS

None.

14 S

COMMENTS

1. This Rule applies to portfolio managers and Chief Investment Officers with respect to any transaction (no matter how small) in any client account managed or overseen by that portfolio manager or CIO (even so-called "clone accounts"). In particular, it should be noted that the requirements of this rule also apply with respect to transactions in client accounts, including "clone accounts," resulting from "cash flows." In order to comply with the requirements of this rule, it is the responsibility of each portfolio manager and CIO to be aware of all transactions in a security by client accounts that he or she manages or oversees that took place within the 7 days preceding a transaction in that security for his or her personal account.

2. This Rule is designed to prevent a Putnam portfolio manager or analyst from engaging in personal investment conduct that appears to be counter to the investment strategy she is pursuing or recommending on behalf of a Putnam client.

3. Trades by a Putnam portfolio manager for her personal account in the "same direction" as the Putnam client portfolio she manages, and trades by an analyst for his personal account in the "same direction" as his recommendation, do not present the same danger, so long as any "same direction" trades do not violate other provisions of the Code or the Policy Statements.

RULE 4 ("CONTRA TRADING" RULE)

(a) Portfolio Managers: No portfolio manager shall, without prior clearance, sell out of his personal account securities or related derivative securities held in any Putnam client portfolio that he manages or co-manages.

(b) Chief Investment Officers: No Chief Investment Officer shall, without prior clearance, sell out of his personal account securities or related derivative securities held in any Putnam client portfolio managed in his investment group.

EXCEPTIONS

None, unless prior clearance is given.

IMPLEMENTATION

A. Individuals Authorized to Give Approval. Prior to engaging in any such sale, a portfolio manager shall seek approval, in writing, of the proposed sale. In the case of a portfolio manager or director, prior written approval of the proposed sale shall be obtained from a chief investment officer to whom he reports or, in his absence, another chief investment officer. In the case of a chief investment officer, prior written approval of the proposed sale shall be obtained from another chief investment officer. In addition to the foregoing, prior written approval must also be obtained from the Code of Ethics Officer.

S 15

B. Contents of Written Approval. In every instance, the written approval form attached as Appendix C (or such other form as the Code of Ethics Officer shall designate) shall be used. The written approval should be signed by the chief investment officer giving approval and dated the date such approval was given, and shall state, briefly, the reasons why the trade was allowed and why the investment conduct pursued by the portfolio manager, director, or chief investment officer was deemed inappropriate for the Putnam client account controlled by the individual seeking to engage in the transaction for his personal account. Such written approval shall be sent by the chief investment officer approving the transaction to the Code of Ethics Officer within twenty-four hours or as promptly as circumstances permit. Approvals obtained after a transaction has been completed or while it is in process will not satisfy the requirements of this Rule.

COMMENT

This Rule, like Rule 3 of this Section, is designed to prevent a Putnam portfolio manager from engaging in personal investment conduct that appears to be counter to the investment strategy that he is pursuing on behalf of a Putnam client.

RULE 5

No portfolio manager shall cause, and no analyst shall recommend, a Putnam client to take action for the portfolio manager's or analyst's own personal benefit.

EXCEPTIONS

None.

COMMENTS

1. A portfolio manager who trades in, or an analyst who recommends, particular securities for a Putnam client account in order to support the price of securities in his personal account, or who "front runs" a Putnam client order is in violation of this Rule. Portfolio managers and analysts should be aware that this Rule is not limited to personal transactions in securities (as that word is defined in "Definitions"). Thus, a portfolio manager or analyst who "front runs" a Putnam client purchase or sale of obligations of the U.S. government is in violation of this Rule, although U.S. government obligations are excluded from the definition of "security."

2. This Rule is not limited to instances when a portfolio manager or analyst has malicious intent. It also prohibits conduct that creates an appearance of impropriety. Portfolio managers and analysts who have questions about whether proposed conduct creates an appearance of impropriety should seek a prior written determination from the Code of Ethics Officer, using the procedures described in Section VII, Part 3.

16 S

A        Section III. Prohibited Conduct for All Employees

         RULE 1

         All employees must comply with applicable laws and regulations as well
         as company policies. This includes tax, antitrust, political
         contribution, and international boycott laws. In addition, no employee
         at Putnam may engage in fraudulent conduct of any kind.

         EXCEPTIONS

         None.

         COMMENTS

         1.       Putnam may report to the appropriate legal authorities conduct
                  by Putnam employees that violates this rule.

         2.       It should also be noted that the U.S. Foreign Corrupt
                  Practices Act makes it a criminal offense to make a payment or
                  offer of payment to any non-U.S. governmental official,
                  political party, or candidate to induce that person to affect
                  any governmental act or decision, or to assist Putnam's
                  obtaining or retaining business.

         RULE 2

         No Putnam employee shall conduct herself in a manner which is contrary
         to the interests of, or in competition with, Putnam or a Putnam client,
         or which creates an actual or apparent conflict of interest with a
         Putnam client.

         EXCEPTIONS

         None.

         COMMENTS

         1.       This Rule is designed to recognize the fundamental principle
                  that Putnam employees owe their chief duty and loyalty to
                  Putnam and Putnam clients.

         2.       It is expected that a Putnam employee who becomes aware of an
                  investment opportunity that she believes is suitable for a
                  Putnam client who she services will present it to the
                  appropriate portfolio manager, prior to taking advantage of
                  the opportunity herself.

         RULE 3

         No Putnam employee shall seek or accept gifts, favors, preferential
         treatment, or special arrangements of material value from any
         broker-dealer, investment adviser, financial institution, corporation,
         or other entity, or from any existing or prospective supplier of goods
         or services to Putnam or Putnam Funds. Specifically, any gift over $50
         in value, or any accumulation of gifts which in aggregate exceeds $50
         in value from one source in one calendar year, is prohibited. Any
         Putnam

S 17

employee who is offered or receives an item prohibited by this Rule
must report the details in writing to the Code of Ethics Officer.

EXCEPTIONS

None.

COMMENTS

1.       This rule is intended to permit only proper types of customary
         business amenities. Listed below are examples of items that
         would be permitted under proper circumstances and of items
         that are prohibited under this rule. These examples are
         illustrative and not all-inclusive. Notwithstanding these

examples, a Putnam employee may not, under any circumstances, accept anything that could create the appearance of any kind of conflict of interest. For example, acceptance of any consideration is prohibited if it would create the appearance of a "reward" or inducement for conducting Putnam business either with the person providing the gift or his employer.

2. This rule also applies to gifts or "favors" of material value that an investment professional may receive from a company or other entity being researched or considered as a possible investment for a Putnam client account.

3. Among items not considered of "material value" which, under proper circumstances, would be considered permissible are:

(a) Occasional lunches or dinners conducted for business purposes;

(b) Occasional cocktail parties or similar social gatherings conducted for business purposes;

(d) Small gifts, usually in the nature of reminder advertising, such as pens, calendars, etc., with a value of no more than $50.

4. Among items which are considered of "material value" and which are prohibited are:

(a) Entertainment of a recurring nature such as sporting events, theater, golf games, etc.;

(b) The cost of transportation to a locality outside the Boston metropolitan area, and lodging while in another locality, unless such attendance and reimbursement arrangements have received advance written approval of the Code of Ethics Officer;

(c) Personal loans to a Putnam employee on terms more favorable than those generally available for comparable credit standing and collateral; and

18 S

(d)      Preferential brokerage or underwriting commissions or
         spreads or allocations of shares or interests in an
         investment for the personal account of a Putnam
         employee.

5. As with any of the provisions of the Code of Ethics, a sincere belief by the employee that he was acting in accordance with the requirements of this Rule will not satisfy his obligations under the Rule. Therefore, an employee who is in doubt concerning the propriety of any gift or "favor" should seek a prior written determination from the Code of Ethics Officer, as provided in Part 3 of Section VII.

RULE 4

No Putnam employee may pay, offer, or commit to pay any amount of consideration which might be or appear to be a bribe or kickback in connection with Putnam's business.

EXCEPTIONS

None.

COMMENT

Although the rule does not specifically address political contributions, Putnam employees should be aware that it is against corporate policy to use company assets to fund political contributions of any sort, even where such contributions may be legal. No Putnam employee should offer or agree to make any political contributions (including political dinners and similar fund-raisers) on behalf of Putnam, and no employee will be reimbursed by Putnam for such contributions made by the employee personally.

RULE 5

No contributions may be made with corporate funds to any political party or campaign, whether directly or by reimbursement to an employee for the expense of such a contribution. No Putnam employee shall solicit any charitable, political or other contributions using Putnam letterhead or making reference to Putnam in the solicitation. No Putnam employee shall personally solicit any such contribution while on Putnam business.

EXCEPTIONS

None.

COMMENT

1. Putnam has established a political action committee (PAC) that contributes to worthy candidates for political office. Any request received by a Putnam employee for a political contribution must be directed to Putnam's Legal and Compliance Department.

2. This rule does not prohibit solicitation on personal letterhead by Putnam employees. Nonetheless, Putnam employees should use discretion in soliciting contributions from

S 19

individuals or entities who provide services to Putnam. There should never be a suggestion that any service provider must contribute to keep Putnam's business.

RULE 6

No unauthorized disclosure may be made by any employee or former employee of any trade secrets or proprietary information of Putnam or of any confidential information. No information regarding any Putnam client portfolio, actual or proposed securities trading activities of any Putnam client, or Putnam research shall be disclosed outside the Putnam organization without a valid business purpose.

EXCEPTIONS

None.

COMMENT

All information about Putnam and Putnam clients is strictly confidential. Putnam research information should not be disclosed unnecessarily and never for personal gain.

RULE 7

No Putnam employee shall serve as officer, employee, director, trustee or general partner of a corporation or entity other than Putnam, without prior approval of the Code of Ethics Officer.

EXCEPTION

Charitable or Non-profit Exception. This Rule shall not prevent any Putnam employee from serving as officer, director, or trustee of a charitable or not-for-profit institution, provided that the employee abides by the spirit of the Code of Ethics and the Policy Statements with respect to any investment activity for which she has any discretion or input as officer, director, or trustee. The pre-clearance and reporting requirements of the Code of Ethics do not apply to the trading activities of such charitable or not-for-profit institutions for which an employee serves as an officer, director, or trustee.

COMMENTS

1. This Rule is designed to ensure that Putnam cannot be deemed an affiliate of any issuer of securities by virtue of service by one of its officers or employees as director or trustee.

2. Certain charitable or not-for-profit institutions have assets (such as endowment funds or employee benefit plans) which require prudent investment. To the extent that a Putnam employee (because of her position as officer, director, or trustee of an outside entity) is charged with responsibility to invest such assets prudently, she may not be able to discharge that duty while simultaneously abiding by the spirit of the Code of Ethics and the Policy Statements. Employees are cautioned that they should not accept service as an officer, director, or trustee of an outside charitable or not-for-profit entity where such investment responsibility is involved,

20 S

         without seriously considering their ability to discharge their
         fiduciary duties with respect to such investments.

RULE 8

No Putnam employee shall serve as a trustee, executor, custodian, any other fiduciary, or as an investment adviser or counselor for any account outside Putnam.

EXCEPTIONS

Charitable or Religious Exception. This Rule shall not prevent any Putnam employee from serving as fiduciary with respect to a religious or charitable trust or foundation, so long as the employee abides by the spirit of the Code of Ethics and the Policy Statements with respect to any investment activity over which he has any discretion or input. The pre-clearance and reporting requirements of the Code of Ethics do not apply to the trading activities of such a religious or charitable trust or foundation.

Family Trust or Estate Exception. This Rule shall not prevent any Putnam employee from serving as fiduciary with respect to a family trust or estate, so long as the employee abides by all of the Rules of the Code of Ethics with respect to any investment activity over which he has any discretion.

COMMENT

The roles permissible under this Rule may carry with them the obligation to invest assets prudently. Once again, Putnam employees are cautioned that they may not be able to fulfill their duties in that respect while abiding by the Code of Ethics and the Policy Statements.

RULE 9

No Putnam employee may be a member of any investment club.

EXCEPTIONS

None.

COMMENT

This Rule guards against the danger that a Putnam employee may be in violation of the Code of Ethics and the Policy Statements by virtue of his personal securities transactions in or through an entity that is not bound by the restrictions imposed by this Code of Ethics and the Policy Statements. Please note that this restriction also applies to the spouse of a Putnam employee and any relatives of a Putnam employee living in the same household as the employee, as their transactions are covered by the Code of Ethics (see page x).

S 21

RULE 10

No Putnam employee may become involved in a personal capacity in consultations or negotiations for corporate financing, acquisitions or other transactions for outside companies (whether or not held by any Putnam client), nor negotiate nor accept a fee in connection with these activities without obtaining the prior written permission of the president of Putnam Investments.

EXCEPTIONS

None.

RULE 11

No new types of securities or instruments may be purchased for a Putnam fund or other client account without following the procedures set forth in Appendix D.

EXCEPTIONS

None.

COMMENT

See Appendix D.

RULE 12

No employee may create or participate in the creation of any record that is intended to mislead anyone or to conceal anything that is improper.

EXCEPTIONS

None.

COMMENT

In many cases, this is not only a matter of company policy and ethical behavior but also required by law. Our books and records must accurately reflect the transactions represented and their true nature. For example, records must be accurate as to the recipient of all payments; expense items, including personal expense reports, must accurately reflect the true nature of the expense. No unrecorded fund or asset shall be established or maintained for any reason.

RULE 13

No employee should have any direct or indirect (including by a family member or close relative) personal financial interest (other than normal investments not material to the employee in the entity's publicly traded securities) in any business, with which Putnam has dealings unless such interest is disclosed and approved by the Code of Ethics Officer.

22 S

RULE 14

No employee shall, with respect to any affiliate of Putnam that provides investment advisory services and is listed below in Comment 4 to this Rule, as revised from time to time (each an "NPA"),

(a) directly or indirectly seek to influence the purchase, retention, or disposition of, or exercise of voting, consent, approval or similar rights with respect to, any portfolio security in any account or fund advised by the NPA and not by Putnam,

(b) transmit any information regarding the purchase, retention or disposition of, or exercise of voting, consent, approval or similar rights with respect to, any portfolio security held in a Putnam or NPA client account to any personnel of the NPA,

(c) transmit any trade secrets, proprietary information, or confidential information of Putnam to the NPA without a valid business purpose,

(d) use confidential information or trade secrets of the NPA for the benefit of the employee, Putnam, or any other NPA, or

(e) breach any duty of loyalty to the NPA by virtue of service as a director or officer of the NPA.

COMMENT

1. Sections (a) and (b) of the Rule are designed to help ensure that the portfolio holdings of Putnam clients and clients of the NPA need not be aggregated for purposes of determining beneficial ownership under Section 13(d) of the Securities Exchange Act or applicable regulatory or contractual investment restrictions that incorporate such definition of beneficial ownership. Persons who serve as directors or officers of both Putnam and an NPA would take care to avoid even inadvertent violations of Section (b). Section (a) does not prohibit a Putnam employee who serves as a director or officer of the NPA from seeking to influence the modification or termination of a particular investment product or strategy in a manner that is not directed at any specific securities. Sections (a) and (b) do not apply when a Putnam affiliate serves as an adviser or subadviser to the NPA or one of its products, in which case normal Putnam aggregation rules apply.

2. As a separate entity, any NPA may have trade secrets or confidential information that it would not choose to share with Putnam. This choice must be respected.

3. When Putnam employees serve as directors or officers of an NPA, they are subject to common law duties of loyalty to the NPA, despite their Putnam employment. In general, this means that when performing their duties as NPA directors or officers, they must act in the best interest of the NPA and its shareholders. Putnam's Legal and Compliance Department will assist any

S 23

Putnam employee who is a director or officer of an NPA and has questions about the scope of his or her responsibilities to the NPA.

4. Entities that are currently non-Putnam affiliates within the scope of this Rule are: Cisalpina Gestioni, S.p.A., PanAgora Asset Management Inc., PanAgora Asset Management Ltd., Nissay Asset Management Co., Ltd., and Thomas H. Lee Partners, L.P.

RULE 15

No employee shall use computer hardware, software, data, Internet, electronic mail, voice mail, electronic messaging ("e-mail" or "cc:
Mail"), or telephone communications systems in a manner that is inconsistent with their use as set forth in policy statements governing their use that are adopted from time to time by Putnam. No employee shall introduce a computer "virus" or computer code that may result in damage to Putnam's information or computer systems.

EXCEPTIONS

None.

COMMENT

1. Internet and Electronic Messaging Policies. As more and more employees of Putnam Investments use the Internet to connect with Putnam's customers, vendors, suppliers and other key organizations, it is important that all Putnam employees understand the appropriate use guidelines and how to protect assets of Putnam and its clients whenever using the Internet. Internet access is provided to designated employees to connect with worldwide information resources for the benefit of the company and its clients. Such access is not intended for personal use. Employees using the Internet or any electronic messaging system must do so in a responsible, ethical and lawful manner.

- Putnam has adopted a Policy and Guidelines on Internet Use. A copy of this policy statement is included in the Putnam Employee Handbook and is available online (you may contact Putnam's Human Resources Department for the on-line address). Failure to comply with this policy statement is a violation of Putnam's Code of Ethics.

2. System Security Policy Statement. It is the policy of Putnam Investments to secure its computer hardware, software, data, electronic mail, voice mail and Internet access by placing strict controls and restrictions on their access and use.

- Putnam has adopted a System Security Policy Statement. This policy statement governs the use of computer hardware and software, data, electronic mail, voice mail, Internet and commercial online services, computer passwords and logon Ids, and workstation security. A copy of this policy statement is included in the Putnam Employee Handbook and is available

24 S

         online (you may contact Putnam's Human Resources Department
         for the on-line address). Failure to comply with this policy
         statement is a violation of Putnam's Code of Ethics.

3.       Computer Virus Policy and Procedure. Putnam has adopted a
         Computer Virus Policy and Procedure. This policy sets forth
         guidelines to prevent computer viruses, procedures to be
         followed in the event a computer may be infected with a virus,
         and a description of virus symptoms. A copy of this policy
         statement is included in the Putnam Employee Handbook and is
         available online (you may contact Putnam's Human Resources
         Department for the on-line address). Failure to comply with
         this policy statement is a violation of Putnam's Code of
         Ethics.

S 25

A      Section IV. Special Rules for Officers and Employees of Putnam
                   Europe Ltd.

         RULE 1

In situations subject to Section I.A., Rule 1 (Restricted List Personal Securities Transactions), the Putnam Europe Ltd. ("PEL") employee must obtain clearance not only as provided in that rule, but also from PEL's Compliance Officer or her designee, who must approve the transaction before any trade is placed and record the approval.

EXCEPTIONS

None.

IMPLEMENTATION

Putnam's Code of Ethics Administrator in Boston (the "Boston Administrator") has also been designated the Assistant Compliance Officer of PEL and has been delegated the right to approve or disapprove personal securities transactions in accordance with the foregoing requirement. Therefore, approval from the Code of Ethics Administrator for PEL employees to make personal securities investments constitutes approval under the Code of Ethics and also for purposes of compliance with IMRO, the U.K. self-regulatory organization that regulates PEL.

The position of London Code of Ethics Administrator (the "London Administrator") has also been created (Jane Barlow is the current London Administrator). All requests for clearances must be made by e-mail to the Boston Administrator copying the London Administrator. The e-mail must include the number of shares to be bought or sold and the name of the broker(s) involved. Where time is of the essence clearances can be made by telephone to the Boston Administrator but they must be followed up by e-mail.

Both the Boston and London Administrators will maintain copies of all clearances for inspection by senior management and regulators.

RULE 2

No PEL employee may trade with any broker or dealer unless that broker or dealer has sent a letter to the London Administrator agreeing to deliver copies of trade confirmations to PEL. No PEL employee may enter into any margin or any other special dealing arrangement with any broker-dealer without the prior written consent of the PEL Compliance Officer.

EXCEPTIONS

None.

IMPLEMENTATION

PEL employees will be notified separately of this requirement once a year by the PEL Compliance Officer, and are required to provide an annual certification of compliance with the Rule.

26 S

All PEL employees must inform the London Administrator of the names of
all brokers and dealers with whom they trade prior to trading. The
London Administrator will send a letter to the broker(s) in question
requesting them to agree to deliver copies of confirms to PEL. The
London Administrator will forward copies of the confirms to the Boston
Administrator. PEL employees may trade with a broker only when the
London Administrator has received the signed agreement from that
broker.

RULE 3

For purposes of the Code of Ethics, including Putnam's Policy Statement
on Insider Trading Prohibitions, PEL employees must also comply with
Part V of the Criminal Justice Act 1993 on insider dealing.

EXCEPTIONS

None.

IMPLEMENTATION

To ensure compliance with U.K. insider dealing legislation, PEL
employees must observe the relevant procedures set forth in PEL's
Compliance Manual, a copy of which is sent to each PEL employee, and
sign an annual certification as to compliance.

S 27

A        Section V. Reporting Requirements for All Employees

         Reporting of Personal Securities Transactions

         RULE 1

         Each Putnam employee shall ensure that broker-dealers send all
         confirmations of securities transactions for his personal accounts to
         the Code of Ethics Officer. (For the purpose of this Rule, "securities"
         shall include securities of The Marsh & McLennan Companies, Inc., and
         any option on a security or securities index, including broad-based
         market indexes.)

         EXCEPTIONS

         None.

         IMPLEMENTATION

         1.       Putnam employees must instruct their broker-dealers to send
                  confirmations to Putnam and must follow up with the
                  broker-dealer on a reasonable basis to ensure that the
                  instructions are being followed. Putnam employees should
                  contact the Code of Ethics Administrator to obtain a letter
                  from Putnam authorizing the setting up of a personal brokerage
                  account. Confirmations should be submitted to the Code of

Ethics Administrator. (Specific procedures apply to employees of Putnam Europe Ltd. ("PEL"). Employees of PEL should contact the London Code of Ethics Administrator.) Failure of a broker-dealer to comply with the instructions of a Putnam employee to send confirmations shall be a violation by the Putnam employee of this Rule.

COMMENTS

1. "Transactions for personal accounts" is defined broadly to include more than transaction in accounts under an employee's own name. See Definitions.

2. A confirmation is required for all personal securities transactions, whether or not exempted or excepted by this Code.

3. To the extent that a Putnam employee has investment authority over securities transactions of a family trust or estate, confirmations of those transactions must also be made, unless the employee has received a prior written exception from the Code of Ethics Officer.

28 S

RULE 2

Every Access Person shall file a quarterly report, within ten calendar days of the end of each quarter, recording all purchases and sales of any securities for personal accounts as defined in the Definitions. (For the purpose of this Rule, "securities" shall include securities of The Marsh & McLennan Companies, Inc., and any option on a security or securities index, including broad-based market indexes.)

EXCEPTIONS

None.

IMPLEMENTATION

All employees required to file such a report will receive a blank form at the end of the quarter from the Code of Ethics Administrator. The form will specify the information to be reported. The form shall also contain a representation that employees have complied fully with all provisions of the Code of Ethics.

COMMENT

1. The date for each transaction required to be disclosed in the quarterly report is the trade date for the transaction, not the settlement date.

2. If the requirement to file a quarterly report applies to you and you fail to report within the required 10-day period, salary increases and bonuses will be reduced in accordance with guidelines stated in the form.

REPORTING OF PERSONAL SECURITIES HOLDINGS

RULE 3

Access Persons must disclose all personal securities holdings to the Code of Ethics Officer upon commencement of employment and thereafter on an annual basis.

EXCEPTIONS

None.

COMMENT

These requirements are mandated by SEC regulations and are designed to facilitate the monitoring of personal securities transactions. Putnam's Code of Ethics Administrator will provide Access Persons with the form for making these reports and the specific information that must be disclosed at the time that the disclosure is required.

S 29

OTHER REPORTING POLICIES

The following rules are designed to ensure that Putnam's internal Control and Reporting professionals are aware of all items that might need to be addressed by Putnam or reported to appropriate entities.

RULE 4

If a Putnam employee suspects that fraudulent or other irregular activity might be occurring at Putnam, the activity must be reported immediately to the Managing Director in charge of that employee's business unit. Managing Directors who are notified of any such activity must immediately report it in writing to Putnam's Chief Financial Officer or Putnam's General Counsel.

RULE 5

Putnam employees must report all communications from regulatory or government agencies (federal, state, or local) to the Managing Director in charge of their business unit. Managing Directors who are notified of any such communication must immediately report it in writing to Putnam's Chief Financial Officer or Putnam's General Counsel.

RULE 6

All claims, circumstances or situations that come to the attention of a Putnam employee must be reported through the employee's management structure up to the Managing Director in charge of the employee's business unit. Managing Directors who are notified of any such claim, circumstance or situation that might give rise to a claim against Putnam for more than $100,000 must immediately report in writing it to Putnam's Chief Financial Officer or Putnam's General Counsel.

RULE 7

All possible violations of law or regulations at Putnam that come to the attention of a Putnam employee must be reported immediately to the Managing Director in charge of the employee's business unit. Managing Directors who are notified of any such activity must immediately report it in writing to Putnam's Chief Financial Officer or Putnam's General Counsel.

RULE 8

Putnam employees must report all requests by anyone for Putnam to participate in or cooperate with an international boycott to the Managing Director in charge of their business unit. Managing Directors who are notified of any such request must immediately report it in writing to Putnam's Chief Financial Officer or Putnam's General Counsel.

30 S

A Section VI. Education Requirements

Every Putnam employee has an obligation to fully understand the requirements of the Code of Ethics. The Rules set forth below are designed to enhance this understanding.

RULE 1

A copy of the Code of Ethics will be distributed to every Putnam employee periodically. All Access Persons will be required to certify periodically that they have read, understood, and will comply with the provisions of the Code of Ethics, including the Code's Policy Statement Concerning Insider Trading Prohibitions.

RULE 2

Every investment professional will attend a meeting periodically at which the Code of Ethics will be reviewed.

S 31

A Section VII. Compliance and Appeal Procedures

1. Assembly of Restricted List. The Code of Ethics Administrator will coordinate the assembly and maintenance of the Restricted List. The list will be assembled each day by 11:30 a.m. EST. No employee may engage in a personal securities transaction without prior clearance on any day, even if the employee believes that the trade will be subject to an exception. Note that pre-clearance may be obtained after 9:00 a.m. for purchases or sales of up to 1,000 shares of issuers having a market capitalization in excess of $5 billion.

2. Consultation of Restricted List. It is the responsibility of each employee to pre-clear through the Intranet pre-clearance system or consult with the Code of Ethics Administrator prior to engaging in a personal securities transaction, to determine if the security he proposes to trade is on the Restricted List and, if so, whether it is subject to the "Large Cap" limitation. The Intranet pre-clearance system and the Code of Ethics Administrator will be able to tell an employee whether a security is on the Restricted List. No other information about the Restricted List is available through the Intranet pre-clearance system. The Code of Ethics Administrator shall not be authorized to answer any questions about the Restricted List, or to render an opinion about the propriety of a particular personal securities transaction. Any such questions shall be directed to the Code of Ethics Officer.

3. Request for Determination. An employee who has a question concerning the applicability of the Code of Ethics to a particular situation shall request a determination from the Code of Ethics Officer before engaging in the conduct or personal securities transaction about which he has a question.

If the question pertains to a personal securities transaction, the request shall state for whose account the transaction is proposed, the relationship of that account to the employee, the security proposed to be traded, the proposed price and quantity, the entity with whom the transaction will take place (if known), and any other information or circumstances of the trade that could have a bearing on the Code of Ethics Officer's determination. If the question pertains to other conduct, the request for determination shall give sufficient information about the proposed conduct to assist the Code of Ethics Officer in ascertaining the applicability of the Code. In every instance, the Code of Ethics Officer may request additional information, and may decline to render a determination if the information provided is insufficient.

The Code of Ethics Officer shall make every effort to render a determination promptly.

No perceived ambiguity in the Code of Ethics shall excuse any violation. Any person who believes the Code to be ambiguous in a particular situation shall request a determination from the Code of Ethics Officer.

32 S

4.       Request for Ad Hoc Exemption. Any employee who wishes to
         obtain an ad hoc exemption under Section I.D., Rule 2, shall
         request from the Code of Ethics Officer an exemption in
         writing in advance of the conduct or transaction sought to be
         exempted. In the case of a personal securities transaction,
         the request for an ad hoc exemption shall give the same
         information about the transaction required in a request for
         determination under Part 3 of this Section, and shall state
         why the proposed personal securities transaction would be
         unlikely to affect a highly institutional market, or is
         unrelated economically to securities to be purchased, sold, or
         held by any Putnam client. In the case of other conduct, the
         request shall give information sufficient for the Code of
         Ethics Officer to ascertain whether the conduct raises
         questions of propriety or conflict of interest (real or
         apparent).

         The Code of Ethics Officer shall make every effort to promptly
         render a written determination concerning the request for an
         ad hoc exemption.

5.       Appeal to Code of Ethics Officer with Respect to Restricted
         List. If an employee ascertains that a security that he wishes
         to trade for his personal account appears on the Restricted
         List, and thus the transaction is prohibited, he may appeal
         the prohibition to the Code of Ethics Officer by submitting a
         written memorandum containing the same information as would be
         required in a request for a determination. The Code of Ethics
         Officer shall make every effort to respond to the appeal
         promptly.

6.       Information Concerning Identity of Compliance Personnel. The
         names of Code of Ethics personnel are available by contacting
         the Legal and Compliance Department.


                                                                     33

                               S

Appendix A

POLICY STATEMENT CONCERNING
INSIDER TRADING PROHIBITIONS

piv
s

34 S

A        Preamble

         Putnam has always forbidden trading on material nonpublic information
         ("inside information") by its employees. Tougher federal laws make it
         important for Putnam to restate that prohibition in the strongest
         possible terms, and to establish, maintain, and enforce written
         policies and procedures to prevent the misuse of material nonpublic
         information.

         Unlawful trading while in possession of inside information can be a
         crime. Today, federal law provides that an individual convicted of
         trading on inside information go to jail for some period of time. There
         is also significant monetary liability for an inside trader; the
         Securities and Exchange Commission can seek a court order requiring a
         violator to pay back profits and penalties of up to three times those
         profits. In addition, private plaintiffs can seek recovery for harm
         suffered by them. The inside trader is not the only one subject to
         liability. In certain cases, "controlling persons" of inside traders
         (including supervisors of inside traders or Putnam itself) can be
         liable for large penalties.

         Section 1 of this Policy Statement contains rules concerning inside
         information. Section 2 contains a discussion of what constitutes
         unlawful insider trading.

         Neither material nonpublic information nor unlawful insider trading is
         easy to define. Section 2 of this Policy Statement gives a general
         overview of the law in this area. However, the legal issues are complex
         and must be resolved by the Code of Ethics Officer. If an employee has
         any doubt as to whether she has received material nonpublic
         information, she must consult with the Code of Ethics Officer prior to
         using that information in connection with the purchase or sale of a
         security for his own account or the account of any Putnam client, or
         communicating the information to others. A simple rule of thumb is if
         you think the information is not available to the public at large,
         don't disclose it to others and don't trade securities to which the
         inside information relates. If an employee has failed to consult the
         Code of Ethics Officer, Putnam will not excuse employee misuse of
         inside information on the ground that the employee claims to have been
         confused about this Policy Statement or the nature of the information
         in his possession.

         If Putnam determines, in its sole discretion, that an employee has
         failed to abide by this Policy Statement, or has engaged in conduct
         that raises a significant question concerning insider trading, he will
         be subject to disciplinary action, including termination of employment.

         THERE ARE NO EXCEPTIONS TO THIS POLICY STATEMENT AND NO ONE IS EXEMPT.

S 35

A        Definitions:Insider Trading

         Gender references in Appendix A alternate.

         Code of Ethics Administrator. The individual designated by the Code of
             Ethics Officer to assume responsibility for day-to-day,
             non-discretionary administration of this Policy Statement.

         Code of Ethics Officer. The Putnam officer who has been assigned the
             responsibility of enforcing and interpreting this Policy Statement.
             The Code of Ethics Officer shall be the General Counsel or such
             other person as is designated by the President of Putnam
             Investments. If he is unavailable, the Deputy Code of Ethics
             Officer (to be appointed by the Code of Ethics Officer) shall act
             in his stead.

         Immediate family. Spouse, minor children or other relatives living in
             the same household as the Putnam employee.

         Purchase or sale of a security. Any acquisition or transfer of any
             interest in the security for direct or indirect consideration,
             including the writing of an option.

         Putnam. Any or all of Putnam Investments, Inc., and its subsidiaries,
             any one of which shall be a "Putnam company."

         Putnam client. Any of the Putnam Funds, or any advisory or trust client
             of Putnam.

         Putnam employee (or "employee"). Any employee of Putnam.

         Security. Anything defined as a security under federal law. The term
             includes any type of equity or debt security, any interest in a
             business trust or partnership, and any rights relating to a
             security, such as put and call options, warrants, convertible
             securities, and securities indices. (Note: The definition of
             "security" in this Policy Statement varies significantly from that
             in the Code of Ethics. For example, the definition in this Policy
             Statement specifically includes securities of The Marsh & McLennan
             Companies, Inc.)

         Transaction for a personal account (or "personal securities
             transaction"). Securities transactions: (a) for the personal
             account of any employee; (b) for the account of a member of the
             immediate family of any employee; (c) for the account of a
             partnership in which a Putnam employee or immediate family member
             is a partner with investment discretion; (d) for the account of a
             trust in which a Putnam employee or immediate family member is a
             trustee with investment discretion; (e) for the account of a
             closely-held corporation in which a Putnam employee or immediate
             family member holds shares and for which he has investment
             discretion; and (f) for any account other than a Putnam client
             account which receives investment advice of any sort from the
             employee or immediate family member, or as to which the employee or
             immediate family member has investment discretion.


36                                       S

         Officers and employees of Putnam Europe Ltd. ("PEL") must also consult
         the relevant procedures on compliance with U.K. insider dealing
         legislation set forth in PEL's Compliance Manual (see Rule 3 of Section
         IV of the Code of Ethics).

S 37

A        Section 1. Rules Concerning Inside Information

         RULE 1

         No Putnam employee shall purchase or sell any security listed on the
         Inside Information List (the "Red List") either for his personal
         account or for a Putnam client.

         IMPLEMENTATION

         When an employee contacts the Code of Ethics Administrator seeking
         clearance for a personal securities transaction, the Code of Ethics
         Administrator's response as to whether a security appears on the
         Restricted List will include securities on the Red List.

         COMMENT

         This Rule is designed to prohibit any employee from trading a security
         while Putnam may have inside information concerning that security or
         the issuer. Every trade, whether for a personal account or for a Putnam
         client, is subject to this Rule.

         RULE 2

         No Putnam employee shall purchase or sell any security, either for a
         personal account or for the account of a Putnam client, while in

possession of material, nonpublic information concerning that security or the issuer, without the prior written approval of the Code of Ethics Officer.

IMPLEMENTATION

In order to obtain prior written approval of the Code of Ethics Officer, a Putnam employee should follow the reporting steps prescribed in Rule 3.

COMMENTS

1. Rule 1 concerns the conduct of an employee when Putnam possesses material nonpublic information. Rule 2 concerns the conduct of an employee who herself possesses material, nonpublic information about a security that is not yet on the Red List.

2. If an employee has any question as to whether information she possesses is material and/or nonpublic information, she must contact the Code of Ethics Officer in accordance with Rule 3 prior to purchasing or selling any security related to the information or communicating the information to others. The Code of Ethics Officer shall have the sole authority to determine what constitutes material, nonpublic information for the purposes of this Policy Statement. An employee's mistaken belief that the information was not material nonpublic information will not excuse a violation of this Policy Statement.

38 S

RULE 3

Any Putnam employee who believes he may have received material, nonpublic information concerning a security or the issuer shall immediately report the information to the Code of Ethics Officer and to no one else. After reporting the information, the Putnam employee shall comply strictly with Rule 2 by not trading in the security without the prior written approval of the Code of Ethics Officer and shall: (a) take precautions to ensure the continued confidentiality of the information; and (b) refrain from communicating the information in question to any person.

EXCEPTION

This rule shall not apply to material, nonpublic information obtained by Putnam employees who are directors or trustees of publicly traded companies, to the extent that such information is received in their capacities as directors or trustees, and then only to the extent such information is not communicated to anyone else within the Putnam organization.

IMPLEMENTATION

1. In order to make any use of potential material, nonpublic information, including purchasing or selling a security or communicating the information to others, an employee must communicate that information to the Code of Ethics Officer in a way designed to prevent the spread of such information. Once the employee has reported potential material, nonpublic information to the Code of Ethics Officer, the Code of Ethics Officer will evaluate whether information constitutes material, nonpublic information, and whether a duty exists that makes use of such information improper. If the Code of Ethics Officer determines either (a) that the information is not material or is public, or (b) that use of the information is proper, he will issue a written approval to the employee specifically authorizing trading while in possession of the information, if the employee so requests. If the Code of Ethics Officer determines (a) that the information may be nonpublic and material, and (b) that use of such information may be improper, he will place the security that is the subject of such information on the Red List.

2. An employee who reports potential inside information to the Code of Ethics Officer should expect that the Code of Ethics Officer will need significant information to make the evaluation described in the foregoing paragraph, including information about (a) the manner in which the employee acquired the information, and (b) the identity of individuals to whom the employee has revealed the information, or who have otherwise learned the information. The Code of Ethics Officer may place the affected security or securities on the Red List pending the completion of his evaluation.

3. If an employee possesses documents, disks, or other materials containing the potential inside information, an employee must take precautions to ensure the confidentiality of the information in question. Those precautions include (a) putting documents containing such information out

S 39

of the view of a casual observer, and (b) securing files containing such documents or ensuring that computer files reflecting such information are secure from viewing by others.

40 S

A        Section 2. Overview of Insider Trading

         A.       Introduction

                  This section of the Policy Statement provides guidelines for
                  employees as to what may constitute inside information. It is
                  possible that in the course of her employment, an employee may
                  receive inside information. No employee should misuse that
                  information, either by trading for her own account or by
                  communicating the information to others.

B. What constitutes unlawful insider trading?

The basic definition of unlawful insider trading is trading on material, nonpublic information (also called "inside information") by an individual who has a duty not to "take advantage" of the information. What does this definition mean? The following sections help explain the definition.

1. WHAT IS MATERIAL INFORMATION?

Trading on inside information is not a basis for liability unless the information is material. Information is "material" if a reasonable person would attach importance to the information in determining his course of action with respect to a security. Information which is reasonably likely to affect the price of a company's securities is "material," but effect on price is not the sole criterion for determining materiality. Information that employees should consider material includes but is not limited to: dividend changes, earnings estimates, changes in previously released earnings estimates, reorganization, recapitalization, asset sales, plans to commence a tender offer, merger or acquisition proposals or agreements, major litigation, liquidity problems, significant contracts, and extraordinary management developments.

Material information does not have to relate to a company's business. For example, a court considered as material certain information about the contents of a forthcoming newspaper column that was expected to affect the market price of a security. In that case, a reporter for The Wall Street Journal was found criminally liable for disclosing to others the dates that reports on various companies would appear in the Journal's "Heard on the Street" column and whether those reports would be favorable or not.

2. WHAT IS NONPUBLIC INFORMATION?

Information is nonpublic until it has been effectively communicated to, and sufficient opportunity has existed for it to be absorbed by, the marketplace. One must be able to point to some fact to show that the information is generally public. For example, information found in a report filed with the Securities and Exchange Commission, or

S 41

         appearing in Dow Jones, Reuters Economic Services,
         The Wall Street Journal, or other publications of
         general circulation would be considered public.

3.       WHO HAS A DUTY NOT TO "TAKE ADVANTAGE" OF INSIDE
         INFORMATION?

         Unlawful insider trading occurs only if there is a
         duty not to "take advantage" of material nonpublic
         information. When there is no such duty, it is
         permissible to trade while in possession of such
         information. Questions as to whether a duty exists
         are complex, fact-specific, and must be answered by a
         lawyer.

a. Insiders and Temporary Insiders. Corporate "insiders" have a duty not to take advantage of inside information. The concept of "insider" is broad. It includes officers, directors, and employees of a corporation. In addition, a person can be a "temporary insider" if she enters into a special confidential relationship with a corporation and as a result is given access to information concerning the corporation's affairs. A temporary insider can include, among others, accounting firms, consulting firms, law firms, banks and the employees of such organizations. Putnam would generally be a temporary insider of a corporation it advises or for which it performs other services, because typically Putnam clients expect Putnam to keep any information disclosed to it confidential.

EXAMPLE

An investment adviser to the pension fund of
a large publicly-traded corporation, Acme,
Inc., learns from an Acme employee that Acme
will not be making the minimum required
annual contribution to the pension fund
because of a serious downturn in Acme's
financial situation. The information
conveyed is material and nonpublic.

COMMENT

Neither the investment adviser, its
employees, nor clients can trade on the
basis of that information, because the
investment adviser and its employees could
be considered "temporary insiders" of Acme.

b. Misappropriators. Certain people who are not insiders (or temporary insiders) also have a duty not to deceptively take advantage of inside information. Included in this category is an individual who "misappropriates" (or takes for his own use) material, nonpublic information in violation of a duty owed either to the corporation that is the subject of inside information or some other entity. Such a misappropriator can be held liable if he trades while in possession of that material, nonpublic information.

42 S

EXAMPLE

The chief financial officer of Acme, Inc.,
is aware of Acme's plans to engage in a
hostile takeover of Profit, Inc. The
proposed hostile takeover is material and
nonpublic.

COMMENT

The chief financial officer of Acme cannot
trade in Profit, Inc.'s stock for his own
account. Even though he owes no duty to
Profit, Inc., or its shareholders, he owes a
duty to Acme not to "take advantage" of the
information about the proposed hostile
takeover by using it for his personal
benefit.

c. Tippers and Tippees. A person (the "tippee") who receives material, nonpublic information from an insider or misappropriator (the "tipper") has a duty not to trade while in possession of that information if he knew or should have known that the information was provided by the tipper for an improper purpose and in breach of a duty owed by the tipper. In this context, it is an improper purpose for a person to provide such information for personal benefit, such as money, affection, or friendship.

EXAMPLE

The chief executive officer of Acme, Inc.,
tells his daughter that negotiations
concerning a previously-announced
acquisition of Acme have been terminated.
This news is material and, at the time the
father tells his daughter, nonpublic. The
daughter sells her shares of Acme.

COMMENT

The father is a tipper because he has a duty
to Acme and its shareholders not to "take
advantage" of the information concerning the
breakdown of negotiations, and he has
conveyed the information for an "improper"
purpose (here, out of love and affection for
his daughter). The daughter is a "tippee"
and is liable for trading on inside
information because she knew or should have
known that her father was conveying the
information to her for his personal benefit,
and that her father had a duty not to "take
advantage" of Acme information.

A person can be a tippee even if he did not
learn the information directly from the
tipper, but learned it from a previous
tippee.

EXAMPLE

An employee of a law firm which works on
mergers and acquisitions learns at work
about impending acquisitions. She tells her
friend and her friend's stockbroker about

S 43

the upcoming acquisitions on a regular basis. The stockbroker tells the brother of a client on a regular basis, who in turn tells two friends, A and B. A and B buy shares of the companies being acquired before public announcement of the acquisition, and regularly profit from such purchases. A and B do not know the employee of the law firm. They do not, however, ask about the source of the information.

COMMENT

A and B, although they have never heard of
the tipper, are tippees because they did not
ask about the source of the information,
even though they were experienced investors,
and were aware that the "tips" they received
from this particular source were always
right.

C. Who can be liable for insider trading?

The categories of individuals discussed above (insiders, temporary insiders, misappropriators or tippees) can be liable if they trade while in possession of material nonpublic information.

In addition, individuals other than those who actually trade on inside information can be liable for trades of others. A tipper can be liable if (a) he provided the information in exchange for a personal benefit in breach of a duty and (b) the recipient of the information (the "tippee") traded while in possession of the information.

Most importantly, a controlling person can be liable if the controlling person "knew or recklessly disregarded" the fact that the controlled person was likely to engage in misuse of inside information and failed to take appropriate steps to prevent it. Putnam is a "controlling person" of its employees. In addition, certain supervisors may be "controlling persons" of those employees they supervise.

EXAMPLE

A supervisor of an analyst learns that the analyst has, over a long period of time, secretly received material inside information from Acme, Inc.'s chief financial officer. The supervisor learns that the analyst has engaged in a number of trades for his personal account on the basis of the inside information. The supervisor takes no action.

COMMENT

Even if he is not liable to a private plaintiff, the supervisor can be liable to the Securities and Exchange Commission for a civil penalty of up to three times the amount of the analyst's profit. (Penalties are discussed in the following section.)

44 S

D. Penalties for Insider Trading

Penalties for misuse of inside information are severe, both for individuals involved in such unlawful conduct and their employers. A person who violates the insider trading laws can be subject to some or all of the penalties below, even if he does not personally benefit from the violation. Penalties include:

-- jail sentences (of which at least one to three years must be served)

-- criminal penalties for individuals of up to $1,000,000, and for corporations of up to $2,500,000

-- injunctions permanently preventing an individual from working in the securities industry

-- injunctions ordering an individual to pay over profits obtained from unlawful insider trading

-- civil penalties of up to three times the profit gained or loss avoided by the trader, even if the individual paying the penalty did not trade or did not benefit personally

-- civil penalties for the employer or other controlling person of up to the greater of $1,000,000 or three times the amount of profit gained or loss avoided

-- damages in the amount of actual losses suffered by other participants in the market for the security at issue.

Regardless of whether penalties or money damages are sought by others, Putnam will take whatever action it deems appropriate (including dismissal) if Putnam determines, in its sole discretion, that an employee appears to have committed any violation of this Policy Statement, or to have engaged in any conduct which raises significant questions about whether an insider trading violation has occurred.

S 45

A Appendix B. Policy Statement Regarding Employee Trades in Shares of Putnam Closed-End Funds

1. Pre-clearance for all employees

Any purchase or sale of Putnam closed-end fund shares by a Putnam employee must be pre-cleared by the Code of Ethics Officer or, in his absence, the Deputy Code of Ethics Officer. A list of the closed-end funds can be obtained from the Code of Ethics Administrator. Trading in shares of closed-end funds is subject to all the rules of the Code of Ethics.

2. Special Rules Applicable to Managing Directors of Putnam Investment Management, Inc. and officers of the Putnam Funds

Please be aware that any employee who is a Managing Director of Putnam Investment Management, Inc. (the investment manager of the Putnam mutual funds) and officers of the Putnam Funds will not receive clearance to engage in any combination of purchase and sale or sale and purchase of the shares of a given closed-end fund within six months of each other. Therefore, purchases should be made only if you intend to hold the shares more than six months; no sales of fund shares should be made if you intend to purchase additional shares of that same fund within six months.

You are also required to file certain forms with the Securities and Exchange Commission in connection with purchases and sales of Putnam closed-end funds. Please contact the Code of Ethics Officer or Deputy Code of Ethics Officer for further information.

3. Reporting by all employees

As with any purchase or sale of a security, duplicate confirmations of all such purchases and sales must be forwarded to the Code of Ethics Officer by the broker-dealer utilized by an employee. If you are required to file a quarterly report of all personal securities transactions, this report should include all purchases and sales of closed-end fund shares.

Please contact the Code of Ethics Officer or Deputy Code of Ethics Officer if there are any questions regarding these matters.

46 S

A        Appendix C. Clearance Form for Portfolio Manager Sales Out of Personal
         Account of Securities Also Held by Fund (For compliance with
         "Contra-Trading" Rule)

         TO: Code of Ethics Officer

         FROM:
                  ---------------------------------------

         DATE:
                  ---------------------------------------

         RE:      Personal Securities Transaction of
                                                        -----------------------

         This serves as prior written approval of the personal securities
         transaction described below:

         NAME OF PORTFOLIO MANAGER CONTEMPLATING PERSONAL TRADE:


         -----------------------------------------------------------------------

SECURITY TO BE TRADED:

AMOUNT TO BE TRADED:

FUND HOLDING SECURITIES:

AMOUNT HELD BY FUND:

REASON FOR PERSONAL TRADE:

SPECIFIC REASON SALE OF SECURITIES IS INAPPROPRIATE FOR FUND:

(Please attach additional sheets if necessary.)

CIO APPROVAL:                                DATE:
             -------------------------------       --------------------

LEGAL/COMPLIANCE APPROVAL:                   DATE:
                          ------------------       --------------------

S 47

A Appendix D. Procedures for Approval of New Financial Instruments

1. Summary

a. Putnam has adopted procedures for the introduction of new instruments and securities, focusing on, but not limited to, derivatives.

b. No new types of securities or instruments may be purchased for any Putnam fund or other client account without the approval of Putnam's New Securities Review Committee ("NSRC").

c. Putnam publishes from time to time a list of approved derivatives. The purchase of any derivative not listed is prohibited without specific authorization from the NSRC.

2. Procedures

a. Introduction. The purchase and sale of financial instruments that have not been used previously at Putnam raise significant investment, business, operational, and compliance issues. In order to address these issues in a comprehensive manner, Putnam has adopted the following procedures for obtaining approval of the use of new instruments or investments. In addition, to provide guidance regarding the purchase of derivatives, Putnam publishes from time to time a list of approved derivatives. Only derivatives listed may be used for Putnam funds or accounts unless specifically authorized by the NSRC.

b. Process of approval. An investment professional wishing to purchase a new type of investment should discuss it with the Investment Division's Administrative office (the current contact is Julie Malloy). Investment Division Administration will coordinate a review of a new instrument by appropriate NSRC members from an investment, operational and compliance perspective, including the review of instruments by the Administrative Services Division of PFTC. Based on this review, the NSRC will then approve or disapprove the proposed new investment. Investment professionals must build in adequate time for this review before planned use of a new instrument. Further, the approval of the NSRC is only a general one. Individual fund and account guidelines must be reviewed in accordance with standard compliance procedures to determine whether purchase is permitted. In addition, if the instrument involves legal documentation, that documentation must be reviewed and be completed before trading. The NSRC may prepare a compliance and operational manual for the new derivative.

3. Violations

48 S

a.       Putnam's Operating Committee has determined that adherence to
         rigorous internal controls and procedures for novel securities
         and instruments is necessary to protect Putnam's business
         standing and reputation. Violation of these procedures will be
         treated as violation of both compliance guidelines and
         Putnam's Code of Ethics. Putnam encourages questions and
         expects that these guidelines will be interpreted
         conservatively.

S 49

A        Index

         "7-Day Rule"
           for transactions by managers, analysts and CIOs, 14
         "60-Day Rule", 13
         Access Persons
           definition, ix
           special rules on trading, 13, 32
         Analysts
           special rules on trading by, 13
         Appeals
           Procedures, 37
         Bankers' acceptances
           excluded from securities, x
         Blackout rule
           on trading by portfolio managers, analysts and CIOs, 15
         Boycotts
           reporting of requests to participate, 33
         Bribes, 21
         CDs
           excluded from securities, x
         Claims against Putnam
           reporting of, 33
         Clearance
           how long pre-clearance is valid, 4
           required for personal securities transactions, 1
         Closed-end funds
           rules on trading, 55
         Commercial paper
           excluded from securities, x
         Commodities (other than securities indices)
           excluded from securities, x
         Computer use
           compliance with corporate policies required, 27
         Confidentiality
           required of all employees, 22
         Confirmations
           of personal transactions required, 31
         Conflicts of interest
           with Putnam and Putnam clients prohibited, 19
         Contra-trading rule
           transactions by managers and CIOs, 17
         Convertible securities
           defined as securities, x
         Currencies
           excluded as securities, x
         Director
           serving as for another entity prohibited, 23
         Employee
           serving as for another entity prohibited, 23
         Excessive trading (over 10 trades)
           by employees strongly discouraged, 10
         Exemptions
           basis for, 10
         Family members
           covered in personal securities transactions, x, 43
         Fiduciary
           serving as for another entity prohibited, 23
         Fraudulent or irregular activities
           reporting of, 33
         Gifts
           restrictions on receipt of by employees, 19
         Government or regulatory agencies
           reporting of communications from, 33
         Holdings
           disclosure of by Access Persons, 32
         Initial public offerings/IPOs
           purchases in prohibited, 6
         Insider trading
           policy statement and explanations, 39
           prohibited, 9
         Investment clubs
           prohibited, 24
         Investment Grade Exception
           for clearance of fixed income securities on Restricted List, 2
         Involuntary personal securities transactions
           exempted, 10
           exemption defined, 6
         Large Cap Exception
           for clearance of securities on Restricted List, 1
         Marsh & McLennan Companies stock
           excluded from securities, x
         Money market instruments
           excluded from securities, x
         Mutual fund shares (open end)
           excluded from securities, x
         Naked options
           by employees discouraged, 9
         New financial instruments
           procedures for approval, 59
         Non-Putnam affiliates (NPAs)
           transactions and relationships with, 25
         Officer
           serving as for another entity prohibited, 23


50                                     S

         Options
           defined as securities, x
           relationship to securities on Restricted or Red Lists, 5
         Partner
           serving as general partner of another entity prohibited, 23
         Partnerships
           covered in personal securities transactions, x, 43
         Personal securities transaction
           defined, x, 43
         Pink sheet reports
           quarterly reporting requirements, 32
         Political contributions, 22
         Portfolio managers
           special rules on trading by, 13
         Private offerings or placements
           purchases of prohibited, 7
         Putnam Europe Ltd.
           special rules for, 29
         Repurchase agreements
           excluded from securities, x
         Sale
           defined, x, 43
         Sanctions, vii
           for failure to pre-clear properly, 3
         Shares by subscription
           procedures to preclear the purchase and sales of Shares by
             Subscription, 2
         Short sales
           by employees prohibited conduct, 6
         Solicitations
           by Putnam employees restricted, 21
         Tender offers
           partial exemption from clearance rules, 6
         Trustee
           serving as for another entity prohibited, 23
         Trusts
           covered in personal securities transactions, x, 43
         U.S. government obligations
           excluded from securities, x
         Violations of Law
           reporting of, 33
         Warrants
           defined as securities, x


                                       S                                      51

Exhibit p(5)

MAY 2001

CODE OF ETHICS

T. ROWE PRICE GROUP, INC.
AND ITS AFFILIATES

CODE OF ETHICS

T. ROWE PRICE GROUP, INC.

AND ITS AFFILIATES

TABLE OF CONTENTS

Page
----

GENERAL POLICY STATEMENT........................................................ 1-1
Purpose and Scope of Code of Ethics...................................... 1-1
Entities and Individuals Subject to this Code............................ 1-1
Entities and Individuals Not Subject to this Code........................ 1-2
Status as a Fiduciary.................................................... 1-2
What the Code Does Not Cover............................................ . 1-2
Compliance with the Code................................................. 1-2
Questions Regarding the Code............................................. 1-3
STANDARDS OF CONDUCT OF PRICE GROUP AND ITS EMPLOYEES........................... 2-1
Allocation of Client Brokerage........................................... 2-1
Annual Verification of Compliance........................................ 2-1
Antitrust ............................................................. 1; 7-1
Compliance with Copyright Laws........................................... 2-1; 5-1
Computer Security........................................................ 2-1; 6-1
Conflicts of Interest.................................................... 2-1
Relationships with Profitmaking Enterprises........................ 2-1
Service with Nonprofitmaking Enterprises........................... 2-2
Relationships with Financial Service Firms......................... 2-2
Investment Clubs................................................... 2-2
Confidentiality.......................................................... 2-3
Internal Operating Procedures and Planning......................... 2-3
Clients, Fund Shareholders, and TRP Brokerage Customers............ 2-3
Investment Advice.................................................. 2-3
Investment Research................................................ 2-4
Understanding as to Clients' Accounts and Company Records
at Time of Employment Termination................................ 2-4

i-1

Employment of Former Government Employees................................ 2-4
Employment Practices..................................................... 2-5
Equal Opportunity.................................................. 2-5
Harassment......................................................... 2-5
Drug and Alcohol Abuse............................................. 2-5
Past and Current Litigation.............................................. 2-5
Financial Reporting...................................................... 2-6
Health and Safety in the Workplace....................................... 2-6
Illegal Payments......................................................... 2-6
Marketing and Sales Activities........................................... 2-6
Policy Regarding Acceptance and Giving of Gifts and Gratuities........... 2-6
Receipt of Gifts................................................... 2-6
Giving of Gifts.................................................... 2-7
Additional Requirements for the Giving of Gifts in Connection
with the Broker/Dealer........................................... 2-7
Entertainment...................................................... 2-8
Research Trips........................................................... 2-9
Other Payments from Brokers and Portfolio Companies...................... 2-9
Political Activities..................................................... 2-9
Protection of Corporate Assets........................................... 2-10
Quality of Services...................................................... 2-10
Record Retention......................................................... 2-10
Referral Fees............................................................ 2-10
Release of Information to the Press...................................... 2-10
Responsibility to Report Violations...................................... 2-10
Service as Trustee, Executor or Personal Representative.................. 2-11
Speaking Engagements and Publications.................................... 2-11
Trading in Securities with Inside Information............................ 2-11; 3-1

STATEMENT OF POLICY ON MATERIAL, INSIDE (NON-PUBLIC) INFORMATION................ 3-1
STATEMENT OF POLICY ON SECURITIES TRANSACTIONS.................................. 4-1
STATEMENT OF POLICY WITH RESPECT TO COMPLIANCE
WITH UNITED STATES COPYRIGHT AND TRADEMARK LAWS.............................. 5-1
STATEMENT OF POLICY WITH RESPECT TO COMPUTER SECURITY

i-2

   AND RELATED ISSUES...........................................................         6-1
STATEMENT OF POLICY ON COMPLIANCE WITH
   ANTITRUST LAWS...............................................................         7-1
STATEMENT OF POLICIES AND PROCEDURES ON PRIVACY.................................         8-1

May, 2001

i-3

CODE OF ETHICS

T. ROWE PRICE GROUP, INC.

AND ITS AFFILIATES

INDEX

                                                                                        Page
                                                                                        ----


Acess Persons...................................................................         4-3
Activities, Political...........................................................         2-9
Alcohol Abuse...................................................................         2-5
Allocation of Client Brokerage..................................................         2-1
Antitrust.......................................................................    2-1; 7-1
Annual Disclosure by Access Persons.............................................  4-13; 4-19
Annual Verification of Compliance...............................................         2-1
Approved Company Rating Changes.................................................        4-12
Assets, Protection of Corporate.................................................        2-10
Association of Investment Management and Research ("AIMR")......................         2-6
Beneficial Ownership............................................................         4-4
Chinese Wall....................................................................         3-8
Client Brokerage, Allocation of.................................................         2-1
Client Limit Orders.............................................................        4-17
Code of Ethics, Compliance with.................................................         1-2
Code of Ethics, Purpose and Scope of............................................         1-1
Code of Ethics, Questions Regarding.............................................         1-3
Code of Ethics, Who is Subject to...............................................         1-1
Code of Ethics, Who is Not Subject to...........................................         1-2
Co-Investment with Client Investment Partnerships...............................        4-15
Commodity Futures Contracts.....................................................         4-9
Computer Security...............................................................    2-1; 6-1

ii-1

Conduct, Standards of, Price Group and its Employees............................         2-1
Confidentiality/Privacy.........................................................         2-3
Confidentiality of Computer Systems Activities and Information..................         6-1
Conflicts of Interest...........................................................         2-1
Copyright Laws, Compliance with..............................................       2-1; 5-1
Corporate Assets, Protection of.................................................        2-10
Data Privacy and Protection.....................................................         6-2
Drug Abuse......................................................................         2-5
Employees, Standards of Conduct.................................................         2-1
Employment of Former Government Employees.......................................         2-4
Employment Practices............................................................         2-5
Entertainment...................................................................         2-8
Equal Opportunity...............................................................         2-5
Exchange Traded Funds ("ETFS")..................................................        4-10
Exchange - Traded Index Options.................................................        4-17
Executor, Service as............................................................        2-11
Exemptions from Prior Clearance.................................................         4-9
Fees, Referral..................................................................        2-10
Fiduciary, Price Advisers' Status as a .........................................         1-2
Financial Reporting.............................................................         2-6
Financial Service Firms, Relationships with.....................................         2-2
Front Running...................................................................         4-1
General Policy Statement........................................................         1-1
Gifts, Giving...................................................................         2-7
Gifts, Receipt of...............................................................         2-6
Government Employees, Employment of Former......................................         2-4
Harassment......................................................................         2-5
Health and Safety in the Workplace..............................................         2-6
Illegal Payments................................................................         2-6
Independent Directors, Transaction Reporting....................................        4-14
Information, Release to the Press...............................................        2-10
Initial Public Offerings........................................................        4-10
Inside Information, Trading in Securities with..................................    2-11;3-1

ii-2

Interest, Conflicts of..........................................................         2-1
Internet, Access to.............................................................         6-3
Investment Clubs................................................................   2-2; 4-15
Investment Personnel............................................................         4-3
Large Company Exemption for Securities Transactions.............................        4-16
Litigation, Past and Current....................................................         2-5
Margin Accounts.................................................................        4-15
Marketing and Sales Activities..................................................         2-6
Non-Access Persons..............................................................         4-4
Nonprofitmaking Enterprises, Service with.......................................         2-2
Options and Futures.............................................................        4-17
Payments from Brokers and Portfolio Companies...................................         2-9
Payments, Illegal...............................................................         2-6
Personal Securities Holdings, Disclosure of by Access Persons...................  4-13; 4-18
Personal Representative, Service as.............................................        2-11
Political Activities............................................................         2-9
Press, Release of Information to the............................................        2-10
Price Group, Standards of Conduct...............................................         2-1
Price Group Stock, Transactions in..............................................         4-5
Prior Clearance of Securities Transactions (other than Price Group stock).......         4-8
Privacy Policies and Procedures.................................................         8-1
Private Placement, Investment In................................................        4-11
Private Placement Memoranda.....................................................         3-9
Profitmaking Enterprises, Relationships with....................................         2-1
Protection of Corporate Assets..................................................        2-10
Publications....................................................................        2-11
Quality of Services.............................................................        2-10
Questions Regarding the Code....................................................         1-3
Rating Changes, Approved Company................................................        4-12
Record Retention................................................................        2-10
Referral Fees...................................................................        2-10
Regulation FD...................................................................         3-7
Release of Information to the Press.............................................        2-10

ii-3

Reporting, Financial............................................................         2-6
Reporting, Price Group Stock Transactions.......................................         4-4
Reporting, Securities Transactions (other than Price Group stock)...............   4-9; 4-14
Research Trips..................................................................         2-9
Restricted List.................................................................         3-8
Retention, Record...............................................................        2-10
Rule 10b5-1.....................................................................         3-6
Rule 10b5-2.....................................................................         3-4
Safety and Health in the Workplace..............................................         2-6
Sanctions.......................................................................        4-19
Savings Bank....................................................................         4-8
Securities Accounts.............................................................        4-13
Securities Transactions, Reporting of (other than Price Group stock)............   4-9; 4-14
Services, Quality of............................................................        2-10
Short Sales.....................................................................        4-18
Sixty (60) Day Rule.............................................................        4-18
Software Programs, Application of Copyright Law.................................         6-6
Speaking Engagements............................................................        2-11
Standards of Conduct of Price Group and its Employees...........................         2-1
Statement, General Policy.......................................................         1-1
Trademark Laws, Compliance with.................................................         5-1
Temporary Workers, Application of Code to.......................................    1-1; 4-2
Termination of Employment.......................................................         2-4
Trading Activity................................................................        4-16
Trips, Research.................................................................         2-9
Trustee, Service as.............................................................        2-11
Violations, Responsibility to Report............................................        2-10
Watch List......................................................................         3-8

May, 2001

ii-4

CODE OF ETHICS

T. ROWE PRICE GROUP, INC.

AND ITS AFFILIATES

GENERAL POLICY STATEMENT

PURPOSE AND SCOPE OF CODE OF ETHICS. In recognition of T. Rowe Price Group, Inc.'s ("PRICE GROUP") commitment to maintain the highest standards of professional conduct and ethics, the firm's Board of Directors has adopted this Code of Ethics ("CODE") composed of Standards of Conduct and the following Statements of Policy ("STATEMENTS"):

1. Statement of Policy on Material, Inside (Non-Public) Information
2. Statement of Policy on Securities Transactions
3. Statement of Policy with Respect to Compliance with Copyright Laws
4. Statement of Policy with Respect to Computer Security and Related Issues
5. Statement of Policy on Compliance with Antitrust Laws
6. Statement of Policies and Procedures on Privacy

The purpose of this Code is to help preserve our most valuable asset - the reputation of Price Group and its employees.

THE FOLLOWING ENTITIES AND INDIVIDUALS ARE SUBJECT TO THIS CODE:

o Price Group

o The subsidiaries and affiliates of Price Group (other than T. Rowe Price International, Inc. ("TRPI"), T. Rowe Price Global Asset Management Limited ("TRPGA") and T. Rowe Price Global Investment Services Limited ("TRPGIS").

o The officers, directors and employees of Group and its affiliates and subsidiaries (except TRPI, TRPGA and TRPGIS).

o Personnel (officers, directors, and employees) of TRPI, TRPGA and TRPGIS who are stationed in Baltimore.

Unless the context otherwise requires, the terms "Group" and "Price Group" refer to Price Group and all its affiliates except TRPI, TRPGA and TRPGIS.

In addition, the following persons are subject to the Code:

1. All temporary workers hired on the Price Group payroll ("TRP TEMPORARIES");

2. All agency temporaries whose assignments at Price Group exceed four weeks or whose cumulative assignments exceed eight weeks over a twelve-month period;

1-1

3. All independent or agency-provided consultants whose assignments exceed four weeks or whose cumulative assignments exceed eight weeks over a twelve-month period AND whose work is closely related to the ongoing work of Price Group employees (versus project work that stands apart from ongoing work); and

4. Any contingent worker whose assignment is more than casual in nature or who will be exposed to the kinds of information and situations that would create conflicts on matters covered in the Code.

THE FOLLOWING ENTITIES AND INDIVIDUALS ARE NOT SUBJECT TO THIS CODE:

o TRPI
o TRPGA
o TRPGIS
o the officers, directors, and employees of TRPI, TRPGA and TRPGIS stationed abroad

If an officer, director or employee of TRPI, TRPGA or TRPGIS stationed outside the United States becomes an officer or director of Price Group or one of its other subsidiaries or affiliates, he or she remains subject to the TRPI Code, not to this Code.

STATUS AS A FIDUCIARY. Several of Price Group's subsidiaries are investment advisers registered with the United States Securities and Exchange Commission ("SEC"). These include T. Rowe Price Associates, Inc. ("TRPA"), TRPI, T. Rowe Price Stable Asset Management, Inc. ("SAM"), T. Rowe Price Advisory Services, Inc. ("TRPAS"), T. Rowe Price Canada, Inc. ("TRP CANADA"), and TRPGA. TRPI and TRPGA are also registered with the Investment Management Regulatory Organisation ("IMRO"). TRPGIS is registered solely with IMRO. All advisers affiliated with Group will be referred to collectively as the "PRICE ADVISERS" unless the context otherwise requires. The primary responsibility of the Price Advisers as investment advisers is to render to their clients on a professional basis unbiased and continuous advice regarding the clients' investments. As investment advisers, the Price Advisers have a fiduciary relationship with all of their clients, which means that they have an absolute duty of undivided loyalty, fairness and good faith toward their clients and mutual fund shareholders and a corresponding obligation to refrain from taking any action or seeking any benefit for themselves which would, or which would appear to, prejudice the rights of any client or shareholder or conflict with his or her best interests.

WHAT THE CODE DOES NOT COVER. The Code was not written for the purpose of covering all policies, rules and regulations to which employees may be subject. As an example, T. Rowe Price Investment Services, Inc. ("INVESTMENT SERVICES") is a member of the National Association of Securities Dealers, Inc. ("NASD") and, as such, is required to maintain written supervisory procedures to enable it to supervise the activities of its registered representatives and associated persons to ensure compliance with applicable securities laws and regulations, and with the applicable rules of the NASD and its regulatory subsidiary, NASD Regulation, Inc. ("NASDR").

COMPLIANCE WITH THE CODE. Strict compliance with the provisions of this Code is considered a basic condition of employment or association with the firm. An employee may be required to surrender any profit realized from a transaction which is deemed to be in violation of the Code. In addition, any breach of the Code may constitute grounds for disciplinary action, including dismissal from employment. Employees may appeal to the Management Committee any ruling or decision rendered with respect to the Code.

1-2

QUESTIONS REGARDING THE CODE. Questions regarding the Code should be referred as follows:

1. Standards of Conduct of Price Group and its Employees: the Chairperson of the Ethics Committee or the Director of Human Resources.

2. Statement of Policy on Material, Inside (Non-Public) Information: Legal Department.

3. Statement of Policy on Securities Transactions: The Chairperson of the Ethics Committee or his or her designee.

4. Statement of Policy with Respect to Compliance with Copyright Laws:
Legal Department.

5. Statement of Policy with Respect to Computer Security and Related Issues: Enterprise Security or the Legal Department.

5. Statement of Policy on Compliance with Antitrust Laws: Legal Department.

6. Statement of Policies and Procedures on Privacy: Legal Department

May, 2001

1-3

STANDARDS OF CONDUCT OF PRICE GROUP AND ITS EMPLOYEES

ALLOCATION OF CLIENT BROKERAGE. The policies of each of the Price Advisers with respect to the allocation of client brokerage are set forth in Part II of Form ADV of each of the Price Advisers. The Form ADV is each adviser's registration statement filed with the SEC. It is imperative that all employees -- especially those who are in a position to make recommendations regarding brokerage allocation, or who are authorized to select brokers that will execute securities transactions on behalf of our clients -- read and become fully knowledgeable concerning our policies in this regard. Any questions regarding our firm's allocation of client brokerage should be addressed to the Chairperson of the Brokerage Control Committee.

ANNUAL VERIFICATION OF COMPLIANCE. Each year, each employee is required to complete a Verification Statement regarding his or her compliance with various provisions of this Code, including its policies on personal securities transactions and material, inside information. In addition, each Access Person (defined below) must file an initial and annual Personal Securities Report.

ANTITRUST. The U.S. antitrust laws are designed to ensure fair competition and preserve the free enterprise system. Some of the most common antitrust issues with which an employee may be confronted are in the areas of pricing (adviser fees) and trade association activity. To ensure its employees' understanding of these laws, Price Group has adopted a Statement of Policy on Compliance with Antitrust Laws. All employees should read and understand this Statement (see page 7-1).

COMPLIANCE WITH COPYRIGHT LAWS. To protect Price Group and its employees, Price Group has adopted a Statement of Policy with Respect to Compliance with Copyright Laws. All employees should read and understand this Statement (see page 5-1).

COMPUTER SECURITY. Computer systems and programs play a central role in Price Group's operations. To establish appropriate computer security to minimize potential for loss or disruptions to our computer operations, Price Group has adopted a Statement of Policy with Respect to Computer Security and Related Issues. All employees should read and understand this Statement (see page 6-1).

CONFLICTS OF INTEREST. A direct or indirect interest in a supplier, creditor, debtor or competitor may conflict with the interests of Price Group. All employees must avoid placing themselves in a "compromising position" where their interests may be in conflict with those of Price Group or its clients.

RELATIONSHIPS WITH PROFITMAKING ENTERPRISES. A conflict may occur when an employee of Price Group is also employed by another firm, directly or as a consultant or independent contractor; has a direct financial interest in another firm; has an immediate family financial interest in another firm; or is a director, officer or partner of another firm.

Employees of our firm sometimes serve as directors, officers, partners, or in other capacities with profitmaking enterprises not related to Price Group or its affiliated mutual funds. Employees are generally prohibited from serving as officers or directors of

2-1

corporations which are approved or are likely to be approved for purchase in our firm's client accounts.

An employee may not accept outside employment that would require him or her to become registered (or dually registered) as a representative of an unaffiliated broker/dealer, investment adviser, or an insurance broker or company. An employee may also not become independently registered as an investment adviser.

Outside business interests that will not conflict or appear to conflict with the interests of the firm must be approved by the employee's supervisor. If an employee contemplates obtaining another interest or relationship that might conflict or appear to conflict with the interests of Price Group, such as accepting an appointment as a director, officer or partner of an outside profitmaking enterprise, he or she must also receive the prior approval of the Ethics Committee. Upon review by the Ethics Committee, the employee will be advised in writing of the Committee's decision. Decisions by the Ethics Committee regarding such positions in outside profitmaking enterprises may be reviewed by the Management Committee before becoming final. See below for a discussion of relationships with financial services firms.

Certain employees may serve as directors or as members of Creditors Committees or in similar positions for non-public, for-profit entities in connection with their professional activities at Price Group. An employee must obtain the permission of the Management Committee before accepting such a position and must relinquish the position if the entity becomes publicly held, unless otherwise determined by the Management Committee.

SERVICE WITH NONPROFITMAKING ENTERPRISES. Price Group encourages its employees to become involved in community programs and civic affairs. However, employees should not permit such activities to affect the performance of their job responsibilities. Approval by the Chairperson of the Ethics Committee must be obtained before an employee accepts a position as a trustee or member of the Board of Directors of any non-profit organization.

RELATIONSHIPS WITH FINANCIAL SERVICE FIRMS. In order to avoid any actual or apparent conflicts of interest, employees are prohibited from investing in or entering into any relationship, either directly or indirectly, with corporations, partnerships, or other entities that are engaged in business as a broker, a dealer, an underwriter, and/or an investment adviser. As described above, this prohibition extends to registration and/or licensure with an unaffiliated firm. This prohibition, however, is not meant to prevent employees from purchasing publicly traded securities of broker/dealers, investment advisers or other companies engaged in the mutual fund industry. Of course, all such purchases are subject to prior clearance and reporting procedures, as applicable. This policy also does not preclude an employee from engaging an outside investment adviser to manage his or her assets.

If any member of an employee's immediate family is employed by, has a partnership interest in, or has an equity interest of .5% or more in a broker/dealer, investment adviser or other company engaged in the mutual fund industry, the relationship must be reported to the Ethics Committee.

INVESTMENT CLUBS. Access Persons (defined on p. 4-3 of the Code) must receive the prior approval of the Chairperson of the Ethics Committee before forming or

2-2

participating in a stock or investment club. Transactions in which Access Persons have beneficial ownership or control (see p. 4-4) through investment clubs are subject to the firm's Statement of Policy on Securities Transactions. Non-Access Persons (defined on p. 4-4) do not have to receive prior approval to form or participate in a stock or investment club and need only obtain prior clearance of transactions in Price Group stock. As described on p. 4-15, an exemption from prior clearance for an Access Person (except for transactions in Price Group stock) is generally available if the Access Person has beneficial ownership solely by virtue of his or her spouse's participation in the club and has no investment control or input into decisions regarding the club's securities transactions.

CONFIDENTIALITY. The exercise of confidentiality extends to four major areas of our operations: internal operating procedures and planning; clients, fund shareholders and TRP Brokerage customers; investment advice; and investment research. The duty to exercise confidentiality applies not only when an employee is with the firm, but also after he or she terminates employment with the firm.

INTERNAL OPERATING PROCEDURES AND PLANNING. During the years we have been in business, a great deal of creative talent has been used to develop specialized and unique methods of operations and portfolio management. In many cases, we feel these methods give us an advantage over our competitors, and we do not want these ideas disseminated outside our firm. Accordingly, employees should be guarded in discussing our business practices with outsiders. Any requests from outsiders for specific information of this type should be cleared with your supervisor before it is released.

Also, from time to time management holds meetings with employees in which material, non-public information concerning the firm's future plans is disclosed. Employees should never discuss confidential information with, or provide copies of written material concerning the firm's internal operating procedures or projections for the future to, unauthorized persons outside the firm.

CLIENTS, FUND SHAREHOLDERS, AND TRP BROKERAGE CUSTOMERS. In many instances, when clients subscribe to our services, we ask them to disclose fully their financial status and needs. This is done only after we have assured them that every member of our organization will hold this information in strict confidence. It is essential that we respect their trust. A simple rule for employees to follow is that the names of our clients, fund shareholders, or TRP Brokerage customers or any information pertaining to their investments must never be divulged to anyone outside the firm, not even to members of their immediate families, and must never be used as a basis for personal trades over which the employee has beneficial interest or control.

INVESTMENT ADVICE. Because of the fine reputation our firm enjoys, there is a great deal of public interest in what we are doing in the market. There are two major considerations that dictate why we must not provide investment "tips":

o From the point of view of our clients, it is not fair to give other people information which clients must purchase.

o From the point of view of the firm, it is not desirable to create an outside demand for a stock when we are trying to buy it for our clients, as this will only serve to push the price up. The reverse is true if we are selling.

2-3

In light of these considerations, employees must never disclose to outsiders our buy and sell recommendations, securities we are considering for future investment, or the portfolio holdings of our clients or mutual funds.

The practice of giving investment advice informally to members of your immediate family should be restricted to very close relatives. Any transactions resulting from such advice are subject to the prior approval (Access Persons only except for Price Group stock) and reporting requirements (Access Persons AND Non-Access Persons) of the Statement of Policy on Securities Transactions. Under no circumstances should an employee receive compensation directly or indirectly (other than from a Price Adviser or an affiliate) for rendering advice to either clients or non-clients.

INVESTMENT RESEARCH. Any report circulated by a research analyst is confidential in its entirety and should not be reproduced or shown to anyone outside of our organization, except our clients where appropriate.

UNDERSTANDING AS TO CLIENTS' ACCOUNTS AND COMPANY RECORDS AT TIME OF EMPLOYMENT TERMINATION. The accounts of clients, mutual fund shareholders, and TRP Brokerage customers are the sole property of Price Group or one of its subsidiaries. This includes the accounts of clients for whom one or more of the Price Advisers acts as investment adviser, regardless of how or through whom the client relationship originated and regardless of who may be the counselor for a particular client. At the time of termination of employment with Price Group, an employee must: (1) surrender to Price Group in good condition any and all materials, reports or records (including all copies in his or her possession or subject to his or her control) developed by him or her or any other person which are considered confidential information of Price Group (except copies of any research material in the production of which the employee participated to a material extent); and (2) refrain from communicating, transmitting or making known to any person or firm any information relating to any materials or matters whatsoever which are considered by Price Group to be confidential.

Employees must use care in disposing of any confidential records or correspondence. Confidential material that is to be discarded should be torn up or shredded or, if a quantity of material is involved, you should contact Document Management for instructions regarding proper disposal.

In addition, the firm has adopted a specific STATEMENT OF POLICIES AND PROCEDURES ON PRIVACY, which is part of this Code (see p. 8-1).

EMPLOYMENT OF FORMER GOVERNMENT EMPLOYEES. Federal laws and regulations govern the employment of former employees of the U.S. Government and its agencies, including the SEC. In addition, certain states have adopted similar statutory restrictions. Finally, certain states and municipalities that are clients of the Price Advisers have imposed contractual restrictions in this regard. Before any action is taken to discuss employment by Price Group of a former government employee, guidance must be obtained from the Legal Department.

2-4

EMPLOYMENT PRACTICES

EQUAL OPPORTUNITY. Price Group is committed to the principles of Equal Employment. We believe our continued success depends on talented people, without regard to race, color, religion, national origin, gender, age, disability, sexual orientation, Vietnam era military service or any other classification protected by federal, state or local laws.

This commitment to Equal Opportunity covers all aspects of the employment relationship including recruitment, application and initial employment, promotion and transfer, selection for training opportunities, wage and salary administration, and the application of service, retirement, and employee benefit plan policies.

All members of T. Rowe Price staff are expected to comply with the spirit and intent of our Equal Employment Opportunity Policy.

If you feel you have not been treated in accordance with this policy, contact your immediate supervisor, your manager or a Human Resources Representative. No retaliation will be taken against any employee who reports an incident of alleged discrimination.

HARASSMENT. Price Group intends to provide employees a workplace free from any form of harassment. This includes sexual harassment which, banned by and punishable under the Civil Rights Act of 1964, may result from unwelcome advances, requests for favors or any verbal or physical conduct of a sexual nature. Such actions or statements may or may not be accompanied by explicit or implied promises of preferential treatment or negative consequences in connection with one's employment. Harassment might include uninvited sex-oriented conversations, touching, comments, jokes, suggestions or innuendos. This type of behavior can create a stressful, intimidating and offensive atmosphere; it may adversely affect morale and work performance.

Any employee who feels offended by the action or comments of another, or any employee who has observed such behavior, should report the matter, in confidence, to his or her immediate supervisor. If that presents a problem, report the matter to the Director of Human Resources or another person in the Human Resources Department. All complaints will be investigated immediately and confidentially. Any employee who has behaved in a reprehensible manner will be subject to disciplinary action in keeping with the gravity of the offense.

DRUG AND ALCOHOL ABUSE. Price Group has adopted a Statement of Policy, available from Human Resources, to maintain a drug-free workplace and prevent alcohol abuse. This policy fosters a safe, healthful and productive environment for its employees and customers and protects Price Group's property, equipment, operations and reputation in the community and the industry.

PAST AND CURRENT LITIGATION. As a condition of employment, each new employee is required to answer a questionnaire regarding past and current civil and criminal actions and certain regulatory matters. Price Group uses the information obtained through these questionnaires to answer questions asked on federal and state registration forms and for insurance and bonding purposes. Each employee is responsible for keeping answers on the questionnaire current. If an employee becomes party to any proceeding that could lead to his or her conviction for any felony

2-5

or misdemeanor (other than traffic or other minor offenses) in a domestic, foreign, or military court or becomes the subject of a regulatory action by the SEC, a state, or foreign government or a federal, state or foreign regulatory agency or any domestic or foreign self-regulatory organization relating to securities or investment activities, he or she should notify the Legal Department promptly.

FINANCIAL REPORTING. Price Group's records are maintained in a manner that provides for an accurate record of all financial transactions in conformity with generally accepted accounting principles. No false or deceptive entries may be made and all entries must contain an appropriate description of the underlying transaction. All reports, vouchers, bills, invoices, payroll and service records and other essential data must be accurate, honest and timely and should provide an accurate and complete representation of the facts.

HEALTH AND SAFETY IN THE WORKPLACE. Price Group recognizes its responsibility to provide personnel a safe and healthful workplace and proper facilities to help them do their jobs effectively.

ILLEGAL PAYMENTS. State, federal and foreign laws prohibit the payment of bribes, kickbacks, inducements or other illegal gratuities or payments by or on behalf of Price Group. Price Group, through its policies and practices, is committed to comply fully with these laws. The Foreign Corrupt Practices Act makes it a crime to corruptly give, promise or authorize payment, in cash or in kind, for any service to a foreign official or political party in connection with obtaining or retaining business. If an employee is solicited to make or receive an illegal payment, he or she should contact the Legal Department.

MARKETING AND SALES ACTIVITIES. All written and oral marketing materials and presentations (including performance data) must be in compliance with applicable SEC, NASD, and Association of Investment Management and Research ("AIMR") requirements. All advertisements, sales literature and other written marketing materials (whether they be for the Price Funds, non-Price funds, or various advisory or brokerage services) must be reviewed and approved by the advertising section of the Legal Department prior to use. All performance data distributed outside the firm, including total return and yield information, must be obtained from the Performance Group before distribution.

POLICY REGARDING ACCEPTANCE AND GIVING OF GIFTS AND GRATUITIES. The firm, as well as its employees and members of their families, should not accept or give gifts that might in any way create or appear to create a conflict of interest or interfere with the impartial discharge of our responsibilities to clients or place our firm in a difficult or embarrassing position. Such gifts would include gratuities or other accommodations from or to business contacts, brokers, securities salespersons, approved companies, suppliers, clients, or any other individual or organization with whom our firm has a business relationship, but would not include certain types of business entertainment as described later in this section.

RECEIPT OF GIFTS. Personal contacts may lead to gifts that are offered on a friendship basis and may be perfectly proper. It must be remembered, however, that business relationships cannot always be separated from personal relationships and that the integrity of a business relationship is always susceptible to criticism in hindsight where gifts are received.

Under no circumstances may employees accept gifts from any business or business contact in the form of cash or cash equivalents. Gift certificates may only be accepted if

2-6

used; they may not be converted to cash except for nominal amounts not consumed when the gift certificate is used.

There may be an occasion where it might be awkward to refuse a token non-cash expression of appreciation given in the spirit of friendship. In such cases, the value of all gifts received from a business contact should not exceed $100 in any twelve-month period. The value of a gift directed to the members of a department as a group may be divided by the number of the employees in that Department. Gifts received which are unacceptable according to this policy must be returned to the givers.

GIVING OF GIFTS. An employee may never give a gift to a business contact in the form of cash or cash equivalents, including gift certificates. Token gifts may be given to business contacts, but the aggregate value of all such gifts given to the business contact may not exceed $100 in any twelve-month period without the permission of the Chairperson of the Ethics Committee. If an employee believes that it would be appropriate to give a gift with a value exceeding $100 to a business contact in a specific situation, he or she must submit a written request to the Chairperson of the Ethics Committee. The request should specify:

o the name of the giver;

o the name of the intended recipient and his or her employer;

o the nature of the gift and its monetary value;

o the nature of the business relationship; and

o the reason the gift is being given.

NASD regulations prohibit exceptions to the $100 limit for gifts given in connection with Investment Services' business. Baltimore/Legal Compliance will retain a record of all such gifts.

ADDITIONAL REQUIREMENTS FOR THE GIVING OF GIFTS IN CONNECTION WITH THE BROKER/DEALER. NASD Conduct Rule 3060 imposes stringent reporting requirements for gifts given to any principal, employee, agent or similarly situated person where the gift is in connection with Investment Services' business with the person's employer. Examples of gifts that fall under this rule would include any gift given to an employee of a company to which our firm provides investment products such as mutual funds (e.g., many 401(k) plans) or to which we are marketing investment products. Under this NASD rule, gifts may not exceed $100 (without exception) and persons associated with Investment Services, including its registered representatives, must report EACH such gift.

The NASD reporting requirement is normally met when an item is ordered electronically from the Corporate Gift website. If a gift is obtained from another source, it must be reported to Baltimore/Legal Compliance. The report to Baltimore Legal/Compliance should include:

o the name of the giver;

o the name of the recipient and his or her employer;

2-7

o the nature of the gift and its monetary value;

o the nature of the business relationship; and

o the date the gift was given.

ENTERTAINMENT. Our firm's $100 limit on the acceptance and giving of gifts not only applies to gifts of merchandise, but also covers the enjoyment or use of property or facilities for weekends, vacations, trips, dinners, and the like. However, this limitation does not apply to dinners, sporting events and other activities which are a normal part of a business relationship. To illustrate this principle, the following examples are provided:

First Example: The head of institutional research at brokerage firm "X" (whom you have known and done business with for a number of years) invites you and your wife to join her and her husband for dinner and afterwards a theatrical production.

Second Example: You are going to New York for a weekend with your spouse. You wish to see a recent Broadway hit, but are told it is sold out. You call a broker friend who works at company "X" to see if he can get tickets for you. The broker says yes and offers you two tickets free of charge.

Third Example: You have been invited by a vendor to a multi-day excursion to a resort where the primary focus is entertainment as opposed to business. The vendor has offered to pay your travel and lodging for this trip.

In the first example, it would be proper for you to accept the invitation.

With respect to the second example, it would not be proper to solicit a person doing business with the firm for free tickets to any event. You could, however, accept the tickets if you pay for them at their fair value or, if greater, at the cost to the broker.

With respect to the third example, trips of substantial value, such as multi-day excursions to resorts, hunting locations or sports events, where the primary focus is entertainment as opposed to business activities, would not be considered a normal part of a business relationship. Generally, such invitations may not be accepted unless our firm or the employee pays for the cost of the excursion and the employee has obtained approval from his or her supervisor and Division Head (if different).

The same principles apply if an employee wishes to entertain a business contact. Inviting business contacts and, if appropriate, their guests, to an occasional meal, sporting event, the theater, or comparable entertainment is acceptable as long as it is neither so frequent nor so extensive as to raise any question of propriety. It is important to understand that if an employee provides, for example, tickets to a sporting event to a business contact, and no one is present from our firm at the event, the tickets are a gift, NOT business entertainment and the limits on gifts apply. If an employee wishes to pay for a business guest's transportation (e.g., airfare) and/or accommodations as part of business entertainment, he or she must first receive the permission of his or her supervisor and the Chairperson of the Ethics Committee.

2-8

RESEARCH TRIPS. Occasionally, brokers or portfolio companies invite employees of our firm to attend or participate in research conferences, tours of portfolio companies' facilities, or meetings with the management of such companies. These invitations may involve traveling extensive distances to and from the sites of the specified activities and may require overnight lodging. Employees may not accept any such invitations until approval has been secured from their Division heads. As a general rule, such invitations should only be accepted after a determination has been made that the proposed activity constitutes a valuable research opportunity that will be of primary benefit to our clients. All travel expenses to and from the sites of the activities, and the expenses of any overnight lodging, meals or other accommodations provided in connection with such activities, should be paid for by our firm except in situations where the costs are considered to be insubstantial and are not readily ascertainable.

OTHER PAYMENTS FROM BROKERS AND PORTFOLIO COMPANIES. Employees may not accept reimbursement from brokers or portfolio companies for: travel and hotel expenses; speaker fees or honoraria for addresses or papers given before audiences; or consulting services or advice they may render. Likewise, employees may neither request nor accept loans or personal services from brokers or portfolio companies.

POLITICAL ACTIVITIES. In support of our nation's democratic process, Price Group encourages its eligible employees to exercise their rights as citizens by voting in all federal, state and local elections. Price Group encourages employees to study the issues and platforms as part of the election process, but does not direct employees to support any particular political party or candidate.

All officers and directors of Price Group and its subsidiaries are required to disclose certain Maryland local and state political contributions on a semi-annual basis (a Political Contribution Questionnaire is sent to officers and directors each January and July). In addition, certain employees associated with Investment Services are subject to limitations on and additional reporting requirements about their political contributions under Rule G-37 of the Municipal Securities Rulemaking Board ("MSRB").

Federal law prohibits corporate involvement in campaign elections for federal office (e.g., U.S. Senate and House of Representatives). This means that Price Group cannot use corporate funds, either directly or indirectly, to help finance any political candidate or party activity. It also means that the firm cannot provide paid leave time to employees for political campaign activity. However, employees may use personal time or paid vacation or may request unpaid leave to participate in political campaigning.

The applicable state or local law controls the use of corporate funds in the context of state and local elections. No political contribution of corporate funds, direct or indirect, to any political candidate or party, or to any other program that might use the contribution for a political candidate or party, or use of corporate property, services or other assets may be made without the written approval of the Legal Department. These prohibitions cover not only direct contributions, but also indirect assistance or support of candidates or political parties through purchase of tickets to special dinners or other fundraising events, or the furnishing of any other goods, services or equipment to political parties or committees.

An employee may participate in political campaigns or run for political office, provided such activity does not conflict with his or her job responsibilities. See p. 2-2 Should the employee have any questions, he or she should consult with his or her immediate supervisor.

2-9

PROTECTION OF CORPORATE ASSETS. All employees are responsible for taking measures to ensure that Price Group's assets are properly protected. This responsibility not only applies to our business facilities, equipment and supplies, but also to intangible assets such as proprietary, research or marketing information, corporate trademarks and servicemarks, copyrights, client relationships and business opportunities. Accordingly, employees shall not solicit for their personal benefit clients or utilize client relationships to the detriment of the firm. Similarly, employees shall not solicit co-workers to act in any manner detrimental to the firm's interests.

QUALITY OF SERVICES. It is a continuing policy of Price Group to provide investment products and services that: (1) meet applicable laws, regulations and industry standards; (2) are offered to the public in a manner that ensures that each client/shareholder understands the objectives of each investment product selected; and (3) are properly advertised and sold in accordance with all applicable SEC, state and NASD rules and regulations.

The quality of Price Group's investment products and services and operations affects our reputation, productivity, profitability and market position. Price Group's goal is to be a quality leader and to create conditions that allow and encourage all employees to perform their duties in an efficient, effective manner.

RECORD RETENTION. Under various federal and state laws and regulations, certain of Price Group's subsidiaries are required to produce, maintain and retain various records, documents and other written (including electronic) communications. Each employee is responsible for adhering to the firm's record maintenance and retention policies.

REFERRAL FEES. Federal securities laws strictly prohibit the payment of any type of referral fee unless certain conditions are met. This would include any compensation to persons who refer clients or shareholders to us (e.g., brokers, registered representatives or any other persons) either directly in cash, by fee splitting, or indirectly by the providing of gifts or services (including the allocation of brokerage). No arrangements should be entered into obligating Price Group or any employee to pay a referral fee unless approved by the Legal Department.

RELEASE OF INFORMATION TO THE PRESS. All requests for information from the media concerning T. Rowe Price Group's corporate affairs, mutual funds, investment services, investment philosophy and policies, and related subjects should be referred to the Public Relations Department for reply. Investment professionals who are contacted directly by the press concerning a particular fund's investment strategy or market outlook may use their own discretion, but are advised to check with the Public Relations Department if they do not know the reporter or feel it may be inappropriate to comment on a particular matter.

RESPONSIBILITY TO REPORT VIOLATIONS. Every employee who becomes aware of a violation of this Code is encouraged to report, on a confidential basis, the violation to his or her supervisor. If the supervisor appears to be involved in the wrongdoing, the report should be made to the next level of supervisory authority or to the Director of the Human Resources Department. Upon notification of the alleged violation, the supervisor is obligated to advise the Legal Department.

It is Price Group's policy that no adverse action will be taken against any employee who reports a violation in good faith.

2-10

SERVICE AS TRUSTEE, EXECUTOR OR PERSONAL REPRESENTATIVE. Employees may serve as trustees, co-trustees, executors or personal representatives for the estates of or trusts created by close family members. Employees may also serve in such capacities for estates or trusts created by nonfamily members. However, if an Access Person expects to be actively involved in an investment capacity in connection with an estate or trust created by a nonfamily member, he or she must first be granted permission by the Ethics Committee. If an employee serves in any of these capacities, securities transactions effected in such accounts will be subject to the prior approval (Access Persons only, except for Price Group stock) and reporting requirements (Access Persons AND Non-Access Persons) of our Statement of Policy on Securities Transactions.

If any employee presently serves in any of these capacities for nonfamily members, he or she should report the relationship in writing to the Ethics Committee.

SPEAKING ENGAGEMENTS AND PUBLICATIONS. Employees are often asked to accept speaking engagements on the subject of investments, finance, or their own particular specialty with our organization. This is encouraged by the firm, as it enhances our public relations, but you should obtain approval from the head of your Division before you accept such requests. You may also accept an offer to teach a course or seminar on investments or related topics (for example, at a local college) in your individual capacity with the approval of the head of your Division and provided the course is in compliance with the Guidelines found in Investment Services' Compliance Manual.

Before making any commitment to write or publish any article or book on a subject related to investments or your work at Price Group, approval should be obtained from your Division head.

TRADING IN SECURITIES WITH INSIDE INFORMATION. The purchase or sale of securities while in possession of material, inside information is prohibited by state and federal laws. Information is considered inside and material if it has not been publicly disclosed and is sufficiently important that it would affect the decision of a reasonable person to buy, sell or hold stock in a company, including Price Group stock. Under no circumstances may an employee transmit such information to any other person, except to other employees who are required to be kept informed on the subject. All employees should read and understand the Statement of Policy on Material, Inside (Non-Public) Information (see page 3-1).

May, 2001

2-11

T. ROWE PRICE GROUP, INC.
STATEMENT OF POLICY
ON
MATERIAL, INSIDE (NON-PUBLIC) INFORMATION

INTRODUCTION. "Insider trading" is a top enforcement priority of the Securities and Exchange Commission. In 1988, the Insider Trading and Securities Fraud Enforcement Act (the "ACT") was signed into law. This Act has had a far reaching impact on all public companies and especially those engaged in the securities brokerage or investment advisory industries, including directors, executive officers and other controlling persons of such companies. Specifically, the Act:

WRITTEN PROCEDURES. Requires SEC-registered brokers, dealers and investment advisers to establish, maintain and enforce written policies and procedures reasonably designed to prevent the misuse of material, non-public information by such persons.

CIVIL PENALTIES. Imposes severe civil penalties on brokerage firms, investment advisers, their management and advisory personnel and other "controlling persons" who fail to take adequate steps to prevent insider trading and illegal tipping by employees and other "controlled persons." Persons who directly or indirectly control violators, including entities such as Price Associates and their officers and directors, face penalties to be determined by the court in light of the facts and circumstances, but not to exceed the greater of $1,000,000 or three times the amount of profit gained or loss avoided as a result of the violation.

CRIMINAL PENALTIES. Provides as penalties for criminal securities law violations:

o Maximum jail term -- from five to ten years;

o Maximum criminal fine for individuals -- from $100,000 to $1,000,000;

o Maximum criminal fine for entities -- from $500,000 to $2,500,000.

PRIVATE RIGHT OF ACTION. Establishes a statutory private right of action on behalf of contemporaneous traders against insider traders and their controlling persons.

BOUNTY PAYMENTS. Authorizes the SEC to award bounty payments to persons who provide information leading to the successful prosecution of insider trading violations. Bounty payments are at the discretion of the SEC, but may not exceed 10% of the penalty imposed.

The Act has been supplemented by three SEC rules, 10b5-1, 10b5-2 and FD, which are discussed later in this Statement.

PURPOSE OF STATEMENT OF POLICY. The purpose of this Statement of Policy ("STATEMENT") is to comply with the Act's requirement to establish, maintain, and enforce written procedures designed to prevent insider trading. This Statement explains: (i) the general legal prohibitions and sanctions regarding insider trading; (ii) the meaning of the key concepts underlying the prohibitions; (iii) the obligations of each employee of Price Group in the event he or she comes into possession of material, non-public information; and (iv) the firm's educational program

3-1

regarding insider trading. Price Group has also adopted a Statement of Policy on Securities Transactions (see page 4-1), which requires both Access Persons (see
p. 4-3) and Non-Access Persons (see p. 4-4) to obtain prior clearance with respect to their transactions in Price Group stock and requires Access Persons to obtain prior clearance with respect to all pertinent securities transactions. In addition, both Access Persons and Non-Access Persons are required to report such transactions on a timely basis to the firm.

THE BASIC INSIDER TRADING PROHIBITION. The "insider trading" doctrine under federal securities laws generally prohibits any person (including investment advisers) from:

o trading in a security while in possession of material, non-public information regarding the issuer of the security;

o tipping such information to others;

o recommending the purchase or sale of securities while in possession of such information;

o assisting someone who is engaged in any of the above activities.

Thus, "insider trading" is not limited to insiders of the company whose securities are being traded. It can also apply to non-insiders, such as investment analysts, portfolio managers and stockbrokers. In addition, it is not limited to persons who trade. It also covers persons who tip material, non-public information or recommend transactions in securities while in possession of such information.

POLICY OF PRICE GROUP ON INSIDER TRADING. It is the policy of Price Group and its affiliates to forbid any of their officers, directors, or employees, while in possession of material, non-public information, from trading securities or recommending transactions, either personally or in their proprietary accounts or on behalf of others (including mutual funds and private accounts), or communicating material, non-public information to others in violation of federal securities laws.

"NEED TO KNOW" POLICY. All information regarding planned, prospective or ongoing securities transactions must be treated as confidential. Such information must be confined, even within the firm, to only those individuals and departments who must have such information in order for the respective entity to carry out its engagement properly and effectively. Ordinarily, these prohibitions will restrict information to only those persons who are involved in the matter.

TRANSACTIONS INVOLVING PRICE GROUP STOCK. Officers, directors and employees are reminded that they are "insiders" with respect to Price Group since Price Group is a public company and its stock is traded in the over-the-counter market. It is therefore important that employees not discuss with family, friends or other persons any matter concerning Price Group which might involve material, non-public information, whether favorable or unfavorable.

SANCTIONS. Penalties for trading on material, non-public information are severe, both for the individuals involved in such unlawful conduct and their employers. An employee of Price Group who violates the insider trading laws can be subject to some or all of the penalties described below, even if he or she does not personally benefit from the violation:

o Injunctions;

3-2

o Treble damages;

o Disgorgement of profits;

o Criminal fines;

o Jail sentences;

o Civil penalties for the person who committed the violation (which would, under normal circumstances, be the employee and not the firm) of up to three times the profit gained or loss avoided, whether or not the individual actually benefitted; and

o Civil penalties for the controlling entity (e.g., Price Associates) (and other persons, such as managers and supervisors, who are deemed to be controlling persons) of up to the greater of $1,000,000 or three times the amount of the profit gained or loss avoided.

In addition, any violation of this Statement can be expected to result in serious sanctions being imposed by Price Group, including dismissal of the person(s) involved.

BASIC CONCEPTS OF INSIDER TRADING. The four critical concepts in insider trading cases are: (1) fiduciary duty/misappropriation, (2) materiality, (3) non-public, and (4) use/possession. Each concept is discussed below.

FIDUCIARY DUTY/MISAPPROPRIATION. In two decisions, Dirks v. SEC and Chiarella v. United States, the United States Supreme Court held that insider trading and tipping violate the federal securities law if the trading or tipping of the information results in a breach of duty of trust or confidence.

A typical breach of duty arises when an insider, such as a corporate officer, purchases securities of his or her corporation on the basis of material, non-public information. Such conduct breaches a duty owed to the corporation's shareholders. The duty breached, however, need not be to shareholders to support liability for insider trading; it could also involve a breach of duty to a client, an employer, employees, or even a personal acquaintance. For example, courts have held that if the insider receives a personal benefit (either direct or indirect) from the disclosure, such as a pecuniary gain or reputational benefit, that would be enough to find a fiduciary breach.

The concept of who constitutes an "insider" is broad. It includes officers, directors and employees of a company. In addition, a person can be a "temporary insider" if he or she enters into a confidential relationship in the conduct of a company's affairs and, as a result, is given access to information solely for the company's purpose. A temporary insider can include, among others, a company's attorneys, accountants, consultants, and bank lending officers, as well as the employees of such organizations. In addition, any person may become a temporary insider of a company if he or she advises the company or provides other services, provided the company expects such person to keep any material, non-public information disclosed confidential.

Court decisions have held that under a "misappropriation" theory, an outsider (such as an investment analyst) may be liable if he or she breaches a duty to anyone by: (1) obtaining information improperly, or (2) using information that was obtained properly for an improper purpose. For example, if information is given to an analyst on a confidential basis and the analyst uses that information for trading purposes, liability could arise under the misappropriation theory. Similarly, an analyst who trades in breach of a duty owed either to his

3-3

or her employer or client may be liable under the misappropriation theory. For example, the Supreme Court upheld the misappropriation theory when a lawyer received material, non-public information from a law partner who represented a client contemplating a tender offer, where that lawyer used the information to trade in the securities of the target company.

SEC Rule 10b5-2 provides a non-exclusive definition of circumstances in which a person has a duty of trust or confidence for purposes of the "misappropriation theory of insider trading. It states that a "duty of trust or confidence" exists in the following circumstances, among others:

(1) Whenever a person agrees to maintain information in confidence;

(2) Whenever the person communicating the material nonpublic information and the person to whom it is communicated have a history, pattern, or practice of sharing confidences, that resulted in a reasonable expectation of confidentiality; or

(3) Whenever a person receives or obtains material nonpublic information from his or her spouse, parent, child, or sibling unless it is shown affirmatively, based on the facts and circumstances of that family relationship, that there was no reasonable expectation of confidentiality.

The situations in which a person can trade while in possession of material, non-public information without breaching a duty are so complex and uncertain that the only safe course is not to trade, tip or recommend securities while in possession of material, non-public information.

MATERIALITY. Insider trading restrictions arise only when the information that is used for trading, tipping or recommendations is "material." The information need not be so important that it would have changed an investor's decision to buy or sell; rather, it is enough that it is the type of information on which reasonable investors rely in making purchase, sale, or hold decisions.

RESOLVING CLOSE CASES. The Supreme Court has held that, in close cases, doubts about whether or not information is material should be resolved in favor of a finding of materiality. You should also be aware that your judgment regarding materiality may be reviewed by a court or the SEC with the 20-20 vision of hindsight.

EFFECT ON MARKET PRICE. Any information that, upon disclosure, is likely to have a significant impact on the market price of a security should be considered material.

3-4

FUTURE EVENTS. The materiality of facts relating to the possible occurrence of future events depends on the likelihood that the event will occur and the significance of the event if it does occur.

ILLUSTRATIONS. The following list, though not exhaustive, illustrates the types of matters that might be considered material: a joint venture, merger or acquisition; the declaration or omission of dividends; the acquisition or loss of a significant contract; a change in control or a significant change in management; a call of securities for redemption; the borrowing of a significant amount of funds; the purchase or sale of a significant asset; a significant change in capital investment plans; a significant labor dispute or disputes with subcontractors or suppliers; an event requiring a company to file a current report on Form 8-K with the SEC; establishment of a program to make purchases of the company's own shares; a tender offer for another company's securities; an event of technical default or default on interest and/or principal payments; advance knowledge of an upcoming publication that is expected to affect the market price of the stock.

NON-PUBLIC VS. PUBLIC INFORMATION. Any information which is not "public" is deemed to be "non-public." Just as an investor is permitted to trade on the basis of information that is not material, he or she may also trade on the basis of information that is public. Information is considered public if it has been disseminated in a manner making it available to investors generally. An example of non-public information would include material information provided to a select group of analysts but not made available to the investment community at large. Set forth below are a number of ways in which non-public information may be made public.

DISCLOSURE TO NEWS SERVICES AND NATIONAL PAPERS. The U.S. stock exchanges require exchange-traded issuers to disseminate material, non-public information about their companies to: (1) the national business and financial newswire services (Dow Jones and Reuters); (2) the national service (Associated Press); and (3) The New York Times and The Wall Street Journal.

LOCAL DISCLOSURE. An announcement by an issuer in a local newspaper might be sufficient for a company that is only locally traded, but might not be sufficient for a company that has a national market.

INFORMATION IN SEC REPORTS. Information contained in reports filed with the SEC will be deemed to be public.

If Price Group is in possession of material, non-public information with respect to a security before such information is disseminated to the public (i.e., such as being disclosed in one of the public media described above), Price Group and its employees must wait a sufficient period of time after the information is first publicly released before trading or initiating transactions to allow the information to be fully disseminated. Price Group may also follow Chinese Wall procedures, as described on page 3-8 of this Statement.

3-5

CONCEPT OF USE/POSSESSION. It is important to note that the SEC takes the position that the law regarding insider trading prohibits any person from trading in a security in violation of a duty of trust and confidence WHILE in possession of material, non-public information regarding the security. This is in contrast to trading ON THE BASIS of the material, non-public information. To illustrate the problems created by the use of the "possession" standard, as opposed to the "caused" standard, the following three examples are provided:

FIRST, if the investment committee to a Price mutual fund were to obtain material, non-public information about one of its portfolio companies from a Price equity research analyst, that fund would be prohibited from trading in the securities to which that information relates. The prohibition would last until the information is no longer material or non-public.

SECOND, if the investment committee to a Price mutual fund obtained material, non-public information about a particular portfolio security but continued to trade in that security, then the committee members, the applicable Price Adviser, and possibly management personnel might be liable for insider trading violations.

THIRD, even if the investment committee to the Fund does not come into possession of the material, non-public information known to the equity research analyst, if it trades in the security, it may have a difficult burden of proving to the SEC or to a court that it was not in possession of such information.

The SEC has expressed its view about the concept of trading "on the basis" of material, nonpublic information in Rule 10b5-1. Under Rule 10b5-1, and subject to the affirmative defenses contained in the rule, a purchase or sale of a security of an issuer is "on the basis of" material nonpublic information about that security or issuer if the person making the purchase or sale was aware of the material nonpublic information when the person made the purchase or sale.

A person's purchase or sale is not "on the basis of" material, nonpublic information if he or she demonstrates that:

(A) Before becoming aware of the information, the person had:

(1) Entered into a binding contract to purchase or sell the security;

(2) Instructed another person to purchase or sell the security for the instructing person's account, or

(3) Adopted a written plan for trading securities.

When a contract, instruction or plan is relied upon under this rule, it must meet detailed criteria set forth in Rule 10b5-1(c)(1)(i)(B) and (C).

3-6

Under Rule 10b5-1, a person other than a natural person (e.g., one of the Price Advisers) may also demonstrate that a purchase or sale of securities is not "on the basis of" material nonpublic information if it demonstrates that:

o The individual making the investment decision on behalf of the person to purchase or sell the securities was not aware of the information; and

o The person had implemented reasonable policies and procedures, taking into consideration the nature of the person's business, to ensure that individuals making investment decisions would not violate the laws prohibiting trading on the basis of material nonpublic information. These policies and procedures may include those that restrict any purchase, sale, and causing any purchase or sale of any security as to which the person has material nonpublic information, or those that prevent such individuals from becoming aware of such information.

TENDER OFFERS. Tender offers are subject to particularly strict regulation under the securities laws. Specifically, trading in securities which are the subject of an actual or impending tender offer by a person who is in possession of material, non-public information relating to the offer is illegal, regardless of whether there was a breach of fiduciary duty. Under no circumstances should you trade in securities while in possession of material, non-public information regarding a potential tender offer.

SELECTIVE DISCLOSURE OF MATERIAL, NON-PUBLIC INFORMATION BY PUBLIC COMPANIES. The SEC has adopted Regulation FD to prohibit certain issuers from selectively disclosing material, nonpublic information to certain persons who would be expected to trade on it. The rule applies only to publicly-traded domestic companies, not to foreign government or foreign private issuers.

Under this rule, whenever:

o An issuer, or person acting on its behalf,

o discloses material, non-public information,

o to securities professionals, institutional investors, broker-dealers, and holders of the issuer's securities,

o the issuer must make public disclosure of that same information,

o simultaneously (for intentional disclosures), or

o promptly within 24 hours after knowledge of the disclosure by a senior official (for non-intentional disclosures).

Regulation FD does not apply to all of the issuer's employees; rather only communications by an issuer's senior management (executive officers and directors), its investor relations professionals, and others who regularly communicate with market professionals and security holders are

3-7

covered. Certain recipients of information are also excluded from the Rule's coverage, including persons who are subject to a confidentiality agreement, credit rating agencies, and "temporary insiders," such as the issuer's lawyers, investment bankers, or accountants.

INFORMATION REGARDING PRICE GROUP.

The illustrations of material information found on page 3-5 of this Statement are equally applicable to Price Group as a public company and should serve as examples of the types of matters that employees should not discuss with persons outside the firm. Remember, even though you may have no intent to violate any federal securities law, an offhand comment to a friend might be used unbeknownst to you by such friend to effect purchases or sales of Price Group stock. If such transactions were discovered and your friend were prosecuted, your status as an informant or "tipper" would directly involve you in the case.

PROCEDURES TO BE FOLLOWED WHEN RECEIVING MATERIAL, NON-PUBLIC INFORMATION.

Whenever an employee comes into possession of material, non-public information, he or she should immediately contact the Legal Department and refrain from disclosing the information to anyone else, including persons within Price Group, unless specifically advised to the contrary.

Specifically, employees may not:

o Trade in securities to which the material, non-public information relates;

o Disclose the information to others;

o Recommend purchases or sales of the securities to which the information relates.

If the Legal Department determines that the information is material and non-public, it will decide whether to:

o Place the security on a Watch List ("WATCH LIST") and restrict the flow of the information to others within Price Group in order to allow the Price Advisers investment personnel to continue their ordinary investment activities. This procedure is commonly referred to as a CHINESE WALL; or

o Place the security on a Restricted List ("RESTRICTED LIST") in order to prohibit trading in the security by both clients and Access Persons.

The Watch List is highly confidential and should, under no circumstances, be disseminated to anyone except authorized personnel in the Legal Department. The Restricted List is also highly confidential and should, under no circumstances, be disseminated to anyone outside Price Group.

The employee whose possession of or access to inside information has caused the inclusion of an issuer on the Watch List may never trade or recommend the trade of the securities of that issuer without the specific prior approval of the Legal Department.

3-8

If an employee receives a private placement memorandum and the existence of the private offering and/or the contents of the memorandum is material and non-public, the employee should contact the Legal Department for a determination of whether the issuer should be placed on the Watch or Restricted List.

SPECIFIC PROCEDURES RELATING TO THE SAFEGUARDING OF INSIDE INFORMATION.

To ensure the integrity of the Chinese Wall, and the confidentiality of the Restricted List, it is important that ALL EMPLOYEES take the following steps to safeguard the confidentiality of material, non-public information:

o Do not discuss confidential information in public places such as elevators, hallways or social gatherings;

o To the extent practical, limit access to the areas of the firm where confidential information could be observed or overheard to employees with a business need for being in the area;

o Avoid using speaker phones in areas where unauthorized persons may overhear conversations;

o Where appropriate, maintain the confidentiality of client identities by using code names or numbers for confidential projects;

o Exercise care to avoid placing documents containing confidential information in areas where they may be read by unauthorized persons and store such documents in secure locations when they are not in use; and

o Destroy copies of confidential documents no longer needed for a project.

Price Group has adopted specific written procedures, Procedures Pertaining to the Administration of the Statement of Policy on Material, Inside (Non-Public) Information ("PROCEDURES"), to deal with those situations where employees of the firm are in possession of material, non-public information with respect to securities which may be in or are being considered for inclusion in the portfolios of clients managed by other areas of the firm and when tender offer financing information is received. These Procedures also describe the procedures for managing relationship conflicts in the municipal area. These Procedures have been designed to isolate and keep confidential material, non-public information known to one investment group or employee from the remainder of the firm. They are considered a part of this Statement and will be distributed to all appropriate personnel.

EDUCATION PROGRAM. While the probability of research analysts and portfolio managers being exposed to material, non-public information with respect to companies considered for investment by clients is greater than that of other employees, it is imperative that all employees have a full understanding of this Statement, particularly since the insider trading restrictions also apply to transactions in the stock of Price Group.

3-9

To ensure that all employees are properly informed of and understand Price Group's policy with respect to insider trading, the following program has been adopted.

INITIAL REVIEW FOR NEW EMPLOYEES. All new employees will be given a copy of the Code, which includes this Statement, at the time of their employment and will be required to certify that they have read it. A representative of the Legal Department will review the Statement with each new portfolio manager, research analyst, and trader, as well as with any person who joins the firm as a vice president of Price Group, promptly after his or her employment in that position.

REVISION OF STATEMENT. All employees will be informed whenever this Statement is materially revised.

ANNUAL REVIEW WITH RESEARCH ANALYSTS, COUNSELORS AND TRADERS. A representative of the Legal Department will review this Statement at least annually with portfolio managers, research analysts, and traders.

ANNUAL CONFIRMATION OF COMPLIANCE. All employees will be asked to confirm their understanding of and adherence to this Statement on an annual basis.

QUESTIONS. If you have any questions with respect to the interpretation or application of this Statement, you are encouraged to discuss them with your immediate supervisor or the Legal Department.

May, 2001

3-10

T. ROWE PRICE GROUP, INC.
STATEMENT OF POLICY
ON
SECURITIES TRANSACTIONS

BACKGROUND INFORMATION.

LEGAL REQUIREMENT. In accordance with the requirements of the Securities Exchange Act of 1934, the Investment Company Act of 1940, the Investment Advisers Act of 1940 and the Insider Trading and Securities Fraud Enforcement Act of 1988, Price Group and the mutual funds ("PRICE FUNDS") which its affiliates manage have adopted this Statement of Policy on Securities Transactions ("STATEMENT"). TRPI has also adopted a Statement of Policy on Securities Transactions.

PRICE ADVISERS' FIDUCIARY POSITION. As investment advisers, the Price Advisers are in a fiduciary position which requires them to act with an eye only to the benefit of their clients, avoiding those situations which might place, or appear to place, the interests of the Price Advisers or their officers, directors and employees in conflict with the interests of clients.

PURPOSE OF STATEMENT. The Statement was developed to help guide Price Group's employees and independent directors and the independent directors of the Price Funds in the conduct of their personal investments and to:

o eliminate the possibility of a transaction occurring that the Securities and Exchange Commission or other regulatory bodies would view as illegal, such as FRONT RUNNING (see definition below);

o avoid situations where it might appear that Price Group or the Price Funds or any of their officers, directors or employees had personally benefited at the expense of a client or fund shareholder or taken inappropriate advantage of their fiduciary positions; and

o prevent, as well as detect, the misuse of material, non-public information.

Employees and the independent directors of Price Group and the Price Funds are urged to consider the reasons for the adoption of this Statement. Price Group's and the Price Funds' reputations could be adversely affected as the result of even a single transaction considered questionable in light of the fiduciary duties of the Price Advisers and the independent directors of the Price Funds.

FRONT RUNNING. Front Running is illegal. It is generally defined as the purchase or sale of a security by an officer, director or employee of an investment adviser or mutual fund in anticipation of and prior to the adviser effecting similar transactions for its clients in order to take advantage of or avoid changes in market prices effected by client transactions.

4-1

PERSONS SUBJECT TO STATEMENT. The provisions of this Statement apply as described below to the following persons and entities. Each person and entity is classified as either an Access Person or a Non-Access Person as described below. The provisions of this Statement may also apply to an Access Person's or Non-Access Person's spouse, minor children, and certain other relatives, as further described on page 4-4 of this Statement. Access Persons are subject to all provisions of this Statement. Non-Access Persons are subject to the general principles of the Statement and its reporting requirements, but are exempt from prior clearance requirements except for transactions in Price Group stock. The persons and entities covered by this Statement are:

PRICE GROUP. Price Group, each of its subsidiaries and affiliates except TRPI, TRPGA and TRPGIS, and their retirement plans.

EMPLOYEE PARTNERSHIPS. Partnerships such as Pratt Street Ventures.

PERSONNEL. Each officer, inside director and employee of Price Group and its subsidiaries and affiliates, including T. Rowe Price Investment Services, Inc., the principal underwriter of the Price Funds, except that personnel working abroad are subject to the TRPI Statement.

CERTAIN TEMPORARY WORKERS. These workers include:

o All temporary workers hired on the Price Group payroll ("TRP TEMPORARIES");

o All agency temporaries whose assignments at Price Group exceed four weeks or whose cumulative assignments exceed eight weeks over a twelve-month period;

o All independent or agency-provided consultants whose assignments exceed four weeks or whose cumulative assignments exceed eight weeks over a twelve-month period AND whose work is closely related to the ongoing work of Price Group's employees (versus project work that stands apart from ongoing work); and

o Any contingent worker whose assignment is more than casual in nature or who will be exposed to the kinds of information and situations that would create conflicts on matters covered in the Code.

TRPI, TRPGA AND TRPGIS PERSONNEL. As stated in the first paragraph, a Statement of Policy on Securities Transactions has been adopted by TRPI. Under that Statement, all TRPI, TRPGA and TRPGIS personnel (officers, directors and employees) stationed in Baltimore will be subject to this Statement.

RETIRED EMPLOYEES. Retired employees of Price Group who continue to receive investment research information from one or more of the Price Advisers will be subject to this Statement.

INDEPENDENT DIRECTORS OF PRICE GROUP, THE SAVINGS BANK AND THE PRICE FUNDS. The independent directors of Price Group include those directors of Price Group who are neither officers nor employees of Price Group. The independent directors of the T. Rowe Price Savings Bank ("SAVINGS BANK") include those directors of the Savings Bank who are

4-2

neither officers nor employees of Price Group or any of its subsidiaries or affiliates. The independent directors of the Price Funds include those directors of the Price Funds who are not deemed to be "interested persons" of Price Group.

Although subject to the general principles of this Statement, including the definition of "beneficial ownership," independent directors are subject only to modified reporting requirements. See p. 4-14. The independent directors of the Savings Bank and the Price Funds are exempt from prior clearance requirements. The independent directors of Price Group are exempt from the prior clearance requirements except for Price Group stock.

ACCESS PERSONS. Certain persons and entities are classified as "ACCESS PERSONS" under the Code. The term "ACCESS PERSON" means:

o the Price Advisers;

o any officer (vice president or above) or director (excluding independent directors) of any of the Price Advisers or the Price Funds;

o any employee of Price Group or the Price Funds who, in connection with his or her regular functions or duties, makes, participates in, or obtains or has access to information regarding the purchase or sale of securities by a Price Fund or other advisory client, or whose functions relate to the making of any recommendations with respect to the purchases or sales; or

o any person in a control relationship to any of the Price Advisers or a Price Fund who obtains or has access to information concerning recommendations made to a Price Fund or other advisory client with regard to the purchase or sale of securities by the Price Fund or advisory client.

All Access Persons are notified of their status under the Code.

INVESTMENT PERSONNEL. An Access Person is further identified as "INVESTMENT PERSONNEL" if, in connection with his or her regular functions or duties, he or she "makes or participates in making recommendations regarding the purchase or sale of securities" by a Price Fund or other advisory client.

The term "Investment Personnel" includes, but is not limited to:

o those employees who are authorized to make investment decisions or to recommend securities transactions on behalf of the firm's clients (investment counselors and members of the mutual fund advisory committees);

o research and credit analysts; and

o traders who assist in the investment process.

4-3

All Investment Personnel are deemed Access Persons under the Code. All Investment Personnel are notified of their status under the Code. Investment Personnel are prohibited from investing in initial public offerings.

NON-ACCESS PERSONS. Persons who do not fall within the definition of Access Persons are deemed "NON-ACCESS PERSONS". If an employee who is a Non-Access Person is married to an Access Person, then the non-Access Person is deemed to be an Access Person under the beneficial ownership provisions described below.

QUESTIONS ABOUT THE STATEMENT. You are urged to seek the advice of the Chairperson of the Ethics Committee when you have questions as to the application of this Statement to individual circumstances.

TRANSACTIONS SUBJECT TO STATEMENT. Except as provided below, the provisions of this Statement apply to transactions that fall under either one of the following two conditions:

FIRST, you are a "BENEFICIAL OWNER" of the security under the Rule 16a-1 of the Securities Exchange Act of 1934 ("EXCHANGE ACT"), as defined below.

SECOND, if you CONTROL or direct securities trading for another person or entity, those trades are subject to this Statement even if you are not a beneficial owner of the securities. For example, if you have an exercisable trading authorization of an unrelated person's or entity's brokerage account, or are directing another person's or entity's trades, those transactions will be subject to this Statement to the same extent your personal trades would be, unless exempted as described below.

DEFINITION OF BENEFICIAL OWNER. A "beneficial owner" is any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has or shares in the opportunity, directly or indirectly, to profit or share in any profit derived from a transaction in the security.

A person has beneficial ownership in:

o securities held by members of the person's immediate family SHARING THE SAME HOUSEHOLD, although the presumption of beneficial ownership may be rebutted;

o a person's interest in securities held by a trust, which may include both trust beneficiaries or trustees with investment control;

o a person's right to acquire securities through the exercise or conversion of any derivative security, whether or not presently exercisable;

o a general partner's proportionate interest in the portfolio securities held by a general or limited partnership;

o certain performance-related fees other than an asset-based fee, received by any broker, dealer, bank, insurance company, investment company, investment adviser, investment manager, trustee or person or entity performing a similar function; and

4-4

o a person's right to dividends that is separated or separable from the underlying securities. Otherwise, right to dividends alone shall not represent beneficial ownership in the securities.

A shareholder shall not be deemed to have beneficial ownership in the portfolio securities held by a corporation or similar entity in which the person owns securities if the shareholder is not a controlling shareholder of the entity and does not have or share investment control over the entity's portfolio.

Requests for Exemptions. If you have beneficial ownership of a security, any transaction involving that security is presumed to be subject to the relevant requirements of this Statement, unless you have no control over the transaction. Such a situation may arise, for example, if you have delegated investment authority to an independent investment adviser, or your spouse has an independent trading program in which you have no input. Similarly, if your spouse has investment control over, but no beneficial ownership in, an unrelated account, an exemption may be appropriate.

If you are involved in an investment account for a family situation, trust, partnership, corporation, etc., which you feel should not be subject to the Statement's relevant prior approval and/or reporting requirements, you should submit a written request for clarification or exemption to Baltimore Legal/Compliance (Attn. D. Jones). Any such request for clarification or exemption should name the account, your interest in the account, the persons or firms responsible for its management, and the basis upon which the exemption is being claimed. Exemptions are NOT self-executing; any exemption must be granted through Baltimore Legal/Compliance.

PRIOR CLEARANCE REQUIREMENTS GENERALLY. As described, certain transactions require prior clearance before execution. Receiving prior clearance does not relieve employees from conducting their personal securities transactions in full compliance with the Code, including its prohibition on trading while in possession of material, inside information, and with applicable law, including the prohibition on Front Running (see page 4-1 for definition of Front Running).

TRANSACTIONS IN STOCK OF PRICE GROUP. Because Price Group is a public company, ownership of its stock subjects its officers, inside and independent directors, and employees to special legal requirements under the federal securities laws. Each officer, director and employee is responsible for his or her own compliance with these requirements. In connection with these legal requirements, Price Group has adopted the following rules and procedures:

INDEPENDENT DIRECTORS OF PRICE FUNDS. The independent directors of the Price Funds are prohibited from owning the stock of Price Group.

QUARTERLY EARNINGS REPORT. Generally, all employees and independent directors of Price Group must refrain from initiating transactions in Price Group stock in which they have a beneficial interest from the sixth trading day following the end of the quarter (or such other date as management shall from time to time determine) until the third trading day following the public release of earnings. Employees and independent directors will be

4-5

notified in writing through the Office of the Secretary of Price Group ("SECRETARY") from time to time as to the controlling dates.

PRIOR CLEARANCE OF PRICE GROUP STOCK TRANSACTIONS GENERALLY. Employees and independent directors of Price Group are required to obtain clearance prior to effecting any proposed transaction (including gifts and transfers) involving shares of Price Group stock owned beneficially or through the Employee Stock Purchase Plan. A transfer includes a change in ownership name of shares of Price Group stock, including a transfer of the shares into street name to be held in a securities account and any transfers of shares of Price Group stock between securities firms or accounts, including accounts held at the same firm.

PRIOR CLEARANCE PROCEDURES FOR PRICE GROUP STOCK. Requests for prior clearance must be in writing on the form entitled "Notification of Proposed Transaction" (available from the Corporate Records Department and on the firm's Intranet under Corporate/Corporate Records) and be submitted to the Secretary, who is responsible for processing and maintaining the records of all such requests. This includes not only market transactions, but also sales of stock purchased either through the Price Group Employee Stock Purchase Plan ("ESPP") or through a brokerage account if shares of Price Group stock are transferred there from the ESPP. Purchases effected through the ESPP are automatically reported to the Secretary.

PROHIBITION REGARDING TRANSACTIONS IN PUBLICLY-TRADED PRICE GROUP OPTIONS. Transactions in publicly-traded options on Price Group stock are not permitted.

APPLICABILITY OF 60-DAY RULE TO PRICE GROUP STOCK TRANSACTIONS. Transactions in Price Group stock are subject to the 60-Day Rule except for transactions effected through the ESPP, the exercise of employee stock options granted by Price Group, and shares obtained through an established dividend reinvestment program.

Gifts of Price Group stock, although subject to prior clearance, are also not subject to this Rule.

Purchases through payroll deduction of Price Group stock in the ESPP are not considered in determining the applicability of the 60-Day Rule to market transactions in Price Group stock. See p. 4-18.

ALL EMPLOYEES (BOTH ACCESS PERSONS AND NON-ACCESS PERSONS) AND INDEPENDENT DIRECTORS OF PRICE GROUP MUST OBTAIN PRIOR CLEARANCE OF ANY TRANSACTION INVOLVING PRICE GROUP STOCK FROM THE OFFICE OF THE SECRETARY OF PRICE GROUP.

INITIAL DISCLOSURE OF HOLDINGS OF PRICE GROUP STOCK. Each new employee must report to the Secretary any shares of Price Group stock of which he or she has beneficial ownership no later than 10 days after his or her starting date of employment.

4-6

DIVIDEND REINVESTMENT PLANS FOR PRICE GROUP STOCK. Purchases of Price Group stock owned outside of the ESPP and effected through a dividend reinvestment plan need not receive prior clearance if the Secretary's office has been previously notified by the employee that he or she will be participating in that plan. Reporting of transactions effected through that plan need only be made quarterly, except in the case of employees who are subject to Section 16 of the Securities Exchange Act of 1934, who must report such transactions at least monthly.

EFFECTIVENESS OF PRIOR CLEARANCE. Prior clearance of transactions in Price Group stock is effective for five (5) business days from and including the date the clearance is granted, unless (i) advised to the contrary by the Secretary prior to the proposed transaction, or (ii) the person receiving the approval comes into possession of material, non-public information concerning the firm. If the proposed transaction in Price Group stock is not executed within this time period, a new clearance must be obtained before the individual can execute the proposed transaction.

REPORTING OF DISPOSITION OF PROPOSED TRANSACTION. Covered persons must use the form returned to them by the Secretary to notify the Secretary of the disposition (whether the proposed transaction was effected or not) of each transaction involving shares of Price Group stock owned directly. The notice must be returned within two business days of the trade's execution, or within seven business days of the date of prior clearance if the trade is not executed.

INSIDER REPORTING AND LIABILITY. Under current rules, certain officers, directors and 10% stockholders of a publicly traded company ("INSIDERS") are subject to the requirements of Section 16. Insiders include the directors and certain managing directors of Price Group.

SEC REPORTING. There are three reporting forms which insiders are required to file with the SEC to report their purchase, sale and transfer transactions in, and holdings of, Price Group stock. Although the Secretary will provide assistance in complying with these requirements as an accommodation to insiders, it remains the legal responsibility of each insider to assure that the applicable reports are filed in a timely manner.

o FORM 3. The initial ownership report by an insider is required to be filed on Form 3. This report must be filed within ten days after a person becomes an insider (i.e., is elected as a director or appointed as an executive officer) to report all current holdings of Price Group stock. Following the election or appointment of an insider, the Secretary will deliver to the insider a Form 3 for appropriate signatures and will file such Form with the SEC.

o FORM 4. Any change in the insider's ownership of Price Group stock must be reported on a Form 4 unless eligible for deferred reporting on year-end Form 5. The Form 4 is due by the 10th day following the end of the month in which the ownership change occurred. Following receipt of the Notice of Disposition of the proposed transaction, the Secretary will deliver to the insider a Form 4, as applicable, for appropriate signatures and will file such Form with the SEC.

4-7

o FORM 5. Any transaction or holding which is exempt from reporting on Form 4, such as option exercises, small purchases of stock, gifts, etc. may be reported on a deferred basis on Form 5 within 45 days after the end of the calendar year in which the transaction occurred. No Form 5 is necessary if all transactions and holdings were previously reported on Form 4.

LIABILITY FOR SHORT-SWING PROFITS. Under federal securities laws, profit realized by certain officers, as well as directors and 10% stockholders of a company (including Price Group) as a result of a purchase and sale (or sale and purchase) of stock of the company within a period of less than six months must be returned to the firm or its designated payee upon request.

OFFICE OF THRIFT SUPERVISION ("OTS") REPORTING. TRPA and Price Group are holding companies of T. Rowe Price Savings Bank, which is regulated by the OTS. OTS regulations require the Directors and senior officers of TRPA and Price Group to file reports regarding their personal holdings of the stock of Price Group and of the stock of any non-affiliated bank, savings bank, bank holding company, or savings and loan holding company. Although the Bank's Compliance Officer will provide assistance in complying with these requirements as an accommodation, it remains the responsibility of each person to ensure that the required reports are filed in a timely manner.

PRIOR CLEARANCE REQUIREMENTS (OTHER THAN PRICE GROUP STOCK) FOR ACCESS PERSONS.

ALL ACCESS PERSONS must obtain prior clearance before directly or indirectly initiating, recommending, or in any way participating in, the purchase or sale of a security in which the Access Person has, or by reason of such transaction may acquire, any beneficial interest or which he or she controls, unless exempted below. NON-ACCESS PERSONS are NOT required to obtain prior clearance before engaging in any securities transactions, except for transactions in Price Group stock.

Where required, prior clearance must be obtained regardless of whether the transaction is effected through TRP Brokerage or through an unaffiliated broker/dealer or other entity. Please note that the prior clearance procedures do NOT check compliance with the 60-Day Rule (p. 4-18); you are responsible for ensuring your compliance with this rule.

TRANSACTIONS (OTHER THAN IN PRICE GROUP STOCK) THAT ARE EXEMPT FROM PRIOR CLEARANCE AND REPORTING. The following transactions are exempt from both the prior clearance and reporting requirements:

4-8

MUTUAL FUNDS AND VARIABLE INSURANCE PRODUCTS. The purchase or redemption of shares of any open-end investment companies, including the Price Funds, and variable insurance products, except that any employee who serves as the president or executive vice president of a Price Fund must report his or her beneficial ownership or control of shares in that Fund to Baltimore Legal/Compliance through electronic mail to Dottie Jones.

U.S. GOVERNMENT OBLIGATIONS. Purchases or sales of direct obligations of the U.S. Government.

CERTAIN COMMODITY FUTURES CONTRACTS. Purchases or sales of commodity futures contracts for tangible goods (e.g., corn, soybeans, wheat) if the transaction is regulated solely by the Commodity Futures Trading Commission ("CFTC"). Futures contracts for financial instruments, however, MUST receive prior clearance.

TRANSACTIONS (OTHER THAN PRICE GROUP STOCK) THAT ARE EXEMPT FROM PRIOR CLEARANCE, BUT MUST BE REPORTED BY BOTH ACCESS PERSONS AND NON-ACCESS PERSONS.

UNIT INVESTMENT TRUSTS. Purchases or sales of shares in unit investment trusts, including such unit investment trusts as DIAMONDS, SPYDER and Nasdaq-100 Index Tracking Stock ("QQQ").

PRO RATA DISTRIBUTIONS. Purchases effected by the exercise of rights issued pro rata to all holders of a class of securities or the sale of rights so received.

STOCK SPLITS AND SIMILAR ACQUISITIONS. The acquisition of additional shares of existing corporate holdings through stock splits, stock dividends, exercise of rights, exchange or conversion. Reporting of such transactions need only be made quarterly.

MANDATORY TENDERS. Purchases and sales of securities pursuant to a mandatory tender offer.

SPOUSAL EMPLOYEE-SPONSORED PAYROLL DEDUCTION PLANS. Purchases by an Access Person's spouse pursuant to an employee-sponsored payroll deduction plan (e.g., a 401(k) plan or employee stock purchase plan), provided Baltimore Legal/Compliance has been previously notified by the Access Person that the spouse will be participating in the payroll deduction plan. Reporting of such transactions need only be made quarterly.

EXERCISE OF STOCK OPTION OF CORPORATE EMPLOYER BY SPOUSE. Transactions involving the exercise by an Access Person's spouse of a stock option issued by the corporation employing the spouse. However, a subsequent sale of the stock obtained by means of the exercise must receive prior clearance.

4-9

DIVIDEND REINVESTMENT PLANS. Purchases effected through an established Dividend Reinvestment Plan ("DRP"). An Access Person's purchase of share(s) of the issuer to initiate participation in the DRP or an Access Person's purchase of shares in addition to those purchased with dividends (a "CONNECTED PURCHASE") AND any sale of shares from the DRP MUST receive prior clearance.

SYSTEMATIC INVESTMENT PLANS. Purchases effected through a systematic investment plan involving the automatic investment of a set dollar amount on predetermined dates, provided Baltimore Legal/Compliance has been previously notified by the Access Person that he or she will be participating in the plan. Reporting of Systematic Investment Plan transactions need only be made quarterly. An Access Person's purchase of securities of the issuer to initiate participation in the plan AND any sale of shares from such a plan MUST receive prior clearance.

INHERITANCES. The acquisition of securities through inheritance.

GIFTS. The giving of or receipt of a security as a gift.

OTHER TRANSACTION REPORTING REQUIREMENTS. Any transaction that is subject to the prior clearance requirements prior to execution on behalf of an Access Person, including purchases in initial public offerings and private placement transactions, must be reported. Although Non-Access Persons are not required to receive prior clearance for securities transactions (other than Price Group stock), they MUST report any transaction that would have been required to be prior cleared by an Access Person.

PROCEDURES FOR OBTAINING PRIOR CLEARANCE (OTHER THAN PRICE GROUP STOCK) FOR ACCESS PERSONS. Unless described as exempt from prior clearance above or subject to an exemption granted by the Chairperson of the Ethics Committee, Access Persons must receive prior clearance for all securities transactions. This includes transactions in closed-end funds, including Exchange Traded Funds ("ETFS") and sector index funds that are closed-end funds. ALL Access Persons should follow the procedures set forth below before engaging in the transactions described.

PROCEDURES FOR OBTAINING PRIOR CLEARANCE FOR INITIAL PUBLIC OFFERINGS
("IPOS"):

NON-INVESTMENT PERSONNEL. Access Persons who are NOT Investment Personnel ("NON-INVESTMENT PERSONNEL") may purchase securities that are the subject of an IPO ONLY if prior written approval has been obtained from the Chairperson of the Ethics Committee or his or her designee ("DESIGNEE"), which may include J. Gilner, N. Morris, or A. Brooks. An IPO is an offering of securities registered under the Securities Act of 1933 when the issuer of the securities, immediately before the registration, was not subject to certain reporting requirements of the Securities Exchange Act of 1934.

In considering such a request for approval, the Chairperson or his or her Designee will determine whether the proposed transaction presents a conflict of interest with

4-10

any of the firm's clients or otherwise violates the Code. The Chairperson or his or her Designee will also determine whether the following conditions have been met:

1. The purchase is made through the Non-Investment Personnel's regular broker;

2. The number of shares to be purchased is commensurate with the normal size and activity of the Non-Investment Personnel's account; and

3. The transaction otherwise meets the requirements of the NASD's rules on free riding and withholding.

Non-Investment Personnel will not be permitted to purchase shares in an IPO if any of the firm's clients are prohibited from doing so. Therefore, Non-Investment Personnel MUST check with the Equity Trading Desk the day the offering is priced before purchasing in the IPO. This prohibition will remain in effect until the firm's clients have had the opportunity to purchase in the secondary market once the underwriting is completed -- commonly referred to as the aftermarket.

INVESTMENT PERSONNEL. Investment Personnel may NOT purchase securities in an IPO.

NON-ACCESS PERSONS. Although Non-Access Persons are not required to receive prior clearance before purchasing shares in an IPO, any Non-Access Person who is a registered representative of Investment Services is reminded that NASD rules may restrict his or her ability to buy shares in a "hot issue," which is a new issue that trades at a premium in the secondary market whenever that trading commences.

PROCEDURES FOR OBTAINING PRIOR CLEARANCE FOR PRIVATE PLACEMENTS. Access Persons may not invest in a private placement of securities, including the purchase of limited partnership interests, unless prior written approval has been obtained from the Chairperson of the Ethics Committee or a Designee. In considering such a request for approval, the Chairperson will determine whether the investment opportunity (private placement) should be reserved for the firm's clients, and whether the opportunity is being offered to the Access Person by virtue of his or her position with the firm. The Chairperson will also secure, if appropriate, the approval of the proposed transaction from the chairperson of the applicable investment steering committee.

CONTINUING OBLIGATION. An Access Person who has received approval to invest in a private placement of securities and who, at a later date, anticipates participating in the firm's investment decision process regarding the purchase or sale of securities of the issuer of that private placement on behalf of any client, must immediately disclose his or her prior investment in the private placement to the Chairperson of the Ethics Committee and to the chairperson of the appropriate investment steering committee.

Employees who are registered representatives of Investment Services are reminded that NASD rules may restrict investment in a private placement in certain circumstances.

4-11

PROCEDURES FOR OBTAINING PRIOR CLEARANCE FOR ALL OTHER SECURITIES TRANSACTIONS. Requests for prior clearance by Access Persons for all other securities transactions requiring prior clearance may be made orally, in writing, or by electronic mail (e-mail address "Personal Trades," in the electronic mail address book) to the Equity Trading Department, which will be responsible for processing and maintaining the records of all such requests. Obtaining clearance by electronic mail is strongly encouraged. All requests must include the name of the security, the number of shares or amount of bond involved, whether a foreign security is involved, and the nature of the transaction, i.e., whether the transaction is a purchase, sale or short sale. Responses to all requests will be made by the Trading Department documenting the request and its approval/disapproval.

Requests will normally be processed on the same day; however, additional time may be required for prior clearance of transactions in foreign securities.

EFFECTIVENESS OF PRIOR CLEARANCE. Prior clearance of a securities transaction is effective for three (3) business days FROM AND INCLUDING the date the clearance is granted, regardless of the time of day when clearance is granted. If the proposed securities transaction is not executed within this time, a new clearance must be obtained

REMINDER. If you are an Access Person and become the beneficial owner of another's securities (e.g., by marriage to the owner of the securities) or begin to direct trading of another's securities, then transactions in those securities become subject to the prior clearance requirements.

REASONS FOR DISALLOWING ANY PROPOSED TRANSACTION. A proposed securities transaction will be disapproved by the Trading Department and/or the Chairperson of the Ethics Committee, unless it is determined that an exception is appropriate, if:

PENDING CLIENT ORDERS. Orders have been placed by any of the Price Advisers to purchase or sell the security.

PURCHASES AND SALES WITHIN SEVEN (7) CALENDAR DAYS. The security has been purchased or sold by any client of a Price Adviser within seven calendar days immediately prior to the date of the proposed transaction. For example, if a client transaction occurs on Monday, an Access Person may not purchase or sell that security until Tuesday of the following week. If all clients have eliminated their holdings in a particular security, the seven-day restriction is not applicable to an Access Person's transactions in that security.

APPROVED COMPANY RATING CHANGES. A change in the rating of an approved company as reported in the firm's Daily Research News has occurred within seven (7) calendar days immediately prior to the date of the proposed transaction. Accordingly, trading would not be permitted until the eighth (8) calendar day.

SECURITIES SUBJECT TO INTERNAL TRADING RESTRICTIONS. The security is limited or restricted by any of the Price Advisers as to purchase or sale by Access Persons.

4-12

REQUESTS FOR WAIVERS OF PRIOR CLEARANCE DENIALS. If an Access Person's request for prior clearance has been denied, he or she may apply to the Chairperson of the Ethics Committee for a waiver. All such requests must be in writing and must fully describe the basis upon which the waiver is being requested. Waivers are NOT routinely granted.

TRANSACTION CONFIRMATIONS AND PERIODIC ACCOUNT STATEMENTS. ALL ACCESS PERSONS AND NON-ACCESS PERSONS must request broker-dealers, investment advisers, banks, or other financial institutions executing their transactions to send to the attention of Compliance, Legal Department, T. Rowe Price, P.O. Box 17218, Baltimore, Maryland 21297-1218 a duplicate confirmation with respect to each and every reportable transaction, including Price Group stock, and a copy of all periodic statements for all securities accounts in which the Access Person or Non-Access Person is considered to have beneficial ownership and/or control (see page 4-4 for a discussion of beneficial ownership and control concepts).

NOTIFICATION OF SECURITIES ACCOUNTS. ALL ACCESS PERSONS AND NON-ACCESS PERSONS must give notice by e-mail addressed to the Legal/Compliance mailbox BEFORE opening or trading in a securities account with any broker, dealer, investment adviser, bank, or other financial institution including TRP Brokerage.

NEW EMPLOYEES. A new employee must give written notice to Baltimore Legal/Compliance of any existing securities accounts maintained with any broker, dealer, investment adviser, bank or other financial institution within 10 days of the employee's joining the firm.

Employees do not have to report accounts at transfer agents or similar entities if the only securities in those accounts are variable contracts or mutual funds IF these are the only types of securities that can be held or traded in the accounts. If other securities can be held or traded, the accounts must be reported. For example, if an employee has an account at T. Rowe Price Services, Inc., a transfer agent, that holds shares of a Price Fund, that account is not reportable. If, however, the employee has a broker account it must be reported even if the only securities currently held or traded in it are mutual funds.

OFFICERS, DIRECTORS AND REGISTERED REPRESENTATIVES OF INVESTMENT SERVICES. The NASD requires each associated person of T. Rowe Price Investment Services, Inc. to:

o Obtain approval from Investment Services (request should be in writing and be directed to Baltimore Legal/Compliance) before opening or placing the initial trade in a securities account; and

o If the securities account is with a broker/dealer, provide the broker/dealer with written notice of his or her association with Investment Services.

ANNUAL STATEMENT BY ACCESS PERSONS. Each Access Person must also file with the firm a statement of his or her accounts as of year-end in January of the following year.

4-13

REMINDER. If you become the beneficial owner of another's securities (e.g., by marriage to the owner of the securities) or begin to direct trading of another's securities, then the associated securities accounts become subject to the account reporting requirements.

PROCEDURES FOR REPORTING TRANSACTIONS. The following requirements apply both to Access Persons and Non-Access Persons:

REPORT FORM. If the executing firm provides a confirmation or similar statement directly to Baltimore Legal/Compliance, you do not need to make a further report. All other transactions must be reported on the form designated "T. Rowe Price Employee's Report of Securities Transactions," a supply of which is available from Baltimore Legal/Compliance or on the firm's Intranet under Corporate/Legal.

WHEN REPORTS ARE DUE. You must report a securities transaction within ten (10) days after the trade date or within (10) days after the date on which you first gain knowledge of the transaction (for example, a bequest) if this is later. Reporting of transactions involving either systematic investment plans or the purchase of securities by a spouse pursuant to an employee-sponsored payroll deduction plan, however, may be reported quarterly.

REMINDER. If you become the beneficial owner of another's securities (e.g., by marriage to the owner of the securities) or begin to direct trading of another's securities, the transactions in these securities become subject to the transaction reporting requirements.

TRANSACTION REPORTING REQUIREMENTS FOR THE INDEPENDENT DIRECTORS OF THE PRICE FUNDS, THE INDEPENDENT DIRECTORS OF PRICE GROUP, AND THE INDEPENDENT DIRECTORS OF THE SAVINGS BANK. The independent directors of the Price Funds are subject to the same reporting requirements as Access Persons and Non-Access Persons except that reports need only be filed quarterly. Specifically: (1) a report for each securities transaction must be filed with Baltimore/Legal Compliance no later than ten (10) days after the end of the calendar quarter in which the transaction was effected; and (2) a report must be filed for each quarter, regardless of whether there have been any reportable transactions. Baltimore/Legal Compliance will send the independent directors of the Price Funds a reminder letter and reporting form approximately ten days prior to the end of each calendar quarter.

The independent directors of Price Group are not required to report their personal securities transactions (other than transactions in Price Group stock) as long as they do not obtain information about the Price Advisers' investment research, recommendations, or transactions. However, the independent directors of Price Group are reminded that changes to certain information reported by the respective independent director in the Annual Questionnaire for Independent Directors are required to be reported to Baltimore/Corporate Records (e.g., changes in holdings of stock of financial institutions or financial institution holding companies).

The independent directors of the Savings Bank are not required to report their personal securities transactions except as they may be requested from time to time to do so by the Savings Bank in accordance with regulatory or examination requirements.

4-14

MISCELLANEOUS RULES REGARDING PERSONAL SECURITIES TRANSACTIONS. These rules vary
in their applicability depending upon whether you are an Access Person.

The following rules apply to ALL Access Persons AND Non-Access Persons and, where indicated, to the independent directors of Price Group and the Price Funds.

DEALING WITH CLIENTS. Access Persons, Non-Access Persons and the independent directors of Price Group and the Price Funds may not, directly or indirectly, sell to or purchase from a client any security. Market transactions are not subject to this restriction. This prohibition does not preclude the purchase or redemption of shares of any mutual fund that is a client of any of the Price Advisers and does not apply to transactions in a spousal employee-sponsored payroll deduction plan or spousal employee-sponsored stock option plan.

CLIENT INVESTMENT PARTNERSHIPS.

CO-INVESTING. The independent directors of the Price Funds are not permitted to co-invest in client investment partnerships of Price Group or its affiliates, such as Strategic Partners, Threshold, and Recovery.

DIRECT INVESTMENT. The independent directors of the Price Funds are not permitted to invest as limited partners in client investment partnerships of Price Group or its affiliates.

INVESTMENT CLUBS. These restrictions vary depending upon the person's status, as follows:

NON-ACCESS PERSONS. A Non-Access Person may form or participate in a stock or investment club without approval of the Chairperson of the Ethics Committee. Only transactions in Price Group stock are subject to prior clearance requirements. Club transactions must be reported just as the Non-Access Person's individual trades are reported.

ACCESS PERSONS. An Access Person may not form or participate in a stock or investment club unless prior written approval has been obtained from the Chairperson of the Ethics Committee. All transactions by such a stock or investment club in which an Access Person has beneficial ownership or control are subject to the same prior clearance and reporting requirements applicable to an individual Access Person's trades. However, if the Access Person has beneficial ownership solely by virtue of his or her spouse's participation in the club and has no investment control or input into decisions regarding the club's securities transactions, he or she may request the waiver of prior clearance requirements of the club's transactions (except for transactions in Price Group stock) from the Chairperson of the Ethics Committee as part of the approval process.

MARGIN ACCOUNTS. While margin accounts are discouraged, you may open and maintain margin accounts for the purchase of securities provided such accounts are with firms with which you maintain a regular securities account relationship.

4-15

TRADING ACTIVITY. You are discouraged from engaging in a pattern of securities transactions which either:

o Is so excessively frequent as to potentially impact your ability to carry out your assigned responsibilities, or

o Involves securities positions that are disproportionate to your net assets.

At the discretion of the Chairperson of the Ethics Committee, written notification of excessive trading may be sent to you and/or your supervisor if ten or more reportable trades occur in your account(s) in a month, or if circumstances otherwise warrant this action.

The following rules apply ONLY to ACCESS PERSONS:

LARGE COMPANY EXEMPTION. Although subject to prior clearance, transactions involving securities in certain large companies, within the parameters set by the Ethics Committee (the "EXEMPT LIST"), will be approved under normal circumstances, as follows:

TRANSACTIONS INVOLVING EXEMPT LIST SECURITIES. This exemption applies to transactions involving no more than $20,000 or the nearest round lot (even if the amount of the transaction MARGINALLY exceeds $20,000) per security per seven (7) calendar day period in securities of companies with market capitalizations of $5 billion or more, unless the rating on the security as reported in the firm's Daily Research News has been changed to a 1 or a 5 within the seven (7) calendar days immediately prior to the date of the proposed transaction. If such a rating change has occurred, the exemption is not available. The Exempt List may also include issuers determined to have a sufficiently large trading volume, as determined by the Ethics Committee.

TRANSACTIONS INVOLVING OPTIONS ON EXEMPT LIST SECURITIES. Access Persons may not purchase uncovered put options or sell uncovered call options unless otherwise permitted under the "Options and Futures" discussion on p. 4-17. Otherwise, in the case of options on an individual security on the Exempt List (if it has not had a prohibited rating change), an Access Person may trade the GREATER of 5 contracts or sufficient option contracts to control $20,000 in the underlying security; thus an Access Person may trade 5 contracts even if this permits the Access Person to control more than $20,000 in the underlying security. Similarly, the Access Person may trade more than 5 contracts as long as the number of contracts does not permit him or her to control more than $20,000 in the underlying security. Options transactions on the stock of Price Group are prohibited. See p. 4-6.

These parameters are subject to change by the Ethics Committee. An Access Person should be aware that if prior clearance is granted for a specific number of shares lower than the number requested, he or she may not be able to receive permission to buy or sell additional shares of the issuer for the next seven (7) calendar day under this exemption.

4-16

EXCHANGE-TRADED INDEX OPTIONS. Although subject to prior clearance, an Access Person's transactions involving exchange-traded index options, within the parameters set by the Ethics Committee, will be approved under normal circumstances. Generally, an Access Person may trade the GREATER of 5 contracts or sufficient contracts to control $20,000 in the underlying securities; thus an Access Person may trade 5 contracts even if this permits the Access Person to control more than $20,000 in the underlying securities. Similarly, the Access Person may trade more than 5 contracts as long as the number of contracts does not permit him or her to control more than $20,000 in the underlying security.

These parameters are subject to change by the Ethics Committee.

CLIENT LIMIT ORDERS. The Equity Trading Desk may approve an Access Person's proposed trade even if a limit order has been entered for a client for the same security, if:

o The Access Person's trade will be entered as a market order; and

o The client's limit order is 10% or more away from the market at the time of approval of the Access Person's trade.

OPTIONS AND FUTURES. Please consult the specific section on Exchange-Traded Index Options (p. 4-17) for transactions in those options.

BEFORE ENGAGING IN OPTIONS AND FUTURES TRANSACTIONS, ACCESS PERSONS SHOULD UNDERSTAND THE IMPACT THAT THE 60-DAY RULE AND INTERVENING CLIENT TRANSACTIONS MAY HAVE UPON THEIR ABILITY TO CLOSE OUT A POSITION WITH A PROFIT (SEE PAGE 4-18).

OPTIONS AND FUTURES ON SECURITIES AND INDICES NOT HELD BY CLIENTS OF THE PRICE ADVISERS. There are no specific restrictions with respect to the purchase, sale or writing of put or call options or any other option or futures activity, such as multiple writings, spreads and straddles, on securities of companies (and options or futures on such securities) which are not held by any of the Price Adviser clients. Options transactions in the stock of Price Group, however, are not permitted. See p. 4-6.

OPTIONS ON SECURITIES OF COMPANIES HELD BY PRICE ADVISERS CLIENTS. With respect to options on securities of companies which are held by any of Price Adviser's clients, it is the firm's policy that an Access Person should not profit from a price decline of a security owned by a client (other than an Index account). Therefore, an Access Person may: (i) purchase call options and sell covered call options and (ii) purchase covered put options and sell put options. An Access Person may not purchase uncovered put options or sell uncovered call options, even if the issuer of the underlying securities is included on the Exempt List, unless purchased in connection with other options on the same security as part of a straddle, combination or spread strategy which is designed to result in a profit to the Access Person if the underlying security rises in or does not change in value. The purchase, sale and exercise of options are subject to the same restrictions as those set forth with respect to securities, i.e., the option should be treated as if it were the common stock itself.

4-17

OTHER OPTIONS AND FUTURES HELD BY PRICE ADVISERS CLIENTS. Any other option or futures transaction with respect to domestic or foreign securities held by any of the Price Advisers' clients will be approved or disapproved on a case-by-case basis after due consideration is given as to whether the proposed transaction or series of transactions might appear to or actually create a conflict with the interests of any of the Price Advisers' clients. Such transactions include transactions in futures and options on futures involving financial instruments regulated solely by the CFTC.

CLOSING POSITIONS. A transaction to close an options transaction must also receive prior clearance. If an intervening client transaction in the underlying security has occurred since the position was opened, the Access Person may not receive prior clearance to initiate a transaction to close out the position.

SHORT SALES. Short sales by Access Persons are subject to prior clearance. In addition, Access Persons may not sell any security short which is owned by any client of one of the Price Advisers. All short sales are subject to the 60-Day Rule described below.

THE 60-DAY RULE. Access Persons are prohibited from profiting from the purchase and sale or sale and purchase of the same (or equivalent) securities within 60 calendar days. An "equivalent" security means any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege at a price related to the subject security, or similar securities with a value derived from the value of the subject security. Thus, for example, the rule prohibits options transactions on or short sales of a security within 60 days of its purchase. In addition, the rule applies regardless of the Access Person's other holdings of the same security or whether the Access Person has split his or her holdings into tax lots. For example, if an Access Person buys 100 shares of XYZ stock on March 1, 1998 and another 100 shares of XYZ stock on May 1, 2001, he or she may not sell ANY shares of XYZ stock at a profit for 60 days following May 1, 2001. The 60-Day Rule "clock" restarts EACH time the Access Person trades in that security.

EXEMPTIONS FROM THE 60-DAY RULE. The 60-Day Rule does not apply to:

o any transaction by a Non-Access Person except for transactions in Price Group stock not exempted below;

o any transaction exempt from prior clearance (e.g., exercise of corporate stock option by Access Person spouse, systematic investment plan; see p. 4-8);

o the purchase and sale or sale and purchase of exchange traded index options;

o any transaction in Price Group stock effected THROUGH the ESPP (the 60-Day Rule does apply to shares transferred from the ESPP to a brokerage account; generally, however, an employee remaining in the ESPP may not transfer shares held less than 60 days out of the ESPP); and

4-18

o the exercise of "company granted" Price Group stock options and the subsequent sale of the derivative shares.

Prior clearance procedures do NOT check compliance with the 60-Day Rule when considering a trading request. Access Persons are responsible for checking their compliance with this rule before entering a trade.

Access Persons may request a waiver from the 60-Day Rule. Such requests should be directed in writing to the Chairperson of the Ethics Committee. These waivers are NOT routinely granted.

INVESTMENTS IN NON-LISTED SECURITIES FIRMS. Access Persons may not purchase or sell the shares of a broker/dealer, underwriter or federally registered investment adviser unless that entity is traded on an exchange or listed as a Nasdaq stock or permission is given under the Private Placement Procedures (see p. 4-11).

OWNERSHIP REPORTING REQUIREMENTS - ONE-HALF OF ONE PERCENT OWNERSHIP. If an employee or an independent director of Price Group or an independent director of the Price Funds owns more than 1/2 of 1% of the total outstanding shares of a public or private company, he or she must immediately report in writing such fact to Baltimore Legal/Compliance, providing the name of the company and the total number of such company's shares beneficially owned.

DISCLOSURE OF PERSONAL SECURITIES HOLDINGS BY ACCESS PERSONS. Upon commencement of employment, appointment or promotion (no later than 10 days after the starting date), each Access Person must disclose in writing all current securities holdings in which he or she is considered to have beneficial ownership and control ("SECURITIES HOLDINGS REPORT") (see page 4-4 for definition of the term Beneficial Owner) and reconfirm the information regarding all of his or her securities accounts. The form to provide the Securities Holding Report will be provided upon commencement of employment, appointment or promotion and should be submitted to Baltimore Legal/Compliance. The form on which to report securities accounts can be found on the firm's Intranet under Corporate/Legal.

All Access Persons are also required to file a Personal Securities Report, consisting of a Statement of Personal Securities Holdings and a Securities Account Verification Form Report on an annual basis. The reports must be as of year end and be filed with the firm in January of the following year.

CONFIDENTIALITY OF RECORDS. Price Group makes every effort to protect the privacy of all persons and entities in connection with their Securities Holdings Reports, Reports of Securities Transactions, and Reports of Securities Accounts.

SANCTIONS. Strict compliance with the provisions of this Statement is considered a basic provision of employment or other association with Price Group and the Price Funds. The Ethics Committee and Baltimore Legal/Compliance are primarily responsible for administering this Statement. In fulfilling this function, the Ethics Committee will institute such procedures as it deems reasonably necessary to monitor each person's and entity's compliance with this Statement and to otherwise prevent and detect violations.

4-19

VIOLATIONS BY ACCESS PERSONS, NON-ACCESS PERSONS AND DIRECTORS OF PRICE GROUP. Upon discovering a material violation of this Statement by any person or entity other than an independent director of a Price Fund, the Ethics Committee will impose such sanctions as it deems appropriate and as are approved by the Management Committee or the Board of Directors including, INTER ALIA, a letter of censure or suspension, a fine, a suspension of trading privileges or termination of employment and/or officership of the violator. In addition, the violator may be required to surrender to Price Group, or to the party or parties it may designate, any profit realized from any transaction that is in violation of this Statement. All material violations of this Statement shall be reported to the Board of Directors of Price Group and to the Board of Directors of any Price Fund with respect to whose securities such violations may have been involved.

VIOLATIONS BY INDEPENDENT DIRECTORS OF PRICE FUNDS. Upon discovering a material violation of this Statement by an independent director of a Price Fund, the Ethics Committee shall report such violation to the Board on which the director serves. The Price Fund Boards will impose such sanctions as they deem appropriate.

VIOLATIONS BY BALTIMORE EMPLOYEES OF TRPI, TRFAM OR TRPGIS. Upon discovering a material violation of this Statement by a Baltimore-based employee of TRPI, TRFAM or TRPGIS, the Ethics Committee shall report such violation to the Board of Directors of TRPI, TRFAM or TRPGIS, as appropriate. A material violation by a Baltimore-based employee of TRPI shall also be reported to the Board of Directors of any TRPI Fund with respect to whose securities such violations may have been involved.

May, 2001

4-20

T. ROWE PRICE GROUP, INC.
STATEMENT OF POLICY
WITH RESPECT TO COMPLIANCE WITH UNITED STATES
COPYRIGHT AND TRADEMARK LAWS

PURPOSE OF STATEMENT OF POLICY. To protect the interests of Price Group and its employees, Price Group has adopted this Statement of Policy with Respect to Compliance with United States Copyright and Trademark Laws ("STATEMENT") to: (1) inform it employees regarding the legal principals governing copyrights, trademarks, and service marks; (2) ensure that Price Group's various copyrights, trademarks, and service marks are protected from infringement; and, (3) prevent Price Group from violating intellectual property rights of others.

DEFINITION OF COPYRIGHT

Copyright. In order to protect authors and owners of books, articles, drawings, designs, business logos, music, videos, electronic media, or computer programs and software, the U.S. Copyright Law makes it a crime to reproduce, in any manner, any copyrighted material without the express written permission of the copyright owner. Under current law, all original works are copyrighted at the moment of creation; it is no longer necessary to officially register a copyright. Copyright infringements may result in judgments of actual damages (i.e., the cost of additional subscriptions, attorneys fees and court costs) and statutory damages which can exceed $1,000,000.

REPRODUCTION OF ARTICLES AND SIMILAR MATERIALS FOR INTERNAL AND EXTERNAL DISTRIBUTION. In general, the unauthorized reproduction and distribution of copyrighted material is a state and federal crime. This includes downloading or copying information from the Internet or fee paid subscription services. Copyrighted material cannot be reproduced without the express written permission of the copyright owner (a sample Permission Request Letter is available from the Legal Department). Exceptions under the "fair use" doctrine include reproduction for scholarly purposes, criticism, or commentary, which ordinarily do not apply in a business environment. Thus, any employee wishing to reproduce copyrighted material for internal or external distribution must obtain written permission from the author or publisher.

It is the responsibility of each employee to obtain permission to reproduce copyrighted material. Such permission must be in writing and forwarded to the Legal Department. If the publisher will not grant permission to reproduce the copyrighted material, then the requestor must purchase from the publisher or owner either additional subscriptions or copies of the work or refrain from using. The original article or periodical may be circulated as an alternative to purchasing additional copies. If the work in question is accessible via an Internet web site, the web site address may be circulated in order for those to publicly view the information.

o Rarely are commercial companies considered eligible for use under "fair use" doctrine.

o For works published after January 1st 1978, copyrights last for the life of the author or owner plus 70 years or up to 120 years from creation.

5-1

o The electronic transmission of copyrighted works can constitute an infringement.

o The Digital Millennium Copyright Act ("DMCA") makes it a violation to
(i) alter or remove copyright notices, (ii) provide false copyright notices, or (iii) distribute works knowing that the copyright notice has been removed or altered.

o Derivative Works - a derivative work is a new work created based on an original work. Only the owner of a copyright has the right to authorize someone else to create a new version of the original work.

o Subscription Agreements for on-line publications typically only grant permission for the licensee to make a single copy. Permission from the copyright owner must be granted in order to make additional copies.

PERSONAL COMPUTER SOFTWARE PROGRAMS. Software products and on-line information services purchased for use on Price Group's personal computers are generally copyrighted material and may not be reproduced or transferred without the proper authorization from the software vendor. See the T. Rowe Price Group, Inc. Statement of Policy With Respect to Computer Security and Related Issues for more information.

DEFINITION OF TRADEMARK AND SERVICE MARK

TRADEMARK. A trademark is either a work, phrase or design, or combination of words, phrases, symbols or designs, which identifies and distinguishes the source of the goods or services of one party from those of others. For example, KLEENEX is a trademark for facial tissues.

SERVICE MARK. A service mark is the same as a trademark except that it identifies and distinguishes the source of a service rather than a product. For example, INVEST WITH CONFIDENCE is a registered service mark, which identifies and distinguishes the mutual fund management services offered by Price Group or its affiliates.

Normally, a mark for goods appears on the product or on its packaging, while a service mark appears in advertising for the services.

USE OF THE "TM", "SM" AND (R)

Anyone who claims rights in a mark may use the TM (trademark) or SM (service mark) designation with the mark to alert the public to the claim. It is not necessary to have a federal registration, or even a pending application, to use these designations. The claim may or may not be valid. The registration symbol,(R), may only be used when the mark is registered with the United States Patent and Trademark Office ("PTO"). It is improper to use this symbol at any point before the registration issues. The symbols are not considered part of the mark.

5-2

REGISTERED TRADEMARKS AND SERVICE MARKS. Once Price Group has registered a trademark or service mark with the U.S. Patent and Trademark Office, it has the exclusive right to use that mark. In order to preserve rights to a registered trademark or service mark, Price Group must (1) use the mark on a continuous basis and in a manner consistent with the Certificate of Registration; (2) place the registration symbol, (R), next to the mark in all publicly distributed media; and (3) take action against any party infringing upon the mark.

ESTABLISHING A TRADEMARK OR SERVICE MARK. The Legal Department has the responsibility to register and maintain all trademarks and service marks and protect them against any infringement. If Price Group wishes to utilize a particular word, phrase, or symbol, logo or design as a trademark or service mark, the Legal Department must be notified in advance so that a search may be conducted to determine if the proposed mark has already been registered or is in use by another entity. Until clearance is obtained from the Legal Department, no new mark should be used. This procedure has been adopted to ensure that Price Group does not unknowingly infringe upon another company's trademark. Once a proposed mark is cleared for use and Price wishes to use the mark, it must be accompanied by the abbreviations "TM" or "SM" as appropriate, until is has been registered. All trademarks and service marks, which have been registered with the U.S. Patent and Trademark Office, must be accompanied by an encircled (R) when used in any public document. These symbols need only accompany the mark in the first or most prominent place it is used in each public document. Subsequent use of the same trademark or service mark in such material would not need to be marked. The Legal Department maintains a written summary of all Price Group's registered and pending trademarks and service marks. If you have any questions regarding the status of a trademark or service mark, you should contact the Legal Department.

INFRINGEMENT OF PRICE GROUP'S REGISTERED MARKS. If an employee notices that another entity is using a mark similar to on which Price Group has registered, the Legal Department should be notified immediately to that appropriate action can be taken to protect Price Group's interests in the mark.

May, 2001

5-3

T. ROWE PRICE GROUP , INC.
STATEMENT OF POLICY WITH RESPECT TO
COMPUTER SECURITY AND RELATED ISSUES

PURPOSE OF STATEMENT OF POLICY. The central and critical role of computer systems in our firm's operations underscores the importance of ensuring the integrity of these systems. The data stored on our firm's computers, as well as the specialized software programs and systems developed for the firm's use, are extremely valuable assets and very confidential.

This Statement of Policy ("STATEMENT") establishes a comprehensive computer security program which has been designed to:

o prevent the unauthorized use of or access to our firm's computer systems (collectively the "SYSTEMS"), including the firm's electronic mail ("E-MAIL") and voice mail systems;

o prevent breaches in computer security;

o maintain the integrity of confidential information;

o protect customer information; and

o prevent the introduction of computer viruses into our Systems that could imperil the firm's operations.

In addition, the Statement describes various issues that arise in connection with the application of U.S. Copyright Law to computer software.

Any material violation of this Statement may lead to sanctions, which may include dismissal of the individual or individuals involved.

CONFIDENTIALITY OF SYSTEMS ACTIVITIES AND INFORMATION. Systems activities and information stored on our firm's computers (including e-mail, voice mail, and online facsimiles) may be subject to monitoring by firm personnel or others. All such information, including messages on the firm's e-mail, voice mail, and online facsimile systems, are records of the firm and the sole property of the firm. The firm reserves the right to monitor, access, and disclose for any purpose all information, including all messages sent, received, or stored through the Systems. The use of the firm's computer systems is for the transaction of firm business and is for authorized users only. All firm policies apply to the use of the Systems. See the Code of Ethics and the Employee Handbook.

By using the firm's Systems, you agree to be bound by this Statement and consent to the access to and disclosure of all information, including e-mail and voice mail messages, by the firm. Individuals do not have any expectation of privacy in connection with the use of the Systems, or with the transmission, receipt, or storage of information in the Systems.

6-1

Information entered into our firm's computers but later deleted from the Systems may continue to be maintained permanently on our firm's back-up tapes. Individuals should take care so that they do not create documents or communications that might later be embarrassing to them or to our firm. This policy applies to e-mail and voice mail, as well to any other communication on the System.

PRIVACY AND PROTECTION OF DATA. The protection of firm information and the maintenance of the privacy of corporate and customer data requires consistent effort by each individual and involves many aspects of the work environment. Individuals who are users of computer and network resources and those who work within the Systems areas must bear in mind privacy and protection obligations. Therefore, data within the T. Rowe Price Group, Inc.'s network should be considered business proprietary and confidential, and should be protected as such. In addition, particular customer data, or the data of customers of certain business units, may be required to be specifically protected as prescribed by laws or regulatory agency requirements (refer to the T. Rowe Price Statement of Policies and Procedures on Privacy in the Code of Ethics). Responsible use of computer access and equipment, including Internet and e-mail use, as described in this Statement of Policy with Respect to Computer Security and Related Issues, is integral to protecting data. In addition, the protection of data privacy must be kept in mind during the design, development, maintenance, storage, handling, access, transfer, and disposal phases of computer related activities.

SECURITY ADMINISTRATION. Enterprise Security in T. Rowe Price Investment Technologies, Inc. ("TRPIT") is responsible for identifying security needs and overseeing the maintenance of computer security, including Internet-related security issues.

AUTHORIZED SYSTEMS USERS. In general, access to any type of system is restricted to authorized users who need access in order to support their business activities. Access for mainframe, LAN and external systems must be requested on a "Systems Access Request" form. The form is available on the Enterprise Security intranet site or can be obtained from Enterprise Security. Access requests and changes must be approved by the appropriate supervisor or manager in the user's department.

AUTHORIZED APPLICATION USERS. Access to specific computer applications (i.e., Finance, Retirement Plan Services systems) can also be requested. Many application systems have an additional level of security, such as extra passwords. If a user wants access to an application or data that is outside the normal scope of his or her business activity, additional approval may be required from the "Owner" of such application or data. The Owner is the employee who is responsible for making judgments and decisions on behalf of the firm with regard to the application or data, including the authority to decide who may have access.

USER-IDS, PASSWORDS, AND OTHER SECURITY ISSUES. Once a request for access is approved, a unique "User-ID" will be assigned the user. Each User-ID has a password that must be kept confidential by the user. For most systems, passwords must be changed on a regular schedule and Enterprise Security has the authority to determine the password policy. Passwords should be of reasonable complexity and uniqueness to prevent easy guessing: ids should not also be used as the password, nor should easily deducible personal or family information. User-IDs and passwords may not be shared. Users can be held accountable for work performed with their User-IDs. Personal computers must not be left logged on and unattended unless screen savers with passwords or software-based keyboard locks are utilized. Pranks, jokes, or other actions

6-2

that simulate or trigger a system security event such as, but not limited to, a computer virus are prohibited and can result in disciplinary action.

EXTERNAL COMPUTER SYSTEMS. Our data processing environment includes access to data stored not only on our firm's computers, but also on external systems, such as DST. Although the security practices governing these outside systems are established by the providers of these external systems, requests for access to such systems should be directed to Enterprise Security. User-IDs and passwords to these systems must be kept confidential by the user.

PORTABLE COMPUTER EQUIPMENT AND HARDWARE. It must be assumed that firm notebook computers, PDAs, and other portable computer equipment contain information that must be regarded as sensitive. Therefore, portable computer equipment should be password protected with a frequently changed, non-intuitive password. They should be protected in transit and either kept with the user or maintained securely if not with the user. Sensitive information that is not currently needed should be removed and stored elsewhere. Passwords and SecurId cards/tokens should not be stored with the machine or maintained in a list on the computer or PDA. Proper virus prevention and backup practices should be regularly performed. In the event of loss or theft, the Help Desk should be contacted to review with the individual whether there are any protective actions that need to be taken.

ACCESS TO THE INTERNET AND OTHER ON-LINE SERVICES. Access to the Internet (including, but not limited to, e-mail, remote FTP, Telnet, World Wide Web, Gopher, remote administration, secure shell, and using IP tunneling software to remotely control Internet servers) presents special security considerations due to the world-wide nature of the connection and the security weaknesses present in Internet protocols and services. The firm can provide authorized individuals with access to Internet e-mail and other Internet services (such as the World Wide Web) through a direct connection from the firm's network.

Access to the Internet or Internet services from our firm's computers, including the firm's e-mail system, is permitted only for legitimate business purposes. Internet e-mail access must be requested through Enterprise Security, approved by the individual's supervisor or an appropriate T. Rowe Price manager, and provided only through firm approved connections. All firm policies apply to the use of the Internet or Internet services. See the Code of Ethics and the Employee Handbook.

USE OF INTERNET. In accordance with firm policies, individuals are prohibited from accessing inappropriate sites, including, but not limited to, adult and gambling sites. Firm personnel monitor Internet use for visits to inappropriate sites and for inappropriate use. Should individuals have questions regarding what constitutes an inappropriate site or inappropriate use, they should discuss it first with their supervisor or an appropriate T. Rowe Price manager who may refer the question to Human Resources. Inappropriate use of the Internet, or accessing inappropriate sites, may lead to sanctions, which may include dismissal of the individual or individuals involved.

6-3

DIAL-OUT ACCESS. Using a modem or an Internet connection on a firm computer housed at any of the firm's offices to access an Internet service provider using one's home or personal account is prohibited, unless this is an authorized account being used by authorized personnel to service the T. Rowe Price Group, Inc. connection to the Internet. When Internet access is granted, the individual will be asked to reaffirm his or her understanding of this Statement.

Unauthorized modems are not permitted. Dial-out access that circumvents the Internet firewall, proxy server, or authentication mechanisms except by authorized personnel in the business of T. Rowe Price Group, Inc. is prohibited.

ON-LINE SERVICES. Access to America Online ("AOL"), AOL Instant Messenger ("AIM"), or other commercial on-line service providers or products is not permitted from a firm computer except for a legitimate business purpose, approved by the individual's supervisor or an appropriate T. Rowe Price Manager and Enterprise Security, and with software obtained through the Help Desk at x4357 (select menu option
1). Once approved AOL access has been implemented, access is only permitted via the AOL password and screen name supplied and approved by Enterprise Security.

PARTICIPATION ON BULLETIN BOARDS. Because communications by our firm, or any individuals associated with it, on on-line service bulletin boards are subject to federal, state and NASD advertising regulations, unsupervised participation can result in serious securities violations. Certain designated individuals have been authorized to use AOL to monitor and respond to inquiries about our firm and its investment services and products. Any individual other than those assigned to this special group must first receive the authorization of a member of the Board of T. Rowe Price Investment Services, Inc. and the Legal Department before initiating or responding to a message on any computer bulletin board relating to the firm, a Price Fund or any investment or brokerage option or service. This policy applies whether or not the individual intends to disclose his or her relationship to the firm, whether or not our firm sponsors the bulletin board, and whether or not the firm is the principal focus of the bulletin board.

E-MAIL USE. Access to the firm's e-mail system is permitted only for legitimate business purposes. All firm policies apply to the use of e-mail. Firm personnel may monitor e-mail usage for inappropriate use. Should individuals have questions regarding what constitutes inappropriate use, they should discuss it first with their supervisor or an appropriate T. Rowe Price manager who may refer the question to Human Resources. Inappropriate use of e-mail may lead to sanctions, which may include dismissal of the individual or individuals involved.

E-mail services, other than those provided or approved by T. Rowe Price Group, Inc. may not be used for business purposes. In addition, accessing e-mail services (such as AOL e-mail) not provided or approved by T. Rowe Price Group, Inc. from firm equipment for any reason could allow the introduction of viruses or malicious code into the network or lead to the compromise of confidential data.

6-4

Individuals should understand that e-mail sent through the Internet is not secure and could be intercepted by a third party. Confidential and company proprietary information should not be included in external e-mail unless specifically prescribed by accepted business procedures. Use of Microsoft Outlook Web Access to the T. Rowe Price Group, Inc. e-mail system provides an encrypted mail session so that e-mail is not in the clear over the Internet and is not passing through a non-TRPG e-mail system. When remote access to the firm's e-mail system, or external access to firm e-mail, is required, Outlook Web Access is the preferred mode of access.

DIAL-IN ACCESS. The ability to access our firm's computer systems from a remote location is also limited to authorized users and authorized methods. A security system that is approved by Enterprise Security and that uses a strong authentication method must be employed when accessing our firm's network from a remote computer. Authorization for remote access can be requested by completing a "Systems Access Request" form. Any individual who requires remote access should contact the Help Desk at x4357 (select menu option 1) for desktop setup. Phone numbers used to access our firm's computer systems are confidential.

VIRUS PROTECTION. A computer virus is a program designed to damage or impair software or data on a computer system. Software from any outside source may contain a computer virus or similar malicious code. Types of carriers and transmission methods increase daily and currently include diskettes, CDs, file transfers and downloads, executables, some e-mail attachments, and active code over the Web. A comprehensive malicious code prevention and control program is in place throughout T. Rowe Price Group, Inc. This program provides policy and procedures for anti-virus controls on all systems. More information about the anti-virus program can be found on the TRPIT Intranet.

Introducing a virus or similar malicious code into the T. Rowe Price Group, Inc. Systems by engaging in prohibited actions, such as downloading non-business related software, or by failing to implement recommended precautions, such as updating virus scanning software on remote machines, may lead to sanctions, which may include dismissal of the individual or individuals involved.

VIRUS SCANNING SOFTWARE. As part of the T. Rowe Price Group, Inc. anti-virus program, virus scanning software is installed on the majority of applicable platforms. This software is designed to detect and eradicate malicious code and viruses. All desktop computers have the corporate standard anti-virus scanning software installed and running. This software is installed and configured by the Distributed Processing Support Group and runs constantly. Virus scanning software updates are automatically distributed to the desktops as they become available. Desktop virus scanning software can also be used by the employee to scan diskettes, CDs, directories, and attachments "on demand". Altering or disabling this desktop scanning software is prohibited. Contact the Help Desk at x4357 (select menu option 3) for assistance.

E-MAIL. An e-mail anti-virus gateway scans the content of inbound and outbound e-mail for viruses. Infected e-mail and attachments will be cleaned when possible and quarantined when not able to be cleaned. Updating of the e-mail gateway anti-virus software and pattern files is done automatically.

6-5

PORTABLE AND REMOTE COMPUTERS. Laptops and other computers that remotely access the T. Rowe Price Group, Inc. network are also required to have the latest anti-virus software and pattern files. IT IS THE RESPONSIBILITY OF EACH USER TO ENSURE THAT HIS OR HER PORTABLE COMPUTER'S ANTI-VIRUS SOFTWARE IS REGULARLY UPDATED. The Help Desk has instructions available. Contact the Help Desk at x4357 (select menu option 3) to obtain further information.

DOWNLOADING OR COPYING. The user of a PC with a modem or with an Internet connection has the ability to connect to other computers or on-line services outside of the firm's network and there may be business reasons to download or copy software from those sources. Downloading or copying software, which includes documents, graphics, programs and other computer-based materials, from any outside source is not permitted unless it is for a legitimate business purpose because downloads and copies could introduce viruses and malicious code into the Systems.

OTHER CONSIDERATIONS. Users must log off the System each night. Unless the user logs off, virus software on each workstation cannot pick up the most current virus scanning downloads or the most current software updates for the user's system. Individuals must call the Help Desk at x4357 (select menu option 3) when viruses are detected so that it can ensure that appropriate tracking and follow-up take place. Do not forward any "virus warning" mail received to other staff until you have contacted the Help Desk, since many of these warnings are hoaxes. When notified that a user has received "virus warning" mail, the Help Desk will contact Enterprise Security, whose personnel will check to determine the validity of the virus warning.

APPLICATION OF U.S. COPYRIGHT LAW TO SOFTWARE PROGRAMS. Software products and on-line information services purchased for use on T. Rowe Price Group, Inc. personal computers are generally copyrighted material and may not be reproduced without proper authorization from the software vendor. This includes the software on CDs or diskettes, any program manuals or documentation, and data or software retrievable from on-line information systems. Unauthorized reproduction of such material or information, or downloading or printing such material, is a federal offense, and the software vendor can sue to protect the developer's rights. In addition to criminal penalties such as fines and imprisonment, civil damages can be awarded in excess of $50,000.

GUIDELINES FOR USING PERSONAL COMPUTER SOFTWARE

ACQUISITION AND INSTALLATION OF SOFTWARE. Only Distributed Processing Support Group approved and installed software is authorized. Any software program that is to be used by an employee of T. Rowe Price Group, Inc. in connection with the business of the firm must be ordered through the Help Desk at x4357 (select menu option 1) and installed by the Distributed Processing Support Group of TRPIT.

6-6

LICENSING. Software residing on firm LAN servers will be either: (1) maintained at an appropriate license level for the number of users, or
(2) made accessible only for those for whom it is licensed.

ORIGINAL CDS, DISKETTES AND COPIES. In most cases, software is installed by the Distributed Processing Support Group and original software CDs and diskettes are not provided to the user. In the event that original CDs or diskettes are provided, they must be stored properly to reduce the possibility of damage or theft. CDs and diskettes should be protected from extreme heat, cold, and contact with anything that may act as a magnet or otherwise damage them. Individuals may not make additional copies of software or software manuals obtained through the firm.

RECOMMENDATIONS, UPGRADES, AND ENHANCEMENTS. All recommendations regarding computer hardware and software programs are to be forwarded to the Help Desk at x4357 (select menu option 1), which will coordinate upgrades and enhancements.

QUESTIONS REGARDING THIS STATEMENT. Any questions regarding this Statement should be directed to Enterprise Security in TRPIT.

May, 2001

6-7

T. ROWE PRICE GROUP, INC.
STATEMENT OF POLICY
ON
COMPLIANCE WITH ANTITRUST LAWS

PURPOSE

To protect the interests of the company and its employees, Price Group has adopted this Statement of Policy on Compliance with Antitrust Laws ("STATEMENT") to:

(1) Inform employees about the legal principles governing prohibited anticompetitive activity in the conduct of Price Group's business; and

(2) Establish guidelines for contacts with other members of the investment management industry to avoid violations of the antitrust laws.

THE BASIC ANTICOMPETITIVE ACTIVITY PROHIBITION

Section 1 of the Sherman Antitrust Act (the "ACT") prohibits agreements, understandings, or joint actions between companies that constitute a "restraint of trade," i.e., reduce or eliminate competition.

This prohibition is triggered only by an agreement or action among two or more companies; unilateral action never violates the Act. To constitute an illegal agreement, however, an understanding does not need to be formal or written. Comments made in conversations, casual comments at meetings, or even as little as "a knowing wink," as one case says, may be sufficient to establish an illegal agreement under the Act.

The agreed upon action must be anticompetitive. Some actions are "per se" anticompetitive, while others are judged according to a "rule of reason."

o Some activities have been found to be so inherently anticompetitive that a court will not even permit the argument that they have a procompetitive component. Examples of such per se illegal activities are agreements between competitors to fix prices or divide up markets in any way, such as exclusive territories.

o Other joint agreements or activities will be examined by a court using the rule of reason approach to see if the procompetitive results of the arrangement outweigh the anticompetitive effects. Permissible agreements among competitors may include a buyers' cooperative, or a syndicate of buyers for an initial public offering of securities. In rare instances, an association of sellers (such as ASCAP) may be permissible.

7-1

There is also an exception for joint activity designed to influence government action. Such activity is protected by the First Amendment to the U.S. Constitution. For example, members of an industry may agree to lobby Congress jointly to enact legislation that may be manifestly anticompetitive.

PENALTIES FOR VIOLATING THE SHERMAN ACT

A charge that the Act has been violated can be brought as a civil or a criminal action. Civil damages can include treble damages, plus attorneys fees. Criminal penalties for individuals can include fines of up to $350,000 and three years in jail, and $100 million or more for corporations.

SITUATIONS IN WHICH ANTITRUST ISSUES MAY ARISE

To avoid violating the Act, any agreement with other members of the investment management industry regarding which securities to buy or sell and under what circumstances we buy or sell them, or about the manner in which we market our mutual funds and investment and retirement services, must be made with the prohibitions of the Act in mind.

TRADE ASSOCIATION MEETINGS AND ACTIVITIES. A trade association is a group of competitors who join together to share common interests and seek common solutions to common problems. Such associations are at a high risk for anticompetitive activity and are closely scrutinized by regulators. Attorneys for trade associations, such as the Investment Company Institute, are typically present at meetings of members to assist in avoiding violations.

Permissible Activities:

o Discussion of how to make the industry more competitive.

o An exchange of information or ideas that have procompetitive or competitively neutral effects, such as: methods of protecting the health or safety of workers; methods of educating customers and preventing abuses; and information regarding how to design and operate training programs.

o Collective action to petition government entities.

Activities to be Avoided:

o Any discussion or direct exchange of current information about prices, salaries, fees, or terms and conditions of sales. Even if such information is publicly available, problems can arise if the information available to the public is difficult to compile or not as current as that being exchanged.

EXCEPTION: A third party consultant can, with appropriate safeguards, collect, aggregate and disseminate some of this information, such as salary information.

7-2

o Discussion of future business plans, strategies, or arrangements that might be considered to involve competitively sensitive information.

o Discussion of specific customers, markets, or territories.

o Negative discussions of service providers that could give rise to an inference of a joint refusal to deal with the provider (a "BOYCOTT").

INVESTMENT-RELATED DISCUSSIONS

PERMISSIBLE ACTIVITIES: Buyers or sellers with a common economic interest may join together to facilitate securities transactions that might otherwise not occur, such as the formation of a syndicate to buy in a private placement or initial public offering of an issuer's stock, or negotiations among creditors of an insolvent or bankrupt company.

Competing investment managers are permitted to serve on creditors committees together and engage in other similar activities in connection with bankruptcies and other judicial proceedings.

ACTIVITIES TO BE AVOIDED: It is important to avoid anything that suggests involvement with any other firm in any threats to "boycott" or "blackball" new offerings, including making any ambiguous statement that, taken out of context, might be misunderstood to imply such joint action. Avoid careless or unguarded comments that a hostile or suspicious listener might interpret as suggesting prohibited coordinated behavior between T. Rowe Price and any other potential buyer.

EXAMPLE: After an Illinois municipal bond default where the state legislature retroactively abrogated some of the bondholders' rights, several investment management complexes organized to protest the state's action. In doing so, there was arguably an implied threat that members of the group would boycott future Illinois municipal bond offerings. Such a boycott would be a violation of the Act. The investment management firms' action led to an 18-month Department of Justice investigation. Although the investigation did not lead to any legal action, it was extremely expensive and time consuming for the firms and individual managers involved.

If you are present when anyone outside of T. Rowe Price suggests that two or more investors with a grievance against an issuer coordinate future purchasing decisions, you should immediately reject any such suggestion. As soon as possible thereafter, you should notify the Legal Department, which will take whatever further steps are necessary.

7-3

BENCHMARKING. Benchmarking is the process of measuring and comparing an organization's processes, products and services to those of industry leaders for the purpose of adopting innovative practices for improvement.

o Because benchmarking usually involves the direct exchange of information with competitors, it is particularly subject to the risk of violating the antitrust laws.

o The list of issues that may and should not be discussed in the context of a trade association also applies in the benchmarking process.

o All proposed benchmarking agreements must be reviewed by the T. Rowe Price Legal Department before T. Rowe Price agrees to participate in such a survey.

May, 2001

7-4

T. ROWE PRICE GROUP, INC.
STATEMENT OF POLICIES AND PROCEDURES ON PRIVACY

INTRODUCTION

This Statement of Policies and Procedures on Privacy ("STATEMENT") applies to T. Rowe Price Group, Inc. and its subsidiaries and affiliates, including its international operations. In addition, certain regulated T. Rowe Price companies (i.e., T. Rowe Price Associates, Inc., T. Rowe Price Advisory Services, Inc., T. Rowe Price Insurance Agency, Inc., T. Rowe Price Investment Services, Inc., T. Rowe Price Savings Bank, T. Rowe Price Trust Company and the T. Rowe Price Funds) offer financial products and services to consumers, and consequently, are required to deliver privacy notices under the Privacy Rules ("REGULATION S-P") adopted by the United States Securities and Exchange Commission, as well as privacy regulations of the federal banking regulators, and applicable state law. It is T. Rowe Price's policy to:

o Treat our customer's personal and financial information ("NONPUBLIC CUSTOMER INFORMATION") as confidential;

o Protect Nonpublic Customer Information; and

o Not share this information with third parties unless necessary to process customer transactions, service customer accounts, or as otherwise permitted by law.

This Statement covers only United States requirements. International privacy regulation is beyond the scope of these procedures and if you conduct business internationally you should be aware of the applicable privacy regulations in the foreign jurisdiction where you conduct business.

INITIAL AND ANNUAL NOTICES OF THE T. ROWE PRICE PRIVACY POLICIES

As a means of informing our customers of T. Rowe Price's Privacy Policies, the firm has adopted a Privacy Policy Notice, which is provided to customers of the regulated T. Rowe Price companies.

The Privacy Policy Notice is included with or accompanies any account application or other material delivered to prospective customers that enables a customer to open an account. The Privacy Policy Notice shall also annually be enclosed with customer account statements, typically in April. Additionally, an internet website version of the Privacy Policy Notice is posted on T. Rowe Price's internet website (troweprice.com).

The Legal Department is responsible for any amendments required to be made to the Privacy Policy Notice. Retail Operations is responsible for the initial Privacy Policy Notice distribution to customers, the distribution to prospective customers, and the annual distribution of the Privacy Policy Notice to Price Fund shareholders, Brokerage customers, annuity customers and other retail customers. Other business units not covered by Retail Operations will be notified of their obligations to deliver the Privacy Policy Notice to customers in their respective business units.

8-1

EDUCATION OF INDIVIDUALS ABOUT PRIVACY POLICIES AND PROCEDURES

Every individual at T. Rowe Price should be aware of our Privacy Policies and Procedures and every individual bears responsibility to protect Nonpublic Customer Information.

Managers and supervisors shall ensure that our Privacy Policies and Procedures are reviewed with all new individuals at T. Rowe Price to ensure sensitivity to our Policies. Particular attention should be given to any temporary or part-time workers and consultants to ensure that such workers are educated to the critical importance of protecting confidential information. Managers and supervisors shall regularly review the operations of their business units to identify potential exposure for breaches of our Privacy Policies and communicate appropriate remedies to applicable individuals as an integral part of the continuing education of such individuals.

WHAT IS NONPUBLIC CUSTOMER INFORMATION?

Nonpublic Customer Information comprises virtually all the information that a customer supplies to T. Rowe Price as well as the information that T. Rowe Price otherwise obtains or generates in connection with providing financial products or services to that customer. Accordingly, the existence of the customer relationship (e.g., customer lists), the contents of any account application (including but not limited to the customer's name, address, social security number, occupation, beneficiary information and account number), the customer's account balance, securities holdings and the customer's transaction history would all be Nonpublic Customer Information that T. Rowe Price considers to be confidential.

METHODS BY WHICH WE PRESERVE CONFIDENTIALITY

Each Business Unit Head has responsibility with respect to his or her business unit to establish procedures whereby the confidentiality of Nonpublic Customer Information is preserved. Such procedures should address access to and safeguards for Nonpublic Customer Information based upon the business unit's operations, access to, and handling of such information. The procedures should address safeguards relating to administrative, technical, and physical access to Nonpublic Customer Information.

ACCESS TO INFORMATION

Nonpublic Customer Information can be used and stored in many forms (e.g., on paper, as computer records, and in conversations stored as voice recordings). All possible methods for conveying such information must be evaluated for the potential of inappropriate disclosure. Only authorized individuals, who are trained in the proper handling of Nonpublic Customer Information, are permitted to have access to such information. Additionally, managers and supervisors shall limit access to Nonpublic Customer Information to those individuals who need access to such information to support their respective job functions. Situations where excessive or inappropriate access to or exposure of Nonpublic Customer Information is identified should be remediated.

8-2

COMPUTER ACCESS

Managers and supervisors of respective business units are responsible for making judgments and decisions with regard to the use of Nonpublic Customer Information including decisions as to who shall have computer access to such information.

In general, managers and supervisors shall instruct Enterprise Security to restrict access to any system that maintains Nonpublic Customer Information to authorized individuals who need access to support their respective job functions. System access, or changes to such access, shall be submitted in the format directed by Enterprise Security and authorized by the appropriate business unit manager or supervisor. Managers and supervisors are also responsible for notifying Enterprise Security, in a timely manner, that an employee, consultant or temporary worker has left the firm so that access may be suspended. This is especially important for temporary staff who are contracted independent of Human Resources and/or one of the on-site temporary agencies. Managers and supervisors are hereby reminded of their obligations to prevent the use of "User IDs" of terminated employees, consultants and temporary workers to gain improper access to systems.

In addition to system access, managers and supervisors shall review their operations to identify whether any application systems that maintain Nonpublic Customer Information should have an additional level of security, such as extra passwords. Managers and supervisors shall promptly communicate the need for additional levels of security to Enterprise Security.

NEW BUSINESS AND SYSTEMS DEVELOPMENT

All new business and systems application development that relates to or affects Nonpublic Customer Information must be developed with consideration to the firm's policies and procedures for safeguarding Nonpublic Customer Information. Business and systems development must be continuously reviewed for adherence to Nonpublic Customer Information protection and the prevention of unauthorized exposure of such information.

Individuals at T. Rowe Price working on systems and processes dealing with Nonpublic Customer Information must evaluate the potential risks for breach of the confidentiality of Nonpublic Customer Information and implement safeguards that will provide reasonable protection of the privacy of such information. Please refer to the Statement of Policy with Respect to Computer Security and Related Issues in the Code of Ethics for additional information on system requirements related to protection of Nonpublic Customer Information.

8-3

SAFEGUARDING NONPUBLIC CUSTOMER INFORMATION

To safeguard the interests of our customers and to respect the confidentiality of Nonpublic Customer Information, all individuals at T. Rowe Price shall take the following precautions:

o Do not discuss Nonpublic Customer Information in public places such as elevators, hallways, lunchrooms or social gatherings;

o To the extent practical, limit access to the areas of the firm where Nonpublic Customer Information could be observed or overheard to individuals with a business need for being in the area;

o Avoid using speaker phones in areas where unauthorized persons may overhear conversations;

o Where appropriate, maintain the confidentiality of client identities by using code names or numbers for confidential projects or use aggregate data that is not personally identifiable to any customer;

o Exercise care to avoid placing documents containing Nonpublic Customer Information in areas where they may be read by unauthorized persons and store such documents in secure locations when they are not in use (particular attention should be directed to securing the information outside of normal business hours to prevent misappropriation of the information); and

o Destroy copies of confidential documents no longer needed for a project.

RECORD RETENTION

Under various federal and state laws and regulations, T. Rowe Price is required to produce, maintain and retain various records, documents and other written (including electronic) communications. All individuals at T. Rowe Price are responsible for adhering to the firm's record maintenance and retention policies.

Managers and supervisors are responsible to see that all Nonpublic Customer Information maintained by their respective business units is retained in a secure location. Nonpublic Customer Information shall be secured so that access to the information is limited to those utilizing the information to support their respective job functions.

DESTRUCTION OF RECORDS

All individuals at T. Rowe Price must use care in disposing of any Nonpublic Customer Information. For example, confidential paper records that are to be discarded should be shredded or destroyed so that no personal information is discernable. If a significant quantity of material is involved, Document Management should be contacted for instructions regarding proper disposal.

8-4

DEALINGS WITH THIRD PARTIES

Generally, T. Rowe Price will not disclose any Nonpublic Customer Information to any third parties unless necessary to process a transaction, service an account or as otherwise permitted by law. Accordingly, absent the explicit approval of the respective manager in the business unit, individuals shall not divulge any Nonpublic Customer Information to anyone outside of the firm. For example, individuals shall not supply a third party with anything showing actual customer information for the purpose of providing a "sample" (e.g., for software testing or problem resolution) without explicit manager approval. This prohibition also bars individuals at T. Rowe Price from disclosing to members of their immediate family Nonpublic Customer Information or the existence of client relationships.

At times, in an effort to obtain confidential information, third parties will assert that they are entitled to certain information pursuant to a subpoena or some other legal process or authority. Since there can be various issues which may affect the validity of such demands, no records or information concerning customers shall be disclosed unless specifically directed by the Legal Department. Any such demands for information should be promptly referred to the Legal Department.

RETENTION OF THIRD PARTY ORGANIZATIONS BY T. ROWE PRICE

Whenever we hire third party organizations to provide support services, we will require them to use our Nonpublic Customer Information only for the purposes for which they are retained and not to divulge or otherwise misuse that information. Therefore, it is imperative that in retaining such third parties, we have contractual representations from them to preserve the confidentiality of Nonpublic Customer Information and that we have adequate means to verify their compliance. Accordingly, no third party organizations shall be retained to deal with or have access to our Nonpublic Customer Information unless the Legal Department has determined that there are adequate contractual provisions in place. All contracts relating to the use of Nonpublic Customer Information shall be submitted to the Legal Department for review.

In the event a supervisor identifies a need to retain a temporary worker for work with access to Nonpublic Customer Information, the supervisor shall ensure that there are adequate safeguards established to protect confidentiality of our records. Additionally, if such temporary worker is being retained independent of the on-site temporary agencies utilized by Human Resources, the supervisor must contact the Legal Department to verify that there are adequate contractual safeguards relative to privacy. Furthermore, supervisors are responsible for identifying temporary workers, reporting their identity to Enterprise Security and to the Legal Department and seeing that such workers are familiar with the Code of Ethics, including the firm's Privacy Policies and Procedures.

8-5

POTENTIAL BREACHES OF PRIVACY

In the event that any circumstances arise where a release of Nonpublic Customer Information to anyone not authorized to receive such information has or may have occurred, the individual identifying such possible breach shall immediately report the incident to his or her supervisor, who in turn will notify the respective Business Unit Head and the Director of Compliance of T. Rowe Price Group, Inc. The Business Unit Head will investigate the matter and instruct T. Rowe Price personnel on what actions, if any, should be taken to remedy any breach of our Privacy Policies.

INQUIRIES FROM CUSTOMERS ABOUT PRIVACY

In light of the growing concerns that many customers have regarding privacy of their financial records, it is anticipated that many customers will have questions. To assist customers, individuals at T. Rowe Price shall be familiar with how the Privacy Policy Notice can be accessed from the firm's intranet site (Inside T. Rowe Price; Retail Services; Reference Materials; Other Reference Material; Fact Sheets; Privacy Policy Statement). In the event customers have questions, such customers shall be referred to the T. Rowe Price Privacy Policy Notice. If customers have questions regarding the internet and privacy, such customers shall be referred to the T. Rowe Price (website) Privacy Policy Notice, which is available on the intranet site as well as the firm's internet website (troweprice.com). Individuals shall offer to mail to the customer a paper copy of the Privacy Policy Notice to an address specified by the customer, if desired.

In the event a customer has questions about our policy or procedures that the customer does not consider are addressed by the Privacy Policy Notice, the customer should be referred to the respective Business Unit Head or the Legal Department.

May, 2001

8-6

Exhibit p(6)

                           Wellington Management Company, llp
                           Wellington Trust Company, na
                           Wellington Management International
                           Wellington International Management Company Pte Ltd.

                           Code of Ethics

-----------------------    -----------------------------------------------------
Summary                    Wellington Management Company, llp and its affiliates
                           have a fiduciary duty to investment company and
                           investment counseling clients which requires each
                           employee to act solely for the benefit of clients.
                           Also, each employee has a duty to act in the best
                           interest of the firm. In addition to the various laws
                           and regulations covering the firm's activities, it is
                           clearly in the firm's best interest as a professional
                           investment advisory organization to avoid potential
                           conflicts of interest or even the appearance of such
                           conflicts with respect to the conduct of the firm's
                           employees. Wellington Management's personal trading
                           and conduct must recognize that the firm's clients
                           always come first, that the firm must avoid any
                           actual or potential abuse of our positions of trust
                           and responsibility, and that the firm must never take
                           inappropriate advantage of its positions. While it is
                           not possible to anticipate all instances of potential
                           conflict, the standard is clear.

                           In light of the firm's professional and legal
                           responsibilities, we believe it is appropriate to
                           restate and periodically distribute the firm's Code
                           of Ethics to all employees. It is Wellington
                           Management's aim to be as flexible as possible in its
                           internal procedures, while simultaneously protecting
                           the organization and its clients from the damage that
                           could arise from a situation involving a real or
                           apparent conflict of interest. While it is not
                           possible to specifically define and prescribe rules
                           regarding all possible cases in which conflicts might
                           arise, this Code of Ethics is designed to set forth
                           the policy regarding employee conduct in those
                           situations in which conflicts are most likely to
                           develop. If an employee has any doubt as to the
                           propriety of any activity, he or she should consult
                           the President or Regulatory Affairs Department.

                           The Code reflects the requirements of United States
                           law, Rule 17j-1 of the Investment Company Act of
                           1940, as amended on October 29, 1999, as well as the
                           recommendations issued by an industry study group in
                           1994, which were strongly supported by the SEC. The
                           term "Employee" includes all employees and Partners.

-----------------------    -----------------------------------------------------
Policy on Personal         Essentially, this policy requires that all personal
Securities                 securities transactions (including acquisitions or
Transactions               dispositions other than through a purchase or sale)
                           by all Employees must be cleared prior to
                           execution. The only exceptions to this policy of
                           prior clearance are noted below.

-----------------------    -----------------------------------------------------
Definition of              The following transactions by Employees are
"Personal Securities       considered "personal" under applicable SEC rules and
Transactions"              therefore subject to this statement of policy:

                           Code of Ethics
                           Page 2

-----------------------    -----------------------------------------------------
                           1
                           Transactions for an Employee's own account,
                           including IRA's.

                           2
                           Transactions for an account in which an Employee has
                           indirect beneficial ownership, unless the Employee
                           has no direct or indirect influence or control over
                           the account. Accounts involving family (including
                           husband, wife, minor children or other dependent
                           relatives), or accounts in which an Employee has a
                           beneficial interest (such as a trust of which the
                           Employee is an income or principal beneficiary) are
                           included within the meaning of "indirect beneficial
                           interest".

                           If an Employee has a substantial measure of influence
                           or control over an account, but neither the Employee
                           nor the Employee's family has any direct or indirect
                           beneficial interest (e.g., a trust for which the
                           Employee is a trustee but not a direct or indirect
                           beneficiary), the rules relating to personal
                           securities transactions are not considered to be
                           directly applicable. Therefore, prior clearance and
                           subsequent reporting of such transactions are not
                           required. In all transactions involving such an
                           account an Employee should, however, conform to the
                           spirit of these rules and avoid any activity which
                           might appear to conflict with the investment company
                           or counseling clients or with respect to the
                           Employee's position within Wellington Management. In
                           this regard, please note "Other Conflicts of
                           Interest", found later in this Code of Ethics, which
                           does apply to such situations.

-----------------------    -----------------------------------------------------
Preclearance               EXCEPT AS SPECIFICALLY EXEMPTED IN THIS SECTION, ALL
Required                   EMPLOYEES MUST CLEAR PERSONAL SECURITIES TRANSACTIONS
                           PRIOR TO EXECUTION. This includes bonds, stocks
                           (including closed end funds), convertibles,
                           preferreds, options on securities, warrants, rights,
                           etc. for domestic and foreign securities, whether
                           publicly traded or privately placed. The only
                           exceptions to this requirement are automatic dividend
                           reinvestment and stock purchase plan acquisitions,
                           broad-based stock index and U.S. government
                           securities futures and options on such futures,
                           transactions in open-end mutual funds, U.S.
                           Government securities, commercial paper, or
                           non-volitional transactions. Non-volitional
                           transactions include gifts to an Employee over which
                           the Employee has no control of the timing or
                           transactions which result from corporate action
                           applicable to all similar security holders (such as
                           splits, tender offers, mergers, stock dividends,
                           etc.). Please note, however, that most of these
                           transactions must be reported even though they do not
                           have to be precleared. See the following section on
                           reporting obligations.

                           Clearance for transactions must be obtained by
                           contacting the Director of Global Equity Trading or
                           those personnel designated by him for this purpose.
                           Requests for clearance and approval for transactions
                           may be communicated orally or via

                           Code of Ethics
                           Page 3

-----------------------    -----------------------------------------------------
                           email. The Trading Department will maintain a log of
                           all requests for approval as coded confidential
                           records of the firm. Private placements (including
                           both securities and partnership interests) are
                           subject to special clearance by the Director of
                           Regulatory Affairs, Director of Enterprise Risk
                           Management or the General Counsel, and the clearance
                           will remain in effect for a reasonable period
                           thereafter, not to exceed 90 days.

                           CLEARANCE FOR PERSONAL SECURITIES TRANSACTIONS FOR
                           PUBLICLY TRADED SECURITIES WILL BE IN EFFECT FOR ONE
                           TRADING DAY ONLY. THIS "ONE TRADING DAY" POLICY IS
                           INTERPRETED AS FOLLOWS:

                           -        IF CLEARANCE IS GRANTED AT A TIME WHEN THE
                                    PRINCIPAL MARKET IN WHICH THE SECURITY
                                    TRADES IS OPEN, CLEARANCE IS EFFECTIVE FOR
                                    THE REMAINDER OF THAT TRADING DAY UNTIL THE
                                    OPENING OF THAT MARKET ON THE FOLLOWING DAY.

                           -        IF CLEARANCE IS GRANTED AT A TIME WHEN THE
                                    PRINCIPAL MARKET IN WHICH THE SECURITY
                                    TRADES IS CLOSED, CLEARANCE IS EFFECTIVE FOR
                                    THE NEXT TRADING DAY UNTIL THE OPENING OF
                                    THAT MARKET ON THE FOLLOWING DAY.

-----------------------    -----------------------------------------------------
Filing of Reports          Records of personal securities transactions by
                           Employees will be maintained. All Employees are
                           subject to the following reporting requirements:

1
Duplicate Brokerage        All Employees must require their securities brokers
Confirmations              to send duplicate confirmations of their securities
                           transactions to the Regulatory Affairs Department.
                           Brokerage firms are accustomed to providing this
                           service. Please contact Regulatory Affairs to obtain
                           a form letter to request this service. Each employee
                           must return to the Regulatory Affairs Department a
                           completed form for each brokerage account that is
                           used for personal securities transactions of the
                           Employee. Employees should not send the completed
                           forms to their brokers directly. The form must be
                           completed and returned to the Regulatory Affairs
                           Department prior to any transactions being placed
                           with the broker. The Regulatory Affairs Department
                           will process the request in order to assure delivery
                           of the confirms directly to the Department and to
                           preserve the confidentiality of this information.
                           When possible, the transaction confirmation filing
                           requirement will be satisfied by electronic filings
                           from securities depositories.

2
Filing of Quarterly        SEC rules require that a quarterly record of all
Report of all              personal securities transactions submitted by each
"Personal Securities       person subject to the Code's requirements and that
Transactions"              this record be available for inspection. To comply
                           with these rules, every Employee must file a
                           quarterly personal securities transaction report
                           within 10 calendar days after the end of each
                           calendar quarter. Reports are filed electronically
                           utilizing the firm's proprietary Personal Securities
                           Transaction

                           Code of Ethics
                           Page 4

-----------------------    -----------------------------------------------------
                           Reporting System (PSTRS) accessible to all Employees
                           via the Wellington Management Intranet.

                           At the end of each calendar quarter, Employees will
                           be notified of the filing requirement. Employees are
                           responsible for submitting the quarterly report
                           within the deadline established in the notice.

                           Transactions during the quarter indicated on
                           brokerage confirmations or electronic filings are
                           displayed on the Employee's reporting screen and must
                           be affirmed if they are accurate. Holdings not
                           acquired through a broker submitting confirmations
                           must be entered manually. All Employees are required
                           to submit a quarterly report, even if there were no
                           reportable transactions during the quarter.

                           Employees must also provide information on any new
                           brokerage account established during the quarter
                           including the name of the broker, dealer or bank and
                           the date the account was established.

                           IMPORTANT NOTE: The quarterly report must include the
                           required information for all "personal securities
                           transactions" as defined above, except transactions
                           in open-end mutual funds, money market securities,
                           U.S. Government securities, and futures and options
                           on futures on U.S. government securities.
                           Non-volitional transactions and those resulting from
                           corporate actions must also be reported even though
                           preclearance is not required and the nature of the
                           transaction must be clearly specified in the report.

3
Certification of
Compliance                 As part of the quarterly reporting process on PSTRS,
                           Employees are required to confirm their compliance
                           with the provisions of this Code of Ethics.

4
Filing of Personal         Annually, all Employees must file a schedule
Holding Report             indicating their personal securities holdings as of
                           December 31 of each year by the following January 30.
                           SEC Rules require that this report include the title,
                           number of shares and principal amount of each
                           security held in an Employee's personal account, and
                           the name of any broker, dealer or bank with whom the
                           Employee maintains an account. "Securities" for
                           purposes of this report are those which must be
                           reported as indicated in the prior paragraph. Newly
                           hired Employees are required to file a holding report
                           within ten (10) days of joining the firm. Employees
                           may indicate securities held in a brokerage account
                           by attaching an account statement, but are not
                           required to do so, since these statements contain
                           additional information not required by the holding
                           report.

                           Code of Ethics
                           Page 5

-----------------------    -----------------------------------------------------
5
Review of Reports          All reports filed in accordance with this section
                           will be maintained and kept confidential by the
                           Regulatory Affairs Department. Reports will be
                           reviewed by the Director of Regulatory Affairs or
                           personnel designated by her for this purpose.

-----------------------    -----------------------------------------------------
Restrictions on            While all personal securities transactions must be
"Personal Securities       cleared prior to execution, the following guidelines
Transactions"              indicate which transactions will be prohibited,
                           discouraged, or subject to nearly automatic
                           clearance. The clearance of personal securities
                           transactions may also depend upon other
                           circumstances, including the timing of the proposed
                           transaction relative to transactions by our
                           investment counseling or investment company clients;
                           the nature of the securities and the parties involved
                           in the transaction; and the percentage of securities
                           involved in the transaction relative to ownership by
                           clients. The word "clients" refers collectively to
                           investment company clients and counseling clients.
                           Employees are expected to be particularly sensitive
                           to meeting the spirit as well as the letter of these
                           restrictions.

                           Please note that these restrictions apply in the case
                           of debt securities to the specific issue and in the
                           case of common stock, not only to the common stock,
                           but to any equity-related security of the same issuer
                           including preferred stock, options, warrants, and
                           convertible bonds. Also, a gift or transfer from you
                           (an Employee) to a third party shall be subject to
                           these restrictions, unless the donee or transferee
                           represents that he or she has no present intention of
                           selling the donated security.

                           1
                           No Employee may engage in personal transactions
                           involving any securities which are:

                           -      being bought or sold on behalf of clients
                                  until one trading day after such buying or
                                  selling is completed or canceled. In
                                  addition, no Portfolio Manager may engage in
                                  a personal transaction involving any security
                                  for 7 days prior to, and 7 days following, a
                                  transaction in the same security for a client
                                  account managed by that Portfolio Manager
                                  without a special exemption. See "Exemptive
                                  Procedures" below. Portfolio Managers include
                                  all designated portfolio managers and others
                                  who have direct authority to make investment
                                  decisions to buy or sell securities, such as
                                  investment team members and analysts involved
                                  in Research Equity portfolios. All Employees
                                  who are considered Portfolio Managers will be
                                  so notified by the Regulatory Affairs
                                  Department.

                           -      the subject of a new or changed action
                                  recommendation from a research analyst until
                                  10 business days following the issuance of
                                  such recommendation;

                           Code of Ethics
                           Page 6

-----------------------    -----------------------------------------------------
                           -      the subject of a reiterated but unchanged
                                  recommendation from a research analyst until
                                  2 business days following reissuance of the
                                  recommendation

                           -      actively contemplated for transactions on
                                  behalf of clients, even though no buy or sell
                                  orders have been placed. This restriction
                                  applies from the moment that an Employee has
                                  been informed in any fashion that any
                                  Portfolio Manager intends to purchase or sell
                                  a specific security. This is a particularly
                                  sensitive area and one in which each Employee
                                  must exercise caution to avoid actions which,
                                  to his or her knowledge, are in conflict or
                                  in competition with the interests of clients.

                           2
                           The Code of Ethics strongly discourages short term
                           trading by Employees. In addition, no Employee may
                           take a "short term trading" profit in a security,
                           which means the sale of a security at a gain (or
                           closing of a short position at a gain) within 60 days
                           of its purchase, without a special exemption. See
                           "Exemptive Procedures". The 60 day prohibition does
                           not apply to transactions resulting in a loss, nor to
                           futures or options on futures on broad-based
                           securities indexes or U.S. government securities.

                           3
                           No Employee engaged in equity or bond trading may
                           engage in personal transactions involving any equity
                           securities of any company whose primary business is
                           that of a broker/dealer.

                           4
                           Subject to preclearance, Employees may engage in
                           short sales, options, and margin transactions, but
                           such transactions are strongly discouraged,
                           particularly due to the 60 day short term
                           profit-taking prohibition. Any Employee engaging in
                           such transactions should also recognize the danger of
                           being "frozen" or subject to a forced close out
                           because of the general restrictions which apply to
                           personal transactions as noted above. In specific
                           case of hardship an exception may be granted by the
                           Director of Regulatory Affairs or her designee upon
                           approval of the Ethics Committee with respect to an
                           otherwise "frozen" transaction.

                           5
                           No Employee may engage in personal transactions
                           involving the purchase of any security on an initial
                           public offering. This restriction also includes new
                           issues resulting from spin-offs, municipal securities
                           and thrift conversions, although in limited cases the
                           purchase of such securities in an offering may be
                           approved by

                           Code of Ethics
                           Page 7

-----------------------    -----------------------------------------------------
                           the Director of Regulatory Affairs or her designee
                           upon determining that approval would not violate any
                           policy reflected in this Code. This restriction does
                           not apply to open-end mutual funds, U.S. government
                           issues or money market investments.

                           6
                           EMPLOYEES MAY NOT PURCHASE SECURITIES IN PRIVATE
                           PLACEMENTS UNLESS APPROVAL OF THE DIRECTOR OF
                           REGULATORY AFFAIRS, DIRECTOR OF ENTERPRISE RISK
                           MANAGEMENT OR THE GENERAL COUNSEL HAS BEEN OBTAINED.
                           This approval will be based upon a determination that
                           the investment opportunity need not be reserved for
                           clients, that the Employee is not being offered the
                           investment opportunity due to his or her employment
                           with Wellington Management and other relevant factors
                           on a case-by-case basis. If the Employee has
                           portfolio management or securities analysis
                           responsibilities and is granted approval to purchase
                           a private placement, he or she must disclose the
                           privately placed holding later if asked to evaluate
                           the issuer of the security. An independent review of
                           the Employee's analytical work or decision to
                           purchase the security for a client account will then
                           be performed by another investment professional with
                           no personal interest in the transaction.

Gifts and Other            Employees should not seek, accept or offer any gifts
Sensitive Payments         or favors of more than minimal value or any
                           preferential treatment in dealings with any client,
                           broker/dealer, portfolio company, financial
                           institution or any other organization with whom the
                           firm transacts business. Occasional participation in
                           lunches, dinners, cocktail parties, sporting
                           activities or similar gatherings conducted for
                           business purposes are not prohibited. However, for
                           both the Employee's protection and that of the firm
                           it is extremely important that even the appearance of
                           a possible conflict of interest be avoided. Extreme
                           caution is to be exercised in any instance in which
                           business related travel and lodgings are paid for
                           other than by Wellington Management, and prior
                           approval must be obtained from the Regulatory Affairs
                           Department.

                           Any question as to the propriety of such situations
                           should be discussed with the Regulatory Affairs
                           Department and any incident in which an Employee is
                           encouraged to violate these provisions should be
                           reported immediately. An explanation of all
                           extraordinary travel, lodging and related meals and
                           entertainment is to be reported in a brief memorandum
                           to the Director of Regulatory Affairs.

                           Employees must not participate individually or on
                           behalf of the firm, a subsidiary, or any client,
                           directly or indirectly, in any of the following
                           transactions:

                           Code of Ethics
                           Page 8

-----------------------    -----------------------------------------------------
                           1
                           Use of the firm's funds for political purposes.

                           2
                           Payment or receipt of bribes, kickbacks, or payment
                           or receipt of any other amount with an understanding
                           that part or all of such amount will be refunded or
                           delivered to a third party in violation of any law
                           applicable to the transaction.

                           3
                           Payments to government officials or employees (other
                           than disbursements in the ordinary course of business
                           for such legal purposes as payment of taxes).

                           4
                           Payment of compensation or fees in a manner the
                           purpose of which is to assist the recipient to evade
                           taxes, federal or state law, or other valid charges
                           or restrictions applicable to such payment.

                           5
                           Use of the funds or assets of the firm or any
                           subsidiary for any other unlawful or improper
                           purpose.

-----------------------    -----------------------------------------------------
Other Conflicts of         Employees should also be aware that areas other than
Interest                   personal securities transactions or gifts and
                           sensitive payments may involve conflicts of interest.
                           The following should be regarded as examples of
                           situations involving real or potential conflicts
                           rather than a complete list of situations to avoid.

"Inside Information"       Specific reference is made to the firm's policy on
                           the use of "inside information" which applies to
                           personal securities transactions as well as to client
                           transactions.

Use of Information         Information acquired in connection with employment by
                           the organization may not be used in any way which
                           might be contrary to or in competition with the
                           interests of clients. Employees are reminded that
                           certain clients have specifically required their
                           relationship with us to be treated confidentially.

Disclosure of              Information regarding actual or contemplated
Information                investment decisions, research priorities or client
                           interests should not be disclosed to persons outside
                           our organization and in no way can be used for
                           personal gain.

Outside                    All outside relationships such as directorships or
Activities                 trusteeships of any kind or membership in investment
                           organizations (e.g., an investment club) must be
                           cleared by the Director of Regulatory Affairs prior
                           to the acceptance of such a position. As

                           Code of Ethics
                           Page 9

-----------------------    -----------------------------------------------------
                           a general matter, directorships in unaffiliated
                           public companies or companies which may reasonably be
                           expected to become public companies will not be
                           authorized because of the potential for conflicts
                           which may impede our freedom to act in the best
                           interests of clients. Service with charitable
                           organizations generally will be authorized, subject
                           to considerations related to time required during
                           working hours and use of proprietary information.

Exemptive Procedure        The Director of Regulatory Affairs, the Director of
                           Enterprise Risk Management, the General Counsel or
                           the Ethics Committee can grant exemptions from the
                           personal trading restrictions in this Code upon
                           determining that the transaction for which an
                           exemption is requested would not result in a conflict
                           of interest or violate any other policy embodied in
                           this Code. Factors to be considered may include: the
                           size and holding period of the Employee's position in
                           the security, the market capitalization of the
                           issuer, the liquidity of the security, the reason for
                           the Employee's requested transaction, the amount and
                           timing of client trading in the same or a related
                           security, and other relevant factors.

                           Any Employee wishing an exemption should submit a
                           written request to the Director of Regulatory Affairs
                           setting forth the pertinent facts and reasons why the
                           employee believes that the exemption should be
                           granted. Employees are cautioned that exemptions are
                           intended to be exceptions, and repetitive exemptive
                           applications by an Employee will not be well
                           received.

                           Records of the approval of exemptions and the reasons
                           for granting exemptions will be maintained by the
                           Regulatory Affairs Department.

-----------------------    -----------------------------------------------------
Compliance with            Adherence to the Code of Ethics is considered a basic
The Code of Ethics         condition of employment with our organization.  The
                           Ethics Committee monitors compliance with the Code
                           and reviews violations of the Code to determine what
                           action or sanctions are appropriate.

                           Violations of the provisions regarding personal
                           trading will presumptively be subject to being
                           reversed in the case of a violative purchase, and to
                           disgorgement of any profit realized from the position
                           (net of transaction costs and capital gains taxes
                           payable with respect to the transaction) by payment
                           of the profit to any client disadvantaged by the
                           transaction, or to a charitable organization, as
                           determined by the Ethics Committee, unless the
                           Employee establishes to the satisfaction of the
                           Ethics Committee that under the particular
                           circumstances disgorgement would be an unreasonable
                           remedy for the violation.

                           Code of Ethics
                           Page 10

-----------------------    -----------------------------------------------------
                           Violations of the Code of Ethics may also adversely
                           affect an Employee's career with Wellington
                           Management with respect to such matters as
                           compensation and advancement.

                           Employees must recognize that a serious violation of
                           the Code of Ethics or related policies may result, at
                           a minimum, in immediate dismissal. Since many
                           provisions of the Code of Ethics also reflect
                           provisions of the U.S. securities laws, Employees
                           should be aware that violations could also lead to
                           regulatory enforcement action resulting in suspension
                           or expulsion from the securities business, fines and
                           penalties, and imprisonment.

                           Again, Wellington Management would like to emphasize
                           the importance of obtaining prior clearance of all
                           personal securities transactions, avoiding prohibited
                           transactions, filing all required reports promptly
                           and avoiding other situations which might involve
                           even an apparent conflict of interest. Questions
                           regarding interpretation of this policy or questions
                           related to specific situations should be directed to
                           the Regulatory Affairs Department or Ethics
                           Committee.

                           Revised: March 1, 2000

POWER OF ATTORNEY

KNOW ALL BY THESE PRESENTS, that the undersigned, Director of North American Funds Variable Product Series I, does hereby constitute and appoint Alice T. Kane, Nori Gabert, Greg Kingston and Todd Spillane, or any of them, the true and lawful attorneys-in-fact of the undersigned with respect to all matters arising in connection with Registration Statements of North American Funds Variable Product Series I and any and all amendments (including post-effective amendments) thereto, in the capacity indicated below, and to file the same, together with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and any state securities authorities. The undersigned hereby ratifies and confirms all that said attorney-in-fact and agent, or his or her substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has subscribed these presents this 23rd day of January, 2001.

/s/ Dr. Judith L. Craven
------------------------
Dr. Judith L. Craven
Director

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has subscribed these presents this 23rd day of January, 2001.

/s/ Dr. Timothy J. Ebner
------------------------
Dr. Timothy J. Ebner
Director

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has subscribed these presents this 23rd day of January, 2001.

/s/ The Honorable Gustavo E. Gonzales, Jr.
------------------------------------------
The Honorable Gustavo E. Gonzales, Jr.
Director

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has subscribed these presents this 23rd day of January, 2001.

/s/ Dr. Norman Hackerman
------------------------
Dr. Norman Hackerman
Director

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has subscribed these presents this 23rd day of January, 2001.

/s/ Dr. John W. Lancaster
-------------------------
Dr. John W. Lancaster
Director

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has subscribed these presents this 23rd day of January, 2001.

/s/ Mr. Ben H. Love
-------------------
Mr. Ben H. Love
Director

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has subscribed these presents this 23rd day of January, 2001.

/s/ Dr. John E. Maupin, Jr.
---------------------------
Dr. John E. Maupin, Jr.
Director

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has subscribed these presents this 23rd day of January, 2001.

/s/ Dr. F. Robert Paulsen
-------------------------
Dr. F. Robert Paulsen
Director