VALIC CO I (Form: 485APOS, Received: 09/20/2005 17:15:48)

REGISTRATION NO. 2-83631/811-3738

FORM N-1A

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

     Pre-Effective Amendment No. __                                          [ ]
     Post-Effective Amendment No. 45                                         [X]

                                     and/or

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

     Amendment No. 46                                                        [X]

                                 VALIC Company I
               (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

                              NORI L. GABERT, ESQ.
                    2929 ALLEN PARKWAY, HOUSTON, TEXAS 77019
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

713.831.5165
(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:
DAVID M. LEAHY, ESQ.
SULLIVAN & WORCESTER LLP
1666 K STREET, N.W.
WASHINGTON, D.C. 20006

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

[ ] Immediately upon filing pursuant to paragraph (b)

[ ] on (date), pursuant to paragraph (b)

[ ] 60 days after filing pursuant to paragraph (a)(1)

[ ] on (date) pursuant to paragraph (a)(1)

[X] 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.

VALIC COMPANY I
2929 Allen Parkway
Houston, Texas 77019

December __, 2005
Prospectus

VALIC Company I (the "Series Company") is a mutual fund made up of 33 separate funds, nine of which are described in this Prospectus (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.

Broad Cap Value Fund Foreign Value Fund Global Equity Fund Global Strategy Fund Large Cap Core Fund Small Cap Aggressive Growth Fund Small Cap Special Values Fund Small Cap Strategic Growth Fund VALIC Ultra Fund

THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") 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
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Cover Page
WELCOME..................................................................     2
ABOUT THE FUNDS..........................................................     2
FUND FACT SHEETS.........................................................     3
      Broad Cap Value Fund...............................................     3
      Foreign Value Fund.................................................     5
      Global Equity Fund.................................................     8
      Global Strategy Fund...............................................    10
      Large Cap Core Fund ...............................................    12
      Small Cap Aggressive Growth Fund...................................    14
      Small Cap Special Values Fund......................................    16
      Small Cap Strategic Growth Fund....................................    19
      VALIC Ultra Fund...................................................    21
EXPENSE SUMMARY..........................................................    24
INVESTMENT GLOSSARY......................................................    26
   Asset-Backed Securities...............................................    26
   Derivatives...........................................................    26
   Depositary Receipts...................................................    26
   Diversification.......................................................    26
   Equity Securities.....................................................    26
   Exchange Traded Funds.................................................    27
   Fixed Income Securities...............................................    27
   Foreign Currency......................................................    28
   Foreign Securities....................................................    28
   Illiquid Securities...................................................    28
   Lending Portfolio Securities..........................................    28
   Loan Participations...................................................    29
   Money Market Securities...............................................    29
   Mortgage-Related Securities...........................................    29
   Repurchase Agreements.................................................    30
   Swap Agreements.......................................................    30
ABOUT THE SERIES COMPANY'S MANAGEMENT....................................    31
   Investment Adviser....................................................    31
   Investment Sub-Advisers...............................................    31
      American Century Investment Management, Inc. ......................    32
      Barrow, Hanley, Mewhinney & Strauss, Inc. .........................    33
      Credit Suisse Asset Management, LLC................................    34
      Evergreen Investment Management Company, LLC ......................    35
      Franklin Advisers, Inc. ...........................................    38
      Putnam Investment Management, Inc. ................................    40
      Templeton Global Advisors, Ltd. ...................................    42
      Templeton Investment Counsel, LLC..................................    43
   Legal Proceedings.....................................................    44
   How VALIC is Paid for its Services....................................    44
ACCOUNT INFORMATION......................................................    46
   Series Company Shares.................................................    46
   Buying and Selling Shares.............................................    46
   Frequent or Short-term Trading........................................    46
   Selective Disclosure of Portfolio Holdings............................    47
   How Shares are Valued.................................................    47
   Dividends and Capital Gains...........................................    48
   Tax Consequences......................................................    48
INTERESTED IN LEARNING MORE?.............................................    48

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 "you" and "your" mean the participant. "VALIC" means The Variable Annuity Life Insurance Company, the investment adviser to the Series Company.

Individuals can't invest in these Funds directly. Instead, they participate through an annuity contract or variable life policy (collectively, the "Contracts" and each a "Contract") with VALIC or one of its affiliates, or through a qualifying retirement plan (collectively, the "Plans" and each a "Plan"). For this purpose, Plans include qualifying employer-sponsored retirement plans and Individual Retirement Accounts ("IRAs"), under which the Funds may be offered without adversely affecting their availability under the Contracts.

All inquiries regarding this prospectus, or a Contract or Plan issued by VALIC should be directed, in writing, to VALIC Client Services, A3-01, 2929 Allen Parkway, Houston, Texas 77019, or by calling 1-800-448-2542.

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. Investors will be given written notice in advance of any change to a Fund's investment objective.

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 a Fund's investments in money market securities for temporary defensive purposes. If a Fund takes such a temporary defensive position, it may not achieve its investment objectives.

All investment restrictions and policies apply at the time of investment. A later change in circumstances will not require the sale of an investment if it was proper at the time it was made.

BROAD CAP VALUE FUND
Fact Sheet

INVESTMENT ADVISER

VALIC

INVESTMENT SUB-ADVISER

Barrow, Hanley, Mewhinney & Strauss, Inc.

INVESTMENT OBJECTIVE

The Fund seeks total return through capital appreciation with income as a secondary objective.

INVESTMENT STRATEGY

Under normal circumstances, the Fund intends to invest primarily in equity securities of U.S. large- and medium-capitalization companies that the sub-adviser believes are undervalued. Generally, these stocks will have a market capitalization of at least $1 billion. The Fund may also invest in small market capitalization companies. In addition, the Fund may invest up to 20% of its net assets in foreign securities.

Under normal circumstances, at least 65% of the Fund's net assets will be invested in common stocks, but it may also invest in other securities that the sub-adviser believes provide opportunities for total return, such as preferred securities, warrants and securities convertible into common stock, and equity swaps. In addition, the Fund may invest up to 15% of its net assets in real estate securities and real estate investment trusts ("REITs"). "Net assets" will take into account borrowing for investment purposes.

The sub-adviser will utilize a value-oriented investment style that emphasizes companies whose stocks are undervalued based on certain financial measurements, including price-to-earnings and price-to-book ratios and dividend income potential. In choosing investments, the sub-adviser utilizes a bottom-up process that involves researching and evaluating companies for potential investment. Undervalued or "deep value" stocks are generally those that are out of favor with investors and presently trading at prices that the sub-advisor feels are below what the stocks are worth in relation to their earnings. These stocks are typically those of companies possessing sound fundamentals but which have been overlooked or misunderstood by the market, with below average price-to-earnings or price-to-book ratios. The sub-adviser's bottom-up process includes ranking current holdings and potential investments on appreciation potential through a disciplined system of stock selection that is price driven on the basis of relative return and appreciation potential. It is expected that the average price-to-earnings ratio of the Fund's stocks will be lower than the average of the Russell 1000(R) Value Index. The sub-adviser may sell a security for a variety of reasons, however, existing holdings generally are sold as they approach their target price reflecting a diminishing opportunity for incremental relative return.

The Fund may participate in the initial public offering ("IPO") market, and a portion of the Fund's return may be attributable to the Fund's investments in IPOs. There is no guarantee that as the Fund's assets grow it will be able to experience significant improvement in performance by investing in IPOs.

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. You may also lose money if the strategy does not accomplish its investment goal. Because of the following principal risks as presented alphabetically, the value of your investment may fluctuate:

Derivatives Risk: Investments in derivatives involve special risks and may result in losses. The prices of derivatives may move in unexpected ways due to the use of leverage and other factors, especially in unusual market conditions, and may result in increased volatility. Other risks arise from the Fund's potential inability to terminate or sell derivative positions. A liquid secondary market may not always exist for the Fund's derivative positions at any time. In fact, many over-the-counter instruments (investments not traded on an exchange) will not be liquid, or the other party to the derivative transaction may not meet its obligations.

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, which means the sub-adviser may at times be unable to sell at desirable prices. Foreign settlement procedures may also involve additional risks. 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.

IPO Risk: A Fund's purchase of shares issued as part of, or a short period after, a company's IPO, exposes it to the risks associated with companies that have little operating history as public companies, as well as to the risks inherent in those sectors of the market where these new issuers operate. The market for IPO issuers has been volatile, and share prices of newly-public companies have fluctuated in significant amounts over short periods of time.

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.

Securities Selection Risk: A strategy used by the Fund, or securities selected by its portfolio manager, may fail to produce the intended return.

Value Investing Risk: The risk that the portfolio manager's judgments that a particular security is undervalued in relation to the company's fundamental economic value may prove incorrect.

PERFORMANCE INFORMATION

Performance information is not shown since this is a new Fund.

FOREIGN VALUE FUND
Fact Sheet

INVESTMENT ADVISER

VALIC

INVESTMENT SUB-ADVISER

Templeton Global Advisors Limited ("Templeton Global")

INVESTMENT OBJECTIVE

The Fund seeks long-term growth of capital.

INVESTMENT STRATEGY

Under normal market conditions, the Fund invests primarily in equity securities of companies located outside the U.S., including emerging markets. Typically, the Fund will invest at least 80% of its net assets in "foreign securities," as defined below, which may include emerging markets. The Fund may invest up to 100% of its total assets in emerging markets. "Net assets" will take into account borrowings for investment purposes.

For purposes of the Fund's investments, "foreign securities" means those securities issued by companies:

- whose principal securities trading markets are outside the U.S.; or

- that derive a significant share of their total revenue from either goods or services produced or sales made in markets outside the U.S.; or

- that have a significant portion of their assets outside the U.S.; or

- that are linked to non-U.S. dollar currencies; or

- that are organized under the laws of, or with principal offices in, another country.

The Fund also invests in depository receipts. These are certificates issued typically by a bank or trust company that give their holders the right to receive securities issued by a foreign or domestic company. The Fund, from time to time, may have significant investments in one or more countries or in particular sectors such as technology (including computer hardware and software, electronics, and telecommunications) and financial institutions.

Depending upon current market conditions, the Fund may invest up to 20% of its total assets in fixed income securities of companies and governments located anywhere in the world. Fixed income securities represent the obligation of the issuer to repay a loan of money to it, and generally pay interest to the holder. Bonds, notes and debentures are examples of fixed income securities.

The Fund may invest up to 5% of its total assets in derivatives, such as options and equity swaps, to protect its assets, implement a cash or tax management strategy or enhance its returns. With derivatives, the sub-adviser attempts to predict whether an underlying investment will increase or decrease in value at some future time. The sub-adviser considers various factors, such as availability and cost, in deciding whether to use a particular derivative instrument or strategy.

When choosing equity investments for the Fund, the sub-adviser applies a "bottom-up," value-oriented, long-term approach, focusing on the market price of a company's securities relative to the sub-adviser's evaluation of the company's long-term earnings, asset value and cash flow potential. The sub-adviser also considers and analyzes various measures relevant to stock valuation, such as a company's price/cash flow ration, price/earnings ratio, profit margins and liquidation value.

INVESTMENT RISK

Country, Sector or Industry Risk: To the extent the Fund invests a significant portion of its assets in one or more countries, sectors or industries at any time, the Fund will face a greater risk of loss due to factors affecting the single country, sector or industry than if the Fund always maintained wide diversity among the countries, sectors and industries in which it invests. For example, technology companies involve risks due to factors such as the rapid pace of product change, technological developments and new competition. Their stocks historically have been volatile in price, especially over the short term, often without regard to the merits of individual companies. Banks and financial institutions are subject to potentially restrictive governmental controls and regulations that may limit or adversely affect profitability and share price. In addition, securities in that sector may be very sensitive to interest rate changes throughout the world.

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.

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.

Emerging Markets Risk: The risks associated with investment in foreign securities are heightened in connection with investments in the securities of issuers in emerging markets, as these markets are generally more volatile than the markets of developed countries.

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

Securities Selection Risk: A strategy used by the Fund, or securities selected by its portfolio manager, may fail to produce the intended return.

Value Investing Risk: The risk that the portfolio manager's judgments that a particular security is undervalued in relation to the company's fundamental economic value may prove incorrect.

PRIOR PERFORMANCE OF A COMPARABLE FUND

The Fund is a new offering and has no performance history. For information on Templeton Global's prior performance with a comparable fund, the Templeton Foreign Fund, see page 42.

GLOBAL EQUITY FUND
Fact Sheet

INVESTMENT ADVISER

VALIC

INVESTMENT SUB-ADVISER

Putnam Investment Management, LLC ("Putnam")

INVESTMENT OBJECTIVE

The Fund seeks capital appreciation.

INVESTMENT STRATEGY

The Fund invests mainly in common stocks of companies worldwide that are believed to have favorable investment potential. For example, the Fund may purchase stocks of companies with stock prices that reflect a value lower than that which the sub-adviser places on the company. The sub-adviser also considers other factors that it believes will cause the stock price to rise.

Under normal circumstances, the Fund invests at least 80% of its net assets in equity investments. "Net assets" will take into account borrowings for investment purposes. The Fund invests primarily in mid-sized and large companies, although it can invest in companies of any size. In addition, the Fund invests mainly in companies located in developed countries, though it may invest up to 25% of its total assets in companies located in emerging markets.

The Fund may invest up to 25% of its total assets in depositary receipts. The Fund may participate in the initial public offering ("IPO") market, and a portion of the Fund's returns may be attributable to the Fund's investments in IPOs. There is no guarantee that as the Fund's assets growth it will be able to experience significant improvement in performance by investing in IPOs.

The Fund may invest up to 20% of its total assets in various derivative securities or strategies such as options, futures, warrants, equity swaps, interest rate swaps and currency forward contracts. The Fund typically invests in currency forward contracts to hedge underlying equity positions or to alter the currency characteristics of the underlying equity positions.

INVESTMENT RISK

Securities Selection Risk: A strategy used by the Fund, or securities selected by its portfolio manager, may fail to produce the intended return.

PRIOR PERFORMANCE OF A COMPARABLE FUND

The Fund is a new offering and has no performance history. For information on Putnam's prior performance with a comparable fund, the Putnam Global Equity Fund, see page 40.

GLOBAL STRATEGY FUND
Fact Sheet

INVESTMENT ADVISER

VALIC

INVESTMENT SUB-ADVISERS

Franklin Advisers, Inc. ("Franklin Advisers")

Templeton Investment Counsel, LLC ("Templeton Investment")

INVESTMENT OBJECTIVE

The Fund seeks high total return.

INVESTMENT STRATEGY

Under normal market conditions, the Fund invests in equity securities of companies in any country, fixed income (debt) securities of companies and governments of any country, and in money market instruments. The mix of investments will be adjusted to capitalize on the total return potential produced by changing economic conditions throughout the world. Although the Fund invests mainly in companies located in developed countries, it may invest up to 20% of its total assets in companies located in emerging markets.

There are no minimum or maximum percentage targets for each asset class, though under normal market conditions the Fund invests 50% to 80% of its assets in equity securities.

The Fund's debt investments generally focus on "investment grade" securities. The Fund may also invest in debt securities that are rated below investment grade or, if unrated, determined by the sub-adviser to be of comparable rating, including high yield debt securities and debt securities that are in default at the time of purchase. The Fund may invest up to 30% of its total assets in such high yield, lower-rated debt securities, commonly referred to as "junk bonds", and up to 10% in defaulted debt securities. Many debt securities of non-U.S. issuers, and especially emerging market issuers, are rated below investment grade or are unrated so that their selection depends on the sub-adviser's internal analysis.

The Fund may use various derivative instruments and strategies seeking to protect its assets, implement a cash management strategy or enhance its returns. The Fund currently may invest up to 5% of its total assets in derivatives, including equity swaps, put and call options and collars. With derivatives, the sub-adviser attempts to predict whether an underlying investment will increase or decrease at some future time. The sub-adviser considers various factors, such as availability and cost, in deciding whether to use a particular instrument or strategy.

The sub-advisers' investment philosophy is "bottom-up," value-oriented, and long-term. In choosing equity investments, the sub-adviser will focus on the market price of a company's securities relative to its evaluation of the company's potential long-term earnings, asset value and cash flow. A company's historical value measures, including price/earnings ratio, profit margins, and liquidation value, will also be considered, but are not limiting factors.

In choosing debt investments, the sub-adviser allocates its assets among issuers, geographic regions, and currencies based upon its assessment of relative interest rates among currencies, the sub-adviser's outlook for changes in interest rates, and credit risks. With respect to debt securities, the sub-adviser may also from time to time seek to hedge (protect) against currency risks by using forward currency exchange contracts.

Franklin Advisers manages the debt portion of the Fund and Templeton Investment manages the equity portion of the Fund.

INVESTMENT RISK

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.

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

Lower Rated Fixed Income Securities Risk: 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.

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.

Securities Selection Risk: A strategy used by the Fund, or securities selected by its portfolio manager, may fail to produce the intended return.

Value Investing Risk: The risk that the portfolio manager's judgments that a particular security is undervalued in relation to the company's fundamental economic value may prove incorrect.

PRIOR PERFORMANCE OF A COMPARABLE FUND

The Fund is a new offering and has no performance history. For information on Franklin Advisers' and Templeton Investment's prior performance with a comparable fund, the Templeton Global Asset Allocation Fund, see page 39 under Franklin Advisers.

LARGE CAP CORE FUND
Fact Sheet

INVESTMENT ADVISER

VALIC

INVESTMENT SUB-ADVISER

Evergreen Investment Management Company, LLC ("Evergreen")

INVESTMENT OBJECTIVE

The Fund seeks capital growth with the potential for current income.

INVESTMENT STRATEGY

The Fund invests, under normal circumstances, at least 80% of its net assets in the common stocks of large-sized U.S. companies (i.e., companies whose market capitalization falls within the range tracked by the Russell 1000(R) Index, at the time of purchase). In addition, the Fund will seek to maintain a weighted average market capitalization that falls within the range of the Russell 1000(R) Index. As of its last reconstitution on June 24, 2005, the Russell 1000(R) Index had a market capitalization range of approximately $1.8 billion to $386.9 billion. "Net assets" will take into account borrowing for investment purposes.

The Fund's stock selection is based on a diversified style of equity management that allows it to invest in both value- and growth-oriented equity securities. The Fund's portfolio manager looks for companies that are temporarily undervalued in the marketplace, sell at a discount to their private market values and display certain characteristics such as earning a high return on investment and having some kind of competitive advantage in their industry. "Growth" stocks are stocks of companies which the Fund's portfolio manager believes have anticipated earnings ranging from steady to accelerated growth.

The Fund intends to seek additional income primarily by investing up to 20% of its total assets in convertible bonds, including below investment grade bonds, and convertible preferred stocks of any quality. The Fund may also invest up to 20% of its total assets in foreign securities, including issuers located in emerging markets.

The Fund may participate in the initial public offering ("IPO") market, and a portion of the Fund's returns may be attributable to the Fund's investments in IPOs. There is no guarantee that as the Fund's assets growth it will be able to experience significant improvement in performance by investing in IPOs.

INVESTMENT RISK

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.

Currency Risk: Because the Fund's foreign investments may be 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.

settlement procedures may also involve additional risks. 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.

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

Large-Cap Company Risk. Large capitalization companies tend to go in and out of favor based on market and economic conditions and tend to be less volatile than companies with smaller market capitalizations. In exchange for this potentially lower risk, the Fund's value may not rise as much as the value of funds that emphasize small- or mid-cap companies.

Securities Selection Risk: A strategy used by the Fund, or securities selected by its portfolio manager, may fail to produce the intended return.

PRIOR PERFORMANCE OF A COMPARABLE FUND

The Fund is a new offering and has no performance history. For information on Evergreen's prior performance with a comparable fund, the Evergreen Fundamental Large Cap Fund, see page 35.

SMALL CAP AGGRESSIVE GROWTH FUND
Fact Sheet

INVESTMENT ADVISER

VALIC

INVESTMENT SUB-ADVISER

Credit Suisse Asset Management, LLC ("CSAM")

INVESTMENT OBJECTIVE

The Fund seeks capital growth.

INVESTMENT STRATEGY

The Fund normally invests at least 80% of its net assets in equity securities of small U.S. companies. "Net assets" will take into account borrowing for investment purposes. Using a growth investment style, the sub-adviser seeks to identify companies with attractive capital-growth potential with any of the following characteristics:

- companies still in the developmental stage;

- older companies that appear to be entering a new stage of growth; and

- companies providing products or services with a high unit-volume growth rate

The Fund may invest in start-up and other small companies that may have less-experienced management, limited product lines, unproven track records or inadequate capital reserves. The Fund may also invest in emerging-growth companies--small- or medium-size companies that have passed their startup phase, show positive earnings, and offer the potential for accelerated earnings growth. Emerging-growth companies generally stand to benefit from new products or services, technological developments, changes in management or other factors. They include "special-situation companies"--companies experiencing unusual developments affecting their market value.

The Fund considers a "small" company to be one whose market capitalization is within the range of capitalizations of companies in the Russell 2000(R) Index. As of its last reconstitution on June 24, 2005, the Russell 2000(R) Index had a market capitalization range of approximately $182.6 million to $1.8 billion. Some companies may outgrow the definition of a small company after the Fund has purchased their securities. These companies continue to be considered small for purposes of the Fund's minimum 80% allocation to small-company equities.

Although the Fund may invest the remaining 20% of its net assets in various securities up to the limitations provided, it intends to invest in such instruments only to a limited extent. Such investments include derivatives such as futures and options (15%), equity swaps (5%), foreign securities (10%), investment grade debt securities (20%), warrants (15%) and illiquid securities (15%).

INVESTMENT RISK

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.

Securities Selection Risk: A strategy used by the Fund, or securities selected by its portfolio manager, may fail to produce the intended return.

Special-Situations Risk companies. Small companies and emerging growth companies are often involved in "special situations." Securities of special situation companies may decline in value and hurt the fund's performance if the anticipated benefits of the special situation do not materialize.

Small Company Risk: Investing in small companies involves greater risk than in 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 ore 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 market volatility. Also, it may take a substantial period of time before the Fund realizes a gain on an investment in a small-cap company, if it realizes any gain at all.

PRIOR PERFORMANCE OF A COMPARABLE FUND

The Fund is a new offering and has no performance history. For information on CSAM's prior performance with a comparable fund, the Credit Suisse Small Cap Growth Fund, see page 34.

SMALL CAP SPECIAL VALUES FUND
Fact Sheet

INVESTMENT ADVISER

VALIC

INVESTMENT SUB-ADVISERS

Evergreen Investment Management Company, LLC ("Evergreen") Putnam Investment Management, LLC ("Putnam")

INVESTMENT OBJECTIVE

The Fund seeks to produce growth of capital by investing primarily in common stocks.

INVESTMENT STRATEGY

Under normal market conditions, the Fund invests at least 80% of its net assets in common stocks of small U.S. companies (i.e., companies whose market capitalizations fall within the range tracked by the Russell 2000(R) Index, at the time of purchase). In addition, the Fund will seek to maintain a weighted average market capitalization that falls within the range of the Russell 2000(R) Index. As of its last reconstitution on June 24, 2005, the Russell 2000(R) Index had a market capitalization range of approximately $182.6 million to $1.8 billion. "Net assets" will take into account borrowing for investment purposes.

The sub-advisers look for significantly undervalued companies that they believe have the potential for above-average appreciation with below average risk. Typical investments are in stocks of companies that have low price-to-earnings ratios, are generally out of favor in the marketplace, are selling significantly below their stated or replacement book value or are undergoing a reorganization or other corporate action that may create above-average price appreciation.

Although the Fund may invest the remaining 20% of its net assets in other types of securities including those that fall outside the range of the Russell 2000(R) Index, it intends to invest in such instruments only to a limited extent. Such investments and the limitations in such investments are as follows: foreign securities, including securities of emerging market issuers (20%), investment grade fixed income securities (20%), lower rated fixed income securities, commonly referred to as junk bonds (5%), depositary receipts (20%), other investment companies including exchange traded funds (10%), derivatives such as futures, options and equity swaps (20%), convertible securities (20%) and illiquid securities (15%).

Putnam and Evergreen each manage approximately 50% of the Fund's assets.

INVESTMENT RISK

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.

and may result in increased volatility. Other risks arise from the Fund's potential inability to terminate or sell derivative positions. A liquid secondary market may not always exist for the Fund's derivative positions at any time. In fact, many over-the-counter instruments (investments not traded on an exchange) will not be liquid, or the other party to the derivative transaction may not meet its obligations.

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. Foreign settlement procedures may also involve additional risks. 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.

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

Securities Selection Risk: A strategy used by the Fund, or securities selected by its portfolio manager, may fail to produce the intended return.

Small Company Risk: Investing in small companies involves greater risk than is customarily associated with investing in 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 greater market volatility. Also, it may take a substantial period of time before the Fund realizes a gain on an investment in a small-cap company, if it realizes any gain at all.

Value Investing Risk: The risk that the portfolio manager's judgments that a particular security is undervalued in relation to the company's fundamental economic value may prove incorrect.

PRIOR PERFORMANCE OF COMPARABLE FUND

The Fund is a new offering and has no performance history. For information on Evergreen's prior performance with a comparable fund, the Evergreen Special Values Fund, see page 36. For information on Putnam's prior performance with a comparable fund, the Putnam Small Cap Value Fund, see page 41.

SMALL CAP STRATEGIC GROWTH FUND
Fact Sheet

INVESTMENT ADVISER

VALIC

INVESTMENT SUB-ADVISER

Evergreen Investment Management Company, LLC ("Evergreen")

INVESTMENT OBJECTIVE

The Fund seeks capital growth by investing primarily in common stocks.

INVESTMENT STRATEGY

The Fund normally invests at least 80% of its assets in common stocks of small U.S. companies (i.e., companies whose market capitalizations fall within the range tracked by the Russell 2000(R) Index, at the time of purchase). "Net assets" will take into account borrowing for investment purposes.

In addition, the Fund will seek to maintain a weighted average market capitalization that falls within the range of the Russell 2000(R) Index. As of its last reconstitution on June 24, 2005, the Russell 2000(R) Index had a market capitalization range of approximately $183 million to $1.8 billion. The sub-adviser selects stocks of companies which it believes have the potential for accelerated growth in earnings and price.

Although the Fund intends, under normal circumstances, to be fully invested in common stocks of small U.S. companies, the Fund may invest the remaining 20% of its net assets in cash, cash equivalents and various securities up to the limitations provided, but it intends to invest in such instruments only to a limited extent. Such investments and their limitations include, derivatives such as futures and options (5%), equity swaps (5%), foreign securities, including securities of issuers located in emerging markets (20%), investment grade debt securities (20%), and warrants (5%).

INVESTMENT RISK

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. Foreign settlement procedures may also involve additional risks. 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 Style Risk: The risk that movements in financial markets will adversely affect the price of the Fund's investments, regardless of how well the companies in which the sub-adviser has invested perform. The market as a whole may not favor the types of investments the sub-adviser makes. Stocks of companies the sub-adviser believes are fast growing may trade at a higher multiple of current earnings than other stocks. The value of such stocks may be more sensitive to changes in current or expected earnings than the values of other stocks. If the sub-adviser's assessment of the prospects for a company's earnings growth is wrong, or if the sub-adviser's judgment of how other investors will value the company's earnings growth is wrong, then the price of the company's stock may fall or not approach the value that the sub-adviser has placed on it.

Small Company Risk: Investing in small companies involves greater risk than in 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 management 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 ore 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 market volatility. Also, it may take a substantial period of time before the Fund realizes a gain on an investment in a small-cap company, if it realizes any gain at all.

Securities Selection Risk: A strategy used by the Fund, or securities selected by its portfolio manager, may fail to produce the intended return.

PRIOR PERFORMANCE OF A COMPARABLE FUND

The Fund is a new offering and has no performance history. For information on Evergreen's prior performance with a comparable fund, the Evergreen Special Equity Fund, see page 37.

VALIC ULTRA FUND
Fact Sheet

INVESTMENT ADVISER

VALIC

INVESTMENT SUB-ADVISER

American Century Investment Management, Inc. ("American Century")

INVESTMENT OBJECTIVE

The Fund seeks long-term capital growth.

INVESTMENT STRATEGY

The sub-adviser looks for stocks of larger-sized companies it believes will increase in value over time, using an investment strategy that it has developed. In implementing this strategy, the sub-adviser uses a bottom-up approach to stock selection. This means that it makes investment decisions based primarily on their analysis of individual companies, rather than on broad economic forecasts. Management of the Fund is based on the belief that, over the long term, stock price movements follow growth in earnings, revenues and/or cash flow.

Using its extensive computer database, as well as other primary analytical research tools, the sub-adviser tracks financial information for individual companies to identify and evaluate trends in earnings, revenues and other business fundamentals. Under normal market conditions, the Fund's portfolio will primarily consist of securities of companies whose earnings and revenues are not only growing, but growing at an accelerating pace. This includes companies whose growth rates, although still negative, are less negative than prior periods, and companies whose growth rates are expected to accelerate. Other analytical techniques help identify additional signs of business improvement, such as increasing cash flows, or other indications of the relative strength of a company's business. These techniques help the sub-adviser buy or hold the stocks of companies they believe have favorable growth prospects and sell the stocks of companies whose characteristics no longer meet their criteria.

Although most of the Fund's assets will be invested in U.S. stocks, the Fund may invest up to 20% of its total assets in securities of foreign companies. Most of the Fund's foreign investments are in companies located and doing business in developed countries, though the Fund may invest in securities of issuers located in emerging markets.

The sub-adviser does not attempt to time the market. Instead, under normal market conditions, it intends to keep the Fund essentially fully invested in stocks regardless of the movement of stock prices generally. When the sub-adviser believes it is prudent, the Fund may invest a portion of its assets in domestic and foreign preferred stocks, convertible debt securities, equity equivalent securities, non-leveraged futures contracts and options, notes, bonds and other debt securities. The Fund may invest up to 35% of its assets in debt securities.

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 futures contracts and similar derivative securities to help manage the risk of these types of investments.

INVESTMENT RISK

Active Trading Risk: A strategy used whereby the Fund may engage in frequent trading of portfolio securities to achieve its investment goal. Active trading may result in high portfolio turnover and correspondingly greater

brokerage commissions and other transactions costs, which will be borne directly by the Fund. In addition, because the Fund may sell a security, active trading may have tax consequences for certain shareholders, involving a possible increase in short-term capital gains or losses. During periods of increased market volatility, active trading may be more pronounced.

Derivatives Risk. Investments in futures, options, warrants and swap contracts, if any, are subject to additional volatility and potential losses. Other risks arise from the Fund's potential inability to terminate or sell derivative positions. A liquid secondary market may not always exist for the Fund's derivative positions at any time. In fact, many over-the-counter instruments (investments not traded on an exchange) will not be liquid. Over-the-counter instruments also involve the risk that the other party to the derivative transaction will not meet its obligations.

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. Foreign settlement procedures may also involve additional risks. 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. These risks are heightened when an issuer is in an emerging market. Historically, the markets of emerging market countries have been more volatile than more developed markets; however, such markets can provide higher rates of return to investors.

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 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 types of stock funds.

Securities Selection Risk: A strategy used by the Fund, or securities selected by its portfolio manager, may fail to produce the intended return.

PRIOR PERFORMANCE OF A COMPARABLE FUND

The Fund is a new offering and has no performance history. For information on American Century's prior performance with a comparable fund, the American Century Ultra Fund, see page 32.

EXPENSE SUMMARY

The table below describes the fees and expenses you may pay if you remain invested in a Fund. A Fund's annual operating expenses do not reflect the separate account fees charged in the Contracts or administrative fees for the Plans in which the Fund is offered and had such fees been included, your expenses would be higher. Please see your Contract prospectus or Plan document for more details on such fees.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR ACCOUNT): Not applicable

Each Fund has no sales charges, redemption or surrender fees, exchange fees or account fees. Those kinds of fees may be imposed on you by the Contract. Such sales charges and other expenses are described in the Contract prospectus or Plan document.

ANNUAL FUND OPERATING EXPENSES

(expenses that are deducted from Fund assets based on estimated amounts for the year ended May 31, 2006)

                                   BROAD CAP   FOREIGN    GLOBAL
                                     VALUE*     VALUE*   EQUITY*
                                   ---------   -------   -------
Management Fees ................     0.70%      0.70%     0.80%
Other Expenses .................     0.23%      0.31%     0.32%
Total Fund Operating Expenses ..     0.93%      1.01%     1.12%
Expense Reimbursement ..........     0.08%      0.01%     0.02%
Net Expenses ...................     0.85%      1.00%     1.10%

                                     GLOBAL    LARGE CAP        SMALL CAP
                                   STRATEGY*     CORE*     AGGRESSIVE GROWTH*
                                   ---------   ---------   ------------------
Management Fees ................     0.50%       0.70%            0.85%
Other Expenses .................     0.32%       0.17%            0.25%
Total Fund Operating Expenses ..     0.82%       0.87%            1.10%
Expense Reimbursement ..........     0.02%       0.02%            0.10%
Net Expenses ...................     0.80%       0.85%            1.00%

                                      SMALL CAP         SMALL CAP       VALIC
                                   SPECIAL VALUES   STRATEGIC GROWTH*   ULTRA
                                   --------------   -----------------   -----
Management Fees ................        0.75%             0.85%         0.80%
Other Expenses .................        0.14%             0.17%         0.12%
Total Fund Operating Expenses ..        0.89%             1.02%         0.92%
Expense Reimbursement ..........          --              0.02%           --
Net Expenses ....................       0.89%             1.00%         0.92%

(*) VALIC will waive fees and reimburse expenses should the Total Annual Fund Operating Expenses before expense reimbursement be higher than the Net Expense ratio. VALIC may not increase such ratios, which are contractually required by agreement with the Board of Directors, without the approval of the Directors, including a majority of the Independent Directors. The expense waivers and fee reimbursements will continue through September 30, 2006, subject to the termination by the Board of Directors, including a majority of the Independent Directors.

EXAMPLE

This Example is intended to help you compare the cost of investing in a Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in a Fund for the time periods indicated and then redeem all of your shares at the end of those periods. This Example also assumes that your investment has a 5% return each year and that the Fund's operating expenses include waivers and reimbursements for year one where applicable. The Example does not reflect charges imposed by the Contract or Plan, and if those charges were included, the expenses would have been higher than those shown below. See the Contract prospectus or Plan document for information on such charges. Although your actual costs may be higher or lower, based on the assumptions, your costs would be:

                                      1 Year   3 Years
                                      ------   -------
Broad Cap Value Fund...............    $ 87      $288
Foreign Value Fund.................    $102      $321
Global Equity Fund.................    $112      $354
Global Strategy Fund...............    $ 82      $260
Large Cap Core Fund................    $ 87      $276
Small Cap Aggressive Growth Fund...    $102      $340
Small Cap Special Values Fund......    $ 91      $284
Small Cap Strategic Growth Fund....    $102      $323
VALIC Ultra Fund...................    $ 94      $293

INVESTMENT GLOSSARY

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.

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.

Examples of assets supporting asset-backed securities include credit card receivables, retail installment loans, home equity loans, auto loans, and manufactured housing loans.

DEPOSITARY RECEIPTS

Depositary Receipts include American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs") and Global Depositary Receipts ("GDRs"). 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.

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.

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 Investment Company Act of 1940 ( the "1940 Act"). All of the Funds 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.

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 Depositary Receipts. 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.

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.

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.

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 Investors Service, Inc. ("Moody's) or BBB by Standard & Poor's ("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.

Investments in fixed income securities include U.S. Government securities. U.S. Government securities are issued or guaranteed by the U.S. Government, its agencies and instrumentalities. Some U.S. Government securities are issued or unconditionally guaranteed by the U.S. Treasury. They are of the highest possible credit quality. While these securities are subject to variations in market value due to fluctuations in interest rates, they will be paid in full if held to maturity. Other U.S. Government securities are neither direct obligations of, nor guaranteed by the U.S. Treasury. However, they involve federal sponsorship in one way or another. For example, some are backed by specific types of collateral; some are supported by the issuer's right to borrow from the Treasury; some are supported by the discretionary authority of the Treasury to purchase certain obligations of the issuer; and others are supported only by the credit of the issuing government agency or instrumentality. For more information about mortgage-related fixed income securities see "Mortgage-Related Securities."

FOREIGN CURRENCY

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.

FOREIGN SECURITIES

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 any 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.

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. 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.

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, adjustable rate securities, and 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.

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 Government National Mortgage Association ("GNMA")) or guaranteed by agencies or instrumentalities of the U.S. Government (i.e., securities guaranteed by Federal National Mortgage Association ("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.

SWAP AGREEMENTS

Swap agreements are two party contracts entered into 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 or in a particular foreign currency), or in a "basket" of securities representing a particular index. Forms of swap agreements include credit default swaps, equity swaps, interest rate swaps, floors, and collars, mortgage swaps, and total return swaps.

Credit default swaps give one party to a transaction the right to dispose of or acquire an asset (or group of assets), or the right to receive or make a payment from the other party, upon the occurrence of specified credit events. An equity swap is a special type of total return swap, where the underlying asset is a stock, a basket of stocks, or a stock index. Compared to actually owning the stock, in this case you do not have to pay anything up front, but you do not have any voting or other rates that stock holder do have. Interest rate swaps are the most common type of swap. They typically exchange fixed rate payments against floating rate payments. Exceptions exist, such as floating-to-floating swaps. A total return swap is a swap, where one party pays the total return of an asset, and the other party makes periodic interest payments. The total return is the capital gain or loss, plus any interest or dividend payments. The parties have exposure to the return of the underlying stock or index, without having to hold the underlying assets.

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 an indirect wholly-owned subsidiary of American International Group, Inc. ("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 is located at 2929 Allen Parkway, Houston, Texas 77019.

VALIC serves as investment adviser through an Investment Advisory Agreement with the Series Company. As Investment Adviser, VALIC oversees the day to day operations of each Fund and supervises the purchase and sale of Fund investments. VALIC employs investment sub-advisers who make investment decisions for the Funds.

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

INVESTMENT SUB-ADVISERS

VALIC works with investment sub-advisers for each Fund. Sub-advisers are financial service companies that specialize in certain types of investing. The sub-adviser's role is to make investment decisions for the Funds according to each Fund's investment objectives and restrictions. VALIC compensates the sub-advisers out of the fees it receives from each Fund.

According to the agreements VALIC has with the sub-advisers, VALIC will receive investment advice for each Fund. Under these agreements VALIC gives the sub-advisers the authority to buy and sell securities for the sub-advised Funds. However, VALIC retains the responsibility for the overall management of these Funds. The sub-advisers may buy and sell securities for each Fund with broker-dealers and other financial intermediaries that they select. The sub-advisers may place orders to buy and sell securities of these Funds with a broker-dealer affiliated with the sub-adviser, as allowed by law. This could include any affiliated futures commission merchants.

The 1940 Act permits sub-advisers, under certain conditions, to place an order to buy or sell securities with an affiliated broker. One of these conditions is that the commission received by the affiliated broker cannot be greater than the usual and customary brokers commission if the sale was completed on a securities exchange. The Series Company has adopted procedures, as required by the 1940 Act, which provide that any commissions received by a sub-adviser's affiliated broker may be considered reasonable and fair if compared to the commission received by other brokers for the same type of securities transaction.

The Securities Exchange Act of 1934 prohibits members of national securities exchanges from effecting exchange transactions for accounts that they or their affiliates manage, except as allowed under rules adopted by the SEC. The Series Company and the sub-advisers have entered into written contracts, as required by the 1940 Act, to allow a sub-adviser's affiliate to effect these type of transactions for commissions. The 1940 Act generally prohibits a sub-adviser or a sub-adviser's affiliate, acting as principal, from engaging in securities transactions with a Fund, without an exemptive order from the SEC.

VALIC and the sub-advisers may enter into simultaneous purchase and sale transactions for the Funds or affiliates of the Funds.

The Series Company relies upon an exemptive order from the SEC 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 Statement of Additional Information provides additional information regarding the portfolio managers listed below, including other accounts they manage, their ownership interest in the Fund(s) they manage, and the structure and method used by the sub-adviser to determine their compensation. In addition, the Statement of Additional Information contains a discussion of the factors considered by the Board of Director's in connection with its approval of the advisory and sub-advisory agreements with respect to the Funds.

THE SUB-ADVISERS ARE:

American Century Investment Management, Inc. Barrow, Hanley, Mewhinney & Strauss, Inc. Credit Suisse Asset Management, LLC Evergreen Investment Management Company, LLC Franklin Advisers, Inc.
Putnam Investment Management, LLC
Templeton Global Advisors Ltd.
Templeton Investment Counsel, LLC

VALIC Ultra 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 $100.9 billion in assets under management as of July 31, 2005. The daily management of the Fund is directed by a team of portfolio managers consisting of Bruce A. Wimberly, Wade W. Slome and Jerry Sullivan.

Mr. Wimberly, Vice President and Senior Portfolio Manager, has been a member of the team that manages American Century Ultra Fund since July 1996. He joined American Century in September 1994 as an Investment Analyst. In 2000, he was named to his current position. Mr. Slome, Vice President and Portfolio Manager, has been a member of the team that manages the American Century Ultra Fund since June 1998. He was promoted to Portfolio Manager in July 2002. He joined American Century in June 1998 as an Investment Analyst. He is a CFA charterholder. Mr. Sullivan, Vice President and Portfolio Manager, has been a member of the team that manages the American Century Ultra Fund since July 2001. Before joining American Century in February 2000, he was a Portfolio Manager with the Franklin Templeton Group from March 1998 to October 1999.

Prior Performance of a Comparable Fund managed by American Century (VALIC Ultra Fund)

The VALIC Ultra Fund and the American Century Ultra Fund, which is also advised by American Century, have substantially similar objectives, policies and strategies. Because the Fund commenced operations in December 2005, it has no investment performance record. In order to provide you with information regarding the investment capabilities of American Century, performance information regarding the American Century Ultra Fund is presented. Such performance information should not be relied upon as an indication of the future performance of the Fund because, among other things, the cash flow in and out of the funds, different fees and expenses, and diversity in portfolio size and positions of the American Century Ultra Fund and the Fund will vary. Even with the differences, however, the investment management of the Fund will not be materially different. Past performance shown below is no guarantee of similar future performance for the Fund.

The historical performance information shown below is for the Investor Class of the American Century Ultra Fund, as reflected in the American Century Investments prospectus dated February 27, 2005. The Fund is sold only through a Contract with VALIC or one of its affiliates, or through a Plan for which VALIC or one of its affiliates provides securities, while the American Century Ultra Fund is sold to the general public. The returns do not reflect

any charges included in the Contract or Plan. If such Contract or Plan charges had been included the returns would be lower.

CALENDAR YEAR TOTAL RETURNS FOR INVESTOR CLASS SHARES OF THE AMERICAN CENTURY ULTRA FUND
[Bar Chart]

1995    37.68%
1996    13.85%
1997    23.13%
1998    34.55%
1999    41.46%
2000   -19.91%
2001   -14.61%
2002   -23.15%
2003    25.83%
2004    10.69%

Best quarter: Quarter ended December 31, 1999     32.09%
Worst quarter: Quarter ended March 31, 2001      -17.49%

The table below compares the performance of the American Century Ultra Fund to that of the S&P 500(R) Index and the Russell 1000(R) Growth Index. The S&P
500(R) Index is an index of the stocks of 500 major large-cap U.S. corporations, chosen for market size, liquidity, and industry group representations. It is a market-weighted index, with each stock's percentage in the Index in proportion to its market value. The Russell 1000(R) Growth Index measures the performance of those Russell 1000(R) companies with higher price-to-book ratios and higher forecasted growth values.

Average Annual Total Returns as of December 31, 2004

                               1 Year   5 Years   10 Years
                               ------   -------   --------
American Century Ultra Fund
   Investor Class Shares       10.69%    -6.05%    10.39%
S&P 500(R) Index               10.88%    -2.30%    12.07%
Russell 1000(R) Growth Index    6.30%    -9.29%     9.59%

Broad Cap Value Fund

BARROW, HANLEY, MEWHINNEY & STRAUSS, INC. ("BHMS")

3232 McKinney Ave., 15th Floor, Dallas, Texas 75204-2429

BHMS has been providing investment counseling since 1979 and as of August 31, 2005, had approximately $49 billion in assets under management.

Timothy J. Culler, CFA and Mark Giambrone, CPA will be responsible for the day-to-day management of the assets of the Broad Cap Value Fund. Mr. Culler joined BHMS in April 1999 and is currently a Principal and Portfolio Manager. Prior to joining BHMS, he was at INVESCO Capital Management where he served as Chief Investment Officer. Mr. Giambrone joined BHMS in December 1998 and is currently a Principal and Portfolio Manager. Prior to joining BHMS, he was a portfolio consultant at HOLT Value Associates

James P. Barrow, Robert J. Chambers, CFA, Richard A. Englander, CFA, J. Ray Nixon and are portfolio managers who will assist Messrs. Culler and Giambrone in the management of the Broad Cap Value Fund. Mr. Barrow founded BHMS in 1979 and is currently a member of the large- and mid-cap value equity teams. Mr. Chambers joined BHMS as a principal in August 1994 and is currently a member of the large cap value equity team. Mr.

Englander joined BHMS as a principal in April 1985 and is a member of the large cap value equity team. Mr. Nixon joined BHMS as a principal in June 1994 and is currently a member of the large cap value equity team.

Small Cap Aggressive Growth Fund

CREDIT SUISSE ASSET MANAGEMENT, LLC ("CSAM")

466 Lexington Avenue, New York, NY 10017

CSAM is a member of Credit Suisse Asset Management, the institutional and mutual fund asset management arm of Credit Suisse First Boston, the investment banking business of Credit Suisse Group (Credit Suisse). Under the management of Credit Suisse First Boston, Credit Suisse Asset Management provides asset management products and services to global corporate, institutional and government clients. As of July 31, 2005, CSAM managed over $24 billion in the U.S. and over $327 billion in 16 countries.

The Small Cap Aggressive Growth Fund is managed by a team of portfolio managers, consisting of Marian U. Pardo, Calvin E. Chung and Leo M. Bernstein. Ms. Pardo, Managing Director, joined CSAM in January 2003, and specializes in large- and mid-capitalization U.S. growth equities. She had been with J.P. Morgan Fleming Asset Management where, from 1999 to December 2002, she served as managing director and co-manager of their U.S. Small Company Fund. Mr. Chung, CFA, Director, joined CSAM in 2000 from Eagle Asset Management, where he was a vice president and senior technology equity analyst from 1997 to 1999. Mr. Bernstein, Director, is an analyst and portfolio manager specializing in all sectors of technology hardware (telecommunications equipment, semiconductors and optical components) in U.S. small- and mid-capitalization, post-venture capital and distribution management equity portfolios. He joined CSAM in 1999.

Prior Performance of a Comparable Fund managed by CSAM (Small Cap Aggressive Growth Fund)

The Small Cap Aggressive Growth Fund and the Credit Suisse Small Cap Growth Fund, which is also advised by CSAM, have substantially similar objectives, policies and strategies. Because the Fund commenced operations in December 2005, it has no investment performance record. In order to provide you with information regarding the investment capabilities of CSAM, performance information regarding the Credit Suisse Small Cap Growth Fund is presented. Such performance information should not be relied upon as an indication of the future performance of the Fund because, among other things, the cash flow in and out of the funds, different fees and expenses, and diversity in portfolio size and positions of the Credit Suisse Small Cap Growth Fund and the Fund will vary. Even with the differences, however, the investment management of the Fund will not be materially different. Past performance shown below is no guarantee of similar future performance for the Fund.

The historical performance information shown below is for the Common Class shares of the Credit Suisse Growth Fund, as reflected in the Credit Suisse Fund Prospectus dated February 28, 2005. The Fund is sold only through a Contract with VALIC or one of its affiliates, or through a Plan for which VALIC or one of its affiliates provides securities, while the Credit Suisse Growth Fund is sold to the general public. The returns of the Credit Suisse Growth Fund is sold to the general public do not reflect any charges included in the Contract or Plan. If such Contract or Plan charges had been included the returns would be lower.

CALENDAR YEAR TOTAL RETURNS OF CREDIT SUISSE SMALL CAP GROWTH FUND COMMON CLASS SHARES [BAR CHART]

1997    22.29%
1998    -1.40%
1999    99.23%
2000    -9.11%
2001   -13.07%
2002   -30.78%
2003    46.45%
2004    11.11%

Best quarter: Quarter ended December 31, 1999      58.51%
Worst quarter: Quarter ended September 30, 2001   -25.20%

The table below compares the performance of the Credit Suisse Small Cap Growth Fund to that of the Russell 2000(R) Growth Index. The Russell 2000(R) Growth Index measures the performance of Russell 2000 companies with higher price-to-earnings ratios and higher forecasted growth values.

Average Annual Total Returns as of December 31, 2004

                                               1 Year   5 Years   10 Years
                                               ------   -------   --------
Credit  Suisse  Small Cap Growth Fund Common
   Class Shares                                11.41%    -2.31%     9.96%
Russell 2000(R) Growth Index                   14.31%    -3.57%     4.08%

Large Cap Core Fund
Small Cap Special Values Fund
Small Cap Strategic Growth Fund

EVERGREEN INVESTMENT MANAGEMENT COMPANY, LLC ("EVERGREEN")

200 Berkeley Street, Boston, Massachusetts 02116-5034

Evergreen has been managing mutual funds and private accounts since 1932 and managed over $104.6 billion in assets for the Evergreen funds as of December 31, 2004. Evergreen is a subsidiary of Wachovia Corporation ("Wachovia"), the fourth largest bank holding company in the United States with over $493.3 billion in consolidated assets as of December 31, 2004.

Management of the Large Cap Core Fund

The Large Cap Core Fund is managed by Walter McCormick, CFA. Walter McCormick is a Managing Director, Senior Portfolio Manager and Head of Evergreen's Value Equity Team. He originally joined a predecessor of Evergreen in 1984. Mr. McCormick joined David L. Babson & Co., Inc. in 1998 and retired from there in April 2000. He rejoined Evergreen in March 2002. Mr. McCormick has been working in the investment management field since 1970.

Prior Performance of a Comparable Fund managed by Evergreen (Large Cap Core Fund)

The Large Cap Core Fund and the Evergreen Fundamental Large Cap Fund (formerly known as the Evergreen Growth and Income Fund), which is also advised by Evergreen, have substantially similar objectives, policies and strategies. Because the Fund commenced operations in December 2005, it has no investment performance record. In order to provide you with information regarding the investment capabilities of Evergreen, performance information regarding the Evergreen Fundamental Large Cap Fund is presented. Such performance information should not be relied upon as an indication of the future performance of the Fund because, among other things, the cash flow in and out of the funds, different fees and expenses, and diversity in portfolio size and positions of the Evergreen Fundamental Large Cap Fund and the Fund will vary. Even with the differences, however, the investment management of the Fund will not be materially different. Past performance shown below is no guarantee of similar future performance for the Fund.

The historical performance information shown below is for the Class I shares of the Evergreen Fundamental Large Cap Fund, as reflected in the Evergreen Domestic Equity Funds II prospectus dated December 1, 2005. The Fund is sold only through a Contract with VALIC or one of its affiliates, or through a Plan for which VALIC or one of its affiliates provides securities, while the Evergreen Fundamental Large Cap Fund is sold to the general public. The returns of the Evergreen Fundamental Large Cap Fund do not reflect any charges included in the Contract or Plan. If such Contract or Plan charges had been included the returns would be lower.

CALENDAR YEAR TOTAL RETURNS FOR
EVERGREEN FUNDAMENTAL LARGE CAP FUND CLASS I SHARES
[BAR CHART]

1995    32.94%
1996    23.82%
1997    31.25%
1998     5.23%
1999    14.54%
2000    -5.82%
2001   -14.64%
2002   -16.75%
2003    29.46%
2004    _____%

Best quarter: Quarter ended December 31, 1999      17.08%
Worst quarter: Quarter ended September 30, 2001   -19.58%

The table below compares the performance of the Evergreen Fundamental Large Cap Fund Class I Shares to that of the Russell 1000(R) Value Index as of December 31, 2004. The Russell 1000(R) Value Index is an unmanaged market capitalization-weighted index measuring the performance of those Russell 1000(R) companies with low price-to-book ratios and low forecasted earnings and growth rates.

Average Annual Total Returns as of December 31, 2004

                                       1 Year   5 Years   10 Years
                                       ------   -------   --------
Evergreen Fundamental Large Cap Fund
  Class I Shares
Russell 1000(R) Index

Management of the Small Cap Special Values Fund

Evergreen is responsible for managing approximately 50% of the assets of the Small Cap Special Values Fund. Evergreen's portion of the Fund's assets are managed by James M. Tringas, CFA. Mr. Tringas is a Vice President, Senior Portfolio Manager and member of the Value Equity team at Evergreen. He joined Evergreen in January 2002. From 1999 until he joined Evergreen, Mr. Tringas was a vice president and portfolio manager with Wachovia Asset Management, where he also served as a security analyst from 1994 until 1999.

Prior Performance of a Comparable Fund managed by Evergreen (Small Cap Special Values Fund)

The Small Cap Special Values Fund and the Evergreen Special Values Fund, which is also advised by Evergreen, have substantially similar objectives, policies and strategies. Because the Fund commenced operations in December 2005, it has no investment performance record. In order to provide you with information regarding the investment capabilities of Evergreen, performance information regarding the Evergreen Special Values Fund is presented. Such performance information should not be relied upon as an indication of the future performance of the Fund because, among other things, the cash flow in and out of the funds, different fees and expenses, and diversity in portfolio size and positions of the Evergreen Special Values Fund and the Fund will vary. Even with the differences, however, the investment management of the Fund will not be materially different. Past performance shown below is no guarantee of similar future performance for the Fund.

The historical performance information shown below is for the Class I shares of the Evergreen Special Values Fund, as reflected in the Evergreen Domestic Equity Funds II prospectus dated December 1, 2005. The Fund is sold only through a Contract with VALIC or one of its affiliates, or through a Plan for which VALIC or one of its affiliates provides securities, while the Evergreen Special Values Fund is sold to the general public. The returns of the Evergreen Special Values Fund do not reflect any charges included in the Contract or Plan. If such Contract or Plan charges had been included the returns would be lower.

CALENDAR YEAR TOTAL RETURNS OF EVERGREEN SPECIAL VALUES FUND CLASS A SHARES(1)
[BAR CHART]

1995   30.26%
1996   36.98%
1997   29.08%
1998   -1.51%
1999    6.39%
2000   15.14%
2001   18.13%
2002   -7.04%
2003   35.36%
2004   20.42%

Best quarter: Quarter ended December 31, 1998      17.20%(1)
Worst quarter: Quarter ended September 30, 1998   -18.00%(1)

The table below compares the performance of the Evergreen Special Values Fund to that of the Russell 2000(R) Growth Index. The Russell 2000(R) Growth Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values.

Average Annual Total Returns as of December 31, 2004

                                1 Year   5 Years   10 Years
                                ------   -------   --------
Evergreen Special Values Fund
   Class I Shares(1)           20.42%    15.78%    17.48%
Russell 2000(R) Value Index    22.25%    17.23%    15.17%

(1) Historical performance shown for Class A and Class I shares prior to June 17, 2002 is based on the performance of the Class A and Y shares of the fund's predecessor fund (Wachovia Special Values Fund). Performance of Class A shares reflect the effects of 12b-1 fees but not sales charges, while Class I shares do not incur any 12b-1 fees or sales charges.

Management of the Small Cap Strategic Growth Fund

The Small Cap Strategic Growth Fund is managed by Tim Stevenson, CFA, CMT. Mr. Stevenson is a Managing Director, Senior Portfolio Manager and Head of Evergreen's Special Equity Team. Mr. Stevenson has been with Evergreen or one of its predecessor firms since 1994. He has been working in the investment management field since 1981.

Prior Performance of a Comparable Fund managed by Evergreeen (Small Cap Strategic Growth Fund)

The Small Cap Strategic Growth Fund and the Evergreen Special Equity Fund, which is also advised by Evergreen, have substantially similar objectives, policies and strategies. Because the Fund commenced operations in December 2005, it has no investment performance record. In order to provide you with information regarding the investment capabilities of Evergreen, performance information regarding the Evergreen Special Equity Fund is presented. Such performance information should not be relied upon as an indication of the future performance of the Fund because, among other things, the cash flow in and out of the funds, different fees and expenses, and diversity in portfolio size and positions of the Evergreen Special Equity Fund and the Fund will vary. Even with the differences, however, the investment management of the Fund will not be materially different. Past performance shown below is no guarantee of similar future performance for the Fund.

The historical performance information shown below is for the Class I shares of the Evergreen Special Equity Fund, as reflected in the Evergreen Domestic Equity Funds I prospectus dated February 1, 2005. The Fund is sold only through a Contract with VALIC or one of its affiliates, or through a Plan for which VALIC or one of its affiliates provides securities, while the Evergreen Special Equity Fund is sold to the general public. The returns of the Evergreen Special Equity Fund do not reflect any charges included in the Contract or Plan. If such Contract or Plan charges had been included the returns would be lower.

CALENDAR YEAR TOTAL RETURNS OF EVERGREEN SPECIAL EQUITY FUND CLASS I SHARES(1)
[BAR CHART]

1995    34.44%
1996    26.25%
1997    19.49%
1998     5.65%
1999    74.31%
2000    -7.76%
2001    -9.05%
2002   -27.26%
2003    52.63%
2004     6.00%

Best quarter: Quarter ended December 31, 1998      28.15%(1)
Worst quarter: Quarter ended September 30, 1998   -21.96%(1)

The table below compares the performance of the Evergreen Special Equity Fund to that of the Russell 2000(R) Growth Index. The Russell 2000(R) Growth Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values.

Average Annual Total Returns as of December 31, 2004

                                1 Year   5 Years   10 Years
                                ------   -------   --------
Evergreen Special Equity Fund
   Class I Shares(1)              6.00%   -0.26%    13.94%
Russell 2000(R)Growth Index      14.31     3.57%     7.12%

(1) Historical performance shown for Class I prior to July 27, 1998 is based on the performance of the Class Y shares of the fund's predecessor fund (CoreFund Special Equity Fund) and the original class of shares of the fund's predecessor fund from March 15, 1994 to February 20, 1995.

Global Strategy Fund

FRANKLIN ADVISERS, INC. ("FRANKLIN ADVISERS")

One Franklin Parkway, San Mateo, CA 94403-1906

Franklin Advisers is a wholly-owned subsidiary of Franklin Resources, Inc. (referred to as "Franklin Templeton Investments"), a publicly owned company engaged in the financial services industry through its subsidiaries. As of July 31, 2005, Franklin Templeton Investments managed approximately $438.7 billion in assets composed of mutual funds and other investment vehicles for individuals, institutions, pension plans, trusts and partnerships in 128 countries.

The team responsible for managing the debt portion of the Global Strategy Fund is Alexander C. Calvo and Michael Hasenstab. Mr. Calvo, Senior Vice President of Franklin Advisers, has been with Franklin Templeton since 1995, and has managed the debt portion of the Templeton Global Asset Allocation Fund since 1998. He has primary

responsibility for the debt investments of the Fund and has final authority over all aspects of the Fund's debt investment portfolio. The degree to which he may perform his duties may change from time-to-time. Dr. Hasenstab first worked for Franklin Templeton from 1995 to 1998, rejoining again in 2001 after a three-year leave to obtain his Ph.D. Since 2002, he has been an assistant manager of the debt portion of the Templeton Global Asset Allocation Fund and an analyst since 2001.

Prior Performance of a Comparable Fund managed by Franklin Advisers and Templeton Investment

The Global Strategy Fund and the Templeton Global Asset Allocation Fund, which is also advised by Franklin Advisers and Templeton Investment, have substantially similar objectives, policies and strategies. Because the Fund commenced operations in December 2005, it has no investment performance record. In order to provide you with information regarding the investment capabilities of Franklin Advisers and Templeton Investment, performance information regarding the Templeton Global Asset Allocation Fund is presented. Such performance information should not be relied upon as an indication of the future performance of the Fund because, among other things, the cash flow in and out of the funds, different fees and expenses, and diversity in portfolio size and positions of the Templeton Global Asset Allocation Fund and the Fund will vary. Even with the differences, however, the investment management of the Fund will not be materially different. Past performance shown below is no guarantee of similar future performance for the Fund.

The historical performance information shown below is for the Class 1 shares of the Templeton Global Asset Allocation Fund, as reflected in the Franklin Templeton Variable Insurance Products Trust prospectus dated May 1, 2005. The Fund is sold only through a Contract with VALIC or one of its affiliates, or through a Plan for which VALIC or one of its affiliates provides securities, while the Templeton Global Asset Allocation Fund is sold to the general public. The returns of the Templeton Global Asset Allocation Fund do not reflect any charges included in the Contract or Plan. If such Contract or Plan charges had been included the returns would be lower.

CALENDAR YEAR TOTAL RETURNS FOR CLASS 1 SHARES OF
TEMPLETON GLOBAL ASSET ALLOCATION FUND
[BAR CHART]

1994   -2.96%
1995   22.54%
1996   18.87%
1997   15.52%
1998    6.41%
1999   22.86%
2000    0.29%
2001   -9.72%
2002   -4.17%
2003   32.31%
2004   15.94

Best quarter: Quarter ended December 31, 1998      19.28%
Worst quarter: Quarter ended September 30, 1998   -18.27%

Performance prior to May 1, 2000 reflects the performance of the Templeton Asset Allocation Fund, whose investment objective and investment strategy was substantially similar to the Templeton Global Asset Allocation Fund.

This table below compares the performance of the Templeton Global Asset Allocation Fund's to that of the Morgan Stanley Capital International (MSCI) All Country (AC) World Index and the J.P. Morgan Global Government Bond (JPM GGB). The unmanaged MSCI AC World Index is market capitalization weighted and measures the performance of equity securities available to foreign (non-local) investors in developed and emerging markets globally. The unmanaged JPM GGB Index tracks the total returns for liquid fixed-rate government bonds with maturities greater than one year issued by developed countries globally.

Average Annual Total Returns as of December 31, 2004

                                         1 Year   5 Years   10 Years
                                         ------   -------   --------
Templeton Global Asset Allocation Fund
   Class 1 Shares                        15.94%     5.89%    11.34%
MSCI AC World Index                      15.75%    -1.79%     8.19%
JPM GGB Index                            10.10%     8.85%     7.77%

Global Equity Fund
Small Cap Special Values Fund

PUTNAM INVESTMENT MANAGEMENT, LLC ("PUTNAM")

One Post Office Square, Boston, Massachusetts 02109

Putnam is a Delaware limited liability company with principal offices at One Post Office Square, Boston, MA 02109. Putnam has been managing mutual funds since 1937 and serves as investment adviser to the funds in the Putnam Family. As of July 31, 2005, Putnam had approximately $196 billion in assets under management.

Management of the Global Equity Fund

The team responsible for the day-to-day investment decisions of the Global Equity Fund is lead by Shigeki Makino, Chief Investment Officer of Putnam since September 2000. The other team members include Mark A. Bogar, Joshua H. Brooks and Bradford S. Greenleaf. Mr. Bogar has been a portfolio manager with Putnam since 1998. Mr. Brooks has been a chief investment officer-core equities of Putnam since 2003. Previously, he was the chief investment officer of Delaware Investments. Mr. Greenleaf has been a portfolio manager with Putnam since 2004 and was previously the Director of International Investments with Independence Equities.

Prior Performance of a Comparable Fund Managed by Putnam (Global Equity Fund)

The Global Equity Fund and the Putnam Global Equity Fund, which is also advised by Putnam, have substantially similar objectives, policies and strategies. Because the Fund commenced operations in December 2005, it has no investment performance record. In order to provide you with information regarding the investment capabilities of Putnam, performance information regarding the Putnam Global Equity Fund is presented. Such performance information should not be relied upon as an indication of the future performance of the Fund because, among other things, the cash flow in and out of the funds, different fees and expenses, and diversity in portfolio size and positions of the Putnam Global Equity Fund and the Fund will vary. Even with the differences, however, the investment management of the Fund will not be materially different. Past performance shown below is no guarantee of similar future performance for the Fund.

The historical performance information shown below is for the Class A shares of the Putnam Global Equity Fund, as reflected in the Franklin Templeton Variable Insurance Products Trust prospectus dated May 1, 2005. The returns of the Templeton Global Asset Allocation Fund do not reflect any charges included in the Contract or Plan. If such Contract or Plan charges had been included the returns would be lower.

The performance information in this section for periods prior to September 23, 2002 is based on the historical performance of a "prior" Putnam Global Equity Fund, which exchanged substantially all of its net assets for shares of the Putnam Global Equity Fund (which was formerly known as the Putnam Global Growth Fund), the surviving entity, on September 23, 2002. The Putnam Global Growth Fund changed its name to the Putnam Global Equity Fund on October 1, 2002.

CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES OF
PUTNAM GLOBAL EQUITY FUND
[BAR CHART]

1995    28.85%
1996    16.48%
1997    23.38%
1998    17.90%
1999    59.66%
2000   -10.27%
2001   -22.03%
2002   -19.04%
2003    28.94%
2004    13.54%

Best quarter: Quarter ended December 31, 1999      35.27%
Worst quarter: Quarter ended September 30, 2001   -16.83%

This table below compares the performance of the Putnam Global Equity Fund's to that of the Morgan Stanley Capital International (MSCI) World Index. The unmanaged MSCI World Index is an unmanaged index of securities of developed and emerging markets.

Average Annual Total Returns as of December 31, 2004

                            1 Year   5 Years   10 Years
                            ------   -------   --------
Putnam Global Equity Fund
   Class A Shares            7.63%    -4.71%    10.60%
MSCI World Index            14.72%    -2.45%     8.09%

Management of the Small Cap Special Values Fund

Putnam is responsible for managing approximately 50% of the assets of the Small Cap Special Values Fund. Putnam's team responsible for the day-to-day investment decisions of a portion of the assets of the Fund is lead by Edward T. Shadek Jr., Chief Investment Officer, Managing Director and Deputy Head of Investments of Putnam. Mr. Shadek rejoined Putnam in 1997 after having begun his career there in 1987. Mr. Shadek is a Certified Public Accountant with 16 years of investment experience. The other team member is Eric N. Harthun, Managing Director and Portfolio Manager of Putnam. Mr. Harthun, who joined Putnam in 2000, is a CFA charterholder and a Certified Public Accountant with 10 years of financial experience.

Prior Performance of a Comparable Fund managed by Putnam (Small Cap Special Values Fund)

The Small Cap Special Values Fund and the Putnam Small Cap Value Fund, which is advised by Putnam, have substantially similar objectives, policies and strategies. Because the Fund commenced operations in December 2005, it has no investment performance record. In order to provide you with information regarding the investment capabilities of Putnam, performance information regarding the Putnam Small Cap Value Fund Class A Shares is presented. Such performance information should not be relied upon as an indication of the future performance of the Fund because, among other things, Putnam is managing approximately 50% of the Fund's assets, the cash flow in and out of the funds, different fees and expenses, and diversity in portfolio size and positions of the Putnam Small Cap Value Fund and the Fund will vary. Even with the differences, however, the investment management of the Fund will not be materially different. Past performance shown below is no guarantee of similar future performance for the Fund.

The historical performance information shown below is for the Class Y shares of the Putnam Small Cap Value Fund, as reflected in the Putnam Investment Funds Trust prospectus dated June 30, 2005. The returns of the Putnam Small Cap Value Fund do not reflect any charges included in the Contract or Plan. If such Contract or Plan charges had been included the returns would be lower.

CALENDAR YEAR TOTAL RETURNS FOR CLASS Y SHARES OF
PUTNAM SMALL CAP VALUE FUND
[BAR CHART]

2000    24.43%
2001    19.20%
2002   -18.44%
2003    51.02%
2004    26.01%

Best quarter: Quarter ended June 30, 2003          24.65%
Worst quarter: Quarter ended September 30, 2002   -22.08%

This table below compares the performance of the Putnam Small Cap Value Fund's to that of the Russell 2000(R) Value Index. The Russell 2000(R) Value Index is an unmanaged index of those companies in the Russell 2000(R) Index chosen for their value orientation.

Average Annual Total Returns as of December 31, 2004

                                                   Since
                              1 Year   5 Years   Inception
                              ------   -------   ---------
Putnam Small Cap Value
   Fund - Class Y Shares      19.09%    16.63%     17.16%
Russell 2000(R) Value Index   22.25%    17.23%     16.31%

Performance information shown in the bar chart and table above, for periods prior to the inception of Class Y shares (January 1, 2001) of the Putnam Small Cap Value Fund, is derived from the historical performance of its Class A shares. Class Y shares' performance does not reflect sales charges or higher operating expenses that are applicable to Class A Shares.

FOREIGN VALUE FUND

TEMPLETON GLOBAL ADVISORS LTD. ("TEMPLETON GLOBAL")
Lyford Cay, Nassau, Bahamas

Templeton Global is a wholly-owned subsidiary of Franklin Templeton Investments. As of July 31, 2005, Franklin Templeton Investments managed approximately $438.7 billion in assets composed of mutual funds and other investment vehicles for individuals, institutions, pension plans, trusts and partnerships in 128 countries.

Day-to-day decisions and management of the Foreign Value Fund are made by Jeffrey A. Everett, CFA, President and Director of Templeton Global. Mr. Everett joined Templeton in 1989 and has been a manager of the retail Templeton Foreign Fund since 2001. In addition, Murdo Murchison, CFA and Lisa F. Myers have secondary portfolio management responsibilities for the Foreign Value Fund. Mr. Murchison, Executive Vice President, joined Templeton in 1993 and has been a manager of the retail Templeton Foreign Fund since 2001. Ms. Myers, a Portfolio Manager, joined Templeton in 1996 and has been a manager of the retail Templeton Foreign Fund since 2002.

Prior Performance of a Comparable Fund managed by Templeton Global (Foreign Value Fund)

The Foreign Value Fund and the Templeton Foreign Fund, which is also advised by Templeton Global, have substantially similar objectives, policies and strategies. Because the Fund commenced operations in December 2005, it has no investment performance record. In order to provide you with information regarding the investment capabilities of Templeton Global, performance information regarding the Templeton Foreign Fund is presented. Such performance information should not be relied upon as an indication of the future performance of the Fund because, among other things, the cash flow in and out of the funds, different fees and expenses, and diversity in

portfolio size and positions of the Templeton Foreign Fund and the Fund will vary. Even with the differences, however, the investment management of the Fund will not be materially different. Past performance shown below is no guarantee of similar future performance for the Fund.

The historical performance information shown below is for the Class A shares of the Templeton Foreign Fund, as reflected in the Templeton Funds, Inc. prospectus dated January 1, 2005. The Fund is sold only through a Contract with VALIC or one of its affiliates, or through a Plan for which VALIC or one of its affiliates provides securities, while the Templeton Foreign Fund is sold to the general public. The returns of the Templeton Foreign Fund do not reflect any charges included in the Contract or Plan. If such Contract or Plan charges had been included the returns would be lower.

CALENDAR YEAR TOTAL RETURNS FOR CLASS A SHARES OF
TEMPLETON FOREIGN FUND
[BAR CHART]

1994    0.35%
1995   11.15%
1996   18.00%
1997    6.65%
1998   -4.89%
1999   39.21%
2000   -3.67%
2001   -7.92%
2002   -8.64%
2003   30.51

Best quarter: Quarter ended June 30, 2003          17.77%
Worst quarter: Quarter ended September 30, 1998   -17.24%

The table below compares the performance of the Templeton Foreign Fund's to that of the Morgan Stanley Capital International ("MSCI") Europe, Australasia, Far East ("EAFE") Index a broad-based securities market index. The MSCI EAFE Index is comprised of the 21 Morgan Stanley Capital International country indices and measures the performance of approximately 1,000 large-cap stocks.

Average Annual Total Returns as of December 31, 2003*

                         1 Year   5 Years   10 Years
                         ------   -------   --------
Templeton Foreign Fund
   Class A Shares        22.97%    6.78%      6.36%
MSCI World Index         39.17%    0.26%      4.78%

* Due to the timing of the Templeton Foreign Fund's fiscal year end (August 31st) and the date of its most recent prospectus (January 1, 2005), the most recent performance information available in that prospectus is as of December 31, 2003.

Global Strategy Fund

TEMPLETON INVESTMENT COUNSEL, LLC ("TEMPLETON INVESTMENT")
Broward Financial Centre, Suite 2100, Fort Lauderdale, Florida 33394

Templeton Investment is a Delaware limited liability company and a wholly-owned subsidiary of Franklin Templeton Investments. As of July 31, 2005, Franklin Templeton Investments managed approximately $438.7 billion in assets composed of mutual funds and other investment vehicles for individuals, institutions, pension plans, trusts and partnerships in 128 countries.

The team responsible for managing the equity portion of the Global Strategy Fund is Peter A. Nori, Tucker Scott and Mark R. Beveridge. Mr. Nori, CFA, Executive Vice President/Portfolio Manager-Research Analyst of Templeton Investment, has been with Franklin Templeton Investments ("Franklin Templeton") since 1987, and has managed the equity portion of the Templeton Global Asset Allocation Fund. Mr. Scott, CFA, Senior Vice President of Templeton, has been with Franklin Templeton since 1996, and has managed the equity portion of the Templeton Global Asset Allocation Fund since 1998. Mr. Beveridge, CFA, Executive Vice President of Templeton, has been with Franklin Templeton Investments 1985, and has managed the equity portion of the Templeton Global Asset

LEGAL PROCEEDINGS

On May 26, 2005, the New York Attorney General and the New York Superintendent of Insurance filed a civil complaint against AIG as well as its former Chairman and Chief Executive Officer and former Vice Chairman and Chief Financial Officer, in the Supreme Court of the State of New York. The complaint asserts claims under New York's Martin Act and Insurance Law, among others, and makes allegations concerning certain transactions entered into by AIG and certain of its subsidiaries, but in no case involving any subsidiary engaged in providing management or administrative services to the Funds. The complaint seeks disgorgement, injunctive relief, punitive damages and costs, among other things.

AIG is the indirect parent company and an affiliated person of VALIC. Neither VALIC nor its respective officers and directors, nor the Funds have been named in the complaint, and the complaint does not seek any penalties against them. In VALIC's view, the matters alleged in the lawsuit are not material in relation of the financial position of VALIC or to its ability to provide their respective their respective services to the Funds. Due to a provision in the law governing the operation of mutual funds, however, if the lawsuit results in an injunction being entered against AIG, then VALIC will need to obtain permission from the Securities and Exchange Commission to continue to serve the Funds. While the Securities and Exchange Commission has granted this type of relief to others in the past in similar circumstances, there is no assurance that this permission would be granted.

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.

The advisory fee that the Fund will pay to VALIC is as follows:

                                             ADVISORY FEE PAID
                                        (AS A PERCENTAGE OF AVERAGE
            FUND NAME                        DAILY NET ASSETS)
            ---------                   ---------------------------
Broad Cap Value Fund               0.70% of the first $250 million;
                                   0.65% on the next $250 million;
                                   0.60% on the next $500 million; and
                                   0.55% over $1.0 billion.

Foreign Value Fund                 0.73% on the first $250 million;
                                   0.68% of the next $250 million;
                                   0.63% of the next $500 million; and
                                   0.58% over $1.0 billion.

Global Equity Fund                 0.82% on the first $250 million;
                                   0.77% on the next $250 million;
                                   0.72% on the next $500 million; and
                                   0.67% over $1.0 billion.

Global Strategy Fund               0.50% of total assets.

                                             ADVISORY FEE PAID
                                        (AS A PERCENTAGE OF AVERAGE
            FUND NAME                        DAILY NET ASSETS)
            ---------                   ---------------------------
Large Cap  Core Fund               0.70% on the first $250 million;
                                   0.65% on the next $250 million;
                                   0.60% on the next $500 million; and
                                   0.55% over $1.0 billion.

Small Cap Aggressive Growth Fund   0.85% on the first $250 million; and
                                   0.75% over $250 million.

Small Cap Special Values Fund      0.75% on the first $500 million; and
                                   0.70% over $500 million.

Small Cap Strategic Growth Fund    0.85% on the first $250 million; and
                                   0.75% over $250 million.

VALIC Ultra Fund                   0.89% on the first $250 million;
                                   0.84% on the next $250 million;
                                   0.79% on the next $500 million; and
                                   0.74% over $1.0 billion.

The Investment Advisory Agreement entered into with each Fund does not limit how much the Funds pay in monthly expenses each year. However, VALIC has agreed to cap certain Fund expenses by waiving a portion of its advisory fee or reimbursing certain expenses, as shown in the Expense Summary.

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 and to qualifying retirement plans (previously defined as the "Plans").

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 or in a Plan. With respect to a Plan, such Plan buys and sells shares of the Funds according to your instructions. The value of a Plan transaction is based on the next calculation of net asset value after its order is placed with the Fund. 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. A Fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange restricts or suspends trading.

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.

FREQUENT OR SHORT-TERM TRADING

The Funds, which are offered only through Contracts or Plans, are intended for long-term investment and not as frequent short-term trading ("market timing") vehicles. Accordingly, organizations or individuals that use market timing investment strategies and make frequent transfers or redemptions should not purchase shares of the Funds. The Board of Directors of the Series Company has adopted policies and procedures with respect to market timing activity as discussed below.

The Series Company believes that market timing activity is not in the best interest of the participants of the Funds. Due to the disruptive nature of this activity, it can adversely impact the ability of the sub-advisers to invest assets in an orderly, long-term manner. In addition, market timing can disrupt the management of a Fund and raise its expenses through: increased trading and transaction costs; forced and unplanned portfolio turnover; and large asset swings that decrease the Fund's ability to provide maximum investment return to all participants. This in turn can have an adverse effect on Fund performance.

Since certain Funds invest significantly in foreign securities and/or high yield fixed income securities ("junk bonds"), they may be particularly vulnerable to market timing. Market timing in Funds investing significantly in foreign securities may occur because of time zone differences between the foreign markets on which a Fund's international portfolio securities trade and the time as of which the Fund's net asset value is calculated. Market timing in Funds investing significantly in junk bonds may occur if market prices are not readily available for a Fund's junk bond holdings. Market timers may purchase shares of a Fund based on events occurring after foreign

market closing prices are established but before calculation of the Fund's net asset value, or if they believe market prices for junk bonds are not accurately reflected by a Fund. One of the objectives of the Series Company's fair value pricing procedures is to minimize the possibilities of this type of market timing (see "How Shares are Valued").

Shares of the Funds are generally held through insurance company separate accounts or Plans. The ability of the Series Company to monitor transfers made by the participants in separate accounts or Plans maintained by financial intermediaries is limited by the institutional nature of these omnibus accounts. The Board's policy is that the Funds must rely on the insurance company separate account or Plan sponsor to monitor market timing within a Fund and attempt to prevent it through their own policies and procedures. There is no guarantee that the Series Company will be able to detect market timing activity or the participants engaged in such activity, or, if it is detected, to prevent its recurrence. Whether or not the Series Company detects it, if market timing activity occurs, then you should anticipate that you will be subject to the disruptions and increased expenses discussed above. In situations in which the Series Company becomes aware of possible market timing activity, it will notify the insurance company separate account or Plan sponsor in order to help facilitate the enforcement of such entity's market timing policies and procedures. The Series Company reserves the right, in its sole discretion and without prior notice, to reject or refuse purchase orders received from insurance company separate accounts or plan sponsors, whether directly or by transfer, including orders that have been accepted by a financial intermediary, that the Series Company determines not to be in the best interest of the Funds. Such rejections or refusals will be applied uniformly without exception.

You should review your Contract prospectus or your Plan document for more information regarding market timing, including any restrictions or limitations on trades made through a Contract or Plan.

Please refer to the documents pertaining to your Contract prospectus or Plan document on how to direct investments in or redemptions from (including making transfers into or out of) the Funds and any fees that may apply.

SELECTIVE DISCLOSURE OF PORTFOLIO HOLDINGS

The Series Company's policies and procedures with respect to the disclosure of the Funds' portfolio securities are described in the Statement of Additional Information.

HOW SHARES ARE VALUED

The net asset value per share ("NAV") for the Fund is determined no less than each business day at the close of regular trading on the New York Stock Exchange (generally 4:00 p.m., Eastern time) by dividing the net assets of the Fund by the number of outstanding shares. Investments for which market quotations are readily available are valued at their market price as of the close of regular trading on the New York Stock Exchange for the day, unless, in accordance with pricing procedures approved by the Fund's Board, the market quotations are determined to be unreliable. Securities and other assets for which market quotations are unavailable or unreliable are valued at fair value in accordance with pricing procedures approved by the Board.

As of the close of regular trading on the New York Stock Exchange, securities traded primarily on security exchanges outside the United States are valued at the market price at the close of such exchanges on the day of valuation. If a security's price is available from more than one exchange, a portfolio uses the exchange that is the primary market for the security. However, depending on the foreign market, closing prices may be up to 15 hours old when they are used to price the Fund's shares, and the Fund may determine that certain closing prices are unreliable. This determination will be based on review of a number of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. If the Fund determines that closing prices do not reflect the fair value of the securities, the Fund will adjust the previous closing prices in accordance with pricing procedures approved by the Board to reflect what it believes to be the fair value of the securities as of the close of regular trading on the New York Stock Exchange. The Fund may also fair value securities in other situations, for example, when a particular foreign market is closed but the Fund is open. For foreign equity securities the Fund uses an outside pricing service to provide it with closing market prices and information used for adjusting those prices.

The fund may invest in securities that are primarily listed on foreign exchanges that trade on weekends or other days when the Fund does not price its shares. As a result, the value of such foreign securities may change on days when the Fund's shares do not trade.

The amortized cost method is used to determine the values of the Fund's short-term securities maturing within 60 days. The amortized cost method approximates fair market value.

DIVIDENDS AND CAPITAL GAINS

Dividends from Net Investment Income

For each Fund, dividends from net investment income are declared and paid quarterly. Dividends from net investment income are automatically reinvested for you into additional shares of the Fund. Each of the Funds reserves the right to declare and pay dividends less frequently than as disclosed above, provided that the net realized capital gains and net investment income, if any, are paid at least annually.

Distributions from Capital Gains

When a Fund sells a security for more than it paid for that security, a capital gain results. For each Fund, distributions from capital gains, if any, are normally declared and paid annually. 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 or Plan, you will not be directly affected by the federal income tax consequences of distributions, sales or redemptions of Fund shares. You should consult your Contract prospectus or Plan document for further information concerning the federal income tax consequences to you of investing in the Funds.

INTERESTED IN LEARNING MORE?

The Statement of Additional Information ("SAI") 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 with respect to the Series Company. You may reach VALIC by calling 1-800-448-2542 or by writing to 2929 Allen Parkway, Houston, Texas 77019. The Series Company's SAI is not available online as it does not have its own internet website. The Series Company's prospectus and semi-annual and annual reports are available online, however, through the internet websites of insurance companies offering the Funds as investment options in variable insurance products.

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 the SEC by writing to: SEC Public Reference Room, Washington, D.C. 20549-6009; or call the SEC at 1-800-SEC-0330. You may also request a paper copy from the SEC electronically at publicinfo@sec.gov.

A duplicating fee will be assessed for all copies provided.

VALIC COMPANY I

ASSET ALLOCATION FUND
BLUE CHIP GROWTH FUND
BROAD CAP VALUE FUND
CAPITAL CONSERVATION FUND
CORE EQUITY FUND
FOREIGN VALUE FUND
GLOBAL EQUITY FUND
GLOBAL STRATEGY FUND
GOVERNMENT SECURITIES FUND
GROWTH & INCOME FUND
HEALTH SCIENCES FUND
INCOME & GROWTH FUND
INFLATION PROTECTED FUND
INTERNATIONAL EQUITIES FUND
INTERNATIONAL GOVERNMENT BOND FUND
INTERNATIONAL GROWTH I FUND
LARGE CAP CORE FUND
LARGE CAP GROWTH FUND
LARGE CAPITAL GROWTH FUND
MID CAP INDEX FUND
MID CAP STRATEGIC GROWTH FUND (FORMERLY MID CAPITAL GROWTH FUND)
MONEY MARKET I FUND
NASDAQ-100(R) INDEX FUND
SCIENCE & TECHNOLOGY FUND
SMALL CAP AGGRESSIVE GROWTH FUND
SMALL CAP FUND
SMALL CAP INDEX FUND SMALL CAP SPECIAL VALUES FUND
SMALL CAP STRATEGIC GROWTH FUND
SOCIAL AWARENESS FUND
STOCK INDEX FUND
VALIC ULTRA FUND
VALUE FUND

STATEMENT OF ADDITIONAL INFORMATION

PART B

DECEMBER __, 2005

This Statement of Additional Information ("SAI") is not a prospectus and contains information in addition to that in the Prospectuses for VALIC Company I (the "Series Company" or "VC I"). It should be read in conjunction with your Prospectus. The SAI relates to the Prospectuses dated September 19, 2005 and December 5, 2005. The Series Company's Annual Report dated May 31, 2005 is incorporated by reference into this SAI. For an individual interested in a variable annuity contract issued by The Variable Annuity Life Insurance Company ("VALIC"), a Prospectus may be obtained by visiting www.aigvalic.com, calling 1-800-448-2542, or writing the Series Company at 2929 Allen Parkway, Houston, Texas, 77019.

TABLE OF CONTENTS

                                                                                  Page
                                                                                  ----
General Information and History                                                      4
Investment Restrictions                                                              6
     Fundamental Investment Restrictions                                             6
     Non-Fundamental Investment Restrictions                                         7
     Operating Policies                                                              8
Investment Practices                                                                10
     Adjustable Rate Securities                                                     10
     Asset-Backed Securities                                                        10
     Bank Obligations                                                               10
     Convertible Securities                                                         11
     Depositary Receipts                                                            11
     Eurodollar Obligations                                                         12
     Fixed Income Securities                                                        12
     Foreign Currency Exchange Transactions and Forward Contracts                   14
     Foreign Securities                                                             16
     Hybrid Instruments                                                             17
     Illiquid Securities                                                            19
     Initial Public Offerings                                                       19
     Interfund Borrowing and Lending Program                                        19
     Lending Portfolio Securities                                                   19
     Loan Participations                                                            20
     Mortgage-Related Securities                                                    20
     Options and Futures Contracts                                                  23
     Other Investment Companies                                                     30
     Real Estate Securities and Real Estate Investment Trusts                       31
     Repurchase Agreements                                                          31
     Reverse Repurchase Agreements                                                  32
     Rule 144A Securities                                                           32
     Short Sales                                                                    33
     Swap Agreements                                                                33
     Unseasoned Issuers                                                             34
     Variable Rate Demand Notes                                                     34
     Warrants                                                                       34
     When-Issued Securities                                                         35
Investment Adviser                                                                  36
     Approval of Advisory Agreement                                                 38
     Code of Ethics                                                                 50
Investment Sub-advisers                                                             51
Service Agreements                                                                  55
Portfolio Managers                                                                  57
Portfolio Turnover                                                                  73
Portfolio Transactions and Brokerage                                                73
Offering, Purchase, and Redemption of Fund Shares                                   80
Determination of Net Asset Value                                                    80
Accounting and Tax Treatment                                                        81
     Calls and Puts                                                                 81
     Financial Futures Contracts                                                    82
     Subchapter M of the Internal Revenue Code of 1986                              82
     Passive Foreign Investment Companies                                           83
     Section 817(h) of the Code                                                     83

                                                                                  Page
                                                                                  ----
Other Information                                                                   84
     Shareholder Reports                                                            84
     Voting and Other Rights                                                        84
     Proxy Voting Policies and Procedures                                           85
     Proxy Voting Records                                                           87
     Disclosure of Portfolio Holdings Policies and Procedures                       87
     Custody of Assets                                                              88
     Index Funds                                                                    88
     Independent Registered Public Accounting Firm                                  89
Management of the Series Company                                                    90
     Director Ownership of Shares                                                   94
     Compensation of Independent Directors                                          95
Appendix                                                                            97
     Description of Corporate Bond Ratings                                          97
     Description of Commercial Paper Ratings                                        98

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 an Investment Advisory Agreement 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. 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 Inflation Protected, the International Government Bond and the Nasdaq-100(R) Index Funds, is "diversified" as the term is used in the 1940 Act. VALIC has engaged investment sub-advisers (hereinafter referred to as "Sub-adviser") for each Fund to provide investment sub-advisory services, subject to VALIC's oversight.

The Series Company issues shares of common stock of each Fund to certain employer-sponsored retirement plans (primarily, but not exclusively, governmental plans; collectively, the "Plans" and each a "Plan") and registered and unregistered separate accounts of VALIC and its affiliates to fund variable annuity contracts or variable life policies (the "Contracts"). Currently, the Series Company acts as an investment vehicle for assets of separate accounts sponsored by VALIC and its affiliates.

The Series Company was originally named VALIC Series Portfolio Company. The name changed to American General Series Portfolio Company ("AGSPC") on January 14, 1985, and to North American Funds Variable Product Series I on October 1, 2000. Subsequently, on December 31, 2001, the name changed to VALIC Company I. The individual Fund names also changed on December 31, 2001, as noted below.

NAME PRIOR TO 10/1/2000                  NAME FROM 10/2000 TO 12/31/2001        NAME EFFECTIVE 12/31/2001
-----------------------                  -------------------------------        -------------------------
AGSPC Asset Allocation Fund              North American - AG Asset Allocation   Asset Allocation Fund
                                         Fund

AGSPC Capital Conservation Fund          North American - AG Capital            Capital Conservation Fund
                                         Conservation Fund

AGSPC Government Securities Fund         North American - AG Government         Government Securities Fund
                                         Securities Fund

AGSPC Growth & Income Fund               North American - AG Growth & Income    Growth & Income Fund
                                         Fund

AGSPC International Equities Fund        North American - AG International      International Equities Fund
                                         Equities Fund

AGSPC International Government Bond      North American - AG International      International Government Bond Fund
Fund                                     Government Bond Fund

AGSPC Mid Cap Index Fund                 North American - AG Mid Cap Index      Mid Cap Index Fund
                                         Fund

AGSPC Money Market Fund                  North American - AG 1 Money Market     Money Market I Fund
                                         Fund

N/A (new fund 10/1/2000)                 North American - AG Nasdaq-100(R)      Nasdaq-100(R) Index Fund
                                         Index Fund

AGSPC Small Cap Index Fund               North American - AG Small Cap Index    Small Cap Index Fund
                                         Fund

AGSPC Social Awareness Fund              North American - AG Social Awareness   Social Awareness Fund
                                         Fund
AGSPC Stock Index Fund                   North American - AG Stock Index Fund   Stock Index Fund

AGSPC Growth Fund                        North American Core Equity Fund        Core Equity Fund

N/A (new fund 10/1/2000)                 North American - American Century      Income & Growth Fund
                                         Income & Growth Fund

NAME PRIOR TO 10/1/2000                  NAME FROM 10/2000 TO 12/31/2001        NAME EFFECTIVE 12/31/2001
-----------------------                  -------------------------------        -------------------------
N/A (new fund 10/1/2000)                 North American - American Century      International Growth I Fund
                                         International Growth Fund

N/A (new fund 10/1/2000)                 North American - Founders Large Cap    Large Cap Growth Fund
                                         Growth Fund

N/A (new fund 10/1/2000)                 North American - Founders/T. Rowe      Small Cap Fund
                                         Price Small Cap Fund

N/A (new fund 11/1/2000)                 North American - T. Rowe Price Blue    Blue Chip Growth Fund
                                         Chip Growth Fund

N/A (new fund 11/1/2000)                 North American - T. Rowe Price         Health Sciences Fund
                                         Health Sciences Fund

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

N/A (new fund 12/31/2001)                N/A                                    Value Fund

The Capital Accumulation Fund, Inc. and Timed Opportunity Fund, Inc., each registered open-end diversified management investment companies under the 1940 Act, became part of the Series Company through a reorganization on September 25, 1985. The Capital Accumulation Fund changed its name to AGSPC Mid Cap Index Fund and changed its investment objective, investment program and one of its restrictions as of October 1, 1991. The Timed Opportunity Fund changed its name to the AGSPC Asset Allocation 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. Effective August 27, 2004, the Growth Fund, formerly named the "Opportunities Fund," was reorganized with and into the Blue Chip Growth Fund. Effective September 16, 2005, the Mid Capital Growth Fund changed its name to the Mid Cap Strategic Growth Fund.

INVESTMENT RESTRICTIONS

The Funds have each adopted certain fundamental investment restrictions which, unlike the other investment objectives, 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, 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 and operating policies 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, Global Industry Classification Standard (GICS) 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

BORROWING
All Funds: Each Fund may borrow money in amounts up to 33 1/3% of the value of its total assets for temporary or emergency purposes, or as permitted by law. Each Fund may also borrow money for investment purposes, up to the maximum extent permissible under the 1940 Act. A Fund may also obtain such short-term credits as may be necessary for the clearance of purchases and sales of portfolio securities. In order to secure any permitted borrowings and reverse repurchase agreements under this section, a Fund may pledge, mortgage or hypothecate its assets. This policy shall not prohibit a Fund from engaging in reverse repurchase agreements, dollar rolls, or similar investment strategies described in the Prospectus and the SAI, as amended from time to time.

COMMODITIES
All Funds: No Fund may purchase or sell physical commodities except that each Fund may (i) hold and sell physical commodities acquired as a result of the Fund's ownership of securities or other instruments; (ii) purchase or sell securities or other instruments backed by physical commodities; or (iii) purchase or sell commodity options and futures contracts in accordance with its investment practices and policies.

CONCENTRATION
All Funds except the Health Sciences Fund and the Nasdaq-100(R) Index Fund: Each Fund may not concentrate its investments in the securities of issuers primarily engaged in any particular industry (other than securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities and repurchase agreements secured thereby), or domestic bank money market instruments.

DIVERSIFICATION
All Funds except the Health Sciences Fund, the Inflation Protected Fund, the International Government Bond Fund, and the Nasdaq-100(R) Index Fund. Each Fund may not make any investment inconsistent with its classification as a diversified investment company under the 1940 Act.

ISSUANCE OF SENIOR SECURITIES
All Funds: No Fund may issue senior securities except as permitted by the 1940 Act, any rule, regulation, or order under the 1940 Act or any Securities and Exchange Commission ("SEC") staff interpretation of the 1940 Act.

LENDING
All Funds: No Fund may make loans, except that each Fund may, in accordance with its investment practices and policies, (i) engage in repurchase agreements; (ii) lend portfolio securities; (iii) purchase debt securities; (iv) purchase commercial paper; and (v) enter into any other lending arrangement, including interfund lending, as permitted by the 1940 Act, any rule, regulation or order under the 1940 Act, by exemptive relief, or by any SEC staff interpretation of the 1940 Act.

REAL ESTATE
All Funds: No Fund may purchase or sell real estate except that each Fund may
(i) hold and sell real estate acquired as a result of the Fund's ownership of securities or other instruments; (ii) purchase or sell securities or other instruments backed by real estate, or interests in real estate; and (iii) purchase or sell securities of entities or investment vehicles, including real estate investment trusts, that invest, deal, or otherwise engage in the business of real estate.

UNDERWRITING
All Funds: No Fund may underwrite the securities of other issuers, except as permitted by the Board within applicable law, and except to the extent that in connection with the sale or disposition of its portfolio securities, a Fund may be deemed to be an underwriter.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS

CONTROL OF COMPANIES
All Funds: 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 shown below for additional information on investment company security investment restrictions.)

ILLIQUID SECURITIES
All Funds: Each Fund may not invest more than 15% (10% for the Money Market I 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.

FOREIGN SECURITIES
All Funds: 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, which may include emerging market securities. ADRs and U.S. dollar-denominated securities of foreign issuers are excluded from such percentage limitation for each Fund.

100%
Foreign Value Fund
Global Equity Fund
Global Strategy Fund
International Equities Fund
International Government Bond Fund
International Growth I Fund

35%
Asset Allocation Fund
Core Equity Fund
Growth & Income Fund
Health Sciences Fund
Income & Growth Fund
Mid Cap Index Fund
Nasdaq-100(R) Index Fund
Small Cap Index Fund
Stock Index Fund

30%
Inflation Protected Fund
Large Cap Growth Fund
Science & Technology Fund
Small Cap Fund

25%
Large Capital Growth Fund
Mid Cap Strategic Growth Fund
Value Fund

20%
Blue Chip Growth Fund
Broad Cap Value Fund
Capital Conservation Fund
Government Securities Fund
Large Cap Core Fund
Money Market I Fund (payable in U.S. Dollars) Small Cap Special Values Fund
Small Cap Strategic Growth Fund
Socially Responsible Fund
VALIC Ultra Fund

10%
Small Cap Aggressive Growth Fund

MARGIN
All Funds: 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.

SHORT SALES
All Funds: Each Fund other than the Money Market I Fund may not sell securities short except to the extent permitted by applicable law.

INVESTMENT COMPANIES
All Funds: 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 shown below for additional information on investment company security investment restrictions.)

OPERATING POLICIES

ASSET-BACKED SECURITIES
All Funds: 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.

SINGLE INVESTMENT COMPANIES
All Funds: Unless otherwise permitted by the 1940 Act, no Fund other than the Blue Chip Growth Fund, the Health Sciences Fund, the Science & Technology Fund and the portion of the Small Cap Fund sub-advised by T. Rowe Price Associates, Inc. ("T. Rowe Price") may invest more than 5% of total assets in a single investment company.

TOTAL INVESTMENT COMPANY INVESTMENT
All Funds: Unless otherwise permitted by the 1940 Act, no Fund other than the Blue Chip Growth Fund, the Health Sciences Fund, the Science & Technology Fund and the portion of the Small Cap Fund sub-advised by T. Rowe Price may invest more than 10% of total assets in investment company securities.

SINGLE INVESTMENT COMPANY VOTING SECURITIES
All Funds: Unless otherwise permitted by the 1940 Act, no Fund other than the Blue Chip Growth Fund, the Health Sciences Fund, the Science & Technology and the portion of the 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.

CERTIFICATES OF DEPOSIT AND BANKERS ACCEPTANCES
All Funds: 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 ("FDIC"). 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.

FUTURES CONTRACTS - INITIAL MARGIN DEPOSITS
All Funds: With respect to each Fund other than the Money Market I Fund, 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.

BLUE CHIP GROWTH FUND, HEALTH SCIENCES FUND, SCIENCE & TECHNOLOGY FUND, AND SMALL CAP FUND

As noted in the prospectus, T. Rowe Price is the Sub-adviser for the Blue Chip Growth Fund, the Health Sciences Fund, the 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 and GRF. 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 Fund 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.

ASSET-BACKED SECURITIES

Each Fund, except the Broad Cap Value Fund, Foreign Value Fund, Global Strategy Fund and VALIC Ultra Fund, 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 15% of its net assets (10% in the case of the Money Market I 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 FDIC. 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 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

Each Fund, other than the Government Securities Fund, International Government Bond Fund, Large Cap Growth Fund, Mid Cap Index Fund, Money Market I Fund, Nasdaq-100 Index Fund, Small Cap Index Fund and Stock Index 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.

DEPOSITARY RECEIPTS

Each Fund, other than the Money Market I Fund, may purchase Depositary Receipts. Depositary Receipts include American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs") or other similar securities convertible into securities of foreign issuers. 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. GDRs, EDRs and other types of Depositary Receipts are typically issued by foreign depositaries, although they may also be issued by U.S. depositaries, and evidence ownership interests in a security or pool of securities issued by either a foreign or a U.S. corporation. Depositary Receipts may not necessarily be denominated in the same currency as the securities into which they may be converted.

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.

Depositary Receipts may be sponsored or unsponsored. A sponsored Depositary Receipt is issued by a Depositary that has an exclusive relationship with the issuer of the underlying security. Generally, Depositary Receipts in registered form are designed for use in the U.S. securities market and Depositary Receipts in bearer form are designed for use in securities markets outside the United States. Holders of unsponsored Depositary Receipts generally bear all the costs associated with establishing the unsponsored Depositary Receipt. The depositary of unsponsored Depositary Receipts is under no obligation to distribute shareholder communications received from the underlying issuer or to pass through to the holders of the unsponsored Depositary Receipt voting rights with respect to the deposited securities or pool of securities. Depositary Receipts are not necessarily denominated in the same currency as the underlying securities to which they may be connected. For purposes of a Fund's investment policies, the Funds' investments in Depositary Receipts will be deemed to be investments in the underlying securities.

EURODOLLAR OBLIGATIONS

Each Fund may, in accordance with its investment objective(s), policies, and investment program, 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.

All Funds, except the Money Market I Fund, may also 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.

Such securities are not registered with the 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 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.

FIXED INCOME SECURITIES

Each Fund may invest in 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 nationally rated statistical rating organization ("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 Sub-advisers will not necessarily dispose of an investment grade security that has been downgraded to below investment grade. See the section in the Appendix 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.

Inflation-Indexed Bonds

Inflation-indexed bonds are fixed income securities whose principal value is periodically adjusted according to the rate of inflation. Two structures are common. The U.S. Treasury and some other issuers use a structure that accrues inflation into the principal value of the bond. Most other issuers pay out the Consumer Price Index accruals as part of a semiannual coupon. Inflation-indexed securities issued by the U.S. Treasury have maturities of five, ten or thirty years, although it is possible that securities with other maturities will be issued in the future. The U.S. Treasury securities pay interest on a semi-annual basis, equal to a fixed percentage of the inflation-adjusted principal amount.

If the periodic adjustment rate measuring inflation falls, the principal value of inflation-indexed bonds will be adjusted downward (but not below the original principal value in the case of U.S. Treasury inflation-indexed bonds), and consequently the interest payable on these securities (calculated with respect to a smaller principal amount) will be reduced. Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-indexed bonds, even during a period of deflation. However, the current market value of the bonds is not guaranteed, and will fluctuate. Other inflation related bonds may or may not provide a similar guarantee. If a guarantee of principal is not provided, the adjusted principal value of the bond repaid at maturity may be less than the original principal.

The value of inflation-indexed bonds is expected to change in response to changes in real interest rates. Real interest rates in turn are tied to the relationship between nominal interest rates and the rate of inflation. Therefore, if inflation were to rise at a faster rate than nominal interest rates, real interest rates might decline, leading to an increase in value of inflation-indexed bonds. In contrast, if nominal interest rates increased at a faster rate than inflation, real interest rates might rise, leading to a decrease in value of inflation-indexed bonds.

While the values of these securities are expected to be protected from long-term inflationary trends, short-term increases in inflation may lead to a decline in value. If interest rates rise due to reasons other than inflation (for example, due to changes in currency exchange rates), investors in these securities may not be protected to the extent that the increase is not reflected in the bond's inflation measure.

The periodic adjustment of U.S. Treasury inflation-indexed bonds is tied to the Consumer Price Index for Urban Consumers ("CPI-U"), which is calculated monthly by the U.S. Bureau of Labor Statistics. The CPI-U is a measurement of changes in the cost of living, made up of components such as housing, food, transportation and energy. Inflation-indexed bonds issued by a foreign government are generally adjusted to reflect a comparable inflation index, calculated by that government. There can be no assurance that the CPI-U or any foreign inflation index will accurately measure the real rate of inflation in the prices of goods and services. Moreover, there can be no assurance that the rate of inflation in a foreign country will be correlated to the rate of inflation in the United States.

Any increase in the principal amount of an inflation-indexed bond will be considered taxable ordinary income, even though investors do not receive their principal until maturity.

Lower Rated Fixed Income Securities

The Broad Cap Value Fund, Capital Conservation Fund, Foreign Value Fund, Global Equity Fund, Global Strategy Fund, Income & Growth Fund, Inflation Protected Fund, International Government Bond Fund, Large Cap Core Fund, Small Cap Special Values Fund and the Value Fund may invest in below investment grade 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. A Sub-adviser will not necessarily dispose of a portfolio security when its ratings have been changed.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS AND FORWARD CONTRACTS

Each Fund, except the Government Securities Fund and the Money Market I Fund, 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 Sub-adviser wishes 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 Sub-adviser. This strategy is often referred to as "anticipatory hedging."

2. Position Hedges. When the Sub-adviser believes 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 Sub-adviser 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 Sub-adviser anticipates. For example, if a currency's value rose at a time when the Sub-adviser 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 Sub-adviser increases 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 Sub-adviser will hedge at appropriate times.

A Fund 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, State Street Bank and Trust Company (the "Custodian" or "State Street") 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.

FOREIGN SECURITIES

Each Fund 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 Mid Cap Index Fund, Small Cap Index Fund and Stock Index Fund focus on the foreign securities included in their respective indices.

A foreign security is a security issued by an entity domiciled or incorporated outside of the United States. 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.

In addition, all the Funds, except the Government Securities Fund and the Money Market I 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.

Emerging Markets

The Blue Chip Growth Fund, Foreign Value Fund, Global Equity Fund, Global Strategy Fund, Health Sciences Fund, Income & Growth Fund, Inflation Protected Fund, International Government Bond Fund, International Growth I Fund, Large Cap Core Fund, Large Capital Growth Fund, Mid Cap Strategic Growth Fund, Science & Technology Fund, Small Cap Aggressive Growth Fund, Small Cap Special Values Fund, Small Cap Strategic Growth Fund, VALIC Ultra Fund and Value Fund may make investments in companies domiciled in emerging market countries. These investments 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.

Money Market Securities of Foreign Issuers

Each Fund 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.

HYBRID INSTRUMENTS

Each of the Funds, other than the Inflation Protected Fund and the Money Market I Fund, may invest in hybrid instruments, up to 10% of total assets. The Inflation Protected Fund may invest up to 5% of its total assets in hybrid instruments. Hybrid instruments, which include indexed or structured securities (such as notes, bonds and debentures) and exchange traded funds ("ETFs"), combine the elements of derivatives, including futures contracts or options with those of debt, preferred equity or a depository instrument. Generally, a hybrid instrument will be a debt security, preferred stock, depository share, trust certificate, certificate of deposit or other evidence of indebtedness on which a portion of or all interest payments, and/or the principal or stated amount payable at maturity, redemption or retirement, is determined by reference to prices, changes in prices, or differences between prices, of securities, currencies, intangibles, goods, articles or commodities (collectively "Underlying Assets") or by another objective index, economic factor or other measure, such as interest rates, currency exchange rates, commodity indices, and securities indices (collectively "Benchmarks"). Thus, hybrid instruments may take a variety of forms, including, but not limited to, debt instruments with interest or principal payments or redemption terms determined by reference to the value of a currency or commodity or securities index at a future point in time, preferred stock with dividend rates determined by reference to the value of a currency, or convertible securities with the conversion terms related to a particular commodity. For more information on ETFs, see "Other Investment Companies."

Hybrid instruments may be an efficient means of creating exposure to a particular market, or segment of a market, with the objective of enhancing total return. For example, a Fund may wish to take advantage of expected declines in interest rates in several European countries, but avoid the transactions costs associated with buying and currency-hedging the foreign bond positions. One solution would be to purchase a U.S. dollar-denominated hybrid instrument whose redemption price is linked to the average three year interest rate in a designated group of countries. The redemption price formula would provide for payoffs of greater than par if the average interest rate was lower than a specified level, and payoffs of less than par if rates were above the specified level. Furthermore, the Fund could limit the downside risk of the security by establishing a minimum redemption price so that the principal paid at maturity could not be below a predetermined minimum level if interest rates were to rise significantly. The purpose of this arrangement, known as a structured security with an embedded put option, would be to give the Fund the desired European bond exposure while avoiding currency risk, limiting downside market risk, and lowering transactions costs. Of course, there is no guarantee that the strategy will be successful and the Fund could lose money if, for example, interest rates do not move as anticipated or credit problems develop with the issuer of the hybrid instrument.

The risks of investing in hybrid instruments reflect a combination of the risks of investing in securities, options, futures and currencies. Thus, an investment in a hybrid instrument may entail significant risks that are not associated

with a similar investment in a traditional debt instrument that has a fixed principal amount, is denominated in U.S. dollars or bears interest either at a fixed rate or a floating rate determined by reference to a common, nationally published Benchmark. The risks of a particular hybrid instrument will, of course, depend upon the terms of the instrument, but may include, without limitation, the possibility of significant changes in the Benchmarks or the prices of Underlying Assets to which the instrument is linked. Such risks generally depend upon factors unrelated to the operations or credit quality of the issuer of the hybrid instrument, which may not be readily foreseen by the purchaser, such as economic and political events, the supply and demand for the Underlying Assets and interest rate movements. In recent years, various Benchmarks and prices for Underlying Assets have been highly volatile, and such volatility may be expected in the future. Reference is also made to the discussion of futures, options, and forward contracts herein for a discussion of the risks associated with such investments.

Hybrid instruments are potentially more volatile and carry greater market risks than traditional debt instruments. Depending on the structure of the particular hybrid instrument, changes in a Benchmark may be magnified by the terms of the hybrid instrument and have an even more dramatic and substantial effect upon the value of the hybrid instrument. Also, the prices of the hybrid instrument and the Benchmark or Underlying Asset may not move in the same direction or at the same time.

Hybrid instruments may bear interest or pay preferred dividends at below market (or even relatively nominal) rates. Alternatively, hybrid instruments may bear interest at above market rates but bear an increased risk of principal loss (or gain). The latter scenario may result if "leverage" is used to structure the hybrid instrument. Leverage risk occurs when the hybrid instrument is structured so that a given change in a Benchmark or Underlying Asset is multiplied to produce a greater value change in the hybrid instrument, thereby magnifying the risk of loss as well as the potential for gain.

Hybrid instruments may also carry liquidity risk since the instruments are often "customized" to meet the portfolio needs of a particular investor, and therefore, the number of investors that are willing and able to buy such instruments in the secondary market may be smaller than that for more traditional debt securities. Under certain conditions, the redemption (or sale) value of such an investment could be zero. In addition, because the purchase and sale of hybrid instruments could take place in an over-the-counter market without the guarantee of a central clearing organization or in a transaction between the Fund and the issuer of the hybrid instrument, the creditworthiness of the counterparty or issuer of the hybrid instrument would be an additional risk factor the Fund would have to consider and monitor. Hybrid instruments also may not be subject to regulation of the Commodities Futures Trading Commission ("CFTC"), which generally regulates the trading of commodity futures by U.S. persons, the SEC, which regulates the offer and sale of securities by and to U.S. persons, or any other governmental regulatory authority.

The various risks discussed above, particularly the market risk of such instruments, may in turn cause significant fluctuations in the net asset value of the Fund. Accordingly, a Fund that so invests will limit its investments in hybrid instruments (including investments in other investment companies) to 10% (5% for the Inflation Protected Fund) of total assets.

Structured investments are organized and operated solely for the purpose of restructuring the investment characteristics of sovereign debt obligations. This type of restructuring involves the deposit with or purchase by an entity, such as a corporation or trust, of specified instruments (such as commercial bank loans) and the issuance by that entity of one or more classes of securities ("Structured Securities") backed by, or representing interests in, the underlying instruments. The cash flow on the underlying instruments may be apportioned among the newly issued Structured Securities to create securities with different investment characteristics, such as varying maturities, payment priorities and interest rate provisions, and the extent of the payments made with respect to Structured Securities is dependent on the extent of the cash flow on the underlying instruments. Because Structured Securities of the type typically involve no credit enhancement, their credit risk generally will be equivalent to that of the underlying instruments. Investments in Structured Securities are generally of a class of Structured Securities that is either subordinated or unsubordinated to the right of payment of another class. Subordinated Structured Securities typically have higher yields and present greater risks than unsubordinated Structured Securities. Structured Securities are typically sold in private placement transactions, and there currently is no active trading market for Structured Securities. Investments in government and government-related and restructured debt instruments are subject to special risks, including the inability or unwillingness to repay principal and interest, requests to reschedule or restructure outstanding debt and requests to extend additional loan amounts.

ILLIQUID SECURITIES

Subject to their investment restrictions, each Fund 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 Fund 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.

INITIAL PUBLIC OFFERINGS ("IPOS")

The Blue Chip Growth Fund, Broad Cap Value Fund, Core Equity Fund, Global Equity Fund, Health Sciences Fund, Income & Growth Fund, International Growth I Fund, Large Cap Core Fund, Mid Cap Strategic Growth Fund, Science & Technology Fund, Small Cap Fund Small Cap Special Values Fund, Small Cap Strategic Growth Fund, VALIC Ultra Fund and Value Fund may invest in IPOs. As such, a portion of each Fund's returns may be attributable to the Fund's investments in IPOs. There is no guarantee that as a Fund's assets grow it will be able to experience significant improvement in performance by investing in IPOs.

A Fund's purchase of shares issued as part of, or a short period after, a company's IPO, exposes it to the risks associated with companies that have little operating history as public companies, as well as to the risks inherent in those sectors of the market where these new issuers operate. The market for IPO issuers has been volatile, and share prices of newly-public companies have fluctuated in significant amounts over short periods of time.

INTERFUND BORROWING AND LENDING PROGRAM

The Series Company has received exemptive relief from the SEC which permits a Fund to participate in an interfund lending program among investment companies advised by VALIC or an affiliate. The interfund lending program allows the participating Funds to borrow money from and loan money to each other for temporary or emergency purposes. The program is subject to a number of conditions designed to ensure fair and equitable treatment of participating funds, including the requirement that no Fund may borrow from the program unless it receives a more favorable interest rate than would be available to any of the participating Funds from a typical bank for comparable transaction. In addition, a Fund may participate in the program only if and to the extent that such participation is consistent with the Fund's investment objectives and policies (for instance, money market funds would normally participate only as lenders and tax exempt funds only as borrowers). Interfund loans and borrowings may extend overnight but could have a maximum duration of seven days. Loans may be called on one business day's notice. A Fund may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed. Any delay in repayment to a lending Fund could result in a lost investment opportunity or additional costs. The program is subject to the oversight and periodic review of the Boards of the participating Funds. To the extent a Fund is actually engaged in borrowing through the interfund lending program, the Fund will comply with its investment policy on borrowing.

LENDING PORTFOLIO SECURITIES

Each Fund may make secured loans of its portfolio securities as shown in the fundamental investment restrictions for purposes of realizing additional income. Securities loans are made to broker-dealers and other financial institutions approved by the Custodian 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

Each Fund, except the Broad Cap Value Fund, Foreign Value Fund, and Global Strategy Fund, may invest in 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. 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. 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.

MORTGAGE-RELATED SECURITIES

All Funds, except the Blue Chip Growth Fund, Foreign Value Fund, the Health Sciences Fund, the Mid Cap Strategic Growth Fund and the Science & Technology Fund may invest in mortgage-related securities described below, except as otherwise indicated. 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, the Capital Conservation Fund, the Government Securities Fund, the Inflation Protected Fund and the Value Fund may also invest in fixed income securities which are secured with collateral consisting of mortgage-related securities (see "Collateralized Mortgage Obligations" below), and in other types of 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 the Government National Mortgage Association, known as "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, 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)

Each Fund, except the Blue Chip Growth Fund, Foreign Value Fund, the Health Sciences Fund, the Mid Cap Strategic Growth Fund, Science & Technology Fund and VALIC Ultra Fund, may invest in 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. 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 "Stripped Mortgage-Backed Securities" below. 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.

Mortgage Dollar Rolls

The Asset Allocation Fund, Broad Cap Value Fund, Capital Conservation Fund, Global Equity Fund, Global Strategy Fund, Government Securities Fund, Inflation Protected Fund, Large Cap Core Fund, Small Cap Aggressive Growth Fund, Small Cap Special Values Fund and Small Cap Strategic Growth 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 GNMA, 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: (i) be

collateralized by the same types of underlying mortgages; (ii) be issued by the same agency and be part of the same program; (iii) have a similar original stated maturity; (iv) have identical net coupon rates; (v) have similar market yields (and therefore price); and (vi) 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.

Stripped Mortgage-Backed Securities (SMBSs)

SMBSs are derivative multi-class mortgage securities. SMBSs 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.

SMBSs 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.

While IOs and POs are generally regarded as being illiquid, such securities may be deemed to be liquid if they can be disposed of promptly in the ordinary course of business at a value reasonably close to that used in the calculation of a Fund's net asset value per share. Only government IOs and POs backed by fixed-rate mortgages and determined to be liquid under established guidelines and standards may be considered liquid securities not subject to a Fund's limitation on investments in illiquid securities.

OPTIONS AND FUTURES CONTRACTS

Options on Securities and Securities Indices

Each Fund, except the Broad Cap Value Fund, Global Strategy Fund and Money Market I Fund, may invest in options and futures. Some Funds may have a limitation on the amount of futures and options which may be permitted. See each Fund Fact Sheet in the Prospectus for additional information. Each Fund, other than the Money Market I 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, the International Government Bond Fund and the Value Fund may also write covered call and put options on foreign currencies that correlate with the Fund's portfolio of foreign securities. The Blue Chip Growth Fund, the Health Sciences Fund, the Science & Technology Fund and the Small Cap Fund may write call and put options that are not covered. 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 Fund, except the Broad Cap Value Fund, Global Strategy Fund and Money Market I Fund, may write options on securities and securities indices. 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(R) 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 Broad Cap Value Fund, Global Strategy Fund and Money Market I 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 Foreign Value Fund, Global Equity Fund, Inflation Protected Fund, International Equities Fund, International Government Bond Fund, Large Cap Core Fund, Large Capital Growth Fund, Mid Cap Strategic Growth Fund, Small Cap Aggressive Growth Fund, Small Cap Special Values Fund, Small Cap Strategic Growth Fund, VALIC Ultra Fund and Value Fund may also 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 a Fund, the Fund 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. The Capital Conservation Fund, Foreign Value Fund, Global Equity Fund, Government Securities Fund, Inflation Protected Fund, International Equities Fund, International Government Bond Fund, Large Cap Core Fund, Large Capital Growth Fund, Mid Cap Strategic Growth Fund, Science & Technology Fund, Small Cap Aggressive Growth Fund, Small Cap Fund, Small Cap Special Values Fund, Small Cap Strategic Growth Fund, VALIC Ultra Fund and the Value 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.

Writing Covered Call and Put Options and Purchasing Call and Put Options

Each Fund, except the Broad Cap Value Fund, Global Strategy Fund and Money Market I 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 and the Science & Technology 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 Foreign Value Fund, Global Equity Fund, Inflation Protected Fund, International Equities Fund, International Government Bond Fund, Large Cap Core Fund, Large Capital Growth Fund, Mid Cap Strategic Growth Fund, Small Cap Aggressive Growth Fund, Small Cap Special Values Fund, Small Cap Strategic Growth Fund and VALIC Ultra 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.

From time to time, the Blue Chip Growth Fund, Health Sciences Fund, Inflation Protected Fund, Large Capital Growth Fund, Mid Cap Strategic Growth Fund, Science & Technology Fund, and the Small Cap Fund will write a call option that is not covered as indicated above but where the Fund will establish and maintain with its Custodian for the term of the option, an account consisting of cash, U.S. government securities, other liquid high-grade debt obligations, or other suitable cover as permitted by the SEC having a value equal to the fluctuating market value of the optioned securities or currencies. While such an option would be "covered" with sufficient collateral to satisfy SEC prohibitions on issuing senior securities, this type of strategy would expose the Fund to the risks of writing uncovered options. If one of these Funds writes an uncovered option as described above, it will bear the risk of having to purchase the security subject to the option at a price higher than the exercise price of the option. As the price of a security could appreciate substantially, the Fund's loss could be significant.

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, except the Broad Cap Value Fund, Global Strategy Fund and Money Market I 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 Foreign Value Fund, Global Equity Fund, Inflation Protected Fund, International Equities Fund, International Government Bond Fund, Large Capital Growth Fund and Mid Cap Strategic Growth 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 Blue Chip Growth Fund, Capital Conservation Fund, Foreign Value Fund, Government Securities Fund, the Health Sciences Fund, the Inflation Protected Fund, the International Equities Fund, International Government Bond Fund, Large Cap Core Fund, Large Capital Growth Fund, Mid Cap Strategic Growth Fund, Science & Technology Fund, Small Cap Aggressive Growth Fund, Small Cap Fund, Small Cap Special Values Fund and Small Cap Strategic Growth 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 the Sub-adviser 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 Broad Cap Value Fund, Global Strategy Fund and Money Market I 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.

The Blue Chip Growth Fund, Core Equity Fund, Foreign Value Fund, Global Equity Fund, Growth & Income Fund, Health Sciences Fund, Large Cap Core Fund, Science & Technology Fund, Small Cap Aggressive Growth Fund, Small Cap Fund, Small Cap Special Values Fund, Small Cap Strategic Growth Fund and VALIC Ultra Fund may also write covered put options on stock index futures contracts.

The Blue Chip Growth Fund, Foreign Value Fund, Global Equity Fund, Health Sciences Fund, Inflation Protected Fund, International Equities Fund, International Government Bond Fund, Large Cap Core Fund, Mid Cap Strategic Growth Fund, Science & Technology Fund Small Cap Aggressive Growth Fund, Small Cap Fund, Small Cap Special Values Fund and VALIC Ultra Fund may utilize currency futures contracts and both listed and unlisted financial futures contracts and options thereon. The Large Capital Growth Fund may utilize currency futures contracts and listed 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. 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"). 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 started trading in the U.S. in December 2001. A public market currently exists for stock index futures contracts based on the S&P 500(R) 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.

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 Foreign Value Fund, Global Equity Fund, Inflation Protected Fund, International Equities Fund, International Government Bond Fund, Large Cap Core Fund, Mid Cap Strategic Growth Fund, Small Cap Aggressive Growth Fund, Small Cap Special Values Fund, Small Cap Strategic Growth Fund and VALIC Ultra 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 15% 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, either as the purchaser or the seller of such contracts, the Fund is required to deposit with its Custodian 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."

Effective February 2006, the Fund will be required to deposit the initial margin and variation margin with the FCM.

A Fund, as an internal operating policy, may not hold financial futures contracts in an amount greater than 33 1/3% 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 Broad Cap Value Fund, Global Strategy Fund and Money Market I 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 certain risks, including the following. 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 SAI. 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 the Sub-adviser'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 the Sub-adviser'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. 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 or CFTC staff interpretive positions or no-action letters or rules adopted by the SEC.

OTHER INVESTMENT COMPANIES

Each Fund, other than the Money Market I Fund, Capital Conservation Fund, and Government Securities Fund, may invest in securities of other investment companies (including HOLDRs and ETFs such as iShares and SPDRs, as described below), up to the maximum extent permissible under the 1940 Act. ETFs 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 of an ETF could result in it being more volatile.

Investments in other investment companies are subject to statutory limitations prescribed by the 1940 Act. These limitations include a prohibition on any Fund acquiring more than 3% of the voting shares of any other investment company, and a prohibition on investing more than 5% of a Fund's total assets in securities of any one investment company or more than 10% of its total assets in securities of all investment companies. A Fund will indirectly bear its proportionate share of any management fees and other expenses paid by such other investment companies. ETFs such as iShares and SPDRs are shares of unaffiliated investment companies which are traded like traditional equity securities on a national securities exchange or the NASDAQ(R) National Market System.

Holding Company Depositary Receipts ("HOLDRs") are securities that represent ownership in the common stock or ADRs of specified companies in a particular industry, sector, or group. HOLDRs involve risks similar to the risks of investing in common stock. Each HOLDR initially owns 20 stocks, but they are unmanaged, and so can become more concentrated due to mergers, or the disparate performance of their holdings. The composition of a HOLDR does not change after issue, except in special cases like corporate mergers, acquisitions or other specified events. Because HOLDRs are not subject to concentration limits, the relative weight of an individual stock may increase substantially, causing the HOLDRs to be less diverse and creating more risk.

iShares are shares of an investment company that invests substantially all of its assets in securities included in specified indices, including the Morgan Stanley Capital International ("MSCI") indices or various countries and regions. iShares are managed by Barclay's Global Investors and are listed on the American Stock Exchange ("AMEX"). The market prices of iShares are expected to fluctuate in accordance with both changes in the net asset

values of their underlying indices and supply and demand of iShares on the AMEX. To date, iShares have traded at relatively modest discounts and premiums to their net asset values. However, iShares have a limited operating history and information is lacking regarding the actual performance and trading liquidity of iShares for extended periods or over complete market cycles. In addition, there is no assurance that the requirements of the AMEX necessary to maintain the listing of iShares will continue to be met or will remain unchanged. In the event substantial market or other disruptions affecting iShares should occur in the future, the liquidity and value of a Fund's shares could also be substantially and adversely affected. If such disruptions were to occur, a Fund could be required to reconsider the use of iShares as part of its investment strategy.

Standard & Poor's Depositary Receipts ("SPDRs") are AMEX-traded securities that represent ownership in the SPDR Trust, a trust established to accumulate and hold a portfolio of common stocks intended to track the price performance and dividend yield of the S&P 500(R). 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, as the price movement of the instrument does not perfectly correlate with the price action of the underlying index. SPDRs are investment companies and are subject to each Fund's limitations on investment company holdings.

REAL ESTATE SECURITIES AND REAL ESTATE INVESTMENT TRUSTS ("REITS")

Each Fund, except the Foreign Value Fund, Large Cap Core Fund and Money Market I 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.

Each Fund, except the Foreign Value Fund, Large Cap Core Fund and Money Market I Fund, may also 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 Sub-advisers pursuant to guidelines and procedures established by the Board of Directors. Unless the Fund participates in a joint repurchase transaction, 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 I Fund, the underlying security must be a U.S. Government security or a security rated in the highest rating category by the requisite NRSROs and must be determined to present minimal credit risk. To the extent a Fund participates in a joint repurchase transaction, the collateral will consist solely of U.S. government obligations. 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 may not 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 Sub-advisers 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 15% of the value of that Fund's total assets (10% in the case of Money Market I Fund).

REVERSE REPURCHASE AGREEMENTS

The Blue Chip Growth Fund, Broad Cap Value Fund, Core Equity Fund, Foreign Value Fund, Global Equity Fund, Global Strategy Fund, Health Sciences Fund, Inflation Protected Fund, Large Cap Core Fund, Large Capital Growth Fund, Mid Cap Strategic Growth Fund, Science & Technology Fund , Small Cap Aggressive Fund, Small Cap Fund, Small Cap Special Values Fund and the Small Cap Strategic Growth 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 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 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.

SHORT SALES

Short sales are effected by selling a security that a Fund does not own. Each Fund, other than the Foreign Value Fund, Money Market I Fund and Small Cap Special Values Fund, may engage in "short sales against the box." This technique involves selling either a security that a Fund owns, or a security equivalent in kind and amount to the security sold short that the Fund has the right to obtain, for delivery at a specified date in the future. A Fund may enter into a short sale against the box to hedge against anticipated declines in the market price of portfolio securities. If the value of the securities sold short increases prior to the scheduled delivery date, a Fund loses the opportunity to participate in the gain.

SWAP AGREEMENTS

The Asset Allocation Fund, Capital Conservation Fund, Government Securities Fund, Inflation Protected Fund, International Government Bond Fund, Large Cap Core Fund, Large Capital Growth Fund, Small Cap Special Values Fund, Small Cap Strategic Values Fund and the Value Fund may enter into interest rate, index and currency exchange rate swap agreements. 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.

The Broad Cap Value Fund, Foreign Value Fund, Global Equity Fund, Global Strategy Fund, Large Cap Core Fund, Small Cap Aggressive Fund, Small Cap Special Values, Small Cap Strategic Growth Fund may invest in equity swaps. An equity swap is a special type of total return swap, where the underlying asset is a stock, a basket of stocks, or a stock index. Compared to actually owning the stock, in this case you do not have to pay anything up front, but you do not have any voting or other rights that stockholders have.

The Asset Allocation Fund, Capital Conservation Fund and Government Securities Fund may invest in credit default swaps. Credit default swaps involve the receipt of floating or fixed rate payments in exchange for assuming potential credit losses of an underlying security. Credit default swaps give one party to a transaction the right to dispose of or acquire an asset (or group of assets), or the right to receive or make a payment from the other party, upon the occurrence of specified credit events.

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 or 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 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.

Whether a Fund's use of swap agreements will be successful in furthering its investment objective of total return will depend on 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 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, FCM, 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 (i) have individually tailored terms, (ii) lack exchange-style offset and the use of a clearing organization or margin system, (iii) are undertaken in conjunction with a line of business, and (iv) are not marketed to the public. When a Fund is invested in this manner, it may not be able to achieve its investment objective.

UNSEASONED ISSUERS

The Global Strategy Fund, Health Sciences Fund, Income & Growth Fund, International Growth I Fund, Science & Technology Fund, Small Cap Fund and VALIC Ultra Fund may invest in unseasoned issuers. Unseasoned issuers are companies that have operated less than three years. The securities of such companies may have limited liquidity, which can result in their being priced higher or lower than might be otherwise be the case. In addition, investments in unseasoned issuers are more speculative and entail greater risk than do investments in companies with an established operating record.

VARIABLE RATE DEMAND NOTES

Each Fund 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. The Money Market I Fund may also 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 the Money Market I Fund, the conditions established by the SEC under which such securities may be considered to have remaining maturities of 397 days or less.

WARRANTS

Each Fund, except the Money Market I Fund and the 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 Fund, except the Money Market I 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 ("Advisory Agreement") dated January 1, 2002, that was last approved by the Board of Directors on July 26, 2005. Under the Advisory Agreement, each Fund pays VALIC an annual fee, payable monthly, based on its average daily net asset value.

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. ("AIG").

Pursuant to the Advisory Agreement, the Series Company retains VALIC to manage 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. As permitted by the Advisory Agreement, VALIC has entered into sub-advisory agreements with various Sub-advisers, which agreements provide that the Sub-adviser will be responsible for the investment and reinvestment of the assets of a Fund, maintaining a trading desk, and placing orders for the purchase and sale of portfolio securities. The Advisory Agreement provides that the Series Company pay all expenses not specifically assumed by VALIC under the Advisory Agreement. Examples of the expenses paid by the Series Company include, but are not limited to, 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. VC I shall allocate the foregoing expenses among the Funds and, to the extent that any of the foregoing expenses are allocated between the Funds and any other Funds or entities, such allocations shall be made pursuant to methods approved by the Board of Directors.

Investment advisory fees paid by the Series Company for the last three fiscal years are shown in the table below.

                                                                 INVESTMENT ADVISORY FEES PAID FOR
                                                                      FISCAL YEAR ENDED MAY 31,
FUND NAME                                                   2005               2004                2003
Asset Allocation Fund                                      $970,558           $886,029            $792,890
Blue Chip Growth Fund                                       361,858            273,640             148,039
Capital Conservation Fund                                   426,719            410,438             398,255
Core Equity Fund                                          4,578,808          4,788,943           4,334,282
Government Securities Fund                                  703,046            836,372             900,370
Growth & Income Fund                                      1,320,789          1,403,452           1,310,594
Health Sciences Fund                                      1,507,528          1,139,275             558,019
Income & Growth Fund                                      1,792,038          1,712,444           1,459,730
Inflation Protected Fund*                                    14,643                N/A                 N/A
International Equities Fund                               1,190,099            451,688             289,208
International Government Bond Fund                          744,522            745,240             624,463
International Growth I Fund                               3,677,792          3,812,799           3,474,142
Large Cap Growth Fund                                     3,453,615          4,282,624           3,900,263
Large Capital Growth Fund*                                   32,708                N/A                 N/A
Mid Cap Index Fund                                        4,793,800          3,906,884           2,905,924
Mid Cap Strategic Growth Fund*                               30,588                N/A                 N/A
Money Market I Fund                                       2,168,600          2,402,961           2,958,515
Nasdaq-100(R) Index Fund                                    365,334            333,005             121,446
Science & Technology Fund                                11,316,300         12,439,525           8,913,172
Small Cap Fund                                            5,507,596          5,475,614           4,553,763

                                                                 INVESTMENT ADVISORY FEES PAID FOR
                                                                      FISCAL YEAR ENDED MAY 31,
FUND NAME                                                   2005               2004                2003
Small Cap Index Fund                                      1,966,633          1,359,431             753,478
Social Awareness Fund                                     2,037,289          1,918,682           1,646,755
Stock Index Fund                                         11,384,135         10,618,015           8,916,679
Value Fund                                                  140,188            102,208              75,358

* Commenced operation December 20, 2004.

For the fiscal years ended May 31, 2005, 2004 and 2003, VALIC reimbursed the following amounts to the Funds pursuant to contractual expense caps:

FUND NAME                                               AMOUNTS REIMBURSED BY VALIC FOR THE
                                                                 YEAR ENDED MAY 31,
                                                 2005                  2004               2003
Asset Allocation Fund                               -                     -                  -
Blue Chip Growth Fund                          $9,180                     -                  -
Capital Conservation Fund                           -                     -                  -
Core Equity Fund                              467,717              $578,600           $658,912
Government Securities Fund                          -                     -                  -
Growth & Income Fund                           96,514                78,657            109,845
Health Sciences Fund                                -                     -                  -
Income & Growth Fund                          191,233               173,800            188,930
Inflation Protected Fund*                      47,476                     -                  -
International Equities Fund                         -                     -                  -
International Government Bond Fund                  -                     -                  -
International Growth I Fund                 1,002,007               842,022          1,038,269
Large Cap Growth Fund                          90,553               107,493            166,331
Large Capital Growth Fund*                     81,913                     -                  -
Mid Cap Index Fund                                  -                     -                  -
Mid Cap Strategic Growth Fund*                 79,834                     -                  -
Money Market I Fund                           146,265               175,304            269,584
Nasdaq-100(R) Index Fund                              -                     -                  -
Science & Technology Fund                           -                75,743            456,761
Small Cap Fund                                611,317               553,653            571,973
Small Cap Index Fund                                -                     -                  -
Social Awareness Fund                               -                     -                  -
Stock Index Fund                                    -                     -                  -
Value Fund                                     20,058                     -                  -

* Commenced operations December 20, 2004.

VALIC has contractually agreed to cap certain Fund expenses by waiving a portion of its advisory fee or reimbursing certain expenses, as shown below. Fund expenses shall be limited for the Funds shown below (expressed as a percentage of average annual net assets) through September 30, 2006.

                                         MAXIMUM FUND          EXPENSE BEFORE
              FUND                         EXPENSE               LIMITATION
                                                            (AS OF MAY 31, 2005)
Blue Chip Growth Fund                       1.10%                   1.10%
Core Equity Fund                            0.85%                   0.93%
Growth & Income Fund                        0.85%                   0.90%
Income and Growth Fund                      0.83%                   0.91%

Inflation Protected Fund                    0.65%                   2.27%
International Growth I Fund                 1.01%                   1.29%
Large Cap Growth Fund                       0.96%*                  1.00%
Large Capital Growth Fund                   0.80%                   2.73%
Mid Cap Strategic Growth Fund               0.85%                   2.68%
Money Market I Fund                         0.56%*                  0.61%
Small Cap Fund                              0.95%                   1.05%
Value Fund                                  1.30%                   1.39%

* Effective October 1, 2005, the new rate for the Large Cap Growth Fund and the Money Market I Fund are 0.90% and 0.55%, respectively.

The Advisory Agreement requires 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 Advisory Agreement requires 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.

APPROVAL OF ADVISORY AGREEMENTS

The Board, including the Directors that are not interested persons of the Series Company, as defined in the 1940 Act (the "Independent Directors"), approved with respect to each Fund (except for the New Funds, as defined below, and the Inflation Protected Fund, the Large Capital Growth Fund and the Mid Cap Strategic Growth Fund), the Investment Advisory Agreement between VALIC and the Series Company and the Investment Sub-Advisory Agreements between VALIC and each of the following sub-advisers at a meeting of the Board held on July 25-26, 2005: AIGGIC, AIM, American Century, American Century Global, Franklin Portfolio, MFS, Oppenheimer, SAAMCo, T. Rowe Price, Wellington Management and WMA. Also at the July 2005 meeting, the Board, and a majority of the Independent Directors, approved a new Investment Sub-Advisory Agreement between VALIC and RCM Capital Management LLC ("RCM") that would become effective on or about September 19, 2005. The Investment Advisory Agreement and Investment Sub-advisory Agreements are collectively referred to as the "Advisory Agreements."

In addition, at a meeting on June 16, 2005, the Board, including a majority of the Independent Directors, approved an amendment to the Investment Advisory Agreement with respect to the "New Funds" (Broad Cap Value Fund, Foreign Value Fund, Global Equity Fund, Global Strategy Fund, Large Cap Core Fund, Small Cap Aggressive Growth Fund, Small Cap Special Values Fund, Small Cap Strategic Growth Fund and VALIC Ultra Fund) and Investment Sub-Advisory Agreements with respect to those Funds between VALIC and each of the following sub-advisers: American Century (with respect to the VALIC Ultra Fund), BHMS (with respect to the Broad Cap Value Fund), CSAM (with respect to the Small Cap Aggressive Fund), Evergreen (with respect to the Large Cap Core, Small Cap Special Values and Small Cap Strategic Growth Funds), Franklin Advisers (with respect to the Global Strategy Fund), Putnam (with respect to the Global Equity and Small Cap Special Values Funds), Templeton Global (with respect to the Foreign Value Fund) and Templeton Investment (with respect to the Global Strategy Fund). These Advisory Agreements with respect to these nine Funds were approved for an initial period of two years.

At a meeting held on April 25-26, 2005, the Board, including a majority of the Independent Directors, approved an amendment to the Investment Sub-Advisory Agreement with AIM and approved an Investment Sub-Advisory Agreement with MFS, both with respect to the International Growth I Fund. The Investment Sub-Advisory Agreements with respect to the Fund were approved for an initial period of two years. The Board noted that AIM and MFS would each manage 25% of the Fund's assets and American Century would continue to manage the remaining 50% of the Fund's assets. AIM and MFS assumed sub-advisory duties effective June 19, 2005.

In addition, at a regular meeting held on October 18-19, 2004, the Board, including a majority of the Independent Directors, approved an amendment to the Investment Advisory Agreement with respect to certain new VC I funds (the Inflation Protected Fund, Large Capital Growth Fund and Mid Cap Strategic Growth Fund), and Investment Sub-Advisory Agreements (or amendments thereto) with respect to such Funds, between VALIC and each of the following sub-advisers:
AIGGIC (with respect to the Inflation Protected Fund), AIM (with respect to the Large

Capital Growth Fund), Brazos (with respect to the Mid Cap Strategic Growth Fund), SAAMCo (with respect to the Large Capital Growth Fund) and Van Kampen (with respect to the Mid Cap Strategic Growth Fund). The Advisory Agreements with respect to these three Funds were approved for an initial period of two years.

AIGGIC, AIM, American Century, American Century Global, BHMS, Brazos, CSAM, Evergreen, Franklin Advisers, Franklin Portfolio, MFS, Oppenheimer, Putnam, RCM, SAAMCo, T. Rowe Price, Templeton Global, Templeton Investment, Van Kampen, Wellington Management and WMA are collectively referred to as the "Sub-advisers" and each a "Sub-adviser."

In connection with the approval of Advisory Agreements described above, the Board received materials related to certain factors used in its consideration whether to renew or approve such Advisory Agreements. Those factors included: (1) the nature, extent and quality of services provided or to be provided by (as the case may be) by VALIC and the Sub-advisers; (2) the advisory fee and sub-advisory-fees charged in connection with VALIC's and the Sub-advisers' management of the Funds, compared to advisory fee rates and sub-advisory fee rates of a group of funds with similar investment objectives (respectively, the "Expense Group/Universe" and the "Sub-Advisor Expense Group/Universe"), as selected by an independent third-party provider of investment company data; (3) the investment performance of the Funds, if any, compared to performance of comparable funds as selected by an independent third-party provider of investment company data ("Performance Group/Universe") and against benchmarks and/or indices, and with respect to the New Funds, the International Growth I Fund with respect to AIM and MFS, the Large Capital Growth Fund and the Mid Cap Strategic Growth Fund, the performance of comparable funds or accounts managed by the relevant Sub-adviser; (4) the costs of services and the benefits potentially derived by VALIC and the Sub-advisers; (5) the terms of the Advisory Agreements; (6) whether the Funds will benefit from possible economies of scale; and (7) information regarding VALIC and each of the Sub-advisers' compliance and regulatory history. The Directors also took into account performance, fee and expense information regarding each Fund provided to them on a quarterly basis. The Independent Directors were separately represented by counsel that is independent of VALIC in connection with their consideration of approval of the Advisory Agreements. The matters discussed below were also considered separately by the Independent Directors in executive sessions during which such independent counsel provided guidance to the Independent Directors.

The Expense Group and the Performance Group each consists of a Fund and a select group of funds that are chosen to be comparable to the Fund based upon certain factors, including fund type (in this case, funds underlying variable insurance products), comparability of investment objectives and asset category (for example, large cap value, small cap growth, mid cap core), sales load type, asset size and expense components. In many cases, the other funds that comprise a Fund's Expense Group and Performance Group may differ. The Expense Universe and the Performance Universe each generally consists of a Fund, the funds in its Expense Group or Performance Group, respectively, and all other funds in the asset category or categories included in the Expense Group or Performance Group regardless of asset size or primary channel of distribution. A Fund's Subadvisor Expense Group and Subadvisor Expense Universe are comprised of the Fund and certain other comparable funds in its asset category or categories with subadviser agreements. The funds that comprise a Fund's Expense Group/Universe, Performance Group/Universe and Sub-Advisor Group/Universe are selected by an independent third-party provider of investment company data.

Nature, Extent and Quality of Services. The Board considered the nature, quality and extent of services to be provided to the Funds by VALIC and the Sub-advisers. The Board reviewed information provided by VALIC relating to its operations and personnel. The Board also took into account its familiarity with VALIC's management through board meetings, discussions and reports during the preceding year. The Board considered that VALIC is responsible for the management of the day-to-day operations of VC I, including but not limited to, general supervision of and coordination of the services provided by the Sub-advisers, and is also responsible for monitoring and reviewing the activities of the Sub-advisers and other third-party service providers and makes changes/replacements when deemed appropriate. The Board also noted that VALIC personnel meet on a periodic basis to discuss the performance of the Funds, as well as the positioning of the insurance products, employer-sponsored retirement plans and the Funds generally vis-a-vis competitors. In addition, it was considered that VALIC works to developing marketing strategies to promote an identity for the Funds separate and apart from the insurance products and the employer-sponsored retirement plans. The Board also considered VALIC's financial condition and whether it had the financial wherewithal to provide the services under the Investment Advisory Agreement with respect to each Fund.

With respect to the services provided by the Sub-advisers, the Board considered information provided to them regarding the services provided by the Sub-adviser, including information presented throughout the previous year, if applicable. The Board considered that the Sub-advisers make investment decisions for the Funds according to

each Fund's investment objective and restrictions. It was also noted that each Sub-adviser (i) determines the securities to be purchased or sold on behalf of the Funds it manages as may be necessary in connection therewith; (ii) provides VALIC with records concerning its activities, which VALIC or VC I are required to maintain; and (iii) renders regular reports to VALIC and to officers and Directors of VC I concerning its discharge of the foregoing responsibilities. The Board reviewed the qualifications, background and responsibilities of each Sub-adviser's investment and compliance personnel who would be responsible for providing investment management services to the Funds. The Directors also took into account the financial condition of each Sub-adviser. The Directors also noted each Sub-adviser's brokerage practices.

The Board considered VALIC's and each Sub-adviser's history and investment experience. With respect to RCM and in addition to the considerations described above, the Board noted that RCM would share responsibility for providing investment management services to the Science & Technology Fund with T. Rowe Price. The Board noted that a contributing factor for the addition of RCM to the Science and Technology Fund was that the addition of RCM could potentially have had a higher return with lower risk based on quantitative models presented by management. The Board noted that a contributing factor for the addition of AIM and MFS as sub-advisers to the International Growth I Fund was that the addition of the sub-advisers could potentially improve performance, maintain style consistency and control portfolio risk. Management presented statistical analyses that showed that the addition of AIM and MFS could potentially reduce portfolio risk while increasing portfolio returns and represented that this was primarily due to AIM's and MFS's differing investment styles.

The Board concluded that it was satisfied with the nature, quality and extent of the services to be provided by VALIC and each Sub-adviser under the Advisory Agreements.

Fees and Expenses. The Board received and reviewed information regarding each Fund's total expenses, advisory and sub-advisory fees, and other expenses compared against the expenses and fees of the funds in its Expense Group, Expense Universe and Subadvisor Expense Group and, in some cases as noted below, the Subadviser Expense Universe. It was noted that VALIC negotiates the sub-advisory fees with each of the unaffiliated Sub-advisers at arms-length. The Board also considered that the sub-advisory fees are paid by VALIC out of its advisory fee and not by the Funds, and that sub-advisory fees may vary widely within the Subadvisor Expense Group or Subadvisor Expense Universe for various reasons, including market pricing demands, existing relationships, experience and success, and individual client needs.

The Board noted that management proposed the institution of breakpoints or the addition of additional breakpoints to twelve of the Funds' advisory fee schedules. In addition, the Board noted that management proposed lowering the expense caps of the Large Cap Growth Fund and the Money Market I Fund. The total expense information, advisory fee information, and sub-advisory fee information considered by the Board, among other fee and expense data, is summarized below.

- Asset Allocation Fund (subadvised by AIGGIC). The Board considered that the Fund's total expenses and actual advisory fees were below the median of its Expense Group and Expense Universe. In addition, the Board noted that the Fund's actual sub-advisory fee was at the median of its Subadvisor Expense Group.

- Blue Chip Growth Fund (subadvised by T. Rowe Price). The Board considered that although the Fund's total expenses and actual advisory fees were above the median of its Expense Group and Expense Universe, the Fund had only $48.5 million in assets as of April 30, 2005, and if the Fund grows, its total expenses would potentially continue to decrease. In addition, the Board noted that the Fund's actual sub-advisory fees were below the median of its Subadvisor Expense Group.

- Broad Cap Value Fund (subadvised by BHMS). The Board considered that the Fund's anticipated total expenses (taking into account the proposed expense limitation) were below the median of its Expense Group and above the median of its Expense Universe. In addition, the Board noted that the Fund's proposed contractual advisory fee was below the median of its Expense Group. The Board also noted that the Fund's proposed sub-advisory fees were above the average of its Subadvisor Expense Group at asset levels below approximately $150 million and below such average for higher asset levels. The Board also noted VALIC's current undertakings to maintain expense limitations for the Fund.

- Capital Conservation Fund (subadvised by AIGGIC ). The Board considered that the Fund's total expenses were below the median of its Expense Group and Expense Universe and that the Fund's actual advisory

fees were above the median of the Expense Group and Expense Universe. The Board noted that the Fund's sub-advisory fees were above the median of the Subadvisor Expense Group. The Board also noted that, at the July 2005 meeting, VALIC proposed and the Board approved the institution of breakpoints to the Fund's contractual advisory fee.

- Core Equity Fund (subadvised by Wellington and WMA). The Board considered that the Fund's total expenses (net of applicable expense waivers/reimbursements) were above the median of its Expense Group and below the median of its Expense Universe and that the Fund's actual advisory fees were above the median of its Expense Group and Expense Universe. The Board noted that the Fund's sub-advisory fees were below the median of its Subadvisor Expense Group and Subadvisor Expense Universe. The Board also noted that, at the July 2005 meeting, VALIC proposed and the Board approved the institution of breakpoints to the Fund's contractual advisory fee. The Board also noted VALIC's current undertakings to maintain expense limitations for the Fund.

- Foreign Value Fund (subadvised by Templeton Global). The Board considered that the Fund's anticipated total expenses (taking into account the proposed expense limitation) were above the median of its Expense Group and below the median of its Expense Universe. In addition, the Board noted that the Fund's contractual advisory fee was below the median of its Expense Group. The Board also noted that the Fund's sub-advisory fees were slightly above the average of its Subadvisor Expense Group at asset levels below approximately $500 million and equal to such average for higher asset levels. The Board also noted VALIC's current undertakings to maintain expense limitations for the Fund.

- Global Equity Fund (subadvised by Putnam). The Board considered that the Fund's anticipated total expenses (taking into account the proposed expense limitation) were above the median of its Expense Group and Expense Universe. In addition, the Board noted that the Fund's proposed contractual advisory fee was below the median of its Expense Group. It was also noted that the Fund's proposed sub-advisory fees were at or slightly above the average of its Subadvisor Expense Group for all asset levels. The Board also noted VALIC's current undertakings to maintain expense limitations for the Fund.

- Global Strategy Fund (subadvised by Franklin Advisers and Templeton Investment). The Board considered that the Fund's anticipated total expenses (taking into account the proposed expense limitation) were below the median of its Expense Group and Expense Universe In addition, the Board noted that the Fund's proposed contractual advisory fees were below the median of its Expense Group. The Board also noted that the Fund's proposed sub-advisory fee was below the average for its Subadvisor Expense Group at asset levels up to approximately $1.2 billion, but rises slightly above the average of its Expense Group at higher asset levels. The Board also noted VALIC's current undertakings to maintain expense limitations for the Fund.

- Government Securities Fund (subadvised by AIGGIC ). The Board considered that the Fund's total expenses were above the median of its Expense Group and below the median of its Expense Universe and that the Fund's actual advisory fees were below the median of its Expense Group and Expense Universe. The Board noted that the Fund's sub-advisory fees were above the median of its Subadvisor Expense Group, noting the relatively small number of funds in the Subadvisor Expense Group. The Board also noted VALIC's current undertakings to maintain expense limitations for the Fund. The Board also considered that, at the July 2005 meeting, VALIC proposed and the Board approved the institution of breakpoints to the Fund's contractual advisory fee.

- Growth & Income Fund (subadvised by SAAMCo). The Board considered that the Fund's total expenses (net of applicable expense waivers/reimbursements) were at the median of its Expense Group and below the median of its Expense Universe and that the Fund's actual advisory fees were below the median of its Expense Group and above the median of its Expense Universe. The Board noted that the Fund's sub-advisory fees were below the median of its Subadvisor Expense Group and Subadvisor Expense Universe. The Board also noted VALIC's current undertakings to maintain expense limitations for the Fund.

- Health Sciences Fund (subadvised by T. Rowe Price). The Board considered that the Fund's total expenses were above the median of its Expense Group and below the median of its Expense Universe and that the Fund's actual advisory fees were above the median of its Expense Group and Expense Universe. With respect to sub-advisory fees, it was reported that there were too few comparable funds for the third party provider of investment management information to compose a Subadvisor Expense Group sufficient to provide meaningful

comparisons. The Board also noted that, at the July 2005 meeting, VALIC proposed and the Board approved the institution of breakpoints to the Fund's contractual advisory fee.

- Income & Growth Fund (subadvised by American Century). The Board considered that the Fund's total expenses (net of applicable expense waivers/reimbursements) were at the median of its Expense Group and below the median of its Expense Universe and that the Fund's actual advisory fees were above the median of its Expense Group and Expense Universe. The Board noted that the Fund's sub-advisory fees were below the median of its Subadvisor Expense Group and Subadvisor Expense Universe. The Board also noted VALIC's current undertakings to maintain expense limitations for the Fund. The Board also considered that, at the July 2005 meeting, VALIC proposed and the Board approved the institution of breakpoints to the Fund's contractual advisory fee.

- Inflation Protected Fund (subadvised by AIGGIC). The Board considered that the Fund's proposed advisory fees were at the median of its Expense Group, noting the relatively small number of funds in the Expense Group as it was reported that there were few comparable funds for the third party provider of investment management information to include. Management explained the Fund's estimated total expenses and the Board noted that the Fund's total expenses would be capped and that VALIC would waive or reimburse Fund expenses above the expense cap.

- International Equities Fund (subadvised by AIGGIC). The Board considered that the Fund's total expenses were below the median of its Expense Universe and slightly above the median of its Expense Group and that the Fund's actual advisory fees were above the median of its Expense Group and Expense Universe. The Board noted the relatively small number of funds in the Expense Group as it was reported that there were few comparable funds for the third party provider of investment management information to include in the peer group. The Board noted that the Fund's sub-advisory fees were below the median of its Subadvisor Expense Group and Subadvisor Expense Universe.

- International Government Bond Fund (subadvised by AIGGIC). The Board considered that the Fund's total expenses and actual advisory fees were below the median of its Expense Group and its Expense Universe. The Board also noted that, at the July 2005 meeting, VALIC proposed and the Board approved the institution of breakpoints to the Fund's contractual advisory fee. In addition, it was noted that the Fund's sub-advisory fees were below the median of its Subadvisor Expense Group.

- International Growth I Fund (subadvised by American Century Global, AIM and MFS). The Board considered that the Fund's total expenses (net of applicable expense waivers/reimbursements) were slightly above the median of its Expense Group and below the median of its Expense Universe and that the Fund's actual advisory fees were above the median of its Expense Group and Expense Universe. The Board noted that the Fund's sub-advisory fees were above the median of its Subadvisor Expense Group The Board also noted VALIC's current undertakings to maintain expense limitations for the Fund. The Board also considered that, at the July 2005 meeting, VALIC proposed and the Board approved the institution of breakpoints to the Fund's contractual management fee.

At the April 2005 meeting, the Board noted that the sub-advisory fees of AIM and MFS were below American Century's sub-advisory fee rate but were slightly above the median for the Fund's Subadvisor Expense Group. As a result of the addition of AIM and MFS, the Board noted that the aggregate sub-advisory fee rate payable by VALIC would decrease.

- Large Cap Core Fund (subadvised by Evergreen). The Board considered that the Fund's anticipated total expenses (taking into account the proposed expense limitation) were at the median of its Expense Group and below the median of its Expense Universe and that the Fund's proposed contractual advisory fees were below the median of its Expense Group. The Board noted that the Fund's sub-advisory fees were below the average for its Subadvisor Expense Group at asset levels over $125 million. The Board also noted VALIC's current undertakings to maintain expense limitations for the Fund.

- Large Cap Growth Fund (subadvised by SAAMCo). The Board considered that the Fund's total expenses (net of applicable expense waivers/reimbursements) and actual advisory fees were above the median of its Expense Group and Expense Universe. The Board considered that the Board had approved the lowering of the Fund's expense cap and its advisory fee at its July 2004 meeting, and that the full benefit of this adjustment was not reflected in the comparative fee information. The Board also considered that, at the July 2005 meeting,

VALIC proposed and the Board approved the reduction of the Fund's contractual advisory fee by 0.10% and lowering the expense cap on total expenses from 0.96% to 0.80%, effective October 1, 2005. In addition, the Board noted that the Fund's sub-advisory fees were below the median of its Subadvisor Expense Group and Subadvisor Expense Universe.

- Large Capital Growth Fund (subadvised by AIM & SAAMCo). At the October 2004 meeting, the Board considered that the Fund's contractual advisory fees and sub-advisory fees were below the median of its Expense Group. Management discussed the Fund's estimated total expenses and the Board noted that the Fund's total expenses would be capped and that VALIC would waive or reimburse Fund expenses above the Fund's expense cap.

- Mid Cap Index Fund (subadvised by AIGGIC). The Board considered that the Fund's total expenses and actual advisory fees were below the median of its Expense Group and Expense Universe. The Board also noted that the Fund's sub-advisory fees were below the median of its Subadvisor Expense Group. The Board also noted that, at the July 2005 meeting, VALIC proposed and the Board approved the institution of additional breakpoints to the Fund's contractual advisory fee.

- Mid Cap Strategic Growth Fund (subadvised by Brazos & Van Kampen). At the October 2004 meeting, the Board considered that the Fund's contractual management fees and sub-advisory fees were below the median of its Expense Group. Management discussed the Fund's estimated total expenses and the Board noted that the Fund's total expenses would be capped and that VALIC would waive or reimburse Fund expenses above the Fund's expense cap.

- Money Market I Fund (subadvised by SAAMCo). The Board considered that the Fund's total expenses (net of applicable expense waivers/reimbursements) and actual advisory fees were above the median of its Expense Group and its Expense Universe. The Board also noted that the Fund's sub-advisory fees were above the median of its Subadvisor Expense Group. The Board took into account its approval at the July 2005 meeting of the reduction of the Fund's cap on total expenses from 0.60% to 0.55%, effective October 1, 2005. The Board also considered that, at the July 2005 meeting, VALIC proposed and the Board approved the reduction of the Fund's contractual management fee from 0.50% to 0.40%.

- Nasdaq-100 Index Fund (subadvised by AIGGIC). The Board considered that the Fund's total expenses and actual advisory fees were above the median of its Expense Group and Expense Universe. The Board considered management's discussion of the appropriateness of the peer group chosen for the Fund. The Board noted that the Fund's sub-advisory fees were below the median of its Subadvisor Expense Group and Subadvisor Expense Universe.

- Science & Technology Fund (subadvised by T. Rowe Price and RCM). The Board considered that the Fund's total expenses were above the median of its Expense Group and below the median of its Expense Universe and that the Fund's actual advisory fees were above the median of its Expense Group and Expense Universe. The Board noted that the Fund's current sub-advisory fees were below the median of its Subadvisor Expense Group. The Board noted that, at the July 2005 meeting, VALIC proposed and the Board approved the institution of breakpoints to the Fund's contractual management fee.

The Board noted that VALIC also proposed that RCM initially manage $250 million of the Fund's assets, with T. Rowe Price managing the remaining portion of the Fund's assets. As a result of the addition of RCM, the aggregate sub-advisory fee rate payable by VALIC would slightly increase and VALIC will retain a smaller percentage of its advisory fee.

- Small Cap Aggressive Fund (subadvised by CSAM). The Board considered that the Fund's anticipated total expenses (taking into account the proposed expense limitation) were below the median of its Expense Group and Expense Universe. The Board considered that the Fund's proposed contractual advisory fees were slightly below the median of its Expense Group. The Board noted that the Fund's proposed sub-advisory fees were slightly above the average of its Subadvisor Expense Group at all asset levels. The Board also noted VALIC's current undertakings to maintain expense limitations for the Fund.

- Small Cap Fund (subadvised by American Century, Franklin Portfolio and T. Rowe Price). The Board considered that the Fund's total expenses (net of applicable expense waivers/reimbursements) and actual advisory fees were above the median of its Expense Group and Expense Universe. The Board noted that the

Fund's sub-advisory fees were above the median of its Subadvisor Expense Group and Subadvisor Expense Universe. The Board also noted that, at the July 2005 meeting, VALIC proposed and the Board approved the institution of breakpoints to the Fund's contractual management fee. The Board also noted VALIC's current undertakings to maintain expense limitations for the Fund.

- Small Cap Index Fund (subadvised by AIGGIC). The Board considered that the Fund's total expenses were at the median of its Expense Group and below the median of its Expense Universe and that the actual advisory fees were at the median of its Expense Group and Expense Universe. The Board noted the relatively small number of funds in the Expense Group as it was reported that there were few comparable funds for the third party provider of investment management information to include in the peer group. The Board also noted that, at the July 2005 meeting, VALIC proposed and the Board approved the institution of additional breakpoints to the Fund's contractual advisory fee. In addition, the Board noted that the Fund's sub-advisory fees were below the median of its Subadvisor Expense Group and Subadvisor Expense Universe.

- Small Cap Special Values Fund (subadvised by Evergreen and Putnam). The Board considered that the Fund's anticipated total expenses (taking into account the proposed expense limitation) were below the median of its Expense Group and Expense Universe. The Board also noted that the proposed contractual advisory fees were below the median of its Expense Group. In addition, it was noted that the Fund's proposed sub-advisory fees were above the average of its Subadvisor Expense Group at all asset levels. The Board also noted VALIC's current undertakings to maintain expense limitations for the Fund.

- Small Cap Strategic Growth Fund (subadvised by Evergreen). The Board considered that the Fund's total expenses (taking into account the proposed expense limitation) were slightly above the median of its Expense Group and but below the median of its Expense Universe. In addition, it was noted that the Fund's contractual advisory fees were at the median of its Expense Group. It was also noted that the Fund's sub-advisory fees were slightly above the average of its Subadvisor Expense Group at all asset levels. The Board also noted VALIC's current undertakings to maintain expense limitations for the Fund.

- Social Awareness Fund (subadvised by AIGGIC). The Board considered that the Fund's total expenses and actual advisory fees were below the median of its Expense Group and Expense Universe. The Board also noted that the Fund's sub-advisory fees were below the median of its Subadvisor Expense Group and Subadvisor Expense Universe.

- Stock Index Fund (subadvised by AIGGIC). The Board considered that the Fund's total expenses were above the median of its Expense Group and below the median of its Expense Universe and that the actual advisory fees were below the median of its Expense Group and Expense Universe. The Board also noted that, at the July 2005 meeting, VALIC proposed and the Board approved the institution of additional breakpoints to the Fund's contractual advisory fee. In addition, the Board noted that the Fund's sub-advisory fees were below the median of its Expense Group.

- VALIC Ultra Fund (subadvised by American Century). The Board considered that the Fund's total expenses (taking into account the proposed expense limitation) were above the median of its Expense Group and Expense Universe. In addition, the Board noted that the Fund's proposed contractual advisory fees were above the median of its Expense Group. It was also noted that the Fund's sub-advisory fees were above the average of its Subadvisor Expense Group at all asset levels. The Board also noted VALIC's current undertakings to maintain expense limitations for the Fund.

- Value Fund (subadvised by Oppenheimer). The Board considered that, although the Fund's total expenses and actual advisory fees were above the median of its Expense Group and Expense Universe, the Fund had only $22.9 million in assets and if the Fund grows, total expenses could potentially continue to decrease. The Board also noted that, at the July 2005 meeting, VALIC proposed and the Board approved the institution of breakpoints to the Fund's contractual advisory fee. The Board also noted that the Fund's proposed sub-advisory fees were above the median of its Subadvisor Expense Group and Subadvisor Expense Universe.

The Directors concluded that the advisory fee and sub-advisory fee for each Fund are fair and reasonable in light of the usual and customary charges made for services of the same nature and quality and the other factors considered.

Investment Performance. With respect to the Funds for which Advisory Agreements were approved at the July 2005 Board meeting, the Board received and reviewed information prepared by management and by a third party

provider of investment company information regarding the Funds' investment performance compared against its benchmark and other funds in its Performance Group and Performance Universe. All information reviewed by the Board at its July 2005 meeting related to Performance Group, Performance Universe and its Lipper Index are as of the period ended April 30, 2005, while all information prepared by management (including benchmark related information) is as of the period ended June 30, 2005. With respect to the New Funds, the International I Growth Fund with respect to AIM and MFS, the Large Capital Growth Fund and the Mid Cap Strategic Growth Fund, the Board considered the performance of comparable funds or accounts managed by the relevant Sub-adviser. A summary of certain of the information that the Board considered is as follows:

- Asset Allocation Fund (subadvised by AIGGIC). The Board considered that the Fund's performance exceeded the Lipper Flexible Portfolio Fund Index and the median of its Performance Universe for the three-, five- and ten-year periods, but trailed such index and its Performance Universe for the one-year period. In addition, it was noted that the Fund slightly trailed the median of its Performance Group for the one-, five- and ten-year periods and outperformed the Group for the three-year period. Furthermore, the Board noted that the Fund outperformed its blended index for the one-, three- and five-year periods but slightly trailed such index for the ten-year period. The blended index is comprised of the S&P 500(R) Index (55%), the Lehman Brothers Aggregate Bond Index (35%) and the New York City 30 Day Certificate of Deposit Primary Offering Rate ("30-Day CD Rate")(10%). The Directors concluded that the Fund's performance has been satisfactory.

- Blue Chip Growth Fund (subadvised by T. Rowe Price). The Board considered that the Fund's performance exceeded the Lipper Large Cap Growth Index and the median of its Performance Universe for the one- and three-year periods. It was also noted that the Fund's performance exceeded the median of its Performance Group for three-year period, but slightly trailed such median for the one-year period. In addition, the Board noted that the Fund outperformed its benchmark, the S&P(R) 500 Index, for the one- and three-year periods. The Directors concluded that the Fund's performance has been satisfactory.

- Broad Cap Value Fund (subadvised by BHMS). As the Fund had no performance history as of June 2005, the Board considered the performance of a composite of portfolios managed by BHMS that have similar investment objectives and investment strategies as the Fund. With respect to such composite, BHMS reported that its composite outperformed the S&P 500(R) Index and the Russell 1000 Value Index for the one-, three-, five- and ten-year periods.

- Capital Conservation (subadvised by AIGGIC ). The Board considered that the Fund's performance slightly trailed the Lipper A Rated Bond Fund Index, the median of its Performance Group and the median of its Performance Universe for the one-. three, five- and ten-year periods. In addition, the Board noted that the Fund slightly trailed its benchmark, the Lehman Brothers Aggregate Bond Index, for the same periods. The Directors noted management's discussion of the Fund's performance and its recent improvement and concluded that the Fund's underperformance is being addressed.

- Core Equity Fund (subadvised by Wellington and WMA). The Board considered that the Fund's performance exceeded the Lipper Large Cap Core Index for the one- and three-year periods, but trailed such index for the five- and ten-year periods. It was also noted that the Fund's performance exceeded the median of its Performance Universe for the three-year period but trailed the median for the one-, five- and ten-year periods. In addition, the Board noted that the Fund's performance exceeded the median of its Performance Group for the three-year period and trailed the median for the one-, five- and ten-year periods. Finally, the Board noted that the Fund's performance trailed its benchmark, the S&P 500(R) Index for the one-, three-, five- and ten-year periods. The Directors also noted the Fund's more recent short-term performance. The Directors noted management's discussion of the Fund's performance and concluded that the Fund's performance has been satisfactory in light of all factors considered.

- Foreign Value Fund (subadvised by Templeton Global). As the Fund had no performance history as of June 2005, the Board considered the performance of the Templeton Foreign Fund, which has a similar investment objective and investment strategies as the Fund. Templeton Global reported that its fund had outperformed the Morgan Stanley Capital International ("MSCI") Europe, Australasia and the Far East Index ("EAFE Index") and the MSCI All Country World ex. U.S. Index over the longer term for the five- and ten-year periods but trailed those indices for the one- and three-year periods, noting the effect of the recent market environment on the fund's performance.

- Global Equity Fund (subadvised by Putnam). As the Fund had no performance history as of June 2005, the Board considered the performance of the Putnam Global Equity Fund, which has a similar investment objective and investment strategies to the Fund. Putnam reported that its fund had underperformed the MSCI World Index for the one-, three- and five-year periods, but outperformed the index for the ten-year period. Putnam also reported that its fund had outperformed the average of the Lipper Global Large-Cap Core Funds for the one-, three- and ten-year periods, but trailed the index for the five-year period. The Directors noted Putnam's discussion of its long-term investment philosophy.

- Global Strategy Fund (subadvised by Franklin Advisers and Templeton Investment). As the Fund had no performance history as of June 2005, the Board considered the performance of the Templeton Global Asset Allocation Fund, which has a similar investment objective and investment strategies as the Fund. Franklin Advisers and Templeton Investment reported that its fund had outperformed the J.P. Morgan Global Government Bond Index for the year-to-date and the one- and ten-year periods, but trailed the index for the three- and five-year periods. The Sub-advisers also reported that its fund had outperformed the MSCI All Country World Index for the one-, three-, five- and ten-year periods.

- Government Securities Fund (subadvised by AIGGIC ). The Board considered that the Fund's performance exceeded the Lipper General U.S. Government Fund Index, the median of its Performance Group and the median of its Performance Universe for the one-, three-, five- and ten-year periods. In addition, the Board noted that the Fund slightly outperformed its benchmark, the Lehman Brothers U.S. Government Bond Index, for the three-year period but slightly underperformed such benchmark for the one-, five- and ten-year periods. The Directors noted management's discussion of the Fund's performance and concluded that the Fund's performance has been satisfactory in light of all factors considered.

- Growth & Income Fund (subadvised by SAAMCo). The Board considered that the Fund's performance exceeded the Lipper Large Cap Core Index for the one-, three, and five-year periods, but trailed the index for the ten-year period. It also noted that the Fund's performance exceeded the median of its Performance Group for the one, three-, five- and ten-year periods. In addition, the Fund's performance exceeded the median of its Performance Universe for the one- and five- year periods, but slightly trailed the median for the three- and ten-year periods. The Board also noted that the Fund outperformed its benchmark, the S&P 500(R) Index, for the one-year period but trailed such benchmark for the three-, five- and ten-year periods. The Directors concluded that the Fund's performance has been satisfactory in light of all factors considered.

- Health Sciences Fund (subadvised by T. Rowe Price). The Board considered that the Fund's performance exceeded the median of its Performance Group and the median for its Performance Universe for the three-year period and trailed such medians for the one-year period. The Board also noted that the Fund outperformed the Lipper Health/Biotech Fund Index for the three-year period and underperformed the index for the one-year period. In addition, the Board noted that the Fund outperformed its benchmark, the S&P 500(R) Index, for the three-year period and trailed such benchmark for the one-year period. The Directors noted management's discussion of the Fund's performance including its continued monitoring of the Fund and concluded that the Fund's performance has been satisfactory in light of all factors considered.

- Income & Growth Fund (subadvised by American Century). The Board considered that the Fund's performance trailed the Lipper Multi-Cap Value Index, the median of its Performance Group and the median of its Performance Universe for the one-, and three-year periods. In addition, the Board noted that the Board outperformed its benchmark, the S&P 500(R) Index, for the one- and three-year periods. The Directors noted management's discussion of its monitoring of the Fund's performance and concluded that the Fund's performance has been satisfactory in light of all factors considered.

- International Equities Fund (subadvised by AIGGIC). The Board considered that the Fund's performance trailed the median of its Performance Universe for the three-, five-, and ten-year periods and exceeded its Performance Universe for the one-year period. The independent third party provider of investment company information did not provide information with respect to the Fund's Performance Group because there were only two other funds in such group. In addition, the Board considered that the Fund underperformed its benchmark, the EAFE Index, for the one-, three-, five- and ten-year periods. The Directors noted management's discussion of the Fund's performance including its continued monitoring of the Fund and concluded that the Fund's performance is satisfactory in light of all factors considered.

- International Government Bond Fund (subadvised by AIGGIC). The Board considered that the Fund's performance exceeded the Lipper Global Income Fund Index and the median of its Performance Universe for the one-, three, five-year periods and lagged the index and its Performance Universe for the ten-year period. It was also noted that the Fund's performance exceeded the median in its Performance Group for the one- and three-year periods, but trailed the median for the five- and ten-year periods. In addition, the Board noted that the Fund underperformed its blended benchmark for the one-, three-, five- and ten-year periods. The blended benchmark is comprised of the JP Morgan Emerging Markets Bond Index Plus (EMBI+) (30%) and the JP Morgan Government Bond Index Plus (GBI+) (70%). The Directors concluded that the Fund's performance was satisfactory in light of all factors considered.

- International Growth I Fund (subadvised by American Century Global, AIM and MFS). The Board considered that the Fund's performed just above the median of its Performance Universe for the one-year period but trailed the median for the three-year period. The independent third party provider of investment company information did not provide information with respect to the Fund's Performance Group because there were only four funds in such group. In addition, the Board noted that the Fund underperformed its benchmark, the EAFE Index, for the benchmark for the one- and three-year periods. The Directors also noted the Fund's more recent short-term performance. The Directors took into account management's hiring of AIM and MFS as Sub-advisers of the Fund in an attempt to address the Fund's underperformance. The Directors noted that the performance of the new Sub-advisers was not reflected in the performance information. The Directors concluded that appropriate action had been to address the Fund's performance.

At the April 2005 meeting, the Board considered the performance of the AIM's and MFS's funds that are managed with a similar investment objective and similar investment strategies as the Fund. It noted that both of their comparable funds (the AIM International Growth Fund and the MFS International Equity Portfolio) outperformed their Performance Groups for the one and three-year periods. Furthermore, it was noted that the AIM International Growth Fund outperformed the EAFE Index for the year-to-date and the three-year period ended March 31, 2005 and that the MFS International Equity Portfolio outperformed the EAFE Index for the year to date, one-, three- and five-year periods ended March 31, 2005.

- Large Cap Core Fund (subadvised by Evergreen). As the Fund had no performance history as of June 2005, the Board considered the performance of a composite fund managed by Evergreen that has similar investment objectives and investment strategies as the Fund. With respect to such composite, the Evergreen Fundamental Large Cap composite, Evergreen reported that its composite outperformed the S&P 500(R) Index for the one-, three- and five-year periods and trailed the index for the ten-year period.

- Large Cap Growth Fund (subadvised by SAAMCo). The Board considered that the Fund's performance trailed the Lipper Large Cap Growth Index, the median of its Performance Group and the median of its Performance Universe for the one- and three-year periods. In addition, the Board noted that the Fund lagged its benchmark, the S&P 500(R) Index, for the same period. The Directors took into account management's proposal at the July 2005 meeting to reduce the Fund's expense cap and its management fee, which the Board considered and approved. The Directors also noted management's discussion of the Fund and concluded that appropriate steps are being taken to address the Fund's performance.

- Large Capital Growth Fund (subadvised by AIM and SAAMCo). As the Fund had no performance history as of October 2004, the Board considered the performance of funds that are managed by the Sub-advisers and that have similar investment objectives and investment strategies as the Fund. With respect to the comparable fund managed by AIM, the AIM Large Cap Growth Fund Portfolio, it was reported that such fund outperformed both the Russell 1000 Growth Index and the average of the Lipper Large Cap Growth Category for the one-, three- and five-year periods.

- Mid Cap Index Fund (subadvised by AIGGIC). The Board considered that the Fund's performance was comparable to the median of its Performance Universe for all periods--the Fund exceeded the median of its Performance Universe for the one- and ten-year periods, but slightly trailed the median for the three- and five-year periods. In addition, it was noted that the Fund's performance exceeded the Lipper Mid Cap Core Index for all periods except the three-year period. The Board also noted that the Fund slightly underperformed its benchmark, the S&P Mid Cap 400 Index, for all periods. The Directors concluded that the Fund's performance has been satisfactory in light of all factors considered.

- Mid Cap Strategic Growth Fund (subadvised by Brazos and Van Kampen). As the Fund had no performance history as of October 2004, the Board considered the performance of funds that are managed by the Sub-advisers and that have similar investment objectives and investment strategies as the Fund. With respect to the comparable fund managed by Brazos, its Mid Cap Composite Portfolio, it was reported that the comparable fund outperformed both the Russell Mid Cap Growth Index and the Russell Mid Cap Index for six of the past eleven years. With respect to the comparable fund managed by Van Kampen, the Morgan Stanley Institutional Funds Mid Cap Growth Portfolio, it was reported that the comparable fund had outperformed the Russell Mid Cap Growth Index and average of the Lipper Mid Cap Growth Category for the one- and ten-year periods, and the period since inception (March 30, 1990), but lagged such index and category average for the three- and five-year periods.

- Money Market I Fund (subadvised by SAAMCo). The Board considered that the Fund's performance trailed the median of its Performance Group and Performance Universe for the one-, three-, five- and ten-year periods. It also noted that the Fund's performance exceeded the Lipper Money Market Fund Index for the one- and three-year periods but trailed the index for the five- and ten-year periods. In addition, the Board noted that the Fund outperformed its benchmark, the 30-Day CD Rate, for the one-, five- and ten-year periods but slightly trailed such benchmark for the three-year period. The Board took into account the proposed reduction of the management fee and the expense cap, which the Board approved at the July 2005 meeting, and the potential effect of such reductions on the Fund's performance. The Directors also noted the relatively small range of returns among the Fund's peer group. The Directors concluded that appropriate action has been taken to address the Fund's performance.

- Nasdaq-100 Index Fund (subadvised by AIGGIC). The Board considered that the Fund's performance exceeded the median of its Performance Universe for the three-year period but trailed the median for the one- year period. It was also noted that the Fund's performance trailed the Lipper Multi Cap Growth Index for the one-year period, but outperformed the index for the three-year period. In addition, the Board noted that the Fund lagged its benchmark, the Nasdaq-100 Index, for the one- and three-year periods. The Directors noted management's discussion of the appropriateness of the Fund's peer group. The Directors concluded that the Fund's performance has been satisfactory in light of all factors considered.

- Science & Technology Fund (subadvised by T. Rowe Price and RCM). The Board considered that the Fund's performance exceeded the Lipper Science & Technology Index for the one- and three-year periods, but trailed such index for the five- and ten-year periods. It also noted that the Fund's performance was at or exceeded the median of its Performance Group for the one-, three- and five-year periods. With respect to the Fund's Performance Universe, it was noted that the Fund's performance was at or exceeded the median for the one- and three-year periods but trailed the median for the five-year period. In addition, the Board noted that the Fund outperformed its benchmark, the S&P 500(R) Index, for the three-year period, but lagged such benchmark for the one-, five- and ten-year periods. The Directors took into account management's plans for the Fund, as well as the proposed addition of RCM, which was not reflected in the performance information. The Directors concluded that the Fund's performance was satisfactory in light of all factors considered.

In approving the Sub-Advisory Agreement with RCM, the Board also considered the performance of the Allianz/PIMCO RCM Global Tech Fund which is managed by RCM with a similar investment objective and investment strategy as the Science & Technology Fund and noted that it had exceptional performance for the one, three- and five-year periods.

- Small Cap Aggressive Fund (subadvised by CSAM). As the Fund had no performance history as of June 2005, the Board considered the performance of a composite of funds managed by CSAM that has a similar investment objective and investment strategy as the Fund. With respect to CSAM's Small Cap Growth Equity composite, CSAM reported that such its composite outperformed the Russell 2000 Growth Index for the ten-year period and the period since inception (January 1, 1990) but trailed such index for the one-, three- and five-year periods.

- Small Cap Fund (subadvised by American Century, Franklin Portfolio and T. Rowe Price). The Board considered that the Fund's performance exceeded the median of its Performance Group for the one- and three-year periods. It also noted that in its Performance Universe, the Fund trailed the median in the three-year period but exceeded the median in the one-year period. In addition, it was noted that the Fund's performance beat the Lipper Small Cap Core Index for the one-year period but trailed such index for the three-year period. The Board also noted that the Fund outperformed its benchmark, the Russell 2000 Index, for the one-year period but

trailed such benchmark for the three-year period. The Directors took into account management's discussion of the Fund's performance, including the recent market environment with respect to smaller capitalization companies. The Directors concluded that the Fund's performance has been satisfactory in light of all factors considered.

- Small Cap Index Fund (subadvised by AIGGIC). The Board considered that the Fund's performance exceeded the median of its Performance Group for the three- and five-year periods but trailed the median for the one-year period. In its Performance Universe, it was noted that the Fund's performance exceeded the median for the three-year period, but trailed the median for the one- and five-year periods. In addition, it was noted that the Fund's performance trailed the Lipper Small Cap Core Index for the one-, three-, five- and ten-year periods. The Board also noted that the Fund slightly underperformed its benchmark, the Russell 2000 Index, for the one-, three-, five- and ten-year periods. The Directors took into account management's discussion of the Fund's performance. The Directors concluded that the Fund's performance has been satisfactory in light of all factors considered.

- Small Cap Special Values Fund (subadvised by Evergreen and Putnam). As the Fund had no performance history as of June 2005, the Board considered the performance of funds that are managed by the Sub-advisers and that have similar investment objectives and investment strategies as the Fund. With respect to the comparable composite of funds managed by Evergreen, the Evergreen Special Values composite, Evergreen reported that its fund outperformed the Russell 2000 Value Index for the one-, three-, five- and ten-year periods and the period since inception (October 1, 1993). With respect to the comparable fund managed by Putnam, the Putnam Small Cap Value Fund, Putnam reported that its fund outperformed the Russell 2000 Value Index and average of the Lipper Small Cap Value Category for the one- and five-year periods and the period since inception (April 13, 1999) and trailed the index and category average for the three-year period.

- Small Cap Strategic Growth Fund (subadvised by Evergreen). As the Fund had no performance history as of June 2005, the Board considered the performance of a composite fund that is managed by Evergreen that has similar investment objectives and investment strategies as the Fund. With respect to such composite, the Evergreen Special Equity composite, Evergreen reported that its composite outperformed the Russell 2000 Growth Index for the three- and five-year periods and the period since inception (January 1, 2000) and matched the index for the one-year period.

- Social Awareness Fund (subadvised by AIGGIC). The Board considered that the Fund's performance outperformed the Lipper Large Cap Core Index for the three-, five-, and ten-year periods and underperformed for the one-year period. It was also noted that the Fund's performance exceeded the median of its Performance Group for the three-year period, but trailed the median for the one- and five-year periods. In addition, the Board noted that the Fund's performance exceeded the median of its Performance Group for the three-, five, and ten-year periods but trailed the median for the one-year period. Finally, the Board noted that the Fund slightly underperformed its benchmark, the S&P 500(R) Index, for the one-, three-, five- and ten-year periods. The Directors concluded that the Fund's performance has been satisfactory in light of all factors considered.

- Stock Index Fund (subadvised by AIGGIC). The Board considered that the Fund's performance was no more than 0.11% above or below the median of both its Performance Group and Performance Universe and was no more than 0.12% below the Lipper S&P 500 Fund Index for the one-, three-, five- and ten-year periods. The Board also noted that the Fund slightly underperformed its benchmark, the S&P 500(R) Index, for the same periods. The Directors concluded that the Fund's performance has been satisfactory in light of all factors considered.

- VALIC Ultra Fund (subadvised by American Century). As the Fund had no performance history as of June 2005, the Board considered the performance of the American Century Ultra Fund, which has a similar investment objectives and investment strategies as the Fund. With respect to the American Century Ultra Fund, American Century reported that the fund outperformed the Russell 1000 Growth Index for the one-, three-, five- and ten-year periods, but trailed the S&P 500(R) Index for those same periods. In addition, American Century reported that the American Century Ultra Fund outperformed the average of the Lipper Large Cap Growth Category for those same periods.

- Value Fund (subadvised by Oppenheimer). The Board considered that the Fund's performance exceeded the Lipper Large Cap Value Index, the median of its Performance Group and the median of its

Performance Universe for the one- and three-year periods. The Board also noted that the Fund outperformed its benchmark, the S&P 500(R) Index, for the one- and three-year periods. The Directors concluded that the Fund's performance has been satisfactory.

Cost of Services & Benefits Derived. The Board was provided information related to the cost of services and benefits derived in connection with the Advisory Agreements. Management reported that it believed that any indirect costs are inconsequential to the analysis of the adequacy of the advisory fees and that any collateral benefits derived as a result of providing advisory services to the Funds are de minimis.

Profitability and Economies of Scale. The Board received information related to VALIC's profitability with respect to the services it provides to the Funds. It was noted that the sub-advisory fees paid pursuant to the Sub-Advisory Agreements are paid by VALIC out of the advisory fees that VALIC receives under the Investment Advisory Agreement. The Directors also relied on the ability of VALIC to negotiate the Investment Sub-Advisory Agreements and the fees thereunder at arm's length. The Board determined that the profitability to each Sub-adviser in connection with its relationship with the Funds is therefore not a material factor in their consideration of the Sub-Advisory Agreements. For similar reasons, the potential for the Funds to experience economies of scale from the Sub-advisers' management of the Funds was not considered a material factor to the Board's approval of the Sub-advisory Agreements. With respect to VALIC, the Board determined that its profitability was reasonable.

Furthermore, the Board noted that VALIC serves as a transfer agent to the Funds and SAAMCo serves as the administrator to the Funds and that the fees for such services are paid for by the Funds.

Terms of the Advisory Agreements. The Board reviewed the terms of the Advisory Agreements including the duties and responsibilities undertaken. The Board also reviewed the terms of payment for services rendered by VALIC and the Sub-advisers and noted that VALIC would compensate the Sub-advisers out of the fees it received from the Funds. The Board noted that the Sub-Advisory Agreements provide that each Sub-adviser will pay all of its own expenses in connection with the performance of its duties as well as the cost of maintaining the staff and personnel as necessary for it to perform its obligations. The Board also considered the termination and liability provisions of the Advisory Agreements.

Compliance. The Board reviewed the administrator's compliance personnel and VALIC's and each Sub-adviser's regulatory history, including information whether it was currently involved in any regulatory actions or investigations. In addition, the Board reviewed information concerning the compliance staff of RCM and AIM and MFS who would be responsible for providing compliance functions on behalf of the Science & Technology Fund and International Growth I Fund, respectively. The Board concluded that there was no information that it felt would have a material adverse effect on VALIC's or the Sub-advisers' ability to provide services to the Funds.

Conclusions. In reaching its decision to recommend the renewal and/or approval of the Advisory Agreements, the Board did not identify any single factor as being controlling, but based its recommendation on each of the factors it considered and each Director contributes different weight to the various factors. Based upon the materials it reviewed, the representations made to it and the considerations described above, and as part of their deliberations, the Board, including the Independent Directors, concluded that VALIC and the Sub-advisers possess the capability and resources to perform the duties required of it under its Advisory Agreement.

Further, based upon its review of the Advisory Agreements, the materials provided, and the considerations described above, the Board, including the Independent Directors, concluded that (1) the terms of the Advisory Agreements are reasonable, fair and in the best interest of the Funds and their shareholders, and (2) the advisory fee rates and sub-advisory fee rates are fair and reasonable in light of the usual and customary charges made for services of the same nature and quality and the other factors considered.

CODE OF ETHICS

The Series Company and VALIC have adopted an Investment Company Code of Ethics (the "VALIC Code"), which prescribes general rules of conduct and sets forth guidelines with respect to personal securities trading by "Access Persons" thereof. An Access Person as defined in the VALIC Code is (1) any trustee, director, officer, general partner or advisory person of the Series Company or VALIC, (2) any Supervised Person who has access to nonpublic information on VALIC's purchase or sale of securities, or non-public information regarding the portfolio holdings of the Funds, (3) any Supervised Person who is involved in making securities recommendations to the Funds, or has access to such recommendations that are non-public, and (4) any other persons designated by the Review Officer (as

defined in the VALIC Code) as having access to current trading information. A "Supervised Person" means VALIC's partners, officers, directors and employees, and any other person who provide advice on behalf of VALIC and is subject to the VALIC's supervision and control. The guidelines on personal securities trading relate to: (i) securities being considered for purchase or sale, or purchased or sold, by any investment company advised by VALIC, (ii) initial public offerings,
(iii) private placements, (iv) blackout periods, (v) short-term trading profits and (vi) services as a director. Subject to certain restrictions, Access Persons may invest in securities, including securities that may be purchased or held by the Portfolios. These guidelines are substantially similar to those contained in the Report of the Advisory Group on Personal Investing issued by the Investment Company Institute's Advisory Panel. VALIC reports to the Board of Directors on a quarterly basis, as to whether there were any violations of the VALIC Code by Access Persons of the Series Company or any Sub-adviser during the quarter.

Each of the Sub-advisers has adopted a code of ethics. Provisions of a Sub-adviser's code of ethics are applicable to persons who, in connection with their regular functions or duties as employees of the Sub-adviser, make, participate in, or obtain information regarding the purchase or sale of a security, or whose functions relate to the making of any recommendation with respect to such purchase or sale by the Fund managed by such Sub-adviser. Such provisions may be more restrictive than the provision set forth in the Code of Ethics. Material violations of a Sub-adviser's code of ethics will be reported to the Series Company's Board of Directors.

The code of ethics can be reviewed and copied at the Securities and Exchange Commission's public reference room in Washington, DC (call 1-202-942-8090 for more information on the operation of the public reference room); on the EDGAR Database on the Securities and Exchange Commission's Internet site (http://www.sec.gov); or, upon payment of copying fees, by writing the Securities and Exchange Commission's public reference section, Washington, DC 20549-0102, or by electronic mail at publicinfo@sec.gov.

INVESTMENT SUB-ADVISERS

Subject to the control, supervision and direction of VALIC, sub-advisory services are provided as follows:

FUND NAME                                   SUB-ADVISER NAME

Asset Allocation Fund                       AIG Global International Corporation ("AIGGIC")
Blue Chip Growth Fund                       T. Rowe Price Associates, Inc. ("T. Rowe Price")
Broad Cap Value Fund                        Barrow, Hanley, Mewhinney & Strauss, Inc. ("BHMS")
Capital Conservation Fund                   AIGGIC
Core Equity Fund                            Wellington Management Company, LLP ("Wellington Management") and WM
                                            Advisors, Inc. ("WMA")
Foreign Value Fund                          Templeton Global Advisers Ltd. ("Templeton Global")
Global Equity Fund                          Putnam Investment Management, Inc. ("Putnam")
Global Strategy Fund                        Franklin Advisers, Inc. ("Franklin Advisers") and Templeton Investment
                                            Counsel, LLC ("Templeton Investment")
Government Securities Fund                  AIGGIC
Growth & Income Fund                        AIG SunAmerica Asset Management Corp. ("SAAMCo")
Health Sciences Fund                        T. Rowe Price
Income & Growth Fund                        American Century Investment Management, Inc. ("American Century")
Inflation Protected Fund                    AIGGIC
International Equities Fund                 AIGGIC
International Government Bond Fund          AIGGIC
International Growth I Fund                 American Century Global Investment Management, Inc. ("American Century
                                            Global"), A I M Capital Management, Inc. ("AIM"), and
                                            Massachusetts Financial Services Company ("MFS")
Large Cap Core Fund                         Evergreen Investment Management Company, LLC ("Evergreen")
Large Cap Growth Fund                       SAAMCo
Large Capital Growth Fund                   AIM and SAAMCo
Mid Cap Index Fund                          AIGGIC
Mid Cap Strategic Growth Fund               Morgan Stanley Investment Management Inc. d/b/a Van Kampen ("Van
                                            Kampen") and Brazos Capital Management, LP ("Brazos")
Money Market I Fund                         SAAMCo
Nasdaq-100(R) Index Fund                    AIGGIC

Science & Technology Fund                   RCM Capital Management LLC ("RCM Capital") and T. Rowe Price
Small Cap Aggressive Growth Fund            Credit Suisse Asset Management, LLC ("CSAM")
Small Cap Fund                              American Century, Franklin Portfolio Associates, LLC ("Franklin
                                            Portfolio"), and T. Rowe Price
Small Cap Index Fund                        AIGGIC
Small Cap Special Values Fund               Evergreen and Putnam
Small Cap Strategic Growth Fund             Evergreen
Social Awareness Fund                       AIGGIC
Stock Index Fund                            AIGGIC
VALIC Ultra Fund                            American Century
Value Fund                                  OppenheimerFunds, Inc. ("Oppenheimer")

Pursuant to the Sub-advisory Agreements VALIC has with each of the Sub-advisers and subject to VALIC's oversight, the Sub-advisers will manage the investment and reinvestment of the assets of each Fund, including the evaluation of pertinent economic, statistical, financial and other data, and the determination of industries and companies to be represented in the each Fund. Further, the Sub-advisers will maintain a trading desk and place orders for the purchase and sale of portfolio investments for each Fund, 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.

VALIC pays each Sub-adviser a monthly fee with respect to each Fund for which such Sub-adviser performs services, computed on average daily net assets. VALIC relies on an exemptive order that, among other things permits the Series Company to disclose to shareholders the Sub-advisers' fees only in the aggregate for each Fund other than for those Funds managed by AIGGIC and SAAMCo, both affiliated Sub-advisers. The aggregate annual rates, as a percentage of daily net assets, of the fees payable by VALIC to the Sub-adviser for each Fund may vary according to the level of assets of each Fund. For the fiscal year ended May 31, 2005, VALIC paid fees to the Sub-advisers equal to the following aggregate annual rates, expressed as a percentage of the assets of each Fund:

FUND NAME                                     AGGREGATE SUBADVISORY
                                                     FEE RATE

Asset Allocation Fund                                  0.25%
Blue Chip Growth Fund                                  0.38%
Capital Conservation Fund                              0.25%
Core Equity Fund                                       0.26%
Government Securities Fund                             0.25%
Growth & Income Fund                                   0.25%
Health Sciences Fund                                   0.58%
Income & Growth Fund                                   0.43%
Inflation Protected Fund*                              0.25%
International Equities Fund                            0.10%
International Government Bond Fund                     0.25%
International Growth I Fund                            0.62%
Large Cap Growth Fund                                  0.35%
Large Capital Growth Fund*                             0.43%
Mid Cap Index Fund                                     0.02%
Mid Cap Strategic Growth Fund*                         0.45%
Money Market I Fund                                    0.12%
Nasdaq-100(R) Index Fund                               0.15%

Science & Technology Fund                              0.55%
Small Cap Fund                                         0.56%
Small Cap Index Fund                                   0.02%
Social Awareness Fund                                  0.25%
Stock Index Fund                                       0.01%
Value Fund                                             0.45%

* Commenced operations December 20, 2004.

For the fiscal years ended May 31, 2005, 2004 and 2003, VALIC paid the Sub-advisers fees for the services rendered and expenses paid by the Sub-advisers as shown below.

                FUND                     SUB-ADVISER                      2005             2004             2003

Asset Allocation Fund                AIGGIC                             $485,279         $443,014          $396,445
Blue Chip Growth Fund                T. Rowe Price                       172,817          130,096            71,661
Capital Conservation Fund            AIGGIC                              213,360          205,219           199,128
Core Equity Fund                     Wellington Management               708,998          755,774           693,723

                                     WMA, from 01/01/2002 to
                                     present                             796,880          815,771           734,848
Government Securities Fund           AIGGIC                              351,523          418,181           450,185
Growth & Income Fund                 SAAMCo                              440,263          467,817           436,865
Health Sciences Fund                 T. Rowe Price                       877,414          661,223           327,719
Income & Growth Fund                 American Century                  1,005,929          964,581           833,301
Inflation Protected Fund             AIGGIC                                7,322              N/A               N/A
International Equities Fund          AIGGIC                              340,028          129,054            82,631
International Government Bond Fund   AIGGIC                              372,261          372,620           312,232
International Growth I Fund          American Century Global           2,360,903        2,347,040        $2,160,778
                                     AIM(1)                                  N/A              N/A               N/A
                                     MFS(1)                                  N/A              N/A               N/A
Large Cap Growth Fund                SAAMCO                            1,392,740        1,577,809         1,436,939
Large Capital Growth Fund            AIM                                   9,266              N/A               N/A
                                                                           9,269
                                     SAAMCO                                                   N/A               N/A
Mid Cap Index Fund                   AIGGIC                              358,504          287,551           207,474
Mid Cap Strategic Growth Fund        Brazos                                9,724              N/A               N/A

                                     Van Kampen                            9,939              N/A               N/A
Money Market I Fund                  SAAMCo                              520,464          576,711           710,043
Nasdaq-100(R) Index Fund             AIGGIC, from 01/01/2002             137,000          124,877            45,542
                                     to present

Science & Technology Fund            RCM Capital(2)                          N/A              N/A               N/A
                                     T. Rowe Price                     6,938,867        7,582,276         5,570,342

                FUND                     SUB-ADVISER                      2005             2004             2003

Small Cap Fund                       American Century(3)                 979,115              N/A               N/A
                                     Founders                             82,427        1,523,863         1,408,460
                                     Franklin Portfolio(3)               799,101              N/A               N/A
                                     T. Rowe Price                     1,569,459        1,762,674         1,362,224
Small Cap Index Fund                 AIGGIC                              132,525           92,682            58,056
Social Awareness Fund                AIGGIC                            1,018,645          959,341           823,377
Stock Index Fund                     AIGGIC                              635,365          604,721           536,667
Value Fund                           Oppenheimer(4)                       77,264              N/A               N/A
                                     Putnam                                4,016           65,518            48,306

(1) Effective June 20, 2005, AIM and MFS were added as co-sub-advisers to the International Growth I Fund.

(2) Effective September 19, 2005, RCM Capital was added as a co-sub-adviser to the Science & Technology Fund.

(3) Effective June 18, 2004, American Century and Franklin Portfolio replaced Founders as co-sub-advisers to the Small Cap Fund.

(4) Effective June 21, 2004, Oppenheimer replaced Putnam as sub-adviser to the Value Fund

For the fiscal years ended May 31, 2005, 2004, and 2003, VALIC retained the following amounts after the payment of subadvisory fees:

                                                                 FEES RETAINED BY VALIC FOR
                                                                 FISCAL YEAR ENDED MAY 31,
FUND NAME                                          2005                   2004                     2003

Asset Allocation Fund                            $485,279               $443,015                 $396,445
Blue Chip Growth Fund                             189,041                143,544                  76,378
Capital Conservation Fund                         213,359                205,219                 199,127
Core Equity Fund                                 3,072,930              3,217,398               2,905,711
Government Securities Fund                        351,523                418,191                 450,185
Growth & Income Fund                              880,526                935,635                 873,729
Health Sciences Fund                              630,114                478,052                 230,300
Income & Growth Fund                              786,109                747,863                 626,429
Inflation Protected Fund                           7,321                   ---                     ---
International Equities Fund                       850,071                322,634                 206,577
International Government Bond Fund                372,261                372,620                 312,232
International Growth I Fund                      1,316,889              1,465,759               1,313,364
Large Cap Growth Fund                            2,060,875              2,704,815               2,463,324
Large Capital Growth Fund                         14,173                   ---                     ---
Mid Cap Index Fund                               4,435,296              3,619,333               2,698,450
Mid Cap Strategic Growth Fund                     10,925                   ---                     ---
Money Market I Fund                              1,648,136              1,826,250               2,248,472
Nasdaq-100(R) Index Fund                          228,334                208,128                  75,904
Science & Technology Fund                        4,377,433              4,857,249               3,342,830
Small Cap Fund                                   2,077,494              2,189,078               1,783,080
Small Cap Index Fund                             1,834,108              1,266,749                695,422

Social Awareness Fund                            1,018,644               959,341                 823,378
Stock Index Fund                                10,748,770             10,013,294               8,380,012
Value Fund                                        58,908                 36,690                   27,052

American Century and American Century Global, respectively, are direct and indirect subsidiaries of American Century Companies, Inc. AIGGIC is an indirect wholly-owned subsidiary of AIG. AIM is an indirect wholly owned subsidiary of AMVESCAP, PLC London, England. BHMS is a wholly owned subsidiary of Old Mutual Asset Management, which is a wholly owned subsidiary of Old Mutual plc. Brazos is an indirect majority-owned subsidiary of AIG. CSAM is an indirect, wholly owned subsidiary of Credit Suisse Group. Evergreen is an indirect wholly-owned subsidiary of Wachovia Corporation. Franklin Advisers is a wholly owned subsidiary of Franklin Resources, Inc. (known as "Franklin Templeton Investments"). Brazos is an indirect wholly-owned subsidiary of AIG. Franklin Portfolio is an indirect wholly-owned subsidiary of Mellon Financial Corporation that has no affiliation to The Franklin/Templeton Group of Funds or Franklin Resources, Inc. MFS is a wholly-owned subsidiary of Sun Life Financial Services of Canada, Inc. Oppenheimer is a wholly-owned subsidiary of MassMutual Financial Group. Putnam is an indirect, wholly-owned subsidiary of Marsh & McLennan Companies, Inc. RCM Capital is an indirect wholly-owned subsidiary of Allianz AG. SAAMCo is an indirect wholly-owned subsidiary of AIG. T. Rowe Price is a wholly-owned subsidiary of T. Rowe Price Group, Inc. Templeton Global and Templeton Investment are wholly owned subsidiaries of Franklin Templeton Investments. Van Kampen is a direct subsidiary of Morgan Stanley. Wellington Management is a limited liability partnership owned entirely by 86 partners. WMA is a wholly-owned subsidiary of New American Capital, Inc. and an indirect wholly-owned subsidiary of Washington Mutual, Inc.

SERVICE AGREEMENTS

SERVICE AGREEMENTS WITH AFFILIATES

The Series Company has entered into an Administrative Services Agreement with SAAMCo to provide certain accounting and administrative services to the Funds. Pursuant to the Administrative Services Agreement, SAAMCo provides administrative services to the Board of Directors, regulatory reporting, fund accounting and related portfolio accounting services, all necessary office space, equipment, personnel, compensation and facilities for handling the affairs of the Funds and other services.

The Series Company has entered into a Transfer Agency and Service Agency Agreement with VALIC to provide transfer agent services to the Funds. Transfer agent services also include shareholder servicing and dividend disbursements and are provided to the Series Company at cost.

Pursuant to the Administrative Services Agreement, the Series Company pays SAAMCo an annual fee of 0.07% based on average daily net assets. These fees are paid directly by the Funds.

For the fiscal years ended May 31, 2005, 2004 and 2003, the Funds paid SAAMCo the following administrative services fees under the Administrative Services Agreement. No fees are shown for the fiscal periods in which the Funds did not exist.

         FUND NAME                                        2005            2004            2003
Asset Allocation Fund                                  $135,878        $124,044        $111,005
Blue Chip Growth Fund                                    31,663          23,944          12,953
Capital Conservation Fund                                59,741          57,461          55,756
Core Equity Fund                                        400,646         419,033         379,250
Government Securities Fund                               98,426         117,092         126,052
Growth & Income Fund                                    123,274         130,989         122,322
Health Sciences Fund                                    105,527          79,749          39,061
Income & Growth Fund                                    162,912         155,677         132,703
Inflation Protected Fund*                                 2,050             N/A             N/A
International Equities Fund                             238,020          90,338          57,842
International Government Bond Fund                      104,233         104,334          87,425
International Growth I Fund                             268,660         266,896         243,190
Large Cap Growth Fund                                   278,548         315,562         287,388
Large Capital Growth Fund*                                3,053             N/A             N/A
Mid Cap Index Fund                                    1,202,264         953,927         673,659
Mid Cap Strategic Growth Fund*                            3,059             N/A             N/A
Money Market I Fund                                     303,604         336,415         414,192
Nasdaq-100(R) Index Fund                                 63,933          58,276          21,253
Science & Technology Fund                               880,157         967,519         693,247
Small Cap Fund                                          428,369         425,881         354,181
Small Cap Index Fund                                    411,337         271,886         150,696
Social Awareness Fund                                   285,220         268,615         230,546
Stock Index Fund                                      3,047,558       2,833,044       2,356,670
Value Fund                                               12,581           9,173           6,763

* Commenced operations December 20, 2004.

For the fiscal years ended May 31, 2005, 2004 and 2003, the Funds paid VALIC the following transfer agent fees under the Transfer Agency and Service Agreement. No fees are shown for the fiscal periods in which the Funds did not exist.

 FUND NAME                                                2005            2004            2003

Asset Allocation Fund                                    $1,262          $1,537          $1,887
Blue Chip Growth Fund                                     1,272           1,274           1,259
Capital Conservation Fund                                 1,262           1,537           1,910
Core Equity Fund                                          1,683           2,049           2,511
Government Securities Fund                                1,683           2,049           2,517
Growth & Income Fund                                      1,262           1,537           1,886
Health Sciences Fund                                      1,272           1,274           1,259
Income & Growth Fund                                      1,272           1,182           1,256
Inflation Protected Fund*                                   812             N/A             N/A
International Equities Fund                              10,344          11,092          11,052
International Government Bond Fund                          414             518             645
International Growth I Fund                                 842           1,024           1,327
Large Cap Growth Fund                                       959           1,151           1,255
Large Capital Growth Fund*                                  812             N/A             N/A
Mid Cap Index Fund                                       11,201          12,071          11,650
Mid Cap Strategic Growth Fund*                              812             N/A             N/A
Money Market I Fund                                      13,654          15,151          24,937
Nasdaq-100(R) Index Fund                                  6,974           6,862           6,626
Science & Technology Fund                                 8,651           8,911           9,144
Small Cap Fund                                              841           1,025           1,249
Small Cap Index Fund                                      8,576          15,108           8,514
Social Awareness Fund                                     1,262           1,539           1,732
Stock Index Fund                                         14,042          15,400          17,129
Value Fund                                                  843           1,040           1,192

* Commenced operations December 20, 2004.

PORTFOLIO MANAGERS

OTHER ACCOUNTS

The portfolio managers primarily responsible for the day-to-day management of the Funds, as provided in the Prospectus ("Portfolio Managers"), are often engaged in the management of various other accounts. The total number of other accounts managed by each Portfolio Manager (whether managed as part of a team or individually) and the total assets in those accounts, as of May 31, 2005, is provided in the table below. If applicable, the total number of accounts and total assets in accounts that have an advisory fee which is all or partly based on the account's performance is provided in parentheses.

                                                                        OTHER ACCOUNTS*
                                                                        (As of May 31, 2005)
                                                                      -----------------------
                                                                      Registered Investment
                                                                            Companies
                                                                      -----------------------

                               Advisers/                               No. of      Assets
        Portfolio             Sub-adviser      Portfolio Manager      Accounts  ($ millions)
        ---------             -----------      -----------------      --------  ------------

Asset Allocation Fund           AIGGIC       Braun, Greg                 15          813
                                             Campion, Timothy            19         8,659
                                             Davis, Raphael              13          785
                                             Kelly, Michael              5           671
                                             Kurtz, James                17         8,153
                                             Reeg, Tom                   15          813
                                             Simmons, Robert             2           533

Blue Chip Growth Fund        T. Rowe Price   Puglia, Larry               8         11,542

Broad Cap Value Fund             BHMS        Barrow, James P.           10(3)      $27,081
                                                                                  ($26,300)
                                             Englander, Richard A.       1          $435
                                             Nixon, J. Ray               1          $389
                                             Chambers, Robert J.         8          $546
                                             Culler, Timothy J.          1          $112

                                             Giambrone, Mark             5(1)      $3,229
                                                                                  ($3,100)

Capital Conservation Fund       AIGGIC       Braun, Greg                 15          813
                                             Davis, Raphael              13          785
                                             Mercante, Richard           2           266
                                             Reeg, Tom                   15          813
                                             Vanden Assem, Robert        13          758

Core Equity Fund              WM Advisors    Spencer, Stephen            2          2,759

                              Wellington     Bittar, Maya                16         4,867
                              Management     Kripke, Jeffrey             16         4,867
                                             Megargel, Matthew           16         4,867
                                             Rodier, Michael             7          1,744

Foreign Value Fund             Templeton     Everett, Jeffrey A.         2         $26,359
                              Investment     Murchison, Murdo            2         $31,929
                                             Myers, Lisa F.              2          $140

Global Equity Fund              Putnam       Bogar, Mark A.              4(1)      $4,487
                                                                                  ($1,156)
                                             Brooks, Joshua H.           9(1)      $9,816
                                                                                  ($1,156)
                                             Greenleaf, Bradford S.      2         $3,111

                                             Makino, Shigeki             2         $3,111

                                                OTHER ACCOUNTS*
                                             (As of May 31, 2005)
                                ----------------------------------------------
                                 Pooled Investment
                                      Vehicles             Other Accounts
                                ----------------------   ---------------------

                                 No. of       Assets      No. of     Assets
        Portfolio               Accounts   ($ millions)  Accounts ($ millions)
        ---------               --------   ------------  ---------------------

Asset Allocation Fund             --           --           7         931
                                   1            5           5        1,103
                                  --           --          19        3,056
                                   4           350         18        3,653
                                   3          1395          2         223
                                  --           --          --          --
                                   4           350          8        1,381

Blue Chip Growth Fund              2           305         12        1,175

Broad Cap Value Fund              --           --          22        $2,132

                                  --           --          23        $2,868
                                   5           $97         26        $2,744
                                   2          $530         59        $1,712
                                   1           $40         42(3)     $4,878
                                                                     ($387)
                                  --           --           8         $337


Capital Conservation Fund         --           --           7         931
                                  --           --          19        3,056
                                  --           --          --          --
                                  --           --          --          --
                                                           19        3,056

Core Equity Fund                  --           --          --          --

                                  15          1,101        36        3,721
                                  15          1,101        36        3,721
                                  15          1,101        36        3,721
                                  12           964         81        4,564

Foreign Value Fund                --           --          13       $3,956
                                  --           --          --          --
                                  --           --           5         $73

Global Equity Fund                17         $3,724         9(1)   $1,663
                                                                     ($60)
                                  20         $3,813        11(1)   $1,718
                                                                     ($60)
                                  17         $3,724         9(1)   $1,663
                                                                     ($60)
                                  17         $3,724         9(1)   $1,663
                                                                     ($60)

                                                                         OTHER ACCOUNTS*
                                                                        (As of May 31, 2005)
                                                                      -----------------------
                                                                      Registered Investment
                                                                            Companies
                                                                      -----------------------

                               Advisers/                               No. of      Assets
        Portfolio             Sub-adviser      Portfolio Manager      Accounts  ($ millions)
        ---------             -----------      -----------------      --------  ------------

Global Strategy Fund           Templeton     Beveridge, Mark R.          1         $2,271
                              Investment     Nori, Peter A.              2         $1,670
                                             Scott, Tucker               2          $525

                               Franklin      Calvo, Alexander C.         24        $8,600
                               Advisers      Hasenstab, Michael          24        $8,600

Government Securities Fund      AIGGIC       Davis, Raphael              13          736
                                             Vanden Assem, Robert        13          736

Growth & Income Fund            SAAMCo       Neimeth, Steve              4           730

Health Sciences Fund         T. Rowe Price   Jenner, Kris                7          2,001


Income & Growth Fund           American      Schniedwind, John           5          6,480
                                Century      Borgwardt, Kurt             4          6,228
                                             Zhang, Zili                 4          6,228

Inflation Protected Fund        AIGGIC       Vanden Assem, Robert        13          863

International Equities          AIGGIC       Cai, Lan                    17         8,172
Fund                                         Campion, Timothy            19         8,382
                                             Haneda, Shinichi            --          --
                                             Kurtz, James                17         7,849
                                             Toohey, John                15         7,640

International Government        AIGGIC       King, Anthony               2           134
Bond Fund                                    Mittal, Rajeev              2           115

International Growth I            AIM        Keeling, Geoffrey           3           323
Fund                                         Shoss, Robert               3           323

                               American      Creveling, Keith            10         7,763
                                Century      Perelstein, Michael         10         7,763
                                Global

                                  MFS        Mannheim, David             15         6,981
                                             Smith, Marcus               9          5,692

Large Cap Core                 Evergreen     McCormick, Walter           3          2,865

Large Cap Growth Fund           SAAMCo       Gannon, Frank               11          924

Large Capital Growth Fund         AIM        Cao, Shuxin (Steve)         8          2,665
                                             Dennis, Matthew             4          1,776
                                             Holzer, Jason               1          3,047
                                             Olsson, Clas                5          1,803
                                             Sides, Barrett              7          2,408

                                SAAMCo       Gannon, Frank               11         1,280

Mid Cap Index Fund              AIGGIC       Cai, Lan                    17         8,172
                                             Campion, Timothy            19         8,382
                                             Kurtz, James                17         7,849
                                             Toohey, John                15         7,640

Mid Cap Strategic Growth        Brazos       Allocco, Michael            4           355
Fund                                         Cuellar, Jamie              4           355
                                             Gatien, Andre               4           355
                                             Graeme, Brian               4           355
                                             Musick, Tom                 4           355

                                                OTHER ACCOUNTS*
                                             (As of May 31, 2005)
                                ----------------------------------------------
                                 Pooled Investment
                                      Vehicles             Other Accounts
                                ----------------------   ---------------------

                                 No. of       Assets      No. of       Assets
        Portfolio               Accounts   ($ millions)  Accounts   ($ millions)
        ---------               --------   ------------  --------   ------------

Global Strategy Fund              --           --          15         $1,680
                                  --           --           7         $2,796
                                  --           --           7          $657

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

Government Securities Fund        --           --          19         3,056
                                  --           --          19         3,056

Growth & Income Fund              --           --          --           --

Health Sciences Fund               2           117          2           69


Income & Growth Fund              --           --          --           --
                                  --           --          --           --
                                  --           --          --           --

Inflation Protected Fund          --           --          19         3,056

International Equities            --           --           4          981
Fund                               1            5           5         1,102
                                  --           --          --           --
                                   3          1,395        19         3,056
                                   1            5           3          463

International Government          --           --          10         1,329
Bond Fund                         --           --          17         1,584

International Growth I             1           10          13           4
Fund                               1           10          13           4
                                   1           44           1          169
                                   1           44           1          169
                                   3           868         68         10,438
                                  --           --          22         2,260

Large Cap Core                    --           --          --           --

Large Cap Growth Fund             --           --          --           --

Large Capital Growth Fund          1           20          154          51
                                   4           115         154          51
                                  10          1,955        154          51
                                  12          2,433        154          51
                                   1           20          154          51

                                  --           --          --           --

Mid Cap Index Fund                --           --           4          981
                                   1            5           5         1,102
                                   3          1,395        19         3,056
                                   1            5           3          463

Mid Cap Strategic Growth          --           --           3           36
Fund                              --           --           3           36
                                  --           --           3           36
                                  --           --           3           36
                                  --           --           3           36

                                                                         OTHER ACCOUNTS*
                                                                         (As of May 31, 2005)
                                                                      ------------------------
                                                                      Registered Investment
                                                                            Companies
                                                                      ------------------------

                               Advisers/                               No. of      Assets
        Portfolio             Sub-adviser      Portfolio Manager      Accounts  ($ millions)
        ---------             -----------      -----------------      --------  ------------

                                             Olsen, Elvind               4           355
                                             Willems, Wayne              4           355

                              Van Kampen     Chainani, Sam               32        13,092
                                             Cohen, David                32        13,092
                                             Lynch, David                32        13,092
                                             Norton, Alexander           --          --

Money Market I Fund             SAAMCo       Wiese, Brian                3          1,743

Nasdaq-100(R) Index Fund        AIGGIC       Cai, Lan                    17         8,172
                                             Campion, Timothy            19         8,382
                                             Kurtz, James                17         7,849
                                             Toohey, John                15         7,640

Science & Technology Fund    T. Rowe Price   Sola, Michael               4          4,798

                              RCM Capital    Chen, Huachen               7          1,795
                                             Price, Jr., Walter C.       7          1,795

Small Cap Aggressive         Credit Suisse   Bernstein, Leo M.           6           897
Growth Fund                                  Chung, Calvin               6           897
                                             Pardo, Marian U.            2           387

Small Cap Fund                 American      Martin, Bill                14         9,130
                                Century      Von Turk, Wilhelmine        5          1,977
                                             Vaiana, Thomas              13         8,575

                               Franklin      Team                        22        14,127
                               Portfolio

                             T. Rowe Price   McCrickard, Gregory         7          7,260

Small Cap Index Fund            AIGGIC       Cai, Lan                    17         8,172
                                             Campion, Timothy            19         8,382
                                             Kurtz, James                17         7,849
                                             Toohey, John                15         7,640

Small Cap Special Values       Evergreen     Tringas, James              2         2,696.1
Fund
                                Putnam       Harthun, Eric T.            2         $1,267

                                             Shadek, Jr., Edward T.      4         $2,296


Small Cap Strategic Growth     Evergreen     Stevenson, Tim              1          309.6
Fund



Social Awareness Fund           AIGGIC       Azema-Barac, Magali         1           136
                                             Cai, Lan                    17         8,172
                                             Campion, Timothy            19         8,382
                                             Kelly, Michael              5           465
                                             Simmons, Robert             2           327

Stock Index Fund                AIGGIC       Cai, Lan                    17         8,172
                                             Campion, Timothy            19         8,382
                                             Kurtz, James                17         7,849
                                             Simmons, Robert             2           327
                                             Toohey, John                15         7,640

VALIC Ultra Fund               American      Slome, Wade W.              2         $22,671
                                Century      Sullivan, Jerry             4         23,128

                                             OTHER ACCOUNTS*
                                          (As of May 31, 2005)
                            -----------------------------------------------
                             Pooled Investment
                                  Vehicles             Other Accounts
                            ----------------------   ----------------------

                             No. of       Assets      No. of       Assets
        Portfolio           Accounts   ($ millions)  Accounts   ($ millions)
        ---------           --------   ------------  --------   ------------

                              --           --           3            36
                              --           --           3            36

                               4          1,688      12,949        3,131
                               4          1,688      12,949        3,131
                               4          1,688      12,949        3,131
                              --           --          --            --

Money Market I Fund           --           --          --            --

Nasdaq-100(R) Index Fund      --           --           4           981
                               1            5           5          1,102
                               3          1,395        19          3,056
                               1            5           3           463

Science & Technology Fund     --           --          --            --

                               4           407         15            75
                               4           407         15            75

Small Cap Aggressive           2           101         33           944
Growth Fund                    2           101         33           944
                              --           --          --            --

Small Cap Fund                --           --           2           229
                              --           --           2           229
                              --           --           2           229

                               4           663         74          13,659


                               2           254          6          1,009

Small Cap Index Fund          --           --           4           981
                               1            5           5          1,102
                               3          1,395        19          3,056
                               1            5           3           463

Small Cap Special Values      --           --           3          223.8
Fund
                               4(1)     $501 ($38)      7(1)      $1,052
                                                                   ($188)
                               4(2)     $679 ($74)      7(1)        $810
                                                                   ($188)

Small Cap Strategic Growth    --           --           2           61.9
Fund



Social Awareness Fund         --           --           2           786
                              --           --           4           981
                               1            5           5          1,102
                               4           350         18          3,653
                               4           350          8          1,381

Stock Index Fund              --           --           4           981
                               1            5           5          1,102
                               3          1,395        19          3,056
                               4           350          8          1,381
                               1            5           3           463

VALIC Ultra Fund              --           --          --            --
                              --           --          --            --

                                                                          OTHER ACCOUNTS*
                                                                       (As of May 31, 2005)
                                                                      ----------------------
                                                                      Registered Investment
                                                                            Companies
                                                                      ----------------------

                               Advisers/                               No. of      Assets
        Portfolio             Sub-adviser      Portfolio Manager      Accounts  ($ millions)
        ---------             -----------      -----------------      --------  ------------

                                             Wimberly, Bruce              3        23,127

Value Fund                    Oppenheimer    Leavy, Christopher          11        $8,511

                                                 OTHER ACCOUNTS*
                                              (As of May 31, 2005)
                                ------------------------------------------------
                                 Pooled Investment
                                      Vehicles               Other Accounts
                                ----------------------   -----------------------

                                 No. of       Assets      No. of       Assets
        Portfolio               Accounts   ($ millions)  Accounts   ($ millions)
        ---------               --------   ------------  --------   ------------

                                  --            --         --          --

Value Fund                         2           $33          1         $58

* Other Account information with respect to the Broad Cap Value Fund, Foreign Value Fund, Global Equity Fund, Global Strategy Fund, Large Cap Core Fund, Small Cap Aggressive Growth Fund, Small Cap Special Values Fund, Small Cap Strategic Growth Fund, and the VALIC Ultra Fund, is provided as of July 31, 2005.

POTENTIAL CONFLICTS OF INTEREST

As shown in the tables above, the Portfolio Managers are responsible for managing other accounts ("Other Accounts") in addition to the Funds. In certain instances, conflicts may arise in their management of a Fund and such Other Accounts.

- Trade Allocations. One situation where a conflict may arise between the Fund and an Other Account is in the allocation of trades among the Fund and the Other Account. For example, a Sub-adviser may determine that there is a security that is suitable for a Fund as well as for Other Accounts of a Sub-adviser, which has a similar investment objective. Likewise, a particular security may be bought for one or more clients when one or more other clients are selling that same security, which may adversely affect the value of securities held by the Fund. The Trust and the Sub-advisers have adopted policies and procedures regarding the allocation of trades, which generally require that securities be allocated among the Funds and Other Accounts in a manner that is fair, equitable and consistent with their fiduciary obligations to each.

- Performance Based Advisory Fees and Portfolio Manager Compensation. As discussed above, a Sub-adviser may base a Portfolio Manager's incentive compensation only on the performance of the Sub-adviser's proprietary Other Accounts and not those accounts which it serves as a sub-adviser, such as the Funds. This creates a conflict that the Portfolio Manager might focus his attention on those Other Accounts that contribute to his compensation and not on the Funds.

- Allocation of Portfolio Managers' Time. The Portfolio Managers' management of the Funds and Other Accounts may result in portfolio manager devoting a disproportionate amount of time and attention to the management of a Fund and Other Accounts if the Funds and Other Accounts have different objectives, benchmarks, time horizons, and fees. Generally, the Sub-advisers seek to manage such competing interest for the time and attention of the portfolio managers. For example, certain Sub-advisers may have their portfolio managers focus on a particular investment strategy or investment discipline, such as investing primarily in value-oriented equity securities of companies located outside the U.S. In such cases, portfolio holdings, position sizes, and industry and sector exposure tend to be similar across similar portfolios, which may minimize the potential for conflicts of interest. In certain instances, Portfolio Managers may be employed by two or more employers. Where the Portfolio Manager receives greater compensation, benefits or incentives from one employer over another, the Portfolio Manager may favor one employer over the other (or Other Accounts) causing a conflict of interest.

- Personal Trading by Portfolio Managers. The management of personal accounts by a Portfolio Manager may give rise to potential conflicts of interest. While generally, a Sub-adviser's code of ethics will impose limits on the ability of a Portfolio Manager to trade for his or her personal account, there is no assurance that the Sub-advisers' codes of ethics will eliminate such conflicts.

Other than the conflicts described above, the Series Company is not aware of any material conflicts that may arise in the connection with each Sub-adviser's management of the Funds investments and such Other Accounts. We believe

the sub-advisers have adopted procedures reasonably designed to ensure that the Portfolio Managers meet their fiduciary obligations to the Funds for whom they serve as portfolio managers and treat every Fund they sub-advise fairly and equitably over time.

COMPENSATION

Pursuant to the Subadvisory Agreements, each Sub-adviser is responsible for paying its own expenses in connection with the management of the Funds, including the compensation of its Portfolio Managers. The structure and method of compensation of the Portfolio Managers, organized by Sub-adviser, is described below.

AIGGIC

Compensation for AIGGIG portfolio managers has both a salary and a bonus component. The salary component is a fixed base salary, which is generally based upon several factors, including experience and market levels of salary for such position. The bonus component is based both on a portfolio manager's individual performance and the organizational performance of AIGGIC. The bonus component is generally calculated as follows: (1) 60% is linked to the management of a portfolio manager's funds; (2) 20% is based on AIGGIC's profitability; and (3) 20% is determined on a discretionary basis (including individual qualitative goals). For the 60% component, the measures for a portfolio manager may vary according to the day-to-day responsibilities of a particular portfolio manager. The measures comprise any combination of (a) total return measures, (b) benchmark measures and (c) peer group measures. Any long-term compensation may include stock options and restricted stock units, both having vesting schedules.

SAAMCO

SAAMCO's portfolio managers' compensation has both a salary and bonus component. The salary is a fixed annual salary, which is the same for all SunAmerica portfolio managers, and is not based on performance. The bonus components of the portfolio managers' salary are based on both the Fund's individual performance and the organizational performance of SunAmerica. The Fund's individual performance constitutes seventy-five percent (75%) of the bonus component. It is determined by the Fund's pre-tax earnings performance relative to the one-year and three-year Lipper rankings. The amount of the individual performance bonus ranges from zero percent to two hundred and twenty-five percent (0% - 225%) of the portfolio manager's base salary.

The organizational performance component of the portfolio manager's bonus constitutes twenty-five percent (25%) of his bonus. This portion of the bonus ranges frm zero percent up to seventy-five percent (0% - 75%) of his base salary. There are four factors which are used in determining the organizational component of the portfolio manager's bonus: (1) overall profitability of SunAmerica; (2) the portfolio manager's overall process of engagement; (3) the construction of the manager's portfolio and exposure to risk; and (4) the portfolio manager's participation in other activities on behalf of SunAmerica.

AIM

AIM seeks to maintain a compensation program that is competitively positioned to attract and retain higher-caliber investment professionals. Portfolio managers receive a base salary, an incentive bonus opportunity, an equity compensation opportunity, and a benefits package. Portfolio manager compensation is reviewed and may be modified each year as appropriate to reflect changes in the market, as well as to adjust the factors used to determine bonuses to promote good sustained fund performance. AIM evaluates competitive market compensation by reviewing compensation survey results conducted by an independent third party of investment industry compensation. Each portfolio manager's compensation consists of the following five elements:

- BASE SALARY. Each portfolio manager is paid a base salary. In setting the base salary, AIM's intention is to be competitive in light of the particular portfolio manager's experience and responsibilities.

- ANNUAL BONUS. Each portfolio manager is eligible to receive an annual cash bonus which has quantitative and non-quantitative components. Generally, 70% of the bonus is quantitatively determined, based typically on a four-year rolling average of pre-tax performance of all registered investment company accounts for which a portfolio manager has day-to-day management

responsibilities versus the performance of a pre-determined peer group. In instance where a portfolio manager has responsibility for management of more than one fund, an asset weighted four-year rolling average is used.

High fund performance (against applicable peer group) would deliver compensation generally associated with top pay in the industry (determined by reference to the third-party provided compensation survey information) and poor fund performance (versus applicable peer group) could result in no bonus. The amount of fund assets under management typically have an impact on the bonus potential (for example, managing more assets increases the bonus potential); however, this factor typically carries less weight than relative performance. The remaining 30% portion of the bonus is discretionary determined by AIM and takes into account other subjective factors.

- EQUITY-BASED COMPENSATION. Portfolio managers may be awarded options to purchase common shares of AMVESCAP stock from pools determined from time to time by the Remuneration Committee of the AMVESCAP Board of Directors. Awards of equity-based compensation typically vest over time, so as to create incentives to retain key talent.

- PARTICIPATION IN GROUP INSURANCE PROGRAMS. Portfolio managers are eligible to participate in a non-qualified deferred compensation plan, which affords participation employees the tax benefits of deferring the receipt of a portion of their cash compensation.

Portfolio mangers also participate in benefit plans and programs available generally to all employees.

AMERICAN CENTURY

American Century portfolio manager compensation is structured to align the interests of portfolio managers with those of the shareholders whose assets they manage. It includes the components described below, each of which is determined with reference to a number of factors such as overall performance, market competition, and internal equity. Compensation is not directly tied to the value of assets held in client portfolios.

- BASE SALARY. Portfolio managers receive base pay in the form of a fixed annual salary.

- BONUS. A significant portion of portfolio manager compensation takes the form of an annual incentive bonus tied to performance. Bonus payments are determined by a combination of factors. One factor is fund investment performance. For policy portfolios, investment performance is measured by a combination of one- and three-year pre-tax performance relative to a pre-established, internally-customized peer group and/or market benchmark. Custom peer groups are constructed using all the funds in appropriate Lipper or Morningstar categories as a starting point. Funds are then eliminated from the peer group based on a standardized methodology designed to result in a final peer group that more closely represents the fund's true peers based on internal investment mandates and that is more stable (i.e., has less peer turnover) over the long-term. In cases where a portfolio manager has responsibility for more than one policy portfolio, the performance of each is assigned a percentage weight commensurate with the portfolio manager's level of responsibility.

With regard to tracking portfolios, investment performance may be measured in a number of ways. The performance of the tracking portfolio may be measured against a customized peer group and/or market benchmark as described above for policy portfolios. This is the case for the International Growth I Fund. Alternatively, the tracking portfolio may be evaluated relative to the performance of its policy portfolio, with the goal of matching the policy portfolio's performance as closely as possible. In some cases, the performance of a tracking portfolio is not separately considered; rather, the performance of the policy portfolio is the key metric. This ist he case of the Income & Growth Fund and the Small Cap Fund.

A second factor in the bonus calculation relates to the performance of all American Century funds managed according to a particular investment style, such as U.S. growth or value. Performance is measured for each product individually as described above and then combined to create an overall composite for the product group. These composites may measure one-year performance (equal weighted) or a combination of one- and three-year performance (asset weighted) depending on the portfolio manager's responsibilities and products

managed. This feature is designed to encourage effective teamwork among portfolio management teams in achieving long-term investment success for similarly styled portfolios.

A portion of some portfolio managers' bonuses may be tied to individual performance goals, such as research projects and the development of new products.

Finally, portfolio manager bonuses may occasionally be affected by extraordinarily positive or negative financial performance by American Century Companies, Inc. ("ACC"), the adviser's privately-held parent company. This feature has been designed to maintain investment performance as the primary component of portfolio manager bonuses which also providing a link to the adviser's ability to pay.

- RESTRICTED STOCK PLANS. Portfolio managers are eligible for grants of restricted stock of ACC. These grants are discretionary, and eligibility and availability can vary from year to year. The size of an individual's grant is determined by individual and product performance as well as other product-specific considerations. Grants can appreciate/depreciate in value based on the performance of the ACC stock during the restriction period (generally three years).

- DEFERRED COMPENSATION PLANS. Portfolio managers are eligible for grants of deferred compensation. These grants are used in very limited situations, primarily for retention purposes. Grants are fixed and can appreciate/depreciate in value based on the performance of the American Century mutual funds in which the portfolio manager chooses to invest them.

BHMS

In addition to base salary, all portfolio managers and analysts share in a bonus pool that is distributed semi-annually. The amount of bonus compensation is based on quantitative and qualitative factors. Analysts and portfolio managers are rated on their value added to the team-oriented investment process. Compensation is not tied to a published or private benchmark. It is important to understand that contributions to the overall investment process may include not recommending securities in an analyst's sector if there are no compelling opportunities in the industries covered by that analyst.

In addition, many of our employees, including all portfolio managers and analysts, have equity ownership in the firm through "phantom stock" in BHMS, as well as participation in a long-term incentive plan with Old Mutual Asset Management (US). Also, all partners of the firm receive, on a quarterly basis, a share of the firm's profits, which are, to a great extent, related to the performance of the entire investment team.

BRAZOS

Compensation for Brazos portfolio managers is comprised of a base salary, participation in performance-based bonus plans, and employment benefits including an employer match for the 401(k) plan and a traditional pension plan. Each portfolio manager has the same base salary and participates in certain incentive-based bonus plans designed to reward the top portfolio manager(s). The first bonus plan is a plan whereby each portfolio manager receives a bonus for each product which exceeds the performance of its benchmark for the applicable quarter. In the event that a product's performance does not exceed its benchmark's performance, no bonuses are earned or paid under this plan for the applicable quarter. A second bonus plan is a stock selection bonus paid to the top four portfolio managers ranked by the performance of their stock selections over the preceding twelve months. This bonus is paid out semi-annually regardless of product performance. Each portfolio manager is currently a non-equity partner who participates in a bonus pool which size is equal to 20% of the profits of Brazos determined on an annual basis.

CSAM

CSAM's compensation to the portfolio managers of the Small Cap Aggressive Growth Fund includes both a fixed base salary component and bonus component. For the portfolio managers, part of the bonus component is discretionary and generally is determined by considering various factors, such as the assets held in the Fund and other accounts managed by the portfolio managers, business growth, teamwork, management, corporate citizenship, etc. The other part of the bonus generally is determined by the pre-tax investment performance of products, including the Fund, for which they are responsible. CSAM considers both the short-term

(generally one year) and long-term (generally three years) performance of the Messrs. Bernstein and Chung relative to the Russell 2000 Growth Index and Lipper Small Cap Growth Funds peer group and Ms. Pardo relative to the Lipper Mid Cap Growth Funds peer group.

A portion of the bonus may be paid in phantom shares of Credit Suisse Group stock as deferred compensation. Phantom shares are shares representing an unsecured right to receive on a particular date a specified number of registered shares subject to certain terms and conditions. Like all employees of CSAM, portfolio managers participate in CSAM's profit sharing and 401(k) plans.

EVERGREEN

Evergreen portfolio managers' compensation consists primarily of a base salary and an annual bonus. Each portfolio manager's base salary is reviewed annually and adjusted based on consideration of various factors specific to the individual portfolio manager, including, among others, experience, quality of performance record and breadth of management responsibility, and based on a comparison to competitive market data provided by external compensation consultants. The annual bonus pool for portfolio managers and other employees that are eligible to receive bonuses is determined based on the overall profitability of the firm during the relevant year.

The annual bonus has an investment performance component, which accounts for a majority of the annual bonus and a subjective evaluation component. The amount of the investment performance component is based on the pre-tax investment performance of the funds and accounts managed by the individual (or one or more appropriate composites of such funds and accounts) over the prior five years compared to the performance over the same time period of an appropriate benchmark (typically a broad-based index or universe of external funds or managers with similar characteristics). See the information below relating to other funds and accounts managed by the portfolio managers for the specific benchmarks used in evaluating performance. In calculating the amount of the investment performance component, performance for the most recent year is weighted 25%, performance for the most recent three-year period is weighted 50% and performance for the most recent five-year period is weighted 25%.

In general, the investment performance component is determined using a weighted average of investment performance of each product managed by the portfolio manager, with the weighting done based on the amount of assets the portfolio manager is responsible for in each such product. For example, if a portfolio manager was to manage a mutual fund with $400 million in assets and separate accounts totaling $100 million in assets, performance with respect to the mutual fund would be weighted 80% and performance with respect to the separate accounts would be weighted 20%. In certain cases, portfolio weights within the composite may differ from the actual weights as determined by assets. For example, a very small fund's weight within a composite may be increased to create a meaningful contribution.

To be eligible for an investment performance related bonus, the time-weighted average percentile rank must be above the 50th percentile. A portfolio manager has the opportunity to maximize the investment component of the incentive payout by generating performance at or above the 25th percentile level.

In determining the subjective evaluation component of the bonus, each manager is measured against predetermined objectives and evaluated in light of other discretionary considerations. Objectives are set in several categories, including teamwork, participation in various assignments, leadership, and development of staff.

The investment performance component of each portfolio manager's bonus was determined based on comparisons to the benchmarks (either to the individual benchmark or one or more composites of all or some of such benchmarks) indicated below. The benchmarks may change on an annual basis for purposes of calculating bonus compensation.

  PORTFOLIO MANAGER                       INCENTIVE BENCHMARKS
  -----------------                       --------------------
Walter T. McCormick                     Lipper Equity Income
                                        Lipper Global Funds
                                        Lipper Large Cap Core
                                        Lipper Large Cap Growth
                                        Lipper Large Cap Value
                                        Lipper Multi Cap Growth
                                        Lipper Multi Cap Value
                                        Lipper Small Cap Value
                                        Lipper Technology
                                        Lipper Utility

Tim Stevenson                           Lipper Small Cap Growth
                                        Callan Small Cap Growth - Mutual Funds
                                        Callan Small Cap Growth - Institutional Funds

James M. Tringas                        Lipper Equity Income
                                        Lipper Large Cap Core
                                        Lipper Multi Cap Value
                                        Lipper Small Cap Value
                                        Lipper Utility

Portfolio managers may also receive equity incentive awards (non-qualified stock options and/or restricted stock) in Wachovia Corporation, Evergreen's publicly traded parent company, based on their performance and/or positions held. Equity incentive awards are made based on subjective review of the factors that are considered in determining base salary and the annual bonus.

In addition, portfolio managers may participate, at their election, in various benefits programs, including the following: medical, dental, vision and prescription benefits, life, disability and long-term care insurance, before-tax spending accounts relating to dependent care, health care, transportation and parking, and various other services, such as family counseling and employee assistance programs, prepaid or discounted legal services, health care advisory programs and access to discount retail services.

These benefits are broadly available to Evergreen employees. Senior level employees, including many portfolio managers but also including many other senior level executives, may pay more or less than employees that are not senior level for certain benefits, or be eligible for, or required to participate in, certain benefits programs not available to employees who are not senior level. For example, only senior level employees above a certain compensation level are eligible to participate in the Wachovia Corporation deferred compensation plan, and certain senior level employees are required to participate in the deferred compensation plan.

FRANKLIN ADVISERS

Franklin Advisers seeks to maintain a compensation program that is competitively positioned to attract, retain and motivate top-quality investment professionals. Portfolio managers receive a base salary, an incentive bonus opportunity, an equity compensation opportunity, and a benefits package. Portfolio manager compensation is reviewed annually and the level of compensation is based on individual performance, the salary range for a portfolio manager's level of responsibility and Franklin Adviser guidelines. Portfolio managers are provided no financial incentive to favor one fund or account over another. Each portfolio manager's compensation consists of the following three elements:

Base salary. Each portfolio manager is paid a base salary.

Annual bonus. Annual bonuses are structured to align the interests of the portfolio managers with those of a Fund's shareholders. Each portfolio manager is eligible to receive an annual bonus. Bonuses generally are split between cash (50% to 65%) and restricted shares of Franklin Resources stock which vest over a three-year period (35% to

The deferred equity based compensation is intended to build a vested interest of the portfolio manager in Franklin Resources. The bonus plan is intended to provide a competitive level of annual bonus compensation that is tied to the portfolio manager achieving consistently strong investment performance, which aligns the financial incentives of the portfolio manager and Fund shareholders. The following factors are generally used in determining bonuses under the plan:

- Investment Performance. Primary consideration is given to the historic investment performance of all accounts managed by the portfolio manager over the 1, 3 and 5 preceding years measured against risk benchmarks developed by the fixed income management team. The pre-tax performance of each fund managed is measured relative to a relevant peer group and/or applicable benchmark as appropriate.

- Non-Investment Performance. The more qualitative contributions of a portfolio manager to an Adviser's business and the investment management team, including business knowledge, productivity, customer service, creativity, and contribution to team goals, are evaluated in determining the amount of any bonus award.

- Responsibilities: The size and complexity of funds managed by the portfolio manager are factored in the manager's appraisal.

Additional long term equity-based compensation. Portfolio managers also may be awarded options to purchase shares of Franklin Resources, restricted shares Franklin Resources stock or restricted shares of one or more mutual funds. Awards of such deferred equity-based compensation typically vest over time, so as to create incentives to retain key talent.

Portfolio managers also participate in benefit plans and programs available generally to all employees of Franklin Advisers

FRANKLIN PORTFOLIO

The portfolio manager's cash compensation is comprised primarily of a market-based salary and an incentive compensation plan (annual and long term incentive). Funding for the FPA Annual Incentive Plan and Long Term Incentive Plan is through a pre-determined fixed percentage of overall company profitability. Therefore, all bonus awards are based initially on Company performance. The investment professionals are eligible to receive annual cash bonus awards from the incentive compensation plan. Annual awards are granted in March, for the prior calendar year. Individual awards for investment professionals are discretionary, based on product performance relative to both benchmarks and peer comparisons and goals established at the beginning of each calendar year. Goals are to a substantial degree based on investment performance, including performance for one and three year periods. Also considered in determining individual awards are team participation and general contributions to FPA.

All portfolio managers are also eligible to participate in the FPA Long Term Investment Plan. This plan provides for an annual award, payable in deferred cash that cliff vests after 3 years, with an interest rate equal to the average year over year earnings growth of FPA (capped at 20% per year). Management has discretion with respect to actual participation and award size.

Mellon Elective Deferred Compensation Plan Portfolio managers whose compensation exceeds certain levels may elect to defer portions of their base salaries and/or incentive compensation pursuant to Mellon's elective deferred compensation plan.

MFS

Portfolio manager total cash compensation is a combination of base salary and performance bonus:

- BASE SALARY. Base salary represents a relatively smaller percentage of portfolio manager total cash compensation (generally below 33%) than incentive compensation.

- PERFORMANCE BONUS. Generally, incentive compensation represents a majority of portfolio manager total cash compensation. The performance bonus is based on a combination of quantitative and qualitative factors, with more weight given to the former (generally over 60%) and less weight given to the latter.

The quantitative portion is based on pre-tax performance of all of the accounts managed by the portfolio manager (which includes the Fund and any other accounts managed by the portfolio manager) over a one-, three- and five-year period relative to the appropriate Lipper peer group universe and/or one or more benchmark indices, with respect to each account. The primary weight is given to portfolio performance over a three-year time period with lesser consideration given to portfolio performance over one- and five-year periods (adjusted as appropriate if the portfolio manager has served for shorter periods).

The qualitative portion is based on the results of an annual internal peer review process (conducted by other portfolio managers, analysts and traders) and management's assessment of overall portfolio manager contributions to the investment process (distinct from portfolio performance).

Portfolio managers also typically benefit from the opportunity to participate in the MFS Equity Plan. Equity interests in MFS or its parent company are awarded by management, on a discretionary basis, taking into account tenure at MFS, contribution to the investment process and other factors.

Finally, portfolio managers are provided with a benefits package including a defined contribution plan, health coverage and other insurance, which are available to other employees of MFS on substantially similar terms. The percentage of compensation provided by these benefits depends upon the length of the individual's tenure at MFS and salary level as well as other factors.

OPPENHEIMER

As indicated above, the Portfolio Manager also manages other funds and accounts. Potentially, at times, those responsibilities could conflict with the interests of the Fund. That may occur whether the investment objectives and strategies of the other funds and accounts are the same as, or different from, the Fund's investment objectives and strategies. For example the Portfolio Manager may need to allocate investment opportunities between the Fund and another fund or account having similar objectives or strategies, or he may need to execute transactions for another fund or account that could have a negative impact on the value of securities held by the Fund. Not all funds and accounts advised by the Manager have the same management fee. If the management fee structure of another fund or account is more advantageous to the Manager than the fee structure of the Fund, the Manager could have an incentive to favor the other fund or account. However, the Manager's compliance procedures and Code of Ethics recognize the Manager's fiduciary obligation to treat all of its clients, including the Fund, fairly and equitably, and are designed to preclude the Portfolio Manager from favoring one client over another. It is possible, of course, that those compliance procedures and the Code of Ethics may not always be adequate to do so. At different times, the Fund's Portfolio Manager may manage other funds or accounts with investment objectives and strategies similar to those of the Fund, or he may manage funds or accounts with different investment objectives and strategies.

- COMPENSATION OF THE PORTFOLIO MANAGERS. The Fund's Portfolio Manager is employed and compensated by the Manager, not the Fund. Under the Manager's compensation program for its portfolio managers and portfolio analysts, their compensation is based primarily on the investment performance results of the funds and accounts they manage, rather than on the financial success of the Manager. This is intended to align the portfolio managers' and analysts' interests with the success of the funds and accounts and their investors. The Manager's compensation structure is designed to attract and retain highly qualified investment management professionals and to reward individual and team contributions toward creating shareholder value. As of December 31, 2004, the Portfolio Manager's compensation consisted of three elements: a base salary, an annual discretionary bonus and eligibility to participate in long-term awards of options and appreciation rights in regard to the common stock of the Manager's holding company parent. Senior portfolio managers may also be eligible to participate in the Manager's deferred compensation plan.

The base pay component of each portfolio manager is reviewed regularly to ensure that it reflects the performance of the individual, is commensurate with the requirements of the particular portfolio, reflects any specific competence or specialty of the individual manager, and is competitive with other

comparable positions, to help the Manager attract and retain talent. The annual discretionary bonus is determined by senior management of the Manager and is based on a number of factors, including a fund's pre-tax performance for periods of up to five years, measured against an appropriate benchmark selected by management. The Lipper benchmark with respect to the Fund is Lipper Large Cap Value. Other factors include management quality (such as style consistency, risk management, sector coverage, team leadership and coaching) and organizational development. The Portfolio Manager's compensation is not based on the total value of the Fund's portfolio assets, although the Fund's investment performance may increase those assets. The compensation structure is also intended to be internally equitable and serve to reduce potential conflicts of interest between the Fund and other funds and accounts managed by the Portfolio Manager. The compensation structure of the other funds and accounts managed by the Portfolio Manager is the same as the compensation structure of the Fund, described above.

PUTNAM

Putnam believes that its investment management teams should be compensated primarily based on their success in helping investors achieve their goals. The portion of Putnam's total incentive compensation pool that is available to its Investment Division is based primarily on its delivery, across all of the portfolios it manages, of consistent, dependable and superior performance over time. The peer group for the Global Strategy Fund, Global Large-Cap Core Funds, is its broad investment category as determined by Lipper Inc. The portion of the incentive compensation pool available to your investment management team is also based primarily on its delivery, across all of the portfolios it manages, of consistent, dependable and superior performance over time.

- Consistent performance means being above median over one year.

- Dependable performance means not being in the 4th quartile of the peer group over one, three or five years.

- Superior performance (which is the largest component of Putnam's incentive compensation program) means being in the top third of the peer group over three and five years.

In determining an investment management team's portion of the incentive compensation pool and allocating that portion to individual team members, Putnam retains discretion to reward or penalize teams or individuals as it deems appropriate, based on other factors. The size of the overall incentive compensation pool each year is determined by Putnam's parent company, Marsh & McLennan Companies, Inc., and depends in large part on Putnam's profitability for the year. Incentive compensation generally represents at least 70% of the total compensation paid to investment team members.

RCM CAPITAL

RCM Capital operates under a merit system with compensation having the following components:

- Competitive salaries

- Competitive bonus

- Profit Sharing Plan and Phantom Equity Plan

RCM's compensation strategy begins by preparing competitive benchmarks for each professional in the firm. The overwhelming factor affecting compensation for portfolio managers and analysts is a quantitative measurement of overall performance, both individual and team, relative to peers and appropriate benchmarks on both a one and three year basis. In addition, analysts are evaluated on their ability to successfully advocate and influence portfolio manager investment decisions.

In 2003, a new profit sharing plan was implemented at RCM that was consistent with the profit sharing arrangements agreed upon with the other Allianz Global Investors equity and fixed income platforms in the United States. In this arrangement, a significant percentage of operating income remains with the Firm. In turn, these profits are shared with key investment and business management professionals on an annual basis. The Firm has also implemented a Phantom Equity Plan. This Plan is designed to provide a long term incentive program for our current and future contributors to investment and business performance. Participation in this program is determined each year by the Firm's Management Committee. Allocations vest over a number of years.

T. ROWE PRICE

PORTFOLIO MANAGER COMPENSATION. Portfolio manger compensation consists primarily of a base salary, as cash bonus, and an equity incentive that usually comes in the form of a stock option grant. Occasionally, portfolio managers will also have the opportunity to participate in venture capital partnerships. Compensation is variable and is determined based on the following factors.

Investment performance over one, three, five, and 10-year periods is the most important input. We evaluate performance in absolute, relative, and risk-adjusted terms. Relative performance and risk-adjusted performance are determined with reference to the broad based index (ex. S&P500) and an applicable Lipper index (ex. Large Cap Growth), though other benchmarks may be used as well. Investment results are also compared to comparably managed funds of competitive investment management firms.

Performance is primarily measured on a pre-tax basis though tax-efficiency is considered and is especially important for tax efficient funds. It is important to note that compensation is viewed with a long term time horizon. The more consistent a manger's performance over time, the higher the compensation opportunity. The increase or decrease in a fund's assets due to the purchase or sale of fund shares is not considered a material factor.

Contribution to our overall investment process is an important consideration as well. Sharing ideas with other portfolio managers, working effectively with and mentoring our younger analysts, and being good corporate citizens are important components of our long term success and are highly valued.

All employees of T. Rowe Price, including portfolio managers, participate in a 401(k) plan sponsored by T. Rowe Price Group. In addition, all employees are eligible to purchase T. Rowe Price common stock through an employee stock purchase plan that features a limited corporate matching contribution. Eligibility for and participation in these plans is on the same basis as for all employees. Finally, all vice presidents of T. Rowe Price Group, including all portfolio managers, receive supplemental medical/hospital reimbursement benefits.

This compensation structure is used for all portfolios managed by the portfolio manager.

TEMPLETON GLOBAL AND TEMPLETON INVESTMENT

Templeton Global and Templeton Investment seeks to maintain compensation programs that are competitively positioned to attract, retain and motivate top-quality investment professionals. Portfolio managers receive a base salary, an incentive bonus opportunity, an equity compensation opportunity, and a benefits package. Portfolio manager compensation is reviewed annually and the level of compensation is based on individual performance, the salary range for a portfolio manager's level of responsibility and Franklin Templeton guidelines. Portfolio managers are provided no financial incentive to favor one fund or account over another. Each portfolio manager's compensation consists of the following three elements:

Base salary. Each portfolio manager is paid a base salary.

- Investment Performance. Primary consideration is given to the historic investment performance over the 1, 3 and 5 preceding years of all accounts managed by the portfolio manager. The pre-tax performance of each fund managed is measured relative to a relevant peer group and/or applicable benchmark as appropriate.

- Non-Investment Performance. For senior portfolio managers, there is a qualitative evaluation based on leadership and mentoring of staff.

- Responsibilities. The size and complexity of funds managed by the portfolio manager are factored in the manager's appraisal; and

- Research. Where the portfolio management team also has research responsibilities, each portfolio manager is evaluated on the number and performance of recommendations over time, productivity and quality of recommendations, and peer evaluation.

Portfolio managers also participate in benefit plans and programs available generally to all employees of their respective Adviser.

VAN KAMPEN

Portfolio managers receive a combination of base compensation and discretionary compensation, comprising a cash bonus and several deferred compensation programs described below. The methodology used to determine portfolio manager compensation is applied across all accounts managed by the portfolio manager.

- BASE SALARY COMPENSATION. Generally, portfolio managers receive base salary compensation based on the level of their position with the Investment Adviser.

- DISCRETIONARY COMPENSATION. In addition to base compensation, portfolio managers may receive discretionary compensation. Discretionary compensation can include

- CASH BONUS;

- MORGAN STANLEY'S EQUITY INCENTIVE COMPENSATION PROGRAM (EICP) AWARDS - a mandatory program that defers a portion of discretionary year-end compensation into restricted stock units or other awards based on Morgan Stanley common stock that are subject to vesting and other conditions;

- INVESTMENT MANAGEMENT DEFERRED COMPENSATION PLAN (IMDCP) AWARDS - a mandatory program that defers a portion of discretionary year-end compensation and notionally invests it in designated funds advised by the Investment Adviser or its affiliates. The award is subject to vesting and other conditions. Portfolio Managers must notionally invest a minimum of 25% to a maximum of 50% of the IMDCP deferral into a combination of the designated funds they manage that are included in the IMDCP fund menu, which may or may not include the Portfolio;

- SELECT EMPLOYEES' CAPITAL ACCUMULATION PROGRAM (SECAP) AWARDS - a voluntary program that permits employees to elect to defer a portion of their discretionary compensation and notionally invest the deferred amount across a range of designated investment funds, including funds advised by the Investment Adviser or its affiliates; and

- VOLUNTARY EQUITY INCENTIVE COMPENSATION PROGRAM (VEICP) AWARDS - a voluntary program that permits employees to elect to defer a portion of their discretionary compensation to invest in Morgan Stanley stock units.

Several factors determine discretionary compensation, which can vary by portfolio management team and circumstances. In order of relative importance, these factors include:

- Investment performance. A portfolio manager's compensation is linked to the pre-tax investment performance of the accounts managed by the portfolio manager. Investment performance is calculated for one-, three- and five-year periods measured against a fund's primary benchmark (as set forth in the fund's prospectus), indices and/or peer groups. Generally, the greatest weight is placed on the three- and five-year periods.

- Revenues generated by the investment companies, pooled investment vehicles and other accounts managed by the portfolio manager.

- Contribution to the business objectives of the Investment Adviser.

- The dollar amount of assets managed by the portfolio manager.

- Market compensation survey research by independent third parties.

- Other qualitative factors, such as contributions to client objectives.

- Performance of Morgan Stanley and Morgan Stanley Investment Management, and the overall performance of the Global Investor Group, a department within Morgan Stanley Investment Management, that includes all investment professionals.

Occasionally, to attract new hires or to retain key employees, the total amount of compensation will be guaranteed in advance of the fiscal year end based on current market levels. In limited circumstances, the guarantee may continue for more than one year. The guaranteed compensation is based on the same factors as those comprising overall compensation described above.

WELLINGTON MANAGEMENT

Conflicts of Interest between the Fund Sub-Advised by Wellington Management and Other Accounts

Individual investment professionals manage multiple portfolios for multiple clients. These accounts may include mutual funds, separate accounts (assets managed on behalf of institutions such as pension funds, insurance companies, foundations), bank common trust accounts, and hedge funds. The Fund's portfolio managers listed in the prospectus who are primarily responsible for the day-to-day management of the Fund ("Investment Professionals") generally manage portfolios in several different investment styles. These portfolios may have investment objectives, strategies, time horizons, tax considerations and risk profiles that differ from those of the Fund. The Investment Professionals make investment decisions for each portfolio based on the investment objectives, policies, practices, benchmarks, cash flows, tax and other relevant investment considerations applicable to that portfolio. Consequently, the Investment Professionals may purchase or sell securities, including IPOs, for one portfolio and not another portfolio, and the performance of securities purchased for one portfolio may vary from the performance of securities purchased for other portfolios. An Investment Professional or other investment professionals at Wellington Management may place transactions on behalf of other accounts that are directly or indirectly contrary to investment decisions made of behalf of the Fund, or make investment decisions that are similar to those made for the Fund, both of which have the potential to adversely impact the Fund depending on market conditions. For example an Investment Professional may purchase a security in one portfolio while appropriately selling that same security in another portfolio. In addition, some of these portfolios have fee structures, including performance fees, that are or have the potential to be higher, in some cases significantly higher, than the fees paid by the Fund to Wellington Management. Because incentive payments are tied to revenues earned by Wellington Management and, where noted, to the performance achieved by the manager in each account, the incentives associated with any given portfolio may be significantly higher or lower than those associated with other accounts managed by a given Investment Professional.

Wellington Management's goal is to meet its fiduciary obligation to treat all clients fairly and provide high quality investment services to all of its clients. Wellington Management has adopted and implemented policies and procedures, that it believes address the conflicts associated with managing multiple accounts for multiple clients. In addition, Wellington Management monitors a variety of areas, including compliance with primary fund guidelines, the allocation of IPOs, and compliance with the firm's Code of Ethics, and places additional investment restrictions on Investment Professionals who manage hedge funds and certain other accounts. Furthermore, senior investment and business personnel at Wellington Management periodically review the performance of the Investment Professionals. Although Wellington Management does not track the time an Investment Professional spends on a single portfolio, Wellington Management does periodically assess whether an Investment Professional has adequate time and resources to effectively manage the Investment Professional's various client mandates.

- DESCRIPTION OF COMPENSATION. The Fund pays Wellington Management a fee based on the assets under management of the Fund as set forth in the Investment Sub-Advisory Agreement between Wellington Management and The Variable Annuity Life Insurance Company on behalf of the Fund. Wellington Management pays its investment professionals out of its total revenues and other resources, including the

advisory fees earned with respect to the Fund. The following information relates to the period ended May 31, 2005.

Wellington Management's compensation structure is designed to attract and retain high-caliber investment professionals necessary to deliver high quality investment management services to its clients. Wellington Management's compensation of the Investment Professionals includes a base salary and incentive components. The base salary for each Investment Professional who is a partner of Wellington Management is determined by the Managing Partners of the firm. A partner's base salary is generally a fixed amount that may change as a result of an annual review. The base salaries for all other Investment Professionals are determined by the Investment Professional's experience and performance in their respective roles. Base salaries for non-partners are reviewed annually and may be adjusted based on the recommendation of the Investment Professional's business manager, using guidelines established by Wellington Management's Compensation Committee, which has final oversight responsibility for base salaries for non-partners. Each Investment Professional is eligible to receive an incentive payment based on the revenues earned by Wellington Management from the Fund managed by the Investment Professional and generally each other portfolio managed by such Investment Professional. Each equity Investment Professional's incentive payment relating to the Fund is linked to the gross pre-tax performance of the portion of the Fund managed by the Investment Professional compared to the S&P 500 Index over one and three year periods, with an emphasis on three year results. Wellington Management applies similar incentive compensation structures (although the benchmarks or peer groups, time periods and rates may differ) to other portfolios managed by the equity Investment Professionals, including portfolios with performance fees. Portfolio-based incentives across all portfolios managed by an Investment Professional can, and typically do, represent a significant portion of an Investment Professional's overall compensation; incentive compensation varies significantly by individual and can vary significantly from year to year. The Investment Professionals may also be eligible for bonus payments based on their overall contribution to Wellington Management's business operations. Senior management at Wellington Management may reward individuals as it deems appropriate based on factors other than portfolio performance. Each partner of Wellington Management is also eligible to participate in a partner-funded tax qualified retirement plan, the contributions to which are made pursuant to an actuarial formula, as a partner of the firm. Mr. Megargel is a partner of the firm.

WM ADVISORS

WM Advisors, Inc. believes that its portfolio managers should be compensated primarily based on their success in helping investors achieve their goals. Portfolio managers employed by WM Advisors, Inc. receive a fixed salary as well as incentive-based compensation. Salary is based on a variety of factors, including seniority. A national survey of compensation for investment advisers is used as a reference when determining salary. The incentive-based portion of the portfolio manager' compensation is determined by an evaluation of their professional performance and investment performance. Professional performance is assessed by reference to a portfolio manager's satisfaction of goals such as those related to compliance, team contribution, and quality and intensity of research, and is inherently subjective. Investment performance is based on a comparison of the portfolio manager's investment performance with the performance of peer groups as determined by Lipper, Inc. Each portfolio manager's performance is based on the percentile rankings of the WM Funds or WM Portfolios for which the manager is primarily responsible as well as the WM Funds or WM Portfolios to whose management the manager contributes, with the performance of the primary WM Funds or WM Portfolios being weighted more heavily. Incentive compensation can be targeted up to 85% of a portfolio manager's total compensation. Twenty-five percent of the incentive-based compensation is credited to a deferred compensation account with a three-year vesting schedule. The value of this account is adjusted as though the account had been invested directly in the WM Funds or WM Portfolios to whose management the portfolio manager contributes, with the primary WM Funds or WM Portfolios being weighted more heavily. This is intended to help align the portfolio manager's economic interests with those of the shareholders of the applicable WM Fund or WM Portfolio. In addition, certain portfolio managers receive an additional amount that is placed in a deferred compensation account identical to the previously described deferred compensation account except that the amount in the account vests after three years instead of one-third vesting each year. All portfolio managers are eligible to participate in the firm's standard employee health and welfare programs, including retirement.

Although the VALIC Co. I Core Equity Fund is managed similarly to other accounts managed by WM Advisors, Inc., portfolio manager compensation is not based on the investment performance of the VALIC Company I Core Equity Fund.

OWNERSHIP OF PORTFOLIO SHARES

As of May 31, 2005, none of the Portfolio Managers who are primarily responsible for the day-to-day management of the Portfolios had any ownership interest in a Portfolio that they managed.

PORTFOLIO TURNOVER

For the fiscal year ended May 31, 2005, the portfolio turnover rate was lower than the previous year for the Growth & Income Fund due to an unusually high volume of trading. For the fiscal year ended May 31, 2005, the portfolio turnover rate was higher than the previous year for the Small Cap Fund due to the transition of a portion of the Fund's assets to two new additional sub-advisers in June 2004, which required that a large portion of the Fund's holdings be sold.

For the fiscal year ended May 31, 2005, the portfolio turnover rate was higher than the previous year for the Government Securities Fund due to increased opportunities in the corporate sector and the repositioning of the Fund's holdings to take advantage of such opportunities. For the same period, the portfolio turnover rate was higher than the previous year for the Asset Allocation Fund due to the realignment of the equity portion of the Fund. For the same period, the portfolio turnover rate was higher than the previous year for the International Equities Fund due to the increase in cash flows into the Fund and the acquisition of numerous stocks in the Japanese market.

For the fiscal year ended May 31, 2005, the portfolio turnover rate was higher than the previous year for the Value Fund due to a change of a sub-adviser in June 2004 and the realignment of the Fund's holdings in connection therewith.

PORTFOLIO TRANSACTIONS AND BROKERAGE

VALIC utilizes the assistance of Sub-advisers in selecting brokers or dealers to handle transactions for the Funds. 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 I Fund, the Capital Conservation Fund, the Government Securities Fund, the Inflation Protected 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 Mid Cap Index Fund, the Stock Index Fund, the International Equities Fund, the Small Cap Index Fund, the Nasdaq-100(R) Index Fund, the Blue Chip Growth 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, Growth & Income Fund, Income & Growth Fund, International Growth I Fund, Large Cap Growth Fund, Large Capital Growth Fund, Mid Cap Strategic Growth Fund, Health Sciences Fund, the Small Cap Fund, Science & Technology Fund and VALIC Ultra 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 the over-the-counter market, securities are generally traded on a "net" basis with dealers acting as principal for their own accounts without a stated commission, although the price of a security usually includes a profit to the dealer. The Fund's portfolios may, however, effect certain "riskless principal transactions" in the over-the-counter market with a stated commission. In underwritten offerings, securities are purchased at a fixed price, which includes an amount of compensation to the underwriter, generally referred to as the underwriter's concession or discount. On occasion, certain money market instruments may be purchased directly from an issuer, in which case no commissions or discounts are paid.

In purchasing and selling each Fund's portfolio securities, it is the policy of the Sub-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 Sub-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; and the reliability, integrity, financial condition, general execution, and operational capabilities of that firm and competing broker-dealers. In over-the-counter transactions, the Sub-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 Sub-advisers seek the best overall price and execution at the most favorable commission rate (except when higher brokerage commissions are paid to obtain directed brokerage and research services, as explained below). When the Sub-advisers believe that more than one firm meets these criteria the Sub-advisers may prefer brokers who provide the Sub-advisers or the Series Company with directed brokerage and research services, described below.

Commission Recapture: A commission recapture arrangement includes those arrangements under which products or services (other than execution of securities transactions) or commissions are recaptured for a client from or through a broker-dealer, in exchange for directing the client's brokerage transactions to that broker-dealer. The Board of Directors has determined that a commission recapture arrangement with State Street Brokerage, Lynch Jones and Ryan, and/or any other comparable broker-dealer is in the best interest of each Fund and its shareholders and therefore has conveyed the information to Sub-advisers. A Fund may participate in commission recapture arrangements, provided the portfolio manager can still obtain the best price and execution for trades. Commission recapture arrangements are generally subject to a maximum of 20% of a Fund's eligible commissions. Thus, a Fund may benefit from the products or services or recaptured commissions obtained through the commission recapture arrangement, although there may be other transaction costs, greater spreads, or less favorable net prices on transactions. As long as the trader executing the transaction for a Fund indicates that this is a commission recapture transaction, the Fund will get a percentage of commissions paid on either domestic trades or international trades credited back to the Fund. The brokerage of one Fund will not be used to help pay the expenses of any other Fund. VALIC will continue to waive its fees or reimburse expenses for any Fund for which it has agreed to do so. All expenses paid through the commission recapture arrangements will be over and above such waivers and/or reimbursements, so that VALIC will not receive any direct or indirect economic benefit from the commission recapture arrangements.

The following chart reflects the commission recapture activity for the periods ended May 31, 2005, 2004 and 2003.

                                Fiscal Year     % of Net     Fiscal Year      % of Net       Fiscal Year       % of Net
                                   Ending        Assets         Ending         Assets          Ending           Assets
                                   ------        ------         ------         ------          ------           ------
                                 05/31/2005    05/31/2005     05/31/2004     05/31/2004      05/31/2003       05/31/2003
                                 ----------    ----------     ----------     ----------      ----------       ----------

Core Equity Fund                   $65,298          0.01%       $63,017           0.01%         $273,263           0.05%
Blue Chip Growth Fund                2,522          0.01%         4,618           0.01%            5,039           0.03%
Health Sciences Fund                16,441          0.01%        29,213           0.03%           14,735           0.03%
Science & Technology Fund          142,074          0.01%       195,895           0.01%          170,767           0.02%

Research services: The Sub-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 Sub-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 Sub-advisers viewed in terms of either that particular transaction or the overall responsibilities of the Sub-advisers. The Sub-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 Sub-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 Sub-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 Sub-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 Sub-advisers' overall responsibilities with respect to accounts for which they exercise investment discretion.

The Sub-advisers receive research services at no cost and cannot assign any specific monetary value to them; nevertheless, the Sub-advisers believe these supplemental investment research services are essential to the Sub-adviser's 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 Sub-advisers in servicing all of the Funds, and the Sub-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 tables list brokerage commissions paid by each Fund on portfolio transactions for the fiscal years ended May 31, 2005, 2004 and 2003. Unless otherwise noted, the Funds paid no brokerage commissions to brokers for research services provided to the Sub-advisers.

2005 BROKERAGE COMMISSIONS

                                                                                                      PERCENTAGE OF AMOUNT OF
                                                                                  PERCENTAGE OF       TRANSACTIONS INVOLVING
                                              AGGREGATE       AMOUNT PAID TO   COMMISSIONS PAID TO    PAYMENTS OF COMMISSIONS
                                              BROKERAGE         AFFILIATED          AFFILIATED             TO AFFILIATED
                  FUND                        COMMISSION     BROKER-DEALERS*     BROKER-DEALERS*          BROKER-DEALERS
                  ----                        ----------     ---------------     ---------------          --------------
Asset Allocation Fund                            $105,217             --             0.00%                      0.00%
Blue Chip Growth Fund                              30,961             --             0.00%                      0.00%
Capital Conservation Fund                              --             --             0.00%                      0.00%
Core Equity Fund                                  471,960             --             0.00%                      0.00%
Government Securities Fund                             --             --             0.00%                      0.00%
Growth & Income Fund                              383,947             --             0.00%                      0.00%
Health Sciences Fund                              221,488             --             0.00%                      0.00%
Income & Growth Fund                              500,158             --             0.00%                      0.00%
Inflation Protected Fund                               --             --             0.00%                      0.00%
International Equities Fund                       310,288             --             0.00%                      0.00%
International Government Bond Fund                     25             --             0.00%                      0.00%
International Growth I Fund                     1,070,292        $27,833             2.60%                      2.52%
Large Cap Growth Fund                           1,412,316             --             0.00%                      0.00%
Large Capital Growth Fund                          17,756             --             0.00%                      0.00%
Mid Cap Index Fund                                137,937             --             0.00%                      0.00%
Mid Cap Strategic Growth Fund                      25,264              5             0.02%                      0.03%
Money Market I Fund                                    --             --             0.00%                      0.00%
Nasdaq-100(R) Index Fund                           10,962             --             0.00%                      0.00%
Science & Technology Fund                       2,390,216             --             0.00%                      0.00%
Small Cap Fund                                  1,607,267             --             0.00%                      0.00%
Small Cap Index Fund                              260,614             --             0.00%                      0.00%
Social Awareness Fund                             462,544             --             0.00%                      0.00%
Stock Index Fund                                   77,957             --             0.00%                      0.00%
Value Fund                                         52,307             56             0.11%                      0.09%

* The affiliated broker-dealers that affected transactions with the indicated Funds was J.P. Morgan, Morgan Stanley & Co., Inc. and Oppenheimer & Co., Inc.

2004 BROKERAGE COMMISSIONS

                                                                                                      PERCENTAGE OF AMOUNT OF
                                                                                  PERCENTAGE OF       TRANSACTIONS INVOLVING
                                              AGGREGATE       AMOUNT PAID TO   COMMISSIONS PAID TO    PAYMENTS OF COMMISSIONS
                                              BROKERAGE         AFFILIATED          AFFILIATED             TO AFFILIATED
                  FUND                        COMMISSION     BROKER-DEALERS*     BROKER-DEALERS*          BROKER-DEALERS
                  ----                        ----------     ---------------     ---------------          --------------
Asset Allocation Fund                           $47,888             --               0.00%                      0.00%
Blue Chip Growth Fund                            28,731             --               0.00%                      0.00%
Capital Conservation Fund                            --             --               0.00%                      0.00%
Core Equity Fund                                477,643             --               0.00%                      0.00%

Government Securities Fund                           --             --               0.00%                      0.00%
Growth & Income Fund                            968,464         $1,000               0.10%                      0.15%
Health Sciences Fund                            201,163             --               0.00%                      0.00%
Income & Growth Fund                            589,185             23               0.00%                      0.01%
International Equities Fund                      80,845             --               0.00%                      0.00%
International Government Bond Fund                   --             --               0.00%                      0.00%
International Growth I Fund                   1,919,971        110,348               5.75%                      4.86%
Large Cap Growth Fund                         1,942,873          6,000               0.31%                      0.48%
Mid Cap Index Fund                              124,388             --               0.00%                      0.00%
Money Market I Fund                                  --             --               0.00%                      0.00%
Nasdaq-100(R) Index Fund                         35,395             --               0.00%                      0.00%
Science & Technology Fund                     2,554,269             --               0.00%                      0.00%
Small Cap Fund                                1,454,002             --               0.00%                      0.00%
Small Cap Index Fund                            143,437             --               0.00%                      0.00%
Social Awareness Fund                           638,505             --               0.00%                      0.00%
Stock Index Fund                                 95,171             --               0.00%                      0.00%
Value Fund                                       12,807             --               0.00%                      0.00%

* The affiliated broker-dealers that affected transactions with the indicated Funds was J.P. Morgan/Chase and Blaylock & Partners.

2003 BROKERAGE COMMISSIONS

                                                                                                     PERCENTAGE OF AMOUNT OF
                                                                                  PERCENTAGE OF      TRANSACTIONS INVOLVING
                                             AGGREGATE        AMOUNT PAID TO     COMMISSIONS PAID    PAYMENTS OF COMMISSIONS
                                             BROKERAGE          AFFILIATED        TO AFFILIATED           TO AFFILIATED
                  FUND                       COMMISSION      BROKER-DEALERS*     BROKER-DEALERS*         BROKER-DEALERS
                  ----                       ----------      ---------------     ---------------         --------------
Asset Allocation Fund                           $45,549             --               0.00%                      0.00%
Blue Chip Growth Fund                            23,870             --               0.00%                      0.00%
Capital Conservation Fund                            --             --               0.00%                      0.00%
Core Equity Fund                                520,339             --               0.00%                      0.00%
Government Securities Fund                           --             --               0.00%                      0.00%
Growth & Income Fund                            645,480             --               0.00%                      0.00%
Health Sciences Fund                            191,445             --               0.00%                      0.00%
Income & Growth Fund                            681,961           $432               0.06%                      0.07%
International Equities Fund                       3,271             --               0.00%                      0.00%
International Government Bond Fund                   --             --               0.00%                      0.00%
International Growth I Fund                   2,207,651         93,191               4.22%                      1.53%
Large Cap Growth Fund                         1,362,504             --               0.00%                      0.00%
Mid Cap Index Fund                               80,282             --               0.00%                      0.00%
Money Market I Fund                                  --             --               0.00%                      0.00%
Nasdaq-100(R) Index Fund                         22,377             --               0.00%                      0.00%
Science & Technology Fund                     1,993,818             --               0.00%                      0.00%
Small Cap Fund                                1,731,027             --               0.00%                      0.00%
Small Cap Index Fund                             52,639             --               0.00%                      0.00%
Social Awareness Fund                           329,894             --               0.00%                      0.00%
Stock Index Fund                                186,297             --               0.00%                      0.00%
Value Fund                                       13,777             --               0.00%                      0.00%

* The affiliated broker-dealer that affected transactions with the indicated Funds was J.P. Morgan/Chase.

In addition, for the fiscal year ended May 31, 2005, the Funds directed the following amounts of portfolio securities transactions, and commissions paid thereon, to broker-dealers which provided research services to the Funds' sub-advisers:

                                              GROSS DOLLAR    DOLLAR AMOUNT
                                               VALUE OF             OF
                                             PURCHASE/SALES    COMMISSIONS
                                               DIRECTED TO     DIRECTED TO
                                                RESEARCH         RESEARCH
PORTFOLIO                                       PROVIDERS       PROVIDERS
---------                                       ---------       ---------
     Asset Allocation Fund                     $47,987,114        $39,565
     Blue Chip Growth Fund                         256,568            260
     Capital Conservation Fund                  17,557,000          2,590
     Core Equity Fund                            8,785,865        167,228
     Government Securities Fund                 54,750,000          7,642
     Growth & Income Fund                       25,907,691         36,515
     Health Sciences Fund                          875,928          1,313
     Income & Growth Fund                              ---            ---
     Inflation Protected Fund                          ---            ---
     International Equities Fund                       ---            ---
     International Government Bond Fund                ---            ---
     International Growth I Fund                       ---            ---
     Large Cap Growth Fund                      15,633,446         33,560
     Large Capital Growth Fund                   8,762,849          6,658
     Mid Cap Index Fund                                ---            ---
     Mid Cap Strategic Growth Fund               8,560,189         16,090
     Money Market I Fund                               ---            ---
     Nasdaq-100(R) Index Fund                          ---            ---
     Science & Technology Fund                  32,990,451         71,069
     Small Cap Fund                             31,232,608         56,768
     Small Cap Index Fund                              ---            ---
     Social Awareness Fund                     402,273,105        415,917
     Stock Index Fund                                  ---            ---
     Value Fund                                    128.657          7,620

The following table sets forth the value of Funds' holdings of securities of the Series Company's regular brokers and dealers (as defined under Rule 10b-1 of the 1940 Act) and their parents as of May 31, 2005.

FUND                             BROKER DEALER                             (000'S)           DEBT OR EQUITY
Asset Allocation                 Bear Stearns Cos., Inc.                    $130                 Equity
                                 Citigroup, Inc.                           2,946                 Equity
                                 Goldman Sachs Group, Inc.                  636                  Equity
                                 JP Morgan Chase & Co.                     1,655                 Equity
                                 Lehman Brothers Holdings, Inc.             223                  Equity
                                 Merrill Lynch & Co., Inc.                  743                  Equity
                                 Morgan Stanley Co., Inc.                   464                  Equity
                                 State Street Bank & Trust Co.               44                  Equity
                                 Citigroup, Inc.                            288                   Debt
                                 Credit Suisse First Boston Corp.           114                   Debt
                                 JP Morgan Chase & Co.                      237                   Debt

Merrill Lynch & Co., Inc. 140 Debt
Morgan Stanley Co., Inc. 280 Debt
State Street Bank & Trust Co. 8,304 Debt

Blue Chip State Street Bank & Trust Co. 850 Equity
Citigroup, Inc. 1,672 Equity
Goldman Sachs Group, Inc. 400 Equity
Merrill Lynch & Co., Inc. 456 Equity
Morgan Stanley Co., Inc. 147 Equity
Legg Mason, Inc. 534 Equity

Capital Conservation Bear Stearns Cos., Inc. 264 Debt
Citigroup, Inc. 385 Debt
Credit Suisse First Boston Corp. 145 Debt
JP Morgan Chase & Co. 350 Debt
Merrill Lynch & Co., Inc. 177 Debt
State Street Bank & Trust Co. 3,073 Debt

Core Equity Citigroup, Inc. 14,516 Equity
JP Morgan Chase & Co. 6,828 Equity
Merrill Lynch & Co., Inc. 4,246 Equity
State Street Bank & Trust Co. 2,520 Equity
State Street Bank & Trust Co. 9,101 Debt

Government Securities State Street Bank & Trust Co. 1,368 Debt

Growth & Income Citigroup, Inc. 6,138 Equity
Goldman Sachs Group, Inc. 1,658 Equity
JP Morgan Chase & Co. 2,574 Equity
State Street Bank & Trust Co. 2,551 Debt

Health Sciences Morgan Stanley Co., Inc. 835 Equity

Income & Growth JP Morgan Chase & Co. 439 Equity

Inflation Protected Morgan Stanley Co., Inc. 152 Debt
Lehman Brothers Holdings, Inc. 155 Debt
State Street Bank & Trust Co. 1,517 Debt

International Equities UBS AG 4,092 Equity
Deutsche Bank AG 1,877 Equity
State Street Bank & Trust Co. 19,819 Debt

International Government Citigroup Global Markets, Inc. 1,401 Debt
Bond HSBC Finance Corp. 404 Debt
State Street Bank & Trust Co. 5,102 Debt

International Growth I UBS Securities, LLC 4,234 Equity
State Street Bank & Trust Co. 13,650 Debt

Large Cap Growth Citigroup, Inc. 3,910 Equity
Goldman Sachs Group, Inc. 3,920 Equity
Merrill Lynch & Co., Inc. 4,883 Equity

Large Capital Growth Bear Stearns Cos., Inc. 45 Equity
Citigroup, Inc. 52 Equity

Goldman Sachs Group, Inc. 124 Equity
Lehman Brothers Holdings, Inc. 75 Equity
Merrill Lynch & Co., Inc. 71 Equity
State Street Bank & Trust Co. 97 Debt

Mid Cap Index State Street Bank & Trust Co. 9,367 Debt

Mid Cap Strategic Growth State Street Bank & Trust Co. 884 Debt

Money Market I ABN AMRO 5,000 Debt
Bear Stearns Cos., Inc. 9,992 Debt
Deutsche Bank Securities, Inc. 6,000 Debt
Goldman Sachs & Co. 7,000 Debt
Merrill Lynch & Co., Inc. 4,989 Debt
State Street Bank & Trust Co. 473 Debt
UBS Finance, Inc. 10,000 Debt
UBS Warburg, LLC 6,000 Debt

Nasdaq-100 Index State Street Bank & Trust Co. 2,395 Debt

Small Cap Investment Technology Group, Inc. 1,354 Equity
State Street Bank & Trust Co. 1,425 Debt

Small Cap Index State Street Bank & Trust Co. 5,134 Debt

Social Awareness Bank of America Corp. 10,742 Equity
Citigroup, Inc. 12,763 Equity
JP Morgan Chase & Co. 7,339 Equity
Merrill Lynch & Co., Inc. 261 Equity
Morgan Stanley Co., Inc. 554 Equity
State Street Bank & Trust Co. 2,726 Debt

Stock Index Bear Stearns Cos., Inc. 4,576 Equity
Citigroup, Inc. 100,222 Equity
Goldman Sachs Group, Inc. 17,774 Equity
JP Morgan Chase & Co. 51,723 Equity
Lehman Brothers Holdings, Inc. 10,354 Equity
Merrill Lynch & Co., Inc. 20,559 Equity
Morgan Stanley Co., Inc. 22,179 Equity
State Street Bank & Trust Co. 6,518 Equity
Wachovia Corp. 32,759 Equity
State Street Bank & Trust Co. 7,489 Debt

Value Citigroup, Inc. 1,157 Equity
Lehman Brothers Holdings, Inc. 458 Equity
State Street Bank & Trust Co. 851 Debt

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. 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 Sub-adviser's 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

Shares of the Funds are sold in a continuous offering. 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.

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: (i) the New York Stock Exchange is closed for other than weekends and customary holidays, or trading on the New York Stock Exchange becomes restricted; (ii) an emergency exists making disposal or valuation of a Fund's assets not reasonably practicable; or (iii) the SEC 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

Shares of the Funds are valued at least daily as of the close of regular trading on the New York Stock Exchange (generally, 4:00 p.m. Eastern time). Each Fund calculates the net asset value of its shares by dividing the total value of its net assets by the number of shares outstanding. The days and times of such computation may, in the future, be changed by the Directors in the event that the portfolio securities are traded in significant amounts in markets other than the New York Stock Exchange, or on days or at times other than those during which the New York Stock Exchange is open for trading.

Stocks are generally valued based upon closing sales prices reported on recognized securities exchanges. Stocks listed on the NASDAQ are valued using the NASDAQ Official Closing Price ("NOCP"). Generally, the NOCP will be the last sale price unless the reported trade for the stock is outside the range of the bid/ask price. In such cases, the NOCP will be normalized to the nearer of the bid or ask price. For listed securities having no sales reported and for unlisted securities, such securities will be valued based upon the last reported bid price.

As of the close of regular trading on the New York Stock Exchange, securities traded primarily on security exchanges outside the United States are valued at the last sale price on such exchanges on the day of valuation, or if there is no sale on the day of valuation, at the last-reported bid price. If a security's price is available from more than one exchange, a portfolio uses the exchange that is the primary market for the security. However, depending on the foreign market, closing prices may be up to 15 hours old when they are used to price a Fund's shares, and the Fund may determine that certain closing prices are unreliable. This determination will be based on review of a number of factors, including developments in foreign markets, the performance of U. S. securities markets, and the performance of instruments trading in U. S. markets that represent foreign securities and baskets of foreign securities. If a Fund determines that closing prices do not reflect the fair value of the securities, the Fund will adjust the previous closing

prices in accordance with pricing procedures approved by the Board to reflect what it believes to be the fair value of the securities as of the close of regular trading on the New York Stock Exchange. A Fund may also fair value securities in other situations, for example, when a particular foreign market is closed but the Fund is open. For foreign equity securities, a Fund uses an outside pricing service to provide it with closing market prices and information used for adjusting those prices.

Non-convertible bonds and debentures, other long-term debt securities, and short term debt securities with maturities in excess of 60 days, are valued at bid prices obtained for the day of valuation from a bond pricing service, when such prices are available. If a vendor quote is unavailable the securities may be priced at the mean of two independent quotes obtained from brokers. Securities for which market quotations are not readily available are valued as determined pursuant to procedures adopted in good faith by the Board of Directors.

Short-term securities with 60 days or less to maturity are amortized to maturity based on their cost to the Fund if acquired within 60 days of maturity or, if already held by a Fund on the 60th day, are amortized to maturity based on the value determined on the 61st day.

Future contracts and options traded on national securities exchanges are valued as of the close of the exchange upon which they trade. Forward contracts are valued at the 4:00 p.m. eastern time forward rate.

Securities for which market quotations are not readily available or if a development/significant event occurs that may significantly impact the value of the security, then these securities are valued, as determined pursuant to procedures adopted in good faith by the Board of Directors. The fair value of all other assets is added to the value of securities to arrive at a Fund's total assets.

Each Fund's liabilities, including proper accruals of expense items, are deducted from total assets to any dividend, withdrawal or redemption options; fees and expenses of legal counsel and independent accountants; membership dues of industry associations; interest on borrowings of the Series Company; postage; insurance premiums on property or personnel (including Officers and Directors) of the Fund that inure to its benefit; extraordinary expenses (including, but not limited to, legal claims and liabilities and litigation costs and any indemnification relating thereto); and all other costs of the Fund's operations.

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 CODE

Each Fund of the Series Company intends to qualify annually as a regulated investment company under Subchapter M of 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.

PASSIVE FOREIGN INVESTMENT COMPANIES

A "passive foreign investment company" ("PFIC") is a foreign corporation that, in general, meets either of the following tests: (a) at least 75% of its gross income is passive or (b) an average of at least 50% of its assets produce, or are held for the production of, passive income. If a Fund acquires and holds stock in a PFIC beyond the end of the year of its acquisition, the Fund will be subject to federal income tax on a portion of any "excess distribution" received on the stock or on any gain from disposition of the stock (collectively, the "PFIC income"), plus certain interest change, even if the Fund distributes the PFIC income as a taxable dividend to its shareholders. The balance of the PFIC income will be included in the Fund's investment company taxable income and, accordingly, will not be taxable to it to the extent that income is distributed to its shareholders. A Fund may make a mark-to-market election with respect to any stock it holds of a PFIC, if such stock is marketable (as defined by the Code for purposes of such election). If the election is in effect, at the end of the Fund's taxable year, the Fund will recognize annually the amount of mark-to-market gains, if any, with respect to PFIC stock as ordinary income. No ordinary loss will be recognized on the marketing to market of PFIC stock, except to the extent of gains recognized in prior years. Alternatively, a Fund may elect to treat any PFIC in which it invests as a "qualified electing fund," in which case, in lieu of the foregoing tax and interest obligation, the Fund will be required to include in its income each year its pro rata share of the qualified electing fund's annual ordinary earnings and net capital gain, even if they are not distributed to the Fund; those amounts would be subject to the distribution requirements applicable to the Fund described above. In order to make this election, a Fund would be required to obtain certain information from the PFIC, which, in many cases, may be difficult to do.

Income received by a Fund from sources within foreign countries may be subject to withholding and other taxes imposed by such countries. Income tax treaties between certain countries and the United States may reduce or eliminate such taxes. It is impossible to determine in advance the effective rate of foreign tax to which a Fund will be subject, since the amount of the Fund assets to be invested in various countries is not known. Shareholders are urged to consult their tax advisors regarding specific questions as to Federal, state and local taxes.

SECTION 817(H) OF THE CODE

The Funds each intend 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 29.25 billion shares of common stock, $0.01 par value per share. The shares are authorized to be issued in 33 classes comprising 750 million to 1 billion shares each. Each of the 33 classes of stock corresponds to one of the Funds and represents an ownership interest in that Fund.

Each outstanding share has one vote on all matters that shareholders vote on. Contract or Plan participants vote on these matters indirectly by voting their units or IRA owners vote their units directly. The way participants vote their units depends on their Contract or Plan. See "Voting Rights" in your Contract prospectus or Plan document for a discussion of the manner in which shares of the Fund are voted. See your Contract prospectus or Plan document 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 restrictions in the Investment Restriction section, above; and (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 Separate Account A (a registered separate account of VALIC) ownership of more than 25% of the outstanding shares may result in VALIC 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, 2005, VALIC Separate Account A, American International Group Annuity Insurance Company ("AIGAIC"), 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     AIGAIC        AGL
Asset Allocation Fund                              99.97%      --           *
Blue Chip Growth Fund                              99.73%      --           *
Capital Conservation Fund                         100.00%      --           --
Core Equity Fund                                  100.00%      --           --
Government Securities Fund                         88.80%      11.20%       --
Growth & Income Fund                               93.14%       6.86%       --
Health Sciences Fund                               99.96%      --           --

                                                   VALIC     AIGAIC        AGL
Income & Growth Fund                               99.98%      --           --
Inflation Protected Fund                          100.00%      --           --
International Equities Fund                        98.63%      *            *
International Government Bond Fund                100.00%      --           --
International Growth I Fund                       100.00%      --           --
Large Cap Growth Fund                             100.00%      --           --
Large Capital Growth Fund                         100.00%
Mid Cap Index Fund                                 98.43%      --           *
Mid Cap Strategic Growth Fund                     100.00%
Money Market I Fund                                83.19%      *            15.74%
Nasdaq-100(R) Index Fund                           95.03%      --           *
Science & Technology Fund                          99.74%      *            *
Small Cap Fund                                    100.00%      --           --
Small Cap Index Fund                               99.11%      --           *
Social Awareness Fund                             100.00%      --           --
Stock Index Fund                                   94.79%      *            *
Value Fund                                        100.00%      --           --

* Less than 5% ownership.

As of May 31, 2005, the other shareholders of the Funds included separate accounts sponsored by VALIC and its affiliates. None of these other shareholders owned of record more than 5% of any Fund's outstanding shares.

PROXY VOTING POLICIES AND PROCEDURES

Proxy Voting Responsibility

The Series Company has adopted policies and procedures for the voting of proxies relating to portfolio securities. The policies and procedures were drafted according to recommendations by a proxy voting committee comprised of senior management of the Series Company and its adviser, VALIC. The policies and procedures enable each Fund to vote proxies in a manner consistent with the best interests of its shareholders.

The Series Company has retained a proxy voting service, the Investor Responsibility Research Center (the "IRRC"), to effect votes on behalf of each Fund according to the Fund's policies and procedures, and to assist each Fund with recordkeeping of proxy votes.

Company Management Recommendations

When determining whether to invest in the securities of a particular company, one of the key factors the portfolio manager considers is the quality and depth of the company's management. In holding portfolio securities, each Fund is seeking to maximize the investment value for shareholders, but not necessarily exercise control over the issuers of portfolio securities or otherwise advance a particular social agenda. The Series Company's policies and procedures therefore provide that the Funds will generally vote in support of management recommendations on most corporate matters. When a Fund's portfolio manager is dissatisfied with a company's management, the Fund typically will sell the holding.

Case-By-Case Voting Matters

The policies and procedures identify certain voting matters that will be decided on a case-by-case basis. In these circumstances, a Fund may request guidance or a recommendation from the portfolio manager or other appropriate

personnel of VALIC and/or the sub-adviser of a Fund. In these instances, such person(s) will recommend the vote that will maximize value for and is in the best interests of the Fund's shareholders.

Examples of a Fund's Positions on Voting Matters

Consistent with the approaches described above, the following are examples of a Fund's voting positions on specific matters:

- Vote with management recommendations on most corporate matters;

- Vote with management recommendations on proposals to increase or decrease authorized common stock;

- Vote against the authorization of preferred stock if the company's board has unlimited rights to set the terms and conditions of the shares;

- Vote for a management proposal to decrease authorized preferred stock or cancel a class or series of preferred stock;

- Vote on a case-by-case basis regarding finance, merger and acquisition matters;

- Vote against most shareholder proposals;

- Abstain from voting on social responsibility or environmental matters, unless the Fund's objective is directly related to the social or environmental matter in question;(1) and

- Not vote proxies for index funds/portfolios and passively managed funds.(2)

Conflicts of Interest

Senior management of the Series Company and VALIC, including members of the proxy voting committee and legal and compliance personnel, will resolve conflicts of interest presented by a proxy vote. In practice, application of the Series Company's proxy voting policies and procedures will in most instances adequately address any possible conflicts of interest, as the policies and procedures were pre-determined by the proxy voting committee, and votes are effected according to the policies and procedures by the IRRC, an independent third-party.

However, if a situation arises where a vote presents a conflict between the interests of a Fund's shareholders and the interests of VALIC, or one of VALIC's affiliates, and the conflict is known to the Fund, senior management of the Series Company and VALIC may be consulted to evaluate the situation and ensure that the Fund selects the vote that is in the best interests of the Fund's shareholders.

(1) In these circumstances, the Fund will consider the effect that the vote's outcome may have on the issuing company and the value of its securities as part of the Fund's overall investment evaluation of whether to retain or sell the company's securities. The Fund will either retain or sell the securities according to the best interests of the Fund's shareholders.

(2) Management has determined that the costs of voting proxies for index and passively managed funds will generally outweigh any benefits that may be achieved by voting such proxies because the outcome will not directly affect whether the fund/portfolio retains a particular security. That is, the Fund will retain or sell a particular security based on objective, rather than subjective, criteria. For example, in the case of an index fund, the fund/portfolio will make a determination to retain or sell a security based on whether the index retains or deletes the security.

PROXY VOTING RECORDS

IRRC maintains records of voting decisions for each vote cast on behalf of the Funds. Information regarding how each Fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2005 has been filed with the SEC on Form N-PX and is available (1) without charge, upon request, by calling VALIC, toll-free at 1-800-448-2542, and (2) on the SEC's website at http://www.sec.gov.

DISCLOSURE OF PORTFOLIO HOLDINGS POLICIES AND PROCEDURES

The Board of Directors of the Series Company has adopted policies and procedures relating to disclosure of the Funds' portfolio securities. These policies and procedures prohibit the release of information concerning portfolio holdings which have not previously been made public to individual investors, institutional investors, intermediaries that distribute the Funds' shares and other parties which are not employed by the Adviser or its affiliates. Except when there are legitimate business purposes for selective disclosure and other conditions (designed to protect the Fund and its participants) are met, the Series Company does not provide or permit others to provide information about the Fund's portfolio holdings on a selective basis.

The Series Company makes the Funds' portfolio holdings available semi-annually in shareholder reports filed on Form N-CSR and after the first and third fiscal quarters in regulatory filings on Form N-Q. These shareholder reports and regulatory filings are filed with the SEC, as required by federal securities laws, and are generally available within seventy (70) days of the end of the Series Company's fiscal quarter.

In addition, the Series Company generally makes publicly available on a periodic basis information regarding a Fund's top ten holdings (including name and percentage of a Fund's assets invested in each holding) and the percentage breakdown of a Fund's investments by country, sector and industry, as applicable. This information is generally made available through the Series Company's website, marketing communications (including printed advertising and sales literature), and/or the Series Company's telephone customer service centers. This information is generally not released until the information is at least 15 days old, unless otherwise approved by the Series Company's legal department. The Series Company and its affiliates are not authorized to receive compensation or other consideration for the non-public disclosure of portfolio holdings information.

Before any non-public disclosure of information about a Fund's portfolio holdings is permitted, the employee seeking to disclose such information must submit a written form to his or her department head requesting the release of non-public portfolio holdings information. The request must be submitted to the legal and compliance departments. The Series Company's chief compliance officer and/or the Adviser's legal counsel is responsible for authorizing the selective release of portfolio holding information. If the request is approved, the Series Company and the third party must execute a confidentiality agreement governing the third party's duties with respect to the portfolio holdings information, which includes the duty to keep such information confidential and not to trade on such information.

The Series Company's chief compliance officer and the Adviser's legal counsel are responsible for determining whether there is a legitimate business purpose for the disclosure of such information and whether there are conflicts between the Funds' participants and the Funds' affiliates. To find that there is a legitimate business purpose, it must be determined that the selective disclosure of portfolio holdings information is necessary to the Funds' operation or useful to the Funds' participants without compromising the integrity or performance of the Funds.

At each quarterly meeting of the Board of Directors of the Series Company, the Board reviews a report disclosing third parties to whom the Funds' portfolio holdings information has been disclosed and the purpose for such disclosure, and considers whether or not the release of information to such third parties is in the best interest of the Funds and its participants.

In the event a sub-adviser is engaged to assume sub-advisory duties of a Fund, the Series Company routinely discloses portfolio holdings information to such sub-adviser prior to its assumption of duties. The Series Company does not receive any compensation or other consideration from these arrangements for the release of the Funds' portfolio holdings information.

Each of the below listed third parties have been approved to receive information concerning the Funds' holdings: (1) Ernst & Young, LLP, Independent Registered Public Accountants; (2) IRRC, proxy voting; (3) State Street Bank & Trust Company, Custodian; (4) Plexus Group, brokerage transaction analysis; (5) Morningstar and Lipper, database services; (6) RR Donnelley, financial printer,
(7) Investment Company Institute, survey information; (8) Manhattan Creative Partners, Board of Director materials; and (9) Fluent Technologies, marketing materials. Ernst & Young is provided with entire portfolio holdings information during periods in which it assists in the preparation of shareholder reports and regulatory filings, and does not publicly disclose this information. IRRC receives entire portfolio holdings information on a weekly basis for the purpose of voting proxies on behalf of the Funds and does not publicly disclose this information. State Street Bank & Trust Company has daily access to the Funds' portfolio holdings information and does not publicly disclose this information. Plexus Group receives portfolio holdings information for the purpose of analyzing brokerage execution statistics approximately 15 days after the quarter end and does not publicly disclose this information. Lipper receives portfolio holdings information within 15 days of each month end and makes certain information available approximately 60 days after its receipt. Morningstar receives portfolio holdings information approximately 30 days after each month end and makes certain information available between five and 30 days after its receipt. RR Donnelley has access to our information approximately 30 days after the Funds' fiscal quarter in preparation of shareholder reports and regulatory filings and does not make publicly disclose this information. The Investment Company Institute receives certain portfolio holdings information approximately 15 days after each calendar quarter and does not publicly disclose the information before the Funds' release of such information. Manhattan Creative Partners has access to certain portfolio holdings information provided to the Board of Directors approximately thirty days after each quarter end, and does not publicly disclose this information. Fluent Technologies receives certain portfolio holdings information on a quarterly basis within 10 business days of each calendar quarter for the preparation of marketing materials, and does not publicly disclose this information.

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. 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.

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 Mid Cap 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 Mid Cap Index Fund particularly or the ability of the S&P Index or the S&P Mid Cap 400(R) 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(R) Index or S&P Mid Cap 400(R) 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 Mid Cap 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(R) INDEX OR S&P MID CAP 400(R) 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(R) INDEX OR S&P MID CAP 400(R) 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(R) INDEX OR S&P MID CAP 400(R) 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(R) Index, 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).

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors has selected Ernst & Young LLP, 5 Houston Center, 1401 McKinney, Suite 1200, Houston, Texas, 77010, to serve as independent registered public accounting firm 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. The officers of the Series Company are elected by the Directors. Each officer holds office until the qualification and election of his or her successor.

INDEPENDENT
DIRECTORS

                                                                                NUMBER OF
                                                                               PORTFOLIOS
                                                                                IN FUND
                                                                                COMPLEX
                            POSITIONS     DATE                                  OVERSEEN
     NAME, ADDRESS AND        HELD       SERVICE     PRINCIPAL OCCUPATION(S)       BY         OTHER DIRECTORSHIPS HELD
       DATE OF BIRTH       WITH FUND(1)   BEGAN        DURING PAST 5 YEARS      DIRECTOR(2)        BY DIRECTOR(3)
       -------------       ------------   -----        -------------------      -----------        --------------
DR. JUDITH L. CRAVEN         Director    August,      Retired Administrator.      88           Director, A.G. Belo
2929 Allen Parkway                       1998                                                  Corporation, a media
Houston, Texas 77019                                                                           company (1992-Present);
10/06/45                                                                                       Director 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).

WILLIAM F. DEVIN             Chairman    October,     Retired.                    88           Member, Board of Governors,
Chairman, July 2005                      2001                                                  Boston Stock Exchange
2929 Allen Parkway                                                                             (1985-Present).
Houston, Texas 77019
12/30/38

DR. TIMOTHY J. EBNER         Director    August,      Professor and Head,         48           N/A
2929 Allen Parkway                       1998         Department of
Houston, Texas 77019                                  Neuroscience, and
07/15/49                                              Visscher Chair of
                                                      Physiology, University of
                                                      Minnesota
                                                      (1999-Present).
                                                      Formerly, Director,
                                                      Graduate Program in
                                                      Neuroscience, University
                                                      of Minnesota (1995-1999);
                                                      Professor of
                                                      Neurosurgery, University
                                                      of Minnesota (1980-1999).

JUDGE GUSTAVO E. GONZALES,   Director    August,      Retired.                    48           N/A
JR.                                      1998
2929 Allen Parkway
Houston, Texas 77019
07/27/40

(1) Directors serve until their successors are duly elected and qualified, subject to the Board's retirement discussed below.

(2) The "Fund Complex" consists of all registered investment companies for which VALIC or an affiliated person of VALIC serves as investment adviser or business manager. The "Fund Complex" includes the Series Company (33 funds), VALIC Company II (15 funds), AIG Series Trust, Inc. (4 funds), SunAmerica Money Market Funds (2 funds), SunAmerica Equity Funds (9 funds), SunAmerica Income Funds (6 funds), SunAmerica Focused Series, Inc. (17 portfolios), Anchor Series Trust (9 portfolios), SunAmerica Focused Alpha Growth Fund (1 fund), SunAmerica Senior Floating Rate Fund, Inc. (1 fund), SunAmerica Series Trust (32 portfolios), and Season Series Trust (24 portfolios).

(3) Directorships of Companies required to report to the Securities and Exchange Commission under the Securities Exchange Act of 1934 (i.e., "public companies") or other investment companies regulated under the 1940 Act.

                                                                                NUMBER OF
                                                                               PORTFOLIOS
                                                                                IN FUND
                                                                                COMPLEX
                            POSITIONS     DATE                                  OVERSEEN
     NAME, ADDRESS AND        HELD       SERVICE   PRINCIPAL OCCUPATION(S)         BY         OTHER DIRECTORSHIPS HELD
       DATE OF BIRTH       WITH FUND(1)   BEGAN      DURING PAST 5 YEARS        DIRECTOR(2)        BY DIRECTOR(3)
       -------------       ------------   -----      -------------------        -----------        --------------
DR. NORMAN HACKERMAN         Director    1984       President Emeritus, Rice      48           Chairman, Scientific
2929 Allen Parkway                                  University, Houston,                       Advisory Board for The
Houston, Texas 77019                                Texas (1985-Present).                      Robert A. Welch Foundation
03/02/12                                                                                       (1983-Present).

DR. JOHN W. LANCASTER        Director    1984       Pastor Emeritus and           48           N/A
2929 Allen Parkway                                  Director of Planned
Houston, Texas 77019                                Giving, First
12/15/23                                            Presbyterian Church,
                                                    Houston, Texas
                                                    (1997-Present).

KENNETH J. LAVERY            Director    October,   Vice President of             48           Director, Board of
2929 Allen Parkway                       2001       Massachusetts Capital                      Overseers, Newton Wellesley
Houston, Texas 77019                                Resources Company                          Hospital (1996-Present).
12/30/49                                            (1982-Present).

BEN H. LOVE                  Director    1993       Retired.                      48           N/A
2929 Allen Parkway
Houston, Texas 77019
09/26/30

DR. JOHN E. MAUPIN, JR.      Director    August,    President, Meharry            48           Director, Monarch Dental
2929 Allen Parkway                       1998       Medical College,                           Corporation (1997-Present);
Houston, Texas 77019                                Nashville, Tennessee                       Director, Pinnacle
10/28/46                                            (1994-Present).                            Financial Partners, Inc.
                                                                                               (2000-Present).

INTERESTED DIRECTORS

                                                                                NUMBER OF
                                                                               PORTFOLIOS
                                                                                IN FUND
                                                                                COMPLEX
                            POSITIONS     DATE                                  OVERSEEN
     NAME, ADDRESS AND        HELD       SERVICE   PRINCIPAL OCCUPATION(S)         BY         OTHER DIRECTORSHIPS HELD
       DATE OF BIRTH       WITH FUND(1)   BEGAN      DURING PAST 5 YEARS        DIRECTOR(2)        BY DIRECTOR(3)
       -------------       ------------   -----      -------------------        -----------        --------------
PETER A. HARBECK             Director    October,   President, CEO and            97           N/A
The SunAmerica Center                    2001       Director, SAAMCo
733 Third Avenue                                    (1995-Present); Director,
New York, New York 10017                            AIG SunAmerica Capital
01/23/54                                            Services, Inc. ("SACS")
                                                    (August 1993-Present),
                                                    President and CEO, AIG
                                                    Advisor Group, Inc. (June
                                                    2004-Present).

OFFICERS

                                                                                NUMBER OF
                                                                               PORTFOLIOS
                                                                                IN FUND
                                                                                COMPLEX
                            POSITIONS     DATE                                  OVERSEEN
     NAME, ADDRESS AND        HELD       SERVICE    PRINCIPAL OCCUPATION(S)        BY         OTHER DIRECTORSHIPS HELD
       DATE OF BIRTH        WITH FUND     BEGAN      DURING PAST 5 YEARS        DIRECTOR(2)        BY DIRECTOR(3)
       -------------       ------------   -----      -------------------        -----------        --------------
EVELYN M. CURRAN             President   October,   President and Principal       N/A          N/A
2919 Allen Parkway           and         2002       Executive Officer, VC I
Houston, Texas 77019         Principal              and VALIC Company II ("VC
06/04/65                     Executive              II") (2002-Present);
                             Officer                Senior Vice President,
                                                    Variable Products and
                                                    Funds VALIC
                                                    (2001-Present); Vice
                                                    President, Series Company
                                                    and VC II (2001-2002).
                                                    Formerly, Vice President,
                                                    American General Fund
                                                    Group (1999-Present).
                                                    Senior Attorney, American
                                                    General Corporation
                                                    (1997-1999).

NORI L. GABERT               Vice        October,   Vice President and Deputy     N/A          N/A
2929 Allen Parkway           President   2000       General Counsel, SAAMCo
Houston, TX 77019            and                    (2001-Present); Vice
08/15/53                     Secretary              President and Assistant
                                                    Secretary, Seasons Series
                                                    Trust (2001-Present); Vice
                                                    President, Series Company
                                                    and VC II (1998-Present);
                                                    Secretary, VC I and VC II
                                                    (2000-Present); Formerly,
                                                    Associate General Counsel,
                                                    American General
                                                    Corporation, (1997-2001);
                                                    Assistant Secretary, VC I
                                                    and VC II (1998-2000).

DONNA M. HANDEL              Vice        October,   Vice President and            N/A          N/A
The SunAmerica Center        President   2001       Assistant Treasurer, VC I
733 Third Avenue             and                    and VC II (2001-Present);
New York, New York 10017     Assistant              Vice President
06/25/66                     Treasurer              (2001-Present),
                                                    Treasurer (2002-Present)
                                                    and Assistant Treasurer
                                                    (1999-2002), Seasons
                                                    Series Trust; Vice
                                                    President, SAAMCo
                                                    (1996-Present); Vice
                                                    President (2000-Present),
                                                    Treasurer (2002-Present)
                                                    and Assistant Treasurer
                                                    (1996-2002), SunAmerica
                                                    Equity Funds, SunAmerica
                                                    Income Funds and
                                                    SunAmerica Money Market
                                                    Funds, Inc., Anchor
                                                    Series Trust, SunAmerica
                                                    Focused Series, Inc.;
                                                    Treasurer, AIG Series
                                                    Trust, Inc.
                                                    (2004-Present).

                                                                                NUMBER OF
                                                                               PORTFOLIOS
                                                                                IN FUND
                                                                                COMPLEX
                            POSITIONS     DATE                                  OVERSEEN
     NAME, ADDRESS AND        HELD       SERVICE    PRINCIPAL OCCUPATION(S)        BY         OTHER DIRECTORSHIPS HELD
       DATE OF BIRTH        WITH FUND     BEGAN      DURING PAST 5 YEARS        DIRECTOR(2)        BY DIRECTOR(3)
       -------------       ------------   -----      -------------------        -----------        --------------
GREGORY R.  KINGSTON         Treasurer   October,   Treasurer and Principal       N/A          N/A
2919 Allen Parkway           and         2002       Financial Officer, VC I
Houston, Texas 77019         Principal              and VC II
01/18/66                     Financial              (2002-Present);Vice
                             Officer                President and Assistant
                                                    Treasurer, Seasons Series
                                                    Trust (2001-Present);
                                                    Treasurer, VC I and VC II
                                                    (2000-Present). Formerly,
                                                    Vice President, American
                                                    General Investment
                                                    Management, L.P.
                                                    (1999-2001); Assistant
                                                    Treasurer, First
                                                    Investors Management Co.
                                                    (1994-1999).

JOHN PACKS                   Vice        October,   Vice President and Senior     N/A          N/A
99 High Street               President   2001       Investment Officer, VC I
Boston, Massachusetts 02110  and                    and VC II (2001-Present);
12/09/55                     Senior                 Senior Investment
                             Investment             Officer, VALIC
                             Officer                (2001-Present).
                                                    Formerly, Senior Vice
                                                    President-Investment
                                                    Research, American General
                                                    Fund Group (2000-2001);
                                                    Principal, Cypress Holding
                                                    Company (1995-2000).

Independent Directors receive an annual retainer of $31,500, and a meeting fee of $4,075 for each Board meeting and $2,000 for each special Board meeting attended in person and $500 for each Board meeting conducted by telephone. Audit and Governance Committee members receive $500 for each meeting attended held in conjunction with a Board Meeting; Committee Members receive $1,000 for each meeting attended not held in conjunction with a Board Meeting. Committee chairs receive an additional $250 for each Committee Meeting chaired held in conjunction with a Board Meeting; Committee chairs receive an additional $500 for each Committee Meeting chaired not held in conjunction with a Board Meeting.

The Series Company has an Audit Committee on which each of the Independent Directors serves with Dr. Lancaster as chairman. 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 Audit Committee has a Sub-Committee to approve audit and non-audit services comprised of Dr. Lancaster, Dr. Ebner and Dr. Maupin. During the fiscal year ended May 31, 2005, the Audit Committee held four meetings. The Series Company has a Governance Committee which consists of all Independent Directors with Mr. Love as chairman. The Governance Committee recommends to the Board nominees for independent director membership, reviews governance procedures and Board composition, and periodically reviews director compensation. The Series Company does not have a standing compensation committee. During the fiscal year ended May 31, 2005, the Governance Committee held five meetings. The Series Company has a Compliance and Ethics Committee comprised of Ms. Craven, Mr. Lavery, Judge Gonzales and Dr. Maupin, which addresses issues that arise under the Code of Ethics for the Principal Executive and Principal Accounting Officers as wells as any material compliance matters arising under Rule 38a-1 policies and procedures approved by the Board of Directors. The Series Company has a Brokerage Committee comprised of Mr. Devin (Chairman), Mr. Hackerman, Mr. Lavery, Judge Gonzales and Dr. Maupin, which reviews brokerage issues but does not meet on a formal basis.

The Independent Directors 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, 2005.

DIRECTOR OWNERSHIP OF SHARES

The following table shows the dollar range of shares beneficially owned by each Director.

INDEPENDENT DIRECTORS

                                                                                  AGGREGATE DOLLAR RANGE OF EQUITY
                                                                                    SECURITIES IN ALL REGISTERED
                                         DOLLAR RANGE OF EQUITY SECURITIES IN     INVESTMENT COMPANIES OVERSEEN BY
           NAME OF DIRECTOR                            THE FUND(1)                     DIRECTOR IN FAMILY(2)
Dr. Judith L. Craven                                      $0                                     $0
William F. Devin                                           0                                     0
Dr. Timothy J. Ebner                                       0                                     0
Judge Gustavo E. Gonzales, Jr.                             0                                     0
Dr. Norman Hackerman                                       0                                     0
Dr. John W. Lancaster                                      0                                     0
Kenneth J. Lavery                                          0                                     0
Ben H. Love                                                0                                     0
Dr. John E. Maupin, Jr.                                    0                                     0

(1) Includes the value of shares beneficially owned by each Director in the Series Company as of May 31, 2005.

(2) Includes the Series Company (33 series) and VC II (15 series).

INTERESTED DIRECTORS

                                                                                  AGGREGATE DOLLAR RANGE OF EQUITY
                                                                                    SECURITIES IN ALL REGISTERED
                                         DOLLAR RANGE OF EQUITY SECURITIES IN     INVESTMENT COMPANIES OVERSEEN BY
           NAME OF DIRECTOR                            THE FUND                          DIRECTOR IN FAMILY
           ----------------                            --------                          ------------------
Paige T. Davis                                             0                                     0
Peter A. Harbeck                                           0                                     0

As of May 31, 2005, no Independent Directors nor any of their immediate family members owned beneficially or of record any securities in VALIC or any person other than a registered investment company, directly or indirectly, controlling, controlled by or under common control with such entities.

COMPENSATION OF INDEPENDENT DIRECTORS

The following table sets forth information regarding compensation and benefits earned by the Independent Directors for the fiscal year ending May 31, 2005. Interested Directors are not eligible for compensation or retirement benefits and thus, are not shown below.

COMPENSATION TABLE
FISCAL YEAR ENDED MAY 31, 2005

        NAME OF DIRECTOR            AGGREGATE COMPENSATION      PENSION OR RETIREMENT       TOTAL COMPENSATION FROM
                                     FROM SERIES COMPANY      BENEFITS ACCRUED AS PART       FUND COMPLEX PAID TO
                                                               OF FUND EXPENSES (1)(2)           DIRECTORS (2)
Dr. Judith L. Craven                       $55,187                     $148,967                      $92,690
William Devin                               55,187                      153,167                       81,470
Dr. Timothy Ebner(3)                        46,527                       66,725                      109,401
Judge Gustavo E. Gonzales(3)                49,252                       70,650                       78,978
Dr. Norman Hackerman                        54,725                       78,500                       79,679
Dr. John W. Lancaster                       56,572                       80,500                      100,733
Kenneth J. Lavery                           50,183                       71,350                       89,757
Ben H. Love                                 56,341                       80,250                      132,591
Dr. John E. Maupin, Jr.                     55,650                       79,500                       54,335

(1) All current Directors would earn ten or more years of service as of their normal retirement date. Complete years of services earned as of May 31, 2005, are as follows: Drs. Hackerman, Lancaster and Mr. Love - 10 or greater; Drs. Craven, Ebner, Maupin and Judge Gonzales - approximately 7 years; Messrs. Devin and Lavery - approximately 4 years.

(2) Includes VC I, VC II, SunAmerica Series Trust, Seasons Series Trust, SunAmerica Senior Floating Rate Fund, SunAmerica Income Funds, SunAmerica Equity Funds, SunAmerica Focused Series, AIG Series Trust and SunAmerica Money Market Funds.

(3) Dr. Ebner and Judge Gonzales have chosen to defer a portion of compensation under the Deferred Compensation Plan discussed below. As of May 31, 2005, the current value of the deferred compensation is $40,851 and $25,688 for Dr. Ebner and Mr. Gonzales, respectively.

Effective January 1, 2001, the Board approved a Deferred Compensation Plan (the "Deferred Plan") for its Independent Directors who are not officers, directors, or employees of VALIC or an affiliate of VALIC. The purpose of the Deferred Plan is to permit such Independent Directors to elect to defer receipt of all or some portion of the fees payable to them for their services to the Series Company, therefore allowing postponement of taxation of income and tax-deferred growth on the earnings. Under the Deferred Plan, an Independent Director may make an annual election to defer all or a portion of his/her future compensation from Series Company.

The Series Company also offers Independent Directors a retirement plan ("Retirement Plan") with benefits based upon the director's years of service and compensation at the time of retirement. The Series Company is responsible for the payment of the retirement benefits as well as all expenses of administration of the Retirement Plan. Benefits vested

under the Retirement Plan are payable for a ten-year period. Additional years of service will not increase benefits. Estimated benefits are shown below.

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
    $70,000           $35,000          $42,000         $49,000          $56,000          $63,000         $70,000

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.

APPENDIX

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.

C -- Bonds rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Note: Moody's may apply numerical modifiers 1, 2 and 3 in each generic rating classification from Aa through B in its corporate bond rating system. The modifier 1 indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of the generic rating category.

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.

C -- The rating C is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC- debt rating. The C rating may be used to cover a situation where a bankruptcy petition has been filed but debt service payments are continued.

CI -- The rating CI is reserved for income bonds on which no interest is being paid.

D -- Debt rated D is in default. The D rating is assigned on the day an interest or principal payment is missed. The D rating also will be used upon the filing of a bankruptcy petition if debt service payments are jeopardized.

Plus (+) or minus (-): The ratings of AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within these ratings categories.

Provisional ratings: The letter "p" indicates that the rating is provisional. A provisional rating assumes the successful completion of the project being financed by the debt being rated and indicates that payment of debt service requirements is largely or entirely dependent upon the successful and timely completion of the project. This rating, however, while addressing credit quality subsequent to completion of the project, makes no comment on the likelihood or risk of default upon failure of such completion. The investor should exercise judgment with respect to such likelihood and risk.

L -- The letter "L" indicates that the rating pertains to the principal amount of those bonds to the extent that the underlying deposit collateral is insured by the Federal Savings & Loan Insurance Corp. or the Federal Deposit Insurance Corp. and interest is adequately collateralized.

* Continuance of the rating is contingent upon Standard & Poor's receipt of an executed copy of the escrow agreement or closing documentation confirming investments and cash flows.

NR -- Indicates that no rating has been requested, that there is insufficient information on which to base a rating or that Standard & Poor's does not rate a particular type of obligation as a matter of policy.

Debt Obligations of Issuers outside the United States and its territories are rated on the same basis as domestic corporate and municipal issues. The ratings measure the credit-worthiness of the obligor but do not take into account currency exchange and related uncertainties.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

Moody's Commercial Paper Ratings

The term "commercial paper" as used by Moody's means promissory obligations not having an original maturity in excess of nine months. Moody's makes no representations as to whether such commercial paper is by any other definition "commercial paper" or is exempt from registration under the Securities Act.

Moody's commercial paper ratings are opinions of the ability of issuers to repay punctually promissory obligations not having an original maturity in excess of nine months. Moody's makes no representation that such obligations are exempt from registration under the Securities Act, nor does it represent that any specific note is a valid obligation of a

rated issuer or issued in conformity with any applicable law. Moody's employs the following three designations, all judged to be investment grade, to indicate the relative repayment capacity of rated issuers:

Issuers rated PRIME-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. PRIME-1 repayment capacity will normally be evidenced by the following characteristics:

- Leading market positions in well established industries

- High rates of return on funds employed

- Conservative capitalization structures with moderate reliance on debt and ample asset protection

- Broad margins in earnings coverage of fixed financial charges and high internal cash generation

- Well established access to a range of financial markets and assured sources of alternate liquidity.

Issuers rated PRIME-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. Issuers rated PRIME-3 (or related supporting institutions) have an acceptable capacity for repayment of short-term promissory obligations. The effect of industry characteristics and market composition may be more pronounced. Variability in earnings and profitability may result in changes in level of debt protection measurements and the requirement for relatively high financial leverage. Adequate alternate liquidity is maintained.

Issuers rated NOT PRIME do not fall within any of the Prime rating categories.

If an issuer represents to Moody's that its commercial paper obligations are supported by the credit of another entity or entities, then the name or names of such supporting entity or entities are listed within parentheses beneath the name of the issuer, or there is a footnote referring the reader to another page for the name or names of the supporting entity or entities. In assigning ratings to such issuers, Moody's evaluates the financial strength of the indicated affiliated corporations, commercial banks, insurance companies, foreign governments or other entities, but only as one factor in the total rating assessment. Moody's makes no representation and gives no opinion on the legal validity or enforceability of any support arrangement. You are cautioned to review with your counsel any questions regarding particular support arrangements.

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: (i) evaluation of the management of the issuer; (ii) economic evaluation of the issuer's industry or industries and an appraisal of speculative-type risks which may be inherent in certain areas; (iii) evaluation of the issuer's products in relation to competition and customer acceptance;
(iv) liquidity; (v) amount and quality of long-term debt; (vi) trend of earnings over a period of ten years; (vii) financial strength of a parent company and the relationships which exist with the issuer; and (viii) 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.

Description of Standard & Poor's Commercial Paper Ratings.

A Standard & Poor's commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of not more than 365 days. Ratings are graded into four categories, ranging from "A" for the highest quality obligations to "D" for the lowest.

A -- Issues assigned this highest rating are regarded as having the greatest capacity for timely payment. Issues in this category are delineated with the numbers 1, 2 and 3 to indicate the relative degree of safety.

A-1 -- This designation indicates that the degree of safety regarding timely payment is either overwhelming or very strong. Those issues designated "A-1" that are determined to possess overwhelming safety characteristics are denoted with a plus (+) sign designation.

A-2 -- Capacity for timely payment on issues with this designation is strong. However, the relative degree of safety is not as high as for issues designated "A-1."

A-3 -- Issues carrying this designation have a satisfactory capacity for timely payment. They are, however, somewhat more vulnerable to the adverse effect of changes in circumstances than obligations carrying the higher designations.

B -- Issues rated "B" are regarded as having only adequate capacity for timely payment. However, such capacity may be damaged by changing conditions or short-term adversities.

C -- This rating is assigned to short-term debt obligations with a doubtful capacity for payment.

D -- This rating indicates that the issue is either in default or is expected to be in default upon maturity.

The commercial paper rating is not a recommendation to purchase or sell a security. The ratings are based on current information furnished to Standard & Poor's by the issuer or obtained from other sources it considers reliable. The ratings may be changed, suspended, or withdrawn as a result of changes in or unavailability of such information.

100

VALIC COMPANY I

PART C. OTHER INFORMATION

ITEM 22. EXHIBITS

a. (1)        Articles of Incorporation. (7)

   (2)        Articles Supplementary to the Articles of Incorporation, effective
              April 10, 1990. (7)

   (3)        Articles Supplementary to the Articles of Incorporation, effective
              September 28, 1990. (7)

   (4)        Amendment One to the Articles of Incorporation, effective October
              1, 1991. (7)

   (5)        Amendment Two to the Articles of Incorporation, effective May 1,
              1992. (7)

   (6)        Articles Supplementary to the Articles of Incorporation, effective
              May 1, 1992. (7)

   (7)        Articles Supplementary to the Articles of Incorporation, effective
              January 20, 1994. (7)

   (8)        Articles Supplementary to the Articles of Incorporation, effective
              February 4, 1994. (7)

   (9)        Articles Supplementary to the Articles of Incorporation, effective
              February 4, 1994. (7)

   (10)       Articles Supplementary to the Articles of Incorporation, effective
              May 1, 1995. (7)

   (11)       Articles of Amendment to the Articles of Incorporation, effective
              October 1, 1997. (6)

   (12)       Restated Articles of Incorporation, effective December 31, 2001.
              (10)

   (13)       Articles of Amendment to the Articles of Incorporation, effective
              December 31, 2001. (11)

   (14)       Articles Supplementary to Restated Articles of Incorporation,
              effective September 29, 2004. (16)

   (15)       Articles of Amendment to the Articles of Incorporation, effective
              September 16, 2005. (18)

   (16)       Articles Supplementary to Restated Articles of Incorporation,
              effective September 19, 2005. (18)

b.            By-Laws as amended and restated October 29, 1991 (7)

c.            Not Applicable

d. (1)        Investment Advisory Agreement between VALIC and the Registrant,
              dated August 29, 2001, as amended on August 2, 2004. (15)

   (1)(a)     Investment Advisory Agreement between VALIC and the Registrant,
              dated August 29, 2001, as amended on October 2, 2004. (17)

   (1)(b)     Form of Amendment No. 2 to Investment Advisory Agreement between
              VALIC and the Registrant, dated January 1, 2002, as amended on
              October 1, 2005. Filed herewith.

   (1)(c)     Form of Amendment No. 3 to Investment Advisory Agreement between
              VALIC and the Registrant, dated January 1, 2002, as amended on
              December 5, 2005. Filed herewith.

   (2)        Investment Sub-Advisory Agreement between The Variable Annuity
              Life Insurance Company ("VALIC") and AIG Global Investment Corp.,
              dated January 1, 2002. (11)

   (3)        Amendment No. 1 to Investment Sub-Advisory Agreement between VALIC
              and AIG Global Investment Corp., dated December 20, 2004. (17)

   (4)        Investment Sub-Advisory Agreement between VALIC and American
              Century Investment Management, Inc. dated August 29, 2001. (8)

   (5)        Amendment No. 1 to Investment Sub-Advisory Agreement between VALIC
              and American Century Investment Management, Inc. dated June 21,
              2004. (15)

   (6)        Investment Sub-Advisory Agreement between VALIC and Franklin
              Portfolio Associates, LLC, dated June 21, 2004. (15)

   (7)        Investment Sub-Advisory Agreement between VALIC and
              OppenheimerFunds, Inc., dated June 21, 2004. (15)

   (8)        Investment Sub-Advisory Agreement between VALIC and AIG SunAmerica
              Asset Management Corp., dated January 1, 2002. (11)

   (9)        Amendment No. 1 to Investment Sub-Advisory Agreement between VALIC
              and AIG Sun America Asset Management Corp., dated December 20,
              2004. (17)

   (10)       Investment Sub-Advisory Agreement between VALIC and T. Rowe Price
              Associates, Inc. (Science & Technology Fund) dated August 29,
              2001. (8)

   (11)       Investment Sub-Advisory Agreement between VALIC and T. Rowe Price
              Associates, Inc. (Founders/T. Rowe Small Cap Fund) dated August
              29, 2001. (8)

   (12)       Investment Sub-Advisory Agreement between VALIC and WM Advisors,
              Inc., dated January 1, 2002. (10)

   (13)       Investment Sub-Advisory Agreement between VALIC and Wellington
              Management Company LLP dated August 29, 2001. (8)

   (14)       Investment Sub-Advisory Agreement between VALIC and A I M Capital
              Management, Inc. (Large Capital Growth Fund) dated December 20,
              2004. (17)

   (15)       Investment Sub-Advisory Agreement between VALIC and John McStay
              Investment Counsel, LP (Mid Capital Growth Fund) dated December
              20, 2004. (17)

   (16)       Investment Sub-Advisory Agreement between VALIC and Morgan Stanley
              Investment Management Inc. (Mid Capital Growth Fund) dated
              December 20, 2004. (17)

   (17)       Investment Sub-Advisory Agreement between VALIC and Massachusetts
              Financial Services Company (International Growth I Fund) dated
              June 20, 2005. (18)

   (18)       Investment Sub-Advisory Agreement between VALIC and RCM Capital
              Management LLC (Science & Technology Fund) dated September 19,
              2005. (18)

   (19)       Amendment No. 1 to Investment Sub-Advisory Agreement between VALIC
              and A I M Capital Management, Inc. (International Growth I Fund)
              dated June 20, 2005. Filed herewith.

   (20)       Amendment No. 2 to Investment Sub-Advisory Agreement between VALIC
              and American Century Global Investment Management, Inc.
              (International Growth I Fund) dated June 20, 2005. Filed herewith.

   (21)       Form of Amendment No. 3 to Investment Sub-Advisory Agreement
              between VALIC and American Century Investment Management, LLC
              (VALIC Ultra Fund) dated December 5, 2005. Filed herewith.

   (22)       Form of Investment Sub-Advisory Agreement between VALIC and
              Barrow, Hanley, Mewhinney & Strauss, Inc. (Broad Cap Value Fund)
              dated December 5, 2005. Filed herewith

   (23)       Form of Investment Sub-Advisory Agreement between VALIC and Credit
              Suisse Asset Management, LLC (Small Cap Aggressive Growth Fund)
              dated December 5, 2005. Filed herewith.

   (24)       Form of Investment Sub-Advisory Agreement between VALIC and
              Evergreen Investment Management Company, LLC (Large Cap Core Fund,
              Small Cap Special Values Fund, Small Cap Strategic Growth Fund)
              dated

              December 5, 2005. Filed herewith.

   (25)       Form of Investment Sub-Advisory Agreement between VALIC and
              Franklin Advisers, Inc. (Global Strategy Fund) dated December 5,
              2005. Filed herewith.

   (26)       Form of Investment Sub-Advisory Agreement between VALIC and Putnam
              Investment Management, LLC (Small Cap Special Values Fund, Global
              Equity Fund) dated December 5, 2005. Filed herewith.

   (27)       Form of Investment Sub-Advisory Agreement between Templeton Global
              Advisers Limited (Foreign Value Fund) dated December 5, 2005.
              Filed herewith.

   (28)       Form of Investment Sub-Advisory Agreement between Templeton
              Investment Counsel, LLC (Global Strategy Fund) dated December 5,
              2005. Filed herewith.

e.            Not Applicable

f.            Not Applicable

g. (1)    (a) Custodian Contract between Registrant and State Street Bank and
              Trust Company dated January 27, 1994. (7)

          (b) Custodian Fee Schedule between Registrant and State Street Bank
              and Trust Company (6)

          (c) Amendment to Custodian Contract between Registrant and State
              Street Bank and Trust Company dated October 30, 1995. (6)

          (d) Amendment to Custodian Contract dated October 18, 2000. (9)

   (2)        Securities Lending Authorization Agreement as Amended between
              Registrant and State Street Bank and Trust Company effective July
              15, 1995. (7)

h. (1)        Amended and Restated Transfer Agency and Service Agreement between
              Registrant and VALIC dated October 17, 2000. (8)

   (2)        Amended and Restated Accounting Services Agreement between
              Registrant and VALIC effective May 1, 2001. (8)

   (3)        Administrative Services Agreement between Registrant and
              SunAmerica Asset Management Corp. effective October 1, 2001. (9)

   (4)        Remote Access Service Agreement between Registrant and State
              Street Bank and Trust Company dated August 18, 2003. (14)

i.            Legal Opinion. Filed herewith.

j.            Reserved.

k.            Not Applicable

l.            Not Applicable

m.            Not Applicable

n.            Not Applicable

o.            Reserved

p. (1)        Code of Ethics - American Century Investment Management, Inc.
              (15).

   (2)        Code of Ethics - T Rowe Price Associates, Inc. (15)

   (3)        Code of Ethics - Wellington Management Company LLP. (13)

(4) Code of Ethics - WM Advisors, Inc. (13)

(5) Code of Ethics - SunAmerica Asset Management Corp. (11)

(6) Code of Ethics - AIG Global Investment Corp. (11)

(7)        Code of Ethics - AIG SunAmerica Asset Management Corp. and VALIC
           dated January 1, 2003. (14)

(8)        Code of Ethics - Franklin Portfolio Associates, LLC. (15)

(9)        Code of Ethics - OppenheimerFunds, Inc. (15)

(10) Code of Ethics - A I M Capital Management, Inc. (17)

(11) Code of Ethics - Brazos Capital Management, L.P. (17)

(12) Code of Ethics -- Morgan Stanley Asset Management Inc. (17)

(13) Code of Ethics -- Massachusetts Financial Services Company. (18)

(14) Code of Ethics -- RCM Capital Management, LLC. (18)

(15) Code of Ethics -- Barrow, Hanley, Mewhinney & Strauss, Inc. Filed herewith.

(16) Code of Ethics -- Credit Suisse Asset Management, LLC. Filed herewith.

(17) Code of Ethics -- Evergreen Investment Management Company, LLC. Filed herewith.

(18) Code of Ethics -- Franklin Advisers, Inc. Filed herewith.

(19) Code of Ethics -- Putnam Investment Management, LLC. Filed herewith.

(20) Code of Ethics -- Templeton Investment Counsel, LLC. Filed herewith.

(21) Code of Ethics -- Templeton Global Advisers Limited. Filed herewith.

Footnotes:

1. Incorporated by reference to the Registrant's Form N-14 registration statement filed with the Securities and Exchange Commission on January 27, 1992 (File No. 33-45217).

2. Incorporated by reference to Post-Effective Amendment Number 15 to the Registrant'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 by reference to Post-Effective Amendment Number 19 to the Registrant'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 by reference to Post-Effective Amendment Number 23 to the Registrant's Form N-1A registration statement filed with the Securities and Exchange Commission on August 2, 1994 (File No. 2-83631/811-3738).

5. Incorporated by reference to Post-Effective Amendment Number 24 to the Registrant's Form N-1A registration statement filed with the Securities and Exchange Commission on September 17, 1996 (Accession No. 0000950129-96-002176).

6. Incorporated by reference to Post-Effective Amendment Number 25 to the Registrant's Form N-1A registration statement filed with the Securities and Exchange Commission on July 31, 1997 (Accession No. 0000950129-97-003030).

7. Incorporated by reference to Post-Effective Amendment Number 26 to the Registrant's Form N-1A registration statement filed with the Securities and Exchange Commission on September 22, 1998 (Accession No. 0000950129-98-004009).

8. Incorporated by reference to Post-Effective Amendment Number 32 to the Registrant's Form N-1A registration statement filed with the Securities and Exchange Commission on October 1, 2001 (Accession No. 0000950129-01-503229).

9. Incorporated by reference to Post-Effective Amendment Number 33 to the Registrant's Form N-1A registration statement filed with the Securities and Exchange Commission on October 17, 2001 (Accession No. 0000719423-01-500030).

10. Incorporated by reference to Post-Effective Amendment Number 34 to the Registrant's Form N-1A registration statement filed with the Securities and Exchange Commission on January 14, 2002 (Accession No. 0000950129-02-000177).

11. Incorporated by reference to Post-Effective Amendment Number 35 to the Registrant's Form N-1A registration statement filed with the Securities and Exchange Commission on March 8, 2002 (File No. 2-83631/811-03737).

12. Incorporated by reference to Post-Effective Amendment Number 36 to the Registrant's Form N-1A registration statement filed with the Securities and Exchange Commission on September 18, 2002 (File No. 2-83631/811-03737).

13. Incorporated by reference to Post-Effective Amendment Number 37 to the Registrant's Form N-1A registration statement filed with the Securities and Exchange Commission on July 14, 2003 (File No. 2-83631/811-03737).

14. Incorporated by reference to Post-Effective Amendment Number 38 to the Registrant's Form N-1A registration statement filed with the Securities and Exchange Commission on September 23, 2003 (File No. 2-83631/811-03737).

15. Incorporated by reference to Post-Effective Amendment No. 40 to the Registrant's Form N-1A registration statement filed with the Securities and Exchange Commission on September 22, 2004 (File No. 2-83631).

16. Incorporated by reference to Post-Effective Amendment No. 41 to the Registrant's Form N-1A registration statement filed with the Securities and Exchange Commission on October 4, 2004 (File No. 2-83681).

17. Incorporated by reference to Post-Effective Amendment No. 42 to the Registrant's Form N-1A registration statement filed with the Securities and Exchange Commission on December 20, 2004 (File No. 2-83681).

18. Incorporated by reference to Post-Effective Amendment No. 44 to the Registrant's Form N-1A registration statement filed with the Securities and Exchange Commission on September 13, 2005 (File No. 2-83681).

ITEM 23. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

There are no persons controlled by or under common control with the Registrant.

ITEM 24. INDEMNIFICATION

Registrant's Restated Articles of Incorporation, Item 22. a. (12.) of this Registration Statement, provide, in summary, that officers and directors shall be indemnified by Registrant against liabilities and expenses incurred by such persons in connection with actions, suits, or proceedings arising out of their offices or duties of employment, except that no indemnification can be made to such a person if he has been adjudged liable by reason of willful misfeasance, bad faith, active and deliberate dishonesty, gross negligence, improper personal benefit or reckless disregard of duties involved in the conduct of his office. In the absence of such an adjudication, the determination of eligibility for indemnification shall be made by independent counsel in a written opinion or by the vote of a majority of a quorum of directors who are neither "interested persons" of Registrant, as that term is defined in Section 2(a)(19) of the Investment Company Act of 1940, nor parties to the proceeding.

Registrant has purchased and maintains liability insurance on behalf of any officer, director, employee or agent against any liabilities arising from such status. In this regard, Registrant maintains a Directors & Officers Professional Liability Insurance Policy of $45 million in the aggregate. Insurance providers are as follows:

Arch Insurance Company
One Liberty Plaza, 53rd Floor
New York, New York 10006

Twin City Fire Insurance Company

2 Park Avenue
New York, New York 10016

Liberty Mutual Insurance Company
55 Water Street, 18th Floor
New York, New York 10016

U.S. Specialty Insurance Company
37 Radio Circle Drive
Mount Kisco, New York 10549

Federal Insurance Company
55 Water Street
New York, New York 10041

Section 3 of the Investment Advisory Agreement (the "Agreement") between the Registrant and VALIC provides that VALIC shall not be liable to the Registrant, or to any shareholder of the Registrant, 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.

ITEM 25. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER

The only employment of a substantial nature of VALIC's directors and officers is with VALIC and its affiliated companies. Reference is also made to the caption "About the Series Company's Management" in the Prospectus which comprises Part A of the Registration Statement, and to the caption "Investment Adviser" of the Statement of Additional Information which comprises Part B of the Registration Statement.

ITEM 26. PRINCIPAL UNDERWRITERS

(a) Not applicable.

(b) Not applicable.

ITEM 27. 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 CUSTODIAN:

The State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110

THE ADMINISTRATOR

AIG SunAmerica Asset Management Corp.
Harborside Financial Center
3200 Plaza 5

Jersey City, New Jersey 07311

INVESTMENT SUB-ADVISERS:

AIG Global Investment Corp.
175 Water Street
New York, New York 10038

AIG SunAmerica Asset Management Corp.
Harborside Financial Center
3200 Plaza 5
Jersey City, New Jersey 07311

A I M Capital Management, Inc.
11 Greenway Plaza
Suite 100
Houston, Texas 77046

Barrow, Hanley, Mewhinney & Strauss, Inc. 2200 Ross Avenue, 31st Floor
Dallas, Texas 75201

Brazos Capital Management, LP
(formerly John McStay Investment Counsel, LP)
5949 Sherry Lane
Suite 1600
Dallas, Texas 75225

American Century Investment Management, Inc. 4500 Main Street
Kansas City, Missouri 64111

American Century Global Investment Management, Inc. 4500 Main Street
Kansas City, Missouri 64111

Credit Suisse Asset Management LLC
466 Lexington Avenue
New York, New York 10017

Evergreen Investment Management Company, LLC 200 Berkeley Street
Boston, Massachusetts 02116

Franklin Advisers, Inc.
One Franklin Parkway
San Mateo, California 94403

Franklin Portfolio Associates, LLC
One Boston Place, 29th Floor
Boston, Massachusetts 02108

Massachusetts Financial Services Company 500 Boylston Street
Boston, Massachusetts 02116

Morgan Stanley Investment Management Inc. 1221 Avenue of the Americas
New York, New York 10020

OppenheimerFunds, Inc.
Two World Financial Center
225 Liberty Street, 11th Floor
New York, New York 10281

Putnam Investment Management, LLC
One Post Office Square
Boston, Massachusetts 02109

RCM Capital Management LLC
4 Embarcadero Center
San Francisco, California 94111

Templeton Global Advisers Limited
500 East Broward Boulevard, Suite 2100
Fort Lauderdale, Florida 33394

Templeton Investment Counsel, LLC
500 East Broward Boulevard, Suite 2100
Fort Lauderdale, Florida 33394

T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, Maryland 21202

WM Advisors, Inc.
1201 Third Street
Seattle, Washington 98101

Wellington Management Company, LLP
75 State Street
Boston, Massachusetts 02109

ITEM 28. MANAGEMENT SERVICES

There is no management-related service contract not discussed in Parts A or B of this Form N-1A.

ITEM 29. UNDERTAKINGS

Not applicable.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant 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 20th day of September, 2005.

VALIC Company I

By: /s/ EVELYN M. CURRAN
    ---------------------------------
    Evelyn M. Curran, President
   (Principal Executive Officer)

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated.

Signature                               Title                           Date
---------                               -----                           ----


/s/ EVELYN M. CURRAN                    President                       September 20, 2005
-------------------------------------   (Principal Executive Officer)
Evelyn M. Curran


/s/ GREGORY K. KINGSTON                 Treasurer                       September 20, 2005
-------------------------------------   (Principal Financial Officer)
Gregory R. Kingston


                 *                      Director                        September 20, 2005
-------------------------------------
Judith Craven


                 *                      Director                        September 20, 2005
-------------------------------------
William F. Devin


                 *                      Director                        September 20, 2005
-------------------------------------
Timothy J. Ebner


                 *                      Director                        September 20, 2005
-------------------------------------
Gustavo E. Gonzales, Jr.


                 *                      Director                        September 20, 2005
-------------------------------------
Norman Hackerman


                 *                      Director                        September 20, 2005
-------------------------------------
Peter A. Harbeck


                 *                      Director                        September 20, 2005
-------------------------------------
John W. Lancaster


                 *                      Director                        September 20, 2005
-------------------------------------
Kenneth J. Lavery


                 *                      Director                        September 20, 2005
-------------------------------------
Ben H. Love


                 *                      Director                        September 20, 2005
-------------------------------------
John E. Maupin, Jr.

*By: /s/ NORI L. GABERT
     --------------------------------
     Nori L. Gabert
     Attorney-in-Fact

EXHIBIT INDEX

ITEM 22.

d.(1)(b)   Form of Amendment No. 2 to Investment Advisory Agreement between
           VALIC and the Registrant, dated January 1, 2002, as amended on
           October 1, 2005.

d.(1)(c)   Form of Amendment No. 3 to Investment Advisory Agreement between
           VALIC and the Registrant, dated January 1, 2002, as amended on
           December 5, 2005.

d.(19)     Amendment No. 1 to Investment Sub-Advisory Agreement between VALIC
           and A I M Capital Management, Inc. (International Growth I Fund)
           dated June 20, 2005.

d.(20)     Amendment No. 2 to Investment Sub-Advisory Agreement between VALIC
           and American Century Global Investment Management, Inc.
           (International Growth I Fund) dated June 20, 2005.

d.(21)     Form of Amendment No. 3 to Investment Sub-Advisory Agreement between
           VALIC and American Century Investment Management, LLC (VALIC Ultra
           Fund) dated December 5, 2005.

d.(22)     Form of Investment Sub-Advisory Agreement between VALIC and Barrow,
           Hanley, Mewhinney & Strauss, Inc. (Broad Cap Value Fund) dated
           December 5, 2005.

d.(23)     Form of Investment Sub-Advisory Agreement between VALIC and Credit
           Suisse Asset Management LLC (Small Cap Aggressive Growth Fund) dated
           December 5, 2005.

d.(24)     Form of Investment Sub-Advisory Agreement between VALIC and Evergreen
           Investment Management Company, LLC (Large Cap Core Fund, Small Cap
           Special Values Fund, Small Cap Strategic Growth Fund) dated December
           5, 2005.

d.(25)     Form of Investment Sub-Advisory Agreement between VALIC and Franklin
           Advisers, Inc. (Global Strategy Fund) dated December 5, 2005.

d.(26)     Form of Investment Sub-Advisory Agreement between VALIC and Putnam
           Investment Management, LLC (Small Cap Special Values Fund, Global
           Equity Fund) dated December 5, 2005.

d.(27)     Form of Investment Sub-Advisory Agreement between Templeton Global
           Advisers Limited (Foreign Value Fund) dated December 5, 2005.

d.(28)     Form of Investment Sub-Advisory Agreement between Templeton
           Investment Counsel, LLC (Global Strategy Fund) dated December 5,
           2005.

i.         Legal Opinion.

p.(15)     Code of Ethics -- Barrow, Hanley, Mewhinney & Strauss, Inc.

p.(16)     Code of Ethics -- Credit Suisse Asset Management, LLC.

p.(17)     Code of Ethics -- Evergreen Investment Management Company, LLC.

p.(18)     Code of Ethics -- Franklin Advisers, Inc.

p.(19)     Code of Ethics -- Putnam Investment Management, LLC.

p.(20)     Code of Ethics -- Templeton Investment Counsel, LLC.

p.(21)     Code of Ethics -- Templeton Global Advisers Limited.

Exhibit d.(1)(b)

FORM OF AMENDMENT NO. 2 TO INVESTMENT ADVISORY AGREEMENT

This AMENDMENT NO. 2 to the INVESTMENT ADVISORY AGREEMENT (the "Amendment") is effective as of October 1, 2005, by and among THE VARIABLE ANNUITY LIFE INSURANCE COMPANY ("VALIC") and VALIC COMPANY I ("VC I").

RECITALS

WHEREAS, VALIC and VALIC Company I ("VC I") entered into an Investment Advisory Agreement dated January 1, 2002 (the "Agreement"), with respect to the Covered Funds reflected in Schedule A; and

WHEREAS, VALIC and VC I entered into the Amendment No. 1 to the Agreement on October 19, 2004; and

WHEREAS, the parties wish to amend Schedule A to the Agreement to reflect a revision to the investment advisory fee schedule for the Capital Conservation Fund, Core Equity Fund, Government Securities Fund, Health Sciences Fund, Income & Growth Fund, International Government Bond Fund, International Growth I Fund, Large Cap Growth Fund, Mid Cap Index Fund, Money Market I Fund, Science & Technology Fund, Small Cap Fund, Small Cap Index Fund, Stock Index Fund and the Value Fund (the "Funds"); and

NOW, THEREFORE, in consideration of the mutual promises set forth herein, VALIC and VC I agree as follows:

1. Schedule A Amendment. Schedule A is amended to reflect the advisory fees.

2. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be an original and all of which together shall constitute one instrument.

3. Full Force and Effect. Except as expressly supplemented, amended or consented to hereby, all of the representations, warranties, terms, covenants and conditions of the Agreement shall remain unamended and shall continue to be in full force and effect.

IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 2 as of the date first above written.

THE VARIABLE ANNUITY LIFE               VALIC COMPANY I
INSURANCE COMPANY


By:                                     By:
    ---------------------------------       ------------------------------------
Name:                                   Name:
      -------------------------------         ----------------------------------
Title:                                  Title:
       ------------------------------          ---------------------------------

VALIC COMPANY I
SCHEDULE A
to Investment Advisory Agreement
(Effective October 1, 2005)

COVERED FUNDS

Annual Fee computed at the following annual rate, based on average monthly net assets value and payable monthly:

Asset Allocation Fund               0.50%

Blue Chip Growth Fund               0.80%

Broad Cap Value Fund*               0.70% on the first $250 million
                                    0.65% on the next $250 million
                                    0.60% on the next $500 million
                                    0.55% on assets over $1 billion

Capital Conservation Fund           0.50% on first $250 million
                                    0.45% on the next $250 million
                                    0.40% on the next $500 million
                                    0.35% on assets over $1 billion

Core Equity Fund                    0.80% on first $250 million
                                    0.75% on the next $250 million
                                    0.70% on the next $500 million
                                    0.65% on assets over $1 billion

Foreign Value Fund*                 0.73% on the first $250 million
                                    0.68% on the next $250 million
                                    0.63% on the next $500 million
                                    0.58% on assets over $1 billion

Global Equity Fund*                 0.82% on the first $250 million
                                    0.77% on the next $250 million
                                    0.72% on the next $500 million
                                    0.67% over $1 billion

Global Strategy Fund*               0.50%

Government Securities Fund          0.50% on first $250 million
                                    0.45% on next $250 million
                                    0.40% on the next $500 million
                                    0.35% on assets over $1 billion

Growth and Income Fund              0.75%

Health Sciences Fund                1.00% on first $500 million
                                    0.95% on assets over $500 million

* To be effective on or about December 5, 2005.

Income & Growth Fund                0.77% on the first $250 million
                                    0.72% on the next $250 million
                                    0.67% on the next $500 million
                                    0.62% on assets over $1 billion

Inflation Protected Fund            0.50% on the first $250 million
                                    0.45% on the next $250 million
                                    0.40% on assets over $500 million

International Equities Fund         0.35% on the first $500 million
                                    0.25% on assets over $500 million

International Government Bond       0.50% on the first $250 million
Fund                                0.45% on the next $250 million
                                    0.40% on the next $500 million
                                    0.35% on assets over $1 billion

International Growth I Fund         0.95% on the first $250 million
                                    0.90% on the next $250 million
                                    0.85% on the next $500 million
                                    0.80% on assets over $1 billion

Large Cap Core Fund*                0.70% on the first $250 million
                                    0.65% on the next $250 million
                                    0.60% on the next $500 million
                                    .055% on assets over $1 billion

Large Cap Growth Fund               0.75%

Large Cap Strategic Growth Fund*    0.89% on the first $250 million
                                    0.84% on the next $250 million
                                    0.79% on the next $500 million
                                    0.74% on assets over $1 billion

Large Capital Growth Fund           0.75% on the first $250 million
                                    0.70% on the next $250 million
                                    0.65% on assets over $500 million

Mid Cap Index Fund                  0.35% on the first $500 million
                                    0.25% on the next $2.5 billion
                                    0.20% on the next $2 billion
                                    0.15% on assets over $5 billion

Mid Cap Strategic Growth Fund       0.70% on the first $250 million
                                    0.65% on the next $250 million
                                    0.60% on assets over $500 million

Money Market I Fund                 0.40%

Nasdaq-100(R) Index Fund            0.40%

Science & Technology Fund           0.90% on the first $500 million
                                    0.85% on assets over $500 million

Small Cap Aggressive Growth Fund*   0.85% on the first $250 million
                                    0.75% on assets over $250 million

Small Cap Fund                      0.90% on the first $250 million
                                    0.85% on the next $250 million
                                    0.80% on the next $500 million
                                    0.75% on assets over $1 billion

Small Cap Index Fund                0.35% on the first $500 million
                                    0.25% on the next $2.5
                                    0.20% on the next $3 billion to $5 billion
                                    0.15% on assets over $5 billion

Small Cap Special Values Fund*      0.75% on the first $500 million
                                    0.70% on assets over $500 million

Small Cap Strategic Growth Fund*    0.85% on the first $250 million
                                    0.75% on assets over $250 million

Social Awareness Fund               0.50%

Stock Index Fund                    0.35% on the first $500 million
                                    0.25% on the next $2.5 billion
                                    0.20% on the next $2 billion
                                    0.15% on assets over $5 billion

Value Fund                          0.78% on the first $250 million
                                    0.73% on the next $250 million
                                    0.68% on the next $500 million
                                    0.63% on assets over $1 billion

Exhibit d.(1)(c)

FORM OF AMENDMENT NO. 3 TO INVESTMENT ADVISORY AGREEMENT

This AMENDMENT NO. 3 to the INVESTMENT ADVISORY AGREEMENT (the "Amendment") is effective as of December 5, 2005, by and among THE VARIABLE ANNUITY LIFE INSURANCE COMPANY ("VALIC") and VALIC COMPANY I ("VC I").

RECITALS

WHEREAS, VALIC and VALIC Company I ("VC I") entered into an Investment Advisory Agreement dated January 1, 2002 (the "Agreement"), with respect to the Covered Funds reflected in Schedule A; and

WHEREAS, the parties wish to amend Schedule A to the Agreement to reflect the addition as Covered Funds of the Broad Cap Value Fund, Foreign Value Fund, Global Equity Fund, Global Strategy Fund, Large Cap Appreciation Fund, Large Cap Strategic Growth Fund, Small Cap Aggressive Growth Fund, Small Cap Special Values Fund and Small Cap Strategic Growth Fund (the "New Funds") and to reflect the name change of the Mid Capital Growth Fund to the Mid Cap Strategic Growth Fund; and

NOW, THEREFORE, in consideration of the mutual promises set forth herein, VALIC and VC I agree as follows:

1. Schedule A Amendment. Schedule A is amended to reflect the addition of the New Funds as Covered Funds, the advisory fees for the New Funds, and to reflect the name change of the Mid Capital Growth Fund to the Mid Cap Strategic Growth Fund.

2. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be an original and all of which together shall constitute one instrument.

IN WITNESS WHEREOF, the undersigned have executed this Amendment No. __ as of the date first above written.

THE VARIABLE ANNUITY LIFE               VALIC COMPANY I
INSURANCE COMPANY


By:                                     By:
    ---------------------------------       ------------------------------------
Name:                                   Name:
      -------------------------------         ----------------------------------
Title:                                  Title:
       ------------------------------          ---------------------------------

VALIC COMPANY I
SCHEDULE A
to Investment Advisory Agreement
(Effective December 5, 2005)

COVERED FUNDS

Annual Fee computed at the following annual rate, based on average monthly net assets value and payable monthly:

Asset Allocation Fund               0.50%

Blue Chip Growth Fund               0.80%

Broad Cap Value Fund*               0.70% on the first $250 million
                                    0.65% on the next $250 million
                                    0.60% on the next $500 million
                                    0.55% on assets over $1 billion

Capital Conservation Fund           0.50% on first $250 million
                                    0.45% on the next $250 million
                                    0.40% on the next $500 million
                                    0.35% on assets over $1 billion

Core Equity Fund                    0.80% on first $250 million
                                    0.75% on the next $250 million
                                    0.70% on the next $500 million
                                    0.65% on assets over $1 billion

Foreign Value Fund*                 0.73% on the first $250 million
                                    0.68% on the next $250 million
                                    0.63% on the next $500 million
                                    0.58% on assets over $1 billion

Global Equity Fund*                 0.82% on the first $250 million
                                    0.77% on the next $250 million
                                    0.72% on the next $500 million
                                    0.67% over $1 billion

Global Strategy Fund*               0.50%

Government Securities Fund          0.50% on first $250 million
                                    0.45% on next $250 million
                                    0.40% on the next $500 million
                                    0.35% on assets over $1 billion

Growth and Income Fund              0.75%

Health Sciences Fund                1.00% on first $500 million
                                    0.95% on assets over $500 million

* To be effective on or about December 5, 2005.

Income & Growth Fund                0.77% on the first $250 million
                                    0.72% on the next $250 million
                                    0.67% on the next $500 million
                                    0.62% on assets over $1 billion

Inflation Protected Fund            0.50% on the first $250 million
                                    0.45% on the next $250 million
                                    0.40% on assets over $500 million

International Equities Fund         0.35% on the first $500 million
                                    0.25% on assets over $500 million

International Government Bond       0.50% on the first $250 million
Fund                                0.45% on the next $250 million
                                    0.40% on the next $500 million
                                    0.35% on assets over $1 billion

International Growth I Fund         0.95% on the first $250 million
                                    0.90% on the next $250 million
                                    0.85% on the next $500 million
                                    0.80% on assets over $1 billion

Large Cap Core Fund*                0.70% on the first $250 million
                                    0.65% on the next $250 million
                                    0.60% on the next $500 million
                                    .055% on assets over $1 billion

Large Cap Growth Fund               0.75%

Large Cap Strategic Growth Fund*    0.89% on the first $250 million
                                    0.84% on the next $250 million
                                    0.79% on the next $500 million
                                    0.74% on assets over $1 billion

Large Capital Growth Fund           0.75% on the first $250 million
                                    0.70% on the next $250 million
                                    0.65% on assets over $500 million

Mid Cap Index Fund                  0.35% on the first $500 million
                                    0.25% on the next $2.5 billion
                                    0.20% on the next $2 billion
                                    0.15% on assets over $5 billion

Mid Cap Strategic Growth Fund       0.70% on the first $250 million
                                    0.65% on the next $250 million
                                    0.60% on assets over $500 million

Money Market I Fund                 0.40%

Nasdaq-100(R) Index Fund            0.40%

Science & Technology Fund           0.90% on the first $500 million
                                    0.85% on assets over $500 million

Small Cap Aggressive Growth Fund*   0.85% on the first $250 million
                                    0.75% on assets over $250 million

Small Cap Fund                      0.90% on the first $250 million
                                    0.85% on the next $250 million
                                    0.80% on the next $500 million
                                    0.75% on assets over $1 billion

Small Cap Index Fund                0.35% on the first $500 million
                                    0.25% on the next $2.5
                                    0.20% on the next $3 billion to
                                    $5 billion
                                    0.15% on assets over $5 billion

Small Cap Special Values Fund*      0.75% on the first $500 million
                                    0.70% on assets over $500 million

Small Cap Strategic Growth Fund*    0.85% on the first $250 million
                                    0.75% on assets over $250 million

Social Awareness Fund               0.50%

Stock Index Fund                    0.35% on the first $500 million
                                    0.25% on the next $2.5 billion
                                    0.20% on the next $2 billion
                                    0.15% on assets over $5 billion

Value Fund                          0.78% on the first $250 million
                                    0.73% on the next $250 million
                                    0.68% on the next $500 million
                                    0.63% on assets over $1 billion

Exhibit d.19

AMENDMENT NO. 1
TO
INVESTMENT SUB-ADVISORY AGREEMENT

THIS AMENDMENT NO. 1 TO INVESTMENT SUB-ADVISORY AGREEMENT (the "Amendment") is effective as of June 20, 2005 by and among THE VARIABLE ANNUITY LIFE INSURANCE COMPANY ("VALIC") and A I M Capital Management, Inc. (the "Sub-Adviser").

RECITALS

WHEREAS, VALIC and VALIC Company I ("VC I") (formerly North American Funds Variable Product Series I) entered into an Investment Advisory Agreement dated January 1, 2002, with respect to the Covered Funds reflected in Schedule A; and

WHEREAS, VALIC and the Sub-Adviser are parties to that certain Investment Sub-Advisory Agreement dated December 20, 2004 (the "Agreement"), with respect to the VC I Covered Funds with the Sub-Adviser; and

WHEREAS, the parties wish to amend Schedule A to the Agreement to reflect the addition as a Covered Fund of the International Growth I Fund; and

NOW, THEREFORE, in consideration of the mutual promises set forth herein, VALIC and the Sub-Adviser agree as follows:

1. Schedule A Amendment. Schedule A to the Agreement is hereby amended to reflect the addition of the new Covered Fund set forth below. The revised Schedule A is also attached hereto.

Covered Fund                  Fee
------------                  ---
International Growth I Fund   0.525% on the first $250million
                              0.50% on the next $250million
                              0.475% over $500 million

Sub-Adviser shall manage a portion of the assets of the International Growth I Fund and shall be compensated on that portion as noted above.

2. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be an original and all of which together shall constitute one instrument.

3. Full Force and Effect. Except as expressly supplemented, amended or consented to hereby, all of the representations, warranties, terms, covenants and conditions of the Agreement shall remain unchanged and shall continue to be in full force and effect.

4. Miscellaneous. Capitalized terms used but not defined herein shall have the meanings assigned to them in the Agreement.

IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1 as of the date first above written.

THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY                       A I M CAPITAL MANAGEMENT, INC.


By: /s/ Evelyn M. Curran                By: /s/ Benjamin A. Hock, Jr.
    ---------------------------------       ------------------------------------
Name: Evelyn M. Curran                  Name: Benjamin A. Hock, Jr.
Title: Senior Vice President            Title: Managing Director

SCHEDULE A

Effective June 20, 2005

Annual Fee computed at the following annual rate, based on average daily net asset value for each month on that portion of the assets managed by Sub-Adviser, and payable monthly:

Covered Fund                  Fee
------------                  ---
International Growth I Fund   0.525% on the first $250million
                              0.50% on the next $250million
                              0.475% over $500 million

Large Capital Growth Fund     0.425% on first $250 million
                              0.375% on next $250 million
                              0.325% over $500 million

Exhibit d.(20)
AMENDMENT NO. 2
TO
INVESTMENT SUB-ADVISORY AGREEMENT

THIS AMENDMENT NO. 2 TO INVESTMENT SUB-ADVISORY AGREEMENT (the "Amendment") is effective as of June 20, 2005, by and among THE VARIABLE ANNUITY LIFE INSURANCE COMPANY ("VALIC") and American Century Global Investment Management, Inc. (the "Sub-Adviser").

RECITALS

WHEREAS, VALIC and the Sub-Adviser are parties to that certain Investment Sub-Advisory Agreement dated August 29, 2001, and as amended on June 21, 2004 (the "Agreement"), with respect to the VC I Covered Funds with the Sub-Adviser; and

WHEREAS, the parties wish to amend Schedule A to the Agreement to reflect the portion of the assets of the as a Covered Fund of the International Growth I Fund; and

NOW, THEREFORE, in consideration of the mutual promises set forth herein, VALIC and the Sub-Adviser agree as follows:

1. Schedule A Amendment. Schedule A to the Agreement is hereby amended to reflect that the Sub-adviser will manage a portion of the assets of the International Growth I Fund and shall be compensated on that portion. The revised Schedule A is also attached hereto.

2. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be an original and all of which together shall constitute one instrument.

3. Full Force and Effect. Except as expressly supplemented, amended or consented to hereby, all of the representations, warranties, terms, covenants and conditions of the Agreement shall remain unchanged and shall continue to be in full force and effect.

4. Miscellaneous. Capitalized terms used but not defined herein shall have the meanings assigned to them in the Agreement.

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date first above written.

THE VARIABLE ANNUITY LIFE AMERICAN CENTURY GLOBAL INVESTMENT
INSURANCE COMPANY MANAGEMENT, INC.

By:    /s/ Evelyn M. Curran               By:    /s/ William M. Lyons
       ------------------------

Name:  Evelyn M. Curran                   Name:  William M. Lyons
       ------------------------                  -------------------------------

Title: Senior Vice President              Title: President
       ------------------------                  -------------------------------

SCHEDULE A

Effective June 20, 2005

SUB-ADVISER shall manage a portion of the assets of the following Covered Funds and shall be compensated on that portion, as follows:

Covered Funds                             Fee
-------------                             ---

International Growth I Fund         .65% on the first $250 million
                                    .55% on the next $250 million
                                    .50% over $500 million

Exhibit d.(21)

FORM OF
AMENDMENT NO. 3
TO
INVESTMENT SUB-ADVISORY AGREEMENT

THIS AMENDMENT NO. 3 TO INVESTMENT SUB-ADVISORY AGREEMENT (the "Amendment") is effective as of December 5, 2005, by and among THE VARIABLE ANNUITY LIFE INSURANCE COMPANY ("VALIC") and American Century Investment Management, Inc. (the "Sub-Adviser").

RECITALS

WHEREAS, VALIC and the Sub-Adviser are parties to that certain Investment Sub-Advisory Agreement dated August 29, 2001 (the "Agreement"), and as amended on June 21, 2004 and June 20, 2005, with respect to the VC I Covered Funds with the Sub-Adviser; and

WHEREAS, the parties wish to amend Schedule A to the Agreement to reflect the portion of the assets of the as a Covered Fund of the International Growth I Fund; and

NOW, THEREFORE, in consideration of the mutual promises set forth herein, VALIC and the Sub-Adviser agree as follows:

1. Schedule A Amendment. Schedule A to the Agreement is hereby amended to reflect that the Sub-Adviser will manage the assets of the Large Cap Strategic Growth Fund and shall be compensated on those assets managed, in accordance with Section 2 of the Agreement. The revised Schedule A is also attached hereto.

2. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be an original and all of which together shall constitute one instrument.

3. Full Force and Effect. Except as expressly supplemented, amended or consented to hereby, all of the representations, warranties, terms, covenants and conditions of the Agreement shall remain unchanged and shall continue to be in full force and effect.

4. Miscellaneous. Capitalized terms used but not defined herein shall have the meanings assigned to them in the Agreement.

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date first above written.

THE VARIABLE ANNUITY LIFE               AMERICAN CENTURY INVESTMENT
INSURANCE COMPANY                       MANAGEMENT, INC.


By:                                     By:
    ---------------------------------       ------------------------------------
Name:                                   Name:
      -------------------------------         ----------------------------------
Title:                                  Title:
       ------------------------------          ---------------------------------

SCHEDULE A

Effective December ___, 2005

SUBADVISER shall manage all or a portion of the assets of the following Covered Fund(s) and shall be compensated on that portion managed, as follows:

Covered Funds                     Fee
-------------                     ---
Income & Growth Fund              0.45% on the first $150 million;
                                  0.40% on the next $150 million; and
                                  0.35% over $300 million.

Large Cap Strategic Growth Fund   0.55% on the first $500 million;
(Name to be changed)              0.50% on the next $500 million;
                                  0.45% on the next $500 million; and
                                  0.40% over $1.5 billion.

Small Cap Fund                    0.59%.

EXHIBIT D.(22)

FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT

This AGREEMENT made this ___ day of December, 2005, by and between THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," and BARROW, HANLEY, MEWHINNEY & STRAUSS, INC., 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 VALIC Company I ("VC I"), pursuant to an Investment Advisory Agreement between VALIC and VC I, 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. VC I 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.

Asset Allocation Fund
Blue Chip Growth Fund
Broad Cap Value Fund
Capital Conservation Fund Core Equity Fund
Foreign Value Fund
Global Equity Fund
Global Strategy Fund
Government Securities Fund Growth & Income Fund
Health Sciences Fund
Income & Growth Fund
Inflation Protected Fund
International Equities Fund International Government Bond Fund International Growth I Fund Large Cap Core Fund
Large Cap Growth Fund
Large Capital Growth Fund Large Cap Strategic Growth Fund Mid Cap Index Fund
Mid Cap Strategic Growth Fund Money Market I Fund
Nasdaq-100(R) Index Fund
Science & Technology Fund Small Cap Aggressive Growth Fund Small Cap Fund
Small Cap Special Values Fund Small Cap Strategic Growth Fund Small Cap Index Fund
Social Awareness Fund
Stock Index Fund
Value Fund

In accordance with VC I's Articles of Incorporation (the "Articles"), new Funds may be added to VC I upon approval of VC I'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 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 VC I'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"), VC I's Articles, Bylaws, registration statements, prospectus and stated investment objectives, policies and restrictions and any applicable procedures adopted by VC I'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 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.

The SUB-ADVISER will assist the Covered Fund(s) and its agents in determining whether prices obtained by the Covered Fund(s) and its agents for valuation purposes are consistent with 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 at such times as VALIC shall reasonably request; provided, however, that the parties acknowledge that the SUB-ADVISER is not the fund accounting agent for the Covered Fund(s) and is not responsible for pricing determinations or calculations and any information provided pursuant to this position by SUB-ADVISER will be provided for information purposes only.

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, under the circumstances of each trade and on the basis of all relevant factors and considerations. Subject to approval by VC I'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 is fair and reasonable and consistent with the SUB-ADVISER'S fiduciary obligations to the Covered Fund(s) and its other clients, considering factors such as 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 whether such aggregation is fair and reasonable by the SUB-ADVISER is subjective and represents the SUB-ADVISER's evaluation that the Covered Fund(s) may benefit 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 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 VC I's Board of Directors regarding the performance of its services under this Agreement. The SUB-ADVISER will make available to VALIC and VC I promptly upon their reasonable written request all of the Covered Fund(s)' investment records and ledgers to assist VALIC and VC 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 VC I's Board of Directors such periodic and special reports as VALIC and VC I'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 VC I 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 VC 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 Court of Law of competent jurisdiction, 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 VC I.

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 VC I. The money and investments will be held by the Custodian of VC I. The SUB-ADVISER will arrange for the transmission to the Custodian for VC I, 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 VC I (i) to pay cash for securities and other property delivered, or to be delivered, to the Custodian for VC I
(ii) to deliver securities and other property against payment for VC I, 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.

may, on certain non-routine matters, consult with the SUB-ADVISER before voting proxies relating to securities held by the Covered Fund(s). VALIC will instruct the Custodian and other parties providing services to VC I promptly to forward to the proxy voting service copies of all proxies and shareholder communications relating to securities held by each Covered Fund(s).

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 VC 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.

The SUB-ADVISER is hereby prohibited from consulting with any other sub-adviser of the Covered Fund(s) (or a portion thereof) or any other sub-adviser to a fund under common control with the Covered Fund(s) (or a portion thereof) concerning securities transactions of the Covered Fund(s) (or a portion thereof) in securities or other assets, except as otherwise permitted by the 1940 Act or any rules thereunder.

Sub-adviser shall not be responsible for taking any action on behalf of the Covered Funds in connection with class action lawsuits involving portfolio securities owned by the Covered Funds.

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 in writing from time to time, provided that amendments are made in conformity with applicable laws and regulations and the Articles and Bylaws of VC I. 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 VC I'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 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 VC I.

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.

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, VC I, 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.

(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 VC I with a copy of such code of ethics together with evidence of its adoption.

(c) The SUB-ADVISER has provided VALIC and VC I 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:

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) 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 VC I'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 VC I'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 VC I as it relates to any Covered Fund(s). The Agreement may be terminated as to any Covered Fund at any time, without the payment of any penalty, by vote of VC I'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 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 VC I with respect to them.

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 VC I, 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 VC I's Prospectus, Statement of Additional Information, Articles and Bylaws, investment objectives, policies and restrictions, and any applicable procedures adopted by VC I'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.

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 who the SUB-ADVISER has reason to believe are acting in good authority. The SUB-ADVISER shall not be liable for so acting in good faith upon such instructions, confirmation or authority.

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 shareholders of the Covered 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 and shall cease to use the SUB-ADVISER name and/or logo as soon as is reasonable. 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.

Promptly after receipt by either VALIC or SUB-ADVISER (an "Indemnified Party") under this Section 6 of the commencement of an action, such Indemnified Party will, if a claim in respect thereof is to be made against the other party (the "Indemnifying Party") under this section, notify Indemnifying Party of the commencement thereof; but the omission so to notify Indemnifying Party will not relieve it from any liability that it may have to any Indemnified Party otherwise than under this section. In case any such action is brought against any Indemnified Party, and it notified Indemnifying Party of the commencement thereof, Indemnifying Party will be entitled to participate therein and, to the extent that it may wish, assume the defense thereof, with counsel satisfactory to such Indemnified Party. After notice from Indemnifying Party of its intention to assume the defense of an action, the Indemnified Party shall bear the expenses of any additional counsel obtained by it, and Indemnifying Party shall not be liable to such Indemnified Party under this section for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof other than reasonable costs of investigation.

A successor by law of the parties to this Agreement shall be entitled to the benefits of the indemnification contained herein. The indemnification provisions contained herein shall survive any termination of this Agreement.

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: Evelyn Curran
2919 Allen Parkway, L12-01
Houston, Texas 77019
Tel: (713) 831-6425
Fax: (713) 831-4124

If to SUB-ADVISER:

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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:

BARROW, HANLEY, MEWHINNEY &
STRAUSS, INC.

By:

Name:
Title:

ATTEST:

Attest:
Name:
Title:

SCHEDULE A
COVERED FUND(S)

Annual Fee computed at the following annual rate, based on average daily net asset value for each month on that portion of the assets managed by SUB-ADVISER, and payable monthly:

Covered Fund           Fee
------------           ---
Broad Cap Value Fund   0.70% on the first $15 million
                       0.55% on the next $10 million
                       0.35 on the next $75 million
                       0.30% on the next $100 million
                       0.25% on the next $800 million
                       0.15% over $1.0 billion

EXHIBIT D.(23)

FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT

This AGREEMENT made this ___ day of December, 2005, by and between THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," and CREDIT SUISSE ASSET MANAGEMENT, LLC, hereinafter referred to as the "SUB-ADVISER."

VALIC and the SUB-ADVISER recognize the following:

Asset Allocation Fund
Blue Chip Growth Fund
Broad Cap Value Fund
Capital Conservation Fund Core Equity Fund
Foreign Value Fund
Global Equity Fund
Global Strategy Fund
Government Securities Fund Growth & Income Fund
Health Sciences Fund
Income & Growth Fund
Inflation Protected Fund
International Equities Fund International Government Bond Fund International Growth I Fund Large Cap Core Fund
Large Cap Growth Fund
Large Capital Growth Fund Large Cap Strategic Growth Fund Mid Cap Index Fund
Mid Cap Strategic Growth Fund Money Market I Fund
Nasdaq-100(R) Index Fund
Science & Technology Fund Small Cap Aggressive Growth Fund Small Cap Fund
Small Cap Index Fund
Small Cap Special Values Fund Small Cap Strategic Growth Fund Social Awareness Fund
Stock Index Fund
Value 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 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 VC I 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 VC 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, self regulatory organization (for example, NYSE or NASD) or Court of Law of competent jurisdiction, 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 VC I.

VALIC will vote proxies relating to securities held by the Covered Fund(s). VALIC will vote all such proxies in accordance with such proxy voting guidelines and procedures adopted by the Board of Directors. VALIC may, on certain non-routine matters, consult with the SUB-ADVISER before voting proxies relating to securities held by the Covered Fund(s). VALIC will instruct the Custodian and other parties providing services to VC I promptly to forward to the proxy voting service copies of all proxies and shareholder communications relating to securities held by each Covered Fund(s).

It is understood that SUB-ADVISER and its affiliates perform investment advisory and other services for various clients. VALIC agrees that SUB-ADVISER and its affiliates may give advice and take action in the performance of their duties with respect to any of their other clients which may differ from advice given, or the timing or nature of actions taken, with respect to the Covered Fund(s). VALIC also acknowledges that SUB-ADVISER and its affiliates are fiduciaries to other entities, some of which have the same or similar investment objectives (and will hold the same or similar investments) as the Covered Fund(s), and that SUB-ADVISER will carry out its duties hereunder together with its duties under such relationships. Nothing in this Agreement shall be deemed to confer upon SUB-ADVISER any obligation to purchase or sell or to recommend for purchase or sale for the Covered Fund(s) any investment which SUB-ADVISER, its affiliates, officers or employees may purchase or sell for its or their own account or for the account of any other client, if in the sole and absolute discretion of SUB-ADVISER it is for any reason impractical or undesirable to take such action or make such recommendation for the Covered Fund(s).

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 VC I.

3. SCOPE OF THE SUB-ADVISER'S ACTIVITIES

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 warrants and represents to SUB-ADVISER (i) that the Covered Fund(s) has been and throughout the term of this Agreement will be operated, and any securities or other financial instruments issued by the Covered Fund(s) have been and throughout the term of this Agreement will be offered and sold, in full compliance with all applicable laws, and (ii) that procedures reasonably designed to prevent and detect direct or indirect investments in securities or other financial instruments issued by Covered Fund(s), or operations of Covered Fund(s), for the purpose of, related to, or in any way involving money laundering have been and throughout the term of this Agreement will be applied.

5. TERM OF AGREEMENT

6. OTHER MATTERS

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: Evelyn Curran
2919 Allen Parkway, L12-01
Houston, Texas 77019
Tel: (713) 831-6425
Fax: (713) 831-4124

If to SUB-ADVISER:

Attn: General Counsel
Credit Suisse Asset Management, LLC 466 Lexington Avenue
New York, NY 10017
Tel: 212-875-3837
Fax: 646- 658-0855

10. MISCELLANEOUS.

Affiliated Transactions. VALIC shall notify SUB-ADVISER promptly, in writing, if VALIC or any of its affiliates, is or becomes an affiliate, director, trustee or controlling person of any issuer whose securities are or may be purchased for the Covered Fund(s).

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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:

CREDIT SUISSE ASSET MANAGEMENT, LLC

By:

Name:
Title:

ATTEST:

Attest:
Name:
Title:

SCHEDULE A
COVERED FUND(S)

Annual Fee computed at the following annual rate, based on average daily net asset value for each month on that portion of the assets managed by SUB-ADVISER, and payable monthly:

Covered Fund                       Fee
------------                       ---
Small Cap Aggressive Growth Fund   0.55% on the first $250 million
                                   0.50% over $250 million

EXHIBIT D.(24)

FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT

This AGREEMENT made this ___ day of December, 2005, by and between THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," and EVERGREEN INVESTMENT MANAGEMENT COMPANY, 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 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 VC I 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 VC I to others or 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 Court of Law of competent jurisdiction, 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 VC I.

Should VALIC at any time make any definite determination as to any investment policy and notify the SUB-ADVISER in writing of such determination, upon the SUB-ADVISER's acknowledgment in writing, or via email, 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 VC I. The money and investments will be held by the Custodian of VC I. The SUB-ADVISER will arrange for the transmission to the Custodian for VC I, 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 VC I (i) to pay cash for securities and other property delivered, or to be delivered, to the Custodian for VC I, (ii) to deliver securities and other property against payment for VC I, 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.

VALIC will vote proxies relating to securities held by the Covered Fund(s). VALIC will vote all such proxies in accordance with such proxy voting guidelines and procedures adopted by the Board of Directors. VALIC may, on certain non-routine matters, consult with the SUB-ADVISER before voting proxies relating to securities held by the Covered Fund(s). VALIC will instruct the Custodian and other parties providing services to VC I promptly to forward to the proxy voting service, copies of all proxies and shareholder communications relating to securities held by each Covered Fund(s).

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 of 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

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 VC I.

3. SCOPE OF THE SUB-ADVISER'S ACTIVITIES

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:

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

6. OTHER MATTERS

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 shareholders of the Covered Fund or the public that refer in any way to the SUB-ADVISER, and not to use such material without the prior approval of the SUB-ADVISER. 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 and shall cease to use the SUB-ADVISER name and/or logo as soon as is reasonable. 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 provide to the SUB-ADVISER, in writing, a list of, and all relevant details relating to, all custodial accounts containing assets being managed by the SUB-ADVISER pursuant to this Agreement and shall provide the SUB-ADVISER with prompt notice, in writing, of all changes to such list and related details.

VALIC agrees to provide the SUB-ADVISER with any further documents, materials or information that the SUB-ADVISER may reasonably request from time to time, including such documents, materials or information that the SUB-ADVISER deems necessary in order to complete an annual due diligence of VALIC, VC I and the Covered Funds. VALIC shall also provide the SUB-ADVISER with a copy of its Form ADV promptly after any material update to its Form ADV.

VALIC agrees that the SUB-ADVISER may use the name of VALIC or VC I in any material that merely refers in accurate terms to the appointment of the SUB-ADVISER 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 any 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 any Covered Fund to the extent any such statement or omission was made in reliance on written information provided by the SUB-ADVISER to VALIC.

Agreement.

7. APPLICABILITY OF FEDERAL SECURITIES LAWS

8. AMENDMENT AND WAIVER

9. NOTICES

If to VALIC:

Attn: Evelyn Curran
2919 Allen Parkway, L12-01
Houston, Texas 77019
Tel: (713) 831-6425
Fax: (713) 831-4124

If to SUB-ADVISER:

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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:

EVERGREEN INVESTMENT MANAGEMENT
COMPANY, LLC

By:

Name:
Title:

ATTEST:

Attest:
Name:
Title:

SCHEDULE A
COVERED FUND(S)

Annual Fee computed at the following annual rate, based on average daily net asset value for each month on that portion of the assets managed by SUB-ADVISER, and payable monthly:

Covered Fund                      Fee
------------                      ---
Large Cap Core Fund               0.40% on the first $100 million
                                  0.25% over $100 million

Small Cap Special Values Fund     0.60% on the first $100 million
                                  0.50% over $100 million

Small Cap Strategic Growth Fund   0.60% on the first $100 million
                                  0.50% over $100 million

EXHIBIT D.(25)

FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT

This AGREEMENT made this ___ day of December, 2005, by and between THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," and FRANKLIN ADVISERS, INC., hereinafter referred to as the "SUB-ADVISER."

VALIC and the SUB-ADVISER recognize the following:

Asset Allocation Fund
Blue Chip Growth Fund
Broad Cap Value Fund
Capital Conservation Fund Core Equity Fund
Foreign Value Fund
Global Equity Fund
Global Strategy Fund
Government Securities Fund Growth & Income Fund
Health Sciences Fund
Income & Growth Fund
Inflation Protected Fund
International Equities Fund International Government Bond Fund International Growth I Fund Large Cap Core Fund
Large Cap Growth Fund
Large Capital Growth Fund Large Cap Strategic Growth Fund Mid Cap Index Fund
Mid Cap Strategic Growth Fund Money Market I Fund
Nasdaq-100(R) Index Fund
Science & Technology Fund Small Cap Aggressive Growth Fund Small Cap Fund
Small Cap Index Fund
Small Cap Special Values Fund Small Cap Strategic Growth Fund Social Awareness Fund
Stock Index Fund
Value 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, VALIC and VC I 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. Each party shall disclose such non-public information only if the other party has authorized such disclosure, or if such information is or hereafter otherwise is known by the disclosing party or has been disclosed, directly or indirectly, by the other party to others or 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 Court of Law of competent jurisdiction, or to the extent such disclosure is reasonably required by auditors or attorneys of the disclosing party 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 VC I.

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 VC I.

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.

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

6. OTHER MATTERS

The SUB-ADVISER agrees that all books and records which it maintains for the Covered Fund(s) are the property of both the SUB-ADVISER and the Covered Fund. The SUB-ADVISER also agrees upon request of VALIC or VC I, to promptly provide access to or copies of 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. . 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.

7. APPLICABILITY OF FEDERAL SECURITIES LAWS

8. AMENDMENT AND WAIVER

9. NOTICES

If to VALIC:

Attn: Evelyn Curran
2919 Allen Parkway, L12-01
Houston, Texas 77019
Tel: (713) 831-6425
Fax: (713) 831-4124

If to SUB-ADVISER:

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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:

FRANKLIN ADVISERS, INC.

By:

Name:
Title:

ATTEST:

Attest:
Name:
Title:

SCHEDULE A
COVERED FUND(S)

Annual Fee computed at the following annual rate, based on average daily net asset value for each month on that portion of the assets managed by SUB-ADVISER, and payable monthly:

Covered Fund           Fee
------------           ---
Global Strategy Fund   0.40%

Exhibit d.(26)

FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT

This AGREEMENT made this ___ day of December, 2005, 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:

Asset Allocation Fund
Blue Chip Growth Fund
Broad Cap Value Fund
Capital Conservation Fund Core Equity Fund
Foreign Value Fund
Global Equity Fund
Global Strategy Fund
Government Securities Fund Growth & Income Fund
Health Sciences Fund
Income & Growth Fund
Inflation Protected Fund
International Equities Fund International Government Bond Fund International Growth I Fund Large Capital Appreciation Fund Large Cap Growth Fund
Large Capital Growth Fund Large Cap Strategic Growth Fund Mid Cap Index Fund
Mid Cap Strategic Growth Fund Money Market I Fund
Nasdaq-100(R) Index Fund
Science & Technology Fund Small Cap Aggressive Growth Fund Small Cap Fund
Small Cap Index Fund
Small Cap Special Values Fund Small Cap Strategic Growth Fund Social Awareness Fund
Stock Index Fund
Value 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

SUB-ADVISER shall not be responsible for taking any action on behalf of the Covered Funds in connection with class action lawsuits involving portfolio securities owned by the Covered Funds.

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 VC I.

3. SCOPE OF THE SUB-ADVISER'S ACTIVITIES

4. REPRESENTATIONS OF THE SUB-ADVISER AND VALIC

The SUB-ADVISER represents, warrants, and agrees as follows:

VALIC represents, warrants, and agrees as follows:

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

6. OTHER MATTERS

7. APPLICABILITY OF FEDERAL SECURITIES LAWS

8. AMENDMENT AND WAIVER

9. NOTICES

If to VALIC:

Attn: Evelyn Curran
2919 Allen Parkway, L12-01
Houston, Texas 77019
Tel: (713) 831-6425
Fax: (713) 831-4124

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

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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.(26)

SCHEDULE A
COVERED FUND(S)

Annual Fee computed at the following annual rate, based on average daily net asset value for each month on that portion of the assets managed by SUB-ADVISER, and payable monthly:

Covered Fund                    Fee
------------                    ---
Global Equity Fund              0.50% on the first $150 million
                                0.45% on the next $150 million
                                0.35% over $300 million

Small Cap Special Values Fund   0.65% to $50 million; and
                                0.60% over $50 million.

EXHIBIT D.(27)

FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT

This AGREEMENT made this ___ day of December, 2005, by and between THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," and TEMPLETON GLOBAL ADVISERS LIMITED, hereinafter referred to as the "SUB-ADVISER."

VALIC and the SUB-ADVISER recognize the following:

Asset Allocation Fund
Blue Chip Growth Fund
Broad Cap Value Fund
Capital Conservation Fund Core Equity Fund
Foreign Value Fund
Global Equity Fund
Global Strategy Fund
Government Securities Fund Growth & Income Fund
Health Sciences Fund
Income & Growth Fund
Inflation Protected Fund
International Equities Fund International Government Bond Fund International Growth I Fund Large Cap Core Fund
Large Cap Growth Fund
Large Capital Growth Fund Large Cap Strategic Growth Fund Mid Cap Index Fund
Mid Cap Strategic Growth Fund Money Market I Fund
Nasdaq-100(R) Index Fund
Science & Technology Fund Small Cap Aggressive Growth Fund Small Cap Fund
Small Cap Index Fund
Small Cap Special Values Fund Small Cap Strategic Growth Fund Social Awareness Fund
Stock Index Fund
Value 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

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 VC I.

3. SCOPE OF THE SUB-ADVISER'S ACTIVITIES

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

6. OTHER MATTERS

7. APPLICABILITY OF FEDERAL SECURITIES LAWS

8. AMENDMENT AND WAIVER

9. NOTICES

If to VALIC:

Attn: Evelyn Curran
2919 Allen Parkway, L12-01
Houston, Texas 77019
Tel: (713) 831-6425
Fax: (713) 831-4124

If to SUB-ADVISER:

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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:

TEMPLETON GLOBAL ADVISERS LIMITED

By:

Name:
Title:

ATTEST:

Attest:
Name:
Title:

SCHEDULE A
COVERED FUND(S)

Annual Fee computed at the following annual rate, based on average daily net asset value for each month on that portion of the assets managed by SUB-ADVISER, and payable monthly:

Covered Fund          Fee
------------          ---
Foreign Value Fund    0.625% to $50 million;
                      0.465% on next $150 million;
                      0.375% on next $300 million; and
                      0.35% over $500 million.

EXHIBIT D.(28)

FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT

This AGREEMENT made this ___ day of December, 2005, by and between THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," and TEMPLETON INVESTMENT COUNSEL, LLC, hereinafter referred to as the "SUB-ADVISER."

VALIC and the SUB-ADVISER recognize the following:

Asset Allocation Fund
Blue Chip Growth Fund
Broad Cap Value Fund
Capital Conservation Fund Core Equity Fund
Foreign Value Fund
Global Equity Fund
Global Strategy Fund
Government Securities Fund Growth & Income Fund
Health Sciences Fund
Income & Growth Fund
Inflation Protected Fund
International Equities Fund International Government Bond Fund International Growth I Fund Large Cap Core Fund
Large Cap Growth Fund
Large Capital Growth Fund Large Cap Strategic Growth Fund Mid Cap Index Fund
Mid Cap Strategic Growth Fund Money Market I Fund
Nasdaq-100(R) Index Fund
Science & Technology Fund Small Cap Aggressive Growth Fund Small Cap Fund
Small Cap Index Fund
Small Cap Special Values Fund Small Cap Strategic Growth Fund Social Awareness Fund
Stock Index Fund
Value 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

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 VC I.

3. SCOPE OF THE SUB-ADVISER'S ACTIVITIES

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

6. OTHER MATTERS

7. APPLICABILITY OF FEDERAL SECURITIES LAWS

8. AMENDMENT AND WAIVER

9. NOTICES

If to VALIC:

Attn: Evelyn Curran
2919 Allen Parkway, L12-01
Houston, Texas 77019
Tel: (713) 831-6425
Fax: (713) 831-4124

If to SUB-ADVISER:

Templeton Investment Counsel, LLC
500 E. Broward Blvd., Suite 2100
Ft. Lauderdale, FL 33394 ________

Attn: Gary Motyl, President

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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:

TEMPLETON INVESTMENT COUNSEL, LLC

By:

Name:
Title:

ATTEST:

Attest:
Name:
Title:

SCHEDULE A
COVERED FUND(S)

Annual Fee computed at the following annual rate, based on average daily net asset value for each month on that portion of the assets managed by SUB-ADVISER, and payable monthly:

Covered Fund           Fee
------------           ---
Global Strategy Fund   0.40%

EXHIBIT I.

September 20, 2005

Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: VALIC Company I
File Numbers 2-83631 and 811-3738

Dear Sir or Madam:

As counsel to VALIC Company I (the "Registrant"), it is my opinion that the securities being registered by this Post-Effective Amendment No. 45 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 p.(15)

BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.

CODE OF ETHICS

INTRODUCTION

Barrow, Hanley, Mewhinney & Strauss, Inc. (the "Firm") has adopted this Code of Ethics ("Code") in compliance with the requirements of Sections 204A-1 of the Investment Advisers Act of 1940 (the "Advisers Act") and Rule 204 of the Advisers Act and Section 17j of the Investment Company Act of 1940. This Code was adopted on November 28, 1983 and last amended on December 31, 2004. The Code of Ethics sets forth standards of conduct expected of the Firm's supervised persons and addresses conflicts that arise from personal trading by access persons. The policies and procedures outlined in the Code of Ethics are intended to promote compliance with fiduciary standards by the Firm and its supervised persons. As a fiduciary, the Firm has the responsibility to render professional, continuous and unbiased investment advice, owes its clients a duty of honesty, good faith and fair dealing, must act at all times in the best interests of clients and must avoid or disclose conflicts of interest.

This Code Of Ethics Is Designed To:

- Protect The Firm's Clients By Deterring Misconduct;

- Educate Our Employees Regarding The Firm's Expectations And The Laws Governing Their Conduct;

- Remind Employees That They Are In A Position Of Trust And Must Act With Complete Propriety At All Times;

- Protect The Reputation Of The Firm;

- Guard Against Violations Of The Securities Laws; And

- Establish Procedures For Employees To Follow So That The Firm May Determine Whether Employees Are Complying With Its Ethical Principals.

This Code of Ethics is based upon the principle that the directors, officers and other employees of the Firm owe a fiduciary duty to, among others, the client's of the Firm to conduct their affairs, including their personal securities transactions, in such a manner as to avoid (i) serving their own personal interests ahead of clients; (ii) taking inappropriate advantage of their position with the Firm; and (iii) any actual or potential conflicts of interest or any abuse of their position of trust and responsibility. This fiduciary duty includes the duty of the Chief Compliance Officer of the Firm to report violations of this Code of Ethics to the Firm's Board of Directors of any U.S. registered management investment company for which the Firm acts as adviser or sub-adviser. This Code contains provisions reasonably necessary to prevent persons from engaging in acts in violation of the above standard and procedures reasonably necessary to prevent violations of the Code.

This Code is adopted by the Board of Directors of the Firm. This Code is based upon the principle that the directors and officers of the Firm, and certain affiliated persons of the Firm, owe a fiduciary duty to, among others, the clients of the Firm to conduct their affairs, including their personal securities transactions, in such manner to avoid:

i. serving their own personal interests ahead of clients;

ii. taking inappropriate advantage of their position with the Firm; and

iii. any actual or potential conflicts of interest or any abuse of their position of trust and responsibility.

This fiduciary duty includes the duty of the Chief Compliance Officer of the Firm to report violations of this Code to the Firm's Board of Directors and to any Investment Company client's Compliance Officer.

POLICY STATEMENT ON INSIDER TRADING

The Firm forbids any officer, director or employee from trading, either personally or on behalf of others, including accounts managed by the Firm, on material nonpublic information or communicating material nonpublic information to others in violation of the law. This conduct is frequently referred to as "insider trading." The Firm's policy applies to every officer, director and employee and extends to activities within and outside their duties at the Firm. Any questions regarding the Firm's policy and procedures should be referred to the Firm's Chief Compliance Officer.

The term "insider trading" is not defined in the federal securities laws, but generally is used to refer to the use of material nonpublic information to trade in securities (whether or not one is an "insider") or to communications of material nonpublic information to others. While the law concerning insider trading is not static, it is generally understood that the law prohibits:

1) trading by an insider, while in possession of material nonpublic information, or

2) trading by a non-insider, while in possession of material nonpublic information, where the information either was disclosed to the non-insider in violation of an insider's duty to keep it confidential or was misappropriated, or

3) communicating material nonpublic information to others.

The concept of "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 special confidential relationship in the conduct of a company's affairs and as a result is given access to information solely for the company's purposes. A temporary insider can include, among others, a company's attorneys, accountants, consultants, bank lending officers, and the employees of such organizations. In addition, the Firm may become a temporary insider of a company it advises or for which it performs other services. For that to occur, the company must expect the Firm to keep the disclosed nonpublic information confidential and the relationship must at least imply such a duty before the Firm will be considered an insider.

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Trading on inside information is not a basis for liability unless the information is material. "Material information" generally is defined as information for which there is a substantial likelihood that a reasonable investor would consider it important in making his or her investment decisions, or information that is reasonably certain to have a substantial effect on the price of a company's securities. Information that officers, directors and employees should consider material includes, but is not limited to: dividend changes, earnings estimates, changes in previously released earnings estimates, significant merger or acquisition proposals or agreements, major litigation, liquidation problems, and extraordinary management developments.

Information is nonpublic until it has been effectively communicated to the market place. 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 SEC, or appearing in Dow Jones, Reuters Economic Services, The Wall Street Journal or other publications of general circulation would be considered public. You should be particularly careful with information received from client contacts at public companies.

Before trading for yourself or others in the securities of a company about which you may have potential inside information, ask yourself the following questions:

i. Is the information material? Is this information that an investor would consider important in making his or her investment decisions? Is this information that would substantially effect the market price of the securities if generally disclosed?

ii. Is the information nonpublic? To whom has this information been provided? Has the information been effectively communicated to the marketplace?

If, after consideration of the above, you believe that the information is material and nonpublic, or if you have questions as to whether the information is material and nonpublic, you should take the following steps.

i. Report the matter immediately to the Firm's Chief Compliance Officer.

ii. Do not purchase or sell the securities on behalf of yourself or others.

iii. Do not communicate the information inside or outside the Firm, other than to the Firm's Chief Compliance Officer.

iv. After the Firm's Chief Compliance Officer has reviewed the issue, you will be instructed to continue the prohibitions against trading and communication, or you will be allowed to trade and communicate the information.

Information in your possession that you identify as material and nonpublic may not be communicated to anyone, including persons within the Firm, except as provided above. In addition, care should be taken so that such information is secure. For example, files containing material nonpublic information should be sealed; access to computer files containing material nonpublic information should be restricted.

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The role of the Firm's Chief Compliance Officer is critical to the implementation and maintenance of the Firm's policy and procedures against insider trading. The Firm's Supervisory Procedures can be divided into two classifications - prevention of insider trading and detection of insider trading.

To prevent insider trading, the Firm will:

i. provide, on a regular basis, an educational program to familiarize officers, directors and employees with the Firm's policy and procedures, and

ii. when it has been determined that an officer, director or employee of the Firm has material nonpublic information,

1. implement measures to prevent dissemination of such information, and

2. if necessary, restrict officers, directors and employees from trading the securities.

To detect insider trading, the Firm's Chief Compliance Officer will:

i. review the trading activity reports filed by each officer, director and employee, and

ii. review the trading activity of accounts managed by the Firm.

A. DEFINITIONS

(1) "ACCESS PERSON" means any director, officer, general partner, advisory person, investment personnel, portfolio manager, or employee of the firm. "Access person does not include a Nonresident Director.

(2) "ADVISORY PERSON" means any natural person in a control relationship to the Firm who obtains information concerning recommendations made to the Firm with regard to the purchase or sale of a security by the Firm

(3) "AFFILIATED COMPANY" means a company which is an affiliate of the Firm through the Old Mutual U.S. Holdings, Inc. relationship.

(4) A security is "BEING CONSIDERED FOR PURCHASE OR SALE" or is "BEING PURCHASED OR SOLD" when a recommendation to purchase or sell the security has been made and communicated, which includes when the Firm has a pending "buy" or "sell" order with respect to a security, and, with respect to the person making the recommendation, when such person seriously considers making such a recommendation. "PURCHASE OR SALE OF A SECURITY" includes the writing of an option to purchase or sell a security.

(5) "BENEFICIAL OWNERSHIP" shall be as defined in, and interpreted in the same manner as it would be in determining whether a person is subject to the provisions of, Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder which, generally speaking, encompasses those situations where the beneficial owner has the right to enjoy some economic benefit from the ownership of the security. A

-4-

person is normally regarded as the beneficial owner of securities held in the name of his or her spouse or minor children living in his or her household.

(6) "CONTROL" means 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 per centum of the voting securities of a company shall be presumed to control such company. Any person who does not so own more than 25 per centum of the voting securities of any company shall be presumed not to control such company. A natural person shall be presumed not to be a controlled person.

(7) "INVESTMENT PERSONNEL" means (a) any portfolio manager of the Firm as defined in (10) below; and (b) securities analysts, traders and other personnel who provide information and advice to the portfolio manager or who help execute the portfolio manager's decisions.

(8) "NONRESIDENT DIRECTOR" means any director of the Firm who: i) is not an officer, employee or shareholder of the firm; ii) does not maintain a business address at the Firm and iii) who does not, in the ordinary course of his business, receive or have access to current information regarding the purchase or sale of securities by the Firm, information regarding recommendations concerning the purchase or sale of securities by the Firm or information regarding securities being considered for purchase or sale by the Firm.

(9) "PERSON" means any natural person or a company.

(10) "PORTFOLIO MANAGER" means an employee of the Firm entrusted with the direct responsibility and authority to make investment decisions.

(11) "SECURITY" means any 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), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a "security," or any certificate of interest or participation in, temporary or interim

-5-

certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. Security shall not include: direct obligations of the Government of the United States, high quality short-term debt instruments, bankers' acceptances, bank certificates of deposit, commercial paper, repurchase agreements, shares of registered open-end investment companies (excluding shares of sub-advised mutual funds) and shares of exchange-traded funds organized as open-end investment companies or unit investment trusts.

B. DUTY OF CONFIDENTIALITY

Employees of the Firm must keep confidential at all times any nonpublic information they may obtain in the course of their employment at the Firm. This information includes but is not limited to:

(1) information on the clients accounts, including recent or impending securities transactions by the clients and activities of the Portfolio Managers for the clients' accounts;

(2) information on the Firm's clients and prospective clients investments and account transactions;

(3) information on other Firm personnel, including their pay, benefits, position level and performance rating; and

(4) information on the Firm's business activities, including new services, products, technologies and business initiatives.

The Firm's personnel have the highest fiduciary obligation not to reveal confidential company information to any party that does not have a clear and compelling need to know such information and to safeguard all client information.

C. RESTRICTIONS FOR ACCESS PERSONS

(1) GENERAL RESTRICTIONS FOR ACCESS PERSONS. Access persons are subject to the following restrictions with respect to their personal transactions:

(a) PROHIBITION ON ACCEPTING GIFTS OF MORE THAN DE MINIMIS VALUE. Access persons are prohibited from accepting any gift or other items of more than de minimis value from any person or entity that does business with or on behalf of the Firm; for the purpose of this Code de minimis shall be considered to be the annual receipt of gifts from the same source valued at $250 or less per individual recipient, when the gifts are in relation to the conduct of the Firm's business;

(b) PROHIBITION ON SERVICE AS A DIRECTOR OR PUBLIC OFFICIAL. Investment Personnel are prohibited from serving on the board of directors of

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any publicly traded company without prior authorization of the President or other duly authorized officer of the Firm. Any such authorization shall be based upon a determination that the board service would be consistent with the interests of the Firm's clients. Authorization of board service shall be subject to the implementation by the Firm of a "Chinese Wall" or other procedures to isolate such investment personnel from making decisions about trading in that company's securities.

(c) PROHIBITION ON INITIAL PUBLIC OFFERINGS. Access persons are prohibited from acquiring securities in an initial public offering.

(d) PROHIBITION ON PRIVATE PLACEMENTS. Access persons are prohibited from acquiring securities in a private placement without prior approval from the Firm's Chief Compliance Officer. In the event an access person receives approval to purchase securities in a private placement, the access person must disclose that investment if he or she plays any part in the Firm's later consideration of an investment in the issuer.

(e) PROHIBITION ON OPTIONS. Access persons are prohibited from acquiring or selling any option on any security.

(f) PROHIBITION ON SHORT-SELLING. Access persons are prohibited from selling any security that the access person does not own or otherwise engaging in "short-selling" activities.

(g) PROHIBITION ON SHORT-TERM TRADING PROFITS. Access persons are prohibited from profiting in the purchase and sale, or sale and purchase, of the same (or equivalent) securities within sixty (60) calendar days. Trades made in violation of this prohibition should be unwound, if possible. Otherwise, any profits realized on such short-term trades shall be subject to disgorgement.

(h) PROHIBITION ON SHORT-TERM TRADING OF MUTUAL FUNDS. Access persons are prohibited from short-term trading of any mutual funds for which the Firm serves as sub-advisor. "Short-term trading" defined as a purchase and redemption/sell of a fund's shares within a 30-day period. This prohibition does not cover purchases and redemptions/sales (1) into or out of money market funds or short term bond funds; or (2) purchases effected on a regular periodic basis by automated means, such as 401(k) purchases.

-7-

(2) BLACKOUT RESTRICTIONS FOR ACCESS PERSONS. All access persons are subject to the following restrictions when their purchases and sales of securities coincide with trades by any client of the Firm:

(a) PURCHASES AND SALES WITHIN THREE DAYS FOLLOWING A TRADE BY A CLIENT. Access persons are prohibited from purchasing or selling any security within three calendar days after any client has traded in the same (or a related) security. In the event that an access person makes a prohibited purchase or sale within the three-day period, the access person must unwind the transaction and relinquish any gain from the transaction to the appropriate client portfolio(s).

(b) PURCHASES WITHIN SEVEN DAYS BEFORE A PURCHASE BY A CLIENT. Any access person who purchases a security within seven calendar days before any client purchases the same (or a related) security is prohibited from selling the security for a period of six months following the client's trade. In the event that an access person makes a prohibited sale within the six-month period, the access person must relinquish to the [appropriate client portfolio(s)] any gain from the transaction.

(c) SALES WITHIN SEVEN DAYS BEFORE A SALE BY A CLIENT. Any access person who sells a security within seven days before any client sells the same (or a related) security must relinquish to the [appropriate client portfolio(s)] the difference between the access person's sale price and the client portfolio(s) sale price (assuming the access person's sale price is higher).

D. EXEMPTED TRANSACTIONS

The prohibitions of Sections C (1)(f)(g) and C (2)(a)(b)(c) 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) purchases or sales which are non-volitional on the part of either the access person or the Firm;

(3) purchases which are part of an automatic dividend reinvestment plan; and

(4) purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired.

E. COMPLIANCE PROCEDURES

(1) RECORDS OF SECURITIES TRANSACTIONS. All access persons and Nonresident Directors must notify the Firm's Chief Compliance Officer if they have opened or intend to open a brokerage account. Access persons must direct their brokers to supply the Firm's Chief Compliance Officer with duplicate brokerage confirmations and statements of their securities transactions.

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(2) PRE-CLEARANCE OF SECURITIES TRANSACTIONS. All access persons shall receive prior written approval from the Firm's Chief Compliance Officer, or other officer designated by the Board of Directors, before purchasing or selling securities. Pre-clearance for securities owned or traded by the Firm is valid for that trading day. Pre-clearance for securities not owned or traded by the Firm is valid for five concurrent trading sessions. The personal securities transactions pre-clearance form is attached as Exhibit D.

(3) PRE-CLEARANCE OF ANY TRANSACTION IN A MUTUAL FUND FOR WHICH THE FIRM SERVES AS SUB-ADVISER. All access persons shall receive prior written approval from the Firm's Chief Compliance Officer, or other officer designated by the Board of Directors, before purchasing or selling any mutual fund for which the Firm serves as sub-adviser. Pre-clearance for mutual funds is valid for five concurrent trading sessions. This prohibition does not cover purchases and redemptions/sales (1) into or out of money market funds or short term bond funds; or (2) effected on a regular periodic basis by automated means, such as 401(k) purchases.

(4) DISCLOSURE OF PERSONAL HOLDINGS. All access persons and Nonresident Directors shall disclose to the Firm's Chief Compliance Officer all personal securities holdings and all sub-advised mutual fund holdings upon the later of commencement of employment or adoption of this Code and thereafter on an annual basis as of December 31. This initial report shall be made on the form attached as Exhibit A and shall be delivered to the Firm's Chief Compliance Officer.

(5) CERTIFICATION OF COMPLIANCE WITH CODE OF ETHICS. Every access person and Nonresident Director shall certify annually that:

(a) they have read and understand the Code and recognize that they are subject thereto;

(b) they have complied with the requirements of the Code; and

(c) they have reported all personal securities transactions, including sub-advised mutual funds, required to be reported pursuant to the requirements of the Code.

The annual report shall be made on the form attached as Exhibit B and delivered to the Firm's Chief Compliance Officer.

(6) REPORTING REQUIREMENTS

(a) Every access person and Nonresident Director shall report to the Chief Compliance Officer of the Firm the information described in, Sub-paragraph (5)(b) of this Section with respect to transactions in any security or sub-advised fund in which such person has, or by reason of such transaction acquires, any direct or indirect beneficial ownership in the security; provided, however, that an access person

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and Nonresident Director shall not be required to make a report with respect to transactions effected for any account over which such person does not have any direct or indirect influence.

(b) Reports required to be made under this Paragraph (5) shall be made not later than 10 days after the end of the calendar quarter in which the transaction to which the report relates was effected. Every access person and Nonresident Director shall be required to submit a report for all periods, including those periods in which no securities transactions were effected. A report shall be made on the form attached hereto as Exhibit C or on any other form containing the following information:

(i) the date of the transaction, the title and the number of shares, and the principal amount of each security involved;

(ii) the nature of the transaction (i.e., purchase or sale);

(iii) the price at which the transaction was effected; and

(iv) the name of the broker, dealer or bank with or through whom the transaction was effected. Duplicate copies of the broker confirmation of all personal transactions and copies of periodic statements for all securities accounts may be appended to Exhibit C to fulfill the reporting requirement.

(c) Any such report may contain a statement that the report shall not be construed as an admission by the person making such report that he or she has any direct or indirect beneficial ownership in the security to which the report relates.

(d) The Chief Compliance Officer of the Firm shall notify each access person that he or she is subject to these reporting requirements, and shall deliver a copy of this Code to each such person upon their date of employment and upon such time as any amendment is made to this Code.

(e) Reports submitted to the Chief Compliance Officer of the Firm pursuant to this Code shall be confidential and shall be provided only to the officers and directors of the Firm, Firm counsel or regulatory authorities upon appropriate request.

(7) CONFLICT OF INTEREST

Every access person shall notify the Chief Compliance Officer of the Firm of any personal conflict of interest relationship which may involve the Firm's clients, such as the existence of any economic relationship between their transactions and securities held or to be acquired by any portfolio of the Firm. Such notification shall occur in the pre-clearance process.

F. REPORTING OF VIOLATIONS

(1) Any employee of the Firm who becomes aware of a violation of the Code must promptly report such violation to the Chief Compliance Officer.

(2) The Firm's Chief Compliance Officer shall promptly report to the Board of Directors and to the any Investment Company client's Compliance Officer all apparent violations of this Code and the reporting requirements thereunder.

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(3) When the Firm's Chief Compliance Officer finds that a transaction otherwise reportable to the Board of Directors under Paragraph
(1) of this Section could not reasonably be found to have resulted in a fraud, deceit or manipulative practice in violation of Section 206 of the Advisers Act or Rule 17j-1 of the '40 Act, he may, in his discretion, lodge a written memorandum of such finding and the reasons therefor with the reports made pursuant to this Code, in lieu of reporting the transaction to the Board of Directors.

(4) The Board of Directors, or a Committee of Directors created by the Board of Directors for that purpose, shall consider reports made to the Board of Directors hereunder and shall determine whether or not this Code has been violated and what sanctions, if any, should be imposed.

G. ANNUAL REPORTING TO THE BOARD OF DIRECTORS

(1) The Firm's Chief Compliance Officer shall prepare an annual report relating to this Code to the Board of Directors. Such annual report shall:

(a) Summarize existing procedures concerning personal investing and any changes in the procedures made during the past year;

(b) identify any violations requiring significant remedial action during the past year; and

(c) identify any recommended changes in the existing restrictions or procedures based upon the Firm's experience under its Code, evolving industry practices or developments in applicable laws or regulations.

H. SANCTIONS

Upon discovering a violation of this Code, the Board of Directors may impose such sanctions, as they deem appropriate, including, among other things, a letter of censure or suspension or termination of the employment of the violator.

I. RETENTION OF RECORDS

This Code, a list of all persons required to make reports hereunder from time to time, as shall be updated by the Firm's Chief Compliance Officer, a copy of each report made by an access person hereunder, each memorandum made by the Firm's Chief Compliance Officer hereunder and a record of any violation hereof and any action taken as a result of such violation, shall be maintained by the Firm.

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Exhibit A

BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.

CODE OF ETHICS

INITIAL REPORT OF ACCESS PERSONS

To the Chief Compliance Officer of Barrow, Hanley, Mewhinney & Strauss, Inc.:

1. I hereby acknowledge receipt of a copy of the Code of Ethics for Barrow, Hanley, Mewhinney & Strauss, Inc. (the "Firm").

2. I have read and understand the Code and recognize that I am subject thereto in the capacity of "Access Persons."

3. Except as noted below, I hereby certify that I have no knowledge of the existence of any personal conflict of interest relationship which may involve the Firm, such as any economic relationship between my transactions and securities held or to be acquired by the Firm or any of its portfolios.

4. As of the date below I had a direct or indirect beneficial ownership in the following securities:

                                                            TYPE OF INTEREST
NAME OF SECURITIES   NUMBER OF SHARES   PRINCIPAL VALUE   (DIRECT OR INDIRECT)
------------------   ----------------   ---------------   --------------------

5. I hereby certify I have the following brokerage accounts open and have directed the firm to send duplicate confirms to Barrow, Hanley, Mewhinney and Strauss.

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                 TYPE OF INTEREST
NAME OF FIRM   (DIRECT OR INDIRECT)
------------   --------------------

NOTE: Do not report transactions in U.S. Government securities, bankers' acceptances, bank certificates of deposit, commercial paper and unaffiliated registered open-end investment companies (mutual funds).

Date:                                   Signature:
      -------------------------------              -----------------------------
      (First date of investment         Print Name:
      personnel status)                             ----------------------------
                                        Title:
                                               ---------------------------------

Employer: Barrow, Hanley, Mewhinney & Strauss, Inc.

Date:                                   Signature:
      -------------------------------               ----------------------------
                                                    Firm's Chief Compliance
                                                    Officer

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Exhibit B

BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.

CODE OF ETHICS

ANNUAL REPORT OF ACCESS PERSONS

To the Chief Compliance Officer of Barrow, Hanley, Mewhinney & Strauss, Inc.:

1. I have read and understand the Code of Ethics and recognize that I am subject thereto in the capacity of an "Access Person."

2. I hereby certify that, during the year ended December 31, 20 ___, I have complied with the requirements of the Code and I have reported all securities transactions required to be reported pursuant to the Code.

3. I hereby certify that I have not disclosed pending "buy" or "sell" orders for a Client's portfolio of the Firm to any employees of any other OMUSH affiliate, except where the disclosure occurred subsequent to the execution or withdrawal of an order.

4. Except as noted below, I hereby certify that I have no knowledge of the existence of any personal conflict of interest relationship which may involve the Firm, such as any economic relationship between my transactions and securities held or to be acquired by the Firm or any of its portfolios.

5. As of December 31, 20___, I had a direct or indirect beneficial ownership in the following securities:

                                          TYPE OF INTEREST
NAME OF SECURITIES   NUMBER OF SHARES   (DIRECT OR INDIRECT)
------------------   ----------------   --------------------

6. I hereby certify I have the following brokerage accounts open and have directed the firm to send duplicate confirms to Barrow, Hanley, Mewhinney and Strauss.

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                 TYPE OF INTEREST
NAME OF FIRM   (DIRECT OR INDIRECT)
------------   --------------------

Date:                                   Signature:
      -------------------------------              -----------------------------
      (First date of investment         Print Name:
      personnel status)                             ----------------------------
                                        Title:
                                               ---------------------------------

Employer: Barrow, Hanley, Mewhinney & Strauss, Inc.

Date:                                   Signature:
      -------------------------------              -----------------------------
                                                   Firm's Chief Compliance
                                                   Officer

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Exhibit C

BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.

ACCESS PERSONS

Securities Transactions Report for the Calendar Quarter Ended: _______________

To the Chief Compliance Officer of Barrow, Hanley, Mewhinney & Strauss, Inc.:

During the quarter referred to above, the following transactions were effected in securities of which I had, or by reason of such transaction acquired, direct or indirect beneficial ownership, and which are required to be reported pursuant to the Code adopted by the Firm.

                                                      NATURE OF
                                                     TRANSACTION             BROKER/DEALER
             DATE OF     NO. OF    DOLLAR AMOUNT   (Purch., Sale,           OR BANK THROUGH
SECURITY   TRANSACTION   SHARES   OF TRANSACTION       Other)       PRICE    WHOM EFFECTED
--------   -----------   ------   --------------   --------------   -----   ---------------

During the quarter referred to above, the following brokerage accounts were opened with direct or indirect beneficial ownership, and which are required to be reported pursuant to the Code adopted by the Firm.

                 TYPE OF INTEREST
NAME OF FIRM   (DIRECT OR INDIRECT)   DATE ACCOUNT OPENED
------------   --------------------   -------------------

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This report (i) excludes transactions with respect to which I had no direct or indirect influence or control, (ii) excludes other transactions not required to be reported, and (iii) is not an admission that I have or had any direct or indirect beneficial ownership in the securities listed above.

Except as noted on the reverse side of this report, I hereby certify that I have no knowledge of the existence of any personal conflict of interest relationship which may involve the Firm, such as the existence of any economic relationship between my transactions and securities held or to be acquired by Firm clients or any related portfolios.

Date:                                   Signature:
      -------------------------------              -----------------------------
      (First date of investment         Print Name:
      personnel status)                             ----------------------------
                                        Title:
                                               ---------------------------------

Employer: Barrow, Hanley, Mewhinney & Strauss, Inc.

Date:                                   Signature:
      -------------------------------              -----------------------------
                                                   Firm's Chief Compliance
                                                   Officer

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Exhibit D

BARROW, HANLEY, MEWHINNEY & STRAUSS, INC.

ACCESS PERSONS

Personal Securities Transactions Pre-clearance Form
(see Section D(2), Code of Ethics)

To the Chief Compliance Officer of Barrow, Hanley, Mewhinney & Strauss, Inc.:

I hereby request pre-clearance of the following proposed transactions:

                                        NATURE OF       PRICE
                                       TRANSACTION       (OR      BROKER/DEALER    AUTHORIZED
           NO. OF    DOLLAR AMOUNT   (Purch., Sale,   PROPOSED   OR BANK THROUGH   ----------
SECURITY   SHARES   OF TRANSACTION       Other)        PRICE)     WHOM EFFECTED     YES   NO
--------   ------   --------------   --------------   --------   ---------------    ---   --

Date:                                   Signature:
      -------------------------------              -----------------------------
      (First date of investment         Print Name:
      personnel status)                             ----------------------------
                                        Title:
                                               ---------------------------------

Employer: Barrow, Hanley, Mewhinney & Strauss, Inc.

Date:                                   Signature:
      -------------------------------              -----------------------------
                                                   Firm's Chief Compliance
                                                   Officer

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[CREDIT SUISSE ASSET MANAGEMENT LOGO]

GLOBAL PERSONAL TRADING POLICY

INTRODUCTION

This Global Personal Trading Policy and any relevant local supplement (referred to throughout as the "Global Policy") establishes rules of conduct for all employees of all Credit Suisse Asset Management entities (collectively, "CSAM") when conducting personal investment activities and supersedes all previously issued policies and directives on this subject. Please ensure that you read and fully understand how this Global Policy applies to your activities. If you have any questions please contact your local Legal and Compliance Department ("Local LCD"). Violation of this Global Policy may be grounds for disciplinary action, including dismissal and, where appropriate, referral to relevant government authorities and self-regulatory organizations. Any circumvention of this Global Policy will be treated as a violation.

FOR INTERNAL USE ONLY
EFFECTIVE AUGUST 30, 2004

I. DEFINITIONS

For purposes of this Global Policy:

o the term "Employees" shall include: (i) any employee of CSAM; (ii) full-time consultants, full-time contractors and long-term temporary workers on more than a six-month assignment; and (iii) any other person designated in the sole discretion of Local LCD.

o the term "security" shall include any security, including a security issued by any collective investment vehicle or fund, as well as an option to purchase or sell, any security that is convertible or exchangeable for, and any other derivative interest relating to the security; "security" shall exclude commodities and foreign currency exchange contracts.

o the terms "purchase" and "sale" of a security shall include, among other things, the writing of an option to purchase or sell a security.

o the term "CSAM client" shall include all advisory clients of the Employee's local CSAM office, including (i) funds advised by the office; and (ii) funds sub-advised by the office to the extent that the local CSAM office renders discretionary investment advice.

o the term "Employee account" includes any account in which an Employee has a direct or indirect financial interest (by contract, arrangement, understanding, relationship or otherwise) or has the power, directly or indirectly, to make or influence investment decisions. For the purposes of the Policy, each Employee is deemed to have a direct or indirect financial interest in the following additional accounts:

o accounts of the Employee's spouse, partner, minor children and other family members residing in the Employee's household (each, a "Family Member");

o accounts of any investment club in which the Employee or a Family Member participates;

o accounts of any corporation, limited liability company or similar entity the management or policies of which are controlled by the Employee or a Family Member or accounts of any limited partnership of which the Employee or a Family Member is a general partner; and

o accounts of any trust of which the Employee is trustee, beneficiary or settlor.

The above list of accounts is meant to be a representative list and is not meant to be exhaustive.

II. STATEMENT OF GENERAL PRINCIPLES

In conducting personal investment activities, all Employees are required to comply with all applicable laws and regulations and the following general fiduciary principles:

o the interests of CSAM clients must always be placed first;

o Employees may not engage in any transaction with a client of CSAM;

o all personal securities transactions must be conducted in such a manner as to avoid any actual, potential or perceived conflict of interest or any abuse of an individual's position of trust and responsibility;

o Employees must not take inappropriate advantage of their positions or information that they have received or to which they have access; and

o personal trading must not take too much of the Employee's time or otherwise interfere with the Employee's ability to fulfill his or her job responsibilities in the judgment of the Employee's manager or the CSAM Local Management Committee.

CSAM has separate policies and procedures designed to detect and prevent insider trading [INTRANET LINK], and governing Directorships and outside business activities [INTRANET LINK], which should be read together with this Global Policy. FOR EXAMPLE, EMPLOYEES WHO MANAGE OR PROVIDE ANALYSIS FOR FUNDS MAY NOT TRADE OR RECOMMEND THAT OTHERS TRADE IN SHARES OF THE FUNDS WHILE IN POSSESSION OF MATERIAL, NON-PUBLIC INFORMATION REGARDING SUCH FUNDS. Nothing contained in this Global Policy should be interpreted as relieving any Employee from the obligation to act in accordance with any applicable law, rule or regulation or any other statement of policy or procedure to which he or she is subject.

III. MUTUAL FUNDS AND OTHER REGULATED COLLECTIVE INVESTMENT SCHEMES

Employees are not required to pre-clear trades in shares of mutual funds (i.e., open-end funds) and other regulated collective investment schemes, but must report all trades and holdings as described below in Section VIII. Trades in shares of such funds, other than money market funds, are subject to the Short-Term Trading Prohibition set forth in Section VII.A.

IV. TRADING ACCOUNTS

All Employee accounts will be subject to monitoring by Local LCD. Each Local LCD will determine whether Employee accounts must be maintained at an affiliate of CSAM or at an unaffiliated entity. No Employee shall open or maintain a numbered account or an account under an alias without the express prior written approval of Local LCD.

V. PRE-CLEARANCE REQUIREMENTS

Employees must pre-clear trades of the securities set forth below with Local LCD for each Employee account (attached as Attachment B is a form to request such approval). If clearance is given for a transaction and such transaction is not effected on that business day, a new pre-clearance request must be made.

Securities Subject to the Pre-Clearance Requirement:

Equities

o common stock;

o preferred stock; and

o rights and warrants.

Options on Single Securities and Indices (subject to the rules herein on the use of options)

o puts; and

o calls.

Bonds

o non-investment grade debt securities (i.e., "junk bonds"), including unrated debt securities of equivalent "junk" quality;

o debt securities (investment grade or non-investment grade) convertible into equity securities;

o municipal debt securities (investment grade or non-investment grade); and

o mortgage-backed and other asset-backed securities.

Funds

o closed-end fund shares traded on an exchange or other secondary market; and

o private funds, limited partnerships, unregulated collective investment schemes and similar vehicles. (Please note special requirements set forth below in Section VII.E.)

Please note that certain securities may be subject to a restricted list, in which case purchases and/or sales may be prohibited.

Transactions Exempt from the Pre-Clearance Requirement:

o purchases and sales of shares of mutual funds (i.e., open-end funds) and other regulated collective investment schemes;

o purchases and sales of exchange-traded funds;

o purchases and sales of shares of closed-end funds that are not traded on an exchange or other secondary market;

o purchases and sales of fixed income securities issued, guaranteed or sponsored by a government member of the Organisation of Economic Co-Operation and Development ("OECD");

o purchases that are part of an automatic purchase plan, such as an automatic dividend reinvestment plan or a plan to purchase a number of shares per month;

o purchases and sales that are involuntary on the part of Employees and CSAM clients (e.g., stock splits, tender offers, and share buy-backs);

o acquisitions of securities through inheritance;

o purchases and sales in any account over which an Employee has no direct or indirect influence or control over the investment or trading of the account (e.g., an account managed on a discretionary basis by an outside portfolio manager, including a "Blind Trust");

o purchases by the exercise of rights offered by an issuer pro rata to all holders of a class of its securities, to the extent that such rights were acquired from the issuer;

o purchases of securities whereby the acquisition is a result of an entity converting from a mutual ownership to a stock ownership; and

o sales pursuant to tender offers by an issuer.

Please note that all securities are subject to the Short-Term Trading Prohibition (Section VII.A.) and Reporting (Section VIII) Requirements.

VI. CONFLICTS/DISCLOSURE OF INTEREST No Employee may recommend to, or effect for, any CSAM client, any securities transaction without having disclosed to Local LCD his or her personal interest (actual or potential), if any, in the issuer of the securities, including without limitation:

o any ownership or contemplated ownership of any privately placed securities of the issuer or any of its affiliates;

o any employment, management or official position with the issuer or any of its affiliates;

o any present or proposed business relationship between the Employee and the issuer or any of its affiliates; and

o any additional factors that may be relevant to a conflict of interest analysis.

Where the Employee has a personal interest in an issuer, a decision to purchase or sell securities of the issuer or any of its affiliates by or for a CSAM client shall be subject to an independent review by Local LCD.

VII. TRADING PROHIBITIONS

Purchases and sales of securities that are exempt from the Pre-Clearance Requirement are also exempt from the following trading prohibitions. The Short-Term Trading Prohibition applies to ALL purchases and sales of securities.

A. Short-Term Trading In no event may an Employee make a purchase and sale (or sale and purchase) of a security, including shares of any (open-end) mutual fund or other regulated collective investment schemes (other than money market funds), within two months of the date of the initial purchase or sale. Local LCD, in its sole discretion, may extend this prohibition period for particular securities and/or Employees. The Short-Term Trading prohibition shall be administered on a "Last In First Out" basis.

Exemptions from Short-Term Trading Prohibition:

o Volitional purchases or sales of shares of any (open-end) mutual fund or other regulated collective investment scheme made within two months of an automatic purchase or sale, such as a periodic purchase or redemption plan.

Examples: (1) Employee purchases shares of a fund twice a month in a retirement account pursuant to a "Dollar Cost Averaging Automatic Purchase Plan." Employee redeems shares of the fund from which he purchased shares within the prior two months. Employee's redemption of the shares is exempt from the Short-Term Trading Prohibition. (2) Employee invests in a fund (outside of an automatic purchase program) and then redeems the shares within two months of the investment. Employee's redemption is prohibited.

o Sales of a security at a significant loss (generally at a loss of 30% or more) (only with approval of LCD).

B. Side-by-Side Trading No Employee may purchase or sell (directly or indirectly) any security if at the time of such purchase or sale:

o there is a "buy" or "sell" order pending for a CSAM client that has not yet been executed; or

o the Employee knows (or should know) that the security is being considered for purchase or sale by or for any CSAM client.

Exemption from Side-by-Side Trading Prohibition:

o Transactions on the Side-by-Side/Blackout Period Exemption List
[INTRANET LINK], which may be updated from time to time. Such list shall be based on a determination that neither the Employee transaction, nor any transaction by CSAM clients (individually or in the aggregate), would have a material impact on the price of the security.

C. Blackout Periods Employees are prohibited from trading in any security during each "blackout period," which is the period from five business days (i.e., days on which the major exchange(s) in the country of your local CSAM office are open) before through one business day after a CSAM client trades in the security. Please note that, if upon review of your pre-clearance request or subsequent review of trades you are found to have executed your trade during the blackout period, you may be required to unwind the trade, donate any profits to charity or swap execution with a client if you obtained a better price for your trade than the CSAM client.

Exemption from Blackout Periods Prohibition:

D. Initial Public Offerings No Employee may directly or indirectly acquire any security (or a financial interest in any security) in an initial public offering in the primary securities market, unless the acquisition is pursuant to a separate non-institutional offering to members of the general public and the securities included in such offering cannot be offered to any CSAM client.

E. Private Placements No Employee may directly or indirectly acquire or dispose of any privately placed security (or any financial interest in any privately placed security) without the express prior written approval of Local
LCD. Approval will take into account, among other factors, whether the investment opportunity should be reserved for a CSAM client, whether the opportunity is being offered to the Employee because of his or her position with CSAM or as a reward for past transactions and whether the investment creates, or may in the future create, a conflict of interest. Attachment A is a form to request such approval.

F. Futures Contracts No Employee may invest in futures contracts with respect to an individual security, but may invest in futures contracts with respect to indices and interest rates.

G. Options No Employee may write (i.e., sell) any options on an individual security, except for hedging purposes and only if the option is fully covered. Employees may write options on indices and purchase options on individual securities and indices. Please note that the purchase and sale of all options are subject to the Short-Term Trading Prohibition (Section VII.A.).

H. Financial Spread Betting No Employee may engage in financial "spread betting."

I. Trading, Hedging and Speculation in Credit Suisse Group Securities Employees may trade CSG stock, subject to applicable trading windows [INTRANET LINK] and may only hedge vested positions in CSG stock through short sales or derivative instruments. Uncovered short exposure, through short sales or otherwise, is not permitted without the express prior written approval by Local LCD.

J. Unlimited Liability Transactions/Short Selling No Employee may engage in any transaction with respect to an individual issuer that can result in a liability that is greater than the amount invested. Accordingly, short selling is only permitted to hedge an underlying security position held by the Employee.

VIII. REPORTING AND OTHER COMPLIANCE PROCEDURES

A. Initial Certification Within 10 days after the commencement of employment with CSAM, each Employee shall submit to Local LCD an initial certification in the form of Attachment C to certify that:

o he or she has read and understood this Global Policy and recognizes that he or she is subject to its requirements;

o he or she has disclosed or reported all personal securities holdings in which Employee has a direct or indirect financial interest, including all Employee accounts; and

o he or she has reported the name(s) of each person or institution managing any Employee account (or portion thereof) for which the Employee has no direct or indirect influence or control over the investment or trading of the account.

As part of orientation for all new Employees, Local LCD shall notify all new Employees about the Initial Certification requirements. The Human Resources ("HR") Department of the local CSAM office shall notify Local LCD of all new Employees, including full-time consultants and long-term temporary workers and contractors on more than a six-month assignment.

B. Annual Certification Each Employee shall submit to Local LCD an annual certification in the form of Attachment D on or before January 30th of 2005 and each year thereafter to certify, among other things, that:

o he or she has read and understood this Global Policy and recognizes that he or she is subject to its requirements;

o he or she has complied with all requirements of this Global Policy; and he or she has disclosed or reported, as of December 31st of the prior year, and (a) all personal securities transactions for the previous year, (b) all personal securities holdings in which Employee has a direct or indirect financial interest, including all Employee accounts, and (c) the name(s) of each person or institution managing any Employee account (or portion thereof) for which the Employee has no direct or indirect influence or control over the investment or trading of the account.

Employees should comply with the initial and annual reporting requirements by submitting account statements and/or Attachment E to Local LCD within the prescribed periods.

C. Quarterly Reporting Each Employee shall submit the following documentation (electronically or otherwise) to Local LCD within 10 days after the end of each calendar quarter:

o duplicate copies of confirmations of all personal securities transactions, if any, and copies of periodic statements for all Employee accounts, including confirmations and statements for transactions exempt from the Pre-Clearance Requirement;

o if an Employee account was first established during the quarter, then the Employee should report to Local LCD the following information if not included in the periodic statement: (i) name of broker-dealer, (ii) date on which the account was established, and (iii) if the Employee has no direct or indirect influence or control over the investment or trading of the account, the name(s) of each person or institution managing the account (or portion thereof); and

o if not included in the periodic statements, a transaction report for all securities that were acquired or disposed of through gift or acquired through inheritance.

Employees may request their broker-dealers to provide such documentation on their behalf (electronically or otherwise) to satisfy their quarterly reporting requirements. If it is impossible for an Employee to submit the quarterly documentation to submit to Local LCD within 10 days after the end of the calendar quarter, then the Employee shall submit a report prepared by the

Employee to Local LCD containing the information in such documentation, which shall include the date of the submission of the report.

Employees of non-U.S. registered investment advisers may, to the extent they desire, for the Quarterly Reporting obligation described in Paragraph C above, he/she may disclose only the name of each security held and any position in which the employee has a "significant interest." For purposes of this policy, significant interest shall mean the lesser of USD $100,000 or 1% of the shares/issue outstanding of a particular security. Employees of U.S. registered investment advisers must comply in full with Paragraph C above.

IX. LOCAL LCD, COMPLIANCE MONITORING AND SUPERVISORY REVIEW

A. Local LCD may exempt any account or transaction from one or more trading prohibitions or reporting provisions in writing under limited circumstances if the transaction or the waiver of the reporting requirements is not inconsistent with the purpose of this Global Policy.

B. Local LCD shall report material issues under this Global Policy immediately to both the Local Management Committee (or equivalent body) of the corresponding CSAM office and the Global General Counsel. At least annually, Local LCD shall prepare a written report to the Local Management Committee (or equivalent body) of the corresponding CSAM office, the Global General Counsel and any other relevant recipient, that:

o describes issues that have arisen under this Global Policy since the last report, including, but not limited to, material violations of the Global Policy or procedures that implement the Global Policy and any sanctions imposed in response to those violations; and

o certifies that the Local CSAM office has adopted procedures reasonably necessary to prevent Employees from violating the Global Policy.

X. SANCTIONS

Upon discovering that an Employee has not complied with the requirements of this Global Policy, the CSAM Local or Global Executive Committees (or equivalent bodies) may, subject to applicable law or regulation, impose on that person whatever sanctions are deemed appropriate, including censure, fine, reversal of transactions, disgorgement of profits (by donation to charity of Employee's choice where permissible under applicable law), suspension, or termination of employment.

XI. CONFIDENTIALITY

All information obtained from Employees under this Global Policy shall be kept in strict confidence by CSAM, except that personal trading information will be made available to any regulatory or self-regulatory organization to the extent required by applicable law or regulation. To the extent permissible under applicable law or regulation, CSAM may also (i) make each Employee's information available to the Employee's manager(s), the CSAM Local Executive Committee (or equivalent body(ies)) and their appointees, and (ii) make such information available to the CSAM Global Executive Committee (or equivalent body(ies)) and any other business unit or legal of CSG, including any of its domestic or foreign subsidiaries or branches, to consider violations of this

Global Policy. To the extent required by applicable law, the sharing of such information will be subject to a data confidentiality agreement with the entity receiving such information.

XII. CONFLICT OF RULES

Where an Employee works in an office of another CSG entity or in close proximity to staff from another CSG entity, Local LCD shall determine which policies apply to the Employee.

XIII. FURTHER INFORMATION

Any questions regarding the Global Policy should be directed to Local LCD.

XIV. APPROVAL AND ENTRY INTO FORCE

The present Global Policy was approved by the Global Executive Committee in its meeting on March 31, 2004 and enters into force August 30, 2004.

Dated: August 30, 2004

ATTACHMENT A

SPECIAL APPROVAL FORM

1. The following is a private placement of securities (or other investment requiring special approval) that I want to dispose of or acquire:

      NAME OF PRIVATE
     SECURITY, IPO OR
          OTHER                   DATE TO BE        AMOUNT TO           RECORD        PURCHASE            HOW ACQUIRED
        INVESTMENT                 ACQUIRED          BE HELD            OWNER          PRICE            (BROKER/ISSUER)
----------------------------- ------------------- ----------------- -------------- --------------- ---------------------------

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

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

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

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

2. Are you aware of a CSAM client for whom this investment opportunity would be appropriate?

___ Yes ___ No

3. Is this investment opportunity being offered to you because of your position/employment with CSAM or as a reward for any transaction?

___ Yes ___ No

4. Would this investment create, now or in the future, a conflict of interest with a CSAM client?

___ Yes ___ No

5. If an IPO, confirm that the offering is a separate, non-institutional offering to members of the general public, and cannot be offered to any CSAM client.

____Yes, I confirm ___ No, I cannot confirm

I certify, as applicable, that I (a) am not aware of any non-public information about the issuer, (b) have made all disclosures required by the CSAM Global Personal Trading Policy, and (c) will comply with all reporting requirements of the CSAM Global Personal Trading Policy.

--------------------------------            -------------------------------
Signature                                                Date


--------------------------------
Print Name

___ Approved
___ Not Approved


-------------------------------             ------------------------------
Local LCD                                                Date

ATTACHMENT B

PERSONAL TRADING PRE-CLEARANCE FORM

This form should be filled out completely to expedite approval.

1. Security: _________________________________________________

Ticker: _________________________________________________

____ Purchase ____ Sale

2. Number of shares/bonds/units/contracts:

3. Account Name/Short name:

4. Bank/Brokerage Firm and Account Number:

5. Are you aware of a CSAM client for whom this investment opportunity is appropriate?

6. Have you purchased or sold the security within two months of today?

___ Yes ___ No

7. Are you aware that:

o there is a "buy" or "sell" order pending for a CSAM client that has not yet been executed; or

o the security is being considered for purchase or sale by or for a CSAM client.

___ Yes ___ No

If yes, please describe.

[NOTE: LOCAL LCD STILL MUST COMPLETE REVIEW OF TRADING ACTIVITY]

8. Is the transaction on the Side-by-Side/Blackout Period Exemption List?

___ Yes ___ No

I certify that I (a) am not aware of any non-public information about the issuer, (b) have made all disclosures required by the CSAM Global Personal Trading Policy and this trade otherwise complies with the CSAM Global Personal Trading Policy, including the prohibition on investments in initial public offerings, and (c) will comply with all reporting requirements of the CSAM Global Personal Trading Policy.

----------------------------------          ------------------------------------
Signature of Employee                       Date




----------------------------------
Print Name

___ Approved
___ Not Approved


----------------------------------          ------------------------------------
Local LCD                                   Date - VALID THIS BUSINESS DAY ONLY.

                                       12

                                                                    ATTACHMENT C

INITIAL CERTIFICATION

I certify that:

o I have read and understood the CSAM Global Personal Trading Policy, which includes any applicable local supplement, and recognize that I am subject to its requirements.

o I have disclosed or reported all personal securities holdings in which I had a direct or indirect financial interest, including all "Employee accounts" as defined in the CSAM Global Personal Trading Policy, as of the date I became an "Employee" of CSAM. I have also reported the name(s) of each person or institution managing any Employee account (or portion thereof) for which I have no direct or indirect influence or control over the investment or trading of the account.

o I understand that CSAM will monitor securities transactions and holdings in order to ensure compliance with the CSAM Global Personal Trading Policy. I also understand that personal trading information will be made available to any regulatory or self-regulatory organization to the extent required by applicable law or regulation. I also understand that, to the extent permissible under applicable law or regulation, CSAM may also (i) make each Employee's information available to the Employee's manager(s), the CSAM Local Executive Committee (or equivalent body(ies)) and their appointees, and (ii) make such information available to the CSAM Global Executive Committee (or equivalent body(ies)) and any other business unit or legal of CSG, including any of its domestic or foreign subsidiaries or branches, to consider violations of this Global Personal Trading Policy. To the extent required by applicable law, the sharing of such information will be subject to a data confidentiality agreement with the entity receiving such information.

o For the purpose of monitoring securities transactions and holdings information under the CSAM Global Personal Trading Policy only, I confirm that I will (i) provide copies of all confirmations and statements subject to this Policy and/or (ii) instruct all financial institutions to provide copies of all such documents. This covers my current Employee accounts and accounts that will be opened in the future during my employment with CSAM.

o I understand that any circumvention or violation of the CSAM Global Personal Trading Policy will lead to disciplinary and/or legal actions, including dismissal.

o I understand that I have to report any additions, deletions or changes with respect to Employee accounts.

--------------------------------            -------------------------------
Signature of Employee                       Date


--------------------------------
Print Name

ATTACHMENT D

ANNUAL CERTIFICATION

I certify that:

o I have read and understood the CSAM Global Personal Trading Policy, which includes any applicable local supplement, and recognize that I am subject to its requirements.

o I have complied with all requirements of the CSAM Global Personal Trading Policy in effect during the year ended December 31, 2___.

o I have disclosed or reported all personal securities transactions, including all personal securities transactions in each "Employee account," for the year ended December 31, 2___ and all personal securities holdings in which I had any direct or indirect interest, including holdings in each Employee account, as of December 31, 2___. I have also reported the name(s) of each person or institution managing any Employee account (or portion thereof) for which I have no direct or indirect influence or control over the investment or trading of the account, as of December 31, 2___.

o For the purpose of monitoring securities transactions and holdings information under the CSAM Global Personal Trading Policy only, I confirm that I have (i) provided copies of all confirmations and statements subject to this Policy, and/or (ii) instructed all financial institutions to provide copies of all such documents. This covers my current Employee accounts and accounts that will be opened in the future during my employment with CSAM.

o I understand that any circumvention or violation of the CSAM Global Personal Trading Policy will lead to disciplinary and/or legal actions, including dismissal.

o I understand that I have to report any additions, deletions or changes with respect to Employee accounts.

--------------------------------            -------------------------------
Signature of Employee                       Date


--------------------------------
Print Name

ATTACHMENT E

CREDIT SUISSE ASSET MANAGEMENT - PERSONAL SECURITIES ACCOUNT DECLARATION ALL EMPLOYEES MUST COMPLETE EACH APPLICABLE ITEM (1,2,3 AND/OR 4) AND SIGN BELOW.

1. The following is a list of "Employee accounts":

                  BANK/BROKER/DEALER/
                      FUND COMPANY                                         ACCOUNT TITLE AND NUMBER
--------------------------------------------------------- -----------------------------------------------------------

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

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

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

2. The following is a list of "Employee accounts" that have been opened in the past year:

        BANK/BROKER/DEALER/
            FUND COMPANY                     ACCOUNT TITLE AND NUMBER                      DATE OPENED
------------------------------------- --------------------------------------- ---------------------------------------

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

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

3. The following is a list of "Employee accounts" that have been closed in the past year:

        BANK/BROKER/DEALER/
            FUND COMPANY                     ACCOUNT TITLE AND NUMBER                      DATE CLOSED
------------------------------------- --------------------------------------- ---------------------------------------

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

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

4. The following is a list of any other securities or other investment holdings (securities acquired in a private placement or securities held in physical form) held in an "Employee account" or in which I have a direct or indirect financial interest (for securities held in accounts other than those disclosed in response to items 1 and 2):

   NAME OF PRIVATE
  SECURITY OR OTHER                DATE            AMOUNT            RECORD           PURCHASE           HOW ACQUIRED
    INVESTMENT                   ACQUIRED           HELD             OWNER             PRICE           (BROKER/ISSUER)
----------------------------- --------------- ----------------- ----------------- --------------- ------------------------

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

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

5. I do not have a direct or indirect financial interest in any securities/funds Employee accounts or otherwise have a financial interest in any securities or other instruments subject to the Policy. (Please initial.)

Initials

I declare that the information given above is true and accurate:

--------------------------------            -------------------------------
Signature of Employee                       Date


-------------------------------
Print Name

SIDE-BY-SIDE/BLACKOUT PERIOD EXEMPTION LIST

Purchases or sales of U.S.$5,000 of common shares/stock of issuers with a market capitalization of at least U.S.$2.0 billion as of the Business Day on which pre-clearance is requested.*

*Local LCD may modify the exemption, provided that Local LCD determines that neither the Employee transaction, nor any transaction by CSAM clients (individually or in the aggregate), would have a material impact on the price of the security, subject to approval by the CSAM Global General Counsel.

CREDIT SUISSE ASSET MANAGEMENT (AUSTRALIA) LIMITED ("CSAMA")
LOCAL SUPPLEMENT TO THE GLOBAL PERSONAL TRADING POLICY ("GLOBAL POLICY")

GLOBAL PERSONAL TRADING POLICY

The application of the Global Policy by Credit Suisse Asset Management (Australia) Limited is amended as outlined below:

PART IV- TRADING ACCOUNTS

Employees are permitted to open an account with a broker pre-approved by the Executive Committee of CSAMA (the "Executive Committee"). To open an account with an Allowed Broker, the employee must complete an "Allowed Broker Request Form" (available on LCD Intranet) and submit it to LCD for approval. This form contains a list of the allowed brokers.

An Employee may apply for an exemption from this requirement but only in extenuating circumstances. An "Outside Broker Request Form" (available on LCD Intranet) must be completed and submitted to LCD who will forward the request to the Executive Committee for approval. Such a request will not be granted unless the Employee has demonstrated a convincing reason why he or she cannot maintain the account with an Allowed Broker.

PART V- PRE-CLEARANCE REQUIREMENTS

CSAMA Employees are required to use the Intranet based Pre-Trade Clearance Form, available on the CSAMA LCD website for all pre-approval to trade (this is in place of completing Attachment B of the Global Policy). In addition to LCD providing pre-approval as per the Global Policy, CSAMA's approval process also requires the approval of a dealer and portfolio manager. Submission of the Intranet based form provides an email alert to the relevant people required to provide the pre-trade approval. Approval or disallowance of the transaction will be forwarded to employees via email. Valid approval is not deemed to be given until all three approvals have been provided.

Transactions Exempt from the Pre-Clearance Requirement includes share top-up plans that are offered by an issuer to all holders or classes of holders of securities in the issuer.

PART VI- CONFLICTS/DISCLOSURE OF INTEREST

For clarification, the disclosure of interests reporting requirement under Part VI of the Global Policy is meant to capture instances where an employee is recommending or effecting a securities transaction for a client in a stock where such disclosure should be made to ensure any conflicts of interest are managed appropriately. Such disclosure may arise in, but would not be limited to, the following:

o An employee holds stock as the result of a private placement and is acquiring shares for their clients in the issuer in the IPO;

o An employee has a significant personal holding in the stock in which they are about to transact in for their clients; or

o An employee has an associate (e.g. relative or business partner) that holds a prominent position in relation to the issuer (e.g. on the board of directors, significant personal holding)

PART VII - TRADING PROHIBITIONS

A. Short-Term Trading

Exemptions from the Short-Term Trading Prohibition includes transactions undertaken for legitimate taxation purposes provided they are in writing and are approved by Legal and Compliance.

B. Side-by-side Trading.

Where a securities transaction is for an amount less than AUD10,000 and the company has a market capitalisation of AUD2bn or greater, the transaction is exempt from the Side-by-Side Trading prohibitions.

C. Blackout Periods.

Where a securities transaction is for an amount less than AUD75,000 and the security is included in the S&P/ASX 200 Index, it will be exempt from the Blackout Period prohibition.

D. Initial Public Offerings.

Employees are only able to subscribe for an initial public offering of a security by applying in the general public offering. Employees are prohibited from participating in an offering under any broker allocation (even in a retail offering).

CREDIT SUISSE ASSET MANAGEMENT, SWITZERLAND ("CSAM, SWITZERLAND")
LOCAL SUPPLEMENT TO THE GLOBAL PERSONAL TRADING POLICY ("GLOBAL POLICY")

GLOBAL PERSONAL TRADING POLICY

This supplement outlines the special procedures to be followed in Switzerland. By signing the Certification and Account Disclosure Form you are committed to adhere to the Global Policy and the Swiss Supplement.

PART IV. TRADING ACCOUNTS

Employees are encouraged to carry out their personal account trading through a securities account with a Credit Suisse Group affiliate (a "Group Company") where the policy can be monitored directly through the existing mainframe or routing system.

Employees are required to sign an initial banking secrecy waiver certification (see annexe) granting CSAM the unfettered right to periodically obtain from CS entities and affiliates operating on the Swiss Banking IT Platform (HOST) transaction details in electronic form. Upon request, CSAM will submit to those CS entities a signed waiver copy accompanied by the Global Personal Account Trading Policy.

The acceptance of a power of attorney by an employee of CSAM covering accounts of any Group Company employee requires prior written authorization by the department head and the Business Compliance.

The employee must disclose all accounts covered by this Policy (including e-trading accounts, e.g., DIRECNET, SWISSQUOTE) to Business Compliance using the appropriate Certification and Account Disclosure Form (Attachment E) before any transactions may be executed. Employees who do not have accounts covered by this policy must confirm this fact by returning the signed Disclosure Form.

PART V. PRE-CLEARANCE REQUIREMENTS

For transactions in instruments requiring pre-approval by Business Compliance, the employee may send his/her request through the FMS Pre-clearance form. In exceptional cases, requests may also be made by calling the designated PA Trading Hotline number (+41 1 334 69 69 ).

Orders for execution may be placed through the ordinary client channels or self-entered through the WI01 mainframe application. Employees aren't allowed to place orders directly with employees at any other Group Company in charge of executing customer or proprietary transactions or allocating new issue subscriptions.

PART VII. TRADING PROHIBITIONS

B. Side-by-Side Trading

C. Blackout Periods

The Side-by-Side Trading and Blackout Period exemptions will be granted if the transaction face value is less than CHF 7'000.- and the market capitalization of the targeted issuer is greater than CHF 1.0 billion as of the Business Day on which the pre-clearance is requested.

RESTRICTIONS IN TRADING OF REAL ESTATE PRODUCTS

Employees involved in the management/administration of Credit Suisse real estate products (mutual funds, investment companies etc.) are required to adhere to a blackout period (trading prohibition) starting 1 month before and ending 1 month after the year end closing of the respective Credit Suisse real estate product. Exemptions to this blackout period may by granted by Local LCD upon request.

The department head may extend this trading prohibition and/or limit appointed employees involved in price sensitive projects on trading.

LCD will provide a regular transaction report to the Department Head for monitoring purposes.

BONUS SHARES

The Bonus Desk executes sales instructions only in connection with the redemption of an existing Lombard loan / credit. Such sales are subject to pre - clearance with Business Compliance. Unblocked shares have to be transferred into the employee's ordinary safekeeping account first before executing any transaction.

An exemption is provided until 2006 for those shares that were acquired through the Swiss Share Plan prior to 2003 whereby pre clearance beyond the trading window at the end of the first quarter through to the 1st Business Day of April is provided for.

PART VIII. REPORTING AND OTHER COMPLIANCE PROCEDURES

PART IX. LOCAL LCD, COMPLIANCE MONITORING AND SUPERVISORY REVIEW

Employees with accounts outside the HOST environment are required to provide a transaction and position statement on a timely basis (i.e. 3 business days) after the execution by either instructing their bank to send a copy of all statements of account directly to the following address:

Credit Suisse Asset Management AMLC 2, P.O. Box 800 8070 Zurich, or submitting them personally. For all accounts maintained on the HOST, no separate transaction statements will be required. However the reporting on positions must be provided.

Regular activity reports will be provided to your department head. On request, Business Compliance will provide department heads with additional employee personal account trading transaction details.

CREDIT SUISSE ASSET MANAGEMENT (FRANCE) S.A. ("CSAM FRANCE")
CREDIT SUISSE ASSET MANAGEMENT GESTION ("CSAM GESTION")
LOCAL SUPPLEMENT TO THE GLOBAL PERSONAL TRADING POLICY ("GLOBAL POLICY")

GLOBAL PERSONAL TRADING POLICY

CSAM's new Global Policy presented below applies to all CSAM entities and describes the conditions under which employees of the CSAM may initiate stock market and financial transactions for their own account.

It applies to all CSAM France and CSAM Gestion employees without distinction. Management took into account:

- The company's small number of employees (less than 50 at present),

- The fact that most of the company's employees work in an open-plan work space,

- The existence of an integrated information system, that is accessible by all,

and concluded that the number of "sensitive" employees affected by the global policy could not be limited to just a few since everyone had access to investment management information in their own particular area.

This Global Policy cancels and replaces procedure PF030 dated 28/09/2001 governing stock market transactions by employees. It also supplements current internal compliance rules and directives as specified in the following documents:

- The Credit Suisse Group Code of Conduct;

- CSAM's Global Code of Conduct;

- Procedure on the prohibition of insider trading;

- Procedure on mandates and non-professional appointments;

- CSAM France's internal regulations.

This Global Policy is an appendix to the internal regulations of CSAM France and shall comply with and be governed by applicable French laws and regulations.

The following are the main texts governing the checks on stock market transactions by employees of investment management companies:

- The French Monetary and Financial Code, articles 533-4 and 533-6 relating to the rules of good conduct applicable to investment service companies;

- Regulation AMF no. 96-03 (amended) relating to the rules of good conduct applicable to portfolio management for third parties;

- The compliance regulations of the French Association of Investment Managers.

Regarding checks on stock market transactions by investment management company employees, the French Financial Markets Authorities (AMF) stipulates in article 12 of Regulation No. 96-03 the following obligations:

"The service provider will establish internal rules and regulations governing personal account transactions by persons appointed to the business of portfolio management for third parties: These rules must specify:

-the conditions under which such persons will be able to trade financial instruments on their personal account in compliance with articles 2.3 and 14-17 of the present regulations;

-the system of checks established by the service provider to ensure transparency whatever the domiciliation of security accounts;

-the obligations of such persons to prevent unwarranted dissemination or misuse of confidential information."

PART IV. TRADING ACCOUNTS

PART VIII. REPORTING AND OTHER COMPLIANCE PROCEDURES

Regarding checks on bank accounts, it is stipulated that in accordance with the applicable regulations, only accounts held by employees or accounts held jointly with an employee are governed by the present policy.

On the notion of "security accounts" CSAM France is not authorised to run accounts and all employee security accounts must therefore be held with other companies. All employee security accounts must be declared to the Legal & Compliance department by completing the required form (APPENDIX E) before any transactions may be executed. Employees who do not hold any accounts covered by this procedure must confirm this by signing the appropriate form and returning it to the Legal & Compliance department.

The Legal & Compliance department is available to answer any questions from employees or discuss any necessary changes that may arise from the application of this procedure.

CREDIT SUISSE ASSET MANAGEMENT (DEUTSCHLAND) GMBH ("CSAM GERMANY")
LOCAL SUPPLEMENT TO THE GLOBAL PERSONAL TRADING POLICY ("GLOBAL POLICY")

GLOBAL PERSONAL TRADING POLICY

This supplement outlines the additional requirements for CSAM Germany to cover all requests expected by Auditors / Regulators.

PART IV. TRADING ACCOUNTS

Account opening requires prior written authorization by LCD.

The acceptance of a power of attorney by an employee requires prior written authorization by LCD.

An account, for which a power of attorney is granted just in case of an emergency ("Notvollmacht"), must not be disclosed as long as the power of attorney is not being made used.

PART V. PRE-CLEARANCE REQUIREMENTS

For transactions in instruments requiring pre-approval by LCD, the employee may send his/her request by e-mail or by fax (...75381888). The original Pre Clearance Form as to be provided the following business day.

PART VIII. REPORTING AND OTHER COMPLIANCE PROCEDURES

The employee must disclose all accounts covered by this Policy (including e-trading Accounts), to LCD using the appropriate CSAM-Personal Securities Account Declaration Form (Attachment E) before any transactions may be executed.

Employees who do not have accounts covered by this policy (safekeeping accounts) must confirm this fact by returning the signed Form.

Employees are required to provide each transaction statement on a timely basis after the execution by instructing their bank to send a copy of all statements of account directly to LCD.

All transactions shall have a wealth formation orientation, not a speculative one.

CREDIT SUISSE ASSET MANAGEMENT LIMITED ("CSAML")
LOCAL SUPPLEMENT TO THE GLOBAL PERSONAL TRADING POLICY ("GLOBAL POLICY")

CSAML has adopted CSAM Global Personal Trading Policy as its company's policy with an approval of CSAML's Board of Directors on April 28, 2004, on the condition that this local supplement is taken into effect at the same time.

II. STATEMENT OF GENERAL PRINCIPLES

CSAML full-time Board Members, full-time Statutory Auditor, and employees registered with Kanto Finance Bureau as portfolio managers or traders under the Law pertaining to Securities Investment Advisory Business (hereafter "specified employee") are required to comply with the following principles of Japan Securities Investment Advisors Association:

o the purpose of equity security trading must be "long term investment";

o an employee must have an intent to hold the purchased equity securities for six months or more under the normal market environment

When a specified employee submits a Personal Trading Pre-Clearance Form for a purchase of equity securities, he or she is required to confirm his or her intent on the supplemental form. When a specified employee submits a Personal Trading Pre-Clearance Form for a sale of equity securities which he or she purchased less than six months ago, he or she is required to write a reason on the supplemental form why he or she has to sell them in spite of the initial intent to hold for at least six months. [Appendix-1: Supplemental Form for Specified Employees]

IV. TRADING ACCOUNTS

CSAML Employees may maintain personal trading accounts with (1) designated brokers for personal trading or (2) any other brokers or banks.

(1) Designated brokers for personal trading are:

o Daiwa Securities Co., Ltd., Head Office, Private Banking Dept.

o Nikko Beans Securities Co., Ltd.

Designated brokers send duplicate copies of all the statements of personal trading accounts directly to LCD. Employees do not have to send them to LCD by themselves. At opening an account, employees are required to sign a consent form for this arrangement. [Appendix-2: CSAML Consent Form for Designated Broker]

(2) Other brokers or banks

Employees are required to send duplicate copies of all the statements of their personal trading accounts received from brokers or banks to LCD by themselves.

In any case, employees are required to pre-clear a transaction with LCD.

VII. TRADING PROHIBITIONS

B. Side-by-Side Trading

C. Blackout Periods

The Side-by-Side Trading and Blackout Period exemptions will be granted if the market capitalization is at least JPY 200 billion or USD 2 billion and employee purchase/sale within JPY 1 million or USD 10,000.

VIII. REPORTING AND OTHER COMPLIANCE PROCEDURES

C. Quarterly Reporting

Employees are required to submit the duplicate copies of all the statements of their personal trading accounts to LCD within one month after the end of each calendar period regardless of the due date stipulated in the Global Policy.

X. SANCTIONS

Sanctions to be imposed shall be discussed by the CSAML Disciplinary Committee and determined in accordance with CSAML Employment Rules.

XII. CONFLICT OF RULES

Quadruple Hatted employees must comply with not only the Global Policy and its supplement but also CSFBJL's Employee Personal Account Trading Policy.

Exhibit p.(17)

FOR INTERNAL USE ONLY

CODE OF ETHICS

EVERGREEN INVESTMENT MANAGEMENT COMPANY, LLC
EVERGREEN INVESTMENT SERVICES, INC.
J.L. KAPLAN ASSOCIATES, LLC

Effective February 1, 2005

EACH CAPITALIZED TERM SHALL HAVE THE MEANING PROVIDED IN SECTION V, "DEFINITIONS."

As an Employee of any of the Covered Companies, you are required to read, understand and abide by this Code of Ethics, or Code. The Code contains affirmative requirements as well as prohibitions that you are required to adhere to in connection with securities transactions effected on your behalf and on behalf of clients (including the Evergreen Funds). Such requirements include, among other things, (i) notifying the Compliance Department upon establishing a personal securities account with a broker/dealer, (ii) in certain cases, obtaining permission prior to engaging in a personal securities transaction, and
(iii) reporting personal securities transactions to the Compliance Department.

All Employees are required to comply with applicable Federal Securities Laws. The Federal Securities Laws have been adopted to prevent and punish activities such as insider trading, front-running, portfolio pumping and window dressing, among others. Certain prohibitions set forth below are intended to have the effect of ensuring compliance with applicable Federal Securities Laws, but such prohibitions shall in no way limit or supersede the general requirement to comply with applicable Federal Securities Laws. FAILURE TO ADHERE TO THE CODE COULD RESULT IN SANCTIONS, INCLUDING DISMISSAL FROM EMPLOYMENT, AND COULD ALSO IN CERTAIN CASES EXPOSE YOU TO CIVIL OR CRIMINAL PENALTIES SUCH AS FINES AND/OR IMPRISONMENT.

No written code of ethics can explicitly cover every situation that possibly may arise. Even in situations not expressly described, the Code and your fiduciary obligations generally require you to put the interests of your clients ahead of your own. In the interests of the Covered Companies and their clients, the Code of Ethics Compliance Officer and/or a Covered Company's Chief Compliance Officer may have the obligation and duty to review and take appropriate action concerning instances of conduct that, while not necessarily violating the letter of the Code, give the appearance of impropriety. If you have any questions regarding the appropriateness of any action under this Code or under your fiduciary duties generally, you should contact the Code of Ethics Compliance Officer, the appropriate Chief Compliance Officer or the General Counsel to discuss the matter before taking the action in question. Similarly, you should consult with the Compliance Department or an attorney in Evergreen's legal department if you have any questions concerning the meaning or interpretation of any provision of the Code.

Finally, as an employee of Wachovia Corporation or one of its divisions or subsidiaries, you should consult Wachovia Corporation's Code of Conduct and Ethics contained in your Employee Handbook.

I. PROHIBITED ACTIVITIES.

A. No Employee shall engage in any Security transactions, activity or relationship that creates or has the appearance of creating a conflict of interest (financial or other) between the Employee and a Covered Company or a Client Account. Each Employee shall always place the financial and business interests of the Covered Companies and Client Accounts before his or her own personal financial and business interests.

B. No Employee shall:

(1) employ any device, scheme or artifice to defraud a Client Account;

(2) engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon a Client Account;

(3) engage in any fraudulent, deceptive or manipulative practice with respect to a Client Account; or

(4) engage in any transaction that may give the appearance of impropriety.

C. No Employee shall purchase or sell, directly or indirectly, any Security (including for the sake of clarification, shares issued by Reportable Funds) for any Personal Account, any Client Account, the account of a Covered Company, or any other account, while in possession of Inside Information concerning that Security or the issuer without the prior written approval of (1) the Code of Ethics Compliance Officer, (2) the General Counsel and (3) per Wachovia Corporation's Code of Conduct and Ethics, Wachovia Corporation's Conflict of Interest Committee, which approval shall specifically determine that such trading would not constitute an improper use of such Inside Information. Employees possessing Inside Information shall take reasonable precautions to ensure that such information is not disseminated beyond those Employees with a need to know such information. For the sake of clarification, Inside Information may include information about important events involving the Reportable Funds, such as, but not limited to, changes in the portfolio management team for a Reportable Fund or any planned merger or liquidation of a Reportable Fund. Any questions should be directed to the Code of Ethics Compliance Officer, the appropriate Chief Compliance Officer or the General Counsel.

D. No Employee shall recommend or cause a Covered Company or Client Account to take action or refrain from taking action for the Employee's own personal benefit.

E. (1) No Employee shall purchase or sell any Security for any Personal Account if he or she knows such Security (a) is being purchased or sold for any Covered Company or Client Account or (b) is being actively considered for purchase or sale by any Covered Company or Client Account.

(2) A Covered Company shall not purchase or sell any Security for its own account if the Employee making such purchase or sale knows such Security (a) is being purchased or sold for any Client Account or (b) is being actively considered for purchase or sale by any Client Account.

The prohibitions contained in Section I.E(1) and I.E(2) shall not apply to:

(i) purchases pursuant to a dividend reinvestment program (DRIP) or purchases based upon preexisting status as a security holder, policyholder or depositor;

(ii) purchases of Securities through the exercise of rights issued to the Employee as part of a pro rata issue to all holders of such Securities, and the sale of such rights;

(iii) transactions that are non-volitional, including any sale out of a brokerage account resulting from a bona fide margin call as long as collateral was not withdrawn from such account within 10 days prior to the call; and

(iv) transactions previously approved in writing by the Code of Ethics Compliance Officer that have been determined not to be harmful to any Client Account because of the volume of trading in the Security.

F. No Employee shall purchase a Security for any Personal Account in an initial public offering, except for initial public offerings where the individual has a right to purchase the Security based on a preexisting status as a security holder, policy holder or depositor and initial public offerings where the Employee qualifies for participation in a "friends and family" program in connection with

the offering. No Access Person who has a right to purchase a Security in an initial public offering based on a preexisting status as a security holder, policy holder or depositor and wishes to purchase the Security, or wishes to purchase a Security in an initial public offering through a "friends and family" program, may purchase a Security for any Personal Account in an initial public offering without prior written approval of the Code of Ethics Compliance Officer. In considering whether to grant such approval, the Code of Ethics Compliance Officer will consider whether the purchase would harm or otherwise be adverse to the interests of any Client Account.

G. No Employee shall maintain or open a brokerage account constituting a Personal Account unless duplicate confirmations and statements of all account activity are forwarded to the Compliance Department.

H. No Employee shall use any Derivative to evade the restrictions of this Code of Ethics.

I. No Investment Person shall be a director of a publicly traded company other than Wachovia Corporation without prior written approval of the Code of Ethics Compliance Officer. Approval generally will not be granted.

J. No Access Person shall make investments for any Personal Account in any investment club without prior written approval from the Code of Ethics Compliance Officer.

K. No Access Person may purchase a Security for any Personal Account in a private offering without prior written approval of the person's Chief Investment Officer and the Code of Ethics Compliance Officer. In considering whether to grant such approval, the Chief Investment Officer and Code of Ethics Compliance Officer will consider several factors, including but not limited to:

(1) whether the investment opportunity should be reserved for a Client Account; and

(2) whether the opportunity is being offered to the Access Person by virtue of his or her position with respect to a Client Account or a Covered Company.

If approval is granted, the Access Person must disclose the investment to the appropriate Chief Investment Officer before participating in any way in any decision as to whether a Client Account should invest in such Security or in another Security issued by the same issuer. In such circumstances, the Chief Investment Officer will conduct a review by investment personnel with no interest in the issuer prior to a purchase on behalf of a Client Account. The Compliance Department shall retain a record of this approval and the rationale supporting it.

L. Without prior written approval from the Code of Ethics Compliance Officer, no Access Person may offer investment advice with respect to, or manage, any account or portfolio (other than a Client Account) of which the Access Person does not have Beneficial Ownership.

M. No Investment Person may profit from the purchase and sale or sale and purchase of the same (or equivalent) Securities (other than Securities issued by Wachovia Corporation) in a Personal Account within 60 calendar days. Any resulting profits will be disgorged as instructed by the Code of Ethics Compliance Officer.

N. No Investment Person may buy or sell a Security for any Personal Account within seven calendar days before or after a Client Account, except for:

(1) purchases pursuant to a dividend reinvestment program (DRIP) or purchases based upon preexisting status as a security holder, policyholder or depositor;

(2) purchases of Securities through the exercise of rights issued to the Employee as part of a pro rata issue to all holders of such Securities, and the sale of such rights;

(3) transactions that are non-volitional, including any sale out of a brokerage account resulting from a bona fide margin call as long as collateral was not withdrawn from such account within ten days prior to the call; and

(4) transactions previously approved in writing by the Code of Ethics Compliance Officer that have been determined not to be harmful to any Client Account because of the volume of trading in the Security or otherwise.

Any related profits from such transaction will be disgorged as instructed by the Code of Ethics Compliance Officer.

O. No Employee shall, directly or indirectly, in connection with any purchase or sale of any Security by a Client Account or a Covered Company or in connection with the business of a Client Account or a Covered Company, accept or receive from a third party any gift or other thing of more than de minimis value (for purposes of this Code, anything with a value in excess of $100), other than (1) business entertainment such as meals and sporting events involving no more than ordinary amenities and (2) unsolicited advertising or promotional materials that are generally available. An Employee also should consult Wachovia Corporation's Code of Conduct and Ethics relating to acceptance of gifts from customers and suppliers. An Employee shall refer questions regarding the permissibility of accepting items of more than de minimis value to the Code of Ethics Compliance Officer.

P. No Investment Person shall sell any shares of any open-end Reportable Fund held in a Personal Account, other than a money market fund, prior to six months from date of purchase (unless the purchase or sale was pursuant to a systematic investment plan or program). Exceptions to this requirement may only be made by the Code of Ethics Compliance Officer, who will report any such exception to the Evergreen Funds' Board of Trustees.

Q. No Employee who is not an Investment Person shall sell any shares of any open-end Reportable Fund held in a Personal Account, other than a money market fund, prior to 90 days from date of purchase (unless the purchase or sale was pursuant to a systematic investment plan or program). Exceptions to this requirement may only be made by the Code of Ethics Compliance Officer, who will report any such exception to the Evergreen Funds' Board of Trustees.

R. All individuals subject to this Code of Ethics shall maintain any open-end Evergreen Fund position of which they have Beneficial Ownership, other than positions held through a Wachovia Corporation retirement plan or other retirement plan (for example, a retirement plan of a spouse's then-current employer) approved by the Code of Ethics Compliance Officer, directly with Evergreen Service Company, LLC (transfer agent for the Evergreen Funds) or Wachovia Securities, LLC.

S. "Good till canceled" and "limit" orders are forbidden for all Access Persons except with respect to transactions excluded from the pre-clearance requirement pursuant to Section II.B(1) or II.B(2) below.

T. No Employee shall participate in a tender offer made by a closed-end Reportable Fund under the terms of which the number of shares to be purchased is limited to less than the outstanding shares of such closed-end Reportable Fund.

II. PRE-CLEARING PERSONAL TRADES

A. Only Access Persons are subject to the pre-clearance requirement set forth in this Section II. Investments that are not Securities as defined in this Code are not subject to the pre-clearance requirement set forth in this Section II. No Access Person may engage in a Securities transaction (other than a transaction described in Section II.B below) involving a Personal Account unless he or she has first completed a Personalized Trade Authorization Form (PTAF). A trade cannot be completed unless the Compliance Department has provided approval or the transaction is

excluded from the pre-clearance requirement pursuant to Section II.B below. Any approval by the Compliance Department shall only be valid until the end of the next trading day. The time allotment is limited to the actual time of purchase or sale of the Security. If execution of the trade does not take place by the end of the next trading day, then another PTAF must be completed and approved. "Good till canceled" and "limit" orders are forbidden for all Access Persons except with respect to transactions excluded from the pre-clearance requirement pursuant to Section II.B(1) or II.B(2) below.

B. The following transactions are excluded from the pre-clearance requirement:

(1) Any transactions in Securities traded on a national securities exchange or NASDAQ with an aggregate amount equal to or less than the lesser of (a) 500 shares or (b) $25,000 for a particular Security within a seven calendar day window.

(2) Any transactions in fixed income Securities, including corporate, municipal and foreign bonds, in an aggregate amount of $50,000 par value or less for a particular Security within a seven calendar day window.

THE EXCLUSIONS IN SECTIONS II.B(1) AND II.B(2) ARE NOT VALID FOR AN INVESTMENT PERSON WHO HAS KNOWLEDGE OF RECENT PURCHASES AND SALES OF THE SAME SECURITY WITHIN ANY CLIENT ACCOUNT.

(3) Transactions in exchange traded funds. For the sake of clarity, many exchange traded funds are registered open-end investment companies and thus would not be included in the definition of "Security" for purposes of this Code; however, other exchange traded funds are unit investment trusts and thus not explicitly excluded from the definition of "Security" for purposes of this Code. Although unit investment trusts that invest exclusively in open-end investment companies are excluded from the definition of "Security," unit investment trusts that are exchange traded funds typically do not invest exclusively in open-end investment companies and therefore typically will not be excluded.

(4) Transactions in Reportable Funds.

(5) Transactions in 529 Plans.

(6) Purchases pursuant to a dividend reinvestment program (DRIP) or purchases based upon preexisting status as a security holder, policy holder or depositor.

(7) Purchases of Securities through the exercise of rights issued to the Employee as part of a pro rata issue to all holders of such Securities (except for purchases of such Securities in an initial public offering, which requires pre-clearance pursuant to Section I.F), and the sale of such rights.

(8) Transactions that are non-volitional, including any sale out of a brokerage account resulting from a bona fide margin call as long as collateral was not withdrawn from such account within ten days prior to the call.

(9) Transactions in Securities issued by Wachovia Corporation.

(10) Transactions by an Investment Person in a Security that all Client Accounts for which the person makes or executes investment decisions or recommendations are prohibited under their investment guidelines from purchasing.

(11) Transactions previously approved in writing by the Code of Ethics Compliance Officer that have been determined not to be harmful to any Client Account because of the volume of trading in the Security or otherwise.

Notwithstanding the exclusions from the pre-clearance requirement set forth in this Section II.B, all transactions that are excluded from the pre-clearance requirement pursuant to Section II.B(1), II.B(2) or II.B(3) must be entered into the StarCompliance system on a PTAF within 24 hours of execution.

C. All Employees should consult Wachovia Corporation's Code of Conduct and Ethics regarding the permissibility of investing in other financial institutions.

III. REPORTING REQUIREMENTS

A. The Covered Companies are required to provide every Employee with a copy of this Code of Ethics and all amendments thereto. Each quarter, every Employee must complete an acknowledgment (in electronic or written form) stating that he or she has received and reviewed and will comply with this Code of Ethics. New Employees must read the Code and complete the acknowledgment within 30 days of employment.

B. Each Employee shall be responsible for ensuring that every broker with whom he or she transacts for any Personal Account provides duplicate confirmations and statements for all purchases and sales of Securities to:

Evergreen Investments
Compliance Department
200 Berkeley Street, 23rd Floor Boston, MA 02116

If an Employee encounters a problem in complying with this provision, he or she shall notify the Compliance Department immediately and may be required to close such Personal Account.

C. Each Employee who is not an Investment Person or Access Person must report all Security transactions for his or her Personal Account annually for each year ending December 31 by the following January 31 for calendar year 2005 and February 14 for each subsequent year (the information being current as of the date the report is submitted); provided, however, Security transactions need not be separately reported under this paragraph if copies of broker confirmations for the transaction or account statements reflecting the transactions are forwarded to the Compliance Department during the course of the year or within 30 calendar days after the end of the applicable calendar quarter.

D. Each Access Person and Investment Person must report all Securities holdings in all Personal Accounts upon commencement of employment (or within ten days of becoming an Access Person, in either case the information being current as of the date the report is submitted) and thereafter annually, for each year ending December 31 by the following January 31 for calendar year 2005 and February 14 for each subsequent year (the information being current as of the date the report is submitted).

E. Each Access Person shall file with the Compliance Department within thirty calendar days after the end of each calendar quarter (March 31, June 30, September 30, December 31) a report listing each Security transaction (including those exempt from the pre-clearance requirements) effected during the quarter for any Personal Account; provided, however, a Security transaction need not be separately reported under this paragraph if a copy of a broker confirmation for the transaction or an account statement reflecting the transaction is forwarded to the Compliance Department within 30 calendar days after the end of the applicable calendar quarter.

F. Any Employee who becomes aware of any person trading on or communicating Inside Information (or contemplating such actions) must promptly report such event to (i) the appropriate Chief Compliance Officer or (ii) the Code of Ethics Compliance Officer or the General Counsel, who shall report such event to the appropriate Chief Compliance Officer.

G. Any Employee who becomes aware of any person violating this Code of Ethics must promptly report such event to (i) the appropriate Chief Compliance Officer or (ii) the Code of Ethics Compliance Officer or the General Counsel, who shall report such event to the appropriate Chief Compliance Officer.

IV. ENFORCEMENT

A. Review. The Code of Ethics Compliance Officer, the appropriate Chief Compliance Officer or his or her respective designee shall review reports filed under the Code of Ethics to determine whether any violation of the Code of Ethics may have occurred. This includes not only instances of violations against the letter of the Code, but also any instances that may give the appearance of impropriety.

B. Investigation. The General Counsel shall investigate any substantive alleged violation of the Code of Ethics. An Employee allegedly involved in a violation of the Code of Ethics may be required to deliver to the General Counsel or his or her designee all tax returns involving any Personal Account or any Securities for which the Employee has Beneficial Ownership for all years requested. Failure to comply may result in termination.

C. Sanctions. In determining the sanctions to be imposed for a violation of this Code of Ethics, the following factors, among others, may be considered:

(1) the degree of willfulness of the violation;

(2) the severity of the violation;

(3) the extent, if any, to which an Employee profited or benefited from the violation;

(4) the adverse effect, if any, of the violation on a Covered Company or a Client Account; and

(5) any history of prior violation of the Code.

The following sanctions, among others, may be considered:

(1) disgorgement of profits;

(2) fines;

(3) letters of reprimand;

(4) suspension or termination of employment; and

(5) such other actions as the Regulatory Compliance Oversight Committee shall determine.

D. All material violations of the Code of Ethics involving Employees with responsibilities relating to the Evergreen Funds or otherwise involving the Evergreen Funds, and any sanctions imposed, shall be reported to the Board of Trustees of the Evergreen Funds. All violations of the Code and any sanctions also shall be reported to the Employee's supervisor, and any regulatory agency requiring such reporting, and shall be filed in the Employee's personnel record.

E. Potential Legal Penalties for Misuse of Inside Information. Violations of the Code may subject the violator to any or all of the following legal penalties, among others, that may be sought by governmental regulators and/or law enforcement agencies:

(1) civil penalties up to three times the profit gained or loss avoided;

(2) disgorgement of profits;

(3) injunctions, including being banned from the securities industry;

(4) criminal penalties up to $1 million; and/or

(5) imprisonment.

V. DEFINITIONS

529 PLAN: A trust created by a state that holds assets for a "qualified tuition plan" as defined in, and pursuant to, Section 529 of the Internal Revenue Code and that issues municipal securities representing interests in the trust.

ACCESS PERSON: Access Person includes: (1) any director of a Covered Company or any officer of a Covered Company with the title of Vice President or above, but excluding any such director or officer excluded in writing by the Code of Ethics Compliance Officer with the approval of the General Counsel; (2) any Investment Person, but excluding any such person excluded in writing by the Code of Ethics Compliance Officer with the approval of the General Counsel; and (3) any Employee of a Covered Company who (a) has access to nonpublic information regarding the purchase or sale of securities by a Client Account or a Covered Company or nonpublic information regarding the portfolio holdings of any Reportable Fund or (b) is involved in making or has access to nonpublic securities recommendations made to Client Accounts. Upon the hiring of a new Employee or of a change in an Employee's job title or responsibilities, the Code of Ethics Compliance Officer will determine whether the Employee is or has become an Access Person under the Code. The Code of Ethics Compliance Officer or his or her designee will notify the Employee.

BENEFICIAL OWNERSHIP: A direct or indirect financial interest in an investment giving a person the opportunity directly or indirectly to participate in the risks and rewards of the investment, regardless of the actual owner of record. Securities of which a person may have Beneficial Ownership include, but are not limited to:

(1) securities owned by a spouse, by or for minor children, or by relatives of the person or his or her spouse who live in his or her home, including securities in trusts of which such persons are beneficiaries;

(2) a proportionate interest in securities held by a partnership of which the person is a general partner;

(3) securities for which a person has a right to dividends that are separated or separable from the underlying securities; and

(4) securities that a person has a right to acquire through the exercise or conversion of another security.

CLIENT ACCOUNT: Any account of any person or entity (including an investment company) for which a Covered Company provides investment advisory or investment management services. Client Account does not include brokerage or other accounts not involving investment advisory or management services.

COMPLIANCE DEPARTMENT: The Compliance Department consists of the Code of Ethics Compliance Officer, the Chief Compliance Officers of the Covered Companies and the staff reporting to them.

CHIEF COMPLIANCE OFFICER: The Chief Compliance Officer for each Covered Company is set forth below:

COVERED COMPANY                                CHIEF COMPLIANCE OFFICER
--------------------------------------------   -----------------------------
Evergreen Investment Management Company, LLC   Barbara Lapple - 704/383-6419

J.L. Kaplan Associates, LLC

Evergreen Investment Services, Inc.            Michele Grant - 704/383-2116

CODE OF ETHICS COMPLIANCE OFFICER: Jim Angelos - 617/210-3690

COVERED COMPANY: Includes Evergreen Investment Management Company, LLC, Evergreen Investment Services, Inc. and J.L. Kaplan Associates, LLC.

DERIVATIVE: Every financial arrangement whose value is linked to, or derived from, fluctuations in the prices of stock, bonds, currencies or other assets. Derivatives include but are not limited to futures, forward contracts, options and swaps on interest rates, currencies, and stocks.

DIRECT OR INDIRECT INFLUENCE OR CONTROL: The power on the part of an Employee, his or her spouse or a relative living in his or her home to directly or indirectly influence the selection or disposition of investments.

EMPLOYEE: Any director, officer, or employee of a Covered Company, including temporary or part-time employees and employees on short-term disability or leave of absence, and may include any director, officer or employee of any affiliate of a Covered Company who provides any services to a Covered Company. Independent contractors and their employees providing services to a Covered Company, if designated by the Code of Ethics Compliance Officer, shall be treated as Employees under this Code. Any other person who provides investment advice on behalf of a Covered Company and is subject to the supervision and control of the Covered Company shall also be treated as an Employee under this Code.

EVERGREEN FUNDS: The registered open-end investment companies whose shares are distributed by Evergreen Investment Services, Inc. and the registered closed-end investment companies that are advised by Evergreen Investment Management Company, LLC.

FEDERAL SECURITIES LAWS: The Securities Act of 1933, as amended; the Securities Exchange Act of 1934, as amended; the Sarbanes-Oxley Act of 2002, as amended; the Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940, as amended; Title V of the Gramm-Leach-Bliley Act, as amended; any rules adopted by the Securities and Exchange Commission under any of the foregoing statutes; and the Bank Secrecy Act, as amended, as it applies to investment companies registered under the Investment Company Act of 1940, as amended, and investment advisers, and any rules adopted under the Bank Secrecy Act by the Securities and Exchange Commission or the Department of the Treasury.

GENERAL COUNSEL: Michael H. Koonce - 617/210-3663

INSIDE INFORMATION: Information regarding a Security or its issuer that has not yet been effectively communicated to the public through a Securities and Exchange Commission filing or widely distributed news release, and which a reasonable investor would consider important in making an investment decision or which is reasonably likely to impact the trading price of the Security. Inside Information includes, but is not limited to, information about (1) dividend changes, (2) earnings estimates and changes to previously released estimates,
(3) other changes in financial status, (4) proposed mergers or acquisitions, (5) purchases or sales of material amounts of assets, (6) significant new business, products or discoveries or losses of business, (7) litigation or investigations,
(8) liquidity difficulties or (9) management changes.

INVESTMENT PERSON: An Employee who is a portfolio manager, securities analyst, or trader, or who otherwise makes recommendations regarding or effects the purchase or sale of securities by a Client Account.

PERSONAL ACCOUNT: Any holding of Securities constituting Beneficial Ownership, other than a holding of Securities previously approved by the Code of Ethics Compliance Officer over which the Employee has no Direct Influence or Control. A Personal Account is not limited to securities accounts maintained at brokerage firms, but also includes holdings of Securities owned directly by an Employee or held through a retirement plan of Wachovia Corporation or any other employer.

REGULATORY COMPLIANCE OVERSIGHT COMMITTEE: The members of the Regulatory Compliance Oversight Committee are Dennis Ferro, Chris Conkey, Michael Koonce, Doug Munn, Jim Angelos and Barbara Lapple.

REPORTABLE FUND: Reportable Fund means (1) any investment company registered under the Investment Company Act of 1940, as amended, for which a Covered Company serves as an investment adviser as defined in Section 2(a)(20) of that Act, or (ii) any investment company registered under the Investment Company Act of 1940, as amended, whose investment adviser or principal underwriter controls a Covered Company, is controlled by a Covered Company or is under common control with a Covered Company. For purposes of this definition, "control" has the same meaning as it does in Section 2(a)(9) of the Investment Company Act of 1940, as amended. A list of all Reportable Funds that are not Evergreen Funds (i.e., funds other than Evergreen Funds that are advised or subadvised by a Covered Company or an affiliate of a Covered Company) shall be maintained and made available for reference under "Affiliated Sub-Advised Funds" under the "Code of Ethics" tab in the Compliance Department InSite web page.

SECURITY: Any type of equity or debt instrument and any rights relating thereto, such as derivatives, options, warrants and convertible securities. Unless otherwise noted, Security does not include:

(1) U.S. Government securities (all direct obligations of the U.S. Government and its agencies and instrumentalities (for instance, obligations of GNMA, FHLCC, or FHLBs));

(2) commercial paper, certificates of deposit, repurchase agreements, bankers' acceptances, or any other money market instruments;

(3) shares of registered open-end investment companies (i.e., mutual funds) that are not Reportable Funds; and

(4) shares issued by unit investment trusts that are invested exclusively in one or more open-end investment companies that are not Reportable Funds.

Shares issued by all closed-end funds are included in the definition of Security. For the sake of clarity, a commodity generally is not considered a Security, except that certain derivative instruments (such as, among others, financial futures contracts and options on financial futures contracts) that may be regulated under the Commodity Exchange Act, as amended, may be considered Securities. You should assume that derivative instruments involving securities and financial futures contracts are Securities for purposes of this Code. In addition, investments in 529 Plans are considered Securities for purposes of this Code. If you think a particular instrument should not be covered as a Security under this Code, please consult with the Compliance Department or an attorney in the Evergreen legal department.

Exhibit p.(18)

FRANKLIN TEMPLETON INVESTMENTS
CODE OF ETHICS

(PURSUANT TO RULE 17J-1 OF THE INVESTMENT COMPANY ACT OF 1940
AND RULE 204A-1 OF THE INVESTMENT ADVISERS ACT OF 1940)

AND
POLICY STATEMENT ON INSIDER TRADING
REVISED APRIL 2005

TABLE OF CONTENTS

CODE OF ETHICS.............................................................    3

PART 1 - STATEMENT OF PRINCIPLES...........................................    3
PART 2 - PURPOSE OF THE CODE AND CONSEQUENCES OF NON-COMPLIANCE............    5
PART 3 - COMPLIANCE REQUIREMENTS...........................................    6
PART 4 - REPORTING REQUIREMENTS FOR CODE OF ETHICS PERSONS (EXCLUDING
         INDEPENDENT DIRECTORS OF THE FUNDS)...............................   16
PART 5 - PRE-CLEARANCE REQUIREMENTS APPLICABLE TO ACCESS PERSONS (EXCLUDING
         INDEPENDENT DIRECTORS OF THE FUNDS) AND PORTFOLIO PERSONS.........   19
PART 6 - REQUIREMENTS FOR INDEPENDENT DIRECTORS OF THE FUNDS...............   23
PART 7 - PENALTIES FOR VIOLATIONS OF THE CODE..............................   25
PART 8 - A REMINDER ABOUT THE FRANKLIN TEMPLETON INVESTMENTS INSIDER
         TRADING POLICY....................................................   27
PART 9 - FOREIGN COUNTRY SUPPLEMENTS (CANADA)..............................   28

APPENDIX A: COMPLIANCE PROCEDURES AND DEFINITIONS..........................   30

I.  RESPONSIBILITIES OF EACH DESIGNATED COMPLIANCE OFFICER.................   31
II. COMPILATION OF DEFINITIONS OF IMPORTANT TERMS..........................   38

APPENDIX B: ACKNOWLEDGEMENT FORM AND SCHEDULES.............................   41

ACKNOWLEDGMENT FORM........................................................   42
SCHEDULE A: LEGAL AND COMPLIANCE OFFICERS CODE OF ETHICS ADMINISTRATION
            DEPT. CONTACT INFO.............................................   43
SCHEDULE B: QUARTERLY TRANSACTIONS REPORT..................................   44
SCHEDULE C: INITIAL & ANNUAL DISCLOSURE OF BROKERAGE ACCOUNTS, SECURITIES
            HOLDINGS AND DISCRETIONARY AUTHORITY...........................   45
SCHEDULE D: NOTIFICATION OF SECURITIES ACCOUNT.............................   47
SCHEDULE E: NOTIFICATION OF DIRECT OR INDIRECT BENEFICIAL INTEREST.........   48
SCHEDULE F: CHECKLIST FOR INVESTMENTS IN PARTNERSHIPS AND SECURITIES ISSUED
            IN LIMITED OFFERINGS (PRIVATE PLACEMENTS)......................   49
SCHEDULE G: REQUEST FOR APPROVAL TO SERVE AS A DIRECTOR....................   51

APPENDIX C: INVESTMENT ADVISOR AND BROKER-DEALER AND OTHER SUBSIDIARIES OF
            FRANKLIN RESOURCES, INC. - NOVEMBER 2004.......................   52

APPENDIX D: FRANKLIN RESOURCES, INC. CODE OF ETHICS AND BUSINESS CONDUCT...   53

POLICY STATEMENT ON INSIDER TRADING........................................   65

A. LEGAL REQUIREMENT.......................................................   65
B. WHO IS AN INSIDER?......................................................   65
C. WHAT IS MATERIAL INFORMATION?...........................................   65

D. WHAT IS NON-PUBLIC INFORMATION?.........................................   66
E. BASIS FOR LIABILITY.....................................................   66
F. PENALTIES FOR INSIDER TRADING...........................................   66
G. INSIDER TRADING PROCEDURES..............................................   67

FAIR DISCLOSURE POLICIES AND PROCEDURES....................................   69

A. WHAT IS REGULATION FD?..................................................   69
B. FTI'S CORPORATE POLICY FOR REGULATION FD................................   69
C. GENERAL PROVISIONS OF REGULATION FD.....................................   69
D. PERSONS TO WHOM SELECTIVE DISCLOSURE MAY NOT BE MADE:...................   70
E. EXCLUSIONS FROM REGULATION FD...........................................   70
F. METHODS OF PUBLIC DISCLOSURE:...........................................   70
G. TRAINING................................................................   71
H. QUESTIONS...............................................................   71
I. FREQUENTLY ASKED QUESTIONS:.............................................   71
J. SUPPLEMENTAL INFORMATION - SEC'S DIVISION OF CORPORATE FINANCE..........   72

SUPPLEMENTAL MEMORANDUM ON CHINESE WALL POLICY.............................   76

CODE OF ETHICS

The Code of Ethics (the "Code") and Policy Statement on Insider Trading (the "Insider Trading Policy"), including any supplemental memoranda is applicable to all officers, directors, employees and certain designated temporary employees (collectively, "Code of Ethics Persons") of Franklin Resources, Inc. ("FRI"), all of its subsidiaries, and the funds in the Franklin Templeton Group of Funds (the "Funds") (collectively, "Franklin Templeton Investments"). The subsidiaries listed in Appendix C of the Code, together with Franklin Resources, Inc., the Funds, have adopted the Code and Insider Trading Policy.

The Code summarizes the values, principles and business practices that guide Franklin Templeton Investments' business conduct, provides a set of basic principles for Code of Ethics Persons regarding the conduct expected of them and also establishes certain reporting requirements applicable to Supervised and Access Persons (defined below). It is the responsibility of all Code of Ethics Persons to maintain an environment that fosters fairness, respect and integrity. Code of Ethics Persons are expected to seek the advice of a supervisor or the Code of Ethics Administration Department with any questions on the Code and/or the Insider Trading Policy.

In addition to this Code, the policies and procedures prescribed under the Code of Ethics and Business Conduct adopted by Franklin Resources, Inc. pursuant to the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley Code") are additional requirements that apply to certain Code of Ethics Persons. Please see Appendix D for the full text of the Sarbanes-Oxley Code.

PART 1 - STATEMENT OF PRINCIPLES

All Code of Ethics Persons are required to conduct themselves in a lawful, honest and ethical manner in their business practices. Franklin Templeton Investments' policy is that the interests of its Funds' shareholders and clients are paramount and come before the interests of any Code Of Ethics Person.

The personal investing activities of Code of Ethics Persons must be conducted in a manner to avoid actual or potential conflicts of interest with Fund shareholders and other clients of any Franklin Templeton adviser.

Code of Ethics Persons shall use their positions with Franklin Templeton Investments and any investment opportunities they learn of because of their positions with Franklin Templeton Investments in a manner consistent with applicable Federal Securities Laws (defined below) and their fiduciary duties to use such opportunities and information for the benefit of the Funds' shareholders and clients.

Information concerning the identity of security holdings and financial circumstances of Funds and other clients is confidential and all Code of Ethics Persons must vigilantly safeguard this sensitive information.

Code of Ethics Persons shall comply with the following Federal Securities Laws:

a. The Securities Act of 1933;

b. The Securities Exchange Act of 1934;

c. The Sarbanes-Oxley Act of 2002;

d. The Investment Company Act of 1940;

e. The Investment Advisers Act of 1940;

f. Title V of the Gramm-Leach-Bliley Act;

g. Any rules adopted by the Securities and Exchange Commission under any of the aforementioned statutes;

h. The Bank Secrecy Act as it applies to funds and investments advisers; and

i. any rules adopted thereunder by the Securities and Exchange Commission or the United States Department of the Treasury.

Lastly, Code of Ethics Persons shall not, in connection with the purchase or sale of a security, including any option to purchase or sell, and any security convertible into or exchangeable for, any security that is "held or to be acquired" by a Fund:

A. employ any device, scheme or artifice to defraud a Fund;

B. make to a Fund any untrue statement of a material fact or omit to state to a Fund a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading;

C. engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon a Fund; or

D. engage in any manipulative practice with respect to a Fund.

A security is "held or to be acquired" if within the most recent 15 days it
(i) is or has been held by a Fund, or (ii) is being or has been considered by a Fund or its investment adviser for purchase by the Fund.

PART 2 - PURPOSE OF THE CODE AND CONSEQUENCES OF NON-COMPLIANCE

It is important that you read and understand the Code because its purpose is to help all of us comply with the law and to preserve and protect the outstanding reputation of Franklin Templeton Investments.

Any violation of the Code or Insider Trading Policy including engaging in a prohibited transaction or failure to file required reports may result in disciplinary action, up to and including termination of employment and/or referral to appropriate governmental agencies.

All Code of Ethics Persons must report violations of the Code and the Insider Trading Policy whether committed by themselves or by others promptly to their supervisor or the Code of Ethics Administration Department. If you have any questions or concerns about compliance with the Code or Insider Trading Policy you are encouraged to speak with your supervisor or the Code of Ethics Administration Department. In addition, you may also speak to an independent ombudsman at the Compliance and Ethics Hotline at 1-800-636-6592. Calls to the Compliance and Ethics Hotline may be made anonymously. Franklin Templeton Investments will treat the information set forth in a report of any suspected violation of the Code or Insider Trading Policy in a confidential manner and will conduct a prompt and appropriate evaluation and investigation of any matter reported. Code of Ethics Persons are expected to cooperate in investigations of reported violations. To facilitate employee reporting of violations of the Code or Insider Trading Policy, Franklin Templeton Investments will not allow retaliation against anyone who has made a report in good faith.

PART 3 - COMPLIANCE REQUIREMENTS

3.1 WHO IS COVERED BY THE CODE AND HOW DOES IT WORK?

The Statement of Principles contained in the Code and the policies and procedures prescribed under the Code of Ethics and Business Conduct contained in Appendix D must be observed by ALL Code of Ethics Persons. All officers, directors, employees and certain designated temporary employees of Franklin Templeton Investments are Code of Ethics Persons. However, depending on which of the categories described below that you are placed, there are different types of restrictions and reporting requirements placed on your personal investing activities. The category in which you will be placed generally depends on your job function, although unique circumstances may result in your placement in a different category. If you have any questions regarding which category you are a member of and the attendant responsibilities, please contact the Code of Ethics Administration Department.

(1) SUPERVISED PERSONS: Supervised persons are a U.S. registered investment adviser's partners, officers, directors (or other persons occupying a similar status or performing similar functions), and employees, as well as any other person who provides advice on behalf of the adviser and are subject to the supervision and control of the adviser.

(2) ACCESS PERSONS: Access Persons are those persons who: have access to nonpublic information regarding Funds' or clients' securities transactions; or are involved in making securities recommendations to Funds or clients; or have access to recommendations that are nonpublic; or have access to nonpublic information regarding the portfolio holdings of Reportable Funds. Examples of "access to nonpublic information" include having access to trading systems, portfolio accounting systems, research databases or settlement information. Thus, Access Persons are those people who are in a position to exploit information about Funds' or clients' securities transactions or holdings. Administrative, technical and clerical personnel may be deemed Access Persons if their functions or duties give them access to such nonpublic information.

The following are some of the departments, which would typically (but not exclusively) include Access Persons. Please note however that whether you are an Access Person is based on an analysis of the types of information that you have access to and the determination will be made on a case-by-case basis:

- fund accounting;

- futures associates;

- legal compliance;

- portfolio administration;

- private client group/high net worth; and

- anyone else designated by the Director of Global Compliance and/or the Chief Compliance Officer.

In addition, you are an Access Person if you are any of the following:

- an officer or director of the Funds;

- an officer or director of an investment advisor or broker-dealer subsidiary of Franklin Templeton Investments; or

- a person that controls those entities.

(3) PORTFOLIO PERSONS: Portfolio Persons are a subset of Access Persons and are those employees of Franklin Templeton Investments, who, in connection with his or her regular functions or duties, makes or participates in the decision to purchase or sell a security by a Fund or any other client or if his or her functions relate to the making of any recommendations about those purchases or sales. Portfolio Persons include:

- portfolio managers;

- research analysts;

- traders;

- employees serving in equivalent capacities (such as Futures Associates);

- employees supervising the activities of Portfolio Persons; and

- anyone else designated by the Director of Global Compliance and/or the Chief Compliance Officer.

(4) NON-ACCESS PERSONS: If you are an employee or temporary employee of Franklin Templeton Investments AND you do not fit into any of the above categories, you are a Non-Access Person. Because you do not receive nonpublic information about Fund/Client portfolios, you are subject only to the prohibited transaction provisions described in 3.4 of the Code, the Statement of Principles and the Insider Trading Policy and the policies and procedures prescribed under the Sarbanes-Oxley Code.

You will be notified about which of the category(ies) you are considered to be a member of by the Code of Ethics Administration Department at the time you become affiliated with Franklin Templeton Investments and also if you become a member of a different category.

As described further below, the Code prohibits certain types of transactions and requires pre-clearance and reporting of others. Non-Access Persons and Supervised Persons do not have to pre-clear their security transactions, and, in most cases, do not have to report their transactions. Independent Directors of the Funds also need not pre-clear or report on any securities transactions unless they knew, or should have known that, during the 15-day period before or after the transaction, the security was purchased or sold or considered for purchase or sale by a Fund. HOWEVER, PERSONAL INVESTING ACTIVITIES OF ALL CODE OF ETHICS PERSONS ARE TO BE CONDUCTED IN COMPLIANCE WITH THE PROHIBITED TRANSACTIONS PROVISIONS CONTAINED IN SECTION 3.4, THE STATEMENT OF PRINCIPLES, THE INSIDER TRADING POLICY AND THE SARBANES-OXLEY CODE.

3.2 WHAT ACCOUNTS AND TRANSACTIONS ARE COVERED?

The Code covers all of your personal securities accounts and transactions, including Investment Club securities accounts and transactions. It also covers all securities and accounts in which you have "beneficial ownership." (1) Thus, a transaction by or for the account of your spouse, or other immediate family member living in your home is considered to be the same as a transaction by you. Also, a transaction for an account in which you have any economic interest (other than the account of an unrelated client for which advisory fees are received) AND have or share investment control is generally considered the same as a transaction by you. For example, if you invest in a corporation that invests in securities and you have or share control over its investments, that corporation's securities transactions are considered yours.

However, you are not deemed to have a pecuniary interest in any securities held by a partnership, corporation, trust or similar entity unless you control, or share control of such entity, or have, or share control over its investments. For example, securities transactions of a trust or foundation in which you do not have an economic interest (i.e., you are not the trustor (settlor) or beneficiary) but of which you are a trustee are not considered yours unless you have voting or investment control of its assets. ACCORDINGLY, EACH TIME THE WORDS "YOU" OR "YOUR" ARE USED IN THIS DOCUMENT, THEY APPLY NOT ONLY TO YOUR PERSONAL TRANSACTIONS AND ACCOUNTS, BUT ALSO TO ALL TRANSACTIONS AND ACCOUNTS IN WHICH YOU HAVE ANY DIRECT OR INDIRECT BENEFICIAL INTEREST. If you have any questions as to whether a particular account or transaction is covered by the Code, contact the Code of Ethics Administration Department 650-312-3693 (ext. 23693) for guidance.

(1) Generally, you have "beneficial ownership" in a security if you, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares a direct or indirect pecuniary interest in the security. There is a presumption that you have a pecuniary interest in securities held or acquired by members of your immediate family sharing the same household.

3.3 WHAT SECURITIES ARE EXEMPT FROM THE CODE OF ETHICS?

You do not need to pre-clear or report transactions in the following types of securities:

(1) direct obligations of the U.S. government (i.e. securities issued or guaranteed by the U.S. government such as Treasury bills, notes and bonds including U.S. savings bonds and derivatives thereof);

(2) money market instruments - banker's acceptances, bank certificates of deposits, commercial paper, repurchase agreements and other high quality short-term debt instruments;

(3) shares of money market funds;

(4) commodity futures (excluding futures on individual securities), currencies, currency forwards and derivatives thereof.

(5) shares issued by U.S. registered open-end funds (i.e. mutual funds) other than Reportable Funds; and

(6) shares issued by unit investment trusts that are invested exclusively in one or more open-end funds, none of which are Reportable Funds.

Transactions in the types of securities listed above are also exempt from:
(i) the prohibited transaction provisions contained in Section 3.4; (ii) the additional requirements applicable to Portfolio Persons; and (iii) the applicable reporting requirements contained in Part 4.

3.4 PROHIBITED TRANSACTIONS AND TRANSACTIONS REQUIRING PRE-APPROVAL FOR CODE OF ETHICS PERSONS

A. "INTENT" IS IMPORTANT

The transactions described below comprise a non-exclusive listing of those transactions that have been determined by the courts and the SEC to be prohibited by law. These types of transactions are a violation of the Statement of Principles and are prohibited. It should be noted that pre-clearance, which is a cornerstone of our compliance efforts, cannot detect inappropriate or illegal transactions, which are by their definition dependent upon intent. Therefore the Code of Ethics Administration Department can assist you with compliance with the Code however, they cannot guarantee any particular transaction complies with the Code or any applicable law. The fact that your proposed transaction receives pre-clearance may not provide a full and complete defense to an accusation of a violation of the Code or of any laws. For example, if you executed a transaction for which you received pre-clearance, or if the transaction was exempt from pre-clearance (e.g., a transaction for 500 shares or less), that would not preclude a subsequent finding that front-running or scalping

occurred because such activity is dependent upon your intent. In other words, your intent may not be able to be detected or determined when a particular transaction request is analyzed for pre-clearance, but can only be determined after a review of all the facts.

In the final analysis, adherence to the principles of the Code remains the responsibility of each person effecting personal securities transactions.

B. CODE OF ETHICS PERSONS - PROHIBITIONS AND REQUIREMENTS

1. FRONT RUNNING: TRADING AHEAD OF A FUND OR CLIENT

You shall not front-run any trade of a Fund or client. The term "front run" means knowingly trading before a contemplated transaction by a Fund or client of any Franklin Templeton adviser, whether or not your trade and the Fund's or client's trade take place in the same market. Front running is prohibited whether or not you realize a profit from such a transaction. Thus, you may not:

(a) purchase a security if you intend, or know of Franklin Templeton Investments' intention, to purchase that security or a related security on behalf of a Fund or client, or

(b) sell a security if you intend, or know of Franklin Templeton Investments' intention, to sell that security or a related security on behalf of a Fund or client.

2. SCALPING

You shall not purchase a security (or its economic equivalent) with the intention of recommending that the security be purchased for a Fund or client, or sell short a security (or its economic equivalent) with the intention of recommending that the security be sold for a Fund or client. Scalping is prohibited whether or not you realize a profit from such a transaction.

3. TRADING PARALLEL TO A FUND OR CLIENT

You shall not either buy a security if you know that the same or a related security is being bought contemporaneously by a Fund or client, or sell a security if you know that the same or a related security is being sold contemporaneously by a Fund or client.

4. TRADING AGAINST A FUND OR CLIENT

You shall not:

(a) buy a security if you know that a Fund or client is selling the same or a related security, or has sold the security, until seven (7) calendar days after the Fund's or client's order has either been executed or withdrawn, or

(b) sell a security if you know that a Fund or client is buying the same or a related security, or has bought the security until seven (7) calendar days after the Fund's or client's order has either been executed or withdrawn.

Refer to Section I.A., "Pre-clearance Standards," of Appendix A of the Code for more details regarding the pre-clearance of personal securities transactions.

5. USING PROPRIETARY INFORMATION FOR PERSONAL TRANSACTIONS

You shall not buy or sell a security based on Proprietary Information (2) without disclosing such information and receiving written authorization from the Code of Ethics Administration Department. If you wish to purchase or sell a security about which you obtained such information, you must provide a written report of all of the information you obtained regarding the security to the Appropriate Analyst(s)(3), or to the Code of Ethics Administration Department for dissemination to the Appropriate Analyst(s). You may be permitted to purchase or sell such security if the Appropriate Analyst(s) confirms to the Code of Ethics Administration Department that there is no intention to engage in a transaction regarding the security within the next seven (7) calendar days on behalf of an Associated Client(4) and you subsequently pre-clear such security.

(2) Proprietary Information: Information that is obtained or developed during the ordinary course of employment with Franklin Templeton Investments, whether by you or someone else, and is not available to persons outside of Franklin Templeton Investments. Examples of such Proprietary Information include, among other things, internal research reports, research materials supplied to Franklin Templeton Investments by vendors and broker-dealers not generally available to the public, minutes of departmental/research meetings and conference calls, and communications with company officers (including confidentiality agreements). Examples of non-Proprietary Information include information found in mass media publications (e.g., The Wall Street Journal, Forbes, and Fortune), certain specialized publications available to the public (e.g., Morningstar, Value Line, Standard and Poors), and research reports available to the general public.

(3) Appropriate Analyst: Any securities analyst or portfolio manager, other than you, making recommendations or investing funds on behalf of any Associated Client, who may be reasonably expected to recommend or consider the purchase or sale of the security in question.

(4) Associated Client: A Fund or client whose trading information would be available to the Access Person during the course of his or her regular functions or duties.

6. CERTAIN TRANSACTIONS IN SECURITIES OF FRANKLIN RESOURCES, INC., AND AFFILIATED CLOSED-END FUNDS

You shall not effect a short sale of the securities, including "short sales against the box" of Franklin Resources, Inc., or any of the Franklin Templeton Investments' closed-end funds, or any other security issued by Franklin Templeton Investments. This prohibition would also apply to effecting economically equivalent transactions, including, but not limited to purchasing and selling call or put options and swap transactions or other derivatives. Officers and directors of Franklin Templeton Investments who may be covered by
Section 16 of the Securities Exchange Act of 1934, are reminded that their obligations under Section 16 are in addition to their obligations under this Code.

7. SHORT TERM TRADING OR "MARKET TIMING" IN THE FUNDS.

Franklin Templeton Investments seeks to discourage short-term or excessive trading, often referred to as "market timing." Code of Ethics Persons must be familiar with the "Market Timing Trading Policy" described in the prospectus of each Fund in which they invest and must not engage in trading activity that might violate the purpose or intent of that policy. Accordingly, all directors, officers and employees of Franklin Templeton Investments must comply with the purpose and intent of each fund's Market Timing Trading Policy and must not engage in any short-term or excessive trading in Funds. The Trade Control Team of each Fund's transfer agent will monitor trading activity by directors, officers and employees and will report to the Code of Ethics Administration Department, trading patterns or behaviors which may constitute short-term or excessive trading. Given the importance of this issue, if the Code of Ethics Administration Department determines that you engaged in this type of activity, you will be subject to discipline, up to and including termination of employment and a permanent suspension of your ability to purchase shares of any Funds. This policy applies to Franklin Templeton funds including those Funds purchased through a 401(k) plan and to funds that are sub-advised by an investment adviser subsidiary of Franklin Resources, Inc., but does not apply to purchases and sales of Franklin Templeton money fund shares.

8. SERVICE AS A DIRECTOR

Code of Ethics Persons may not serve as a director, trustee, or in a similar capacity for any public or private company (excluding not-for-profit companies, charitable groups, and eleemosynary organizations)

unless you receive approval from one of the Franklin Resources, Inc. Co-CEOs and it is determined that your service is consistent with the interests of the Funds and clients of Franklin Templeton Investments. You must notify the Code of Ethics Administration Department, of your interest in serving as a director, including your reasons for electing to take on the directorship by completing Schedule G. The Code of Ethics Administration Department will process the request through the Franklin Resources, Inc. Co-CEOs.

C. ACCESS PERSONS (EXCLUDING INDEPENDENT DIRECTORS OF THE FUNDS) AND PORTFOLIO PERSONS - ADDITIONAL PROHIBITIONS AND REQUIREMENTS

1. SECURITIES SOLD IN A PUBLIC OFFERING

Access Persons shall not buy securities in any initial public offering, or a secondary offering by an issuer except for offerings of securities made by closed-end funds that are either advised or sub-advised by a Franklin Templeton Investments adviser. Although exceptions are rarely granted, they will be considered on a case-by-case basis and only in accordance with procedures contained in section I.B. of Appendix A.

2. INTERESTS IN PARTNERSHIPS AND SECURITIES ISSUED IN LIMITED OFFERING (PRIVATE PLACEMENTS)

Access Persons shall not invest in limited partnerships (including interests in limited liability companies, business trusts or other forms of "hedge funds") or other securities in a Limited Offering (private placement) without pre-approval from the Code of Ethics Administration Department. In order to seek consideration for pre-approval you must:

(a) complete the Limited Offering (Private Placement) Checklist (Schedule F)

(b) provide supporting documentation (e.g., a copy of the offering memorandum); and

(d) submit all documents to the Code of Ethics Administration Department.

Approval will only be granted after the Director of Global Compliance or the Chief Compliance Officer consults with an executive officer of Franklin Resources, Inc. Under no circumstances will approval be granted for investments in "hedge funds" that are permitted to invest in registered open-end investment companies ("mutual funds") or registered closed-end investment companies.

D. PORTFOLIO PERSONS - ADDITIONAL PROHIBITIONS AND REQUIREMENTS

1. SHORT SALES OF SECURITIES

Portfolio Persons shall not sell short any security held by Associated Clients, including "short sales against the box." Additionally, Portfolio Persons associated with the Templeton Group of Funds and clients shall not sell short any security on the Templeton "Bargain List." This prohibition also applies to effecting economically equivalent transactions, including, but not limited to, sales of uncovered call options, purchases of put options while not owning the underlying security and short sales of bonds that are convertible into equity positions.

2. SHORT SWING TRADING

Portfolio Persons shall not profit from the purchase and sale or sale and purchase within sixty (60) calendar days of any security, including derivatives. Portfolio Persons are responsible for transactions that may occur in margin and option accounts and all such transactions must comply with this restriction.(5)

This restriction does NOT apply to:

(a) trading within a sixty (60) calendar day period if you do not realize a profit and you do not violate any other provisions of this Code; and

(b) profiting on the purchase and sale or sale and purchase within sixty
(60) calendar days of the following securities:

- securities that are direct obligations of the U.S. Government, such as Treasury bills, notes and bonds, and U.S. Savings Bonds and derivatives thereof;

- high quality short-term instruments ("money market instruments") including but not limited to (i) bankers' acceptances, (ii) U.S. bank certificates of deposit; (iii) commercial paper; and (iv) repurchase agreements;

(5) This restriction applies equally to transactions occurring in margin and option accounts, which may not be due to direct actions by the Portfolio Person. For example, a stock held less than sixty (60) days that is sold to meet a margin call or the underlying stock of a covered call option held less than sixty (60) days that is called away, would be a violation of this restriction if these transactions resulted in a profit for the Portfolio Person.

- shares of any registered open-end investment companies including Exchange Traded Funds (ETF), Holding Company Depository Receipts (Hldrs) and shares of Franklin Templeton Funds subject to the short term trading (market timing) policies described in each Fund's prospectus ;

- commodity futures, currencies, currency forwards and derivatives thereof.

Calculation of profits during the sixty (60) calendar day holding period generally will be based on "last-in, first-out" ("LIFO"). Portfolio Persons may elect to calculate their sixty (60) calendar day profits on either a LIFO or FIFO ("first-in, first-out") basis only if there has not been any activity in such security by their Associated Clients during the previous sixty (60) calendar days.

3. DISCLOSURE OF INTEREST IN A SECURITY AND METHOD OF DISCLOSURE

As a Portfolio Person, you must promptly disclose your direct or indirect beneficial interest in a security whenever you learn that the security is under consideration for purchase or sale by an Associated Client and you;

(a) Have or share investment control of the Associated Client;

(b) Make any recommendation or participate in the determination of which recommendations shall be made on behalf of the Associated Client; or

(c) Have functions or duties that relate to the determination of which recommendation shall be made to the Associated Client.

In such instances, you must initially disclose that beneficial interest orally to the primary portfolio manager (or other Appropriate Analyst) of the Associated Client(s) or the appropriate Chief Investment Officer. Following that oral disclosure, you must send a written acknowledgment of that interest on Schedule E (or on a form containing substantially similar information) that has been signed by the primary portfolio manager, with a copy to the Code of Ethics Administration Department.

PART 4 - REPORTING REQUIREMENTS FOR CODE OF ETHICS PERSONS (EXCLUDING

INDEPENDENT DIRECTORS OF THE FUNDS)

References to Access Persons in this Part 4 do not apply to the Independent Directors of the Funds. Reporting requirements applicable to Independent Directors of the Funds are separately described in Part 6.

4.1 REPORTING OF BENEFICIAL OWNERSHIP AND SECURITIES TRANSACTIONS

Compliance with the following personal securities transaction reporting procedures is essential to meeting our responsibilities with respect to the Funds and other clients as well as complying with regulatory requirements. You are expected to comply with both the letter and spirit of these requirements by completing and filing all reports required under the Code in a timely manner. If you have any questions about which reporting requirements apply to you, please contact the Code of Ethics Administration Department.

4.2 INITIAL REPORTS

A. ACKNOWLEDGEMENT FORM (SUPERVISED PERSONS, ACCESS PERSONS AND PORTFOLIO PERSONS

All Supervised Persons, Access Persons and Portfolio Persons must complete and return an executed Acknowledgement Form to the Code of Ethics Administration Department no later than ten (10) calendar days after the date the person is notified by a member of the Code of Ethics Administration Department.

B. SCHEDULE C - INITIAL & ANNUAL DISCLOSURE OF BROKERAGE ACCOUNTS, SECURITIES HOLDINGS AND DISCRETIONARY AUTHORITY (ACCESS PERSONS AND PORTFOLIO PERSONS)

In addition, all Access Persons and Portfolio Persons must also file Schedule C (Initial & Annual Disclosure of Brokerage Accounts, Securities Holdings and Discretionary Authority) with the Code of Ethics Administration Department no later than ten (10) calendar days after becoming an Access or Portfolio Person. The submitted information must be current as of a date not more than forty-five (45) days prior to becoming an Access or Portfolio Person.

4.3 QUARTERLY TRANSACTION REPORTS

A. ACCESS PERSONS AND PORTFOLIO PERSONS

You must report all securities transactions except for those (1) in any account over which you had no direct or indirect influence or control; (2) effected pursuant to an Automatic Investment Plan (however, any

transaction that overrides the preset schedule or allocations of the automatic investment plan must be included in a quarterly transaction report); (3) that would duplicate information contained in broker confirmations or statements provided no later than thirty (30) days after the end of each calendar quarter. You must provide the Code of Ethics Administration Department no later than thirty (30) calendar days after the end of each calendar quarter, with either;
(i) copies of all broker's confirmations and statements (which may be sent under separate cover by the broker) showing all your securities transactions and holdings in such securities, or (ii) a completed Schedule B (Transactions Report). Brokerage statements and confirmations submitted must include all transactions in securities in which you have, or by reason of the transaction acquire any direct or indirect beneficial ownership, including transactions in a discretionary account and transactions for any account in which you have any economic interest and have or share investment control. Please remember that you must report all securities acquired by gift, inheritance, vesting,(6) stock splits, merger or reorganization of the issuer of the security.

Failure to timely report transactions is a violation of Rule 17j-1, Rule 204A-1, as well as the Code, and will be reported to the Director of Global Compliance and/or the Fund's Board of Directors and may also result in disciplinary action, up to and including, termination.

4.4 ANNUAL REPORTS

A. SECURITIES ACCOUNTS AND SECURITIES HOLDINGS REPORTS (ACCESS PERSONS AND PORTFOLIO PERSONS)

You must file a report of all personal securities accounts and securities holdings on Schedule C (Initial, Annual Disclosure of Brokerage Accounts, Securities Holdings and Discretionary Authority), with the Code of Ethics Administration Department, annually by February 1st. You must report the name and description of each securities account in which you have a direct or indirect beneficial interest, including securities accounts of your immediate family residing in the same household. You must provide information on any account in which you have any economic interest and have or share investment control (e.g., trusts, foundations, etc.) other than an account for a Fund or other client of Franklin Templeton Investments.

(6) You are not required to separately report the vesting of shares or options of Franklin Resources, Inc., received pursuant to a deferred compensation plan as such information is already maintained.

This report should include all of your securities holdings, including any security acquired by a transaction, gift, inheritance, vesting, merger or reorganization of the issuer of the security, in which you have any direct or indirect beneficial ownership, including securities holdings in a discretionary account. Your securities holding information must be current as of a date no more than forty-five (45) days before the report is submitted. You may attach copies of year-end brokerage statements to Schedule C in lieu of listing each of your security positions on the Schedule.

B. ACKNOWLEDGEMENT FORM (SUPERVISED PERSONS, ACCESS PERSONS AND PORTFOLIO PERSONS)

Supervised Persons, Access Persons and Portfolio Persons will be asked to certify by February 1st annually that they have complied with and will comply with the Code and Insider Trading Policy by filing the Acknowledgment Form with the Code of Ethics Administration Department.

4.5 BROKERAGE ACCOUNTS AND CONFIRMATIONS OF SECURITIES TRANSACTIONS (ACCESS PERSONS AND PORTFOLIO PERSONS)

Before or at a time contemporaneous with opening a brokerage account with a registered broker-dealer, or a bank, or placing an initial order for the purchase or sale of securities with that broker-dealer or bank, you must:

(1) notify the Code of Ethics Administration Department, in writing, by completing Schedule D (Notification of Securities Account) or by providing substantially similar information; and

(2) notify the institution with which you open the account, in writing, of your association with Franklin Templeton Investments.

The Code of Ethics Administration Department will request, in writing, that the institution send duplicate copies of confirmations and statements for all transactions effected in the account simultaneously with their mailing of such confirmation and statement to you.

If you have an existing account on the effective date of this Code or upon becoming an Access or Portfolio Person, you must comply within ten (10) days with conditions (1) and (2) above.

PART 5 - PRE-CLEARANCE REQUIREMENTS APPLICABLE TO ACCESS PERSONS (EXCLUDING

INDEPENDENT DIRECTORS OF THE FUNDS) AND PORTFOLIO PERSONS

REFERENCES TO ACCESS PERSONS IN THIS PART 5 DO NOT APPLY TO THE INDEPENDENT DIRECTORS OF THE FUNDS. PRE-CLEARANCE REQUIREMENTS APPLICABLE TO INDEPENDENT DIRECTORS OF THE FUNDS ARE SEPARATELY DESCRIBED IN PART 6.

5.1 PRIOR APPROVAL (PRE-CLEARANCE) OF SECURITIES TRANSACTIONS

A. LENGTH OF APPROVAL

You shall not buy or sell any security without first contacting a member of the Code of Ethics Administration Department either electronically or by phone and obtaining his or her approval, unless your proposed transaction is covered by paragraph C below. Approval for a proposed transaction will remain valid until the close of the business day following the day pre-clearance is granted but may be extended in special circumstances, shortened or rescinded, as explained in the section entitled Pre-clearance Standards in Appendix A.

B. SECURITIES NOT REQUIRING PRE-CLEARANCE

You do not need to request pre-clearance for the types of securities or transactions listed below. However, all other provisions of the Code apply, including, but not limited to: (i) the prohibited transaction provisions contained in Part 3.4 such as front-running; (ii) the additional compliance requirements applicable to Portfolio Persons contained in Part 4, (iii) the applicable reporting requirements contained in Part 5; and (iv) insider trading prohibitions described in the Insider Trading Policy.

If you have any questions, contact the Code of Ethics Administration Department before engaging in the transaction. If you have any doubt whether you have or might acquire direct or indirect beneficial ownership or have or share investment control over an account or entity in a particular transaction, or whether a transaction involves a security covered by the Code, you should consult with the Code of Ethics Administration Department before engaging in the transaction.

You need NOT pre-clear the following types of transactions or securities:

(1) FRANKLIN RESOURCES, INC., AND ITS AFFILIATES. Purchases and sales of securities of Franklin Resources, Inc., closed-end funds of the Franklin Templeton Investments as these securities cannot be purchased on behalf of our advisory clients.(7)

(2) SHARES OF OPEN-END INVESTMENT COMPANIES

(3) SMALL QUANTITIES (NOT APPLICABLE TO OPTION TRANSACTIONS).

- Transactions of 500 shares or less of any security regardless of where it is traded in any 30-day period; or

- Transactions of 1000 shares or less of the top 50 securities by volume during the previous calendar quarter on the NYSE or NASDAQ NMS(does not include Small Cap or OTC) in any 30-day period. You can find this list at http://intranet/leglcomp/codeofethics/top50.xls.

- Transactions in municipal bonds with a face value of $100,000 or less.

- OPTION TRANSACTIONS: THE SMALL QUANTITIES RULE IS NOT APPLICABLE TO OPTION TRANSACTIONS.

PLEASE NOTE THAT YOU MAY NOT EXECUTE ANY TRANSACTION, REGARDLESS OF QUANTITY, IF YOU LEARN THAT THE FUNDS OR CLIENTS ARE ACTIVE IN THE SECURITY. IT WILL BE PRESUMED THAT YOU HAVE KNOWLEDGE OF FUND OR CLIENT ACTIVITY IN THE SECURITY IF, AMONG OTHER THINGS, YOU ARE DENIED APPROVAL TO GO FORWARD WITH A TRANSACTION REQUEST.

(4) DIVIDEND REINVESTMENT PLANS: Transactions made pursuant to dividend reinvestment plans ("DRIPs") do not require pre-clearance regardless of quantity or Fund activity.

(5) GOVERNMENT OBLIGATIONS. Transactions in securities issued or guaranteed by the governments of the United States, Canada, the United Kingdom, France, Germany, Switzerland, Italy and Japan, or their agencies or instrumentalities, or derivatives thereof.

(6) PAYROLL DEDUCTION PLANS. Securities purchased by an Access Person's spouse pursuant to a payroll deduction program, provided the Access Person has previously notified the Code of Ethics Administration Department in writing that their spouse will be participating in the payroll deduction program.

(7) EMPLOYER STOCK OPTION PROGRAMS. Transactions involving the exercise and/or purchase by an Access Person or an Access Person's spouse of securities pursuant to a program sponsored by a company employing the Access Person or Access Person's spouse.

(8) 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.

(9) TENDER OFFERS. Transactions in securities pursuant to a bona fide tender offer made for any and all such securities to all similarly situated shareholders in conjunction with mergers, acquisitions, reorganizations and/or similar corporate actions. However, tenders pursuant to offers for less than all outstanding securities of a class of securities of an issuer must be pre-cleared.

(7) Officers, directors and certain other key management personnel who perform significant policy-making functions for Franklin Resources, Inc. and its affiliated closed-end funds may have ownership reporting requirements in addition to these reporting requirements. Contact the Code of Ethics Administration Department for additional information. See also the attached Insider Trading Policy.

(10) SECURITIES PROHIBITED FOR PURCHASE BY THE FUNDS AND OTHER CLIENTS. Transactions in any securities that are prohibited investments for all Funds and clients advised by the entity employing the Access Person.

(11) NO INVESTMENT CONTROL. Transactions effected for an account or entity over which you do not have or share investment control (i.e., an account where someone else exercises complete investment control).

(12) NO BENEFICIAL OWNERSHIP. Transactions in which you do not acquire or dispose of direct or indirect beneficial ownership (i.e., an account where in you have no financial interest).

(13) ETFS AND HOLDRS. Transactions in Exchange-Traded Funds and Holding Company Depository Receipts.

C. DISCRETIONARY ACCOUNTS

You need not pre-clear transactions in any discretionary account for which a registered broker-dealer, a registered investment adviser, or other investment manager acting in a similar fiduciary capacity, which is not affiliated with Franklin Templeton Investments, exercises sole investment discretion, if the following conditions are met:(8)

(1) The terms of each account relationship ("Agreement") must be in writing and filed with the Code of Ethics Administration Department prior to any transactions.

(2) Any amendment to each Agreement must be filed with the Code of Ethics Administration Department prior to its effective date.

(3) The Access Person certifies to the Code of Ethics Administration Department at the time such account relationship commences, and annually thereafter, as contained in Schedule C of the Code that such Access Person does not have direct or indirect influence or control over the account, other than the right to terminate the account.

(4) Additionally, any discretionary account that you open or maintain with a registered broker-dealer, a registered investment adviser, or other investment manager acting in a similar fiduciary capacity must provide duplicate copies of confirmations and statements for all transactions effected in the account simultaneously with their delivery to you. If your discretionary account acquires securities that are not reported to the Code of Ethics Administration Department by a duplicate confirmation, such transaction must be reported to the Code of Ethics Administration Department on Schedule B (Quarterly Transactions Report) no later than thirty (30) days after the end of the calendar quarter after you are notified of the acquisition.(9)

(8) Please note that these conditions apply to any discretionary account in existence prior to the effective date of this Code or prior to your becoming an Access Person. Also, the conditions apply to transactions in any discretionary account, including pre-existing accounts, in which you have any direct or indirect beneficial ownership, even if it is not in your name.

(9) Any pre-existing agreement must be promptly amended to comply with this condition. The required reports may be made in the form of an account statement if they are filed by the applicable deadline.

However, if prior to making any request you advised the discretionary account manager to enter into or refrain from a specific transaction or class of transactions, you must first consult with the Code of Ethics Administration Department and obtain approval prior to making such request.

PART 6 - REQUIREMENTS FOR INDEPENDENT DIRECTORS OF THE FUNDS

6.1 PRE-CLEARANCE REQUIREMENTS

Independent Directors of the Funds shall pre-clear or report on any securities transactions if they knew or should have known that during the 15-day period before or after the transaction the security was purchased or sold or considered for purchase or sale by the Fund. Such pre-clearance and reporting requirements shall not apply to securities transactions conducted in an account where an Independent Director has granted full investment discretion to a brokerage firm, bank or investment advisor or conducted in a trust account in which the trustee has full investment discretion.

6.2 REPORTING REQUIREMENTS

A. INITIAL REPORTS

1. ACKNOWLEDGEMENT FORM.

Independent Directors of the Funds must complete and return an executed Acknowledgement Form to the Code of Ethics Administration Department no later than ten (10) calendar days after the date the person becomes an Independent Director of the Fund.

2. DISCLOSURE OF SECURITIES HOLDINGS, BROKERAGE ACCOUNTS AND DISCRETIONARY AUTHORITY.

Independent Directors of the Funds are not required to disclose any securities holdings, brokerage accounts, including brokerage accounts where he/she has granted discretionary authority to a brokerage firm, bank or investment adviser.

B. QUARTERLY TRANSACTION REPORTS

Independent Directors of the Funds are not required to file any quarterly transaction reports unless he/she knew or should have known that, during the 15-day period before or after a transaction, the security was purchased or sold, or considered for purchase or sale, by a Fund or by Franklin Templeton Investments on behalf of a Fund.

C. ANNUAL REPORTS

Independent Directors of the Funds will be asked to certify by February 1st annually that they have complied with and will comply with the Code and Insider Trading Policy by filing the Acknowledgment Form with the Code of Ethics Administration Department.

PART 7 - PENALTIES FOR VIOLATIONS OF THE CODE

The Code is designed to assure compliance with applicable laws and to maintain shareholder confidence in Franklin Templeton Investments.

In adopting this Code, it is the intention of the Boards of Directors/Trustees of the subsidiaries listed in Appendix C of this Code, together with Franklin Resources, Inc., and the Funds, to attempt to achieve 100% compliance with all requirements of the Code but recognize that this may not be possible. Certain incidental failures to comply with the Code are not necessarily a violation of the law or the Code. Such violations of the Code not resulting in a violation of law or the Code will be referred to the Director of Global Compliance and/or the Chief Compliance Officer and/or the relevant management personnel, and disciplinary action commensurate with the violation, if warranted, will be imposed. Additionally, if you violate any of the enumerated prohibited transactions contained in Parts 3 and 4 of the Code, you will be expected to give up any profits realized from these transactions to Franklin Resources, Inc. for the benefit of the affected Funds or other clients. If Franklin Resources, Inc. cannot determine which Funds or clients were affected the proceeds will be donated to a charity chosen either by you or by Franklin Resources, Inc. Please refer to the following page for guidance on the types of sanctions that would likely be imposed for violations of the Code.

Failure to disgorge profits when requested or even a pattern of violations that individually do not violate the law or the Code, but which taken together demonstrate a lack of respect for the Code, may result in more significant disciplinary action, up to and including termination of employment. A violation of the Code resulting in a violation of the law will be severely sanctioned, with disciplinary action potentially including, but not limited to, referral of the matter to the board of directors of the affected Fund, senior management of the appropriate investment adviser, principal underwriter or other Franklin subsidiary and/or the board of directors of Franklin Resources, Inc., termination of employment and referral of the matter to the appropriate regulatory agency for civil and/or criminal investigation.

CODE OF ETHICS SANCTION GUIDELINES

Please be aware that these guidelines represent only a representative sampling of the possible sanctions that may be taken against you in the event of a violation of the Code.

                          VIOLATION                                       SANCTION IMPOSED
                          ---------                                       ----------------
-    Failure to pre-clear but otherwise would have been        Reminder Memo
     approved (i.e., no conflict with the fund's
     transactions).

-    Failure to pre-clear but otherwise would have been        30 Day Personal Securities Trading
     approved (i.e., no conflict with the fund's               Suspension
     transactions) twice within twelve (12) calendar months
-    Failure to pre-clear and the transaction would have
     been disapproved

-    Failure to pre-clear but otherwise would have been        Greater Than 30 Day Personal
     approved (i.e., no conflict with the fund's               Securities Trading Suspension (e.g.,
     transactions) three times or more within twelve (12)      60 or 90 Days)
     calendar months
-    Failure to pre-clear and the transaction would have
     been disapproved twice or more within twelve (12)
     calendar months

-    Profiting from short-swing trades (profiting on           Profits are donated to The United Way
     purchase & sale or sale & purchase within sixty (60)      (or charity of employee's choice)
     days)

-    Repeated violations of the Code of Ethics even if each    Fines levied after discussion with
     individual violation might be considered de minimis       the General Counsel and appropriate
                                                               CIO.

-    Failure to return initial or annual disclosure forms      Sanction may include but not limited
-    Failure to timely report transactions                     to a reminder memo, suspension of
                                                               personal trading, monetary sanctions,
                                                               reporting to the Board of Directors,
                                                               placed on unpaid administrative leave
                                                               or termination of employment

-    Insider Trading Violation and/or violation of the Code    Subject to review by the appropriate
     of Ethics and Business Conduct contained in Appendix D    supervisor in consultation with the
                                                               Franklin Resources Inc., General
                                                               Counsel for consideration of
                                                               appropriate disciplinary action up to
                                                               and including termination of
                                                               employment and reporting to the
                                                               appropriate regulatory agency.

PART 8 - A REMINDER ABOUT THE FRANKLIN TEMPLETON INVESTMENTS INSIDER TRADING

POLICY

The Insider Trading Policy (see the attached Policy Statement on Insider Trading) deals with the problem of insider trading in securities that could result in harm to a Fund, a client, or members of the public. It applies to all Code of Ethics Persons. The guidelines and requirements described in the Insider Trading Policy go hand-in-hand with the Code. If you have any questions or concerns about compliance with the Code and the Insider Trading Policy you are encouraged to speak with the Code of Ethics Administration Department.

PART 9 - FOREIGN COUNTRY SUPPLEMENTS (CANADA)

The Investment Funds Institute of Canada ("IFIC") has implemented a new Model Code of Ethics for Personal Investing (the "IFIC Code") to be adopted by all IFIC members. Certain provisions in the IFIC Code differ from the provisions of Franklin Templeton Investments Code of Ethics (the "FT Code"). This Supplementary Statement of Requirements for Canadian Employees (the "Canadian Supplement") describes certain further specific requirements that govern the activities of Franklin Templeton Investments Corp. ("FTIC"). It is important to note that the Canadian Supplement does not replace the FT Code but adds certain restrictions on trading activities, which must be read in conjunction with the Code.

All capitalized terms in this Canadian Supplement, unless defined in this Canadian Supplement, have the meaning set forth in the FT Code.

INITIAL PUBLIC AND SECONDARY OFFERINGS

Access Persons cannot buy securities in any initial public offering, or a secondary offering by an issuer. Public offerings of securities made by Franklin Templeton Investments, including open-end and closed-end mutual funds, real estate investment trusts and securities of Franklin Resources, Inc, are excluded from this prohibition.

INTERESTS IN PARTNERSHIPS AND SECURITIES ISSUED IN PRIVATE PLACEMENTS

Access Persons and Portfolio Persons cannot acquire limited partnership interests or other securities in private placements unless they obtain approval of the appropriate Chief Investment Officer and Director of Global Compliance after he or she consults with an executive officer of Franklin Resources, Inc. Purchases of limited partnership interests or other securities in private placements will not be approved, unless in addition to the requirements for the approval of other trades and such other requirements as the executive officer of Franklin Resources, Inc. may require, the Director of Global Compliance is satisfied that the issuer is a "private company" as defined in the Securities Act (Ontario) and the Access Person has no reason to believe that the issuer will make a public offering of its securities in the foreseeable future.

ADDITIONAL REQUIREMENTS TO OBTAIN APPROVAL FOR PERSONAL TRADES

Prior to an Access Person obtaining approval for a personal trade he or she must advise the Code of Ethics Administration Department that he or she:

- Does not possess material non-public information relating to the security;

- Is not aware of any proposed trade or investment program relating to that security by any of the Franklin Templeton Group of Funds;

- Believes that the proposed trade has not been offered because of the Access Person's position in Franklin Templeton Investments and is available to any market participant on the same terms;

- Believes that the proposed trade does not contravene any of the prohibited activities set out in Section 3.4 of the FT Code, and in the case of Portfolio Persons does not violate any of the additional requirements set out in Part 4 of the FT Code; and

- Will provide any other information requested by the Code of Ethics Administration Department concerning the proposed personal trade.

An Access Person may contact the Code of Ethics Administration Department by fax, phone or e-mail to obtain his or her approval.

Note: the method of obtaining approval is presently set out in Section 6.1 of the FT Code and provides that an Access Person may contact the Code of Ethics Administration Department by e-mail or phone. The additional requirement described above makes it clear that an Access Person may continue to contact the Code of Ethics Administration Department in the same manner as before. The Access Person will have deemed to have confirmed compliance with the above requirements prior to obtaining approval from the Code of Ethics Administration Department.

APPOINTMENT OF INDEPENDENT REVIEW PERSON

FTIC shall appoint an independent review person who will be responsible for approval of all personal trading rules and other provisions of the FT Code with respect to FTIC and for monitoring the administration of the FT Code from time to time with respect to FTIC employees. The Code of Ethics Administration Department Manager will provide a written report to the Independent Review Person, at least annually, summarizing:

- Compliance with the FT Code for the period under review

- Violations of the FT Code for the period under review

- Sanctions imposed by Franklin Templeton Investments for the period under review

- Changes in procedures recommended by the FT Code

- Any other information requested by the Independent Review Person

APPENDIX A: COMPLIANCE PROCEDURES AND DEFINITIONS

This appendix sets forth the responsibilities and obligations of the Compliance Officers of each entity that has adopted the Code, the Code of Ethics Administration Department, and the Legal Department, under the Code and Insider Trading Policy.

I. RESPONSIBILITIES OF EACH DESIGNATED COMPLIANCE OFFICER

A. PRE-CLEARANCE STANDARDS

1. GENERAL PRINCIPLES

The Director of Global Compliance, the Chief Compliance Officer and/or the Code of Ethics Administration Department, shall permit an Access Person to go forward with a proposed security(10) transaction only if he or she determines that, considering all of the facts and circumstances known to them, the transaction does not violate Federal Securities Laws, or this Code and there is no likelihood of harm to a Fund or client.

2. ASSOCIATED CLIENTS

Unless there are special circumstances that make it appropriate to disapprove a personal securities transaction request, the Code of Ethics Administration Department shall consider only those securities transactions of the "Associated Clients" of the Access Person, including open and executed orders and recommendations, in determining whether to approve such a request. "Associated Clients" are those Funds or clients whose securities holdings and/or trading information would be available to the Access Person during the course of his or her regular functions or duties. As of November 2004, there are five groups of Associated Clients: (i) the Franklin Mutual Series Funds and clients advised by Franklin Mutual Advisers, LLC ("Mutual Clients"); (ii) the Franklin Group of Funds and the clients advised by the various Franklin investment advisers ("Franklin Clients"); (iii) the Templeton Group of Funds and the clients advised by the various Templeton investment advisers ("Templeton Clients"); (iv) the Bissett Group of Funds and the clients advised by Franklin Templeton Investments Corp.; and (v) the Fiduciary Group of funds and the clients advised by the various Fiduciary investment advisers. Other Associated Clients will be added to this list as they are established. Thus, for example, persons who have access to the trading information of Mutual Clients generally will be pre-cleared solely against the securities transactions of the Mutual Clients, including open and executed orders and recommendations. Similarly, persons who have access to the trading information of Franklin Clients, Templeton Clients, Bissett clients, or Fiduciary clients, generally will be pre-cleared solely against the securities transactions of Franklin Clients, Templeton Clients, Bissett clients or Fiduciary clients respectively.

(10) Security includes any option to purchase or sell, and any security that is exchangeable for or convertible into, any security that is held or to be acquired by a fund.

Certain officers of Franklin Templeton Investments, as well as certain employees in the Legal, Legal Compliance, Fund Accounting, Investment Operations and other personnel who generally have access to trading information of the Funds and clients of Franklin Templeton Investments during the course of their regular functions and duties, will have their personal securities transactions pre-cleared against executed transactions, open orders and recommendations of all Associated Clients.

3. SPECIFIC STANDARDS

(a) Securities Transactions by Funds or clients

No clearance shall be given for any transaction in any security on any day during which an Associated Client of the Access Person has executed a buy or sell order in that security, until seven (7) calendar days after the order has been executed. Notwithstanding a transaction in the previous seven days, clearance may be granted to sell if all Associated Clients have disposed of the security.

(b) Securities under Consideration

Open Orders

No clearance shall be given for any transaction in any security on any day which an Associated Client of the Access Person has a pending buy or sell order for such security, until seven (7) calendar days after the order has been executed or if the order is immediately withdrawn.

Recommendations

No clearance shall be given for any transaction in any security on any day on which a recommendation for such security was made by a Portfolio Person, until seven (7) calendar days after the recommendation was made and no orders have subsequently been executed or are pending.

In considering requests by Access Persons for approval of limited partnerships and other limited offering, the Director of Global Compliance or Chief Compliance Officer shall consult with an executive officer of Franklin Resources, Inc. In deciding whether to approve the transaction, the Director of Global Compliance or the Chief Compliance Officer and the executive officer shall take into account, among other factors, whether the investment opportunity should be reserved for a Fund or other client, and whether the investment

opportunity is being offered to the Access Person by virtue of his or her position with Franklin Templeton Investments. If the Access Person receives clearance for the transaction, an investment in the same issuer may only be made for a Fund or client if an executive officer of Franklin Resources, Inc., who has been informed of the Portfolio Person's pre-existing investment and who has no interest in the issuer, approves the transaction. Please see Schedule F.

(d) Duration of Clearance

If the Code of Ethics Administration Department approves a proposed securities transaction, the order for the transaction must be placed and effected by the close of the next business day following the day approval was granted. The Director of Global Compliance and/or the Chief Compliance Officer may, in his or her discretion, extend the clearance period up to seven (7) calendar days, beginning on the date of the approval, for a securities transaction of any Access Person who demonstrates that special circumstances make the extended clearance period necessary and appropriate.(11) The Director of Global Compliance or the Chief Compliance Officer may, in his or her discretion, after consultation with an executive officer of Franklin Resources, Inc., renew the approval for a particular transaction for up to an additional seven (7) calendar days upon a showing of special circumstances by the Access Person. The Director of Global Compliance or the Chief Compliance Officer may shorten or rescind any approval or renewal of approval under this paragraph if he or she determines it is appropriate to do so.

(11) Special circumstances include but are not limited to, for example, differences in time zones, delays due to travel, and the unusual size of proposed trades or limit orders. Limit orders must expire within the applicable clearance period.

B. WAIVERS BY THE DIRECTOR OF GLOBAL COMPLIANCE AND/OR THE CHIEF COMPLIANCE

OFFICER

The Director of Global Compliance and/or the Chief Compliance Officer may, in his or her discretion, after consultation with an executive officer of Franklin Resources, Inc., waive compliance by any Access Person with the provisions of the Code, if he or she finds that such a waiver:

(1) is necessary to alleviate undue hardship or in view of unforeseen circumstances or is otherwise appropriate under all the relevant facts and circumstances;

(2) will not be inconsistent with the purposes and objectives of the Code;

(3) will not adversely affect the interests of advisory clients of Franklin Templeton Investments, the interests of Franklin Templeton Investments or its affiliates; and

(4) will not result in a transaction or conduct that would violate provisions of applicable laws or regulations.

Any waiver shall be in writing, shall contain a statement of the basis for it, and the Director of Global Compliance or the Chief Compliance Officer, shall promptly send a copy to the General Counsel of Franklin Resources, Inc.

C. CONTINUING RESPONSIBILITIES OF THE CODE OF ETHICS ADMINISTRATION

DEPARTMENT

PRE-CLEARANCE RECORDKEEPING

The Code of Ethics Administration Department shall keep a record of all requests for pre-clearance regarding the purchase or sale of a security, including the date of the request, the name of the Access Person, the details of the proposed transaction, and whether the request was approved or denied. The Code of Ethics Administration Department shall keep a record of any waivers given, including the reasons for each exception and a description of any potentially conflicting Fund or client transactions.

INITIAL, ANNUAL HOLDINGS REPORTS AND QUARTERLY TRANSACTION REPORTS

The Code of Ethics Administration Department shall also collect the signed Acknowledgment Forms from Supervised and Access Persons as well as reports, on Schedules B, C, D, E, F, G of the Code, as applicable. In addition, the Code of Ethics Administration Department shall keep records of all confirmations, and other information with respect to an account opened and maintained with the broker-dealer by any Access Person of the Franklin Templeton Group. The Code of Ethics Administration Department shall preserve those acknowledgments and reports, the records of consultations and waivers, and the confirmations, and other information for the period required by the applicable regulation.

The Code of Ethics Administration Department shall review brokerage transaction confirmations, account statements, Schedules B, C, D, E, F and G for compliance with the Code. The reviews shall include, but are not limited to;

(1) Comparison of brokerage confirmations, Schedule Bs, and/or brokerage statements to pre-clearance requests or, if a private placement, the Private Placement Checklist;

(2) Comparison of brokerage statements and/or Schedule Cs to current securities holding information, securities account information and discretionary authority information;

(3) Conducting periodic "back-testing" of Access Person transactions, Schedule Cs and/or Schedule Es in comparison to fund and client transactions;

The Code of Ethics Administration Department shall evidence review by initialing and dating the appropriate document or log. Violations of the Code detected by the Code of Ethics Administration Department during his or her reviews shall be promptly brought to the attention of the Director of Global Compliance and/or the Chief Compliance Officer with periodic reports to each appropriate Chief Compliance Officer.

D. PERIODIC RESPONSIBILITIES OF THE CODE OF ETHICS ADMINISTRATION

DEPARTMENT

The Code of Ethics Administration Department shall consult with FRI's General Counsel and seek the assistance of the Human Resources Department, as the case may be, to assure that:

1. Adequate reviews and audits are conducted to monitor compliance with the reporting, pre-clearance, prohibited transaction and other requirements of the Code.

2. All Code of Ethics Persons are adequately informed and receive appropriate education and training as to their duties and obligations under the Code.

3. All new Supervised and Access Persons of Franklin Templeton Investments are required to complete the Code of Ethics Computer Based Training program. Onsite training will be conducted on an "as needed" basis.

4. There are adequate educational, informational and monitoring efforts to ensure that reasonable steps are taken to prevent and detect unlawful insider trading by Supervised and Access Persons and to control access to inside information.

5. Written compliance reports are submitted to the Board of Directors of each relevant Fund at least quarterly. Additionally, written compliance reports are submitted to the Board of Directors of Franklin Resources, Inc., and the Board of each relevant Fund at least annually. Such reports will describe any issues arising under the Code or procedures since the last report, including, but not limited to, information about material violations of the Code or procedures and sanctions imposed in response to the material violations.

6. The Legal Compliance Department will certify at least annually to the Fund's board of directors that Franklin Templeton Investments has adopted procedures reasonably necessary to prevent Supervised and Access Persons from violating the Code, and

7. Appropriate records are kept for the periods required by law. Types of records include pre-clearance requests and approvals, brokerage confirmations, brokerage statements, initial and annual Code of Ethics certifications.

E. APPROVAL BY FUND'S BOARD OF DIRECTORS

(1) BASIS FOR APPROVAL

The Board of Directors/Trustees must base its approval of the Code on a determination that the Code contains provisions reasonably necessary to prevent Code of Ethics Persons from engaging in any conduct prohibited by Rule 17j-1 or Rule 204A-1. The Code of Ethics Administration Department maintains a detailed list of violations and will amend the Code of Ethics and procedures in an attempt to reduce such violations.

(2) NEW FUNDS

At the time a new fund is organized, the Code Of Ethics Administration Department will provide the Fund's board of directors, a certification that the investment adviser and principal underwriter has adopted procedures reasonably necessary to prevent Code of Ethics Persons from violating the Code. Such certification will state that the Code contains provisions reasonably necessary to prevent Code of Ethics Persons from violating the Code.

(3) MATERIAL CHANGES TO THE CODE OF ETHICS

The Legal Compliance Department will provide the Fund's board of directors a written description of all material changes to the Code no later than six months after adoption of the material change by Franklin Templeton Investments.

II. COMPILATION OF DEFINITIONS OF IMPORTANT TERMS

For purposes of the Code of Ethics and Insider Trading Policy, the terms below have the following meanings:

1934 ACT - The Securities Exchange Act of 1934, as amended.

1940 ACT - The Investment Company Act of 1940, as amended.

ACCESS PERSON - Each director, trustee, general partner or officer, and any other person that directly or indirectly controls (within the meaning of Section 2(a)(9) of the 1940 Act) the Franklin Templeton Group or a person, including an Advisory Representative, who has access to information concerning recommendations made to a Fund or client with regard to the purchase or sale of a security.

ADVISERS ACT - The Investment Advisers Act of 1940, as amended.

ADVISORY REPRESENTATIVE - Any officer or director of Franklin Resources; any employee who makes any recommendation, who participates in the determination of which recommendation shall be made, or whose functions or duties relate to the determination of which recommendation shall be made; any employee who, in connection with his or her duties, obtains any information concerning which securities are being recommended prior to the effective dissemination of such recommendations or of the information concerning such recommendations; and any of the following persons who obtain information concerning securities recommendations being made by Franklin Resources prior to the effective dissemination of such recommendations or of the information concerning such recommendations: (i) any person in a control relationship to Franklin Resources,
(ii) any affiliated person of such controlling person, and (iii) any affiliated person of such affiliated person.

AFFILIATED PERSON - it has the same meaning as Section 2(a)(3) of the Investment Company Act of 1940. An "affiliated person" of an investment company includes directors, officers, employees, and the investment adviser. In addition, it includes any person owning 5% of the company's voting securities, any person in which the investment company owns 5% or more of the voting securities, and any person directly or indirectly controlling, controlled by, or under common control with the company.

APPROPRIATE ANALYST - With respect to any Access Person, any securities analyst or portfolio manager making investment recommendations or investing funds on behalf of an Associated Client and who may be reasonably expected to recommend or consider the purchase or sale of a security.

ASSOCIATED CLIENT - A Fund or client whose trading information would be available to the Access Person during the course of his or her regular functions or duties.

AUTOMATIC INVESTMENT PLAN-A program in which regular periodic purchases (or withdrawals) are made automatically in (or from) investment accounts in accordance with a predetermined schedule and allocations. An automatic investment plan includes a dividend reinvestment plan.

BENEFICIAL OWNERSHIP - Has the same meaning as in Rule 16a-1(a)(2) under the 1934 Act. Generally, a person has a beneficial ownership in a security if he or she, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares a direct or indirect pecuniary interest in the security. There is a presumption of a pecuniary interest in a security held or acquired by a member of a person's immediate family sharing the same household.

EXCHANGE TRADED FUNDS AND HOLDING COMPANY DEPOSITORY RECEIPTS - An Exchange-Traded Fund or "ETF" is a basket of securities that is designed to generally track an index--broad stock or bond market, stock industry sector, or international stock. Holding Company Depository Receipts "Holdrs" are securities that represent

an investor's ownership in the common stock or American Depository Receipts of specified companies in a particular industry, sector or group.

FUNDS - Investment companies in the Franklin Templeton Group of Funds.

HELD OR TO BE ACQUIRED - A security is "held or to be acquired" if within the most recent 15 days it (i) is or has been held by a Fund, or (ii) is being or has been considered by a Fund or its investment adviser for purchase by the Fund.

INITIAL PUBLIC OFFERING - An offering of securities registered under the Securities Act of 1933, the issuer of which immediately before the registration, was not subject to the reporting requirements of sections 13 or 15(d) of the Securities Exchange Act of 1934.

LIMITED OFFERING- An offering that is exempt from registration under the Securities Act of 1933 pursuant to section 4(2) of section 4(6).

PORTFOLIO PERSON - Any employee of Franklin Templeton Investments, who, in connection with his or her regular functions or duties, makes or participates in the decision to purchase or sell a security by a Fund in Franklin Templeton Investments, or any other client or if his or her functions relate to the making of any recommendations about those purchases or sales. Portfolio Persons include portfolio managers, research analysts, traders, persons serving in equivalent capacities (such as Management Trainees), persons supervising the activities of Portfolio Persons, and anyone else designated by the Director of Global Compliance.

PROPRIETARY INFORMATION - Information that is obtained or developed during the ordinary course of employment with Franklin Templeton Investments, whether by you or someone else, and is not available to persons outside of Franklin Templeton Investments. Examples of such Proprietary Information include, among other things, internal research reports, research materials supplied to Franklin Templeton Investments by vendors and broker-dealers not generally available to the public, minutes of departmental/research meetings and conference calls, and communications with company officers (including confidentiality agreements). Examples of non-Proprietary Information include mass media publications (e.g., The Wall Street Journal, Forbes, and Fortune), certain specialized publications available to the public (e.g., Morningstar, Value Line, Standard and Poors), and research reports available to the general public.

REPORTABLE FUND - Any fund for which an Franklin Templeton Investments' U.S. registered investment adviser ("FTI Adviser") serves as an investment adviser or a sub-adviser or any fund whose investment adviser or principal underwriter controls a FTI Adviser, is controlled by a FTI adviser or is under common control with a FTI Adviser.

SECURITY - Any stock, note, bond, evidence of indebtedness, participation or interest in any profit-sharing plan or limited or general partnership, investment contract, certificate of deposit for a security, fractional undivided interest in oil or gas or other mineral rights, any put, call, straddle, option, or privilege on any security (including a certificate of deposit), guarantee of, or warrant or right to subscribe for or purchase any of the foregoing, and in general any interest or instrument commonly known as a security. For purposes of the Code, security does not include:

1. direct obligations of the U.S. government (i.e. securities issued or guaranteed by the U.S. government such as Treasury bills, notes and bonds including U.S. savings bonds and derivatives thereof);

2. money market instruments - banker's acceptances, bank certificates of deposits, commercial paper, repurchase agreement and other high quality short-term debt instruments;

3. shares of money market funds;

4. commodity futures (excluding futures on individual securities), currencies, currency forwards and derivatives thereof.

5. shares issued by open-end funds other than Reportable Funds; and

6. Shares issued by unit investment trusts that are invested exclusively in one or more open-end funds, none of which are Reportable Funds.

SUPERVISED PERSONS- Supervised persons are a U.S. registered investment advisers' partners, officers, directors (or other persons occupying a similar status or performing similar functions), and employees, as well as any other persons who provide advice on behalf of the adviser and are subject to the supervision and control of the adviser.

APPENDIX B: ACKNOWLEDGEMENT FORM AND SCHEDULES

INITIAL AND ANNUAL

ACKNOWLEDGMENT FORM

CODE OF ETHICS AND POLICY STATEMENT ON INSIDER TRADING

INSTRUCTIONS: Print form, complete, sign and date. Submit completed form to Code of Ethics Administration Department via:

Inter-office: Code of Ethics, L-COMP SM-920/2   Fax: (650) 312-5646

U.S. Mail: Franklin Templeton Investments       E-mail: Preclear, Legal (internal)
Attn: Code of Ethics                                    Lpreclear@frk.com (external)
Administration Dept.
P.O. Box 25050
San Mateo, CA 94402-5050

TO: CODE OF ETHICS ADMINISTRATION DEPARTMENT

I HEREBY ACKNOWLEDGE RECEIPT OF A COPY OF THE FRANKLIN TEMPLETON INVESTMENT'S CODE OF ETHICS ("CODE") AND POLICY STATEMENT ON INSIDER TRADING, AS AMENDED, WHICH I HAVE READ AND UNDERSTAND. I WILL COMPLY FULLY WITH ALL PROVISIONS OF THE CODE AND THE INSIDER TRADING POLICY TO THE EXTENT THEY APPLY TO ME DURING THE PERIOD OF MY EMPLOYMENT. IF THIS IS AN ANNUAL CERTIFICATION, I CERTIFY THAT I HAVE COMPLIED WITH ALL PROVISIONS OF THE CODE AND THE INSIDER TRADING POLICY TO THE EXTENT THEY APPLIED TO ME

OVER THE PAST YEAR. ADDITIONALLY, I AUTHORIZE ANY BROKER-DEALER, BANK, OR INVESTMENT ADVISER WITH WHOM I HAVE SECURITIES ACCOUNTS AND ACCOUNTS IN WHICH I HAVE DIRECT OR INDIRECT BENEFICIAL OWNERSHIP, TO PROVIDE BROKERAGE CONFIRMATIONS AND STATEMENTS AS REQUIRED FOR COMPLIANCE WITH THE CODE. I FURTHER UNDERSTAND AND ACKNOWLEDGE THAT ANY VIOLATION OF THE CODE OR INSIDER TRADING POLICY, INCLUDING ENGAGING IN A PROHIBITED TRANSACTION OR FAILURE TO FILE REPORTS AS REQUIRED (SEE SCHEDULES B, C, D, E, F AND G), MAY SUBJECT ME TO DISCIPLINARY ACTION UP TO AND INCLUDING TERMINATION OF EMPLOYMENT.

NAME (PRINT)   SIGNATURE   DATE SUBMITTED
------------   ---------   --------------

TITLE   DEPARTMENT NAME   LOCATION
-----   ---------------   --------

                                                  YEAR END
INITIAL DISCLOSURE   ANNUAL DISCLOSURE   (FOR COMPLIANCE USE ONLY)
------------------   -----------------   -------------------------
        [ ]                 [ ]

SCHEDULE A: LEGAL AND COMPLIANCE OFFICERS CODE OF ETHICS ADMINISTRATION

DEPT. CONTACT INFO1

LEGAL OFFICER
Murray L. Simpson
Executive Vice President & General Counsel Franklin Templeton Investments
One Franklin Parkway
San Mateo, CA 94403-1906
Tel: (650) 525-7331
Fax: (650) 312-2221
Email: mlsimpson@frk.com

COMPLIANCE OFFICERS

DIRECTOR, GLOBAL COMPLIANCE
James M. Davis
Franklin Templeton Investments
One Franklin Parkway
San Mateo, CA 94403-1906
Tel: (650) 312-2832
Fax: (650) 312-5676
Email: jdavis@frk.com

CHIEF COMPLIANCE OFFICER
Franklin Templeton Investments
One Franklin Parkway
San Mateo, CA 94403-1906

CODE OF ETHICS ADMINISTRATION DEPARTMENT
Maria Abbott, Manager
Lisa Del Carlo
Darlene James
Legal Compliance Department
Franklin Templeton Investments
One Franklin Parkway
San Mateo, CA 94403-1906
Tel: (650) 312-3693
Fax: (650) 312-5646
Email: Preclear, Legal (internal)
Lpreclear@frk.com (external)

(12) As of November 2004

SCHEDULE B: QUARTERLY TRANSACTIONS REPORT

INSTRUCTIONS: Print form, complete, sign and date. Submit completed form to the Code of Ethics Administration Department via:

Inter-office: Code of Ethics, L-COMP        Fax: (650) 312-5646
              SM-920/2

U.S. Mail: Franklin Templeton Investments   E-mail: Preclear, Legal (internal)
           Attn: Code of Ethics             Lpreclear@frk.com (external)
           Administration Dept.
           P.O. Box 25050
           San Mateo, CA 94402-5050

This report of personal securities transactions not reported by duplicate confirmations and brokerage statements pursuant to Section 5.3 of the Code is required pursuant to Rule 204A-1of the Investment Advisers Act of 1940 and Rule 17j-1(c) of the Investment Company Act of 1940. The report must be completed and submitted to the Code of Ethics Administration Department no later than thirty
(30) calendar days after the end of the calendar quarter in which you completed such as transaction. Refer to Section 5.3 of the Code for further instructions.

                             SECURITY NAME
                          DESCRIPTION/TICKER
                            SYMBOL OR CUSIP                                                        PRE-CLEARED
                            NUMBER/TYPE OF                                                           THROUGH
                          SECURITY (INTEREST     QUANTITY                        BROKER-DEALER/     COMPLIANCE
             BUY, SELL     RATE AND MATURITY    (NUMBER OF           PRINCIPAL      BANK AND        DEPARTMENT
TRADE DATE    OR OTHER   DATE, IF APPLICABLE)     SHARES)    PRICE     AMOUNT    ACCOUNT NUMBER   (DATE OR N/A)
----------   ---------   --------------------   ----------   -----   ---------   --------------   -------------

THIS REPORT SHALL NOT BE CONSTRUED AS AN ADMISSION THAT I HAVE ANY DIRECT OR INDIRECT BENEFICIAL OWNERSHIP IN THE SECURITIES DESCRIBED ABOVE.

NAME (PRINT)   SIGNATURE
------------   ---------

DATE REPORT SUBMITTED   QUARTER ENDED
---------------------   -------------

SCHEDULE C: INITIAL & ANNUAL DISCLOSURE OF BROKERAGE ACCOUNTS, SECURITIES
HOLDINGS AND DISCRETIONARY AUTHORITY

INSTRUCTIONS: Print form, complete, sign and date. Submit completed form to Code of Ethics Administration via:

Inter-office: Code of Ethics, L-COMP SM-920/2          Fax: (650) 312-5646

U.S. Mail: Franklin Templeton Investments              E-mail: Preclear, Legal (internal)
           Attn: Code of Ethics Administration Dept.   Lpreclear@frk.com (external)
           P.O. Box 25050
           San Mateo, CA 94402-5050

This report shall set forth the name and/or description of each securities account and holding in which you have a direct or indirect beneficial interest, including securities accounts and holdings of a spouse, minor children or other immediate family member living in your home, trusts, foundations, and any account for which trading authority has been delegated to you, other than authority to trade for a Fund or other client of Franklin Templeton Investments or by you to an unaffiliated registered broker-dealer, registered investment adviser, or other investment manager acting in a similar fiduciary capacity, who exercises sole investment discretion. In lieu of listing each securities account and holding below, you may attach copies of current brokerage statements, sign below and return the Schedule C along with the brokerage statements to the Code of Ethics Administration Department within 10 days of becoming an Access Person if an initial report or by February 1st of each year, if an annual report. The information in this Schedule C or any attached brokerage statements must be current as of a date no more than 45 days prior to the date you become an Access Person or the date you submit your annual report. Refer to Part 5 of the Code for additional filing instructions.

Securities that are EXEMPT from being reported on the Schedule C include: (i) securities that are direct obligations of the U.S. Government, such as Treasury bills, notes and bonds, and U.S. Savings Bonds and derivatives thereof; (ii) high quality short-term instruments ("money market instruments") including but not limited to bankers' acceptances, U.S. bank certificates of deposit; commercial paper; and repurchase agreements; (iii) commodity futures, currencies, currency forwards and derivatives thereof; shares of money market funds; shares issued by open-end funds other than Reportable Funds (Any fund for which a Franklin Templeton Investments' U.S. registered investment adviser ("FTI Adviser") serves as an investment adviser or a sub-adviser or any fund whose investment adviser or principal underwriter is controlled by an FTI adviser or is under common control with a FTI adviser; and shares issued by unit investment trusts that are invested in one or more open-end funds none of which are Reportable Funds.

[ ] I DO NOT HAVE ANY BROKERAGE ACCOUNTS.

[ ] I DO NOT HAVE ANY SECURITIES HOLDINGS.

[ ] I HAVE ATTACHED STATEMENTS CONTAINING ALL MY BROKERAGE ACCOUNTS AND SECURITIES HOLDINGS.

[ ] I HAVE LISTED MY BROKERAGE ACCOUNTS CONTAINING NO SECURITIES HOLDINGS.

[ ] I HAVE LISTED MY SECURITIES HOLDINGS NOT HELD IN A BROKERAGE ACCOUNT.

                                            ADDRESS OF BROKERAGE                       SECURITY           QUANTITY
  ACCOUNT NAME(S)      NAME OF BROKERAGE        FIRM, BANK OR                  DESCRIPTION/TITLE/TICKER   NUMBER OF     CHECK THIS
(REGISTRATION SHOWN          FIRM,           INVESTMENT ADVISER                   SYMBOL OR CUSIP #        SHARES &       BOX IF
    ON BROKERAGE      BANK OR INVESTMENT   (STREET/CITY/STATE/ZIP   ACCOUNT   (INTEREST RATE & MATURITY   PRINCIPAL   DISCRETIONARY
     STATEMENT)             ADVISER                 CODE)            NUMBER        IF APPROPRIATE)          AMOUNT       ACCOUNT
-------------------   ------------------   ----------------------   -------   -------------------------   ---------   -------------

                                            ADDRESS OF BROKERAGE                       SECURITY           QUANTITY
  ACCOUNT NAME(S)      NAME OF BROKERAGE        FIRM, BANK OR                  DESCRIPTION/TITLE/TICKER   NUMBER OF     CHECK THIS
(REGISTRATION SHOWN          FIRM,           INVESTMENT ADVISER                   SYMBOL OR CUSIP #        SHARES &       BOX IF
    ON BROKERAGE      BANK OR INVESTMENT   (STREET/CITY/STATE/ZIP   ACCOUNT   (INTEREST RATE & MATURITY   PRINCIPAL   DISCRETIONARY
     STATEMENT)             ADVISER                 CODE)            NUMBER        IF APPROPRIATE)          AMOUNT       ACCOUNT
-------------------   ------------------   ----------------------   -------   -------------------------   ---------   -------------

TO THE BEST OF MY KNOWLEDGE, I HAVE DISCLOSED ALL OF MY SECURITIES ACCOUNTS AND/OR HOLDINGS IN WHICH I HAVE A DIRECT OR INDIRECT BENEFICIAL INTEREST, INCLUDING SECURITIES ACCOUNTS AND/OR HOLDINGS OF A SPOUSE, MINOR CHILDREN OR OTHER IMMEDIATE MEMBER LIVING IN MY HOME, TRUSTS, FOUNDATIONS, AND ANY ACCOUNT FOR WHICH TRADING AUTHORITY HAS BEEN DELEGATED TO ME OR BY ME TO AN UNAFFILIATED REGISTERED BROKER-DEALER, REGISTERED INVESTMENT ADVISER, OR OTHER INVESTMENT MANAGER ACTING IN A SIMILAR FIDUCIARY CAPACITY, WHO EXERCISES SOLE INVESTMENT DISCRETION.

NAME (PRINT)   SIGNATURE   DATE REPORT SUBMITTED
------------   ---------   ---------------------

          INITIAL DISCLOSURE
(CHECK THIS BOX IF YOU'RE A NEW ACCESS               ANNUAL DISCLOSURE                       YEAR END
                PERSON)                  (CHECK THIS BOX IF ANNUAL CERTIFICATION)   (FOR COMPLIANCE USE ONLY)
--------------------------------------   ----------------------------------------   -------------------------
                  [ ]                                       [ ]

SCHEDULE D: NOTIFICATION OF SECURITIES ACCOUNT

INSTRUCTIONS: Print form, complete, sign and date. Submit completed form to Code of Ethics Administration via:

Inter-office: Code of Ethics, L-COMP SM-920/2   Fax: (650) 312-5646

U.S. Mail: Franklin Templeton Investments       E-mail: Preclear, Legal (internal)
           Attn: Code of Ethics                 Lpreclear@frk.com (external)
           Administration Dept.
           P.O. Box 25050
           San Mateo, CA 94402-5050

All Franklin registered representatives and Access Persons, PRIOR TO OPENING A BROKERAGE ACCOUNT OR PLACING AN INITIAL ORDER IN THE NEW ACCOUNT, are required to notify the Code of Ethics Administration Department and the executing broker-dealer in writing. This includes accounts in which the registered representative or Access Person has or will have a financial interest in (e.g., a spouse's account) or discretionary authority (e.g., a trust account for a minor child).

UPON RECEIPT OF THE NOTIFICATION OF SECURITIES ACCOUNT FORM, THE CODE OF ETHICS ADMINISTRATION DEPARTMENT WILL CONTACT THE BROKER-DEALER IDENTIFIED BELOW AND REQUEST THAT DUPLICATE CONFIRMATIONS AND STATEMENTS OF YOUR BROKERAGE ACCOUNT ARE SENT TO FRANKLIN TEMPLETON INVESTMENTS.

ACCOUNT INFORMATION:

               NAME ON THE ACCOUNT
(IF OTHER THAN EMPLOYEE, STATE RELATIONSHIP I.E.,   ACCOUNT NUMBER OR SOCIAL       DATE
                     SPOUSE)                             SECURITY NUMBER       ESTABLISHED
-------------------------------------------------   ------------------------   -----------

    NAME OF      YOUR REPRESENTATIVE   BROKERAGE FIRM ADDRESS
BROKERAGE FIRM        (OPTIONAL)        (CITY/STATE/ZIP CODE)
--------------   -------------------   ----------------------

EMPLOYEE INFORMATION:

EMPLOYEE'S NAME (PRINT)   TITLE   DEPARTMENT NAME
-----------------------   -----   ---------------

                     ARE YOU A REGISTERED
INTEROFFICE             REPRESENTATIVE?              ARE YOU AN
 MAIL CODE    (NASD LICENSED, I.E., SERIES 6, 7)   ACCESS PERSON?
-----------   ----------------------------------   --------------
                         [ ]YES  [ ]NO              [ ]YES [ ]NO

PHONE EXTENSION   SIGNATURE   DATE
---------------   ---------   ----

SCHEDULE E: NOTIFICATION OF DIRECT OR INDIRECT BENEFICIAL INTEREST

INSTRUCTIONS: Print form, complete, sign and date. Obtain required signature and submit completed form to Code of Ethics Administration Dept. via:

Inter-office:  Code of Ethics, L-COMP         Fax: (650) 312-5646
SM-920/2

U.S. Mail: Franklin Templeton Investments     E-mail: Preclear, Legal (internal)
Attn: Code of Ethics Administration Dept.     Lpreclear@frk.com (external)
P.O. Box 2505
San Mateo, CA 94402-5050

If you have any beneficial ownership in a security and it is recommended to the Appropriate Analyst that the security be considered for purchase or sale by an Associated Client, or if a purchase or sale of that security for an Associated Client is carried out, you must disclose your beneficial ownership to Code of Ethics Administration Department and the Appropriate Analyst in writing on Schedule E (or an equivalent form containing similar information) before the purchase or sale, or before or simultaneously with the recommendation.

                                                             DATE AND
               OWNERSHIP                 METHOD OF        METHOD LEARNED          PRIMARY
                TYPE:                   ACQUISITION       THAT SECURITY'S        PORTFOLIO
  SECURITY    (DIRECT OR     YEAR     (PURCHASE/GIFT/   UNDER CONSIDERATION      MANAGER OR       NAME OF PERSON   DATE OF VERBAL
DESCRIPTION   INDIRECT)    ACQUIRED        OTHER)            BY FUNDS         PORTFOLIO ANALYST      NOTIFIED       NOTIFICATION
-----------   ----------   --------   ---------------   -------------------   -----------------   --------------   --------------

EMPLOYEE'S NAME (PRINT)   SIGNATURE   DATE
-----------------------   ---------   ----

PRIMARY PM OR ANALYST'S NAME (PRINT)   SIGNATURE   DATE

SCHEDULE F: CHECKLIST FOR INVESTMENTS IN PARTNERSHIPS AND SECURITIES ISSUED
IN LIMITED OFFERINGS (PRIVATE PLACEMENTS)

INSTRUCTIONS: Print form, complete, sign, date and obtain CIO's signatures. Submit completed form to Code of Ethics Administration Dept. via:

Inter-office:  Code of Ethics,              Fax:  (650) 312-5646
L-COMP SM-920/2
U.S. Mail: Franklin Templeton Investments   E-mail: Preclear, Legal (internal)
Attn: Code of Ethics Administration Dept.           Lpreclear@frk.com (external)
P.O. Box 25050
San Mateo, CA 94402-5050

In considering requests by Access Persons for approval of limited partnerships and other Limited Offering (private placement) securities transactions, the Compliance Officer shall consult with an executive officer of Franklin Resources, Inc. In deciding whether to approve the transaction, the Compliance Officer and the executive officer shall take into account, among other factors, whether the investment opportunity should be reserved for a Fund or other client, and whether the investment opportunity is being offered to the Access Person by virtue of his or her position with the Franklin Templeton Group. IF THE ACCESS PERSON RECEIVES CLEARANCE FOR THE TRANSACTION, NO INVESTMENT IN THE SAME ISSUER MAY BE MADE FOR A FUND OR CLIENT UNLESS AN EXECUTIVE OFFICER OF FRANKLIN RESOURCES, INC., WITH NO INTEREST IN THE ISSUER, APPROVES THE TRANSACTION.

IN ORDER TO EXPEDITE YOUR REQUEST, PLEASE PROVIDE THE FOLLOWING INFORMATION:

NAME/DESCRIPTION OF PROPOSED INVESTMENT:

PROPOSED INVESTMENT AMOUNT:

PLEASE ATTACH PAGES OF THE OFFERING MEMORANDUM (OR OTHER DOCUMENTS) SUMMARIZING THE INVESTMENT OPPORTUNITY, INCLUDING:

i) Name of the partnership/hedge fund/issuer;

ii) Name of the general partner, location & telephone number;

iii) Summary of the offering; including the total amount the offering/issuer;

iv) Percentage your investment will represent of the total offering;

v) Plan of distribution; and

vi) Investment objective and strategy,

PLEASE RESPOND TO THE FOLLOWING QUESTIONS:

a) Was this investment opportunity presented to you in your capacity as a portfolio manager? If no, please explain the relationship, if any, you have to the issuer or principals of the issuer.

b) Is this investment opportunity suitable for any fund/client that you advise? (13) If yes, why isn't the investment being made on behalf of the fund/client? If no, why isn't the investment opportunity suitable for the fund/clients?

c) Do any of the fund/clients that you advise presently hold securities of the issuer of this proposed investment (e.g., common stock, preferred stock, corporate debt, loan participations, partnership interests, etc), ? If yes, please provide the names of the funds/clients and security description.

(13) If an investment opportunity is presented to you in your capacity as a portfolio manager and the investment opportunity is suitable for the fund/client, it must first be offered to the fund/client before any personal securities transaction can be effected.

d) Do you presently have or will you have any managerial role with the company/issuer as a result of your investment? If yes, please explain in detail your responsibilities, including any compensation you will receive.

e) Will you have any investment control or input to the investment decision making process?

f) Will you receive reports of portfolio holdings? If yes, when and how frequently will these be provided?

REMINDER: PERSONAL SECURITIES TRANSACTIONS THAT DO NOT GENERATE BROKERAGE CONFIRMATIONS (E.G., INVESTMENTS IN PRIVATE PLACEMENTS) MUST BE REPORTED TO THE CODE OF ETHICS ADMINISTRATION DEPARTMENT ON SCHEDULE B NO LATER THAN 30 CALENDAR DAYS AFTER THE END OF THE CALENDAR QUARTER THE TRANSACTION TOOK PLACE.

EMPLOYEE'S NAME (PRINT)   SIGNATURE   DATE

"I CONFIRM, TO THE BEST OF MY KNOWLEDGE AND BELIEF, THAT I HAVE REVIEWED THE PRIVATE PLACEMENT AND DO NOT BELIEVE THAT THE PROPOSED PERSONAL TRADE WILL BE CONTRARY TO THE BEST INTERESTS OF ANY OF OUR FUNDS' OR CLIENTS' PORTFOLIOS."

CHIEF INVESTMENT OFFICER'S NAME   SIGNATURE   DATE

CHIEF COMPLIANCE OFFICER'S NAME   SIGNATURE   DATE

CODE OF ETHICS ADMINISTRATION DEPT. USE ONLY

DATE RECEIVED: _____________  DATE FORWARDED TO FRI EXECUTIVE OFFICER: _________

APPROVED BY:

_____________________________________________________          _________________
 DIRECTOR, GLOBAL COMPLIANCE/CHIEF COMPLIANCE OFFICER                 DATE

_____________________________________________________          _________________
EXECUTIVE OFFICER, FRANKLIN RESOURCES, INC.                           DATE

DATE ENTERED IN LOTUS NOTES: ______________ DATE ENTERED IN EXAMINER: _________

PRECLEARED: [ ] [ ] (ATTACH E-MAIL) IS THE ACCESS PERSON REGISTERED? [ ] [ ] YES NO YES NO

SCHEDULE G: REQUEST FOR APPROVAL TO SERVE AS A DIRECTOR

INSTRUCTIONS: Print form, complete, sign and date. Submit completed form to Code of Ethics Administration Department via:

Inter-office: Code of Ethics,               Fax: (650) 312-5646
L-COMP SM-920/2

U.S. Mail: Franklin Templeton Investments   E-mail: Preclear, Legal (internal)
Attn: Code of Ethics Administration Dept.           Lpreclear@frk.com (external)
P.O. Box 25050
San Mateo, CA 94402-5050

EMPLOYEE INFORMATION

Employee: ___________________________
Department: _________________________   Extension: _____________________________
Job Title: __________________________   Site/Location: _________________________
Supervisor: _________________________   Sup. Extension: ________________________

COMPANY INFORMATION

Company Name:                      _____________________________________________

Nature of company's business:      _____________________________________________

Is this a public or private
company?                           _____________________________________________

Title/Position:                    _____________________________________________

Reason for serving as a director
for the company:                   _____________________________________________

Estimate of hours to be devoted
to the directorship:               _____________________________________________

Compensation received:                   [  ] Yes           [ ] No

If compensated, how?

Starting date:                     _____________________________________________

NASD Registered/Licensed? [ ] Yes [ ] No

FOR APPROVAL USE ONLY

                           [ ] Approved    [ ] Denied

Signatory Name                          Signatory Title:
               ----------------------                    -----------------------


Signature:                              Date:
           --------------------------         ----------------------------------

APPENDIX C: INVESTMENT ADVISOR AND BROKER-DEALER AND OTHER SUBSIDIARIES
OF FRANKLIN RESOURCES, INC. - NOVEMBER 2004

Franklin Advisers, Inc.                                       IA
Franklin Advisory Services, LLC                               IA
Franklin Investment Advisory Services, Inc.                   IA
Franklin Templeton Portfolio Advisors, Inc.                   IA
Franklin Mutual Advisers, LLC                                 IA
Franklin/Templeton Distributors, Inc.                         BD
Franklin Templeton Services, LLC                              FA
Franklin Templeton International Services S.A.                FBD
(Luxembourg)
Franklin Templeton Investments Australia Limited              FIA
Franklin/Templeton Investor Services, LLC                     TA
Franklin Templeton Alternative Strategies, LLC                IA
Franklin Templeton Institutional, LLC                         IA
Fiduciary Financial Services, Corp.                           BD
Franklin Templeton Asset Management S.A. (France)             FIA
Franklin Templeton Investments (Asia) Limited                 FBD/IA
(Hong Kong)
Franklin Templeton Investment Management Limited              IA/FIA
(UK)
Templeton/Franklin Investment Services, Inc                   BD
Templeton Investment Counsel, LLC                             IA
Templeton Asset Management, Ltd.                              IA/FIA
Franklin Templeton Investments Japan Ltd.                     FIA
Templeton Global Advisors Ltd. (Bahamas)                      IA
Franklin Templeton Italia Societa di Gestione del             FBD/FIA
Risparmio per Axioni (Italy)
Franklin Templeton Investment Services GmbH (Germany)         FBD
Fiduciary Trust International of the South                    Trust Co
Franklin Templeton Services, LLC                              BM
Franklin Templeton Investments Corp. (Ontario)                IA/FIA
Templeton Asset Management Ltd. (Singapore)                   IA/FIA
Fiduciary Trust Company International                         Trust Co.
Fiduciary International, Inc                                  IA
Fiduciary Investment Management International Inc             IA
Franklin Templeton Institutional Asia Limited (Hong Kong)     FIA
Fiduciary Trust International Limited (UK)                    IA/FIA
Franklin Templeton Investment Trust Management, Ltd (Korea)   FIA
Franklin Templeton Asset Management (India) Private           FBD/FIA
Limited (India)

Codes:   IA:      US registered investment adviser
         BD:      US registered broker-dealer
         FIA:     Foreign equivalent investment adviser
         FBD:     Foreign equivalent broker-dealer
         TA:      US registered transfer agent
         FA:      Fund Administrator
         BM:      Business manager to the funds
         REA:     Real estate adviser
         Trust:   Trust company

APPENDIX D: FRANKLIN RESOURCES, INC. CODE OF ETHICS AND BUSINESS CONDUCT

This Code of Ethics and Business Conduct (the "Code") has been adopted by the Board of Directors (the "Board") of Franklin Resources, Inc. in connection with its oversight of the management and business affairs Franklin Resources, Inc.

1. PURPOSE AND OVERVIEW.

(a) Application. The Code is applicable to all officers, directors, employees and temporary employees (each, a "Covered Person") of Franklin Resources, Inc. and all of its U.S. and non-U.S. subsidiaries and affiliates (collectively, the "Company").

(b) Purpose. The Code summarizes the values, principles and business practices that guide the business conduct of the Company and also provides a set of basic principles to guide Covered Persons regarding the minimum ethical requirements expected of them. The Code supplements the Company's existing employee policies, including those specified in the respective U.S. and non-U.S. employee handbooks and also supplements various other codes of ethics, policies and procedures that have been adopted by the Company. All Covered Persons are expected to become familiar with the Code and to apply these principles in the daily performance of their jobs.

(c) Overriding Responsibilities. It is the responsibility of all Covered Persons to maintain a work environment that fosters fairness, respect and integrity. The Company requires all Covered Persons to conduct themselves in a lawful, honest and ethical manner in all of the Company's business practices.

(d) Questions. All Covered Persons are expected to seek the advice of a supervisor, a manager, the Human Resources Department, the Company's General Counsel or the Legal Compliance Department for additional guidance or if there is any question about issues discussed in this Code.

(e) Violations. If any Covered Person observes possible unethical or illegal conduct, such concerns or complaints should be reported as set forth in Section 16 below.

(f) Definition of Executive Officer. For the purposes of this Code, the term "Executive Officer" shall mean those officers, as shall be determined by the Board of Directors of Franklin Resources, Inc. from time to time, who are subject to the reporting obligations of Section 16(a) of the Securities Exchange Act of 1934.

(g) Definition of Director. For purposes of this Code, the term "Director" shall mean members of the Board of Directors of Franklin Resources, Inc.

2. COMPLIANCE WITH LAWS, RULES AND REGULATIONS.

(a) Compliance. All Covered Persons of the Company are required to comply with all of the applicable laws, rules and regulations of the United States and other countries, and the

states, counties, cities and other jurisdictions, in which the Company conducts its business. Local laws may in some instances be less restrictive than the principles set forth in this Code. In those situations, Covered Persons should comply with the Code, even if the conduct would otherwise be legal under applicable laws. On the other hand, if local laws are more restrictive than the Code, Covered Persons should comply with applicable laws.

(b) Insider Trading. Such legal compliance includes, without limitation, compliance with the Company's insider trading policy, which prohibits Covered Persons from trading securities either personally or on behalf of others, while in possession of material non-public information or communicating material non-public information to others in violation of the law. Securities include common stocks, bonds, options, futures and other financial instruments. Material information includes any information that a reasonable investor would consider important in a decision to buy, hold, or sell securities. These laws provide substantial civil and criminal penalties for individuals who fail to comply. The policy is described in more detail in the various employee handbooks and compliance policies. In addition, the Company has implemented trading restrictions to reduce the risk, or appearance, of insider trading.

(c) Questions Regarding Stock Trading. All questions regarding insider trading or reports of impropriety regarding stock transactions should be made to the Legal Compliance Department. See also Section 16 below.

3. CONFLICTS OF INTEREST.

(a) Avoidance of Conflicts. All Covered Persons are required to conduct themselves in a manner and with such ethics and integrity so as to avoid a conflict of interest, either real or apparent.

(b) Conflict of Interest Defined. A conflict of interest is any circumstance where an individual's personal interest interferes or even appears to interfere with the interests of the Company. All Covered Persons have a duty to avoid financial, business or other relationships that might be opposed to the interests of the Company or might cause a conflict with the performance of their duties.

(c) Potential Conflict Situations. A conflict can arise when a Covered Person takes actions or has interests that may make it difficult to perform his or her Company related work objectively and effectively. Conflicts also may arise when a Covered Person or a member of his or her family, receives improper personal benefits as a result of his or her position in the Company.

(d) Examples of Potential Conflicts. Some of the areas where a conflict could arise include:

(i) Employment by a competitor, regardless of the nature of the employment, while employed by the Company.

(ii) Placement of business with any company in which a Covered Person, or any member of the Covered Person's family, has a substantial ownership interest or management responsibility.

(iii) Making endorsements or testimonials for third parties.

(iv) Processing a transaction on the Covered Person's personal account(s), or his or her friend or family members' account(s), through the Company's internal systems without first submitting the transaction request to the Company's Customer Service Center.

(v) Disclosing the Company's confidential information to a third party without the prior consent of senior management.

(e) Questions Regarding Conflicts. All questions regarding conflicts of interest and whether a particular situation constitutes a conflict of interest should be directed to the Legal Compliance Department. See also Section 16 below.

4. GIFTS AND ENTERTAINMENT.

(a) Rationale. The Company's aim is to deter providers of gifts from seeking or receiving special favors from Covered Persons. Gifts of more than a nominal value can cause Covered Persons to feel placed in a position of "obligation" and/or give the appearance of a conflict of interest.

(b) No Conditional Gifts. Covered Persons may not at any time accept any item that is conditioned upon the Company doing business with the entity or person giving the gift.

(d) No Non-Cash Gifts Over $100. Covered Persons, including members of their immediate families, may not, directly or indirectly, take, accept or receive bonuses, fees, commissions, gifts, gratuities, or any other similar form of consideration, from any person, firm, corporation or association with which the Company does or seeks to do business if the value of such item is in excess of $100.00 on an annual basis.

(e) No Solicitation for Gifts. Covered Persons should not solicit any third party for any gift, gratuity, entertainment or any other item regardless of its value.

(f) Permitted Entertainment. Covered Persons, including members of their immediate families, may accept or participate in "reasonable entertainment" provided by any person, firm, corporation or association with which the Company does or seeks to do business. "Reasonable entertainment" would include, among other things, an occasional meal, a ticket to a sporting event or the theater, or comparable entertainment, which is neither so frequent nor so excessive as to raise any question of propriety; attended by the entity or person providing the entertainment, meal, or tickets; not more frequent than once per quarter; and not preconditioned on a "quid pro quo" business relationship.

(g) No Excessive Entertainment. Covered Persons are prohibited from accepting "excessive entertainment" without the prior written approval of one of the Company's Co-Chief Executive Officers or the Office of the Chairman. "Excessive entertainment" is entertainment that has a value greater than $1000.00 or is provided more frequently than once per quarter.

(h) What To Do. Covered Persons presented with a gift with a value in excess of $100.00 or entertainment valued greater than $1000.00 should politely decline and explain that the Company policy makes it impossible to accept such a gift. Covered Persons are encouraged to be guided by their own sense of ethical responsibility, and if they are presented with such a gift from an individual or company, they should notify their manager so the gift can be returned.

(i) Permitted Compensation. The Company recognizes that this Section 4 does not prohibit Directors who do not also serve in management positions within the Company from accepting compensation, bonuses, fees and other similar consideration paid in the normal course of business as a result of their outside business activity, employment or directorships.

(j) Questions Regarding Gifts and Entertainment. All questions regarding gifts and entertainment should be directed to the Legal Compliance Department. See also Section 16 below.

5. OUTSIDE EMPLOYMENT.

(a) Restrictions. Subject to any departmental restrictions, Covered Persons are permitted to engage in outside employment if it is free of any actions that could be considered a conflict of interest. Outside employment must not adversely affect a Covered Person's job performance at the Company, and outside employment must not result in absenteeism, tardiness or a Covered Person's inability to work overtime when requested or required. Covered Persons may not engage in outside employment, which requires or involves using Company time, materials or resources.

(b) Self-Employment. For purposes of this policy, outside employment includes self-employment.

(c) Required Approvals. Due to the fiduciary nature of the Company's business, all potential conflicts of interest that could result from a Covered Person's outside employment should be discussed with the Covered Person's manager and the Human Resources Department, prior to entering into additional employment relationships.

(d) Outside Directors Exempt. The Company recognizes that this Section 5 is not applicable to Directors who do not also serve in management positions within the Company.

6. CONFIDENTIALITY.

(a) Confidentiality Obligation. Covered Persons are responsible for maintaining the confidentiality of information entrusted to them by the Company or its customers, except when disclosure is authorized or legally mandated. The sensitive nature of the investment business requires that the Company keep its customers' confidence and trust. Covered Persons must be continuously sensitive to the confidential and privileged nature of the information to which they have access concerning the Company, and must exercise the utmost discretion when discussing any work-related matters with third parties. Each Covered Person must safeguard the Company's confidential information and not disclose it to a third party without the prior consent of senior management.

(b) What Is Confidential Information. "Confidential information" includes but is not limited to information, knowledge, ideas, documents or materials that are owned, developed or possessed by the Company or that in some other fashion are related to confidential or proprietary matters of the Company, its business, customers, shareholders, Covered Persons or brokers. It includes all business, product, marketing, financial, accounting, personnel, operations, supplier, technical and research information. It also includes computer systems, software, documentation, creations, inventions, literary works, developments, discoveries and trade secrets. Confidential information includes any non-public information of the Company that might be of use to competitors, or harmful to the Company or its customers, if disclosed.

(c) Acknowledgment. All employees of the Company are expected to sign an acknowledgment regarding the confidentiality policy set forth above at the time they become employed with the Company.

(d) Length of Confidentiality Obligations. Covered Persons are expected to comply with the confidentiality policy not only for the duration of their employment or service with the Company, but also after the end of their employment or service with the Company.

(e) Confidentiality Under the Code. All reports and records prepared or maintained pursuant to this Code shall be considered confidential and shall be maintained and protected accordingly.

7. OWNERSHIP OF INTELLECTUAL PROPERTY.

(a) Company Ownership. The Company owns all of the work performed by Covered Persons at and/or for the Company, whether partial or completed. All Covered Persons shall be obligated to assign to the Company all "intellectual property" that is created or developed by Covered Persons, alone or with others, while working for the Company.

(b) What Is Intellectual Property. "Intellectual Property" includes all trademarks and service marks, trade secrets, patents and patent subject matter and inventor rights in the United States and foreign countries and related applications. It includes all United States and foreign copyrights and subject matter and all other literary property and author rights,

whether or not copyrightable. It includes all creations, not limited to inventions, discoveries, developments, works of authorship, ideas and know-how. It does not matter whether or not the Company can protect them by patent, copyright, trade secrets, trade names, trade or service marks or other intellectual property right. It also includes all materials containing any intellectual property. These materials include but are not limited to computer tapes and disks, printouts, notebooks, drawings, artwork and other documentation. To the extent applicable, non-trade secret intellectual property constitutes a "work made for hire" owned by the Company, even if it is not a trade secret.

(c) Exceptions. The Company will not be considered to have a proprietary interest in a Covered Person's work product if: (i) the work product is developed entirely on the Covered Person's own time without the use or aid of any Company resources, including without limitation, equipment, supplies, facilities or trade secrets; (ii) the work product does not result from Covered Person's employment with the Company; and (iii) at the time a Covered Person conceives or reduces the creation to practice, it is not related to the Company's business nor the Company's actual or expected research or development.

(d) Required Disclosure. All Covered Persons must disclose to the Company all intellectual property conceived or developed while working for the Company. If requested, a Covered Person must sign all documents necessary to memorialize the Company's ownership of intellectual property under this policy. These documents include but are not limited to assignments and patent, copyright and trademark applications.

8. CORPORATE OPPORTUNITIES. Covered Persons are prohibited from (i) taking for themselves opportunities that are discovered through the use of Company property, information or position, (ii) using Company property, information or position for personal gain, and/or (iii) competing with the Company.

9. FAIR DEALING. Each Covered Person should endeavor to deal fairly with the Company's customers, suppliers, competitors and Covered Persons and not to take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing practice.

10. PROTECTION AND USE OF COMPANY PROPERTY. All Covered Persons should protect the Company's assets and ensure they are used for legitimate business purposes during employment with the Company. Improper use includes unauthorized personal appropriation or use of the Company's assets, data or resources, including computer equipment, software and data.

11. STANDARDS OF BUSINESS CONDUCT.

(a) Respectful Work Environment. The Company is committed to fostering a work environment in which all individuals are treated with respect and dignity. Each individual should be permitted to work in a business-like atmosphere that promotes equal employment opportunities.

(b) Prohibited Conduct. The following conduct will not be tolerated and could result in disciplinary action, including termination:

(i) Any act which causes doubt about a Covered Person's integrity, such as the falsifying of Company records and documents, competing in business with the Company, divulging trade secrets, or engaging in any criminal conduct.

(ii) Any act which may create a dangerous situation, such as carrying weapons, firearms or explosives on Company premises or surrounding areas, assaulting another individual, or disregarding property and safety standards.

(iii) The use, sale, purchase, transfer, possession, or attempted sale, purchase or transfer of alcohol or drugs while at work. Reporting to work while under the influence of alcohol or drugs, or otherwise in a condition not fit for work.

(iv) Insubordination, including refusal to perform a job assignment or to follow a reasonable request of a Covered Person's manager, or discourteous conduct toward customers, associates, or supervisors.

(v) Harassment of any form including threats, intimidation, abusive behavior and/or coercion of any other person in the course of doing business.

(vi) Falsification or destruction of any timekeeping record, intentionally clocking in on another Covered Person's attendance or timekeeping record, the knowledge of another Covered Person tampering with their attendance record or tampering with one's own attendance record.

(vii) Failure to perform work, which meets the standards/expectations of the Covered Person's position.

(viii) Excessive absenteeism, chronic tardiness, or consecutive absence of 3 or more days without notification or authorization.

(ix) Any act of dishonesty or falsification of any Company records or documents, including obtaining employment based on false, misleading, or omitted information.

(c) Disciplinary Action. A Covered Person or the Company may terminate the employment or service relationship at will, at any time, without cause or advance notice. Thus, the Company does not strictly adhere to a progressive disciplinary system since each incident of misconduct may have a different set of circumstances or differ in its severity. The Company will take such disciplinary action as it deems appropriate and commensurate with any misconduct of the Covered Person.

12. DISCLOSURE IN REPORTS AND DOCUMENTS.

(a) Filings and Public Materials. As a public company, it is important that the Company's filings with the Securities and Exchange Commission (the "SEC") and other Federal, State, domestic and international regulatory agencies are full, fair, accurate, timely and understandable. The Company also makes many other filings with the SEC and other domestic and international regulatory agencies on behalf of the funds that its subsidiaries and affiliates manage. Further, the Company prepares mutual fund account statements, client investment performance information, prospectuses and advertising materials that are sent out to its mutual fund shareholders and clients.

(b) Disclosure and Reporting Policy. The Company's policy is to comply with all applicable disclosure, financial reporting and accounting regulations applicable to the Company. The Company maintains the highest commitment to its disclosure and reporting requirements, and expects all Covered Persons to record information accurately and truthfully in the books and records of the Company.

(c) Information for Filings. Depending on his or her position with the Company, a Covered Person, may be called upon to provide necessary information to assure that the Company's public reports and regulatory filings are full, fair, accurate, timely and understandable. The Company expects all Covered Persons to be diligent in providing accurate information to the inquiries that are made related to the Company's public disclosure requirements.

(d) Disclosure Controls and Procedures and Internal Control Over Financial Reporting. Covered Persons are required to cooperate and comply with the Company's disclosure controls and procedures and internal controls over financial reporting so that the Company's reports and documents filed with the SEC and other Federal, State, domestic and international regulatory agencies comply in all material respects with applicable laws, and rules and regulations, and provide full, fair, accurate, timely and understandable disclosure.

13. RELATIONSHIPS WITH GOVERNMENT PERSONNEL. Covered persons should be aware that practices that may be acceptable in the commercial business environment (such as providing certain transportation, meals, entertainment and other things of nominal value) may be entirely unacceptable and even illegal when they relate to government employees or others who act on the government's behalf. Therefore, Covered Persons are required to comply with the relevant laws and regulations governing relations between government employees and customers and suppliers in every country where the Company conducts business. Covered persons are prohibited from giving money or gifts to any official or any employee of a governmental entity if doing so could reasonably be construed as having any connection with the Company's business relationship. Any proposed payment or gift to a government official or employee must be reviewed in advance by the Legal Compliance Department, even if such payment is common in the country of payment.

14. POLITICAL CONTRIBUTIONS. Election laws in many jurisdictions generally prohibit political contributions by corporations to candidates. Many local laws also prohibit corporate contributions to local political campaigns. In accordance with these laws, the Company does not make direct contributions to any candidates for federal, state or local offices where applicable laws make such contributions illegal. Contributions to political campaigns must not be, or appear to be, made with or reimbursed by the Company's funds or resources. The Company's funds and resources include (but are not limited to) the Company's facilities, office supplies, letterhead, telephones and fax machines. Employees may make personal political contributions as they see fit in accordance with all applicable laws.

15. ACCOUNTABILITY FOR ADHERENCE TO THE CODE.

(a) Honesty and Integrity. The Company is committed to uphold ethical standards in all of its corporate and business activities. All Covered Persons are expected to perform their work with honesty, truthfulness and integrity and to comply with the general principles set forth in the Code. Covered Persons are also expected to perform their work with honesty and integrity in any areas not specifically addressed by the Code.

(b) Disciplinary Actions. A violation of the Code may result in appropriate disciplinary action including the possible termination from employment with the Company. Nothing in this Code restricts the Company from taking any disciplinary action on any matters pertaining to the conduct of a Covered Person, whether or not expressly set forth in the Code.

(c) Annual Certifications. Directors and Executive Officers will be required to certify annually, on a form to be provided by the Legal Compliance Department, that they have received, read and understand the Code and have complied with the requirements of the Code.

(d) Training and Educational Requirements.

(i) Orientation. New Covered Persons will receive a copy of the Code during the orientation process conducted by representatives of the Human Resources Department and shall acknowledge that they have received, read and understand the Code and will comply with the requirements of the Code.

(ii) Continuing Education. Covered Persons shall be required to complete such additional training and continuing education requirements regarding the Code and matters related to the Code as the Company shall from time to time establish.

16. REPORTING VIOLATIONS OF THE CODE.

(a) Questions and Concerns. Described in this Code are procedures generally available for addressing ethical issues that may arise. As a general matter, if a Covered Person has any questions or concerns about compliance with this Code he or she is encouraged to speak with his or her supervisor, manager, representatives of the Human Resources Department, the Company's General Counsel or the Legal Compliance Department.

(b) Compliance and Ethics Hot-Line. If a Covered Person does not feel comfortable talking to any of the persons listed above for any reason, he or she should call the Compliance and Ethics Hot-Line at 1-800-636-6592. Calls to the Compliance and Ethics Hot-Line may be made anonymously.

(c) Responsibility to Report Violations of the Code and Law. As part of its commitment to ethical and lawful conduct, the Company expects Covered Persons to promptly report any suspected violations of this Code or law. Failure to report knowledge of a violation or other misconduct may result in disciplinary action.

(d) Confidentiality and Investigation. The Company will treat the information set forth in a report of any suspected violation of the Code or law in a confidential manner and will conduct a prompt and appropriate evaluation and investigation of any matter reported. Covered Persons are expected to cooperate in any investigations of reported violations.

(e) Protection of Covered Persons. By law, the Company may not discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act done by the employee to provide information or otherwise assist in an investigation regarding any conduct which the employee reasonably believes constitutes a violation of any rule or regulation of the SEC or any provision of Federal law relating to fraud against shareholders when the information or assistance is provided to or the investigation is conducted, by, among others, a person(s) working for the Company with the authority to investigate, discover or terminate misconduct. To encourage Covered Persons to report violations of illegal or unethical conduct, the Company will not allow retaliation to be taken against any Covered Person who has made a report under this section in good faith.

(f) Accounting/Auditing Complaints. The law requires that the Company's Audit Committee have in place procedures for the receipt, retention and treatment of complaints concerning accounting, internal accounting controls, or auditing matters and procedures for Covered Persons to anonymously submit their concerns regarding questionable accounting or auditing matters.

(g) Complaints concerning accounting, internal accounting controls or auditing matters will be directed to the attention of the Audit Committee, or the appropriate members of that committee. For direct access to the Company's Audit Committee, please address complaints regarding accounting, internal accounting controls, or auditing matters to:

Audit Committee
Franklin Resources, Inc.
One Franklin Parkway
San Mateo, California 94403

Complaints or concerns regarding accounting or auditing matters may also be made to the Compliance and Ethics Hot-Line at 1-800-636-6592. Calls to the Compliance and Ethics Hot-Line may be made anonymously.

17. WAIVERS OF THE CODE.

(a) Waivers by Directors and Executive Officers. Any change in or waiver of this Code for Directors or Executive Officers of the Company may be made only by the Board or a committee thereof in the manner described in Section 17(d) below, and any such waiver (including any implicit waiver) shall be promptly disclosed to shareholders as required by the corporate governance listing standards of the New York Stock Exchange and other applicable laws, rules and regulations.

(b) Waivers by Other Covered Persons. Any requests for waivers of this Code for Covered Persons other than Directors and Executive Officers of the Company may be made to the Legal Compliance Department in the manner described in Section 17(e) below.

(c) Definition of Waiver. For the purposes of the Code, the term "waiver" shall mean a material departure from a provision of the Code. An "implicit waiver" shall mean the failure of the Company to take action within a reasonable period of time regarding a material departure from a provision of the Code that has been made known to an Executive Officer.

(d) Manner for Requesting Director and Executive Officer Waivers.

(i) Request and Criteria. If a Director or Executive Officer wishes to request a waiver of this Code, the Director or Executive Officer may submit to the Director of Global Compliance or the Legal Compliance Department a written request for a waiver of the Code only if he/she can demonstrate that such a waiver:

(A) is necessary to alleviate undue hardship or in view of unforeseen circumstances or is otherwise appropriate under all the relevant facts and circumstances;

(B) will not be inconsistent with the purposes and objectives of the Code;

(D) will not result in a transaction or conduct that would violate provisions of applicable laws or regulations.

(ii) Discretionary Waiver and Response. The Legal Compliance Department will forward the waiver request to the Board or a committee thereof for consideration. Any decision to grant a waiver from the Code shall be at the sole and absolute discretion of the Board or committee thereof, as appropriate. The Secretary of the Company will advise the Legal Compliance Department in writing of the Board's decision regarding the waiver, including the grounds for granting or denying the waiver request. The Legal Compliance Department shall promptly advise the Director or Executive Officer in writing of the Board's decision.

(e) Manner for Requesting Other Covered Person Waivers.

(i) Request and Criteria. If a Covered Person who is a non-director and non-Executive Officer wishes to request a waiver of this Code, the Covered Person may submit to the Legal Compliance Department a written request for a waiver of the Code only if he/she can demonstrate that such a waiver would satisfy the same criteria set forth in Section 17(d).

(ii) Discretionary Waiver and Response. The Legal Compliance Department shall forward the waiver request to the General Counsel of the Company for consideration. The decision to grant a waiver request shall be at the sole and absolute discretion of the General Counsel of the Company. The General Counsel will advise the Legal Compliance Department in writing of his/her decision regarding the waiver, including the grounds for granting or denying the waiver request. The Legal Compliance Department shall promptly advise the Covered Person in writing of the General Counsel's decision.

18. INTERNAL USE. The Code is intended solely for the internal use by the Company and does not constitute an admission, by or on behalf of the Company, as to any fact, circumstance, or legal conclusion.

19. OTHER POLICIES AND PROCEDURES. The "Code of Ethics and Policy Statement on Insider Trading" under Rule 17j-1 pursuant to the Investment Company Act and other policies and procedures adopted by the Company are additional requirements that apply to Covered Persons.

POLICY STATEMENT ON INSIDER TRADING

A. LEGAL REQUIREMENT

Pursuant to the Insider Trading and Securities Fraud Enforcement Act of 1988, No officer, director, employee, consultant acting in a similar capacity, or other person associated with Franklin Templeton Investments may trade, either personally or on behalf of clients, including all client assets managed by the entities in Franklin Templeton Investments, on material non-public information or communicating material non-public information to others in violation of the law. This conduct is frequently referred to as "insider trading." Franklin Templeton Investment's Policy Statement on Insider Trading applies to every officer, director, employee or other person associated with Franklin Templeton Investments and extends to activities within and outside their duties with Franklin Templeton Investments. Every officer, director and employee must read and retain this policy statement. Any questions regarding Franklin Templeton Investments Policy Statement on Insider Trading or the Compliance Procedures should be referred to the Legal Department.

The term "insider trading" is not defined in the federal securities laws, but generally is used to refer to the use of material non-public information to trade in securities (whether or not one is an "insider") or to communications of material non-public information to others.

While the law concerning insider trading is not static, it is generally understood that the law prohibits:

(1) trading by an insider, while in possession of material non-public information; or

(2) trading by a non-insider, while in possession of material non-public information, where the information either was disclosed to the non-insider in violation of an insider's duty to keep it confidential or was misappropriated; or

(3) communicating material non-public information to others.

The elements of insider trading and the penalties for such unlawful conduct are discussed below. If, after reviewing this policy statement, you have any questions, you should consult the Legal Department.

B. WHO IS AN INSIDER?

The concept of "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 special confidential relationship in the conduct of a company's affairs and as a result is given access to information solely for the company's purposes. A temporary insider can include, among others, a company's outside attorneys, accountants, consultants, bank lending officers, and the employees of such organizations. In addition, an investment adviser may become a temporary insider of a company it advises or for which it performs other services. According to the U.S. Supreme Court, the company must expect the outsider to keep the disclosed non-public information confidential and the relationship must at least imply such a duty before the outsider will be considered an insider.

C. WHAT IS MATERIAL INFORMATION?

Trading on inside information is not a basis for liability unless the information is material. "Material information" generally is defined as information for which there is a substantial likelihood that a reasonable investor would consider it important in making his or her investment decisions, or information that is reasonably certain to have a substantial effect on the price of the company's securities. Information that officers, directors and employees should consider material includes, but is not limited to: dividend changes, earnings estimates, changes in previously released earnings estimates, significant merger or acquisition proposals or agreements, major litigation, liquidation problems, and extraordinary management developments.

Material information does not have to relate to a company's business. For example, in Carpenter v. U.S., 108 U.S. 316 (1987), the Supreme 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 Wall Street Journal reporter was found criminally liable for disclosing to others the dates that reports on various companies would appear in the Wall Street Journal and whether those reports would be favorable or not.

D. WHAT IS NON-PUBLIC INFORMATION?

Information is non-public until it has been effectively communicated to 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 ("SEC"), or appearing in Dow Jones, Reuters Economic Services, The Wall Street Journal or other publications of general circulation would be considered public.

E. BASIS FOR LIABILITY

1. FIDUCIARY DUTY THEORY

In 1980, the Supreme Court found that there is no general duty to disclose before trading on material non-public information, but that such a duty arises only where there is a fiduciary relationship. That is, there must be a relationship between the parties to the transaction such that one party has a right to expect that the other party will not disclose any material non-public information or refrain from trading. Chiarella v. U.S., 445 U.S. 22 (1980).

In Dirks v. SEC, 463 U.S. 646 (1983), the Supreme Court stated alternate theories under which non-insiders can acquire the fiduciary duties of insiders. They can enter into a confidential relationship with the company through which they gain information (e.g., attorneys, accountants), or they can acquire a fiduciary duty to the company's shareholders as "tippees" if they are aware or should have been aware that they have been given confidential information by an insider who has violated his fiduciary duty to the company's shareholders.

However, in the "tippee" situation, a breach of duty occurs only if the insider personally benefits, directly or indirectly, from the disclosure. The benefit does not have to be pecuniary but can be a gift, a reputational benefit that will translate into future earnings, or even evidence of a relationship that suggests a quid pro quo.

2. MISAPPROPRIATION THEORY

Another basis for insider trading liability is the "misappropriation" theory, under which liability is established when trading occurs on material non-public information that was stolen or misappropriated from any other person. In U.S. v. Carpenter, supra, the Court found, in 1987, a columnist defrauded The Wall Street Journal when he stole information from the Wall Street Journal and used it for trading in the securities markets. It should be noted that the misappropriation theory can be used to reach a variety of individuals not previously thought to be encompassed under the fiduciary duty theory.

F. PENALTIES FOR INSIDER TRADING

Penalties for trading on or communicating material non-public information are severe, both for individuals involved in such unlawful conduct and their employers A violation of the Code resulting in a violation of the law will be severely sanctioned, with disciplinary action including but not limited to termination. Please refer to Part 7 - Penalties for Violations of the Code.

A person can be subject to some or all of the penalties below even if he or she does not personally benefit from the violation. Penalties include:

- civil injunctions;

- treble damages;

- disgorgement of profits;

- jail sentences;

- fines for the person who committed the violation of up to three times the profit gained or loss avoided, whether or not the person actually benefited; and

- fines for the employer or other controlling person 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 policy statement can result in serious sanctions by the Franklin Templeton Group, including dismissal of any person involved.

G. Insider Trading Procedures

Each Access Person, Compliance Officer, the Risk Management Department, and the Legal Department, as the case may be, shall comply with the following procedures.

1. IDENTIFYING INSIDE INFORMATION

Before trading for yourself or others, including investment companies or private accounts managed by the Franklin Templeton Group, in the securities of a company about which you may have potential inside information, ask yourself the following questions:

- Is the information material?

- Is this information that an investor would consider important in making his or her investment decisions?

- Is this information that would substantially affect the market price of the securities if generally disclosed?

- Is the information non-public?

- To whom has this information been provided?

- Has the information been effectively communicated to the marketplace (e.g., published in Reuters, The Wall Street Journal or other publications of general circulation)?

If, after consideration of these questions, you believe that the information may be material and non-public, or if you have questions as to whether the information is material and non-public, you should take the following steps:

(i) Report the matter immediately to the designated Compliance Officer, or if he or she is not available, to the Legal Department.

(ii) Do not purchase or sell the securities on behalf of yourself or others, including investment companies or private accounts managed by Franklin Templeton Investments.

(iii) Do not communicate the information inside or outside Franklin Templeton Investments, other than to the Compliance Officer or the Legal Department.

(iv) The Compliance Officer shall immediately contact the Legal Department for advice concerning any possible material, non-public information.

(v) After the Legal Department has reviewed the issue and consulted with the Compliance Officer, you will be instructed either to continue the prohibitions against trading and communication noted in (ii) and
(iii), or you will be allowed to trade and communicate the information.

(vi) In the event the information in your possession is determined by the Legal Department or the Compliance Officer to be material and non-public, it may not be communicated to anyone, including persons within Franklin Templeton Investments, except as provided in (i) above. In addition, care should be taken so that the information is secure. For example, files containing the information should be sealed and access to computer files containing material non-public information should be restricted to the extent practicable. Securities for which there is material, non-public information shall be placed on the personal trading restricted list for a timeframe determined by the Compliance Officer.

2. RESTRICTING ACCESS TO OTHER SENSITIVE INFORMATION

All Franklin Templeton Investments personnel also are reminded of the need to be careful to protect from disclosure other types of sensitive information that they may obtain or have access to as a result of their employment or association with Franklin Templeton Investments.

(I) GENERAL ACCESS CONTROL PROCEDURES

Franklin Templeton Investments has established a process by which access to company files that may contain sensitive or non-public information such as the Bargain List and the Source of Funds List is carefully limited. Since most of the Franklin Templeton Group files, which contain sensitive information, are stored in computers, personal identification numbers, passwords and/or code access numbers are distributed to Franklin Templeton Investments computer Access Persons only. This activity is monitored on an ongoing basis. In addition, access to certain areas likely to contain sensitive information is normally restricted by access codes.

FAIR DISCLOSURE POLICIES AND PROCEDURES

A. WHAT IS REGULATION FD?

Regulation FD under the Securities Exchange Act of 1934, as amended (the "1934 Act"), prohibits certain persons associated with Franklin Resources, Inc., its affiliates, subsidiaries (collectively, "FTI") and closed-end funds advised by an investment advisory subsidiary of Resources ( "FTI Closed-End Funds") and persons associated with the FTI investment adviser to the FTI Closed-End Funds, from selectively disclosing material nonpublic information about Resources and the FTI Closed-End Funds to certain securities market professionals and shareholders. Regulation FD is designed to promote the full and fair disclosure of information by issuers such as Resources and the FTI Closed-End Funds.

The scope of Regulation FD is limited. Regulation FD applies to Resources and FTI Closed-End Funds, but does not apply to open-end investment companies managed by the FTI investment advisers. The rule also does not apply to all communications about the Resources or FTI Closed-End Funds with outside persons. Rather, Regulation FD applies only to communications to securities market professionals and to any shareholder of the Resources or FTI Closed-End Funds under circumstances in which it is reasonably foreseeable that such shareholder will trade on the basis of the information. In addition, Regulation FD does not apply to all employees and officers. It only applies to certain senior officials of Resources and the FTI Closed-End Funds and those persons who regularly communicate with securities market professionals or with shareholders. Consequently, Regulation FD and the Franklin Templeton Investments Fair Disclosure Policies and Procedures (the "Policies and Procedures") will not apply to a variety of legitimate, ordinary-course business communications or to disclosures made to the media. Irrespective of Regulation FD, all Franklin personnel must comply with the "Franklin Templeton Investment Policy Statement on Insider Trading" and should be aware that disclosure of material nonpublic information to another person may constitute a form of illegal insider trading called "tipping."

B. FTI'S CORPORATE POLICY FOR REGULATION FD

Franklin Templeton Investments is committed to complying with Regulation FD by making fair disclosure of information about Resources or FTI Closed-End Funds without advantage to any particular securities market professional, shareholder or investor. It is not the intention of these Policies and Procedures, however, to interfere with legitimate, ordinary-course business communications or disclosures made to the media or governmental agencies. FTI believes it is in its best interest to maintain an active and open dialogue with securities market professionals, shareholders and investors regarding Resources and the FTI Closed-End Funds. FTI will continue to provide current and potential shareholders access to key information reasonably required for making an informed decision on whether to invest in shares of Resources or FTI Closed-End Funds. FTI personnel will make appropriate announcements and conduct interviews about Resources and FTI Closed-End Funds with the media, in accordance with Corporate Communication's policies and procedures regarding such announcements or interviews.

C. GENERAL PROVISIONS OF REGULATION FD

WHENEVER:

1) AN ISSUER, OR PERSON ACTING ON ITS BEHALF (i.e. any senior official or any other officer, employee or agent of an issuer (or issuer's investment adviser) who regularly communicates with securities professionals or shareholders, or any employee directed to make a disclosure by a member of senior management)

2) DISCLOSES MATERIAL NON-PUBLIC INFORMATION

3) TO CERTAIN SPECIFIED PERSONS (generally, securities market professionals or holders of the issuer's securities who may trade on the basis of the information)

THEN:

(4) THE ISSUER MUST MAKE PUBLIC DISCLOSURE OF THAT SAME INFORMATION:

- simultaneously (for intentional disclosures), or

- promptly (for non-intentional disclosures). In the case of non-intentional disclosures, "promptly" means no later than 24 hours (or the commencement of the next day's trading on the NYSE, whichever is later), after a senior official learns of the disclosure and knows, or is reckless in not knowing, that the information is both material and non-public.

D. PERSONS TO WHOM SELECTIVE DISCLOSURE MAY NOT BE MADE:

(1) BROKER-DEALERS and their associated persons;

(2) INVESTMENT ADVISERS, certain institutional investment managers and their associated persons,

(3) INVESTMENT COMPANIES, hedge funds and their affiliated persons, and

(4) HOLDERS OF THE ISSUER'S SECURITIES, under circumstances where it is reasonably foreseeable that such person would purchase or sell securities on the basis of the information.

The Regulation is designed to cover sell-side analysts, buy-side analysts, institutional investment managers, and other market professionals who may be likely to trade on the basis of selectively disclosed information.

E. EXCLUSIONS FROM REGULATION FD

SELECTIVE DISCLOSURES MAY BE MADE TO THE FOLLOWING AND NOT VIOLATE REGULATION
FD:

(1) communications to "temporary insiders" who owe a duty of trust or confidence to the issuer (i.e. attorneys, investment bankers, or accountants);

(2) any person who expressly agrees to maintain the information in confidence (i.e., disclosures by a public company to private investors in private offerings);

(3) an entity whose primary business is the issuance of a credit rating, if the information is disclosed for the sole purpose of developing such ratings and the entity's ratings are publicly available; and

(4) communications made in connection with most offerings of securities registered under the Securities Act of 1933.

F. METHODS OF PUBLIC DISCLOSURE:

An issuer's disclosure obligation may be met by any method reasonably designed to provide broad, non-exclusionary distribution of the information to the public. Acceptable methods of public disclosure include:

- Furnishing or filing with the SEC a Form 8-K (not applicable to closed-end investment companies);

- press releases distributed through a widely circulated news or wire service; or

- announcements made through press conferences or conference calls that interested members of the public may attend or listen to either in person, by telephonic transmission, or by other electronic transmission (including use of the Internet), of which the public has adequate notice and means of access.

Posting of new information on issuer's own website is not by itself a sufficient method of public disclosure. It may be used in combination with other methods.

G. TRAINING

Appropriate training will be provided to certain employees identified as follows:

- Corporate Communications Department

- Portfolio managers of FTI Closed-End Funds and their assistants;

- Managers and supervisors of Customer Service Representatives.

As a part of this training, each employee will be notified that they should not communicate on substantive matters involving Franklin Resources Inc., or the FTI Closed-End Funds except in accordance with these Policies and Procedures.

H. QUESTIONS

All inquiries regarding these Policies and Procedures should be addressed to Barbara Green, Deputy General Counsel (650-525-7188), or Jim Davis, Director of Global Compliance (650-312-2832).

I. FREQUENTLY ASKED QUESTIONS:

(1) WHEN IS DISCLOSURE CONSIDERED INTENTIONAL WITHIN THE MEANING OF REGULATION FD?

Under Regulation FD, selective disclosure is considered intentional when the issuer (or person acting on its behalf) knows, or is reckless in not knowing, that the information disclosed is BOTH material and non-public. For example, non-intentional selective disclosures may occur when company officials inadvertently disclose material information in response to questions from analysts or shareholders or when a decision is made to selectively disclose information that the company does not view as material but the market moves in response to the disclosure.

(2) WHAT IS NON-PUBLIC INFORMATION?

Information is non-public if it has not been disseminated in a manner making it available to investors generally.

(3) WHAT IS MATERIAL INFORMATION?

Regulation FD deems information material if "there is a substantial likelihood that a reasonable shareholder would consider it important" in making an investment decision or if there a substantial likelihood that a fact would be viewed by a reasonable investor as having "significantly altered the 'total mix' of information made available."

(4) ARE THERE SPECIFIC TYPES OF INFORMATION THAT ARE CONSIDERED MATERIAL?

There is no bright line test to determine materiality. However, below is a list of items that should be reviewed carefully to determine whether they are material.

- An impending departure of a portfolio manager who is primarily responsible for day-to-day management of a Closed-End Fund;

- A plan to convert a Closed-End Fund from a closed-end investment company to an open-end investment company;

- A plan to merge a Closed-End Fund into another investment company;

- Impending purchases or sales of particular portfolio securities;

- Information about Resources related to earnings or earnings forecasts;

- Mergers, acquisitions, tender offers, joint ventures, or material change in assets;

- Changes in control or in management;

- Change in auditors or auditor notification that the issuer may no longer rely on an auditor's audit report;

- Events regarding Resources or an FTI Closed-End Fund's securities - e.g., repurchase plans, stock splits or changes in dividends, calls of securities for redemption, changes to the rights of security holders, public or private sales of additional securities; and

- Bankruptcies or receiverships.

(5) ARE ALL ISSUER COMMUNICATIONS COVERED BY THE RULE?

No. Regulation FD applies only to communications by the issuer's senior management, its investor relations professionals and others who regularly communicate with securities market professionals and security holders when those communications are made to securities market professionals and security holders under circumstances in which it is reasonably foreseeable that the holders will trade on the basis of the information. Regulation FD isn't intended to apply to persons who are engaged in ordinary-course business communications with the issuer or to interfere with disclosures to the media. However, the traditional disclosure concerns (such as "tipping" material non-public information and leaking disclosure into the market) still apply.

(6) ARE COMMUNICATIONS TO THE MEDIA COVERED BY REGULATION FD?

No. However, an interview with a reporter is not the best way to disseminate material information to the public and is not a method of public disclosure mentioned by the SEC as a means to satisfy Regulation FD.

(7) ARE ONE-ON-ONE DISCUSSIONS WITH ANALYSTS PERMITTED?

Yes. Regulation FD is not intended to undermine the role of analysts in "sifting through and extracting information that may not be significant to the ordinary investor to reach material conclusions." However, persons covered by Regulation FD must be cautious not to selectively provide material non-public information in one-on-one discussions. (This may be confusing to some - perhaps this should be deleted.)

(8) MAY ISSUERS PROVIDE GUIDANCE ON EARNINGS?

Not selectively. Although many issuers have historically provided earnings guidance, the SEC observed in Regulation FD's adopting release that an issuer that has a private conversation with an analyst in which the issuer provides direct or indirect guidance as to whether earnings will be higher than, lower than or even the same as forecasted will likely violate the rule. Regulation FD may be violated simply by confirming in a non-public manner an earnings forecast that is already public, because such confirmation may be material.

J. SUPPLEMENTAL INFORMATION - SEC'S DIVISION OF CORPORATE FINANCE

(1) INTERPRETATIONS ISSUED OCTOBER 2000

1. CAN AN ISSUER EVER CONFIRM SELECTIVELY A FORECAST IT HAS PREVIOUSLY MADE TO THE PUBLIC WITHOUT TRIGGERING THE RULE'S PUBLIC REPORTING REQUIREMENTS?

Yes. In assessing the materiality of an issuer's confirmation of its own forecast, the issuer should consider whether the confirmation conveys any information above and beyond the original forecast and whether that additional information is itself material. That may depend on, among other things, the amount of time that has elapsed between the original forecast and the confirmation (or the amount of time elapsed since the last public confirmation, if applicable). For example, a confirmation of expected quarterly earnings made near the end of a quarter might convey information about how the issuer actually performed. In that respect, the inference a reasonable investor may draw from such a confirmation may differ significantly from the inference he or she may have drawn from the original forecast early in the quarter. The materiality of a confirmation also may depend on, among other things, intervening events. For example, if it is clear that the issuer's forecast is highly dependent on a particular customer and the customer subsequently announces that it is ceasing operations, a confirmation by the issuer of a prior forecast may be material.

We note that a statement by an issuer that it has "not changed," or that it is "still comfortable with," a prior forecast is no different than a confirmation of a prior forecast. Moreover, under certain circumstances, an issuer's reference to a prior forecast may imply that the issuer is confirming the forecast. If, when asked about a prior forecast, the issuer does not want to confirm it, the issuer may simply wish to say "no comment." If an issuer wishes to refer back to the prior estimate without implicitly confirming it, the issuer should make clear that the prior estimate was as of the date it was given and is not being updated as of the time of the subsequent statement.

2. DOES REGULATION FD CREATE A DUTY TO UPDATE?

No. Regulation FD does not change existing law with respect to any duty to update.

3. IF AN ISSUER WANTS TO MAKE PUBLIC DISCLOSURE OF MATERIAL NONPUBLIC INFORMATION UNDER REGULATION FD BY MEANS OF A CONFERENCE CALL, WHAT INFORMATION MUST THE ISSUER PROVIDE IN THE NOTICE AND HOW FAR IN ADVANCE SHOULD NOTICE BE GIVEN?

An adequate advance notice under Regulation FD must include the date, time, and call-in information for the conference call.

Issuers also should consider the following non-exclusive factors in determining what constitutes adequate advance notice of a conference call:

- TIMING: Public notice should be provided a reasonable period of time ahead of the conference call. For example, for a quarterly earnings announcement that the issuer makes on a regular basis, notice of several days would be reasonable. We recognize, however, that the period of notice may be shorter when unexpected events occur and the information is critical or time sensitive.

- AVAILABILITY: If a transcript or re-play of the conference call will be available after it has occurred, for instance via the issuer's website, we encourage issuers to indicate in the notice how, and for how long, such a record will be available to the public.

4. CAN AN ISSUER SATISFY REGULATION FD'S PUBLIC DISCLOSURE REQUIREMENT BY DISCLOSING MATERIAL NONPUBLIC INFORMATION AT A SHAREHOLDER MEETING THAT IS OPEN TO ALL SHAREHOLDERS, BUT NOT TO THE PUBLIC?

No. If a shareholder meeting is not accessible by the public, an issuer's selective disclosure of material nonpublic information at the meeting would not satisfy Regulation FD's public disclosure requirement.

5. COULD AN EXCHANGE ACT FILING OTHER THAN A FORM 8-K, SUCH AS A FORM 10-Q OR PROXY STATEMENT, CONSTITUTE PUBLIC DISCLOSURE?

Yes. In general, including information in a document publicly filed on EDGAR with the SEC within the time frames that Regulation FD requires would satisfy the rule. In considering whether that disclosure is sufficient, however, companies must take care to bring the disclosure to the attention of readers of the document, must not bury the information, and must not make the disclosure in a piecemeal fashion throughout the filing.

6. FOR PURPOSES OF REGULATION FD, MUST AN ISSUER WAIT SOME PERIOD OF TIME AFTER MAKING A FILING OR FURNISHING A REPORT ON EDGAR THAT COMPLIES WITH THE EXCHANGE ACT BEFORE MAKING DISCLOSURE OF THE SAME INFORMATION TO A SELECT AUDIENCE?

Prior to making disclosure to a select audience, the issuer need only confirm that the filing or furnished report has received a filing date (as determined in accordance with Rules 12 and 13 of Regulation S-T) that is no later than the date of the selective disclosure.

7. CAN AN ISSUER EVER REVIEW AND COMMENT ON AN ANALYST'S MODEL PRIVATELY WITHOUT TRIGGERING REGULATION FD'S DISCLOSURE REQUIREMENTS?

Yes. It depends on whether, in so doing, the issuer communicates material nonpublic information. For example, an issuer ordinarily would not be conveying material nonpublic information if it corrected historical facts that were a matter of public record. An issuer also would not be conveying such information if it shared seemingly inconsequential data which, pieced together with public information by a skilled analyst with knowledge of the issuer and the industry, helps form a mosaic that reveals material nonpublic information. It would not violate Regulation FD to reveal this type of data even if, when added to the analyst's own fund of knowledge, it is used to construct his or her ultimate judgments about the issuer. An issuer may not, however, use the discussion of an analyst's model as a vehicle for selectively communicating - either expressly or in code - material nonpublic information.

8. DURING A NONPUBLIC MEETING WITH ANALYSTS, AN ISSUER'S CEO PROVIDES MATERIAL NONPUBLIC INFORMATION ON A SUBJECT SHE HAD NOT PLANNED TO COVER. ALTHOUGH THE CEO HAD NOT PLANNED TO DISCLOSE THIS INFORMATION WHEN SHE ENTERED THE MEETING, AFTER HEARING THE DIRECTION OF THE DISCUSSION, SHE DECIDED TO PROVIDE IT, KNOWING THAT THE INFORMATION WAS MATERIAL AND NONPUBLIC. WOULD THIS BE CONSIDERED AN INTENTIONAL DISCLOSURE THAT VIOLATED REGULATION FD BECAUSE NO SIMULTANEOUS PUBLIC DISCLOSURE WAS MADE?

Yes. A disclosure is "intentional" under Regulation FD when the person making it either knows, or is reckless in not knowing, that the information he or she is communicating is both material and nonpublic. In this example, the CEO knew that the information was material and nonpublic, so the disclosure was "intentional" under Regulation FD, even though she did not originally plan to make it.

9. MAY AN ISSUER PROVIDE MATERIAL NONPUBLIC INFORMATION TO ANALYSTS AS LONG AS THE ANALYSTS EXPRESSLY AGREE TO MAINTAIN CONFIDENTIALITY UNTIL THE INFORMATION IS PUBLIC?

Yes.

10. IF AN ISSUER GETS AN AGREEMENT TO MAINTAIN MATERIAL NONPUBLIC INFORMATION IN CONFIDENCE, MUST IT ALSO GET THE ADDITIONAL STATEMENT THAT THE RECIPIENT AGREES NOT TO TRADE ON THE INFORMATION IN ORDER TO RELY ON THE EXCLUSION IN RULE
100(B)(2)(II) OF REGULATION FD?

No. An express agreement to maintain the information in confidence is sufficient. If a recipient of material nonpublic information subject to such a confidentiality agreement trades or advises others to trade, he or she could face insider trading liability.

11. IF AN ISSUER WISHES TO RELY ON THE CONFIDENTIALITY AGREEMENT EXCLUSION OF REGULATION FD, IS IT SUFFICIENT TO GET AN ACKNOWLEDGMENT THAT THE RECIPIENT OF THE MATERIAL NONPUBLIC INFORMATION WILL NOT USE THE INFORMATION IN VIOLATION OF THE FEDERAL SECURITIES LAWS?

No. The recipient must expressly agree to keep the information confidential.

12. MUST ROAD SHOW MATERIALS IN CONNECTION WITH A REGISTERED PUBLIC OFFERING BE DISCLOSED UNDER REGULATION FD?

Any disclosure made "in connection with" a registered public offering of the type excluded from Regulation FD is not subject to Regulation FD. That includes road shows in those offerings. All other road shows are subject to Regulation FD in the absence of another applicable exclusion from Regulation FD. For example, a disclosure in a road show in an unregistered offering is subject to Regulation FD. Also, a disclosure in a road show made while the issuer is not in registration and is not otherwise engaged in a securities offering is subject to Regulation FD. If, however, those who receive road show information expressly agree to keep the material nonpublic information confidential, disclosure to them is not subject to Regulation FD.

13. CAN AN ISSUER DISCLOSE MATERIAL NONPUBLIC INFORMATION TO ITS EMPLOYEES (WHO MAY ALSO BE SHAREHOLDERS) WITHOUT MAKING PUBLIC DISCLOSURE OF THE INFORMATION?

Yes. Rule 100(b)(1) states that Regulation FD applies to disclosures made to "any person outside the issuer." Regulation FD does not apply to communications of confidential information to employees of the issuer. An issuer's officers, directors, and other employees are subject to duties of trust and confidence and face insider trading liability if they trade or tip.

14. IF AN ISSUER HAS A POLICY THAT LIMITS WHICH SENIOR OFFICIALS ARE AUTHORIZED TO SPEAK TO PERSONS ENUMERATED IN RULE 100(B)(1)(I) - (B)(1)(IV), WILL DISCLOSURES BY SENIOR OFFICIALS NOT AUTHORIZED TO SPEAK UNDER THE POLICY BE SUBJECT TO REGULATION FD?

No. Selective disclosures of material nonpublic information by senior officials not authorized to speak to enumerated persons are made in breach of a duty of trust or confidence to the issuer and are not covered by Regulation FD. Such disclosures may, however, trigger liability under existing insider trading law.

15. A PUBLICLY TRADED COMPANY HAS DECIDED TO CONDUCT A PRIVATE PLACEMENT OF SHARES AND THEN SUBSEQUENTLY REGISTER THE RESALE BY THOSE SHAREHOLDERS ON A FORM S-3 REGISTRATION STATEMENT. THE COMPANY AND ITS INVESTMENT BANKERS CONDUCT MINI-ROAD SHOWS OVER A THREE-DAY PERIOD DURING THE PRIVATE PLACEMENT. DOES THE RESALE REGISTRATION STATEMENT FILED AFTER COMPLETION OF THE PRIVATE PLACEMENT AFFECT WHETHER DISCLOSURE AT THE ROAD SHOWS IS COVERED BY REGULATION FD?

No. The road shows are made in connection with an offering by the issuer that is not registered (i.e., the private placement), regardless of whether a registration statement is later filed for an offering by those who purchased in the private placement.

(2) ADDITIONAL INTERPRETATIONS ISSUED DECEMBER 2000

1. DOES THE MERE PRESENCE OF THE PRESS AT AN OTHERWISE NON-PUBLIC MEETING ATTENDED BY PERSONS OUTSIDE THE ISSUER DESCRIBED IN PARAGRAPH (B)(1) OF RULE 100 UNDER REGULATION FD RENDER THE MEETING PUBLIC FOR PURPOSES OF REGULATION FD?

Regulation FD states that a company can make public disclosure by filing or furnishing a Form 8-K or by disseminating information through another method (or combination of methods) that is reasonably designed to provide broad, non-exclusionary distribution of the information to the public. Some companies may attempt to satisfy the latter method for public dissemination by merely having the press in attendance at a meeting to which the public is not invited or otherwise present. If it is attended by persons outside the issuer described in paragraph (b)(1) of Rule 100 under Regulation FD and if it is not otherwise public, the meeting will not necessarily be deemed public for purposes of Regulation FD by the mere presence of the press at the meeting. Whether or not the meeting would be deemed public would depend, among other things, on when, what and how widely the press reports on the meeting.

2. IS REGULATION FD INTENDED TO REPLACE THE PRACTICE OF USING A PRESS RELEASE TO DISSEMINATE EARNINGS INFORMATION IN ADVANCE OF A CONFERENCE CALL OR WEBCAST AT WHICH EARNINGS INFORMATION WILL BE DISCUSSED?

No. In adopting Regulation FD, the Commission specifically indicated that it did not intend the regulation to alter or supplant the rules of self-regulatory organizations with respect to the use of press releases to announce material developments. In this regard, the Commission specifically endorsed a model for the planned disclosure of material information, such as earnings, in which the conference call or webcast is preceded by a press release containing the earnings information.

SUPPLEMENTAL MEMORANDUM ON CHINESE WALL POLICY

AS REVISED AUGUST, 2004

The following revised memorandum updates the memo, dated November 19, 1999, and reflects changes to the Advisory Groups. The memorandum sets forth FTI's policies and procedures for restricting the flow of "Investment Information" and erecting barriers to prevent the flow of such "Investment Information" (the "Chinese Wall") between the following Advisory Groups:

1. Franklin Templeton Advisory Group ("Franklin Templeton");

2. Franklin Floating Rate Trust Advisory Group ("Floating Rate"); and

3. Franklin Mutual Advisory Group ("Franklin Mutual")

"Investment Information" of each respective Advisory Group is information relating to:

- actual and proposed trading on behalf of clients of the Advisory Group;

- current and prospective Advisory Group client portfolio positions; and

- investment research related to current and prospective positions.

Specifically, under the Chinese Wall, access persons(14) from these Advisory Groups (as defined in Appendix A) are prohibited from having access to Investment Information of an Advisory Group other than his or her own Advisory Group with the following exception: Access persons to Floating Rate may have access to Investment Information of Franklin Templeton, but access persons to Franklin Templeton may not have access to Floating Rate.

The Chinese Wall applies to all access persons, including part-time employees, and consultants, and are in addition to those obligations prescribed by the Franklin Templeton Group's Code of Ethics (the "Code of Ethics").

Questions regarding these procedures should be directed to the attention of the Director, Legal Global Compliance, Legal Department, San Mateo, California at
(650) 312-2832 or e-mailed to jdavis@frk.com.

GENERAL PROCEDURES

CONFIDENTIALITY. Access persons within one Advisory Group (e.g., Franklin Templeton) may not disclose Investment Information to access persons of the other Advisory Group (e.g., Franklin Mutual). Any communication of Investment Information outside an Advisory Group should be limited to persons (such as Accounting, Investment Operations, Legal and Compliance personnel) who have a valid "need to know" such information and each of whom is specifically prohibited from disclosing Investment Information from one to another except when necessary for regulatory purposes. Nothing contained herein is designed to prohibit the proper exchange of accounting, operational, legal or compliance information among such persons in the normal course of performing his or her duties.

DISCUSSIONS. Access persons within one Advisory Group shall avoid discussing Investment Information in the presence of persons who do not have a need to know the information. Extreme caution should be taken with discussions in public places such as hallways, elevators, taxis, airplanes, airports, restaurants, and social gatherings.

(14) The definition of access person is the same as that contained in the Code of Ethics.

Avoid discussing confidential information on speakerphones. Mobile telephones should be used with great care because they are not secure.

ACCESS. Access persons should limit physical access to areas where confidential or proprietary information may be present or discussed. Only persons with a valid business reason for being in such an area should be permitted. In this regard, meetings with personnel who are not members of the same Advisory Group should be conducted in conference rooms rather than employee offices. Work on confidential projects should take place in areas that are physically separate and secure.

OUTSIDE INQUIRIES. Any person not specifically authorized to respond to press or other outside inquiries concerning a particular matter shall refer all calls relating to the matter to the attention of the Director, Corporate Communications, Franklin Templeton Investments, in San Mateo, California, at
(650) 312-4701.

DOCUMENTS AND DATABASES. Confidential documents should not be stored in common office areas where they may be read by unauthorized persons. Such documents shall be stored in secure locations and not left exposed overnight on desks or in workrooms.

Confidential databases and other confidential information accessible by computer shall be protected by passwords or otherwise secured against access by unauthorized persons.

FAXING, MAILING AND EMAILING PROCEDURES. Confidential documents shall not be faxed, e-mailed or sent via interoffice or other mailto locations where they may be read by unauthorized persons, including to other FRI offices outside the Advisory Group, unless steps have been taken to remove or redact any confidential information included in such documents. Prior to faxing a document that includes confidential information, the sender shall confirm that the recipient is attending the machine that receives such documents.

THE CHINESE WALL

GENERAL. FRI has adopted the Chinese Wall to separate investment management activities conducted by certain investment advisory subsidiaries of FRI. The Chinese Wall may be amended or supplemented from time to time by memoranda circulated by the Legal Compliance Department.

CHINESE WALL RESTRICTIONS. Except in accordance with the Wall-crossing procedures described below or in accordance with such other procedures as may be developed by the Legal Compliance Department for a particular department or division:

- No access person in any Advisory Group (as defined in Appendix A) shall disclose Investment Information to any access person in the any other Advisory Group, or give such access persons access to any file or database containing such Investment Information; and

- No access person in any Advisory Group shall obtain or make any effort to obtain Investment Information within the any other Advisory Group from any person.

An access person who obtains Investment Information of an Advisory Group other than his or her own in a manner other than in accordance with the Chinese Wall procedures described herein, shall immediately notify an appropriate supervisory person in his or her department who, in turn, should consult with the Legal Compliance Department concerning what, if any, action should be taken. Unless expressly advised to the contrary by the Legal Compliance Department, such employee shall refrain from engaging in transactions in the related securities or other securities of the related issuer for any account and avoid further disclosure of the information.

CROSSING PROCEDURES. Disclosure of Investment Information of one Advisory Group to an access person in another Advisory Group on a "need to know" basis in the performance of his or her duties, should be made only if absolutely

necessary. In such instance, the disclosure of such information may be made only in accordance with the specific procedures set forth below.

An access person within one Advisory Group must obtain prior approval from the Legal Compliance Department before making any disclosure of Investment Information to an access person within the other Advisory Group.

Before approval is granted, the Legal Compliance Department must be notified in writing by an Executive Officer within the Advisory Group (the "Originating Group") which proposes to cross the Chinese Wall of (1) the identity of the Advisory Group access person(s) who are proposed to cross the Chinese Wall, (2) the identity of the access person(s) in the other Advisory Group (the "Receiving Group") who are proposed to receive the Investment Information, (3) the applicable issuer(s), (4) the nature of the information to be discussed, and (5) the reason for crossing the Chinese Wall. The form of notice is attached to this Memorandum as Appendix B. The Legal Compliance Department will notify an Executive Officer within the Receiving Group of the identity of the access person(s) who are proposed to cross the Chinese Wall. The Legal Compliance Department may not disclose any additional information to such person.

If approval is obtained from an Executive Officer within the Receiving Group, the Legal Compliance Department will notify the requesting Executive Officer in the Originating Group that the proposed Wall-crosser(s) may be contacted. Personnel from the Legal Compliance Department or their designees must attend all meetings where Wall-crossing communications are made. Communications permitted by these crossing procedures shall be conducted in a manner not to be overheard or received by persons not authorized to receive confidential information.

A record of Wall-crossings will be maintained by the Legal Compliance Department.

An access person who has crossed the Chinese Wall under these procedures must maintain the confidentiality of the Investment Information received and may use it only for the purposes for which it was disclosed.

Any questions or issues arising in connection with these crossing procedures will be resolved between the appropriate Executive Officers(s), the Legal Compliance Department and the Legal Department.

APPENDIX A

As of JUNE 2004

FRANKLIN TEMPLETON INVESTMENT'S ADVISORY GROUPS

1. FRANKLIN/TEMPLETON ADVISORY GROUP

Franklin Advisers, Inc.
Franklin Advisory Services, LLC Franklin Investment Advisory Services, Inc. Franklin Private Client Group, Inc. Franklin Templeton Alternative Strategies, Inc. Franklin Templeton Asset Management S.A. (France) Franklin Templeton Fiduciary Bank & Trust Ltd. (Bahamas) Franklin Templeton Institutional Asia Limited (Hong Kong) Franklin Templeton Institutional, LLC Franklin Templeton Investments Corp (Canada) Franklin Templeton Investment Management, Limited (UK) Franklin Templeton Investment Trust Management Co., Ltd. (Korea) Franklin Templeton Investments Japan, Ltd.
Franklin Templeton Investments (Asia) Limited (Hong Kong) Franklin Templeton Investments Australia Limited Franklin Templeton Italia Societa di Gestione del Risparimo per Azioni (Italy)
Templeton/Franklin Investment Services, Inc. Templeton Investment Counsel, LLC Templeton Asset Management, Limited. Templeton Global Advisors Limited (Bahamas) Franklin Templeton Asset Management (India) Pvt. Ltd. Fiduciary Trust Company International (NY) Fiduciary International, Inc.
Fiduciary Investment Management International, Inc. Fiduciary International Ireland Limited (Ireland) Fiduciary Trust International Limited (UK) Fiduciary Trust International of California Fiduciary Trust International of Delaware Fiduciary Trust International of the South (Florida) FTI -Banque Fiduciary Trust (Switzerland)

2. FRANKLIN FLOATING RATE TRUST ADVISORY GROUP

3. FRANKLIN MUTUAL ADVISORY GROUP

Franklin Mutual Advisers, LLC

APPENDIX B

MEMORANDUM

TO: The Legal Compliance Department - San Mateo

FROM:

RE: Chinese Wall Crossing

DATE:

The following access person(s)

    Name           Title          Department
    ----           -----          ----------
________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

within the _______________________ Advisory Group are proposing to cross the Chinese Wall and communicate certain Investment Information to the access persons within the ______________________ Advisory Group identified below.

    Name           Title          Department
    ----           -----          ----------
________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

Such access person(s) will cross the Chinese Wall with respect to the following issuer:

The following is a description of the nature of the information to be discussed by such access person(s):

APPROVED: ___________________________   ________________________________________
               Executive Officer                    Executive Officer
              (Originating Group)                  (Receiving Group)

Exhibit p.(19)

WORKING@PUTNAM AUGUST 2004

CODE OF ETHICS

(PUTNAM INVESTMENTS LOGO)

CODE OF ETHICS

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 FUND SHAREHOLDERS AND OTHER CLIENTS, OR TO DO ANYTHING THAT COULD DAMAGE OR ERODE THE TRUST OUR FUND SHAREHOLDERS AND OTHER CLIENTS PLACE IN PUTNAM AND ITS EMPLOYEES.

TABLE OF CONTENTS

OVERVIEW .................................................................   iii
PREAMBLE .................................................................    vi
DEFINITIONS: Code of Ethics ..............................................   vii
SECTION I. Personal Securities Rules for All Employees ...................     1
A. Pre-clearance and the Restricted List .................................     1
B. Prohibited Transactions ...............................................     5
C. Discouraged Transactions ..............................................    11
D. Exempted Transactions .................................................    11
SECTION II. Additional Special Rules for Personal Securities Transactions
of Access Persons and Certain Investment Professionals ...................    13
SECTION III. General Rules for All Employees .............................    18
SECTION IV. Special Rules for Officers and Employees of Putnam Investments
Limited ..................................................................    29
SECTION V. Reporting Requirements for All Employees ......................    31
SECTION VI. Education Requirements .......................................    34
SECTION VII. Compliance and Appeal Procedures ............................    35
APPENDIX A: Policy Statement Concerning Insider Trading Prohibitions
PREAMBLE .................................................................    37
DEFINITIONS: Insider Trading .............................................    38
SECTION I. Rules Concerning Inside Information ...........................    39
SECTION II. Overview of Insider Trading ..................................    41
APPENDIX B: Policy Statement Regarding Employee Trades in Shares of Putnam
Closed-End Funds .........................................................    45
APPENDIX C: Contra-Trading Rule Clearance Form ...........................    46
APPENDIX D: AIMR Code of Ethics and Standards of Professional Conduct ....    47
APPENDIX E: Report of Entertainment Form .................................    53
INDEX ....................................................................    55

OVERVIEW

EVERY PUTNAM EMPLOYEE IS REQUIRED, AS A CONDITION OF CONTINUED EMPLOYMENT, TO READ, UNDERSTAND, AND COMPLY WITH THE ENTIRE CODE OF ETHICS. ADDITIONALLY, EMPLOYEES ARE EXPECTED TO COMPLY WITH THE POLICIES AND PROCEDURES CONTAINED WITHIN THE PUTNAM EMPLOYEE HANDBOOK, WHICH CAN BE ACCESSED ONLINE THROUGH WWW.IBENEFITCENTER.COM. 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 FUND SHAREHOLDERS OR OTHER 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 material, 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. An employee aware of or in possession of inside information must report it immediately to the Code of Ethics Officer. See Appendix A, Section ll: Overview of Insider Trading.

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 $100 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 or other

entity 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.

PERSONAL SECURITIES TRADING

Putnam employees may not buy or sell any security for their own account without clearing the proposed transaction in advance. Clearance is facilitated through the online pre-clearance system for equity securities, and directly with the Code of Ethics Administrator for fixed-income securities and transactions in Putnam closed-end funds. Certain securities are exempted from this pre-clearance requirement (e.g., shares of open-end (not closed-end) mutual funds).

Clearance must be obtained in advance, between 11:30 a.m. and 4:00 p.m. Eastern Standard Time (EST) on the day of the trade, except in the case of a trade for up to 1,000 shares of stock of an issuer whose capitalization exceeds $5 billion, clearance may be obtained between 9:00 a.m. and 4:00 p.m. EST on the day of the trade. A clearance is valid only for the day it is obtained. Putnam employees are strongly discouraged from engaging in excessive trading for their personal accounts. Beginning with the fourth quarter of 2004, employees will be prohibited from making more than 25 trades in individual securities. Trading in excess of this level will be reviewed with the Code of Ethics Oversight Committee.

PUTNAM MUTUAL FUNDS

All employees and certain family members are subject to a minimum 90-day holding period for shares in Putnam's open-end mutual funds. This restriction does not apply to Putnam's money market funds. Except in limited circumstances, all employees must hold Putnam open-end fund shares in accounts at Putnam Preferred Access.

Portfolio managers and others with access to investment information (so-called "Access Persons") are subject to a minimum one-year holding period for holding Putnam open-end fund shares.

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 broad market indexes and "against the box" are permitted. Note, however, that short selling "against the box" or otherwise hedging an investment in shares of Marsh & McLennan (MMC) stock is prohibited.

CONFIRMATIONS OF TRADING AND PERIODIC ACCOUNT STATEMENTS

All Putnam employees must have their brokers send confirmations and statements 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

Access persons 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 (even those to which pre-clearance may not apply) 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 may be reduced. Egregious conduct, e.g., willful failures to report, will be subject to harsher sanctions, which may include termination of employment.

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.

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. (Refer to Section II for details):

- 60-Day Holding Period. No Access Person shall purchase and then sell at a profit, or sell and then repurchase at a lower price, 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 seven 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 seven 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 seven 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 an appropriate CIO and the Code of Ethics Officer.

- No portfolio 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 as you are responsible for understanding the restrictions.

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 FUND SHAREHOLDERS OR OTHER 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 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 purposes of the law are to ensure that companies and their employees comply with all applicable laws and to prevent abuses in the investment advisory business that can arise when conflicts of interest exist between the employees of an investment advisor and its clients. 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.

The Code that follows represents a balancing of important interests. On the one hand, as a registered investment advisor, 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.

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.

DEFINITIONS: CODE OF ETHICS

The words below are defined specifically for the purpose 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., beginning on the dates from which the measurement is made.

ACCESS PERSONS

Access Persons are (a) employees within Putnam's Investment Division, and (b) 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 (such as certain Information Services Division employees and certain members of the Legal and Compliance Department). Each employee will be informed if he or she is considered a Code of Ethics Access Person. The Code of Ethics Officer maintains a list of all Access Persons.

CODE OF ETHICS ADMINISTRATOR

The individual designated by the Code of Ethics Officer to assume responsibility for day-to-day, nondiscretionary 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 Chief Compliance Officer or such other person as is designated by the Chief Executive Officer of Putnam Investments. If the Code of Ethics Officer is unavailable, the Deputy Code of Ethics Officer shall act in his or her stead. The Code of Ethics Officer is Tony Ruys de Perez. The Deputy Code of Ethics Officer is Kathleen Griffin.

CODE OF ETHICS OVERSIGHT COMMITTEE

Has oversight responsibility for administering the Code of Ethics. Members include the Code of Ethics Officer 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.

NARROW-BASED DERIVATIVE

A future, swap, option, or similar derivative instrument whose return is determined by reference to fewer than 25 underlying issuers. Single stock futures and exchange traded funds based on fewer than 25 issuers are included.

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 offered to the public and not requiring 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; this includes the writing of an option.

PUTNAM

Any or all of Putnam Investments Trust, and its subsidiaries, any one of which shall be a Putnam company.

PUTNAM CLIENT

Any of the Putnam mutual 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; any rights relating to a security, such as warrants, convertible securities, and any narrow-based derivative. Pre-clearance in all trades for any narrow-based derivative is required. 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. Exchange traded index funds containing a portfolio or securities of 25 or more issuers (e.g., SPDRs, WEBs, QQQs), commodities, and any option on a broad-based market index or an exchange-traded futures contract or option thereon are excluded.

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 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.

SECTION I
PERSONAL SECURITIES RULES FOR ALL EMPLOYEES

A. Pre-clearance and the Restricted List

RULE 1

NO PUTNAM EMPLOYEE SHALL PURCHASE OR SELL FOR HIS PERSONAL ACCOUNT ANY SECURITY (OTHER THAN SHARES OF OPEN-END INVESTMENT COMPANIES) WITHOUT PRIOR CLEARANCE OBTAINED THROUGH PUTNAM'S INTRANET PRE-CLEARANCE SYSTEM (UNDER THE @PUTNAM TAB OF WWW.IBENEFITCENTER.COM). FIXED-INCOME SECURITIES MUST BE PRE-CLEARED BY CALLING THE CODE OF ETHICS ADMINISTRATOR, AND THERE ARE SPECIAL RULES FOR TRADING IN PUTNAM CLOSED-END FUNDS. SEE APPENDIX B. SUBJECT TO THE LIMITED EXCEPTIONS BELOW, NO CLEARANCE WILL BE GRANTED FOR SECURITIES APPEARING ON THE

RESTRICTED LIST. SECURITIES WILL 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 for any Putnam client, unless the security is a nonconvertible investment grade rated (BBB by S&P or Baa by Moody's) fixed-income investment;

(b) When such a security is a voting security of a corporation in the banking, savings and loan, communications, or gaming (i.e., casinos) industries, if holdings of Putnam clients in that corporation 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.

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 online at ibenefitcenter.com. Select Employee Essentials under the @Putnam tab. 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. EST.

Pre-clearance of fixed income securities and Putnam closed-end funds must be made by calling the Code of Ethics Administrator.

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 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 any applicable 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.

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. Pre-clearing Transactions Effected by Share Subscription. The purchase 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) Because 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.

C. Trades in Approved Discretionary Brokerage Accounts. A transaction does not need to be pre-cleared if it takes place in an account that the Code of Ethics Officer has approved in writing as exempt from the pre-clearance requirement. In the sole discretion of the Code of Ethics Officer accounts that will be considered for exclusion from the pre-clearance requirement are only those for which an employee's securities broker or investment advisor has complete discretion (a discretionary account) and the following conditions are met (i) the employee certifies annually in writing that the employee has no influence over the transactions in the discretionary account and is not aware of the transactions in the discretionary account prior to their execution, (ii) the compliance department of the employee's broker or investment advisor certifies annually in writing that the employee has no influence over the transactions in the discretionary account and is not aware of the transactions in the discretionary account prior to their execution; and (iii) each calendar quarter, the broker or investment advisor sends Putnam's Code of Ethics Administrator copies of each quarterly statement for the discretionary account. Employees wishing to seek such an exemption must send a written request to the Code of Ethics Administrator.

COMMENTS

- Pre-clearance. Subpart (a) of Rule 1 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.

- 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 (5% for public utilities) of any issuer in those industries. 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.

- 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. The automatic 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.

- Involuntary transactions. Involuntary personal securities transactions are exempted from the Code. Special attention should be paid to this exemption. (See
Section I.D.)

- 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.

- MMC securities. The pre-clearance, reporting and the rules applicable to personal trading apply to securities of MMC, including MMC shares held in the Putnam 401(k) plans and in the MMC Stock Purchase Plan.

SANCTION GUIDELINES

A. Failure to Pre-clear a Personal Trade

- First violation: One month trading ban with written warning that a future violation will result in a longer trading ban.

- Second violation: Three month trading ban and written notice to the Senior Managing Director of the employee's division.

- 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

- 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.

- Second violation: Disgorgement of any profit from the transaction, three month trading ban, and written notice to the Senior Managing Director of the employee's division.

- 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 two-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 has violated the Code of Ethics intentionally 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: (a) small-cap stocks (i.e., stocks not entitled to the Large Cap exception) and (b) 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.

B. Prohibited Transactions

RULE 1

PUTNAM EMPLOYEES ARE PROHIBITED FROM SHORT SELLING ANY SECURITY, WHETHER OR NOT THE SECURITY IS HELD IN A PUTNAM CLIENT PORTFOLIO. EMPLOYEES ARE PROHIBITED FROM HEDGING INVESTMENTS MADE IN SECURITIES OF MMC.

EXCEPTIONS

Short selling against broad market indexes (such as the Dow Jones Industrial Average, the NASDAQ index, and the S&P 100 and 500 indexes) and short selling against the box are permitted (except that short selling shares of MMC against the box is not 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.

COMMENTS

- 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.

- 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.

- 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. PRIVATELY PLACED LIMITED PARTNERSHIPS ARE SPECIFICALLY INCLUDED IN THIS RULE.

COMMENTS

- 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.

- 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.

- 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 activities or decision-making process of the fund except for financial reports made in the ordinary course of the fund's business, and subject to the condition that the hedge fund does not invest significantly in registered investment companies.

(b) Private placements where the investment cannot relate, or be expected to relate, directly or indirectly to Putnam or investments by a Putnam client.

- 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.

- 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.

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.

RULE 6

PUTNAM EMPLOYEES MAY NOT HOLD SHARES OF PUTNAM OPEN-END U.S. MUTUAL FUNDS OTHER THAN THROUGH ACCOUNTS MAINTAINED AT PUTNAM THROUGH PUTNAM PREFERRED ACCESS (PPA). EMPLOYEES PLACING PURCHASE ORDERS IN SHARES OF PUTNAM OPEN-END FUNDS MUST PLACE SUCH ORDERS THROUGH PUTNAM AND NOT THROUGH AN OUTSIDE BROKER OR OTHER INTERMEDIARY. EMPLOYEES REDEEMING OR EXCHANGING SHARES OF PUTNAM OPEN-END FUNDS MUST PLACE THOSE ORDERS THROUGH PUTNAM AND NOT THROUGH AN OUTSIDE BROKER OR OTHER INTERMEDIARY. CONTACT A PPA REPRESENTATIVE AT 1-800-634-1590 FOR INSTRUCTIONS ON HOW TO TRANSFER THESE FUNDS.

NOTE:

For purposes of this Rule, "employee" includes:

- Members of the immediate family of a Putnam employee who share the same household as the employee or for whom the Putnam employee has investment discretion (family member);

- Any trust in which a Putnam employee or family member is a trustee with investment discretion and in which such Putnam employee or any family member are collectively beneficiaries;

- Any closely-held entity (such as a partnership, limited liability company, or corporation) in which a Putnam employee and his or her family members hold a controlling interest and with respect to which they have investment

discretion; and

- Any account (including any retirement, pension, deferred compensation, or similar account) in which a Putnam employee or family member has a substantial economic interest and over which said Putnam employee or family member exercises investment discretion.

COMMENTS

- These requirements also apply to self-directed IRA accounts holding Putnam fund shares.

- For Putnam Profit Sharing Plan or other Putnam deferred compensation accounts, trades may continue to be placed through ibenefitcenter.com.

- These Rules apply to variable insurance accounts, which invest in Putnam Variable Trust such as the Putnam/Hartford Capital Manager. Employees must designate Putnam Retail Management as the broker of record for all such accounts.

EXCEPTION

Retirement, pension, deferred compensation and similar accounts that cannot be legally transferred to Putnam are not subject to the requirement. For example, a spouse of a Putnam employee may have a 401(k) plan with her employer that invests in Putnam funds. Any employee who continues to hold shares in open-end Putnam funds outside of Putnam must notify the Code of Ethics Officer in writing of the account information, provide the reason why the account cannot be transferred to Putnam and arrange for a quarterly statement of transaction in such account to be sent to the Code of Ethics Administrator.

RULE 7

(A) EMPLOYEES DEFINED IN RULE 6 MAY NOT, WITHIN A 90-CALENDAR DAY PERIOD, MAKE A PURCHASE FOLLOWED BY A SALE, OR A SALE FOLLOWED BY A PURCHASE, OF SHARES OF THE SAME OPEN-END PUTNAM MUTUAL FUND EVEN IF THE TRANSACTIONS OCCUR IN DIFFERENT ACCOUNTS.

(B) EMPLOYEES WHO ARE ACCESS PERSONS MAY NOT, WITHIN A ONE-YEAR PERIOD, MAKE A PURCHASE FOLLOWED BY A SALE, OR A SALE FOLLOWED BY A PURCHASE, OF SHARES OF THE SAME OPEN-END PUTNAM MUTUAL FUND OR OF SHARES OF ANY U.S. REGISTERED MUTUAL FUND TO WHICH PUTNAM ACTS AS ADVISOR OR SUB-ADVISOR EVEN IF THE TRANSACTIONS OCCUR IN DIFFERENT ACCOUNTS.

COMMENTS

- This restriction applies across all accounts maintained by an employee as follows:

An employee who buys shares of an open-end Putnam mutual fund may not sell any

shares of the same mutual fund until 90 calendar days have passed. Example. If an employee buys shares of a Putnam fund on Day 1 for a retail account and then sells (by exchange) shares of the same fund for his or her Putnam Profit Sharing
401(k) Plan account on Day 85, the employee has violated the rule.

Similarly, an employee who sells shares of an open-end Putnam mutual fund may not buy any shares of the same mutual fund until 90 calendar days have passed.

Example. If an employee sells shares of a Putnam fund on day 1 for a retail account and then sells (by exchange out) shares of the same fund for his or her Putnam Profit Sharing 401(k) Plan account on day 85, the employee may not buy (or exchange in) shares of that fund in any account until day 176, which is more than 90 days after the most recent sale of shares of that fund.

- The purpose of these blackout periods restriction is to prevent any market timing, or appearance of market timing activity.

- This Rule applies to transactions by a Putnam employee in any type of account, including retail, IRA, variable annuity, college savings 529 plans, Profit Sharing 401(k) Plan, and any deferred compensation accounts.

- The minimum sanction for an initial violation of the blackout period shall be disgorgement of any profit made on the transaction. Additional sanctions may apply, including termination of employment.

EXCEPTIONS

A. This restriction does not apply to Putnam's money market funds and Putnam Stable Value Fund.

B. Profit Sharing 401(k) Plan Contributions and Payroll Deductions. The 90-day restriction is not triggered by initial allocation of regular employee or employer contributions or forfeitures to an employee's account under the terms of Putnam employee benefit plans or a Putnam payroll deduction direct investment program; later exchanges of these contributions will be subject to the 90-day blackout period.

C. Systematic Programs. This restriction does not apply with respect to shares sold or acquired as a result of participation in a systematic program for contributions, withdrawals or exchanges, provided that an election to participate in any such program and the participation dates of the program may not be changed more often than quarterly after the program is elected by the employee. Access Persons may elect a quarterly or semiannual rebalancing program although it may only be changed on an annual basis;

D. Employee Benefit Plan Withdrawals and Distributions. This restriction does not apply with respect to shares sold for withdrawals, loans or distributions under the terms of Putnam employee benefit plans;

E. Dividends, Distributions, Mergers, and Share Class Conversions. This restriction does not apply with respect to the requisitioned shares as a result of reinvestment of dividends, distributions, mergers, conversions of share classes, or other similar actions. Subsequent transactions with respect to the shares will be covered.

F. In special situations, Putnam's Code of Ethics Oversight Committee may grant exceptions to the blackout periods as a result of death, disability, or special circumstances (such as, personal hardship), all as determined from time to time by the Committee. Employees can request an exception by submitting a written request to the Code of Ethics Officer.

RULE 8: GOOD UNTIL CANCELED ORDERS

GOOD UNTIL CANCELED (GTC) ORDERS AND LIMIT ORDERS ARE PROHIBITED.

Any order not executed on the day of pre-clearance must be resubmitted for pre-clearance before being executed on a subsequent day. "Good until canceled" or "limit" orders are prohibited because of the potential failure to pre-clear.

RULE 9: EXCESSIVE TRADING

PUTNAM EMPLOYEES ARE STRONGLY DISCOURAGED FROM ENGAGING IN EXCESSIVE TRADING FOR THEIR PERSONAL ACCOUNTS. BEGINNING WITH THE FOURTH QUARTER OF 2004, EMPLOYEES WILL BE PROHIBITED FROM MAKING MORE THAN 25 TRADES IN INDIVIDUAL SECURITIES IN ANY GIVEN QUARTER. EXCESSIVE TRADING WITHIN PUTNAM OPEN-END MUTUAL FUNDS IS PROHIBITED.

COMMENTS

- 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. Short-term trading is strongly discouraged while employees are encouraged to take a long-term view.

- Employees should be aware that their trading activity is closely monitored. Ten trades or more per quarter will be discouraged and will warrant a review memo. Activity exceeding 25 trades per quarter will be prohibited by the Code of Ethics Oversight Committee. Sanctions will be imposed such as a trading ban or a more stringent sanction may be determined at the discretion of the Committee. Different rules apply with respect to trading in shares of Putnam open-end mutual funds. See Section I. B, Rule 7 above.

C. Discouraged Transactions

RULE 1

PUTNAM EMPLOYEES ARE STRONGLY DISCOURAGED FROM ENGAGING IN WRITING (SELLING) NAKED OPTIONS FOR THEIR PERSONAL ACCOUNTS.

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.

EXCEPTIONS

None.

D. Exempted Transactions

RULE 1

TRANSACTIONS THAT 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

- This exemption is based on categories of conduct that the Securities and Exchange Commission does not consider "abusive."

- 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.

- 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.

- 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 4.

RULE 2

TRANSACTIONS THAT HAVE BEEN DETERMINED IN WRITING BY THE CODE OF ETHICS OFFICER BEFORE THE TRANSACTION OCCURS TO BE NO MORE THAN REMOTELY HARMFUL TO PUTNAM CLIENTS BECAUSE 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.

IMPLEMENTATION

An employee may seek an ad-hoc exemption under this Rule by following the procedures in Section VII, Part 4.

COMMENTS

- This exemption is also based upon categories of conduct that the Securities and Exchange Commission does not consider "abusive."

- 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.

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 vii)

RULE 1: 60-DAY RULE

NO ACCESS PERSON SHALL PURCHASE AND THEN SELL AT A PROFIT, OR SELL AND THEN REPURCHASE AT A LOWER PRICE, 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

A. The 60-Day Rule applies to all Access Persons, as defined in the Definitions section of the Code.

B. 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.

C. 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.

COMMENTS

- 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.

- 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.

- Effective in the fourth quarter of 2004, the 60-Day Rule will become a Black Out Rule.

An Access Person cannot trade a security within 60 days regardless of tax lot election.

Certain Investment Professionals

RULE 2: 7-DAY RULE

(A) PORTFOLIO MANAGERS: BEFORE A PORTFOLIO MANAGER (INCLUDING A CHIEF INVESTMENT OFFICER WITH RESPECT TO AN ACCOUNT HE MANAGES) 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) COMANAGERS: BEFORE A PORTFOLIO MANAGER PLACES AN ORDER TO BUY A SECURITY FOR ANY PUTNAM CLIENT HE MANAGES, HIS COMANAGER SHALL SELL ANY SUCH SECURITY OR RELATED DERIVATIVE SECURITY PURCHASED IN A TRANSACTION FOR HIS PERSONAL ACCOUNT WITHIN THE PRECEDING SEVEN CALENDAR DAYS.

(C) ANALYSTS: BEFORE AN ANALYST MAKES A BUY RECOMMENDATION FOR A SECURITY (INCLUDING DESIGNATION OF A SECURITY FOR INCLUSION IN THE PORTFOLIO OF THE PUTNAM RESEARCH FUND), HE SHALL SELL ANY SUCH SECURITY OR RELATED DERIVATIVE SECURITY PURCHASED IN A TRANSACTION FOR HIS PERSONAL ACCOUNT WITHIN THE PRECEDING SEVEN CALENDAR DAYS.

COMMENTS

- This Rule applies to portfolio managers (including chief investment officers (CIO) with respect to accounts they manage) in connection with any purchase (no matter how small) in any client account managed 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 or CIO to be aware of the placement of all orders for purchases of a security by client accounts that he or she manages for seven days following the purchase of that security for his or her personal account.

- 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. The recipient charity will be chosen by the Code of Ethics Officer.

- This Rule is designed to avoid even the appearance of a conflict of interest between an investment professional and a Putnam client. A greater burden is placed on these professionals given their positions in the organization. Transactions executed for the employee's personal account must be conducted in a manner consistent with the Code of Ethics and in such a manner as to avoid any actual or perceived conflict of interest or any abuse of the employee's position of trust and responsibility.

- "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.

EXCEPTIONS

None.

RULE 3: BLACKOUT RULE

(A) PORTFOLIO MANAGERS: NO PORTFOLIO MANAGER (INCLUDING A CHIEF INVESTMENT OFFICER WITH RESPECT TO AN ACCOUNT SHE MANAGES) 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 COMANAGES; 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 COMANAGES.

(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 (INCLUDING DESIGNATION OF A SECURITY FOR INCLUSION IN THE PORTFOLIO OF THE PUTNAM RESEARCH FUND); 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 (INCLUDING THE REMOVAL OF A SECURITY FROM THE PORTFOLIO OF THE PUTNAM RESEARCH FUND).

COMMENTS

- This Rule applies to portfolio managers (including chief investment officers with respect to accounts they manage) in connection with any purchase (no matter how small) in any client account managed by that portfolio manager or CIO (even 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 that took place within the seven days preceding a transaction in that security for his or her personal account.

- 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.

- 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.

EXCEPTIONS

None.

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 COMANAGES

(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 and written approval are 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.

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, for her approval, within 24 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

- 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.

- 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.

SECTION III
GENERAL RULES FOR ALL EMPLOYEES

RULE 1: COMPLIANCE WITH ALL LAWS, REGULATIONS AND POLICIES

ALL EMPLOYEES MUST COMPLY WITH APPLICABLE LAWS AND REGULATIONS AS WELL AS COMPANY POLICIES. THIS INCLUDES TAX, ANTI-TRUST, POLITICAL CONTRIBUTION, AND INTERNATIONAL BOYCOTT LAWS. IN ADDITION, NO EMPLOYEE AT PUTNAM MAY ENGAGE IN FRAUDULENT CONDUCT OF ANY KIND.

EXCEPTIONS

None.

COMMENTS

- Putnam may report to the appropriate legal authorities conduct by Putnam employees that violates this Rule.

- 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: CONFLICTS OF INTEREST

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

- This Rule is designed to recognize the fundamental principle that Putnam employees owe their chief duty and loyalty to Putnam and Putnam clients.

- 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: GIFTS AND ENTERTAINMENT POLICY

NO PUTNAM EMPLOYEE SHALL ACCEPT ANYTHING OF MATERIAL VALUE FROM ANY BROKER-DEALER, FINANCIAL INSTITUTION, CORPORATION OR OTHER ENTITY, ANY EXISTING OR PROSPECTIVE SUPPLIER OF GOODS OR SERVICES WITH A BUSINESS RELATIONSHIP TO PUTNAM, OR ANY COMPANY OR OTHER ENTITY WHOSE SECURITIES ARE HELD IN OR ARE BEING CONSIDERED AS INVESTMENTS FOR THE PUTNAM FUNDS, OR ANY OTHER CLIENT ACCOUNT. INCLUDED ARE GIFTS, FAVORS, PREFERENTIAL TREATMENT, SPECIAL ARRANGEMENTS, OR ACCESS TO SPECIAL EVENTS.

COMMENTS

This Rule is intended to permit the acceptance of only proper types of customary and limited business amenities.

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.

IMPLEMENTATION

A. Gifts. An employee may not accept small gifts with an aggregate value of more than $100 in any year from any one source. Any Putnam employee who is offered or receives an item exceeding $100 in value is prohibited by this Rule and must report the details to the Code of Ethics Officer. Any entertainment event provided to an employee where the host is not in attendance is treated as a gift and is subject to the $100 per year per source limit.

B. Entertainment. Putnam's rules are designed to permit reasonable, ordinary business entertainment, but prohibit any events, which may be perceived as extravagant or involving lavish expenditures.

1. Occasional lunches, dinners, cocktail parties, or comparable gatherings conducted for business purposes are permitted.

For example, occasional attendance at group functions sponsored by sell side firms is permitted where the function relates to investments or other business activity. Occasional attendance at these functions is not required to be counted against the limits described in paragraph 2(b) below.

2. Other entertainment events, such as, sporting events, theater, movies, concerts, or other forms of entertainment conducted for business purposes, are permitted only under the following conditions:

(i) The host must be present for the event.

(ii) The location of the event must be in the metropolitan area in which the office of the employee is located.

(iii) Spouses or other family members of the employee may not attend the entertainment event or any meals before or after the entertainment event.

(iv) The value of the entertainment event provided to the employee may not exceed $150, not including the value of any meals that may be provided to the employee before or after the event.

Acceptance of entertainment events having a market value materially exceeding the face value of the entertainment including, for example, attendance at sporting event playoff games, is prohibited. This prohibition applies even if the face value of tickets to the events is $150 or less or when the Putnam employee offers to pay for the tickets. If there is any ambiguity about whether to accept an entertainment event in these circumstances, please consult the Code of Ethics Officer.

(v) The employee may not accept entertainment events under this provision (B)(2) more than six times a year and not more than two times in any year from any single source.

(vi) The Code of Ethics Officer may grant exceptions to these rules. For example, it may be appropriate for an employee attending a legitimate conference in a location away from the office to attend a business entertainment event in that location. All exceptions must be approved in advance by written request to the Code of Ethics Officer.

3. Any employee attending any entertainment event under (B)(1) or (B)(2) above must file a Report of Entertainment Form (attached as Appendix E) with the Code of Ethics Officer within 10 days following the date of the entertainment event. Failure to file the notice is a violation of the Code of Ethics.

4. Meals and entertainment, which are part of the regular program at an investment conference (i.e., open to all participants) are not subject to the limits of this section (B)(2) above.

C. Among the items that are prohibited are:

1. Any entertainment event attendance, which would reflect badly on Putnam as a firm of the highest fiduciary and ethical standards. For example, events involving adult entertainment or gambling must be avoided.

2. Entertainment involving travel away from the metropolitan area in which the employee is located. Even in the event an exception is granted as contemplated by (B)(2)(vi) above, payment by a third party of the cost of transportation to a location outside the employee's

metropolitan area, lodging while in another location, and any meals not specifically approved by the Code of Ethics officer, are prohibited;

3. Personal loans to a Putnam employee on terms more favorable than those generally available for comparable credit standing and collateral; and

4. Preferential brokerage or underwriting commissions or spreads or allocations of shares or interests in an investment for the personal account of a Putnam employee; and

5. Cash or cash equivalents

D. 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 number 3 of Section VII.

E. No Putnam employee may solicit any gift or entertainment from any person, even if the gift or entertainment, if unsolicited, would be permitted.

F. The Rule does not prohibit employees on business travel from using local transportation and arrangements customarily supplied by brokers or similar entities. For example, it is customary for brokers in developing markets to make local transportation arrangements. These arrangements are permitted so long as the expense of lodging and air travel are paid by Putnam.

RULE 4: ANTI-BRIBERY/KICKBACK POLICY

NO PUTNAM EMPLOYEE SHALL 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 (which are described in Rule 5 below), 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 fundraisers) on behalf of Putnam, and no employee will be reimbursed by Putnam for such contributions made by the employee personally.

RULE 5: POLITICAL CONTRIBUTIONS/SOLICITATIONS POLICY

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.

COMMENTS

- 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.

- This rule prohibits solicitation on personal letterhead by Putnam employees except as approved by the Code of Ethics Officer.

- Certain officers and employees of Putnam Retail Management and other employees involved in Putnam's College Advantage Section 529 Plan with Ohio Tuition Trust Authority are subject to special rules on political contributions. For questions on these requirements, please call the Code of Ethics Administrator.

RULE 6: CONFIDENTIALITY OF PUTNAM BUSINESS INFORMATION

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 UNLESS DOING SO HAS A VALID BUSINESS PURPOSE AND IS IN ACCORD WITH ANY RELEVANT PROCEDURES ESTABLISHED BY PUTNAM RELATING TO SUCH DISCLOSURES.

COMMENT

All information about Putnam and Putnam clients is strictly confidential. Putnam research information should not be disclosed without proper approval and never for personal gain.

RULE 7: ROLES AT OTHER ENTITIES

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. REQUESTS FOR A ROLE AT A PUBLICLY-TRADED COMPANY WILL BE CLOSELY REVIEWED AND PERMISSION WILL BE GRANTED ON AN AD-HOC BASIS.

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 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 unless the employee is responsible for day-to-day portfolio management of the account.

COMMENTS

- 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.

- Positions with public companies are especially problematic and will normally not be approved.

- 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, without seriously considering their ability to discharge their fiduciary duties with respect to such investments.

RULE 8: ROLE AS TRUSTEE OR FIDUCIARY OUTSIDE OF PUTNAM

NO PUTNAM EMPLOYEE SHALL SERVE AS A TRUSTEE, EXECUTOR, CUSTODIAN, ANY OTHER FIDUCIARY, OR AS AN INVESTMENT ADVISOR OR COUNSELOR FOR ANY ACCOUNT OUTSIDE PUTNAM.

EXCEPTIONS

A. 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 unless the employee is responsible for day-to-day portfolio management of the account.

B. 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: INVESTMENT CLUBS

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 vii).

RULE 10: BUSINESS NEGOTIATIONS FOR PUTNAM

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: ACCURATE RECORDS

NO EMPLOYEE MAY CREATE, ALTER OR DESTROY (OR PARTICIPATE IN THE CREATION, ALTERATION

OR DESTRUCTION OF) ANY RECORD THAT IS INTENDED TO MISLEAD ANYONE OR TO CONCEAL ANYTHING THAT IS, OR IS REASONABLY BELIEVED TO BE, IMPROPER. IN ADDITION, ALL EMPLOYEES RESPONSIBLE FOR THE PREPARATION, FILING, OR DISTRIBUTION OF ANY REGULATORY FILINGS OR PUBLIC COMMUNICATIONS MUST ENSURE THAT SUCH FILINGS OR COMMUNICATIONS ARE TIMELY, COMPLETE, FAIR, ACCURATE, AND UNDERSTANDABLE.

EXCEPTIONS

None.

COMMENTS

- 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.

- All financial books and records must be prepared and maintained in accordance with Generally Accepted Accounting Principles and Putnam's existing accounting controls, to the extent applicable.

RULE 12: INTEREST IN ENTITIES DOING BUSINESS WITH PUTNAM

NO EMPLOYEE SHALL 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.

RULE 13: AFFILIATED ENTITIES

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 A NON-PUTNAM AFFILIATE OR 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,

OF PUTNAM TO THE NPA UNLESS DOING SO HAS A VALID BUSINESS PURPOSE AND IS IN ACCORD WITH ANY RELEVANT PROCEDURES ESTABLISHED BY PUTNAM RELATING TO SUCH DISCLOSURES,

(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 DERIVED FROM THE EMPLOYEE'S SERVICE AS
A DIRECTOR OR OFFICER OF THE NPA.

COMMENTS

- 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 should 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 advisor or sub-advisor to the NPA or one of its products, in which case normal Putnam aggregation rules apply.

- 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.

- 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 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.

- Entities that are currently non-Putnam affiliates within the scope of this Rule are: Cisalpina Gestioni, S.p.A., Nissay Asset Management Co., Ltd., Thomas H. Lee Partners, L.P., Ampega Asset Management, GMBH, and Sceptre Investment Counsel, Ltd.

RULE 14: COMPUTER SYSTEM/NETWORK POLICIES

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.

COMMENT

Putnam's policy statements relating to these matters are contained in the Computer System and Network Responsibilities section of the Employment Issues category within the Employee Handbook. The online Employee Handbook is located online at www.ibenefitcenter.com under Policies and Procedures under the @Putnam tab.

EXCEPTIONS

None.

RULE 15: AIMRCODE OF ETHICS

ALL EMPLOYEES MUST FOLLOW AND ABIDE BY THE SPIRIT OF THE CODE OF ETHICS AND THE STANDARDS OF PROFESSIONAL CONDUCT OF THE ASSOCIATION OF INVESTMENT MANAGEMENT AND RESEARCH (AIMR). THE TEXTS OF THE AIMR CODE OF ETHICS AND STANDARDS OF PROFESSIONAL CONDUCT ARE SET FORTH IN EXHIBIT D.

EXCEPTIONS

None.

RULE 16: PRIVACY POLICY

EXCEPT AS PROVIDED BELOW, NO EMPLOYEE MAY DISCLOSE TO ANY OUTSIDE ORGANIZATION OR PERSON ANY NONPUBLIC PERSONAL INFORMATION ABOUT ANY INDIVIDUAL WHO IS A CURRENT OR FORMER SHAREHOLDER OF ANY PUTNAM RETAIL OR INSTITUTIONAL FUND, OR CURRENT OR FORMER CLIENT OF A PUTNAM COMPANY. ALL EMPLOYEES SHALL FOLLOW THE SECURITY PROCEDURES AS ESTABLISHED FROM TIME TO TIME BY A PUTNAM COMPANY TO PROTECT THE CONFIDENTIALITY OF ALL SHAREHOLDER AND CLIENT ACCOUNT INFORMATION.

EXCEPT AS PUTNAM'S LEGAL AND COMPLIANCE DEPARTMENT MAY EXPRESSLY AUTHORIZE, NO EMPLOYEE SHALL COLLECT ANY NONPUBLIC PERSONAL INFORMATION ABOUT A PROSPECTIVE OR CURRENT SHAREHOLDER OF A PUTNAM FUND OR PROSPECTIVE OR CURRENT CLIENT OF A PUTNAM COMPANY, OTHER THAN THROUGH AN ACCOUNT APPLICATION (OR CORRESPONDING INFORMATION PROVIDED BY THE SHAREHOLDER'S FINANCIAL REPRESENTATIVE) OR IN CONNECTION WITH EXECUTING SHAREHOLDER OR CLIENT TRANSACTIONS, NOR SHALL ANY INFORMATION BE COLLECTED OTHER THAN THE FOLLOWING: NAME, ADDRESS, TELEPHONE NUMBER, SOCIAL SECURITY NUMBER, AND INVESTMENT, BROKER, AND TRANSACTION INFORMATION.

EXCEPTIONS

A. Putnam Employees. Nonpublic personal information may be disclosed to Putnam employees in connection with processing transactions or maintaining accounts for shareholders of a Putnam fund and clients of a Putnam company, to the extent that access

to such information is necessary to the performance of that employee's job functions.

B. Shareholder Consent Exception. Nonpublic personal information about a shareholder's or client's account may be provided to a non-Putnam organization at the specific request of the shareholder or client or with the shareholder's or client's prior written consent.

C. Broker or Advisor Exception. Nonpublic personal information about a shareholder's or client's account may be provided to the shareholder's or client's broker of record.

D. Third-Party Service Provider Exception. Nonpublic personal information may be disclosed to a service provider that is not affiliated with a Putnam fund or Putnam company only when such disclosure is necessary for the service provider to perform the specific services contracted for, and only (a) if the service provider executes Putnam's standard confidentiality agreement, or (b) pursuant to an agreement containing a confidentiality provision that has been approved by the Legal and Compliance Department. Examples of such service providers include proxy solicitors and proxy vote tabulators, mail services, and providers of other administrative services, and Information Services Division consultants who have access to nonpublic personal information.

COMMENTS

- Nonpublic personal information is any information that personally identifies a shareholder of a Putnam fund or client of a Putnam company and is not derived from publicly available sources. This privacy policy applies to shareholders or clients who are individuals, not institutions. However, as a general matter, all information that we receive about a shareholder of a Putnam fund or client of a Putnam company shall be treated as confidential. No employee may sell or otherwise provide shareholder or client lists or any other information relating to a shareholder or client to any marketing organization.

- All Putnam employees with access to shareholder or client account information must be trained in and follow Putnam's security procedures designed to safeguard that information from unauthorized use. For example, a telephone representative must be trained in and follow Putnam's security procedures to verify the identity of a caller requesting account information.

- Any questions regarding this privacy policy should be directed to Putnam's Legal and Compliance Department. A violation of this policy will be subject to the sanctions imposed for violations of Putnam's Code of Ethics.

- Employees must report any violation of this policy or any possible breach of the confidentiality of client information (whether intentional or accidental) to the managing director in charge of the employee's business unit. Managing directors who are notified of such a violation or possible breach must immediately report it in writing to Putnam's chief compliance officer and, in the event of a breach of computerized data, Putnam's chief technology officer.

RULE 17: ANTI-MONEY LAUNDERING POLICY

NO EMPLOYEE MAY ENGAGE IN ANY MONEY LAUNDERING ACTIVITY OR FACILITATE ANY MONEY-LAUNDERING ACTIVITY THROUGH THE USE OF ANY PUTNAM ACCOUNT OR CLIENT ACCOUNT. ANY SITUATIONS GIVING RISE TO A SUSPICION THAT ATTEMPTED MONEY LAUNDERING MAY BE OCCURRING IN ANY ACCOUNT MUST BE REPORTED IMMEDIATELY TO THE MANAGING DIRECTOR IN CHARGE OF THE EMPLOYEE'S BUSINESS UNIT. MANAGING DIRECTORS WHO ARE NOTIFIED OF SUCH A SUSPICION OF MONEY LAUNDERING ACTIVITY MUST IMMEDIATELY REPORT IT IN WRITING TO PUTNAM'S CHIEF COMPLIANCE OFFICER AND CHIEF FINANCIAL OFFICER.

RULE 18: RECORD RETENTION

ALL EMPLOYEES MUST COMPLY WITH THE RECORD RETENTION REQUIREMENTS APPLICABLE TO THE BUSINESS UNIT. EMPLOYEES SHOULD CHECK WITH THEIR MANAGERS OR THE CHIEF ADMINISTRATIVE OFFICER OF THEIR DIVISION TO DETERMINE WHAT RECORD RETENTION REQUIREMENTS APPLY TO THEIR BUSINESS UNIT.

SECTION IV

SPECIAL RULES FOR OFFICERS AND EMPLOYEES OF PUTNAM INVESTMENTS LIMITED

RULE 1

IN SITUATIONS SUBJECT TO SECTION I.A., RULE 1 (RESTRICTED LIST PERSONAL SECURITIES TRANSACTIONS, THE PUTNAM INVESTMENTS LIMITED (PIL) EMPLOYEE MUST OBTAIN CLEARANCE NOT ONLY AS PROVIDED IN THAT RULE, BUT ALSO FROM PIL'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 PIL and has been delegated the right to approve or disapprove personal securities transactions in accordance with the requirements of Section I.A. Therefore, approval from the Code of Ethics Administrator for PIL employees to make personal securities investments constitutes approval under the Code of Ethics and also for purposes of compliance with the Financial Services Authority, the U.K. self-regulatory organization that regulates PIL.

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 may 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 PIL 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 AND STATEMENTS TO PIL. NO PIL EMPLOYEE MAY ENTER INTO ANY MARGIN OR ANY OTHER SPECIAL DEALING ARRANGEMENT WITH ANY BROKER-DEALER WITHOUT THE PRIOR WRITTEN CONSENT OF THE PIL COMPLIANCE OFFICER.

EXCEPTIONS

None.

IMPLEMENTATION

PIL employees will be notified separately of this requirement once a year by the PIL compliance officer, and are required to provide an annual certification of compliance with the Rule.

All PIL 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 PIL. The London Administrator will forward copies of the confirms to the Boston Administrator. PIL 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, PIL EMPLOYEES MUST ALSO COMPLY WITH PART V OF THE CRIMINAL JUSTICE ACT 1993 ON INSIDER DEALING.

EXCEPTIONS

None.

IMPLEMENTATION

To ensure compliance with UK insider dealing legislation, PIL employees must observe the relevant procedures set forth in PIL's Compliance Manual, a copy of which is sent to each PIL employee, and sign an annual certification as to compliance.

SECTION V

REPORTING REQUIREMENTS FOR ALL EMPLOYEES

Reporting of Personal Securities Transactions

RULE 1

EACH PUTNAM EMPLOYEE SHALL ENSURE THAT COPIES OF ALL CONFIRMATIONS FOR SECURITIES TRANSACTIONS FOR HIS PERSONAL BROKERAGE ACCOUNTS, AND, BEGINNING IN THE FOURTH QUARTER 2004, BROKERAGE ACCOUNT STATEMENTS ARE SENT TO THE PUTNAM COMPLIANCE DEPARTMENT'S (CODE OF ETHICS ADMINISTRATOR). (FOR THE PURPOSE OF THIS RULE, SECURITIES SHALL ALSO INCLUDE ETFS, FUTURES, AND OTHER DERIVATIVES ON BROAD-BASED MARKET INDEXES EXCLUDED FROM THE PRE-CLEARANCE REQUIREMENT.) STATEMENTS AND CONFIRMATIONS ARE REQUIRED FOR PUTNAM FUNDS NOT HELD AT PPA OR IN A PUTNAM RETIREMENT PLAN, AS WELL AS FOR U.S. MUTUAL FUNDS SUB-ADVISED BY PUTNAM.

EXCEPTION

None.

IMPLEMENTATION

A. Putnam employees must instruct their broker-dealers to send statements and confirmations to Putnam and must follow up with the broker-dealer on a reasonable basis to ensure that the instructions are being followed. For brokerage accounts, Putnam employees should contact the Code of Ethics Administrator to obtain a letter from Putnam authorizing the setting up of a personal brokerage account.

B. Statements and confirmations should be submitted to the Code of Ethics Administrator.

C. Specific procedures apply to employees of PIL. Employees of PIL should contact the London Code of Ethics Administrator.

D. 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. Similarly, failure by an employee to report the existence of a personal account (and, if the account is opened after joining Putnam, failure to obtain proper authorization to establish the account) shall be a violation of this Rule.

E. Statements and confirmations must also be sent for members of an employees' immediate family, including statements received with respect to a family member's 401(k) plan at another employer.

COMMENTS

- Transactions for personal accounts is defined broadly to include more than transaction in accounts under an employee's own name. See Definitions.

- Statements and confirmations are required for all personal securities transactions, whether or not exempted or excepted by this Code.

- 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.

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 EXCHANGE TRADED FUNDS (ETF), FUTURES, AND ANY OPTION ON A SECURITY OR SECURITIES INDEX, INCLUDING BROAD-BASED MARKET INDEXES EXCLUDED FROM THE PRE-CLEARANCE REQUIREMENT AND ALSO INCLUDES TRANSACTIONS IN PUTNAM OPEN-END FUNDS IF THE ACCOUNT FOR THE PUTNAM FUNDS IS NOT HELD AT PPA OR IN A PUTNAM RETIREMENT PLAN AND FOR TRANSACTIONS IN U.S. MUTUAL FUNDS SUB-ADVISED BY PUTNAM.)

EXCEPTIONS

None.

IMPLEMENTATION

All employees required to file such a report will receive by e-mail 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.

COMMENTS

- The date for each transaction required to be disclosed in the quarterly report is the trade date for the transaction, not the settlement date.

- 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. It is the responsibility of the employee to request an early report if he has knowledge of a planned absence, i.e., vacation or business trip.

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 WITHIN TEN CALENDAR DAYS OF HIRE AND THEREAFTER ON AN ANNUAL BASIS. THIS REQUIREMENT IS MANDATED BY SEC REGULATIONS AND IS 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.

Reporting Irregular Activity

RULE 4

IF A PUTNAM EMPLOYEE SUSPECTS THAT FRAUDULENT, ILLEGAL, OR OTHER IRREGULAR ACTIVITY (INCLUDING VIOLATIONS OF THE CODE OF ETHICS) MIGHT BE OCCURRING AT PUTNAM, THE ACTIVITY SHOULD 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 FINANCIAL OFFICER AND PUTNAM'S CHIEF COMPLIANCE OFFICER.

AN EMPLOYEE WHO DOES NOT FEEL COMFORTABLE REPORTING THIS ACTIVITY TO THE RELEVANT MANAGING DIRECTOR MAY INSTEAD CONTACT THE CHIEF COMPLIANCE OFFICER, THE PUTNAM OR MMC ETHICS HOTLINES OR THE OMBUDSMAN.

RULE 5

PUTNAM HAS ESTABLISHED A FORMAL OFFICE OF THE OMBUDSMAN AS AN ADDITIONAL MECHANISM FOR AN EMPLOYEE TO REPORT AN IMPROPRIETY OR CONDUCT THAT IS NOT IN LINE WITH THE COMPANY'S VALUE SYSTEM. THE OMBUDSMAN IS A PERSON WHO IS AUTHORIZED TO RECEIVE COMPLAINTS OR QUESTIONS CONFIDENTIALLY ABOUT ALLEGED ACTS, OMISSIONS, IMPROPRIETIES, AND BROADER SYSTEMIC PROBLEMS WITHIN THE ORGANIZATION. COMMUNICATION WITH THE OMBUDSMAN IS CONFIDENTIAL.

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 ANNUALLY 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 EMPLOYEE WILL ANNUALLY BE REQUIRED TO COMPLETE TRAINING ON PUTNAM'S CODE OF ETHICS.

SECTION VII

COMPLIANCE AND APPEAL PROCEDURES

A. 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. 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.

B. Consultation of Restricted List

It is the responsibility of each employee to pre-clear through the 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 exception. The 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 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.

C. 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.

D. 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 number 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 reasonable efforts to promptly render a written determination concerning the request for an ad hoc exemption.

E. 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.

F. Information Concerning Identity of Compliance Personnel

The names of Code of Ethics personnel are available by contacting the Legal and Compliance Department and will be published on Putnam's Web site.

APPENDIX A: POLICY STATEMENT CONCERNING INSIDER TRADING PROHIBITIONS

PREAMBLE

Putnam has always forbidden trading on material nonpublic information (inside information) by its employees. Tough federal laws make it important for Putnam to state 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. Federal law provides that an individual convicted of trading on inside information may go to jail for a 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, as well as penalties substantially greater than 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.

An employee aware of or in possession of inside information must report it immediately to the Code of Ethics Officer. 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.

APPENDIX 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 chief compliance officer or such other person as is designated by the chief executive officer of Putnam Investments. If he or she is unavailable, the Deputy Code of Ethics Officer (to be appointed by the Code of Ethics Officer) shall act in his or her 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, LLC, 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 all securities of any type.)

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. Officers and employees of PIL must also consult the relevant procedures on compliance with U.K. insider dealing legislation set forth in PIL's Compliance Manual (See Rule 3 of Section IV of the Code of Ethics).

APPENDIX A

SECTION I: 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

- 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.

- 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.

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, THE DEPUTY CODE OF ETHICS OFFICER OR, IN THEIR ABSENCE, THE GENERAL COUNSEL 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.

IMPLEMENTATION

A. 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.

B. 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 (and time to gather such 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. In appropriate situations, the Code of Ethics Officer shall place the affected security or securities on the Red List pending the completion of his evaluation.

C. 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 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.

D. Members of the executive board of directors and members of chief financial officer's staff may not trade securities of MMC in the period from the end of each calendar quarter

to the date of announcement of MMC's earnings for such quarter.

COMMENTS

While all employees must pre-clear trades of MMC securities and make sure they are not in possession of material inside information about MMC when trading, certain employees who may receive information about Putnam's earnings are subject to the rules above concerning trading black out periods.

APPENDIX A

SECTION II: Overview of Insider Trading

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.

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. The following sections help explain the definition.

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 that 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.

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 appearing in Dow Jones, Reuters Economic Services, The Wall Street Journal, or other publications of general circulation would be considered public.

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.

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 advisor 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 advisor or its employees, nor its clients can trade on the basis of that information, because the investment advisor and its employees could be considered "temporary insiders" of Acme.

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.

EXAMPLE

The Chief Investment 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 Investment 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.

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 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.

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 Investment 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.)

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 types penalties below, even if he does not personally benefit from the violation. Penalties include:

- Jail sentences, criminal monetary penalties.

- 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 substantially greater than 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.

- 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.

APPENDIX B: POLICY STATEMENT REGARDING EMPLOYEE TRADES IN SHARES OF PUTNAM CLOSED-END FUNDS

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. The automated pre-clearance system is not available for Putnam closed-end fund clearance. Trading in shares of closed-end funds is subject to all the rules of the Code of Ethics. Contact the Code of Ethics Administrator with these pre-clearance requests.

Special Rules Applicable to Managing Directors of Putnam Investment Management, LLC 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 Administrator for further information.

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.

APPENDIX C: CONTRA-TRADING RULE CLEARANCE FORM

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: ______________________

APPENDIX D: AIMR CODE OF ETHICS AND STANDARDS OF PROFESSIONAL CONDUCT

The Code of Ethics (Full Text)

Members of the Association for Investment Management and Research shall:

- Act with integrity, competence, dignity, and in an ethical manner when dealing with the public, clients, prospects, employers, employees, and fellow members.

- Practice and encourage others to practice in a professional and ethical manner that will reflect credit on members and their profession.

- Strive to maintain and improve their competence and the competence of others in the profession.

- Use reasonable care and exercise independent professional judgment.

The Standards of Professional Conduct

All members of the Association for Investment Management and Research and the holders of and candidates for the Chartered Financial Analyst designation are obligated to conduct their activities in accordance with the following Code of Ethics. Disciplinary sanctions may be imposed for violations of the Code and Standards.

- Fundamental responsibilities

- Relationships with and responsibilities to a profession

- Relationships with and responsibilities to an employer

- Relationships with and responsibilities to clients and prospects

- Relationships with and responsibilities to the public

- Standards of Practice Handbook

FUNDAMENTAL RESPONSIBILITIES

Members shall maintain knowledge of and comply with all applicable laws, rules, and regulations (including AIMR's Code of Ethics and Standards of Professional Conduct) of any government, governmental agency, regulatory organization, licensing agency, or professional association governing the members' professional activities. Not knowingly participate in or assist any violation of such laws, rules, or regulations.

RELATIONSHIPS WITH AND RESPONSIBILITIES TO THE PROFESSION

USE OF PROFESSIONAL DESIGNATION

AIMR members may reference their membership only in a dignified and judicious manner. The use of the reference may be accompanied by an accurate explanation of the requirements that have been met to obtain membership in these organizations.

Those who have earned the right to use the Chartered Financial Analyst designation may use the marks "Chartered Financial Analyst" or "CFA" and are encouraged to do so, but only in a proper, dignified, and judicious manner. The use of the designation may be accompanied by an accurate explanation of the requirements that have been met to obtain the right to use the designation.

Candidates in the CFA Program, as defined in the AIMR Bylaws, may reference their participation in the CFA Program, but the reference must clearly state that an individual is a candidate in the CFA Program and cannot imply that the candidate has achieved any type of partial designation.

PROFESSIONAL MISCONDUCT

Members shall not engage in any professional conduct involving dishonesty, fraud, deceit, or misrepresentation or commit any act that reflects adversely on their honesty, trustworthiness, or professional competence.

Members and candidates shall not engage in any conduct or commit any act that compromises the integrity of the CFA designation or the integrity or validity of the examinations leading to the award of the right to use the CFA designation.

PROHIBITION AGAINST PLAGIARISM

Members shall not copy or use, in substantially the same form as the original, material prepared by another without acknowledging and identifying the name of the author, publisher, or source of such material. Members may use, without acknowledgment, factual information published by recognized financial and statistical reporting services or similar sources.

RELATIONSHIPS WITH AND RESPONSIBILITIES TO THE EMPLOYER

OBLIGATION TO INFORM EMPLOYER OF CODE AND STANDARDS

Members shall inform their employer in writing, through their direct supervisor, that they are obligated to comply with the Code and Standards and are subject to disciplinary sanctions for violations thereof.

Members shall deliver a copy of the Code and Standards to their employer if the

employer does not have a copy.

DUTY TO EMPLOYER

Members shall not undertake any independent practice that could result in compensation or other benefit in competition with their employer unless they obtain written consent from both their employer and the persons or entities for whom they undertake independent practice.

DISCLOSURE OF CONFLICTS TO EMPLOYER

Members shall comply with any prohibitions on activities imposed by their employer if a conflict of interest exists.

DISCLOSURE OF ADDITIONAL COMPENSATION ARRANGEMENTS

Members shall disclose to their employer in writing all monetary compensation or other benefits that they receive for their services that are in addition to compensation or benefits conferred by a member's employer.

RESPONSIBILITIES OF SUPERVISORS

Members with supervisory responsibility, authority, or the ability to influence the conduct of others shall exercise reasonable supervision over those subject to their supervision or authority to prevent any violation of applicable statutes, regulations, or provisions of the Code and Standards. In so doing, members are entitled to rely on reasonable procedures to detect and prevent such violations.

RELATIONSHIPS WITH AND RESPONSIBILITIES TO CLIENTS AND PROSPECTS

INVESTMENT PROCESS

REASONABLE BASIS AND REPRESENTATIONS

- Exercise diligence and thoroughness in making investment recommendations or in taking investment actions.

- Have a reasonable and adequate basis, supported by appropriate research and investigation, for such recommendations or actions.

- Make reasonable and diligent efforts to avoid any material misrepresentation in any research report or investment recommendation.

- Maintain appropriate records to support the reasonableness of such recommendations or actions.

RESEARCH REPORTS

- Use reasonable judgment regarding the inclusion or exclusion of relevant factors in research reports.

- Distinguish between facts and opinions in research reports.

- Indicate the basic characteristics of the investment involved when preparing for public distribution a research report that is not directly related to a specific portfolio or client.

INDEPENDENCE AND OBJECTIVITY

- Members shall use reasonable care and judgment to achieve and maintain independence and objectivity in making investment recommendations or taking investment action.

INTERACTIONS WITH CLIENTS AND PROSPECTS

FIDUCIARY DUTIES

In relationships with clients, members shall use particular care in determining applicable fiduciary duty and shall comply with such duty as to those persons and interests to whom the duty is owed. Members must act for the benefit of their clients and place their clients' interests before their own.

PORTFOLIO INVESTMENT RECOMMENDATIONS AND ACTIONS

Members shall:

- Make a reasonable inquiry into a client's financial situation, investment experience, and investment objectives prior to making any investment recommendations and shall update this information as necessary, but no less frequently than annually, to allow the members to adjust their investment recommendations to reflect changed circumstances.

- Consider the appropriateness and suitability of investment recommendations or actions for each portfolio or client. In determining appropriateness and suitability, members shall consider applicable relevant factors, including the needs and circumstances of the portfolio or client, the basic characteristics of the investment involved, and the basic characteristics of the total portfolio.

- Members shall not make a recommendation unless they reasonably determine that the recommendation is suitable to the client's financial situation, investment experience, and investment objectives.

- Distinguish between facts and opinions in the presentation of investment recommendations.

- Disclose to clients and prospects the basic format and general principles of the investment processes by which securities are selected and portfolios are constructed and shall promptly disclose to clients and prospects any changes that might significantly affect those processes.

FAIR DEALING

Members shall deal fairly and objectively with all clients and prospects when disseminating investment recommendations, disseminating material changes in prior investment recommendations, and taking investment action.

PRIORITY OF TRANSACTIONS

Transactions for clients and employers shall have priority over transactions in securities or other investments of which a member is the beneficial owner so that such personal transactions do not operate adversely to their clients' or employer's interests. If members make a recommendation regarding the purchase or sale of a security or other investment, they shall give their clients and employer adequate opportunity to act on their recommendations before acting on their own behalf. For purposes of the Code and Standards, a member is a "beneficial owner" if the member has:

- direct or indirect pecuniary interest in the securities;

- the power to vote or direct the voting of the shares of the securities or investments;

- the power to dispose or direct the disposition of the security or investment.

PRESERVATION OF CONFIDENTIALITY

Members shall preserve the confidentiality of information communicated by clients, prospects, or employers concerning matters within the scope of the client-member, prospect-member, or employer-member relationship unless a member receives information concerning illegal activities on the part of the client, prospect, or employer.

PROHIBITION AGAINST MISREPRESENTATION

Members shall not make any statements, orally or in writing, that misrepresent

- the services that they or their firms are capable of performing;

- their qualifications or the qualifications of their firm;

- the member's academic or professional credentials.

Members shall not make or imply, orally or in writing, any assurances or guarantees regarding any investment except to communicate accurate information regarding the

terms of the investment instrument and the issuer's obligations under the instrument.

DISCLOSURE OF CONFLICTS TO CLIENTS AND PROSPECTS

Members shall disclose to their clients and prospects all matters, including beneficial ownership of securities or other investments, that reasonably could be expected to impair the members' ability to make unbiased and objective recommendations.

DISCLOSURE OF REFERRAL FEES

Members shall disclose to clients and prospects any consideration or benefit received by the member or delivered to others for the recommendation of any services to the client or prospect.

RELATIONSHIPS WITH AND RESPONSIBILITIES TO THE PUBLIC

PROHIBITION AGAINST USE OF MATERIAL NONPUBLIC INFORMATION

Members who possess material nonpublic information related to the value of a security shall not trade or cause others to trade in that security if such trading would breach a duty or if the information was misappropriated or relates to a tender offer. If members receive material nonpublic information in confidence, they shall not breach that confidence by trading or causing others to trade in securities to which such information relates. Members shall make reasonable efforts to achieve public dissemination of material nonpublic information disclosed in breach of a duty.

PERFORMANCE PRESENTATION

Members shall not make any statements, orally or in writing, that misrepresent the investment performance that they or their firms have accomplished or can reasonably be expected to achieve. If members communicate individual or firm performance information directly or indirectly to clients or prospective clients, or in a manner intended to be received by clients or prospective clients, members shall make every reasonable effort to assure that such performance information is a fair, accurate, and complete presentation of such performance.

APPENDIX E: REPORT OF ENTERTAINMENT FORM

This form must be filed with the Putnam Legal and Compliance Department within 10 days of date of entertainment.

Send to:
LAURA ROSE
ASSISTANT VICE PRESIDENT AND CODE OF ETHICS ADMINISTRATOR MAILSTOP L-5

Attach to an e-mail to:
LAURA_ROSE@PUTNAM.COM

Name of employee: ______________________________________________________________

Name of party providing entertainment:

Firm: __________________________________________________________________________

Person: ________________________________________________________________________

Date of entertainment: _________________________________________________________

Describe entertainment provided: _______________________________________________
(e.g., name and location of restaurant, sporting, or cultural event)

Value of entertainment (excluding meals): ______________________________________

Signature: ____________________________________ Date: __________________________

INDEX

7-Day Rule
   transactions by portfolio managers,
   analysts, and CIOs ............................................            14
60-Day Rule ......................................................            13

A

Access Persons
   definition.....................................................           vii
   special rules on trading.......................................            13
AIMR Code of Ethics and Standards of
   Professional Conduct ..........................................            47
Analysts
   special rules on trading.......................................            14
Appeals
   Procedures ....................................................            36

B

Bankers' acceptances
   excluded from securities.......................................          viii
Blackout rule
   trading by portfolio managers,
   analysts and CIOs .............................................            15
Boycott
   anti-trust and other laws......................................            18
Bribes ...........................................................            21

C

Certificates of Deposit
   excluded from securities.......................................          viii
Clearance
   how long pre-clearance is valid................................             2
   required for personal
   securities transactions........................................             1
Closed-end funds
   pre-clearance and reporting....................................            45
Commercial paper
   excluded from securities.......................................          viii
Commodities (other than securities indices)
   excluded from securities.......................................          viii
Computer use
   compliance with corporate

   policies required..............................................            26
Confidentiality
   required of all employees......................................        22, 26
Confirmations and broker statements
   required for personal transactions.............................            31
Conflicts of interest
   with Putnam and Putnam clients ................................            18
Contra-trading rule
   transactions by portfolio managers
   and CIOs ......................................................            16
Convertible securities
   defined as securities..........................................          viii
Currencies
   excluded as securities ........................................          viii

D

Definitions ......................................................           vii
Director
   prohibited to serve for another entity.........................            23
Dividend reinvestment program.....................................            11

E

Employee
   prohibited to serve for another entity.........................            23
Excessive trading (over 25 trades) prohibited ....................            10
Exchange traded index funds,
   excluded from securities.......................................          viii
Exemptions........................................................      3, 4, 11

F

Family members
   covered in personal
   securities transactions........................................   viii, 7, 38
Fiduciary
   prohibited to serve for another entity.........................            23
Fraudulent or irregular activities
   reporting .....................................................            24

G

Gifts and Entertainment Policy....................................        18, 19
Good-until-canceled orders........................................            10

H

Holdings of securities
   disclosure by Access Persons...................................            32

I

Initial public offerings/IPOs
   purchases are prohibited.......................................             5
Insider trading
   policy statement and explanations..............................            38
   prohibited.....................................................        iii, 5
Investment clubs
   prohibited.....................................................            23
Involuntary personal securities transactions
   exemptions ....................................................         4, 11

L

Large Cap Exception
   for clearance of securities on
   Restricted List ...............................................             2
Limit Orders .....................................................            10

M

Market timing prohibition ........................................             9
Money market instruments
   excluded from securities.......................................          viii
N

Naked options
   by employees discouraged.......................................            11
Non-Putnam affiliates (NPAs)
   transactions and relationships.................................            25

O

Officer
   prohibited to serve for another entity.........................        22, 23
Options
   defined as securities..........................................          viii
   relationship to securities on
   Restricted or Red Lists........................................             3
Ombudsman ........................................................            33

P

Partner
   prohibited to serve as general partner of
   another entity.................................................            23
Partnerships
   covered in personal securities
   transactions...................................................      viii, 37
Personal securities transaction
   defined........................................................      viii, 38
Political contributions ..........................................            21
Portfolio managers
   special rules on trading ......................................        14, 17
Privacy policy....................................................            26
Private offerings, purchases in private
   placements ....................................................             6
Putnam Investments Limited
   special rules..................................................            29

Q

Quarterly Report of securities transactions.......................            32

R

Reporting requirements ...........................................            31
Repurchase agreements
   excluded from securities.......................................          viii

S

Sanctions.........................................................            vi
   for failure to pre-clear properly..............................             4
Shares by subscription
   procedures to preclear trades..................................             2
Short sales
   prohibited conduct.............................................             5

T

Tender offers ....................................................             4
Trustee
   prohibited to serve for another entity.........................            23
Trusts
   covered in personal securities
   transactions...................................................      viii, 38

U

U.S. government obligations
   excluded from securities.......................................          viii

V

Violations of Law
   reporting .....................................................            33

W

Warrants
   defined as securities..........................................          viii

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Exhibit p.(20)

FRANKLIN TEMPLETON INVESTMENTS
CODE OF ETHICS

(PURSUANT TO RULE 17J-1 OF THE INVESTMENT COMPANY ACT OF 1940
AND RULE 204A-1 OF THE INVESTMENT ADVISERS ACT OF 1940)

AND
POLICY STATEMENT ON INSIDER TRADING
REVISED APRIL 2005

TABLE OF CONTENTS

CODE OF ETHICS..................................................................    3

PART 1 - STATEMENT OF PRINCIPLES................................................    3
PART 2 - PURPOSE OF THE CODE AND CONSEQUENCES OF NON-COMPLIANCE.................    5
PART 3 - COMPLIANCE REQUIREMENTS................................................    6
PART 4 - REPORTING REQUIREMENTS FOR CODE OF ETHICS PERSONS (EXCLUDING
         INDEPENDENT DIRECTORS OF THE FUNDS)....................................   16
PART 5 - PRE-CLEARANCE REQUIREMENTS APPLICABLE TO ACCESS PERSONS (EXCLUDING
         INDEPENDENT DIRECTORS OF THE FUNDS) AND PORTFOLIO PERSONS..............   19
PART 6 - REQUIREMENTS FOR INDEPENDENT DIRECTORS OF THE FUNDS....................   23
PART 7 - PENALTIES FOR VIOLATIONS OF THE CODE...................................   25
PART 8 - A REMINDER ABOUT THE FRANKLIN TEMPLETON INVESTMENTS INSIDER
         TRADING POLICY.........................................................   27
PART 9 - FOREIGN COUNTRY SUPPLEMENTS (CANADA)...................................   28

APPENDIX A: COMPLIANCE PROCEDURES AND DEFINITIONS...............................   30

I.  RESPONSIBILITIES OF EACH DESIGNATED COMPLIANCE OFFICER......................   31
II. COMPILATION OF DEFINITIONS OF IMPORTANT TERMS...............................   38

APPENDIX B: ACKNOWLEDGEMENT FORM AND SCHEDULES..................................   41

ACKNOWLEDGMENT FORM.............................................................   42
SCHEDULE A: LEGAL AND COMPLIANCE OFFICERS CODE OF ETHICS ADMINISTRATION DEPT.
            CONTACT INFO........................................................   43
SCHEDULE B: QUARTERLY TRANSACTIONS REPORT.......................................   44
SCHEDULE C: INITIAL & ANNUAL DISCLOSURE OF BROKERAGE ACCOUNTS, SECURITIES
            HOLDINGS AND DISCRETIONARY AUTHORITY................................   45
SCHEDULE D: NOTIFICATION OF SECURITIES ACCOUNT..................................   47
SCHEDULE E: NOTIFICATION OF DIRECT OR INDIRECT BENEFICIAL INTEREST..............   48
SCHEDULE F: CHECKLIST FOR INVESTMENTS IN PARTNERSHIPS AND SECURITIES ISSUED
            IN LIMITED OFFERINGS (PRIVATE PLACEMENTS)...........................   49
SCHEDULE G: REQUEST FOR APPROVAL TO SERVE AS A DIRECTOR.........................   51

APPENDIX C: INVESTMENT ADVISOR AND BROKER-DEALER AND OTHER SUBSIDIARIES OF
            FRANKLIN RESOURCES, INC. - NOVEMBER 2004............................   52

APPENDIX D: FRANKLIN RESOURCES, INC. CODE OF ETHICS AND BUSINESS CONDUCT........   53

POLICY STATEMENT ON INSIDER TRADING.............................................   65

A. LEGAL REQUIREMENT............................................................   65
B. WHO IS AN INSIDER?...........................................................   65
C. WHAT IS MATERIAL INFORMATION?................................................   65

D. WHAT IS NON-PUBLIC INFORMATION?..............................................   66
E. BASIS FOR LIABILITY..........................................................   66
F. PENALTIES FOR INSIDER TRADING................................................   66
G. INSIDER TRADING PROCEDURES...................................................   67

FAIR DISCLOSURE POLICIES AND PROCEDURES.........................................   69

A. WHAT IS REGULATION FD?.......................................................   69
B. FTI'S CORPORATE POLICY FOR REGULATION FD.....................................   69
C. GENERAL PROVISIONS OF REGULATION FD..........................................   69
D. PERSONS TO WHOM SELECTIVE DISCLOSURE MAY NOT BE MADE:........................   70
E. EXCLUSIONS FROM REGULATION FD................................................   70
F. METHODS OF PUBLIC DISCLOSURE:................................................   70
G. TRAINING.....................................................................   71
H. QUESTIONS....................................................................   71
I. FREQUENTLY ASKED QUESTIONS:..................................................   71
J. SUPPLEMENTAL INFORMATION - SEC'S DIVISION OF CORPORATE FINANCE...............   72

SUPPLEMENTAL MEMORANDUM ON CHINESE WALL POLICY..................................   76