<PAGE> 1
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A
PORTFOLIO DIRECTOR PLUS
Fixed and Variable Annuity
Separate Account A
For Series 1-12
Supplement issued November 15, 2000
To the Prospectus dated May 1, 2000
Outside Cover Pages
Insert the following above "Separate Account A":
Fixed and Variable Annuity
Inside Cover Pages (changes underlined)
The Variable Annuity life Insurance Company
Units of Interest Under Group and Individual Fixed and Variable Annuity
---------
Contracts
Portfolio Director(R) Plus Fixed and Variable Annuity
--------------------------
First paragraph, inside cover page (changes underlined)
The Variable Annuity Life Insurance Company ("VALIC") offers certain Series
Portfolio Director Plus that consist of group and individual fixed and variable
---------
annuity contracts (the "Contracts") to Participants in certain employer
sponsored retirement plans.
--------------------------------------------------------------------------------
Portfolio Director Plus has added 20 variable account options as shown below.
Generally, however, the variable account options shown below will not be
available to participants for allocations and future investments until December
11, 2000.
--------------------------------------------------------------------------------
Additions to the Fee Tables
<TABLE>
<CAPTION>
SEPARATE ACCOUNT EXPENSES, PAGE 2
Administration Separate
and Account Total
Mortality and Distribution Expense Separate
Fund Expense Risk Fee Fee Reimbursement Account Fee
---- ---------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
North American - AG Nasdaq-100(R) Index Fund 0.25% 0.75% -- 1.00%
North American - American Century Income & Growth Fund 0.25 0.75 -- 1.00
North American - American Century International Growth Fund 0.25 0.75 -- 1.00
North American - Founders Large Cap Growth Fund 0.25 0.75 -- 1.00
North American - Founders/T. Rowe Price Small Cap Fund 0.25 0.75 -- 1.00
North American - Putnam Opportunities Fund 0.25 0.75 -- 1.00
North American - T. Rowe Price Blue Chip Growth Fund 0.25 0.75 -- 1.00
North American - T. Rowe Price Health Sciences Fund 0.25 0.75 -- 1.00
Ariel Appreciation Fund 0.25 1.00 (0.25) 1.00
Ariel Fund 0.25 1.00 (0.25) 1.00
Dreyfus Basic GNMA Fund 0.25 1.00 (0.25) 1.00
Evergreen Special Equity Fund, Class A 0.25 1.00 (0.25) 1.00
INVESCO Blue Chip Growth Fund, Investor Class 0.25 1.00 (0.25) 1.00
Janus Adviser Worldwide Fund 0.25 1.00 (0.25) 1.00
Janus Fund 0.25 1.00 (0.25) 1.00
Lou Holland Growth Fund 0.25 1.00 (0.25) 1.00
MAS Mid Cap Growth Portfolio, Advisor Class 0.25 1.00 (0.25) 1.00
Sit Mid Cap Growth Fund 0.25 1.00 (0.25) 1.00
Sit Small Cap Growth Fund 0.25 1.00 (0.25) 1.00
Warburg Pincus Small Company Growth Fund, Common Class 0.25 1.00 (0.25) 1.00
</TABLE>
For the funds above that reflect Separate Account Expense Reimbursement, the
Total Separate Account Fee equals the VALIC Separate Account A mortality and
expense risk fee plus the administration and distribution fee, reduced by the
Separate Account Expense Reimbursement. Pursuant to the Separate Account Expense
Reimbursement, the charges as shown are reduced by certain payments received
from the underlying fund and/or its affiliates or distributors for
administrative and shareholder services provided by the Company. See "Fees and
Charges -- Separate Account Expense Reimbursement" in the prospectus for more
information.
<PAGE> 2
<TABLE>
<CAPTION>
FUND ANNUAL EXPENSES, PAGE 3 Other Total Fund
Management Expenses Expenses
Fees (After (After Fee (After Fee
Fund Fee Waiver) 12b-1 Fees Waiver) Waiver)
---- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
North American - AG Nasdaq-100(R) Index Fund 0.40% -- 0.10% 0.50%
North American - American Century Income & Growth Fund 0.77 -- 0.06 0.83
North American - American Century International Growth Fund 1.00 -- 0.06 1.06
North American Core Equity Fund 0.80 -- 0.05 0.85
North American - Founders Large Cap Growth Fund 1.00 -- 0.06 1.06
North American - Founders/T. Rowe Price Small Cap Fund 0.90 -- 0.05 0.95
North American - Putnam Opportunities Fund 0.95 -- 0.06 1.01
North American Small Cap Value Fund 0.74 -- 0.21 0.95
North American - T. Rowe Price Blue Chip Growth Fund 0.80 -- 0.06 0.86
North American - T. Rowe Price Health Sciences Fund 1.00 -- 0.06 1.06
Ariel Appreciation Fund 0.75 0.25% 0.26 1.26
Ariel Fund 0.65 0.25 0.35 1.25
Dreyfus Basic GNMA Fund 0.26 -- 1.29 1.55
Evergreen Special Equity Fund, Class A 0.90 0.25 0.16 1.31
INVESCO Blue Chip Growth Fund, Investor Class 0.53 0.25 0.26 1.04
Janus Adviser Worldwide Fund 0.65 0.25 0.30 1.20
Janus Fund 0.65 -- 0.20 0.85
Lou Holland Growth Fund 0.85 -- 0.50 1.35
MAS Mid Cap Growth Portfolio, Advisor Class 0.50 0.25 0.13 0.88
Sit Mid Cap Growth Fund 1.00 -- -- 1.00
Sit Small Cap Growth Fund 1.50 -- -- 1.50
Warburg Pincus Small Company Growth Fund, Common Class 0.00 0.25 1.15 1.40
</TABLE>
Waivers and Fee Reimbursements:
Dreyfus Basic GNMA Fund: During 1999, Dreyfus waived a portion of its fee so
that the effective management fee paid by the fund was 0.26%. This waiver
reflects an undertaking by Dreyfus to limit fund expenses, exclusive of taxes,
brokerage, interest on borrowings and extraordinary expenses, to 0.65%. This
undertaking may be terminated upon 90 days' notice to shareholders.
Evergreen Special Equity Fund: The Fund's investment advisor may reduce or waive
its fees or reimburse a fund for certain expenses in order to reduce expense
ratios. The Fund's investment advisor may cease these waivers or reimbursements
at any time. Including fee waivers and expense reimbursements and restating to
reflect current fees, estimated total fund operating expenses for the fiscal
year ending 6/30/2000 would be 1.31% for Class A shares.
Janus Adviser Worldwide Fund: Janus Capital has contractually agreed to waive
the Fund's total operating expenses (excluding brokerage commissions, interest,
taxes and extraordinary expenses) so that it will not exceed 1.20% until at
least July 31, 2003. Lou Holland Growth Fund: The Investment Manager has
contractually agreed to waive its fees and reimburse other expenses of the
Growth Fund to the extent that the Fund's total operating expenses exceed 1.35%.
This agreement may be terminated only by the Fund's Board of Trustees.
Sit Mid Cap Growth Fund: The Adviser voluntarily waived 0.25% of its fee. It may
terminate this fee waiver at any time after December 31, 2000.
Warburg Pincus Small Company Growth Fund: Fee waivers and expense reimbursements
or credits reduced expenses for the Fund during 1999 but may be discontinued at
any time.
<TABLE>
<CAPTION>
ADDITIONS TO EXAMPLE #1, PAGE 5
Fund 1 Year 3 Years 5 Years 10 Years
---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
North American - AG Nasdaq-100(R) Index Fund $16 $49 $ 84 $184
North American - American Century Income & Growth Fund 19 59 101 219
North American - American Century International Growth Fund 21 66 113 244
North American Core Equity Fund 19 59 102 222
North American - Founders Large Cap Growth Fund 21 66 113 244
North American - Founders/T. Rowe Price Small Cap Fund 20 62 107 232
</TABLE>
Page 2
<PAGE> 3
<TABLE>
<S> <C> <C> <C> <C>
North American - Putnam Opportunities Fund 21 64 110 238
North American Small Cap Value Fund 18 55 94 206
North American - T. Rowe Price Blue Chip Growth Fund 19 60 103 223
North American - T. Rowe Price Health Sciences Fund 21 66 113 244
Ariel Appreciation Fund 23 72 123 264
Ariel Fund 23 72 123 263
Dreyfus Basic GNMA Fund 26 81 138 293
Evergreen Special Equity Fund, Class A 24 73 126 269
INVESCO Blue Chip Growth Fund, Investor Class 21 65 112 241
Janus Adviser Worldwide Fund 23 70 120 258
Janus Fund 19 59 102 222
Lou Holland Growth Fund 24 75 128 273
MAS Mid Cap Growth Portfolio, Advisor Class 19 60 104 225
Sit Mid Cap Growth Fund 21 64 110 237
Sit Small Cap Growth Fund 26 79 135 288
Warburg Pincus Small Company Growth Fund, Common Class 25 76 130 278
</TABLE>
<TABLE>
<CAPTION>
ADDITIONS TO EXAMPLE #2, PAGE 6
Fund 1 Year 3 Years 5 Years 10 Years
---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
North American - AG Nasdaq-100(R) Index Fund $62 $ 99 $134 $184
North American - American Century Income & Growth Fund 65 108 151 219
North American Core Equity Fund 66 109 152 222
North American - American Century International Growth Fund 68 115 163 244
North American - Founders Large Cap Growth Fund 68 115 163 244
North American - Founders/T. Rowe Price Small Cap Fund 67 112 157 232
North American - Putnam Opportunities Fund 67 113 160 238
North American Small Cap Value Fund 64 104 144 206
North American - T. Rowe Price Blue Chip Growth Fund 66 109 153 223
North American - T. Rowe Price Health Sciences Fund 68 115 163 244
Ariel Appreciation Fund 70 121 173 264
Ariel Fund 69 120 173 263
Dreyfus Basic GNMA Fund 72 129 188 293
Evergreen Special Equity Fund, Class A 70 122 176 269
INVESCO Blue Chip Growth Fund, Investor Class 67 114 162 241
Janus Adviser Worldwide Fund 69 119 170 258
Janus Fund 66 109 152 222
Lou Holland Growth Fund 70 123 178 273
MAS Mid Cap Growth Portfolio, Advisor Class 66 110 154 225
Sit Mid Cap Growth Fund 67 113 160 237
Sit Small Cap Growth Fund 72 127 185 288
Warburg Pincus Small Company Growth Fund, Common Class 71 125 180 278
</TABLE>
SUMMARY (OF INVESTMENT OBJECTIVES), PAGE 7
North American - AG Nasdaq-100(R) Index Fund
The Fund seeks long-term capital growth through investments in the stocks that
are included in the Nasdaq-100 Index(R).
Adviser: American General Advisers, a division of VALIC
Sub-Adviser: American General Investment Management, L.P.
North American - American Century Income & Growth Fund
The Fund seeks dividend growth, current income and capital appreciation by
investing in common stocks. Current income is a secondary consideration.
Adviser: American General Advisers
Sub-Adviser: American Century Investment Management, Inc.
Page 3
<PAGE> 4
North American - American Century International Growth Fund
The Fund seeks capital growth through investments primarily in equity securities
of issuers in developed foreign countries.
Adviser: American General Advisers
Sub-Adviser: American Century Investment Management, Inc.
North American - Founders Large Cap Growth Fund
The Fund seeks long-term growth of capital. The Fund normally will invest at
least 65% of its total assets in common stocks of well-established, high-quality
growth companies.
Adviser: American General Advisers
Sub-Adviser: Founders Asset Management LLC
North American - Founders/T. Rowe Price Small Cap Fund
The Fund seeks to provide long-term capital growth by investing primarily in the
stocks of small companies. It will invest at least 65% of its total assets in
stocks of small companies.
Adviser: American General Advisers
Co-Sub-Advisers: Founders Asset Management LLC and T. Rowe Price Associates,
Inc.
North American - Putnam Opportunities Fund
The Fund seeks capital appreciation through investments in common stocks. It
invests mainly in common stocks of large U.S. companies, with a focus on growth
stocks (those the manager believes whose earnings will grow faster than the
economy, with a resultant price increase).
Adviser: American General Advisers
Sub-Adviser: Putnam Investment Management, Inc.
North American - T. Rowe Price Blue Chip Growth Fund
The Fund seeks long-term capital growth. Income is a secondary objective. The
Fund pursues long-term capital appreciation by normally investing at least 65%
of total assets in the common stocks of large and medium-sized blue chip growth
companies.
Adviser: American General Advisers
Sub-Adviser: T. Rowe Price Associates, Inc.
North American - T. Rowe Price Health Sciences Fund
The Fund seeks long-term capital growth. The Fund pursues long-term capital
appreciation by normally investing at least 65% of total assets in the common
stocks of companies engaged in the research, development, production, or
distribution of products or services related to health care, medicine, or the
life sciences (collectively termed "health sciences").
Adviser: American General Advisers
Sub-Adviser: T. Rowe Price Associates, Inc.
Each of the North American funds shown above is a series of North American Funds
Variable Product Series I.
Ariel Appreciation Fund
The Fund seeks long-term capital appreciation by investing primarily in
medium-sized company stocks.
Adviser: Ariel Capital Management, Inc.
Ariel Fund
The Fund seeks long-term capital appreciation primarily through investment in
small company stocks.
Adviser: Ariel Capital Management, Inc.
Dreyfus Basic GNMA Fund
The Fund seeks a high level of current income as is consistent with the
preservation of capital. To pursue this goal, the Fund normally invests at least
65% of its net assets in GNMA certificates (popularly called "Ginnie Maes"),
which are guaranteed as to timely payment of principal and interest by the
Government National Mortgage Association.
Adviser: The Dreyfus Corporation
Page 4
<PAGE> 5
Evergreen Special Equity Fund
The Fund seeks capital growth. It invests primarily in equity securities of U.S.
companies with small market capitalizations.
Adviser: Meridian Investment Company (a subsidiary of First Union Corporation)
INVESCO Blue Chip Growth Fund
The Fund tries to buy securities that will increase in value over the long-term;
current income is a secondary goal. The Fund invests primarily in common stocks
of large companies with market capitalizations of more than $15 billion and that
have a history of consistent earnings growth regardless of business cycles.
Adviser: INVESCO Funds Group, Inc.
Janus Adviser Worldwide Fund
The Fund seeks long-term growth of capital in a manner consistent with the
preservation of capital. It invests primarily in common stocks of companies of
any size throughout the world.
Adviser: Janus Capital Corporation
Janus Fund
The Fund seeks long-term growth of capital in a manner consistent with the
preservation of capital. It invests primarily in common stocks selected for
their growth potential. Although the Fund can invest in companies of any size,
it generally invests in larger, more established companies.
Adviser: Janus Capital Corporation
Lou Holland Growth Fund
The Fund primarily seeks long-term growth of capital. The receipt of dividend
income is a secondary consideration. It invests primarily in common stocks of
growth companies.
Adviser: Holland Capital Management, L.P.
MAS Mid Cap Growth Portfolio
The Portfolio seeks long-term capital growth. It invests primarily in common
stocks of companies with capitalizations in the range of companies included in
the S&P MidCap 400 Index.
Adviser: Miller Anderson & Sherrerd, LLP
Sit Mid Cap Growth Fund
The Fund seeks to maximize long-term capital appreciation. It invests at least
65% of its total assets in the common stocks of growth companies with
capitalizations of $2 billion to $15 billion at the time of purchase.
Adviser: Sit Investment Management, Inc.
Sit Small Cap Growth Fund
The Fund seeks to maximize long-term capital appreciation. It invests at least
65% of its total assets in common stocks of small growth companies with
capitalizations of $2.5 billion or less at the time of purchase.
Adviser: Sit Investment Management, Inc.
Warburg Pincus Small Company Growth Fund
The Fund seeks capital growth by investing in the equity securities of small
U.S. companies.
Adviser: Credit Suisse Asset Management, LLC
Page 5
<PAGE> 6
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A
PORTFOLIO DIRECTOR PLUS
Fixed and Variable Annuity
Separate Account A
For Series 1.20-12.20
Supplement issued November 15, 2000
To the Prospectus dated May 1, 2000
Outside Cover Pages
Insert the following above "Separate Account A":
Fixed and Variable Annuity
Inside Cover Pages (changes underlined)
The Variable Annuity life Insurance Company
Units of Interest Under Group and Individual Fixed and Variable Annuity
---------
Contracts
Portfolio Director(R) Plus Fixed and Variable Annuity
--------------------------
First paragraph, inside cover page (changes underlined)
The Variable Annuity Life Insurance Company ("VALIC") offers certain Series
Portfolio Director Plus that consist of group and individual fixed and variable
---------
annuity contracts (the "Contracts") to Participants in certain employer
sponsored retirement plans.
--------------------------------------------------------------------------------
Portfolio Director Plus has added 20 variable account options as shown below.
Generally, however, the variable account options shown below will not be
available to participants for allocations and future investments until December
11, 2000.
--------------------------------------------------------------------------------
Additions to the Fee Tables
<TABLE>
<CAPTION>
SEPARATE ACCOUNT EXPENSES, PAGE 2 Administration Separate
Mortality and and Account
Expense Risk Distribution Expense Total Separate
Fund Fee Fee Reimbursement Account Fee
---- ------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
North American - AG Nasdaq-100(R) Index Fund 0.25% 0.55% -- 0.80%
North American - American Century Income & Growth Fund 0.25 0.55 -- 0.80
North American - American Century International Growth Fund 0.25 0.55 -- 0.80
North American - Founders Large Cap Growth Fund 0.25 0.55 -- 0.80
North American - Founders/T. Rowe Price Small Cap Fund 0.25 0.55 -- 0.80
North American - Putnam Opportunities Fund 0.25 0.55 -- 0.80
North American - T. Rowe Price Blue Chip Growth Fund 0.25 0.55 -- 0.80
North American - T. Rowe Price Health Sciences Fund 0.25 0.55 -- 0.80
Ariel Appreciation Fund 0.25 0.80 (0.25) 0.80
Ariel Fund 0.25 0.80 (0.25) 0.80
Dreyfus Basic GNMA Fund 0.25 0.80 (0.25) 0.80
Evergreen Special Equity Fund, Class A 0.25 0.80 (0.25) 0.80
INVESCO Blue Chip Growth Fund, Investor Class 0.25 0.80 (0.25) 0.80
Janus Adviser Worldwide Fund 0.25 0.80 (0.25) 0.80
Janus Fund 0.25 0.80 (0.25) 0.80
Lou Holland Growth Fund 0.25 0.80 (0.25) 0.80
MAS Mid Cap Growth Portfolio, Advisor Class 0.25 0.80 (0.25) 0.80
Sit Mid Cap Growth Fund 0.25 0.80 (0.25) 0.80
Sit Small Cap Growth Fund 0.25 0.80 (0.25) 0.80
Warburg Pincus Small Company Growth Fund, Common Class 0.25 0.80 (0.25) 0.80
</TABLE>
For the funds above that reflect Separate Account Expense Reimbursement, the
Total Separate Account Fee equals the VALIC Separate Account A mortality and
expense risk fee plus the administration and distribution fee, reduced by the
Separate Account Expense Reimbursement. Pursuant to the Separate Account Expense
Reimbursement, the charges as shown are reduced by certain payments received
from the underlying fund and/or its affiliates or distributors for
administrative and shareholder services provided by the Company. See "Fees and
Charges -- Separate Account Expense Reimbursement" in the prospectus for more
information.
<PAGE> 7
<TABLE>
<CAPTION>
FUND ANNUAL EXPENSES, PAGE 3 Management Other Total Fund
Fees Expenses Expenses
(After Fee (After Fee (After Fee
Fund Waiver) 12b-1 Fees Waiver) Waiver)
---- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
North American - AG Nasdaq-100(R)Index Fund 0.40% -- 0.10% 0.50%
North American - American Century Income & Growth Fund 0.77 -- 0.06 0.83
North American - American Century International Growth Fund 1.00 -- 0.06 1.06
North American - Core Equity Fund 0.80 -- 0.05 0.85
North American - Founders Large Cap Growth Fund 1.00 -- 0.06 1.06
North American - Founders/T. Rowe Price Small Cap Fund 0.90 -- 0.05 0.95
North American - Putnam Opportunities Fund 0.95 -- 0.06 1.01
North American - Small Cap Value Fund 0.74 -- 0.21 0.95
North American - T. Rowe Price Blue Chip Growth Fund 0.80 -- 0.06 0.86
North American - T. Rowe Price Health Sciences Fund 1.00 -- 0.06 1.06
Ariel Appreciation Fund 0.75 0.25% 0.26 1.26
Ariel Fund 0.65 0.25 0.35 1.25
Dreyfus Basic GNMA Fund 0.26 -- 1.29 1.55
Evergreen Special Equity Fund, Class A 0.90 0.25 0.16 1.31
INVESCO Blue Chip Growth Fund, Investor Class 0.53 0.25 0.26 1.04
Janus Adviser Worldwide Fund 0.65 0.25 0.30 1.20
Janus Fund 0.65 -- 0.20 0.85
Lou Holland Growth Fund 0.85 -- 0.50 1.35
MAS Mid Cap Growth Portfolio, Advisor Class 0.50 0.25 0.13 0.88
Sit Mid Cap Growth Fund 1.00 -- -- 1.00
Sit Small Cap Growth Fund 1.50 -- -- 1.50
Warburg Pincus Small Company Growth Fund, Common Class 0.00 0.25 1.15 1.40
</TABLE>
Waivers and Fee Reimbursements:
Dreyfus Basic GNMA Fund: During 1999, Dreyfus waived a portion of its fee so
that the effective management fee paid by the fund was 0.26%. This waiver
reflects an undertaking by Dreyfus to limit fund expenses, exclusive of taxes,
brokerage, interest on borrowings and extraordinary expenses, to 0.65%. This
undertaking may be terminated upon 90 days' notice to shareholders.
Evergreen Special Equity Fund: The Fund's investment advisor may reduce or waive
its fees or reimburse a fund for certain expenses in order to reduce expense
ratios. The Fund's investment advisor may cease these waivers or reimbursements
at any time. Including fee waivers and expense reimbursements and restating to
reflect current fees, estimated total fund operating expenses for the fiscal
year ending 6/30/2000 would be 1.31% for Class A shares.
Janus Adviser Worldwide Fund: Janus Capital has contractually agreed to waive
the Fund's total operating expenses (excluding brokerage commissions, interest,
taxes and extraordinary expenses) so that it will not exceed 1.20% until at
least July 31, 2003.
Lou Holland Growth Fund: The Investment Manager has contractually agreed to
waive its fees and reimburse other expenses of the Growth Fund to the extent
that the Fund's total operating expenses exceed 1.35%. This agreement may be
terminated only by the Fund's Board of Trustees.
Sit Mid Cap Growth Fund: The Adviser voluntarily waived 0.25% of its fee. It may
terminate this fee waiver at any time after December 31, 2000.
Warburg Pincus Small Company Growth Fund: Fee waivers and expense reimbursements
or credits reduced expenses for the Fund during 1999 but may be discontinued at
any time.
Page 2
<PAGE> 8
ADDITIONS TO EXAMPLE #1, PAGE 5
<TABLE>
<CAPTION>
Fund 1 Year 3 Years 5 Years 10 Years
---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
North American - AG Nasdaq-100(R)Index Fund $14 $42 $ 73 $162
North American - American Century Income & Growth Fund 17 53 91 198
North American - American Century International Growth Fund 19 60 103 223
North American - Core Equity Fund 17 53 92 200
North American - Founders Large Cap Growth Fund 19 60 103 223
North American - Founders/T. Rowe Price Small Cap Fund 18 56 97 211
North American - Putnam Opportunities Fund 19 58 100 217
North American - Small Cap Value Fund 16 49 84 184
North American - T. Rowe Price Blue Chip Growth Fund 17 54 92 201
North American - T. Rowe Price Health Sciences Fund 19 60 103 223
Ariel Appreciation Fund 21 66 113 244
Ariel Fund 21 65 112 242
Dreyfus Basic GNMA Fund 26 79 136 289
Evergreen Special Equity Fund, Class A 22 67 115 249
INVESCO Blue Chip Growth Fund, Investor Class 19 59 102 221
Janus Adviser Worldwide Fund 21 64 110 237
Janus Fund 17 53 92 200
Lou Holland Growth Fund 22 69 118 253
MAS Mid Cap Growth Portfolio, Advisor Class 17 54 93 203
Sit Mid Cap Growth Fund 19 58 100 216
Sit Small Cap Growth Fund 24 73 125 268
Warburg Pincus Small Company Growth Fund, Common Class 23 70 120 258
</TABLE>
ADDITIONS TO EXAMPLE #2, PAGE 6
<TABLE>
<CAPTION>
Fund 1 Year 3 Years 5 Years 10 Years
---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
North American - AG Nasdaq-100(R)Index Fund $60 $ 92 $123 $162
North American - American Century Income & Growth Fund 63 102 141 198
North American - American Century International Growth Fund 66 109 153 223
North American - Core Equity Fund 64 103 142 200
North American - Founders Large Cap Growth Fund 66 109 153 223
North American - Founders/T. Rowe Price Small Cap Fund 65 106 147 211
North American - Putnam Opportunities Fund 65 108 150 217
North American - Small Cap Value Fund 62 99 134 184
North American - T. Rowe Price Blue Chip Growth Fund 64 103 142 201
North American - T. Rowe Price Health Sciences Fund 66 109 153 223
Ariel Appreciation Fund 68 115 163 244
Ariel Fund 68 115 162 242
Dreyfus Basic GNMA Fund 72 128 186 289
Evergreen Special Equity Fund, Class A 68 116 165 249
INVESCO Blue Chip Growth Fund, Investor Class 65 108 152 221
Janus Adviser Worldwide Fund 67 113 160 237
Janus Fund 64 103 142 200
Lou Holland Growth Fund 68 117 168 253
MAS Mid Cap Growth Portfolio, Advisor Class 64 104 143 203
Sit Mid Cap Growth Fund 65 107 150 216
Sit Small Cap Growth Fund 70 122 175 268
Warburg Pincus Small Company Growth Fund, Common Class 69 119 170 258
</TABLE>
SUMMARY (OF INVESTMENT OBJECTIVES), PAGE 7
North American - AG Nasdaq-100(R) Index Fund
The Fund seeks long-term capital growth through investments in the stocks that
are included in the Nasdaq-100 Index(R).
Adviser: American General Advisers, a division of VALIC
Sub-Adviser: American General Investment Management, L.P.
North American - American Century Income & Growth Fund
The Fund seeks dividend growth, current income and capital appreciation by
investing in common stocks. Current income is a secondary consideration.
Adviser: American General Advisers
Sub-Adviser: American Century Investment Management, Inc.
Page 3
<PAGE> 9
North American - American Century International Growth Fund
The Fund seeks capital growth through investments primarily in equity securities
of issuers in developed foreign countries.
Adviser: American General Advisers
Sub-Adviser: American Century Investment Management, Inc.
North American - Founders Large Cap Growth Fund
The Fund seeks long-term growth of capital. The Fund normally will invest at
least 65% of its total assets in common stocks of well-established, high-quality
growth companies.
Adviser: American General Advisers
Sub-Adviser: Founders Asset Management LLC
North American - Founders/T. Rowe Price Small Cap Fund
The Fund seeks to provide long-term capital growth by investing primarily in the
stocks of small companies. It will invest at least 65% of its total assets in
stocks of small companies.
Adviser: American General Advisers
Co-Sub-Advisers: Founders Asset Management LLC and T. Rowe Price Associates,
Inc.
North American - Putnam Opportunities Fund
The Fund seeks capital appreciation through investments in common stocks. It
invests mainly in common stocks of large U.S. companies, with a focus on growth
stocks (those the manager believes whose earnings will grow faster than the
economy, with a resultant price increase).
Adviser: American General Advisers
Sub-Adviser: Putnam Investment Management, Inc.
North American - T. Rowe Price Blue Chip Growth Fund
The Fund seeks long-term capital growth. Income is a secondary objective. The
Fund pursues long-term capital appreciation by normally investing at least 65%
of total assets in the common stocks of large and medium-sized blue chip growth
companies.
Adviser: American General Advisers
Sub-Adviser: T. Rowe Price Associates, Inc.
North American - T. Rowe Price Health Sciences Fund
The Fund seeks long-term capital growth. The Fund pursues long-term capital
appreciation by normally investing at least 65% of total assets in the common
stocks of companies engaged in the research, development, production, or
distribution of products or services related to health care, medicine, or the
life sciences (collectively termed "health sciences").
Adviser: American General Advisers
Sub-Adviser: T. Rowe Price Associates, Inc.
Each of the North American funds shown above is a series of North American Funds
Variable Product Series I.
Ariel Appreciation Fund
The Fund seeks long-term capital appreciation by investing primarily in
medium-sized company stocks.
Adviser: Ariel Capital Management, Inc.
Ariel Fund
The Fund seeks long-term capital appreciation primarily through investment in
small company stocks.
Adviser: Ariel Capital Management, Inc.
Dreyfus Basic GNMA Fund
The Fund seeks a high level of current income as is consistent with the
preservation of capital. To pursue this goal, the Fund normally invests at least
65% of its net assets in GNMA certificates (popularly called "Ginnie Maes"),
which are guaranteed as to timely payment of principal and interest by the
Government National Mortgage Association.
Adviser: The Dreyfus Corporation
Evergreen Special Equity Fund
The Fund seeks capital growth. It invests primarily in equity securities of U.S.
companies with small market capitalizations.
Adviser: Meridian Investment Company (a subsidiary of First Union Corporation)
Page 4
<PAGE> 10
INVESCO Blue Chip Growth Fund
The Fund tries to buy securities that will increase in value over the long-term;
current income is a secondary goal. The Fund invests primarily in common stocks
of large companies with market capitalizations of more than $15 billion and that
have a history of consistent earnings growth regardless of business cycles.
Adviser: INVESCO Funds Group, Inc.
Janus Adviser Worldwide Fund
The Fund seeks long-term growth of capital in a manner consistent with the
preservation of capital. It invests primarily in common stocks of companies of
any size throughout the world.
Adviser: Janus Capital Corporation
Janus Fund
The Fund seeks long-term growth of capital in a manner consistent with the
preservation of capital. It invests primarily in common stocks selected for
their growth potential. Although the Fund can invest in companies of any size,
it generally invests in larger, more established companies.
Adviser: Janus Capital Corporation
Lou Holland Growth Fund
The Fund primarily seeks long-term growth of capital. The receipt of dividend
income is a secondary consideration. It invests primarily in common stocks of
growth companies.
Adviser: Holland Capital Management, L.P.
MAS Mid Cap Growth Portfolio
The Portfolio seeks long-term capital growth. It invests primarily in common
stocks of companies with capitalizations in the range of companies included in
the S&P MidCap 400 Index.
Adviser: Miller Anderson & Sherrerd, LLP
Sit Mid Cap Growth Fund
The Fund seeks to maximize long-term capital appreciation. It invests at least
65% of its total assets in the common stocks of growth companies with
capitalizations of $2 billion to $15 billion at the time of purchase.
Adviser: Sit Investment Management, Inc.
Sit Small Cap Growth Fund
The Fund seeks to maximize long-term capital appreciation. It invests at least
65% of its total assets in common stocks of small growth companies with
capitalizations of $2.5 billion or less at the time of purchase.
Adviser: Sit Investment Management, Inc.
Warburg Pincus Small Company Growth Fund
The Fund seeks capital growth by investing in the equity securities of small
U.S. companies.
Adviser: Credit Suisse Asset Management, LLC
Page 5
<PAGE> 11
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A
PORTFOLIO DIRECTOR PLUS
Fixed and Variable Annuity
Separate Account A
For Series 1.40-12.40
Supplement issued November 15, 2000
To the Prospectus dated May 1, 2000
Outside Cover Pages
Insert the following above "Separate Account A":
Fixed and Variable Annuity
Inside Cover Pages (changes underlined)
The Variable Annuity Life Insurance Company
Units of Interest Under Group and Individual Fixed and Variable Annuity
---------
Contracts
Portfolio Director(R) Plus Fixed and Variable Annuity
--------------------------
First paragraph, inside cover page (changes underlined)
The Variable Annuity Life Insurance Company ("VALIC") offers certain Series
Portfolio Director Plus that consist of group and individual fixed and variable
---------
annuity contracts (the "Contracts") to Participants in certain employer
sponsored retirement plans.
-------------------------------------------------------------------------------
Portfolio Director Plus has added 20 variable account options as shown below.
Generally, however, the variable account options shown below will not be
available to participants for allocations and future investments until December
11, 2000.
-------------------------------------------------------------------------------
Additions to the Fee Tables
<TABLE>
<CAPTION>
Separate
SEPARATE ACCOUNT EXPENSES, PAGE 2 Administration Account
Mortality and and Expense Total Separate
Expense Risk Distribution Reimburse- Account
Fund Fee Fee ment Fee
---- ------------- -------------- ---------- --------------
<S> <C> <C> <C> <C>
North American - AG Nasdaq-100(R) Index Fund 0.25% 0.35% -- 0.60%
North American - American Century Income & Growth Fund 0.25 0.35 -- 0.60
North American - American Century International Growth Fund 0.25 0.35 -- 0.60
North American - Founders Large Cap Growth Fund 0.25 0.35 -- 0.60
North American - Founders/T. Rowe Price Small Cap Fund 0.25 0.35 -- 0.60
North American - Putnam Opportunities Fund 0.25 0.35 -- 0.60
North American - T. Rowe Price Blue Chip Growth Fund 0.25 0.35 -- 0.60
North American - T. Rowe Price Health Sciences Fund 0.25 0.35 -- 0.60
Ariel Appreciation Fund 0.25 0.60 (0.25) 0.60
Ariel Fund 0.25 0.60 (0.25) 0.60
Dreyfus Basic GNMA Fund 0.25 0.60 (0.25) 0.60
Evergreen Special Equity Fund, Class A 0.25 0.60 (0.25) 0.60
INVESCO Blue Chip Growth Fund, Investor Class 0.25 0.60 (0.25) 0.60
Janus Adviser Worldwide Fund 0.25 0.60 (0.25) 0.60
Janus Fund 0.25 0.60 (0.25) 0.60
Lou Holland Growth Fund 0.25 0.60 (0.25) 0.60
MAS Mid Cap Growth Portfolio, Advisor Class 0.25 0.60 (0.25) 0.60
Sit Mid Cap Growth Fund 0.25 0.60 (0.25) 0.60
Sit Small Cap Growth Fund 0.25 0.60 (0.25) 0.60
Warburg Pincus Small Company Growth Fund, Common Class 0.25 0.60 (0.25) 0.60
</TABLE>
For the funds above that reflect Separate Account Expense Reimbursement, the
Total Separate Account Fee equals the VALIC Separate Account A mortality and
expense risk fee plus the administration and distribution fee, reduced by the
Separate Account Expense Reimbursement. Pursuant to the Separate Account Expense
Reimbursement, the charges as shown are reduced by certain payments received
from the underlying fund and/or its affiliates or distributors for
administrative and shareholder services provided by the Company. See "Fees and
Charges -- Separate Account Expense Reimbursement" in the prospectus for more
information.
<PAGE> 12
<TABLE>
<CAPTION>
FUND ANNUAL EXPENSES, PAGE 3 Other Total Fund
Management Expenses Expenses
Fees (After (After Fee (After Fee
Fund Fee Waiver) 12b-1 Fees Waiver) Waiver)
---- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
North American - AG Nasdaq-100(R)Index Fund 0.40% -- 0.10% 0.50%
North American - American Century Income & Growth Fund 0.77 -- 0.06 0.83
North American - American Century International Growth Fund 1.00 -- 0.06 1.06
North American Core Equity Fund 0.80 -- 0.05 0.85
North American - Founders Large Cap Growth Fund 1.00 -- 0.06 1.06
North American - Founders/T. Rowe Price Small Cap Fund 0.90 -- 0.05 0.95
North American - Putnam Opportunities Fund 0.95 -- 0.06 1.01
North American Small Cap Value Fund 0.74 -- 0.21 0.95
North American - T. Rowe Price Blue Chip Growth Fund 0.80 -- 0.06 0.86
North American - T. Rowe Price Health Sciences Fund 1.00 -- 0.06 1.06
Ariel Appreciation Fund 0.75 0.25% 0.26 1.26
Ariel Fund 0.65 0.25 0.35 1.25
Dreyfus Basic GNMA Fund 0.26 -- 1.29 1.55
Evergreen Special Equity Fund, Class A 0.90 0.25 0.16 1.31
INVESCO Blue Chip Growth Fund, Investor Class 0.53 0.25 0.26 1.04
Janus Adviser Worldwide Fund 0.65 0.25 0.30 1.20
Janus Fund 0.65 -- 0.20 0.85
Lou Holland Growth Fund 0.85 -- 0.50 1.35
MAS Mid Cap Growth Portfolio, Advisor Class 0.50 0.25 0.13 0.88
Sit Mid Cap Growth Fund 1.00 -- -- 1.00
Sit Small Cap Growth Fund 1.50 -- -- 1.50
Warburg Pincus Small Company Growth Fund, Common Class 0.00 0.25 1.15 1.40
</TABLE>
Waivers and Fee Reimbursements:
Dreyfus Basic GNMA Fund: During 1999, Dreyfus waived a portion of its fee so
that the effective management fee paid by the fund was 0.26%. This waiver
reflects an undertaking by Dreyfus to limit fund expenses, exclusive of taxes,
brokerage, interest on borrowings and extraordinary expenses, to 0.65%. This
undertaking may be terminated upon 90 days' notice to shareholders.
Evergreen Special Equity Fund: The Fund's investment advisor may reduce or waive
its fees or reimburse a fund for certain expenses in order to reduce expense
ratios. The Fund's investment advisor may cease these waivers or reimbursements
at any time. Including fee waivers and expense reimbursements and restating to
reflect current fees, estimated total fund operating expenses for the fiscal
year ending 6/30/2000 would be 1.31% for Class A shares.
Janus Adviser Worldwide Fund: Janus Capital has contractually agreed to waive
the Fund's total operating expenses (excluding brokerage commissions, interest,
taxes and extraordinary expenses) so that it will not exceed 1.20% until at
least July 31, 2003.
Lou Holland Growth Fund: The Investment Manager has contractually agreed to
waive its fees and reimburse other expenses of the Growth Fund to the extent
that the Fund's total operating expenses exceed 1.35%. This agreement may be
terminated only by the Fund's Board of Trustees.
Sit Mid Cap Growth Fund: The Adviser voluntarily waived 0.25% of its fee. It may
terminate this fee waiver at any time after December 31, 2000.
Warburg Pincus Small Company Growth Fund: Fee waivers and expense reimbursements
or credits reduced expenses for the Fund during 1999 but may be discontinued at
any time.
<TABLE>
<CAPTION>
ADDITIONS TO EXAMPLE #1, PAGE 5
Fund 1 Year 3 Years 5 Years 10 Years
---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
North American - AG Nasdaq-100(R)Index Fund $12 $36 $63 $139
North American - American Century Income & Growth Fund 15 46 80 176
North American - American Century International Growth Fund 17 54 92 201
North American Core Equity Fund 15 47 81 178
North American - Founders Large Cap Growth Fund 17 54 92 201
North American - Founders/T. Rowe Price Small Cap Fund 16 50 87 189
</TABLE>
Page 2
<PAGE> 13
<TABLE>
<S> <C> <C> <C> <C>
North American - Putnam Opportunities Fund 17 52 90 196
North American Small Cap Value Fund 14 42 73 162
North American - T. Rowe Price Blue Chip Growth Fund 15 47 82 179
North American - T. Rowe Price Health Sciences Fund 17 54 92 201
Ariel Appreciation Fund 19 60 103 223
Ariel Fund 19 59 102 222
Dreyfus Basic GNMA Fund 22 69 118 253
Evergreen Special Equity Fund, Class A 20 61 105 228
INVESCO Blue Chip Growth Fund, Investor Class 17 53 91 199
Janus Adviser Worldwide Fund 19 58 100 216
Janus Fund 15 47 81 178
Lou Holland Growth Fund 20 62 107 232
MAS Mid Cap Growth Portfolio, Advisor Class 15 48 83 182
Sit Mid Cap Growth Fund 17 52 89 195
Sit Small Cap Growth Fund 22 67 115 248
Warburg Pincus Small Company Growth Fund, Common Class 21 64 110 237
</TABLE>
<TABLE>
<CAPTION>
ADDITIONS TO EXAMPLE #2, PAGE 6
Fund 1 Year 3 Years 5 Years 10 Years
---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
North American - AG Nasdaq-100(R)Index Fund $58 $ 86 $113 $139
North American - American Century Income & Growth Fund 62 96 130 176
North American - American Century International Growth Fund 64 103 142 201
North American Core Equity Fund 62 97 131 178
North American - Founders Large Cap Growth Fund 64 103 142 201
North American - Founders/T. Rowe Price Small Cap Fund 63 100 137 189
North American - Putnam Opportunities Fund 63 102 140 196
North American Small Cap Value Fund 60 92 123 162
North American - T. Rowe Price Blue Chip Growth Fund 62 97 132 179
North American - T. Rowe Price Health Sciences Fund 64 103 142 201
Ariel Appreciation Fund 66 109 153 223
Ariel Fund 66 109 152 222
Dreyfus Basic GNMA Fund 68 117 168 253
Evergreen Special Equity Fund, Class A 66 111 155 228
INVESCO Blue Chip Growth Fund, Investor Class 64 103 141 199
Janus Adviser Worldwide Fund 65 107 150 216
Janus Fund 62 97 131 178
Lou Holland Growth Fund 67 112 157 232
MAS Mid Cap Growth Portfolio, Advisor Class 62 98 133 182
Sit Mid Cap Growth Fund 63 101 139 195
Sit Small Cap Growth Fund 68 116 165 248
Warburg Pincus Small Company Growth Fund, Common Class 67 113 160 237
</TABLE>
SUMMARY (OF INVESTMENT OBJECTIVES), PAGE 7
North American - AG Nasdaq-100(R) Index Fund
The Fund seeks long-term capital growth through investments in the stocks that
are included in the Nasdaq-100 Index(R).
Adviser: American General Advisers, a division of VALIC
Sub-Adviser: American General Investment Management, L.P.
North American - American Century Income & Growth Fund
The Fund seeks dividend growth, current income and capital appreciation by
investing in common stocks. Current income is a secondary consideration.
Adviser: American General Advisers
Sub-Adviser: American Century Investment Management, Inc.
Page 3
<PAGE> 14
North American - American Century International Growth Fund
The Fund seeks capital growth through investments primarily in equity securities
of issuers in developed foreign countries.
Adviser: American General Advisers
Sub-Adviser: American Century Investment Management, Inc.
North American - Founders Large Cap Growth Fund
The Fund seeks long-term growth of capital. The Fund normally will invest at
least 65% of its total assets in common stocks of well-established, high-quality
growth companies.
Adviser: American General Advisers
Sub-Adviser: Founders Asset Management LLC
North American - Founders/T. Rowe Price Small Cap Fund
The Fund seeks to provide long-term capital growth by investing primarily in the
stocks of small companies. It will invest at least 65% of its total assets in
stocks of small companies.
Adviser: American General Advisers
Co-Sub-Advisers: Founders Asset Management LLC and T. Rowe Price Associates,
Inc.
North American - Putnam Opportunities Fund
The Fund seeks capital appreciation through investments in common stocks. It
invests mainly in common stocks of large U.S. companies, with a focus on growth
stocks (those the manager believes whose earnings will grow faster than the
economy, with a resultant price increase).
Adviser: American General Advisers
Sub-Adviser: Putnam Investment Management, Inc.
North American - T. Rowe Price Blue Chip Growth Fund
The Fund seeks long-term capital growth. Income is a secondary objective. The
Fund pursues long-term capital appreciation by normally investing at least 65%
of total assets in the common stocks of large and medium-sized blue chip growth
companies.
Adviser: American General Advisers
Sub-Adviser: T. Rowe Price Associates, Inc.
North American - T. Rowe Price Health Sciences Fund
The Fund seeks long-term capital growth. The Fund pursues long-term capital
appreciation by normally investing at least 65% of total assets in the common
stocks of companies engaged in the research, development, production, or
distribution of products or services related to health care, medicine, or the
life sciences (collectively termed "health sciences").
Adviser: American General Advisers
Sub-Adviser: T. Rowe Price Associates, Inc.
Each of the North American funds shown above is a series of North American Funds
Variable Product Series I.
Ariel Appreciation Fund
The Fund seeks long-term capital appreciation by investing primarily in
medium-sized company stocks.
Adviser: Ariel Capital Management, Inc.
Ariel Fund
The Fund seeks long-term capital appreciation primarily through investment in
small company stocks.
Adviser: Ariel Capital Management, Inc.
Dreyfus Basic GNMA Fund
The Fund seeks a high level of current income as is consistent with the
preservation of capital. To pursue this goal, the Fund normally invests at least
65% of its net assets in GNMA certificates (popularly called "Ginnie Maes"),
which are guaranteed as to timely payment of principal and interest by the
Government National Mortgage Association.
Adviser: The Dreyfus Corporation
Page 4
<PAGE> 15
Evergreen Special Equity Fund
The Fund seeks capital growth. It invests primarily in equity securities of U.S.
companies with small market capitalizations.
Adviser: Meridian Investment Company (a subsidiary of First Union Corporation)
INVESCO Blue Chip Growth Fund
The Fund tries to buy securities that will increase in value over the long-term;
current income is a secondary goal. The Fund invests primarily in common stocks
of large companies with market capitalizations of more than $15 billion and that
have a history of consistent earnings growth regardless of business cycles.
Adviser: INVESCO Funds Group, Inc.
Janus Adviser Worldwide Fund
The Fund seeks long-term growth of capital in a manner consistent with the
preservation of capital. It invests primarily in common stocks of companies of
any size throughout the world.
Adviser: Janus Capital Corporation
Janus Fund
The Fund seeks long-term growth of capital in a manner consistent with the
preservation of capital. It invests primarily in common stocks selected for
their growth potential. Although the Fund can invest in companies of any size,
it generally invests in larger, more established companies.
Adviser: Janus Capital Corporation
Lou Holland Growth Fund
The Fund primarily seeks long-term growth of capital. The receipt of dividend
income is a secondary consideration. It invests primarily in common stocks of
growth companies.
Adviser: Holland Capital Management, L.P.
MAS Mid Cap Growth Portfolio
The Portfolio seeks long-term capital growth. It invests primarily in common
stocks of companies with capitalizations in the range of companies included in
the S&P MidCap 400 Index.
Adviser: Miller Anderson & Sherrerd, LLP
Sit Mid Cap Growth Fund
The Fund seeks to maximize long-term capital appreciation. It invests at least
65% of its total assets in the common stocks of growth companies with
capitalizations of $2 billion to $15 billion at the time of purchase.
Adviser: Sit Investment Management, Inc.
Sit Small Cap Growth Fund
The Fund seeks to maximize long-term capital appreciation. It invests at least
65% of its total assets in common stocks of small growth companies with
capitalizations of $2.5 billion or less at the time of purchase.
Adviser: Sit Investment Management, Inc.
Warburg Pincus Small Company Growth Fund
The Fund seeks capital growth by investing in the equity securities of small
U.S. companies.
Adviser: Credit Suisse Asset Management, LLC
Page 5
<PAGE> 16
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A
PORTFOLIO DIRECTOR 2
Fixed and Variable Annuity
Separate Account A
For Series 1-12
Supplement issued November 15, 2000
To the Prospectus dated May 1, 2000
Outside Cover Pages
Insert the following above "Separate Account A":
Fixed and Variable Annuity
Inside Cover Pages (changes underlined)
The Variable Annuity life Insurance Company
Units of Interest Under Group and Individual Fixed and Variable Annuity
---------
Contracts
Portfolio Director(R) 2 Fixed and Variable Annuity
--------------------------
First paragraph, inside cover page (changes underlined)
The Variable Annuity Life Insurance Company ("VALIC") offers certain Series of
Portfolio Director 2 that consist of group and individual fixed and variable
---------
annuity contracts (the "Contracts") to Participants in certain employer
sponsored retirement plans.
--------------------------------------------------------------------------------
Portfolio Director 2 has added several new variable account options as shown
below. Generally, however, the variable account options shown below will not be
available to participants for allocations and future investments until December
11, 2000.
--------------------------------------------------------------------------------
Additions to the Fee Tables, page 2
<TABLE>
<CAPTION>
SEPARATE ACCOUNT EXPENSES
(as a percentage of Separate Account net Administration Separate
assets): Mortality and and Account
Expense Risk Distribution Expense Total Separate
Fund Fee Fee Reimbursement Account Fee
---- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
NORTH AMERICAN FUNDS VARIABLE
PRODUCT SERIES I
North American - AG Asset 0.25% 0.75% -- 1.00%
Allocation Fund
North American - AG Capital 0.25 0.75 -- 1.00
Conservation Fund
North American - AG Government 0.25 0.75 -- 1.00
Securities Fund
North American - AG Growth 0.25 0.75 -- 1.00
& Income Fund
North American - AG International 0.25 0.75 -- 1.00
Equities Fund
North American - AG MidCap Index 0.25 0.75 -- 1.00
Fund
North American - AG Nasdaq-100(R) 0.25 0.75 -- 1.00
Index Fund
North American - AG Small Cap 0.25 0.75 -- 1.00
Index Fund
North American - American Century 0.25 0.75 -- 1.00
</TABLE>
<PAGE> 17
<TABLE>
<S> <C> <C> <C> <C>
Income & Growth Fund
North American - American Century 0.25 0.75 -- 1.00
International Growth Fund
North American - Founders Large 0.25 0.75 -- 1.00
Cap Growth Fund
North American - Founders/T. Rowe 0.25 0.75 -- 1.00
Price Small Cap Fund
North American - Putnam 0.25 0.75 -- 1.00
Opportunities Fund
North American - T. Rowe Price Blue 0.25 0.75 -- 1.00
Chip Growth Fund
North American - T. Rowe Price 0.25 0.75 -- 1.00
Health Sciences Fund
NORTH AMERICAN FUNDS VARIABLE
PRODUCT SERIES II
North American - AG Aggressive 0.25 0.75 (0.25%) 0.75
Growth Lifestyle Fund
North American - AG Conservative 0.25 0.75 (0.25) 0.75
Growth Lifestyle Fund
North American - AG Core Bond Fund 0.25 0.75 (0.25) 0.75
North American - AG High Yield 0.25 0.75 (0.25) 0.75
Bond Fund
North American - AG Moderate Growth 0.25 0.75 (0.25) 0.75
Lifestyle Fund
North American - AG 2 Money Market 0.25 0.75 (0.25) 0.75
Fund
North American - AG Socially 0.25 0.75 (0.25) 0.75
Responsible Fund
North American - AG Strategic Bond 0.25 0.75 (0.25) 0.75
Fund
North American - Goldman Sachs 0.25 0.75 (0.25) 0.75
Large Cap Growth Fund
North American International Growth 0.25 0.75 (0.25) 0.75
Fund
North American - INVESCO MidCap 0.25 0.75 (0.25) 0.75
Growth Fund
North American - J.P. Morgan Small 0.25 0.75 (0.25) 0.75
Cap Growth Fund
North American Small Cap Value 0.25 0.75 (0.25) 0.75
Fund
North American - State Street Large 0.25 0.75 (0.25) 0.75
Cap Value Fund
North American - Neuberger Berman 0.25 0.75 (0.25) 0.75
MidCap Value Fund
ARIEL INVESTMENT TRUST
Ariel Appreciation Fund 0.25 1.00 (0.25) 1.00
Ariel Fund 0.25 1.00 (0.25) 1.00
Dreyfus Basic GNMA Fund 0.25 1.00 (0.25) 1.00
EVERGREEN EQUITY TRUST
Evergreen Growth and Income Fund, 0.25 1.00 (0.25) 1.00
Class A
Evergreen Small Cap Value Fund, 0.25 1.00 (0.25) 1.00
Class A
</TABLE>
Page 2
<PAGE> 18
<TABLE>
<S> <C> <C> <C> <C>
Evergreen Value Fund, Class A 0.25 1.00 (0.25) 1.00
EVERGREEN SELECT EQUITY TRUST
Evergreen Special Equity Fund, 0.25 1.00 (0.25) 1.00
Class A
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST
Templeton Asset Strategy Fund 0.25 1.00 -- 1.25
INVESCO Blue Chip Growth Fund, 0.25 1.00 (0.25) 1.00
Investor Class
Janus Adviser Worldwide Fund 0.25 1.00 (0.25) 1.00
Janus Fund 0.25 1.00 (0.25) 1.00
Lou Holland Growth Fund 0.25 1.00 (0.25) 1.00
MAS Mid Cap Growth Portfolio, 0.25 1.00 (0.25) 1.00
Advisor Class
SIT MUTUAL FUNDS
Sit Mid Cap Growth Fund 0.25 1.00 (0.25) 1.00
Sit Small Cap Growth Fund 0.25 1.00 (0.25) 1.00
Vanguard LifeStrategy Conservative 0.25 1.00 -- 1.25
Growth Fund
Vanguard LifeStrategy Growth Fund 0.25 1.00 -- 1.25
Vanguard LifeStrategy Moderate 0.25 1.00 -- 1.25
Growth Fund
Warburg Pincus Small Company 0.25 1.00 (0.25) 1.00
Growth Fund, Common Class
</TABLE>
For the funds above that reflect Separate Account Expense Reimbursement, the
Total Separate Account Fee equals the VALIC Separate Account A mortality and
expense risk fee plus the administration and distribution fee, reduced by the
Separate Account Expense Reimbursement. Pursuant to the Separate Account Expense
Reimbursement, the charges as shown are reduced by certain payments received
from the underlying fund and/or its affiliates or distributors for
administrative and shareholder services provided by the Company. See "Fees and
Charges -- Separate Account Expense Reimbursement" in the prospectus for more
information.
<TABLE>
<CAPTION>
FUND ANNUAL EXPENSES
(as a percentage of Fund net assets): Total Fund
Management Fees Other Expenses Expenses (After
(After Fee (After Expense Expense
Fund Waiver) 12b-1 Fees Waiver) Waiver)
---- --------------- ---------- -------------- ---------------
<S> <C> <C> <C> <C>
NORTH AMERICAN FUNDS VARIABLE
PRODUCT SERIES I
North American - AG Asset 0.50% -- 0.07% 0.57%
Allocation Fund
North American - AG Capital 0.50 -- 0.10 0.60
Conservation Fund
North American - AG Government 0.50 -- 0.09 0.59
Securities Fund
North American - AG Growth 0.75 -- 0.07 0.82
& Income Fund
North American - AG International 0.35 -- 0.08 0.43
Equities Fund
North American - AG MidCap Index 0.31 -- 0.07 0.38
Fund
North American - AG Nasdaq-100(R) 0.40 -- 0.10 0.50
Index Fund
North American - AG Small Cap 0.35 -- 0.06 0.41
Index Fund
North American - American Century 0.77 -- 0.06 0.83
Income & Growth Fund
North American - American Century 1.00 -- 0.06 1.06
International Growth Fund
North American Core Equity Fund 0.80 -- 0.05 0.85
</TABLE>
Page 3
<PAGE> 19
<TABLE>
<S> <C> <C> <C> <C>
North American - Founders Large 1.00 -- 0.06 1.06
Cap Growth Fund
North American - Founders/T. Rowe 0.90 -- 0.05 0.95
Price Small Cap Fund
North American - Putnam 0.95 -- 0.06 1.01
Opportunities Fund
North American - T. Rowe Price Blue 0.80 -- 0.06 0.86
Chip Growth Fund
North American - T. Rowe Price 1.00 -- 0.06 1.06
Health Sciences Fund
NORTH AMERICAN FUNDS VARIABLE
PRODUCT SERIES II
North American - AG Aggressive 0.10 -- -- 0.10
Growth Lifestyle Fund
North American - AG Conservative 0.10 -- -- 0.10
Growth Lifestyle Fund
North American - AG Core Bond Fund 0.50 -- 0.30 0.80
North American - AG High Yield 0.69 -- 0.29 0.98
Bond Fund
North American - AG Moderate Growth 0.10 -- -- 0.10
Lifestyle Fund
North American - AG 2 Money Market 0.24 -- 0.30 0.54
Fund
North American - AG Socially 0.25 -- 0.30 0.55
Responsible Fund
North American - AG Strategic Bond 0.59 -- 0.29 0.88
Fund
North American - Goldman Sachs 0.52 -- 0.29 0.81
Large Cap Growth Fund
North American International Growth 0.88 -- 0.25 1.13
Fund
North American - INVESCO MidCap 0.63 -- 0.14 0.77
Growth Fund
North American - J.P. Morgan Small 0.81 -- 0.30 1.11
Cap Growth Fund
North American Small Cap Value 0.74 -- 0.21 0.95
Fund
North American - State Street Large 0.49 -- 0.31 0.80
Cap Value Fund
North American - Neuberger Berman 0.74 -- 0.29 1.03
MidCap Value Fund
ARIEL INVESTMENT TRUST
Ariel Appreciation Fund 0.75 0.25% 0.26 1.26
Ariel Fund 0.65 0.25 0.35 1.25
Dreyfus Basic GNMA Fund 0.26 -- 1.29 1.55
EVERGREEN EQUITY TRUST
Evergreen Growth and Income Fund, 0.89 0.25 0.29 1.43
Class A
Evergreen Small Cap Value Fund, 1.00 0.25 0.42 1.67
Class A
Evergreen Value Fund, Class A 0.50 0.25 0.25 1.00
EVERGREEN SELECT EQUITY TRUST
Evergreen Special Equity Fund, 0.90 0.25 0.16 1.31
Class A
</TABLE>
Page 4
<PAGE> 20
<TABLE>
<S> <C> <C> <C> <C>
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST
Templeton Asset Strategy Fund 0.60 -- 0.18 0.78
INVESCO Blue Chip Growth Fund, 0.53 0.25 0.26 1.04
Investor Class
Janus Adviser Worldwide Fund 0.65 0.25 0.30 1.20
Janus Fund 0.65 -- 0.20 0.85
Lou Holland Growth Fund 0.85 -- 0.50 1.35
MAS Mid Cap Growth Portfolio, 0.50 0.25 0.13 0.88
Advisor Class
SIT MUTUAL FUNDS
Sit Mid Cap Growth Fund 1.00 -- -- 1.00
Sit Small Cap Growth Fund 1.50 -- -- 1.50
Vanguard LifeStrategy Conservative 0.28 -- -- 0.28
Growth Fund
Vanguard LifeStrategy Growth Fund 0.29 -- -- 0.29
Vanguard LifeStrategy Moderate 0.29 -- -- 0.29
Growth Fund
Warburg Pincus Small Company 0.00 0.25 1.15 1.40
Growth Fund, Common Class
</TABLE>
Notes concerning the Fund Annual Expenses Table:
North American Fund Variable Product Series II: The management of the Funds
waived or reimbursed fees during the fiscal year shown. In the absence of these
waivers, management fees, other expenses and total annual portfolio operating
expenses, respectively would be: Core Bond Fund, 0.50%, 1.04% and 1.54%; High
Yield Bond Fund, 0.69%, 1.05% and 1.74%; International Growth Fund, 0.88%, 1.02%
and 1.90%; Large Cap Growth Fund, 0.52%, 0.92% and 1.44%; Large Cap Value Fund,
0.49%, 1.02% and 1.51%; Mid Cap Growth Fund, 0.63%, 1.01% and 1.64%; Mid Cap
Value Fund, 0.74%, 0.99% and 1.73%; Money Market Fund, 0.24%, 0.99% and 1.23%;
Small Cap Growth Fund, 0.81%, 0.97% and 1.78%; Small Cap Value Fund, 0.74%,
1.01% and 1.75%; Socially Responsible Fund, 0.25%, 0.98% and 1.23%; and
Strategic Bond Fund, 0.59%, 1.05% and 1.64%.
North American Fund Variable Product Series II: Total Combined Operating
Expenses based on estimated total average weighted combined operating expenses
for the Aggressive Growth Lifestyle Fund is 1.04%, Conservative Growth Lifestyle
Fund is 0.95%, and Moderate Growth Lifestyle Fund is 0.98%. Estimated Total
Combined Operating Expenses of each Lifestyle Fund is based on the Total Fund
Operating Expenses of the underlying funds and the Lifestyle Funds, assuming
each Lifestyle Fund's projected asset allocation among the underlying funds is
maintained.
Dreyfus Basic GNMA Fund: During 1999, Dreyfus waived a portion of its fee so
that the effective management fee paid by the fund was 0.26%. This waiver
reflects an undertaking by Dreyfus to limit fund expenses, exclusive of taxes,
brokerage, interest on borrowings and extraordinary expenses, to 0.65%. This
undertaking may be terminated upon 90 days' notice to shareholders.
Evergreen Special Equity Fund: The Fund's investment advisor may reduce or waive
its fees or reimburse a fund for certain expenses in order to reduce expense
ratios. The Fund's investment advisor may cease these waivers or reimbursements
at any time. Including fee waivers and expense reimbursements and restating to
reflect current fees, estimated total fund operating expenses for the fiscal
year ending 6/30/2000 would be 1.31% for Class A shares.
Janus Adviser Worldwide Fund: Janus Capital has contractually agreed to waive
the Fund's total operating expenses (excluding brokerage commissions, interest,
taxes and extraordinary expenses) so that it will not exceed 1.20% until at
least July 31, 2003.
Lou Holland Growth Fund: The Investment Manager has contractually agreed to
waive its fees and reimburse other expenses of the Growth Fund to the extent
that the Fund's total operating expenses exceed 1.35%. This agreement may be
terminated only by the Fund's Board of Trustees.
Sit Mid Cap Growth Fund: The Adviser voluntarily waived 0.25% of its fee. It may
terminate this fee waiver at any time after December 31, 2000.
Templeton Asset Strategy Fund: On February 8, 2000, shareholders of the
Templeton Asset Allocation Fund approved a merger and reorganization that
combined the Templeton Asset Allocation Fund with the Templeton Global Asset
Allocation Fund, effective May 1, 2000. At the same time as the merger, the
Templeton Asset Allocation Fund changed its name to the Templeton Asset Strategy
Fund. The table shows restated total expenses for the Templeton Asset Strategy
Fund based on the new fund fees and the assets of the Templeton Asset Allocation
Fund as of December 31, 1999, and not the assets of the combined fund. However,
if the table reflected both the new fund fees and the fund's combined assets,
the fund's expenses after May 1, 2000 would be estimated as: Management Fees
0.60%, Other Expenses 0.14%, and Annual Expenses 0.74%.
Page 5
<PAGE> 21
Vanguard: The Vanguard LifeStrategy Funds did not incur any expenses in fiscal
year 1999. However, while the funds are expected to operate without expenses,
shareholders in the Vanguard LifeStrategy Funds indirectly bear the expenses
of the underlying Vanguard Funds in which the Funds invest. The indirect
expense ratios that the Vanguard LifeStrategy Conservative Growth Fund,
Vanguard LifeStrategy Growth Fund, and Vanguard LifeStrategy Moderate Growth
Fund incurred for the year ended December 31, 1999 was 0.28%, 0.29% and
0.29%, respectively.
Warburg Pincus Small Company Growth Fund: Fee waivers and expense reimbursements
or credits reduced expenses for the Fund during 1999 but may be discontinued at
any time.
EXAMPLE #1
<TABLE>
<CAPTION>
Fund 1 Year 3 years 5 Years 10 Years
---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
NORTH AMERICAN FUNDS VARIABLE PRODUCT
SERIES I
North American - AG Asset $16 $51 $88 $192
Allocation Fund
North American - AG Capital 17 52 89 195
Conservation Fund
North American - AG Government 17 51 89 194
Securities Fund
North American - AG Growth & Income 19 58 101 218
Fund
North American - AG International 15 46 80 176
Equities Fund
North American - AG MidCap Index 14 45 78 171
Fund
North American - AG Nasdaq-100(R) 16 49 84 184
Index Fund
North American - AG Small Cap Index 15 46 79 174
Fund
North American - American Century 19 59 101 219
Income & Growth Fund
North American - American Century 21 66 113 244
International Growth Fund
North American - Core Equity Fund 19 59 102 222
North American - Founders Large 21 66 113 244
Cap Growth Fund
North American - Founders/T. Rowe 20 62 107 232
Price Small Cap Fund
North American - Putnam 21 64 110 238
Opportunities Fund
North American - T. Rowe Price Blue 19 60 103 223
Chip Growth Fund
North American - T. Rowe Price 21 66 113 244
Health Sciences Fund
NORTH AMERICAN FUNDS VARIABLE PRODUCT
SERIES II
North American - AG Aggressive 9 28 49 110
Growth Lifestyle Fund
North American - AG Conservative 9 28 49 110
Growth Lifestyle Fund
North American - AG Core Bond Fund 16 50 87 189
North American - AG High Yield 18 56 96 209
Bond Fund
North American - AG Moderate Growth 9 28 49 110
Lifestyle Fund
North American - AG 2 Money Market 14 42 73 161
Fund
North American - AG Socially 14 42 73 162
Responsible Fund
North American - AG Strategic Bond 17 53 91 198
Fund
</TABLE>
Page 6
<PAGE> 22
<TABLE>
<S> <C> <C> <C> <C>
North American - Goldman Sachs 16 51 87 190
Large Cap Growth Fund
North American International Growth 19 60 104 225
Fund
North American - INVESCO MidCap 16 49 85 186
Growth Fund
North American - J.P. Morgan Small 19 60 103 223
Cap Growth Fund
North American Small Cap Value 18 55 94 206
Fund
North American - State Street Large 16 50 87 189
Cap Value Fund
North American - Neuberger Berman 18 57 99 214
MidCap Value Fund
ARIEL INVESTMENT TRUST
Ariel Appreciation Fund 23 72 123 264
Ariel Fund 23 72 123 263
Dreyfus Basic GNMA Fund 26 81 138 293
EVERGREEN EQUITY TRUST
Evergreen Growth and Income Fund, 25 77 132 281
Class A
Evergreen Small Cap Value Fund, 27 84 144 304
Class A
Evergreen Value Fund, Class A 21 64 110 237
EVERGREEN SELECT EQUITY TRUST
Evergreen Special Equity Fund, 24 73 126 269
Class A
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST
Templeton Asset Strategy Fund 21 65 111 240
INVESCO Blue Chip Growth Fund, 21 65 112 241
Investor Class
Janus Adviser Worldwide Fund 23 70 120 258
Janus Fund 19 59 102 222
Lou Holland Growth Fund 24 75 128 273
MAS Mid Cap Growth Portfolio, 19 60 104 225
Advisor Class
SIT MUTUAL FUNDS
Sit Mid Cap Growth Fund 21 64 110 237
Sit Small Cap Growth Fund 26 79 135 288
Vanguard LifeStrategy Conservative 16 50 86 187
Growth Fund
Vanguard LifeStrategy Growth Fund 16 50 86 188
Vanguard LifeStrategy Moderate 16 50 86 188
Growth Fund
Warburg Pincus Small Company 25 76 130 278
Growth Fund, Common Class
</TABLE>
EXAMPLE #2
<TABLE>
<CAPTION>
Fund 1 Year 3 Years 5 years 10 Years
---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
NORTH AMERICAN FUNDS VARIABLE PRODUCT
SERIES I
North American - AG Asset $63 $101 $138 $192
Allocation Fund
North American - AG Capital 63 101 139 195
Conservation Fund
North American - AG Government 63 101 139 194
Securities Fund
</TABLE>
Page 7
<PAGE> 23
<TABLE>
<S> <C> <C> <C> <C>
North American - AG Growth & Income 65 108 151 218
Fund
North American - AG International 62 96 130 176
Equities Fund
North American - AG MidCap Index 61 95 128 171
Fund
North American - AG Nasdaq-100(R) 62 99 134 184
Index Fund
North American - AG Small Cap Index 61 96 129 174
Fund
North American - American Century 65 108 151 219
Income & Growth Fund
North American - American Century 68 115 163 244
International Growth Fund
North American Core Equity Fund 66 109 152 222
North American - Founders Large 68 115 163 244
Cap Growth Fund
North American - Founders/T. Rowe 67 112 157 232
Price Small Cap Fund
North American - Putnam 67 113 160 238
Opportunities Fund
North American - T. Rowe Price Blue 66 109 153 223
Chip Growth Fund
North American - T. Rowe Price 68 115 163 244
Health Sciences Fund
NORTH AMERICAN FUNDS VARIABLE PRODUCT
SERIES II
North American - AG Aggressive 56 78 99 110
Growth Lifestyle Fund
North American - AG Conservative 56 78 99 110
Growth Lifestyle Fund
North American - AG Core Bond Fund 63 100 137 189
North American - AG High Yield 64 105 146 209
Bond Fund
North American - AG Moderate Growth 56 78 99 110
Lifestyle Fund
North American - AG 2 Money Market 60 92 123 161
Fund
North American - AG Socially 60 92 123 162
Responsible Fund
North American - AG Strategic Bond 63 102 141 198
Fund
North American - Goldman Sachs 63 100 137 190
Large Cap Growth Fund
North American International Growth 66 110 154 225
Fund
North American - INVESCO MidCap 62 99 135 186
Growth Fund
North American - J.P. Morgan Small 66 109 153 223
Cap Growth Fund
North American Small Cap Value 64 104 144 206
Fund
North American - State Street Large 63 100 137 189
Cap Value Fund
</TABLE>
Page 8
<PAGE> 24
<TABLE>
<S> <C> <C> <C> <C>
North American - Neuberger Berman 65 107 149 214
MidCap Value Fund
ARIEL INVESTMENT TRUST
Ariel Appreciation Fund 70 121 173 264
Ariel Fund 69 120 173 263
Dreyfus Basic GNMA Fund 72 129 188 293
EVERGREEN EQUITY TRUST
Evergreen Growth and Income Fund, 71 125 182 281
Class A
Evergreen Small Cap Value Fund, 73 132 194 304
Class A
Evergreen Value Fund, Class A 67 113 160 237
EVERGREEN SELECT EQUITY TRUST
Evergreen Special Equity Fund, 70 122 176 269
Class A
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST
Templeton Asset Strategy Fund 67 114 161 240
INVESCO Blue Chip Growth Fund, 67 114 162 241
Investor Class
Janus Adviser Worldwide Fund 69 119 170 258
Janus Fund 66 109 152 222
Lou Holland Growth Fund 70 123 178 273
MAS Mid Cap Growth Portfolio, 66 110 154 225
Advisor Class
SIT MUTUAL FUNDS
Sit Mid Cap Growth Fund 67 113 160 237
Sit Small Cap Growth Fund 72 127 185 288
Vanguard LifeStrategy Conservative 63 99 136 187
Growth Fund
Vanguard LifeStrategy Growth Fund 63 100 136 188
Vanguard LifeStrategy Moderate 63 100 136 188
Growth Fund
Warburg Pincus Small Company 71 125 180 278
Growth Fund, Common Class
</TABLE>
SUMMARY (OF INVESTMENT OBJECTIVES), PAGE 7
North American Funds Variable Product Series I:
North American - AG Nasdaq-100(R) Index Fund
The Fund seeks long-term capital growth through investments in the stocks that
are included in the Nasdaq-100 Index(R).
Adviser: American General Advisers, a division of VALIC
Sub-Adviser: American General Investment Management, L.P.
North American - AG Asset Allocation Fund
The Fund seeks a maximum aggregate rate of return over the long-term through
controlled investment risk by adjusting its investment mix among stocks,
long-term debt securities and short-term money market securities.
Adviser: American General Advisers
North American - AG Capital Conservation Fund
The Fund seeks the highest possible total return consistent with preservation of
capital through current income and capital gains on investments in intermediate
and long-term debt instruments and other income producing securities.
Adviser: American General Advisers
North American - AG Government Securities Fund
The Fund seeks high current income and protection of capital through investments
in intermediate and long-term U.S. Government debt securities.
Adviser: American General Advisers
Page 9
<PAGE> 25
North American - AG Growth & Income Fund
The Fund seeks long-term growth of capital and, secondarily, current income
through investment in common stocks and equity-related securities.
Adviser: American General Advisers
North American - AG International Equities Fund
The Fund seeks to provide long-term growth of capital through investments
primarily in a diversified portfolio of equity and equity-related securities of
foreign issuers that, as a group, are expected to provide investment results
closely corresponding to the performance of the Morgan Stanley Capital
International, Europe, Australasia and the Far East Index.
Adviser: American General Advisers
North American - AG MidCap Index Fund
The Fund seeks to provide growth of capital through investments primarily in a
diversified portfolio of common stocks that, as a group, are expected to provide
investment results closely corresponding to the performance of the Standard &
Poor's MidCap 400 Index.
Adviser: American General Advisers
North American - AG Small Cap Index Fund
The Fund seeks to provide growth of capital through investments primarily in a
diversified portfolio of common stocks that, as a group, are expected to provide
investment results closely corresponding to the performance of the Russell 2000
Index.
Adviser: American General Advisers
North American - American Century Income & Growth Fund
The Fund seeks dividend growth, current income and capital appreciation by
investing in common stocks. Current income is a secondary consideration.
Adviser: American General Advisers
Sub-Adviser: American Century Investment Management, Inc.
North American - American Century International Growth Fund
The Fund seeks capital growth through investments primarily in equity securities
of issuers in developed foreign countries.
Adviser: American General Advisers
Sub-Adviser: American Century Investment Management, Inc.
North American - Founders Large Cap Growth Fund
The Fund seeks long-term growth of capital. The Fund normally will invest at
least 65% of its total assets in common stocks of well-established, high-quality
growth companies.
Adviser: American General Advisers
Sub-Adviser: Founders Asset Management LLC
North American - Founders/T. Rowe Price Small Cap Fund
The Fund seeks to provide long-term capital growth by investing primarily in the
stocks of small companies. It will invest at least 65% of its total assets in
stocks of small companies.
Adviser: American General Advisers
Co-Sub-Advisers: Founders Asset Management LLC and T. Rowe Price Associates,
Inc.
North American - Putnam Opportunities Fund
The Fund seeks capital appreciation through investments in common stocks. It
invests mainly in common stocks of large U.S. companies, with a focus on growth
stocks (those the manager believes whose earnings will grow faster than the
economy, with a resultant price increase).
Adviser: American General Advisers
Sub-Adviser: Putnam Investment Management, Inc.
Page 10
<PAGE> 26
North American - T. Rowe Price Blue Chip Growth Fund
The Fund seeks long-term capital growth. Income is a secondary objective. The
Fund pursues long-term capital appreciation by normally investing at least 65%
of total assets in the common stocks of large and medium-sized blue chip growth
companies.
Adviser: American General Advisers
Sub-Adviser: T. Rowe Price Associates, Inc.
North American - T. Rowe Price Health Sciences Fund
The Fund seeks long-term capital growth. The Fund pursues long-term capital
appreciation by normally investing at least 65% of total assets in the common
stocks of companies engaged in the research, development, production, or
distribution of products or services related to health care, medicine, or the
life sciences (collectively termed "health sciences").
Adviser: American General Advisers
Sub-Adviser: T. Rowe Price Associates, Inc.
North American Funds Variable Product Series II:
North American - AG Aggressive Growth Lifestyle Fund
The Fund seeks growth through investments in a combination of the North American
Funds Variable Product Series I or II Funds (primarily the equity funds).
Adviser: American General Advisers
North American - AG Conservative Growth Lifestyle Fund
The Fund seeks current income and low to moderate growth of capital through
investments in North American Funds Variable Product Series I or II Funds.
Adviser: American General Advisers
North American - AG Core Bond Fund
The Fund seeks the highest possible total return consistent with conservation of
capital through investment in medium to high quality fixed income securities.
Adviser: American General Advisers
Sub-Adviser: American General Investment Management, L.P.
North American - AG High Yield Bond Fund
The Fund seeks the highest possible total return and income consistent with
conservation of capital through investment in a diversified portfolio of high
yielding high risk fixed income securities.
Adviser: American General Advisers
Sub-Adviser: American General Investment Management, L.P.
North American - AG Moderate Growth Lifestyle Fund
The Fund seeks growth and current income through investments in North American
Funds Variable Product Series I or II Funds.
Adviser: American General Advisers
North American - AG 2 Money Market Fund
The Fund seeks liquidity, protection of capital and current income through
investments in short-term money market instruments.
Adviser: American General Advisers
North American - AG Socially Responsible Fund
The Fund seeks growth of capital through investment primarily in equity
securities in companies which meet the social criteria established for the Fund.
Adviser: American General Advisers
North American - AG Strategic Bond Fund
The Fund seeks the highest possible total return and income consistent with
conservation of capital through investment in a diversified portfolio of income
producing securities.
Page 11
<PAGE> 27
Adviser: American General Advisers
Sub-Adviser: American General Investment Management, L.P.
North American - Goldman Sachs Large Cap Growth Fund
The Fund seeks long-term growth of capital through a broadly diversified
portfolio of equity securities of large cap U.S. issuers that are expected to
have better prospects for earnings growth than the growth rate of the federal
domestic economy. Dividend income is a secondary objective.
Adviser: American General Advisers
Sub-Adviser: Goldman Sachs Asset Management
North American International Growth Fund
The Fund seeks long-term capital appreciation by investing in equity securities
of non-U.S. companies, the majority of which are expected to be in developed
markets. The Fund may invest across the capitalization spectrum, although it
intends to emphasize smaller capitalization stocks.
Adviser: American General Advisers
Sub-Adviser: Thompson, Siegel & Walmsley, Inc.
North American - INVESCO MidCap Growth Fund
The Fund seeks capital appreciation principally through investments in medium
capitalization equity securities, such as common and preferred stocks and
securities convertible into common stocks.
Adviser: American General Advisers
Sub-Adviser: INVESCO Funds Group, Inc.
North American - J.P. Morgan Small Cap Growth Fund
The Fund seeks long-term growth from a portfolio of equity securities of small
capitalization growth companies.
Adviser: American General Advisers
Sub-Adviser: J.P. Morgan Investment Management Inc.
North American Small Cap Value Fund
The Fund seeks maximum long-term return consistent with reasonable risk to
principal by investing primarily in equity securities of small capitalization
companies in terms of revenues and/or market capitalization.
Adviser: American General Advisers
Sub-Adviser: Fiduciary Management Associates, Inc.
North American - State Street Large Cap Value Fund
The Fund seeks total returns that exceed over time the Russell 1000(R) Value
Index through investments in equity securities.
Adviser: American General Advisers
Sub-Adviser: State Street Global Advisors
North American - Neuberger Berman MidCap Value Fund
The Fund seeks capital growth through investment in equity securities of medium
capitalization companies using a value-oriented investment approach.
Adviser: American General Advisers
Sub-Adviser: Neuberger Berman Management Inc.
Ariel Investment Trust:
Ariel Appreciation Fund
The Fund seeks long-term capital appreciation by investing primarily in
medium-sized company stocks.
Adviser: Ariel Capital Management, Inc.
Ariel Fund
The Fund seeks long-term capital appreciation primarily through investment in
small company stocks.
Adviser: Ariel Capital Management, Inc.
Page 12
<PAGE> 28
Dreyfus Basic GNMA Fund
The Fund seeks a high level of current income as is consistent with the
preservation of capital. To pursue this goal, the Fund normally invests at least
65% of its net assets in GNMA certificates (popularly called "Ginnie Maes"),
which are guaranteed as to timely payment of principal and interest by the
Government National Mortgage Association.
Adviser: The Dreyfus Corporation
Evergreen Equity Trust:
Evergreen Growth and Income Fund
The Fund seeks capital growth in the value of its shares by investing in the
securities of companies which are temporarily undervalued in the market place
but display characteristics of growth such as high return on investment and
competitive advantage in their industry.
Adviser: Evergreen Asset Management Corporation
Evergreen Small Cap Value Fund
The Fund seeks current income and capital growth in the value of its shares by
investing in common stocks of small U.S. companies (less than $1 billion in
market capitalization).
Adviser: Evergreen Asset Management Corporation
Evergreen Value Fund
The Fund seeks long-term capital growth with current income as a secondary
objective by investing at least 75% of its assets in common stocks of medium and
large-cap U.S. companies with prospects for earning growth and dividends.
Adviser: Evergreen Asset Management Corporation
Evergreen Select Equity Trust:
Evergreen Special Equity Fund
The Fund seeks capital growth. It invests primarily in equity securities of U.S.
companies with small market capitalizations.
Adviser: Meridian Investment Company (a subsidiary of First Union Corporation)
Franklin Templeton Variable Insurance Products Trust:
Templeton Asset Strategy Fund
The Fund seeks a high level of total return by investing in the stocks and bonds
of any nation, including emerging markets, and money market instruments.
Adviser: Templeton Investment Counsel, Inc.
INVESCO Blue Chip Growth Fund
The Fund tries to buy securities that will increase in value over the long-term;
current income is a secondary goal. The Fund invests primarily in common stocks
of large companies with market capitalizations of more than $15 billion and that
have a history of consistent earnings growth regardless of business cycles.
Adviser: INVESCO Funds Group, Inc.
Janus Adviser Worldwide Fund
The Fund seeks long-term growth of capital in a manner consistent with the
preservation of capital. It invests primarily in common stocks of companies of
any size throughout the world.
Adviser: Janus Capital Corporation
Janus Fund
The Fund seeks long-term growth of capital in a manner consistent with the
preservation of capital. It invests primarily in common stocks selected for
their growth potential. Although the Fund can invest in companies of any size,
it generally invests in larger, more established companies.
Adviser: Janus Capital Corporation
Page 13
<PAGE> 29
Lou Holland Growth Fund
The Fund primarily seeks long-term growth of capital. The receipt of dividend
income is a secondary consideration. It invests primarily in common stocks of
growth companies.
Adviser: Holland Capital Management, L.P.
MAS Mid Cap Growth Portfolio
The Portfolio seeks long-term capital growth. It invests primarily in common
stocks of companies with capitalizations in the range of companies included in
the S&P MidCap 400 Index.
Adviser: Miller Anderson & Sherrerd, LLP
Sit Mutual Funds:
Sit Mid Cap Growth Fund
The Fund seeks to maximize long-term capital appreciation. It invests at least
65% of its total assets in the common stocks of growth companies with
capitalizations of $2 billion to $15 billion at the time of purchase.
Adviser: Sit Investment Management, Inc.
Sit Small Cap Growth Fund
The Fund seeks to maximize long-term capital appreciation. It invests at least
65% of its total assets in common stocks of small growth companies with
capitalizations of $2.5 billion or less at the time of purchase.
Adviser: Sit Investment Management, Inc.
Vanguard LifeStrategy Conservative Growth Fund
The Fund seeks current income and low-to-moderate growth of capital by
investing in a relatively fixed combination of other Vanguard funds.
Adviser: Vanguard
Vanguard LifeStrategy Growth Fund
The Fund seeks growth of capital by investing in a relatively fixed combination
of other Vanguard funds.
Adviser: Vanguard
Vanguard LifeStrategy Moderate Growth Fund
The Fund seeks growth of capital and a reasonable level of current income by
investing in a relatively fixed combination of other Vanguard funds.
Adviser: Vanguard
Warburg Pincus Small Company Growth Fund
The Fund seeks capital growth by investing in the equity securities of small
U.S. companies.
Adviser: Credit Suisse Asset Management, LLC
Portfolio Director 2 Standard Supplement
11/1/2000
Page 14
<PAGE> 30
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A
PORTFOLIO DIRECTOR 2
Fixed and Variable Annuity
Separate Account A
For Series 1.20 - 12.20
Supplement issued November 15, 2000
To the Prospectus dated May 1, 2000
Outside Cover Pages
Insert the following above "Separate Account A":
Fixed and Variable Annuity
Inside Cover Pages (changes underlined)
The Variable Annuity life Insurance Company
Units of Interest Under Group and Individual Fixed and Variable Annuity
---------
Contracts
Portfolio Director(R) 2 Fixed and Variable Annuity
--------------------------
First paragraph, inside cover page (changes underlined)
The Variable Annuity Life Insurance Company ("VALIC") offers certain Series of
Portfolio Director 2 that consist of group and individual fixed and variable
---------
annuity contracts (the "Contracts") to Participants in certain employer
sponsored retirement plans.
--------------------------------------------------------------------------------
Portfolio Director 2 has added several new variable account options as shown
below. Generally, however, the variable account options shown below will not be
available to participants for allocations and future investments until December
11, 2000.
--------------------------------------------------------------------------------
Additions to the Fee Tables, page 2
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT EXPENSES
(as a percentage of Separate Account net Administration Separate
assets): Mortality and and Account
Expense Risk Distribution Expense Total Separate
Fund Fee Fee Reimbursement Account Fee
---- ------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
NORTH AMERICAN FUNDS VARIABLE PRODUCT
SERIES I
North American - AG Asset 0.25% 0.55% -- 0.80%
Allocation Fund
North American - AG Capital 0.25 0.55 -- 0.80
Conservation Fund
North American - AG Government 0.25 0.55 -- 0.80
Securities Fund
North American - AG Growth & 0.25 0.55 -- 0.80
Income Fund
North American - AG International 0.25 0.55 -- 0.80
Equities Fund
North American - AG MidCap Index 0.25 0.55 -- 0.80
Fund
North American - AG Nasdaq-100(R) 0.25 0.55 -- 0.80
Index Fund
North American - AG Small Cap Index 0.25 0.55 -- 0.80
Fund
North American - American Century 0.25 0.55 -- 0.80
Income & Growth Fund
</TABLE>
<PAGE> 31
<TABLE>
<S> <C> <C> <C> <C>
North American - American Century 0.25 0.55 -- 0.80
International Growth Fund
North American - Founders Large 0.25 0.55 -- 0.80
Cap Growth Fund
North American - Founders/T. Rowe 0.25 0.55 -- 0.80
Price Small Cap Fund
North American - Putnam 0.25 0.55 -- 0.80
Opportunities Fund
North American - T. Rowe Price Blue 0.25 0.55 -- 0.80
Chip Growth Fund
North American - T. Rowe Price 0.25 0.55 -- 0.80
Health Sciences Fund
NORTH AMERICAN FUNDS VARIABLE PRODUCT
SERIES II
North American - AG Aggressive 0.25 0.55 (0.25%) 0.55
Growth Lifestyle Fund
North American - AG Conservative 0.25 0.55 (0.25) 0.55
Growth Lifestyle Fund
North American - AG Core Bond Fund 0.25 0.55 (0.25) 0.55
North American - AG High Yield 0.25 0.55 (0.25) 0.55
Bond Fund
North American - AG Moderate Growth 0.25 0.55 (0.25) 0.55
Lifestyle Fund
North American - AG 2 Money Market 0.25 0.55 (0.25) 0.55
Fund
North American - AG Socially 0.25 0.55 (0.25) 0.55
Responsible Fund
North American - AG Strategic Bond 0.25 0.55 (0.25) 0.55
Fund
North American - Goldman Sachs 0.25 0.55 (0.25) 0.55
Large Cap Growth Fund
North American International Growth 0.25 0.55 (0.25) 0.55
Fund
North American - INVESCO MidCap 0.25 0.55 (0.25) 0.55
Growth Fund
North American - J.P. Morgan Small 0.25 0.55 (0.25) 0.55
Cap Growth Fund
North American Small Cap Value 0.25 0.55 (0.25) 0.55
Fund
North American - State Street Large 0.25 0.55 (0.25) 0.55
Cap Value Fund
North American - Neuberger Berman 0.25 0.55 (0.25) 0.55
MidCap Value Fund
ARIEL INVESTMENT TRUST
Ariel Appreciation Fund 0.25 0.80 (0.25) 0.80
Ariel Fund 0.25 0.80 (0.25) 0.80
Dreyfus Basic GNMA Fund 0.25 0.80 (0.25) 0.80
EVERGREEN EQUITY TRUST
Evergreen Growth and Income Fund, 0.25 0.80 (0.25) 0.80
Class A
Evergreen Small Cap Value Fund, 0.25 0.80 (0.25) 0.80
Class A
</TABLE>
Page 2
<PAGE> 32
<TABLE>
<S> <C> <C> <C> <C>
Evergreen Value Fund, Class A 0.25 0.80 (0.25) 0.80
EVERGREEN SELECT EQUITY TRUST
Evergreen Special Equity Fund, 0.25 0.80 (0.25) 0.80
Class A
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST
Templeton Asset Strategy Fund 0.25 0.80 -- 1.05
INVESCO Blue Chip Growth Fund, 0.25 0.80 (0.25) 0.80
Investor Class
Janus Adviser Worldwide Fund 0.25 0.80 (0.25) 0.80
Janus Fund 0.25 0.80 (0.25) 0.80
Lou Holland Growth Fund 0.25 0.80 (0.25) 0.80
MAS Mid Cap Growth Portfolio, 0.25 0.80 (0.25) 0.80
Advisor Class
SIT MUTUAL FUNDS
Sit Mid Cap Growth Fund 0.25 0.80 (0.25) 0.80
Sit Small Cap Growth Fund 0.25 0.80 (0.25) 0.80
Vanguard LifeStrategy Conservative Growth Fund 0.25 0.80 -- 1.05
Vanguard LifeStrategy Growth Fund 0.25 0.80 -- 1.05
Vanguard LifeStrategy Moderate Growth Fund 0.25 0.80 -- 1.05
Warburg Pincus Small Company 0.25 0.80 (0.25) 0.80
Growth Fund, Common Class
</TABLE>
For the funds above that reflect Separate Account Expense Reimbursement, the
Total Separate Account Fee equals the VALIC Separate Account A mortality and
expense risk fee plus the administration and distribution fee, reduced by the
Separate Account Expense Reimbursement. Pursuant to the Separate Account Expense
Reimbursement, the charges as shown are reduced by certain payments received
from the underlying fund and/or its affiliates or distributors for
administrative and shareholder services provided by the Company. See "Fees and
Charges -- Separate Account Expense Reimbursement" in the prospectus for more
information.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
FUND ANNUAL EXPENSES
(as a percentage of Fund net assets): Total Fund
Management Fees Other Expenses Expenses (After
(After Fee (After Expense Expense Waiver)
Fund Waiver) 12b-1 Fees Waiver)
---- --------------- ---------- -------------- ---------------
<S> <C> <C> <C> <C>
NORTH AMERICAN FUNDS VARIABLE PRODUCT
SERIES I
North American - AG Asset 0.50% -- 0.07% 0.57%
Allocation Fund
North American - AG Capital 0.50 -- 0.10 0.60
Conservation Fund
North American - AG Government 0.50 -- 0.09 0.59
Securities Fund
North American - AG Growth & Income 0.75 -- 0.07 0.82
Fund
North American - AG International 0.35 -- 0.08 0.43
Equities Fund
North American - AG MidCap Index 0.31 -- 0.07 0.38
Fund
North American - AG Nasdaq-100(R) 0.40 -- 0.10 0.50
Index Fund
North American - AG Small Cap Index 0.35 -- 0.06 0.41
Fund
North American - American Century 0.77 -- 0.06 0.83
Income & Growth Fund
North American - American Century 1.00 -- 0.06 1.06
International Growth Fund
North American - Core Equity Fund 0.80 -- 0.05 0.85
North American - Founders Large 1.00 -- 0.06 1.06
Cap Growth Fund
</TABLE>
Page 3
<PAGE> 33
<TABLE>
<S> <C> <C> <C> <C>
North American - Founders/T. Rowe 0.90 -- 0.05 0.95
Price Small Cap Fund
North American - Putnam 0.95 -- 0.06 1.01
Opportunities Fund
North American - T. Rowe Price Blue 0.80 -- 0.06 0.86
Chip Growth Fund
North American - T. Rowe Price 1.00 -- 0.06 1.06
Health Sciences Fund
NORTH AMERICAN FUNDS VARIABLE PRODUCT
SERIES II
North American - AG Aggressive 0.10 -- -- 0.10
Growth Lifestyle Fund
North American - AG Conservative 0.10 -- -- 0.10
Growth Lifestyle Fund
North American - AG Core Bond Fund 0.50 -- 0.30 0.80
North American - AG High Yield 0.69 -- 0.29 0.98
Bond Fund
North American - AG Moderate Growth 0.10 -- -- 0.10
Lifestyle Fund
North American - AG 2 Money Market 0.24 -- 0.30 0.54
Fund
North American - AG Socially 0.25 -- 0.30 0.55
Responsible Fund
North American - AG Strategic Bond 0.59 -- 0.29 0.88
Fund
North American - Goldman Sachs 0.52 -- 0.29 0.81
Large Cap Growth Fund
North American International Growth 0.88 -- 0.25 1.13
Fund
North American - INVESCO MidCap 0.63 -- 0.14 0.77
Growth Fund
North American - J.P. Morgan Small 0.81 -- 0.30 1.11
Cap Growth Fund
North American Small Cap Value 0.74 -- 0.21 0.95
Fund
North American - State Street Large 0.49 -- 0.31 0.80
Cap Value Fund
North American - Neuberger Berman 0.74 -- 0.29 1.03
MidCap Value Fund
ARIEL INVESTMENT TRUST
Ariel Appreciation Fund 0.75 0.25% 0.26 1.26
Ariel Fund 0.65 0.25 0.35 1.25
Dreyfus Basic GNMA Fund 0.26 -- 1.29 1.55
EVERGREEN EQUITY TRUST
Evergreen Growth and Income Fund, 0.89 0.25 0.29 1.43
Class A
Evergreen Small Cap Value Fund, 1.00 0.25 0.42 1.67
Class A
Evergreen Value Fund, Class A 0.50 0.25 0.25 1.00
EVERGREEN SELECT EQUITY TRUST
Evergreen Special Equity Fund, 0.90 0.25 0.16 1.31
Class A
</TABLE>
Page 4
<PAGE> 34
<TABLE>
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST
<S> <C> <C> <C> <C>
Templeton Asset Strategy Fund 0.60 -- 0.18 0.78
INVESCO Blue Chip Growth Fund, 0.53 0.25 0.26 1.04
Investor Class
Janus Adviser Worldwide Fund 0.65 0.25 0.30 1.20
Janus Fund 0.65 -- 0.20 0.85
Lou Holland Growth Fund 0.85 -- 0.50 1.35
MAS Mid Cap Growth Portfolio, 0.50 0.25 0.13 0.88
Advisor Class
SIT MUTUAL FUNDS
Sit Mid Cap Growth Fund 1.00 -- -- 1.00
Sit Small Cap Growth Fund 1.50 -- -- 1.50
Vanguard LifeStrategy Conservative 0.28 -- -- 0.28
Growth Fund
Vanguard LifeStrategy Growth Fund 0.29 -- -- 0.29
Vanguard LifeStrategy Moderate 0.29 -- -- 0.29
Growth Fund
Warburg Pincus Small Company 0.00 0.25 1.15 1.40
Growth Fund, Common Class
</TABLE>
Notes concerning the Fund Annual Expenses Table:
North American Fund Variable Product Series II: The management of the Funds
waived or reimbursed fees during the fiscal year shown. In the absence of these
waivers, management fees, other expenses and total annual portfolio operating
expenses, respectively would be: Core Bond Fund, 0.50%, 1.04% and 1.54%; High
Yield Bond Fund, 0.69%, 1.05% and 1.74%; International Growth Fund, 0.88%, 1.02%
and 1.90%; Large Cap Growth Fund, 0.52%, 0.92% and 1.44%; Large Cap Value Fund,
0.49%, 1.02% and 1.51%; Mid Cap Growth Fund, 0.63%, 1.01% and 1.64%; Mid Cap
Value Fund, 0.74%, 0.99% and 1.73%; Money Market Fund, 0.24%, 0.99% and 1.23%;
Small Cap Growth Fund, 0.81%, 0.97% and 1.78%; Small Cap Value Fund, 0.74%,
1.01% and 1.75%; Socially Responsible Fund, 0.25%, 0.98% and 1.23%; and
Strategic Bond Fund, 0.59%, 1.05% and 1.64%.
North American Fund Variable Product Series II: Total Combined Operating
Expenses based on estimated total average weighted combined operating expenses
for the Aggressive Growth Lifestyle Fund is 1.04%, Conservative Growth Lifestyle
Fund is 0.95%, and Moderate Growth Lifestyle Fund is 0.98%. Estimated Total
Combined Operating Expenses of each Lifestyle Fund is based on the Total Fund
Operating Expenses of the underlying funds and the Lifestyle Funds, assuming
each Lifestyle Fund's projected asset allocation among the underlying funds is
maintained.
Dreyfus Basic GNMA Fund: During 1999, Dreyfus waived a portion of its fee so
that the effective management fee paid by the fund was 0.26%. This waiver
reflects an undertaking by Dreyfus to limit fund expenses, exclusive of taxes,
brokerage, interest on borrowings and extraordinary expenses, to 0.65%. This
undertaking may be terminated upon 90 days' notice to shareholders.
Evergreen Special Equity Fund: The Fund's investment advisor may reduce or waive
its fees or reimburse a fund for certain expenses in order to reduce expense
ratios. The Fund's investment advisor may cease these waivers or reimbursements
at any time. Including fee waivers and expense reimbursements and restating to
reflect current fees, estimated total fund operating expenses for the fiscal
year ending 6/30/2000 would be 1.31% for Class A shares.
Janus Adviser Worldwide Fund: Janus Capital has contractually agreed to waive
the Fund's total operating expenses (excluding brokerage commissions, interest,
taxes and extraordinary expenses) so that it will not exceed 1.20% until at
least July 31, 2003.
Lou Holland Growth Fund: The Investment Manager has contractually agreed to
waive its fees and reimburse other expenses of the Growth Fund to the extent
that the Fund's total operating expenses exceed 1.35%. This agreement may be
terminated only by the Fund's Board of Trustees.
Sit Mid Cap Growth Fund: The Adviser voluntarily waived 0.25% of its fee. It may
terminate this fee waiver at any time after December 31, 2000.
Templeton Asset Strategy Fund: On February 8, 2000, shareholders of the
Templeton Asset Allocation Fund approved a merger and reorganization that
combined the Templeton Asset Allocation Fund with the Templeton Global Asset
Allocation Fund, effective May 1, 2000. At the same time as the merger, the
Templeton Asset Allocation Fund changed its name to the Templeton Asset Strategy
Fund. The table shows restated total expenses for the Templeton Asset Strategy
Fund based on the new fund fees and the assets of the Templeton Asset Allocation
Fund as of December 31, 1999, and not the assets of the combined fund. However,
if the table reflected both the new fund fees and the fund's combined assets,
the fund's expenses after May 1, 2000 would be estimated as: Management Fees
0.60%, Other Expenses 0.14%, and Annual Expenses 0.74%.
Page 5
<PAGE> 35
Vanguard:The Vanguard LifeStrategy Funds did not incur any expenses in fiscal
year 1999. However, while the Funds are expected to operate without expenses,
shareholders in the Vanguard LifeStrategy Funds indirectly bear the expenses of
the underlying Vanguard Funds in which the Funds invest. The indirect expense
ratios that the Vanguard LifeStrategy Conservative Growth Fund, Vanguard
LifeStrategy Growth Fund, and Vanguard LifeStrategy Moderate Growth Fund
incurred for the year ended December 31, 1999 was 0.28%, 0.29% and 0.29%,
respectively.
Warburg Pincus Small Company Growth Fund: Fee waivers and expense reimbursements
or credits reduced expenses for the Fund during 1999 but may be discontinued at
any time.
EXAMPLE #1
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Fund 1 Year 3 years 5 Years 10 Years
---- ------ ------- ------- --------
NORTH AMERICAN FUNDS VARIABLE PRODUCT
SERIES I
<S> <C> <C> <C> <C>
North American - AG Asset $14 $45 $77 $170
Allocation Fund
North American - AG Capital 15 46 79 173
Conservation Fund
North American - AG Government 15 45 78 172
Securities Fund
North American - AG Growth & 17 52 90 197
Income Fund
North American - AG International 13 40 70 154
Equities Fund
North American - AG MidCap Index 12 39 67 148
Fund
North American - AG Nasdaq-100(R) 14 42 73 162
Index Fund
North American - AG Small Cap 13 40 69 152
Index Fund
North American - American Century 17 53 91 198
Income & Growth Fund
North American - American Century 19 60 103 223
International Growth Fund
North American - Core Equity Fund 17 53 92 200
North American - Founders Large 19 60 103 223
Cap Growth Fund
North American - Founders/T. Rowe 18 56 97 211
Price Small Cap Fund
North American - Putnam 19 58 100 217
Opportunities Fund
North American - T. Rowe Price Blue 17 54 92 201
Chip Growth Fund
North American - T. Rowe Price 19 60 103 223
Health Sciences Fund
NORTH AMERICAN FUNDS VARIABLE PRODUCT
SERIES II
North American - AG Aggressive 7 22 38 86
Growth Lifestyle Fund
North American - AG Conservative 7 22 38 86
Growth Lifestyle Fund
North American - AG Core Bond 14 44 76 167
Fund
North American - AG High Yield 16 50 86 187
Bond Fund
North American - AG Moderate 7 22 38 86
Growth Lifestyle Fund
North American - AG 2 Money 12 36 62 138
Market Fund
North American - AG Socially 12 36 63 139
Responsible Fund
North American - AG Strategic Bond 15 46 80 176
Fund
</TABLE>
Page 6
<PAGE> 36
<TABLE>
<S> <C> <C> <C> <C>
North American - Goldman Sachs 14 44 77 168
Large Cap Growth Fund
North American International Growth 17 54 93 203
Fund
North American - INVESCO MidCap 14 43 75 164
Growth Fund
North American - J.P. Morgan Small 17 54 92 201
Cap Growth Fund
North American Small Cap Value 16 49 84 184
Fund
North American - State Street Large 14 44 76 167
Cap Value Fund
North American - Neuberger Berman 16 51 88 193
MidCap Value Fund
ARIEL INVESTMENT TRUST
Ariel Appreciation Fund 21 66 113 244
Ariel Fund 21 65 112 242
Dreyfus Basic GNMA Fund 26 79 136 289
EVERGREEN EQUITY TRUST
Evergreen Growth and Income Fund, 23 71 122 261
Class A
Evergreen Small Cap Value Fund, 25 78 134 285
Class A
Evergreen Value Fund, Class A 19 58 100 216
EVERGREEN SELECT EQUITY TRUST
Evergreen Special Equity Fund, 22 67 115 249
Class A
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST
Templeton Asset Strategy Fund 19 59 101 219
INVESCO Blue Chip Growth Fund, 19 59 102 221
Investor Class
Janus Adviser Worldwide Fund 21 64 110 237
Janus Fund 17 53 92 200
Lou Holland Growth Fund 22 69 118 253
MAS Mid Cap Growth Portfolio, 17 54 93 203
Advisor Class
SIT MUTUAL FUNDS
Sit Mid Cap Growth Fund 19 58 100 216
Sit Small Cap Growth Fund 24 73 125 268
Vanguard LifeStrategy Conservative 14 43 75 165
Growth Fund
Vanguard LifeStrategy Growth Fund 14 44 76 166
Vanguard LifeStrategy Moderate 14 44 76 166
Growth Fund
Warburg Pincus Small Company 23 70 120 258
Growth Fund, Common Class
</TABLE>
EXAMPLE #2
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Fund 1 Year 3 Years 5 years 10 Years
---- ------ ------- ------- --------
NORTH AMERICAN FUNDS VARIABLE PRODUCT
SERIES I
<S> <C> <C> <C> <C>
North American - AG Asset $61 $95 $127 $170
Allocation Fund
North American - AG Capital 61 96 129 173
Conservation Fund
North American - AG Government 61 95 128 172
Securities Fund
</TABLE>
Page 7
<PAGE> 37
<TABLE>
<S> <C> <C> <C> <C>
North American - AG Growth & 63 102 140 197
Income Fund
North American - AG International 60 90 120 154
Equities Fund
North American - AG MidCap Index 59 89 117 148
Fund
North American - AG Nasdaq-100(R) 60 92 123 162
Index Fund
North American - AG Small Cap 59 90 119 152
Index Fund
North American - American Century 63 102 141 198
Income & Growth Fund
North American - American Century 66 109 153 223
International Growth Fund
North American - Core Equity Fund 64 103 142 200
North American - Founders Large 66 109 153 223
Cap Growth Fund
North American - Founders/T. Rowe 65 106 147 211
Price Small Cap Fund
North American - Putnam 65 108 150 217
Opportunities Fund
North American - T. Rowe Price Blue 64 103 142 201
Chip Growth Fund
North American - T. Rowe Price 66 109 153 223
Health Sciences Fund
NORTH AMERICAN FUNDS VARIABLE
PRODUCT SERIES II
North American - AG Aggressive 54 72 88 86
Growth Lifestyle Fund
North American - AG Conservative 54 72 88 86
Growth Lifestyle Fund
North American - AG Core Bond 61 94 126 167
Fund
North American - AG High Yield 63 99 136 187
Bond Fund
North American - AG Moderate 54 72 88 86
Growth Lifestyle Fund
North American - AG 2 Money 58 86 112 138
Market Fund
North American - AG Socially 58 86 113 139
Responsible Fund
North American - AG Strategic Bond 62 96 130 176
Fund
North American - Goldman Sachs 61 94 127 168
Large Cap Growth Fund
North American International Growth 64 104 143 203
Fund
North American - INVESCO MidCap 60 93 125 164
Growth Fund
North American - J.P. Morgan Small 64 103 142 201
Cap Growth Fund
North American Small Cap Value 62 99 134 184
Fund
North American - State Street Large 61 94 126 167
Cap Value Fund
</TABLE>
Page 8
<PAGE> 38
<TABLE>
<S> <C> <C> <C> <C>
North American - Neuberger Berman 63 101 138 193
MidCap Value Fund
ARIEL INVESTMENT TRUST
Ariel Appreciation Fund 68 115 163 244
Ariel Fund 68 115 162 242
Dreyfus Basic GNMA Fund 72 128 186 289
EVERGREEN EQUITY TRUST
Evergreen Growth and Income Fund, 69 120 172 261
Class A
Evergreen Small Cap Value Fund, 72 127 184 285
Class A
Evergreen Value Fund, Class A 65 107 150 216
EVERGREEN SELECT EQUITY TRUST
Evergreen Special Equity Fund, 68 116 165 249
Class A
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST
Templeton Asset Strategy Fund 65 108 151 219
INVESCO Blue Chip Growth Fund, 65 108 152 221
Investor Class
Janus Adviser Worldwide Fund 67 113 160 237
Janus Fund 64 103 142 200
Lou Holland Growth Fund 68 117 168 253
MAS Mid Cap Growth Portfolio, 64 104 143 203
Advisor Class
SIT MUTUAL FUNDS
Sit Mid Cap Growth Fund 65 107 150 216
Sit Small Cap Growth Fund 70 122 175 268
Vanguard LifeStrategy Conservative
Growth Fund 61 93 125 165
Vanguard LifeStrategy Growth Fund 61 94 126 166
Vanguard LifeStrategy Moderate
Growth Fund 61 94 126 166
Warburg Pincus Small Company 69 119 170 258
Growth Fund, Common Class
</TABLE>
SUMMARY (OF INVESTMENT OBJECTIVES), PAGE 7
North American Funds Variable Product Series I:
North American - AG Nasdaq-100(R) Index Fund
The Fund seeks long-term capital growth through investments in the stocks that
are included in the Nasdaq-100 Index(R).
Adviser: American General Advisers, a division of VALIC
Sub-Adviser: American General Investment Management, L.P.
North American - AG Asset Allocation Fund
The Fund seeks a maximum aggregate rate of return over the long-term through
controlled investment risk by adjusting its investment mix among stocks,
long-term debt securities and short-term money market securities.
Adviser: American General Advisers
North American - AG Capital Conservation Fund
The Fund seeks the highest possible total return consistent with preservation of
capital through current income and capital gains on investments in intermediate
and long-term debt instruments and other income producing securities.
Adviser: American General Advisers
North American - AG Government Securities Fund
The Fund seeks high current income and protection of capital through investments
in intermediate and long-term U.S. Government debt securities.
Adviser: American General Advisers
Page 9
<PAGE> 39
North American - AG Growth & Income Fund
The Fund seeks long-term growth of capital and, secondarily, current income
through investment in common stocks and equity-related securities.
Adviser: American General Advisers
North American - AG International Equities Fund
The Fund seeks to provide long-term growth of capital through investments
primarily in a diversified portfolio of equity and equity-related securities of
foreign issuers that, as a group, are expected to provide investment results
closely corresponding to the performance of the Morgan Stanley Capital
International, Europe, Australasia and the Far East Index.
Adviser: American General Advisers
North American - AG MidCap Index Fund
The Fund seeks to provide growth of capital through investments primarily in a
diversified portfolio of common stocks that, as a group, are expected to provide
investment results closely corresponding to the performance of the Standard &
Poor's MidCap 400 Index.
Adviser: American General Advisers
North American - AG Small Cap Index Fund
The Fund seeks to provide growth of capital through investments primarily in a
diversified portfolio of common stocks that, as a group, are expected to provide
investment results closely corresponding to the performance of the Russell 2000
Index.
Adviser: American General Advisers
North American - American Century Income & Growth Fund
The Fund seeks dividend growth, current income and capital appreciation by
investing in common stocks. Current income is a secondary consideration.
Adviser: American General Advisers
Sub-Adviser: American Century Investment Management, Inc.
North American - American Century International Growth Fund
The Fund seeks capital growth through investments primarily in equity securities
of issuers in developed foreign countries.
Adviser: American General Advisers
Sub-Adviser: American Century Investment Management, Inc.
North American - Founders Large Cap Growth Fund
The Fund seeks long-term growth of capital. The Fund normally will invest at
least 65% of its total assets in common stocks of well-established, high-quality
growth companies.
Adviser: American General Advisers
Sub-Adviser: Founders Asset Management LLC
North American - Founders/T. Rowe Price Small Cap Fund
The Fund seeks to provide long-term capital growth by investing primarily in the
stocks of small companies. It will invest at least 65% of its total assets in
stocks of small companies.
Adviser: American General Advisers
Co-Sub-Advisers: Founders Asset Management LLC and T. Rowe Price Associates,
Inc.
North American - Putnam Opportunities Fund
The Fund seeks capital appreciation through investments in common stocks. It
invests mainly in common stocks of large U.S. companies, with a focus on growth
stocks (those the manager believes whose earnings will grow faster than the
economy, with a resultant price increase).
Adviser: American General Advisers
Sub-Adviser: Putnam Investment Management, Inc.
Page 10
<PAGE> 40
North American - T. Rowe Price Blue Chip Growth Fund
The Fund seeks long-term capital growth. Income is a secondary objective. The
Fund pursues long-term capital appreciation by normally investing at least 65%
of total assets in the common stocks of large and medium-sized blue chip growth
companies.
Adviser: American General Advisers
Sub-Adviser: T. Rowe Price Associates, Inc.
North American - T. Rowe Price Health Sciences Fund
The Fund seeks long-term capital growth. The Fund pursues long-term capital
appreciation by normally investing at least 65% of total assets in the common
stocks of companies engaged in the research, development, production, or
distribution of products or services related to health care, medicine, or the
life sciences (collectively termed "health sciences").
Adviser: American General Advisers
Sub-Adviser: T. Rowe Price Associates, Inc.
North American Funds Variable Product Series II:
North American - AG Aggressive Growth Lifestyle Fund
The Fund seeks growth through investments in a combination of the North American
Funds Variable Product Series I or II Funds (primarily the equity funds).
Adviser: American General Advisers
North American - AG Conservative Growth Lifestyle Fund
The Fund seeks current income and low to moderate growth of capital through
investments in North American Funds Variable Product Series I or II Funds.
Adviser: American General Advisers
North American - AG Core Bond Fund
The Fund seeks the highest possible total return consistent with conservation of
capital through investment in medium to high quality fixed income securities.
Adviser: American General Advisers
Sub-Adviser: American General Investment Management, L.P.
North American - AG High Yield Bond Fund
The Fund seeks the highest possible total return and income consistent with
conservation of capital through investment in a diversified portfolio of high
yielding high risk fixed income securities.
Adviser: American General Advisers
Sub-Adviser: American General Investment Management, L.P.
North American - AG Moderate Growth Lifestyle Fund
The Fund seeks growth and current income through investments in North American
Funds Variable Product Series I or II Funds.
Adviser: American General Advisers
North American - AG 2 Money Market Fund
The Fund seeks liquidity, protection of capital and current income through
investments in short-term money market instruments.
Adviser: American General Advisers
North American - AG Socially Responsible Fund
The Fund seeks growth of capital through investment primarily in equity
securities in companies which meet the social criteria established for the Fund.
Adviser: American General Advisers
North American - AG Strategic Bond Fund
The Fund seeks the highest possible total return and income consistent with
conservation of capital through investment in a diversified portfolio of income
producing securities.
Adviser: American General Advisers
Sub-Adviser: American General Investment Management, L.P.
Page 11
<PAGE> 41
North American - Goldman Sachs Large Cap Growth Fund
The Fund seeks long-term growth of capital through a broadly diversified
portfolio of equity securities of large cap U.S. issuers that are expected to
have better prospects for earnings growth than the growth rate of the federal
domestic economy. Dividend income is a secondary objective.
Adviser: American General Advisers
Sub-Adviser: Goldman Sachs Asset Management
North American International Growth Fund
The Fund seeks long-term capital appreciation by investing in equity securities
of non-U.S. companies, the majority of which are expected to be in developed
markets. The Fund may invest across the capitalization spectrum, although it
intends to emphasize smaller capitalization stocks.
Adviser: American General Advisers
Sub-Adviser: Thompson, Siegel & Walmsley, Inc.
North American - INVESCO MidCap Growth Fund
The Fund seeks capital appreciation principally through investments in medium
capitalization equity securities, such as common and preferred stocks and
securities convertible into common stocks.
Adviser: American General Advisers
Sub-Adviser: INVESCO Funds Group, Inc.
North American - J.P. Morgan Small Cap Growth Fund
The Fund seeks long-term growth from a portfolio of equity securities of small
capitalization growth companies.
Adviser: American General Advisers
Sub-Adviser: J.P. Morgan Investment Management Inc.
North American Small Cap Value Fund
The Fund seeks maximum long-term return consistent with reasonable risk to
principal by investing primarily in equity securities of small capitalization
companies in terms of revenues and/or market capitalization.
Adviser: American General Advisers
Sub-Adviser: Fiduciary Management Associates, Inc.
North American - State Street Large Cap Value Fund
The Fund seeks total returns that exceed over time the Russell 1000(R) Value
Index through investments in equity securities.
Adviser: American General Advisers
Sub-Adviser: State Street Global Advisors
North American - Neuberger Berman MidCap Value Fund
The Fund seeks capital growth through investment in equity securities of medium
capitalization companies using a value-oriented investment approach.
Adviser: American General Advisers
Sub-Adviser: Neuberger Berman Management Inc.
Ariel Investment Trust:
Ariel Appreciation Fund
The Fund seeks long-term capital appreciation by investing primarily in
medium-sized company stocks.
Adviser: Ariel Capital Management, Inc.
Ariel Fund
The Fund seeks long-term capital appreciation primarily through investment in
small company stocks.
Adviser: Ariel Capital Management, Inc.
Page 12
<PAGE> 42
Dreyfus Basic GNMA Fund
The Fund seeks a high level of current income as is consistent with the
preservation of capital. To pursue this goal, the Fund normally invests at least
65% of its net assets in GNMA certificates (popularly called "Ginnie Maes"),
which are guaranteed as to timely payment of principal and interest by the
Government National Mortgage Association.
Adviser: The Dreyfus Corporation
Evergreen Equity Trust:
Evergreen Growth and Income Fund
The Fund seeks capital growth in the value of its shares by investing in the
securities of companies which are temporarily undervalued in the market place
but display characteristics of growth such as high return on investment and
competitive advantage in their industry.
Adviser: Evergreen Asset Management Corporation
Evergreen Small Cap Value Fund
The Fund seeks current income and capital growth in the value of its shares by
investing in common stocks of small U.S. companies (less than $1 billion in
market capitalization).
Adviser: Evergreen Asset Management Corporation
Evergreen Value Fund
The Fund seeks long-term capital growth with current income as a secondary
objective by investing at least 75% of its assets in common stocks of medium and
large-cap U.S. companies with prospects for earning growth and dividends.
Adviser: Evergreen Asset Management Corporation
Evergreen Select Equity Trust:
Evergreen Special Equity Fund
The Fund seeks capital growth. It invests primarily in equity securities of U.S.
companies with small market capitalizations.
Adviser: Meridian Investment Company (a subsidiary of First Union Corporation)
Franklin Templeton Variable Insurance Products Trust:
Templeton Asset Strategy Fund
The Fund seeks a high level of total return by investing in the stocks and bonds
of any nation, including emerging markets, and money market instruments.
Adviser: Templeton Investment Counsel, Inc.
INVESCO Blue Chip Growth Fund
The Fund tries to buy securities that will increase in value over the long-term;
current income is a secondary goal. The Fund invests primarily in common stocks
of large companies with market capitalizations of more than $15 billion and that
have a history of consistent earnings growth regardless of business cycles.
Adviser: INVESCO Funds Group, Inc.
Janus Adviser Worldwide Fund
The Fund seeks long-term growth of capital in a manner consistent with the
preservation of capital. It invests primarily in common stocks of companies of
any size throughout the world.
Adviser: Janus Capital Corporation
Janus Fund
The Fund seeks long-term growth of capital in a manner consistent with the
preservation of capital. It invests primarily in common stocks selected for
their growth potential. Although the Fund can invest in companies of any size,
it generally invests in larger, more established companies.
Adviser: Janus Capital Corporation
Page 13
<PAGE> 43
Lou Holland Growth Fund
The Fund primarily seeks long-term growth of capital. The receipt of dividend
income is a secondary consideration. It invests primarily in common stocks of
growth companies.
Adviser: Holland Capital Management, L.P.
MAS Mid Cap Growth Portfolio
The Portfolio seeks long-term capital growth. It invests primarily in common
stocks of companies with capitalizations in the range of companies included in
the S&P MidCap 400 Index.
Adviser: Miller Anderson & Sherrerd, LLP
Sit Mutual Funds:
Sit Mid Cap Growth Fund
The Fund seeks to maximize long-term capital appreciation. It invests at least
65% of its total assets in the common stocks of growth companies with
capitalizations of $2 billion to $15 billion at the time of purchase.
Adviser: Sit Investment Management, Inc.
Sit Small Cap Growth Fund
The Fund seeks to maximize long-term capital appreciation. It invests at least
65% of its total assets in common stocks of small growth companies with
capitalizations of $2.5 billion or less at the time of purchase.
Adviser: Sit Investment Management, Inc.
Vanguard LifeStrategy Conservative Growth Fund
The Fund seeks current income and low-to-moderate growth of capital by
investing in a relatively fixed combination of other Vanguard funds.
Adviser: Vanguard
Vanguard LifeStrategy Growth Fund
The Fund seeks growth of capital by investing in a relatively fixed combination
of other Vanguard funds.
Adviser: Vanguard
Vanguard LifeStrategy Moderate Growth Fund
The Fund seeks growth of capital and a reasonable level of current income by
investing in a relatively fixed combination of other Vanguard funds.
Adviser: Vanguard
Warburg Pincus Small Company Growth Fund
The Fund seeks capital growth by investing in the equity securities of small
U.S. companies.
Adviser: Credit Suisse Asset Management, LLC
Portfolio Director 2 Supplement
11/1/2000
<PAGE> 44
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A
PORTFOLIO DIRECTOR 2
Fixed and Variable Annuity
Separate Account A
For Series 1.40 - 12.40
Supplement issued November 15, 2000
To the Prospectus dated May 1, 2000
Outside Cover Pages
Insert the following above "Separate Account A":
Fixed and Variable Annuity
Inside Cover Pages (changes underlined)
The Variable Annuity life Insurance Company
Units of Interest Under Group and Individual Fixed and Variable Annuity
---------
Contracts
Portfolio Director(R) 2 Fixed and Variable Annuity
--------------------------
First paragraph, inside cover page (changes underlined)
The Variable Annuity Life Insurance Company ("VALIC") offers certain Series of
Portfolio Director 2 that consist of group and individual fixed and variable
---------
annuity contracts (the "Contracts") to Participants in certain employer
sponsored retirement plans.
-------------------------------------------------------------------------------
Portfolio Director 2 has added several new variable account options as shown
below. Generally, however, the variable account options shown below will not be
available to participants for allocations and future investments until December
11, 2000.
-------------------------------------------------------------------------------
Additions to the Fee Tables, page 2
<TABLE>
<CAPTION>
SEPARATE ACCOUNT EXPENSES
(as a percentage of Separate Account net Administration Separate
assets): Mortality and and Distribution Account Expense Total Separate
Fund Expense Risk Fee Fee Reimbursement Account Fee
---- ---------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C>
NORTH AMERICAN FUNDS VARIABLE PRODUCT
SERIES I
North American - AG Asset 0.25% 0.35% -- 0.60%
Allocation Fund
North American - AG Capital 0.25 0.35 -- 0.60
Conservation Fund
North American - AG Government 0.25 0.35 -- 0.60
Securities Fund
North American - AG Growth & Income 0.25 0.35 -- 0.60
Fund
North American - AG International 0.25 0.35 -- 0.60
Equities Fund
North American - AG MidCap Index 0.25 0.35 -- 0.60
Fund
North American - AG Nasdaq-100(R) 0.25 0.35 -- 0.60
Index Fund
North American - AG Small Cap Index 0.25 0.35 -- 0.60
Fund
North American - American Century 0.25 0.35 -- 0.60
Income & Growth Fund
</TABLE>
<PAGE> 45
<TABLE>
<S> <C> <C> <C> <C>
North American - American Century 0.25 0.35 -- 0.60
International Growth Fund
North American - Founders Large 0.25 0.35 -- 0.60
Cap Growth Fund
North American - Founders/T. Rowe 0.25 0.35 -- 0.60
Price Small Cap Fund
North American - Putnam 0.25 0.35 -- 0.60
Opportunities Fund
North American - T. Rowe Price Blue 0.25 0.35 -- 0.60
Chip Growth Fund
North American - T. Rowe Price 0.25 0.35 -- 0.60
Health Sciences Fund
NORTH AMERICAN FUNDS VARIABLE PRODUCT
SERIES II
North American - AG Aggressive 0.25 0.35 (0.25)% 0.35
Growth Lifestyle Fund
North American - AG Conservative 0.25 0.35 (0.25) 0.35
Growth Lifestyle Fund
North American - AG Core Bond Fund 0.25 0.35 (0.25) 0.35
North American - AG High Yield 0.25 0.35 (0.25) 0.35
Bond Fund
North American - AG Moderate Growth 0.25 0.35 (0.25) 0.35
Lifestyle Fund
North American - AG 2 Money Market 0.25 0.35 (0.25) 0.35
Fund
North American - AG Socially 0.25 0.35 (0.25) 0.35
Responsible Fund
North American - AG Strategic Bond 0.25 0.35 (0.25) 0.35
Fund
North American - Goldman Sachs 0.25 0.35 (0.25) 0.35
Large Cap Growth Fund
North American International Growth 0.25 0.35 (0.25) 0.35
Fund
North American - INVESCO MidCap 0.25 0.35 (0.25) 0.35
Growth Fund
North American - J.P. Morgan Small 0.25 0.35 (0.25) 0.35
Cap Growth Fund
North American Small Cap Value 0.25 0.35 (0.25) 0.35
Fund
North American - State Street Large 0.25 0.35 (0.25) 0.35
Cap Value Fund
North American - Neuberger Berman 0.25 0.35 (0.25) 0.35
MidCap Value Fund
ARIEL INVESTMENT TRUST
Ariel Appreciation Fund 0.25 0.60 (0.25) 0.60
Ariel Fund 0.25 0.60 (0.25) 0.60
Dreyfus Basic GNMA Fund 0.25 0.60 (0.25) 0.60
EVERGREEN EQUITY TRUST
Evergreen Growth and Income Fund, 0.25 0.35 (0.25) 0.60
Class A
Evergreen Small Cap Value Fund, 0.25 0.35 (0.25) 0.60
Class A
</TABLE>
Page 2
<PAGE> 46
<TABLE>
<S> <C> <C> <C> <C>
Evergreen Value Fund, Class A 0.25 0.35 (0.25) 0.60
EVERGREEN SELECT EQUITY TRUST
Evergreen Special Equity Fund, 0.25 0.60 (0.25) 0.60
Class A
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST
Templeton Asset Strategy Fund 0.25 0.60 -- 0.85
INVESCO Blue Chip Growth Fund, 0.25 0.60 (0.25) 0.60
Investor Class
Janus Adviser Worldwide Fund 0.25 0.60 (0.25) 0.60
Janus Fund 0.25 0.60 (0.25) 0.60
Lou Holland Growth Fund 0.25 0.60 (0.25) 0.60
MAS Mid Cap Growth Portfolio, 0.25 0.60 (0.25) 0.60
Advisor Class
SIT MUTUAL FUNDS
Sit Mid Cap Growth Fund 0.25 0.60 (0.25) 0.60
Sit Small Cap Growth Fund 0.25 0.60 (0.25) 0.60
Vanguard LifeStrategy Conservative 0.25 0.60 -- 0.85
Growth Fund
Vanguard LifeStrategy Growth Fund 0.25 0.60 -- 0.85
Vanguard LifeStrategy Moderate 0.25 0.60 -- 0.85
Growth Fund
Warburg Pincus Small Company 0.25 0.60 (0.25) 0.60
Growth Fund, Common Class
</TABLE>
For the funds above that reflect Separate Account Expense Reimbursement, the
Total Separate Account Fee equals the VALIC Separate Account A mortality and
expense risk fee plus the administration and distribution fee, reduced by the
Separate Account Expense Reimbursement. Pursuant to the Separate Account Expense
Reimbursement, the charges as shown are reduced by certain payments received
from the underlying fund and/or its affiliates or distributors for
administrative and shareholder services provided by the Company. See "Fees and
Charges -- Separate Account Expense Reimbursement" in the prospectus for more
information.
<TABLE>
<CAPTION>
FUND ANNUAL EXPENSES
(as a percentage of Fund net assets):
Management Fees Other Expenses Total Fund
(After Fee (After Expense Expenses (After
Fund Waiver) 12b-1 Fees Waiver) Expense Waiver)
---- --------------- ---------- -------------- ---------------
<S> <C> <C> <C> <C>
NORTH AMERICAN FUNDS VARIABLE PRODUCT
SERIES I
North American - AG Asset 0.50% -- 0.07% 0.57%
Allocation Fund
North American - AG Capital 0.50 -- 0.10 0.60
Conservation Fund
North American - AG Government 0.50 -- 0.09 0.59
Securities Fund
North American - AG Growth & Income 0.75 -- 0.07 0.82
Fund
North American - AG International 0.35 -- 0.08 0.43
Equities Fund
North American - AG MidCap Index 0.31 -- 0.07 0.38
Fund
North American - AG Nasdaq-100(R) 0.40 -- 0.10 0.50
Index Fund
North American - AG Small Cap Index 0.35 -- 0.06 0.41
Fund
North American - American Century 0.77 -- 0.06 0.83
Income & Growth Fund
North American - American Century 1.00 -- 0.06 1.06
International Growth Fund
North American - Core Equity Fund 0.80 -- 0.05 0.85
North American - Founders Large 1.00 -- 0.06 1.06
Cap Growth Fund
</TABLE>
Page 3
<PAGE> 47
<TABLE>
<S> <C> <C> <C> <C>
North American - Founders/T. Rowe 0.90 -- 0.05 0.95
Price Small Cap Fund
North American - Putnam 0.95 -- 0.06 1.01
Opportunities Fund
North American - T. Rowe Price Blue 0.80 -- 0.06 0.86
Chip Growth Fund
North American - T. Rowe Price 1.00 -- 0.06 1.06
Health Sciences Fund
NORTH AMERICAN FUNDS VARIABLE PRODUCT
SERIES II
North American - AG Aggressive 0.10 -- -- 0.10
Growth Lifestyle Fund
North American - AG Conservative 0.10 -- -- 0.10
Growth Lifestyle Fund
North American - AG Core Bond Fund 0.50 -- 0.30 0.80
North American - AG High Yield 0.69 -- 0.29 0.98
Bond Fund
North American - AG Moderate Growth 0.10 -- -- 0.10
Lifestyle Fund
North American - AG 2 Money Market 0.24 -- 0.30 0.54
Fund
North American - AG Socially 0.25 -- 0.30 0.55
Responsible Fund
North American - AG Strategic Bond 0.59 -- 0.29 0.88
Fund
North American - Goldman Sachs 0.52 -- 0.29 0.81
Large Cap Growth Fund
North American International Growth 0.88 -- 0.25 1.13
Fund
North American - INVESCO MidCap 0.63 -- 0.14 0.77
Growth Fund
North American - J.P. Morgan Small 0.81 -- 0.30 1.11
Cap Growth Fund
North American Small Cap Value 0.74 -- 0.21 0.95
Fund
North American - State Street Large 0.49 -- 0.31 0.80
Cap Value Fund
North American - Neuberger Berman 0.74 -- 0.29 1.03
MidCap Value Fund
ARIEL INVESTMENT TRUST
Ariel Appreciation Fund 0.75 0.25% 0.26 1.26
Ariel Fund 0.65 0.25 0.35 1.25
Dreyfus Basic GNMA Fund 0.26 -- 1.29 1.55
EVERGREEN EQUITY TRUST
Evergreen Growth and Income Fund, 0.89 0.25 0.29 1.43
Class A
Evergreen Small Cap Value Fund, 1.00 0.25 0.42 1.67
Class A
Evergreen Value Fund, Class A 0.50 0.25 0.25 1.00
EVERGREEN SELECT EQUITY TRUST
Evergreen Special Equity Fund, 0.90 0.25 0.16 1.31
Class A
</TABLE>
Page 4
<PAGE> 48
<TABLE>
<S> <C> <C> <C> <C>
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST
Templeton Asset Strategy Fund 0.60 -- 0.18 0.78
INVESCO Blue Chip Growth Fund, 0.53 0.25 0.26 1.04
Investor Class
Janus Adviser Worldwide Fund 0.65 0.25 0.30 1.20
Janus Fund 0.65 -- 0.20 0.85
Lou Holland Growth Fund 0.85 -- 0.50 1.35
MAS Mid Cap Growth Portfolio, 0.50 0.25 0.13 0.88
Advisor Class
SIT MUTUAL FUNDS
Sit Mid Cap Growth Fund 1.00 -- -- 1.00
Sit Small Cap Growth Fund 1.50 -- -- 1.50
Vanguard LifeStrategy Conservative 0.28 -- -- 0.28
Growth Fund
Vanguard LifeStrategy Growth Fund 0.29 -- -- 0.29
Vanguard LifeStrategy Moderate 0.29 -- -- 0.29
Growth Fund
Warburg Pincus Small Company 0.00 0.25 1.15 1.40
Growth Fund, Common Class
</TABLE>
Notes concerning the Fund Annual Expenses Table:
North American Fund Variable Product Series II: The management of the Funds
waived or reimbursed fees during the fiscal year shown. In the absence of these
waivers, management fees, other expenses and total annual portfolio operating
expenses, respectively would be: Core Bond Fund, 0.50%, 1.04% and 1.54%; High
Yield Bond Fund, 0.69%, 1.05% and 1.74%; International Growth Fund, 0.88%, 1.02%
and 1.90%; Large Cap Growth Fund, 0.52%, 0.92% and 1.44%; Large Cap Value Fund,
0.49%, 1.02% and 1.51%; Mid Cap Growth Fund, 0.63%, 1.01% and 1.64%; Mid Cap
Value Fund, 0.74%, 0.99% and 1.73%; Money Market Fund, 0.24%, 0.99% and 1.23%;
Small Cap Growth Fund, 0.81%, 0.97% and 1.78%; Small Cap Value Fund, 0.74%,
1.01% and 1.75%; Socially Responsible Fund, 0.25%, 0.98% and 1.23%; and
Strategic Bond Fund, 0.59%, 1.05% and 1.64%.
North American Fund Variable Product Series II: Total Combined Operating
Expenses based on estimated total average weighted combined operating expenses
for the Aggressive Growth Lifestyle Fund is 1.04%, Conservative Growth Lifestyle
Fund is 0.95%, and Moderate Growth Lifestyle Fund is 0.98%. Estimated Total
Combined Operating Expenses of each Lifestyle Fund is based on the Total Fund
Operating Expenses of the underlying funds and the Lifestyle Funds, assuming
each Lifestyle Fund's projected asset allocation among the underlying funds is
maintained.
Dreyfus Basic GNMA Fund: During 1999, Dreyfus waived a portion of its fee so
that the effective management fee paid by the fund was 0.26%. This waiver
reflects an undertaking by Dreyfus to limit fund expenses, exclusive of taxes,
brokerage, interest on borrowings and extraordinary expenses, to 0.65%. This
undertaking may be terminated upon 90 days' notice to shareholders.
Evergreen Special Equity Fund: The Fund's investment advisor may reduce or waive
its fees or reimburse a fund for certain expenses in order to reduce expense
ratios. The Fund's investment advisor may cease these waivers or reimbursements
at any time. Including fee waivers and expense reimbursements and restating to
reflect current fees, estimated total fund operating expenses for the fiscal
year ending 6/30/2000 would be 1.31% for Class A shares. Janus Adviser Worldwide
Fund: Janus Capital has contractually agreed to waive the Fund's total operating
expenses (excluding brokerage commissions, interest, taxes and extraordinary
expenses) so that it will not exceed 1.20% until at least July 31, 2003.
Lou Holland Growth Fund: The Investment Manager has contractually agreed to
waive its fees and reimburse other expenses of the Growth Fund to the extent
that the Fund's total operating expenses exceed 1.35%. This agreement may be
terminated only by the Fund's Board of Trustees. Sit Mid Cap Growth Fund: The
Adviser voluntarily waived 0.25% of its fee. It may terminate this fee waiver at
any time after December 31, 2000.
Templeton Asset Strategy Fund: On February 8, 2000, shareholders of the
Templeton Asset Allocation Fund approved a merger and reorganization that
combined the Templeton Asset Allocation Fund with the Templeton Global Asset
Allocation Fund, effective May 1, 2000. At the same time as the merger, the
Templeton Asset Allocation Fund changed its name to the Templeton Asset Strategy
Fund. The table shows restated total expenses for the Templeton Asset Strategy
Fund based on the new fund fees and the assets of the Templeton Asset Allocation
Fund as of December 31, 1999, and not the assets of the combined fund. However,
if the table reflected both the new fund fees and the fund's combined assets,
the fund's expenses after May 1, 2000 would be estimated as: Management Fees
0.60%, Other Expenses 0.14%, and Annual Expenses 0.74%.
Vanguard: The Vanguard LifeStrategy Funds did not incur any expenses in fiscal
year 1999. However, while the Funds are expected to operate without expenses,
shareholders in the Vanguard LifeStrategy Funds indirectly bear the expenses of
the underlying Vanguard Funds in which the Funds invest. The indirect expense
ratios that the Vanguard LifeStrategy Conservative Growth Fund, Vanguard
LifeStrategy Growth Fund, and Vanguard LifeStrategy Moderate Growth Fund
incurred for the year ended December 31, 1999 was 0.28%, 0.29% and 0.29%,
respectively.
Page 5
<PAGE> 49
Warburg Pincus Small Company Growth Fund: Fee waivers and expense reimbursements
or credits reduced expenses for the Fund during 1999 but may be discontinued at
any time.
EXAMPLE #1
<TABLE>
<CAPTION>
Fund 1 Year 3 years 5 Years 10 Years
---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
NORTH AMERICAN FUNDS VARIABLE PRODUCT
SERIES I
North American - AG Asset $12 $38 $67 $147
Allocation Fund
North American - AG Capital 13 39 68 150
Conservation Fund
North American - AG Government 13 39 68 149
Securities Fund
North American - AG Growth & Income 15 46 80 175
Fund
North American - AG International 11 34 59 131
Equities Fund
North American - AG MidCap Index 10 32 56 125
Fund
North American - AG Nasdaq-100(R) 12 36 63 139
Index Fund
North American - AG Small Cap Index 11 33 58 129
Fund
North American - American Century 15 46 80 176
Income & Growth Fund
North American - American Century 17 54 92 201
International Growth Fund
North American Core Equity Fund 15 47 81 178
North American - Founders Large 17 54 92 201
Cap Growth Fund
North American - Founders/T. Rowe 16 50 87 189
Price Small Cap Fund
North American - Putnam 17 52 90 196
Opportunities Fund
North American - T. Rowe Price Blue 15 47 82 179
Chip Growth Fund
North American - T. Rowe Price 17 54 92 201
Health Sciences Fund
NORTH AMERICAN FUNDS VARIABLE PRODUCT
SERIES II
North American - AG Aggressive 5 16 27 62
Growth Lifestyle Fund
North American - AG Conservative 5 16 27 62
Growth Lifestyle Fund
North American - AG Core Bond Fund 12 38 65 145
North American - AG High Yield 14 43 75 165
Bond Fund
North American - AG Moderate Growth 5 16 27 62
Lifestyle Fund
North American - AG 2 Money Market 9 30 52 115
Fund
North American - AG Socially 10 30 52 116
Responsible Fund
North American - AG Strategic Bond 13 40 70 154
Fund
</TABLE>
Page 6
<PAGE> 50
<TABLE>
<S> <C> <C> <C> <C>
North American - Goldman Sachs 12 38 66 146
Large Cap Growth Fund
North American International Growth 15 48 83 182
Fund
North American - INVESCO MidCap 12 37 64 141
Growth Fund
North American - J.P. Morgan Small 15 47 82 179
Cap Growth Fund
North American Small Cap Value 14 42 73 162
Fund
North American - State Street Large 12 38 65 145
Cap Value Fund
North American - Neuberger Berman 14 45 78 171
MidCap Value Fund
ARIEL INVESTMENT TRUST
Ariel Appreciation Fund 19 60 103 223
Ariel Fund 19 59 102 222
Dreyfus Basic GNMA Fund 22 69 118 253
EVERGREEN EQUITY TRUST
Evergreen Growth and Income Fund, 21 65 111 240
Class A
Evergreen Small Cap Value Fund, 23 72 124 265
Class A
Evergreen Value Fund, Class A 17 52 89 195
EVERGREEN SELECT EQUITY TRUST
Evergreen Special Equity Fund, 20 61 105 228
Class A
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST
Templeton Asset Strategy Fund 17 53 91 198
INVESCO Blue Chip Growth Fund, 17 53 91 199
Investor Class
Janus Adviser Worldwide Fund 19 58 100 216
Janus Fund 15 47 81 178
Lou Holland Growth Fund 20 62 107 232
MAS Mid Cap Growth Portfolio, 15 48 83 182
Advisor Class
SIT MUTUAL FUNDS
Sit Mid Cap Growth Fund 17 52 89 195
Sit Small Cap Growth Fund 22 67 115 248
Vanguard LifeStrategy Conservative 12 37 64 142
Growth Fund
Vanguard LifeStrategy Growth Fund 12 37 65 144
Vanguard LifeStrategy Moderate 12 37 65 144
Growth Fund
Warburg Pincus Small Company 21 64 110 237
Growth Fund, Common Class
</TABLE>
EXAMPLE #2
<TABLE>
<CAPTION>
Fund 1 Year 3 Years 5 years 10 Years
---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
NORTH AMERICAN FUNDS VARIABLE PRODUCT
SERIES I
North American - AG Asset $59 $88 $117 $147
Allocation Fund
North American - AG Capital 59 89 118 150
Conservation Fund
North American - AG Government 59 89 118 149
Securities Fund
</TABLE>
Page 7
<PAGE> 51
<TABLE>
<S> <C> <C> <C> <C>
North American - AG Growth & Income 61 96 130 175
Fund
North American - AG International 58 84 109 131
Equities Fund
North American - AG MidCap Index 57 82 106 125
Fund
North American - AG Nasdaq-100(R) 58 86 113 139
Index Fund
North American - AG Small Cap Index 57 83 108 129
Fund
North American - American Century 62 96 130 176
Income & Growth Fund
North American - American Century 64 103 142 201
International Growth Fund
North American Core 62 97 131 178
Equity Fund
North American - Founders Large 64 103 142 201
Cap Growth Fund
North American - Founders/T. Rowe 63 100 137 189
Price Small Cap Fund
North American - Putnam 63 102 140 196
Opportunities Fund
North American - T. Rowe Price Blue 62 97 132 179
Chip Growth Fund
North American - T. Rowe Price 64 103 142 201
Health Sciences Fund
NORTH AMERICAN FUNDS VARIABLE PRODUCT
SERIES II
North American - AG Aggressive 52 66 77 62
Growth Lifestyle Fund
North American - AG Conservative 52 66 77 62
Growth Lifestyle Fund
North American - AG Core Bond Fund 59 88 115 145
North American - AG High Yield 61 93 125 165
Bond Fund
North American - AG Moderate Growth 52 66 77 62
Lifestyle Fund
North American - AG 2 Money Market 56 80 102 115
Fund
North American - AG Socially 56 80 102 116
Responsible Fund
North American - AG Strategic Bond 60 90 120 154
Fund
North American - Goldman Sachs 59 88 116 146
Large Cap Growth Fund
North American International Growth 62 98 133 182
Fund
North American - INVESCO MidCap 59 87 114 141
Growth Fund
North American - J.P. Morgan Small 62 97 132 179
Cap Growth Fund
North American Small Cap Value 60 92 123 162
Fund
North American - State Street Large 59 88 115 145
Cap Value Fund
</TABLE>
Page 8
<PAGE> 52
<TABLE>
<S> <C> <C> <C> <C>
North American - Neuberger Berman 61 95 128 171
MidCap Value Fund
ARIEL INVESTMENT TRUST
Ariel Appreciation Fund 66 109 153 223
Ariel Fund 66 109 152 222
Dreyfus Basic GNMA Fund 68 117 168 253
EVERGREEN EQUITY TRUST
Evergreen Growth and Income Fund, 67 114 161 240
Class A
Evergreen Small Cap Value Fund, 70 121 174 265
Class A
Evergreen Value Fund, Class A 63 101 139 195
EVERGREEN SELECT EQUITY TRUST
Evergreen Special Equity Fund, 66 111 155 228
Class A
FRANKLIN TEMPLETON VARIABLE INSURANCE
PRODUCTS TRUST
Templeton Asset Strategy Fund 63 102 141 198
INVESCO Blue Chip Growth Fund, 64 103 141 199
Investor Class
Janus Adviser Worldwide Fund 65 107 150 216
Janus Fund 62 97 131 178
Lou Holland Growth Fund 67 112 157 232
MAS Mid Cap Growth Portfolio, 62 98 133 182
Advisor Class
SIT MUTUAL FUNDS
Sit Mid Cap Growth Fund 63 101 139 195
Sit Small Cap Growth Fund 68 116 165 248
Vanguard LifeStrategy Conservative 59 87 114 142
Growth Fund
Vanguard LifeStrategy Growth Fund 59 87 115 144
Vanguard LifeStrategy Moderate 59 87 115 144
Growth Fund
Warburg Pincus Small Company 67 113 160 237
Growth Fund, Common Class
</TABLE>
SUMMARY (OF INVESTMENT OBJECTIVES), PAGE 7
North American Funds Variable Product Series I:
North American - AG Nasdaq-100(R) Index Fund
The Fund seeks long-term capital growth through investments in the stocks that
are included in the Nasdaq-100 Index(R).
Adviser: American General Advisers, a division of VALIC
Sub-Adviser: American General Investment Management, L.P.
North American - AG Asset Allocation Fund
The Fund seeks a maximum aggregate rate of return over the long-term through
controlled investment risk by adjusting its investment mix among stocks,
long-term debt securities and short-term money market securities.
Adviser: American General Advisers
North American - AG Capital Conservation Fund
The Fund seeks the highest possible total return consistent with preservation of
capital through current income and capital gains on investments in intermediate
and long-term debt instruments and other income producing securities.
Adviser: American General Advisers
North American - AG Government Securities Fund
The Fund seeks high current income and protection of capital through investments
in intermediate and long-term U.S. Government debt securities.
Adviser: American General Advisers
Page 9
<PAGE> 53
North American - AG Growth & Income Fund
The Fund seeks long-term growth of capital and, secondarily, current income
through investment in common stocks and
equity-related securities.
Adviser: American General Advisers
North American - AG International Equities Fund
The Fund seeks to provide long-term growth of capital through investments
primarily in a diversified portfolio of equity and equity-related securities of
foreign issuers that, as a group, are expected to provide investment results
closely corresponding to the performance of the Morgan Stanley Capital
International, Europe, Australasia and the Far East Index.
Adviser: American General Advisers
North American - AG MidCap Index Fund
The Fund seeks to provide growth of capital through investments primarily in a
diversified portfolio of common stocks that, as a group, are expected to provide
investment results closely corresponding to the performance of the Standard &
Poor's MidCap 400 Index.
Adviser: American General Advisers
North American - AG Small Cap Index Fund
The Fund seeks to provide growth of capital through investments primarily in a
diversified portfolio of common stocks that, as a group, are expected to provide
investment results closely corresponding to the performance of the Russell 2000
Index.
Adviser: American General Advisers
North American - American Century Income & Growth Fund
The Fund seeks dividend growth, current income and capital appreciation by
investing in common stocks. Current income is a secondary consideration.
Adviser: American General Advisers
Sub-Adviser: American Century Investment Management, Inc.
North American - American Century International Growth Fund
The Fund seeks capital growth through investments primarily in equity securities
of issuers in developed foreign countries.
Adviser: American General Advisers
Sub-Adviser: American Century Investment Management, Inc.
North American - Founders Large Cap Growth Fund
The Fund seeks long-term growth of capital. The Fund normally will invest at
least 65% of its total assets in common stocks of well-established, high-quality
growth companies.
Adviser: American General Advisers
Sub-Adviser: Founders Asset Management LLC
North American - Founders/T. Rowe Price Small Cap Fund
The Fund seeks to provide long-term capital growth by investing primarily in the
stocks of small companies. It will invest at least 65% of its total assets in
stocks of small companies.
Adviser: American General Advisers
Co-Sub-Advisers: Founders Asset Management LLC and T. Rowe Price Associates,
Inc.
North American - Putnam Opportunities Fund
The Fund seeks capital appreciation through investments in common stocks. It
invests mainly in common stocks of large U.S. companies, with a focus on growth
stocks (those the manager believes whose earnings will grow faster than the
economy, with a resultant price increase).
Adviser: American General Advisers
Sub-Adviser: Putnam Investment Management, Inc.
Page 10
<PAGE> 54
North American - T. Rowe Price Blue Chip Growth Fund
The Fund seeks long-term capital growth. Income is a secondary objective. The
Fund pursues long-term capital appreciation by normally investing at least 65%
of total assets in the common stocks of large and medium-sized blue chip growth
companies.
Adviser: American General Advisers
Sub-Adviser: T. Rowe Price Associates, Inc.
North American - T. Rowe Price Health Sciences Fund
The Fund seeks long-term capital growth. The Fund pursues long-term capital
appreciation by normally investing at least 65% of total assets in the common
stocks of companies engaged in the research, development, production, or
distribution of products or services related to health care, medicine, or the
life sciences (collectively termed "health sciences").
Adviser: American General Advisers
Sub-Adviser: T. Rowe Price Associates, Inc.
North American Funds Variable Product Series II:
North American - AG Aggressive Growth Lifestyle Fund The Fund seeks growth
through investments in a combination of the North American Funds Variable
Product Series I or II Funds (primarily the equity funds).
Adviser: American General Advisers
North American - AG Conservative Growth Lifestyle Fund
The Fund seeks current income and low to moderate growth of capital through
investments in North American Funds Variable Product Series I or II Funds.
Adviser: American General Advisers
North American - AG Core Bond Fund
The Fund seeks the highest possible total return consistent with conservation of
capital through investment in medium to high quality fixed income securities.
Adviser: American General Advisers
Sub-Adviser: American General Investment Management, L.P.
North American - AG High Yield Bond Fund
The Fund seeks the highest possible total return and income consistent with
conservation of capital through investment in a diversified portfolio of high
yielding high risk fixed income securities.
Adviser: American General Advisers
Sub-Adviser: American General Investment Management, L.P.
North American - AG Moderate Growth Lifestyle Fund
The Fund seeks growth and current income through investments in North American
Funds Variable Product Series I or II Funds.
Adviser: American General Advisers
North American - AG 2 Money Market Fund
The Fund seeks liquidity, protection of capital and current income through
investments in short-term money market instruments.
Adviser: American General Advisers
North American - AG Socially Responsible Fund
The Fund seeks growth of capital through investment primarily in equity
securities in companies which meet the social
criteria established for the Fund.
Adviser: American General Advisers
North American - AG Strategic Bond Fund
The Fund seeks the highest possible total return and income consistent with
conservation of capital through investment in a diversified portfolio of income
producing securities.
Adviser: American General Advisers
Sub-Adviser: American General Investment Management, L.P.
Page 11
<PAGE> 55
North American - Goldman Sachs Large Cap Growth Fund
The Fund seeks long-term growth of capital through a broadly diversified
portfolio of equity securities of large cap U.S. issuers that are expected to
have better prospects for earnings growth than the growth rate of the federal
domestic economy. Dividend income is a secondary objective.
Adviser: American General Advisers
Sub-Adviser: Goldman Sachs Asset Management
North American International Growth Fund
The Fund seeks long-term capital appreciation by investing in equity securities
of non-U.S. companies, the majority of which are expected to be in developed
markets. The Fund may invest across the capitalization spectrum, although it
intends to emphasize smaller capitalization stocks.
Adviser: American General Advisers
Sub-Adviser: Thompson, Siegel & Walmsley, Inc.
North American - INVESCO MidCap Growth Fund
The Fund seeks capital appreciation principally through investments in medium
capitalization equity securities, such as common and preferred stocks and
securities convertible into common stocks.
Adviser: American General Advisers
Sub-Adviser: INVESCO Funds Group, Inc.
North American - J.P. Morgan Small Cap Growth Fund
The Fund seeks long-term growth from a portfolio of equity securities of small
capitalization growth companies.
Adviser: American General Advisers
Sub-Adviser: J.P. Morgan Investment Management Inc.
North American Small Cap Value Fund
The Fund seeks maximum long-term return consistent with reasonable risk to
principal by investing primarily in equity securities of small capitalization
companies in terms of revenues and/or market capitalization.
Adviser: American General Advisers
Sub-Adviser: Fiduciary Management Associates, Inc.
North American - State Street Large Cap Value Fund
The Fund seeks total returns that exceed over time the Russell 1000(R) Value
Index through investments in equity securities.
Adviser: American General Advisers
Sub-Adviser: State Street Global Advisors
North American - Neuberger Berman MidCap Value Fund
The Fund seeks capital growth through investment in equity securities of medium
capitalization companies using a value-oriented investment approach.
Adviser: American General Advisers
Sub-Adviser: Neuberger Berman Management Inc.
Ariel Investment Trust:
Ariel Appreciation Fund
The Fund seeks long-term capital appreciation by investing primarily in
medium-sized company stocks.
Adviser: Ariel Capital Management, Inc.
Ariel Fund
The Fund seeks long-term capital appreciation primarily through investment in
small company stocks.
Adviser: Ariel Capital Management, Inc.
Page 12
<PAGE> 56
Dreyfus Basic GNMA Fund
The Fund seeks a high level of current income as is consistent with the
preservation of capital. To pursue this goal, the Fund normally invests at least
65% of its net assets in GNMA certificates (popularly called "Ginnie Maes"),
which are guaranteed as to timely payment of principal and interest by the
Government National Mortgage Association.
Adviser: The Dreyfus Corporation
Evergreen Equity Trust:
Evergreen Growth and Income Fund
The Fund seeks capital growth in the value of its shares by investing in the
securities of companies which are temporarily undervalued in the market place
but display characteristics of growth such as high return on investment and
competitive advantage in their industry.
Adviser: Evergreen Asset Management Corporation
Evergreen Small Cap Value Fund
The Fund seeks current income and capital growth in the value of its shares by
investing in common stocks of small U.S.
companies (less than $1 billion in market capitalization).
Adviser: Evergreen Asset Management Corporation
Evergreen Value Fund
The Fund seeks long-term capital growth with current income as a secondary
objective by investing at least 75% of its assets in common stocks of medium and
large-cap U.S. companies with prospects for earning growth and dividends.
Adviser: Evergreen Asset Management Corporation
Evergreen Select Equity Trust:
Evergreen Special Equity Fund
The Fund seeks capital growth. It invests primarily in equity securities of U.S.
companies with small market capitalizations.
Adviser: Meridian Investment Company (a subsidiary of First Union Corporation)
Franklin Templeton Variable Insurance Products Trust:
Templeton Asset Strategy Fund
The Fund seeks a high level of total return by investing in the stocks and bonds
of any nation, including emerging markets, and money market instruments.
Adviser: Templeton Investment Counsel, Inc.
INVESCO Blue Chip Growth Fund
The Fund tries to buy securities that will increase in value over the long-term;
current income is a secondary goal. The Fund invests primarily in common stocks
of large companies with market capitalizations of more than $15 billion and that
have a history of consistent earnings growth regardless of business cycles.
Adviser: INVESCO Funds Group, Inc.
Janus Adviser Worldwide Fund
The Fund seeks long-term growth of capital in a manner consistent with the
preservation of capital. It invests primarily in common stocks of companies of
any size throughout the world.
Adviser: Janus Capital Corporation
Janus Fund
The Fund seeks long-term growth of capital in a manner consistent with the
preservation of capital. It invests primarily in common stocks selected for
their growth potential. Although the Fund can invest in companies of any size,
it generally invests in larger, more established companies.
Adviser: Janus Capital Corporation
Page 13
<PAGE> 57
Lou Holland Growth Fund
The Fund primarily seeks long-term growth of capital. The receipt of dividend
income is a secondary consideration. It invests primarily in common stocks of
growth companies.
Adviser: Holland Capital Management, L.P.
MAS Mid Cap Growth Portfolio
The Portfolio seeks long-term capital growth. It invests primarily in common
stocks of companies with capitalizations in the range of companies included in
the S&P MidCap 400 Index.
Adviser: Miller Anderson & Sherrerd, LLP
Sit Mutual Funds:
Sit Mid Cap Growth Fund
The Fund seeks to maximize long-term capital appreciation. It invests at least
65% of its total assets in the common stocks of growth companies with
capitalizations of $2 billion to $15 billion at the time of purchase.
Adviser: Sit Investment Management, Inc.
Sit Small Cap Growth Fund
The Fund seeks to maximize long-term capital appreciation. It invests at least
65% of its total assets in common stocks of small growth companies with
capitalizations of $2.5 billion or less at the time of purchase.
Adviser: Sit Investment Management, Inc.
Vanguard LifeStrategy Conservative Growth Fund
The Fund seeks current income and low-to-moderate growth of capital by investing
in a relatively fixed combination of other Vanguard funds.
Adviser: Vanguard
Vanguard LifeStrategy Growth Fund
The Fund seeks growth of capital by investing in a relatively fixed combination
of other Vanguard funds.
Adviser: Vanguard
Vanguard LifeStrategy Moderate Growth Fund
The Fund seeks growth of capital and a reasonable level of current income by
investing in a relatively fixed combination of other Vanguard funds.
Adviser: Vanguard
Warburg Pincus Small Company Growth Fund
The Fund seeks capital growth by investing in the equity securities of small
U.S. companies.
Adviser: Credit Suisse Asset Management, LLC
Portfolio Director 2 Supplement
11/1/2000
Page 14
<PAGE> 58
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A
PORTFOLIO DIRECTOR
Fixed and Variable Annuity
Separate Account A
Supplement issued November 15, 2000
To the Prospectus dated May 1, 2000
Outside Cover Pages
Insert the following above "Separate Account A":
Fixed and Variable Annuity
Inside Cover Pages (changes underlined)
The Variable Annuity life Insurance Company
Units of Interest Under Group and Individual Fixed and Variable Annuity
---------
Contracts
Portfolio Director(R) Fixed and Variable Annuity
--------------------------
First paragraph, inside cover page (changes underlined)
The Variable Annuity Life Insurance Company ("VALIC") offers certain Series of
Portfolio Director that consist of group and individual fixed and variable
---------
annuity contracts (the "Contracts") to Participants in certain employer
sponsored retirement plans.
--------------------------------------------------------------------------------
Portfolio Director has added several new variable account options as shown
below. Generally, however, the variable account options shown below will not be
available to participants for allocations and future investments until December
11, 2000.
--------------------------------------------------------------------------------
Additions to the Fee Tables, page 2
<TABLE>
<CAPTION>
SEPARATE ACCOUNT EXPENSES
(as a percentage of Separate Account net
assets):
Administration Separate
Mortality and and Distribution Account Expense Total Separate
Fund Expense Risk Fee Fee Reimbursement Account Fee
---- ---------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C>
NORTH AMERICAN FUNDS VARIABLE
PRODUCT SERIES I
North American - AG Nasdaq-100(R) 0.25% 0.75% -- 1.00%
Index Fund
North American - American Century 0.25 0.75 -- 1.00
Income & Growth Fund
North American - American Century 0.25 0.75 -- 1.00
International Growth Fund
North American - Founders Large 0.25 0.75 -- 1.00
Cap Growth Fund
North American - Founders/T. Rowe 0.25 0.75 -- 1.00
Price Small Cap Fund
North American - Putnam 0.25 0.75 -- 1.00
Opportunities Fund
North American - T. Rowe Price Blue 0.25 0.75 -- 1.00
Chip Growth Fund
North American - T. Rowe Price 0.25 0.75 -- 1.00
Health Sciences Fund
NORTH AMERICAN FUNDS VARIABLE
PRODUCT SERIES II
North American - AG Aggressive 0.25 0.75 (0.25%) 0.75
Growth Lifestyle Fund
</TABLE>
<PAGE> 59
<TABLE>
<S> <C> <C> <C> <C>
North American - AG Conservative 0.25 0.75 (0.25) 0.75
Growth Lifestyle Fund
North American - AG Core Bond Fund 0.25 0.75 (0.25) 0.75
North American - AG High Yield 0.25 0.75 (0.25) 0.75
Bond Fund
North American - AG Moderate Growth 0.25 0.75 (0.25) 0.75
Lifestyle Fund
North American - AG 2 Money
Market Fund 0.25 0.75 (0.25) 0.75
North American - AG Socially 0.25 0.75 (0.25) 0.75
Responsible Fund
North American - AG Strategic 0.25 0.75 (0.25) 0.75
Bond Fund
North American - Goldman Sachs 0.25 0.75 (0.25) 0.75
Large Cap Growth Fund
North American International Growth 0.25 0.75 (0.25) 0.75
Fund
North American - INVESCO MidCap 0.25 0.75 (0.25) 0.75
Growth Fund
North American - J.P. Morgan Small 0.25 0.75 (0.25) 0.75
Cap Growth Fund
North American Small Cap Value 0.25 0.75 (0.25) 0.75
Fund
North American - State Street Large 0.25 0.75 (0.25) 0.75
Cap Value Fund
North American - Neuberger Berman 0.25 0.75 (0.25) 0.75
MidCap Value Fund
American Century Ultra Fund 0.25 1.00 (0.21) 1.04
ARIEL INVESTMENT TRUST
Ariel Appreciation Fund 0.25 1.00 (0.25) 1.00
Ariel Fund 0.25 1.00 (0.25) 1.00
Dreyfus Basic GNMA Fund 0.25 1.00 (0.25) 1.00
EVERGREEN EQUITY TRUST
Evergreen Growth and Income Fund, 0.25 1.00 (0.25) 1.00
Class A
Evergreen Small Cap Value Fund, 0.25 1.00 (0.25) 1.00
Class A
Evergreen Value Fund, Class A 0.25 1.00 (0.25) 1.00
EVERGREEN SELECT EQUITY TRUST
Evergreen Special Equity Fund, 0.25 1.00 (0.25) 1.00
Class A
INVESCO Blue Chip Growth Fund, 0.25 1.00 (0.25) 1.00
Investor Class
Janus Adviser Worldwide Fund 0.25 1.00 (0.25) 1.00
Janus Fund 0.25 1.00 (0.25) 1.00
Lou Holland Growth Fund 0.25 1.00 (0.25) 1.00
MAS Mid Cap Growth Portfolio, 0.25 1.00 (0.25) 1.00
Advisor Class
Putnam Global Growth Fund, Class A 0.25 1.00 (0.25) 1.00
Putnam New Opportunities Fund, Class A 0.25 1.00 (0.25) 1.00
Putnam OTC & Emerging Growth Fund, Class A 0.25 1.00 (0.25) 1.00
</TABLE>
Page 2
<PAGE> 60
<TABLE>
<S> <C> <C> <C> <C>
SIT MUTUAL FUNDS
Sit Mid Cap Growth Fund 0.25 1.00 (0.25) 1.00
Sit Small Cap Growth Fund 0.25 1.00 (0.25) 1.00
Templeton Foreign Fund, Class A 0.25 1.00 (0.25) 1.00
Vanguard LifeStrategy Conservative 0.25 1.00 -- 1.25
Growth Fund
Vanguard LifeStrategy Growth Fund 0.25 1.00 -- 1.25
Vanguard LifeStrategy Moderate 0.25 1.00 -- 1.25
Growth Fund
Vanguard Long-Term Corporate Fund 0.25 1.00 (0.25) 1.00
Vanguard Long-Term Treasury Fund 0.25 1.00 (0.25) 1.00
Vanguard Wellington Fund 0.25 1.00 -- 1.25
Vanguard Windsor II Fund 0.25 1.00 -- 1.25
Warburg Pincus Small Company 0.25 1.00 (0.25) 1.00
Growth Fund, Common Class
</TABLE>
For the funds above that reflect Separate Account Expense Reimbursement (except
for Vanguard Long-Term Corporate and Treasury Funds), the Total Separate Account
Fee equals the VALIC Separate Account A mortality and expense risk fee plus the
administration and distribution fee, reduced by the Separate Account Expense
Reimbursement. Pursuant to the Separate Account Expense Reimbursement, the
charges as shown are reduced by certain payments received from the underlying
fund and/or its affiliates or distributors for administrative and shareholder
services provided by the Company. See "Fees and Charges -- Separate Account
Expense Reimbursement" in the prospectus for more information.
Vanguard Long-Term Corporate and Treasury Funds: The Total Separate Account Fee
equals the VALIC Separate Account A mortality and expense risk fee plus the
administration and distribution fee reduced by the Separate Account Expense
Reimbursement. The Separate Account Expense Reimbursement reflects a voluntary
expense reimbursement made by the Company directly to the Account Division,
which may be terminated by the Company at any time without notice.
<TABLE>
<CAPTION>
FUND ANNUAL EXPENSES
(as a percentage of Fund net assets):
Other Expenses Total Fund
Management Fees (After Expense Expenses (After
Fund (After Fee Waiver) 12b-1 Fees Waiver) Expense Waiver)
---- ------------------ ---------- -------------- ---------------
<S> <C> <C> <C> <C>
NORTH AMERICAN FUNDS VARIABLE
PRODUCT SERIES I
North American - AG Nasdaq-100(R) 0.40% -- 0.10% 0.50%
Index Fund
North American - American Century 0.77 -- 0.06 0.83
Income & Growth Fund
North American - American Century 1.00 -- 0.06 1.06
International Growth Fund
North American Core 0.80 -- 0.05 0.85
Equity Fund
North American - Founders Large 1.00 -- 0.06 1.06
Cap Growth Fund
North American - Founders/T. Rowe 0.90 -- 0.05 0.95
Price Small Cap Fund
North American - Putnam 0.95 -- 0.06 1.01
Opportunities Fund
North American - T. Rowe Price Blue 0.80 -- 0.06 0.86
Chip Growth Fund
North American - T. Rowe Price 1.00 -- 0.06 1.06
Health Sciences Fund
NORTH AMERICAN FUNDS VARIABLE
PRODUCT SERIES II
North American - AG Aggressive 0.10 -- -- 0.10
Growth Lifestyle Fund
North American - AG Conservative 0.10 -- -- 0.10
Growth Lifestyle Fund
North American - AG Core Bond Fund 0.50 -- 0.30 0.80
North American - AG High Yield 0.69 -- 0.29 0.98
Bond Fund
North American - AG Moderate Growth 0.10 -- -- 0.10
Lifestyle Fund
North American - AG 2 Money 0.24 -- 0.30 0.54
Market Fund
North American - AG Socially 0.25 -- 0.30 0.55
Responsible Fund
North American - AG Strategic Bond 0.59 -- 0.29 0.88
Fund
</TABLE>
Page 3
<PAGE> 61
<TABLE>
<S> <C> <C> <C> <C>
North American - Goldman Sachs 0.52 -- 0.29 0.81
Large Cap Growth Fund
North American International Growth 0.88 -- 0.25 1.13
Fund
North American - INVESCO MidCap 0.63 -- 0.14 0.77
Growth Fund
North American - J.P. Morgan Small 0.81 -- 0.30 1.11
Cap Growth Fund
North American Small Cap Value 0.74 -- 0.21 0.95
Fund
North American - State Street Large 0.49 -- 0.31 0.80
Cap Value Fund
North American - Neuberger Berman 0.74 -- 0.29 1.03
MidCap Value Fund
American Century Ultra Fund 1.00 -- -- 1.00
ARIEL INVESTMENT TRUST
Ariel Appreciation Fund 0.75 0.25% 0.26 1.26
Ariel Fund 0.65 0.25 0.35 1.25
Dreyfus Basic GNMA Fund 0.26 -- 1.29 1.55
EVERGREEN EQUITY TRUST
Evergreen Growth and Income Fund, 0.89 0.25 0.29 1.43
Class A
Evergreen Small Cap Value Fund, 1.00 0.25 0.42 1.67
Class A
Evergreen Value Fund, Class A 0.50 0.25 0.25 1.00
EVERGREEN SELECT EQUITY TRUST
Evergreen Special Equity Fund, 0.90 0.25 0.16 1.31
Class A
INVESCO Blue Chip Growth Fund, Investor 0.53 0.25 0.26 1.04
Class
Janus Adviser Worldwide Fund 0.65 0.25 0.30 1.20
Janus Fund 0.65 -- 0.20 0.85
Lou Holland Growth Fund 0.85 -- 0.50 1.35
MAS Mid Cap Growth Portfolio, Advisor Class 0.50 0.25 0.13 0.88
Putnam Global Growth Fund, Class A 0.63 0.25 0.22 1.10
Putnam New Opportunities Fund, Class A 0.48 0.25 0.20 0.93
Putnam OTC & Emerging Growth Fund, Class A 0.55 0.25 0.18 0.98
SIT MUTUAL FUNDS
Sit Mid Cap Growth Fund 1.00 -- -- 1.00
Sit Small Cap Growth Fund 1.50 -- -- 1.50
Templeton Foreign Fund, Class A 0.61 0.25 0.27 1.13
Vanguard LifeStrategy Conservative 0.28 -- -- 0.28
Growth Fund
Vanguard LifeStrategy Growth Fund 0.29 -- -- 0.29
Vanguard LifeStrategy Moderate 0.29 -- -- 0.29
Growth Fund
Vanguard Long-Term Corporate 0.28 -- 0.02 0.30
Fund
Vanguard Long-Term Treasury Fund 0.25 -- 0.03 0.28
Vanguard Wellington Fund 0.28 -- 0.02 0.30
Vanguard Windsor II Fund 0.35 -- 0.02 0.37
Warburg Pincus Small Company 0.00 0.25 1.15 1.40
Growth Fund, Common Class
</TABLE>
Notes concerning the Fund Annual Expenses Table:
North American Fund Variable Product Series II: The management of the Funds
waived or reimbursed fees during the fiscal year shown. In the absence of these
waivers, management fees, other expenses and total annual portfolio operating
expenses, respectively would be: Core Bond Fund, 0.50%, 1.04% and 1.54%; High
Yield Bond Fund, 0.69%, 1.05% and 1.74%; International Growth Fund, 0.88%, 1.02%
and 1.90%; Large Cap Growth Fund, 0.52%, 0.92% and 1.44%; Large Cap Value Fund,
0.49%, 1.02% and 1.51%; Mid Cap Growth Fund, 0.63%, 1.01% and 1.64%; Mid Cap
Value Fund, 0.74%, 0.99% and 1.73%; Money Market Fund, 0.24%, 0.99% and 1.23%;
Small Cap
Page 4
<PAGE> 62
Growth Fund, 0.81%, 0.97% and 1.78%; Small Cap Value Fund, 0.74%, 1.01% and
1.75%; Socially Responsible Fund, 0.25%, 0.98% and 1.23%; and Strategic Bond
Fund, 0.59%, 1.05% and 1.64%.
North American Fund Variable Product Series II: Total Combined Operating
Expenses based on estimated total average weighted combined operating expenses
for the Aggressive Growth Lifestyle Fund is 1.04%, Conservative Growth Lifestyle
Fund is 0.95%, and Moderate Growth Lifestyle Fund is 0.98%. Estimated Total
Combined Operating Expenses of each Lifestyle Fund is based on the Total Fund
Operating Expenses of the underlying funds and the Lifestyle Funds, assuming
each Lifestyle Fund's projected asset allocation among the underlying funds is
maintained.
Dreyfus Basic GNMA Fund: During 1999, Dreyfus waived a portion of its fee so
that the effective management fee paid by the fund was 0.26%. This waiver
reflects an undertaking by Dreyfus to limit fund expenses, exclusive of taxes,
brokerage, interest on borrowings and extraordinary expenses, to 0.65%. This
undertaking may be terminated upon 90 days' notice to shareholders.
Evergreen Special Equity Fund: The Fund's investment advisor may reduce or waive
its fees or reimburse a fund for certain expenses in order to reduce expense
ratios. The Fund's investment advisor may cease these waivers or reimbursements
at any time. Including fee waivers and expense reimbursements and restating to
reflect current fees, estimated total fund operating expenses for the fiscal
year ending 6/30/2000 would be 1.31% for Class A shares.
Janus Adviser Worldwide Fund: Janus Capital has contractually agreed to waive
the Fund's total operating expenses (excluding brokerage commissions, interest,
taxes and extraordinary expenses) so that it will not exceed 1.20% until at
least July 31, 2003.
Lou Holland Growth Fund: The Investment Manager has contractually agreed to
waive its fees and reimburse other expenses of the Growth Fund to the extent
that the Fund's total operating expenses exceed 1.35%. This agreement may be
terminated only by the Fund's Board of Trustees.
Sit Mid Cap Growth Fund: The Adviser voluntarily waived 0.25% of its fee. It may
terminate this fee waiver at any time after December 31, 2000.
Templeton Asset Strategy Fund: On February 8, 2000, shareholders of the
Templeton Asset Allocation Fund approved a merger and reorganization that
combined the Templeton Asset Allocation Fund with the Templeton Global Asset
Allocation Fund, effective May 1, 2000. At the same time as the merger, the
Templeton Asset Allocation Fund changed its name to the Templeton Asset Strategy
Fund. The table shows restated total expenses for the Templeton Asset Strategy
Fund based on the new fund fees and the assets of the Templeton Asset Allocation
Fund as of December 31, 1999, and not the assets of the combined fund. However,
if the table reflected both the new fund fees and the fund's combined assets,
the fund's expenses after May 1, 2000 would be estimated as: Management Fees
0.60%, Other Expenses 0.14%, and Annual Expenses 0.74%.
Vanguard: The Vanguard LifeStrategy Funds did not incur any expenses in fiscal
year 1999. However, while the Funds are expected to operate without expenses,
shareholders in the Vanguard LifeStrategy Funds indirectly bear the expenses of
the underlying Vanguard Funds in which the Funds invest. The indirect expense
ratios that the Vanguard LifeStrategy Conservative Growth Fund, Vanguard
LifeStrategy Growth Fund, and Vanguard LifeStrategy Moderate Growth Fund
incurred for the year ended December 31, 1999 was 0.28%, 0.29% and 0.29%,
respectively.
Warburg Pincus Small Company Growth Fund: Fee waivers and expense reimbursements
or credits reduced expenses for the Fund during 1999 but may be discontinued at
any time.
EXAMPLE #1
<TABLE>
<CAPTION>
Fund 1 Year 3 years 5 Years 10 Years
---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
NORTH AMERICAN FUNDS VARIABLE
PRODUCT SERIES I
North American - AG Nasdaq-100(R) $16 $49 $ 84 $184
Index Fund
North American - American Century 19 59 101 219
Income & Growth Fund
North American - American Century 21 66 113 244
International Growth Fund
North American Core Equity Fund 19 59 102 222
North American - Founders Large 21 66 113 244
Cap Growth Fund
North American - Founders/T. Rowe 20 62 107 232
Price Small Cap Fund
North American - Putnam 21 64 110 238
Opportunities Fund
North American - T. Rowe Price Blue 19 60 103 223
Chip Growth Fund
North American - T. Rowe Price 21 66 113 244
Health Sciences Fund
</TABLE>
Page 5
<PAGE> 63
<TABLE>
<S> <C> <C> <C> <C>
NORTH AMERICAN FUNDS VARIABLE
PRODUCT SERIES II
North American - AG Aggressive 9 28 49 110
Growth Lifestyle Fund
North American - AG Conservative 9 28 49 110
Growth Lifestyle Fund
North American - AG Core Bond Fund 16 50 87 189
North American - AG High Yield 18 56 96 209
Bond Fund
North American - AG Moderate Growth 9 28 49 110
Lifestyle Fund
North American - AG 2 Money 14 42 73 161
Market Fund
North American - AG Socially 14 42 73 162
Responsible Fund
North American - AG Strategic Bond 17 53 91 198
Fund
North American - Goldman Sachs 16 51 87 190
Large Cap Growth Fund
North American International Growth 19 60 104 225
Fund
North American - INVESCO MidCap 16 49 85 186
Growth Fund
North American - J.P. Morgan Small 19 60 103 223
Cap Growth Fund
North American Small Cap Value 18 55 94 206
Fund
North American - State Street Large 16 50 87 189
Cap Value Fund
North American - Neuberger Berman 18 57 99 214
MidCap Value Fund
American Century Ultra Fund 21 65 112 241
ARIEL INVESTMENT TRUST
Ariel Appreciation Fund 23 72 123 264
Ariel Fund 23 72 123 263
Dreyfus Basic GNMA Fund 26 81 138 293
EVERGREEN EQUITY TRUST
Evergreen Growth and Income Fund, 25 77 132 281
Class A
Evergreen Small Cap Value Fund, 27 84 144 304
Class A
Evergreen Value Fund, Class A 21 64 110 237
EVERGREEN SELECT EQUITY TRUST
Evergreen Special Equity Fund, 24 73 126 269
Class A
INVESCO Blue Chip Growth Fund, 21 65 112 241
Investor Class
Janus Adviser Worldwide Fund 23 70 120 258
Janus Fund 19 59 102 222
Lou Holland Growth Fund 24 75 128 273
MAS Mid Cap Growth Portfolio, 19 60 104 225
Advisor Class
</TABLE>
Page 6
<PAGE> 64
<TABLE>
<S> <C> <C> <C> <C>
Putnam Global Growth Fund, Class A 22 67 115 248
Putnam New Opportunities Fund, Class A 20 62 106 230
Putnam OTC & Emerging Growth Fund, Class A 21 63 109 235
SIT MUTUAL FUNDS
Sit Mid Cap Growth Fund 21 64 110 237
Sit Small Cap Growth Fund 26 79 135 288
Templeton Foreign Fund, Class A 22 68 117 251
Vanguard LifeStrategy Conservative 16 50 86 187
Growth Fund
Vanguard LifeStrategy Growth 16 50 86 188
Fund
Vanguard LifeStrategy Moderate 16 50 86 188
Growth Fund
Vanguard Long-Term 14 42 73 162
Corporate Fund
Vanguard Long-Term Treasury Fund 13 42 72 159
Vanguard Wellington Fund 16 50 87 189
Vanguard Windsor II Fund 17 52 90 197
Warburg Pincus Small Company 25 76 130 278
Growth Fund, Common Class
</TABLE>
EXAMPLE #2
<TABLE>
<CAPTION>
Fund 1 Year 3 Years 5 years 10 Years
---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
NORTH AMERICAN FUNDS VARIABLE
PRODUCT SERIES I
North American - AG Nasdaq-100(R) $62 $99 $134 $184
Index Fund
North American - American Century 65 108 151 219
Income & Growth Fund
North American - American Century 68 115 163 244
International Growth Fund
North American - Core Equity Fund 66 109 152 222
North American - Founders Large 68 115 163 244
Cap Growth Fund
North American - Founders/T. Rowe 67 112 157 232
Price Small Cap Fund
North American - Putnam 67 113 160 238
Opportunities Fund
North American - T. Rowe Price Blue 66 109 153 223
Chip Growth Fund
North American - T. Rowe Price 68 115 163 244
Health Sciences Fund
NORTH AMERICAN FUNDS VARIABLE
PRODUCT SERIES II
North American - AG Aggressive 56 78 99 110
Growth Lifestyle Fund
North American - AG Conservative 56 78 99 110
Growth Lifestyle Fund
North American - AG Core Bond Fund 63 100 137 189
North American - AG High Yield 64 105 146 209
Bond Fund
North American - AG Moderate 56 78 99 110
Growth Lifestyle Fund
North American - AG 2 Money 60 92 123 161
Market Fund
North American - AG Socially 60 92 123 162
Responsible Fund
North American - AG Strategic Bond 63 102 141 198
Fund
North American - Goldman Sachs 63 100 137 190
Large Cap Growth Fund
North American International Growth 66 110 154 225
Fund
</TABLE>
Page 7
<PAGE> 65
<TABLE>
<S> <C> <C> <C> <C>
North American - INVESCO MidCap 62 99 135 186
Growth Fund
North American - J.P. Morgan Small 66 109 153 223
Cap Growth Fund
North American Small Cap Value 64 104 144 206
Fund
North American - State Street Large 63 100 137 189
Cap Value Fund
North American - Neuberger Berman 65 107 149 214
MidCap Value Fund
American Century Ultra Fund 67 114 162 241
ARIEL INVESTMENT TRUST
Ariel Appreciation Fund 70 121 173 264
Ariel Fund 69 120 173 263
Dreyfus Basic GNMA Fund 72 129 188 293
EVERGREEN EQUITY TRUST
Evergreen Growth and Income Fund, 71 125 182 281
Class A
Evergreen Small Cap Value Fund, 73 132 194 304
Class A
Evergreen Value Fund, Class A 67 113 160 237
EVERGREEN SELECT EQUITY TRUST
Evergreen Special Equity Fund, 70 122 176 269
Class A
INVESCO Blue Chip Growth Fund, 67 114 162 241
Investor Class
Janus Adviser Worldwide Fund 69 119 170 258
Janus Fund 66 109 152 222
Lou Holland Growth Fund 70 123 178 273
MAS Mid Cap Growth Portfolio, 66 110 154 225
Advisor Class
Putnam Global Growth Fund, Class A 68 116 165 248
Putnam New Opportunities Fund, Class A 66 111 156 230
Putnam OTC & Emerging Growth Fund, Class A 67 113 159 235
SIT MUTUAL FUNDS
Sit Mid Cap Growth Fund 67 113 160 237
Sit Small Cap Growth Fund 72 127 185 288
Templeton Foreign Fund, Class A 68 117 167 251
Vanguard LifeStrategy Conservative 63 99 136 187
Growth Fund
Vanguard LifeStrategy Growth 63 100 136 188
Fund
Vanguard LifeStrategy Moderate 63 100 136 188
Growth Fund
Vanguard Long-Term Corporate 60 92 123 162
Fund
Vanguard Long-Term Treasury Fund 60 92 122 159
Vanguard Wellington Fund 63 100 137 189
Vanguard Windsor II Fund 63 102 140 197
Warburg Pincus Small Company 71 125 180 278
Growth Fund, Common Class
</TABLE>
SUMMARY (OF INVESTMENT OBJECTIVES), PAGE 7
North American Funds Variable Product Series I:
North American - AG Nasdaq-100(R) Index Fund
The Fund seeks long-term capital growth through investments in the stocks that
are included in the Nasdaq-100 Index(R).
Adviser: American General Advisers, a division of VALIC
Sub-Adviser: American General Investment Management, L.P.
North American - American Century Income & Growth Fund
The Fund seeks dividend growth, current income and capital appreciation by
investing in common stocks. Current income is a secondary consideration.
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Adviser: American General Advisers
Sub-Adviser: American Century Investment Management, Inc.
North American - American Century International Growth Fund
The Fund seeks capital growth through investments primarily in equity securities
of issuers in developed foreign countries.
Adviser: American General Advisers
Sub-Adviser: American Century Investment Management, Inc.
North American - Founders Large Cap Growth Fund
The Fund seeks long-term growth of capital. The Fund normally will invest at
least 65% of its total assets in common stocks of well-established, high-quality
growth companies.
Adviser: American General Advisers
Sub-Adviser: Founders Asset Management LLC
North American - Founders/T. Rowe Price Small Cap Fund
The Fund seeks to provide long-term capital growth by investing primarily in the
stocks of small companies. It will invest at least 65% of its total assets in
stocks of small companies.
Adviser: American General Advisers
Co-Sub-Advisers: Founders Asset Management LLC and T. Rowe Price Associates,
Inc.
North American - Putnam Opportunities Fund
The Fund seeks capital appreciation through investments in common stocks. It
invests mainly in common stocks of large U.S. companies, with a focus on growth
stocks (those the manager believes whose earnings will grow faster than the
economy, with a resultant price increase).
Adviser: American General Advisers
Sub-Adviser: Putnam Investment Management, Inc.
North American - T. Rowe Price Blue Chip Growth Fund
The Fund seeks long-term capital growth. Income is a secondary objective. The
Fund pursues long-term capital appreciation by normally investing at least 65%
of total assets in the common stocks of large and medium-sized blue chip growth
companies.
Adviser: American General Advisers
Sub-Adviser: T. Rowe Price Associates, Inc.
North American - T. Rowe Price Health Sciences Fund
The Fund seeks long-term capital growth. The Fund pursues long-term capital
appreciation by normally investing at least 65% of total assets in the common
stocks of companies engaged in the research, development, production, or
distribution of products or services related to health care, medicine, or the
life sciences (collectively termed "health sciences").
Adviser: American General Advisers
Sub-Adviser: T. Rowe Price Associates, Inc.
North American Funds Variable Product Series II:
North American - AG Aggressive Growth Lifestyle Fund
The Fund seeks growth through investments in a combination of the North American
Funds Variable Product Series I or II Funds (primarily the equity funds).
Adviser: American General Advisers
North American - AG Conservative Growth Lifestyle Fund
The Fund seeks current income and low to moderate growth of capital through
investments in North American Funds Variable Product Series I or II Funds.
Adviser: American General Advisers
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<PAGE> 67
North American - AG Core Bond Fund
The Fund seeks the highest possible total return consistent with conservation of
capital through investment in medium to high quality fixed income securities.
Adviser: American General Advisers
Sub-Adviser: American General Investment Management, L.P.
North American - AG High Yield Bond Fund
The Fund seeks the highest possible total return and income consistent with
conservation of capital through investment in a diversified portfolio of high
yielding high risk fixed income securities.
Adviser: American General Advisers
Sub-Adviser: American General Investment Management, L.P.
North American - AG Moderate Growth Lifestyle Fund
The Fund seeks growth and current income through investments in North American
Funds Variable Product Series I or II Funds.
Adviser: American General Advisers
North American - AG 2 Money Market Fund
The Fund seeks liquidity, protection of capital and current income through
investments in short-term money market instruments.
Adviser: American General Advisers
North American - AG Socially Responsible Fund
The Fund seeks growth of capital through investment primarily in equity
securities in companies which meet the social criteria established for the Fund.
Adviser: American General Advisers
North American - AG Strategic Bond Fund
The Fund seeks the highest possible total return and income consistent with
conservation of capital through investment in a diversified portfolio of income
producing securities.
Adviser: American General Advisers
Sub-Adviser: American General Investment Management, L.P.
North American - Goldman Sachs Large Cap Growth Fund
The Fund seeks long-term growth of capital through a broadly diversified
portfolio of equity securities of large cap U.S. issuers that are expected to
have better prospects for earnings growth than the growth rate of the federal
domestic economy. Dividend income is a secondary objective.
Adviser: American General Advisers
Sub-Adviser: Goldman Sachs Asset Management
North American International Growth Fund
The Fund seeks long-term capital appreciation by investing in equity securities
of non-U.S. companies, the majority of which are expected to be in developed
markets. The Fund may invest across the capitalization spectrum, although it
intends to emphasize smaller capitalization stocks.
Adviser: American General Advisers
Sub-Adviser: Thompson, Siegel & Walmsley, Inc.
North American - INVESCO MidCap Growth Fund
The Fund seeks capital appreciation principally through investments in medium
capitalization equity securities, such as common and preferred stocks and
securities convertible into common stocks.
Adviser: American General Advisers
Sub-Adviser: INVESCO Funds Group, Inc.
North American - J.P. Morgan Small Cap Growth Fund
The Fund seeks long-term growth from a portfolio of equity securities of small
capitalization growth companies.
Adviser: American General Advisers
Sub-Adviser: J.P. Morgan Investment Management Inc.
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North American Small Cap Value Fund
The Fund seeks maximum long-term return consistent with reasonable risk to
principal by investing primarily in equity securities of small capitalization
companies in terms of revenues and/or market capitalization.
Adviser: American General Advisers
Sub-Adviser: Fiduciary Management Associates, Inc.
North American - State Street Large Cap Value Fund
The Fund seeks total returns that exceed over time the Russell 1000(R)Value
Index through investments in equity securities.
Adviser: American General Advisers
Sub-Adviser: State Street Global Advisors
North American - Neuberger Berman MidCap Value Fund
The Fund seeks capital growth through investment in equity securities of medium
capitalization companies using a value-oriented investment approach.
Adviser: American General Advisers
Sub-Adviser: Neuberger Berman Management Inc.
American Century Ultra Fund
The Fund seeks capital growth through investments primarily in common stocks
that are considered to have better-than-average prospects for appreciation.
Adviser: American Century Investment Management, Inc.
Ariel Investment Trust:
Ariel Appreciation Fund
The Fund seeks long-term capital appreciation by investing primarily in
medium-sized company stocks.
Adviser: Ariel Capital Management, Inc.
Ariel Fund
The Fund seeks long-term capital appreciation primarily through investment in
small company stocks.
Adviser: Ariel Capital Management, Inc.
Dreyfus Basic GNMA Fund
The Fund seeks a high level of current income as is consistent with the
preservation of capital. To pursue this goal, the Fund normally invests at least
65% of its net assets in GNMA certificates (popularly called "Ginnie Maes"),
which are guaranteed as to timely payment of principal and interest by the
Government National Mortgage Association.
Adviser: The Dreyfus Corporation
Evergreen Equity Trust:
Evergreen Growth and Income Fund
The Fund seeks capital growth in the value of its shares by investing in the
securities of companies which are temporarily undervalued in the market place
but display characteristics of growth such as high return on investment and
competitive advantage in their industry.
Adviser: Evergreen Asset Management Corporation
Evergreen Small Cap Value Fund
The Fund seeks current income and capital growth in the value of its shares by
investing in common stocks of small U.S. companies (less than $1 billion in
market capitalization).
Adviser: Evergreen Asset Management Corporation
Evergreen Value Fund
The Fund seeks long-term capital growth with current income as a secondary
objective by investing at least 75% of its assets in common stocks of medium and
large-cap U.S. companies with prospects for earning growth and dividends.
Adviser: Evergreen Asset Management Corporation
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<PAGE> 69
Evergreen Select Equity Trust:
Evergreen Special Equity Fund
The Fund seeks capital growth. It invests primarily in equity securities of U.S.
companies with small market capitalizations.
Adviser: Meridian Investment Company (a subsidiary of First Union Corporation)
INVESCO Blue Chip Growth Fund
The Fund tries to buy securities that will increase in value over the long-term;
current income is a secondary goal. The Fund invests primarily in common stocks
of large companies with market capitalizations of more than $15 billion and that
have a history of consistent earnings growth regardless of business cycles.
Adviser: INVESCO Funds Group, Inc.
Janus Adviser Worldwide Fund
The Fund seeks long-term growth of capital in a manner consistent with the
preservation of capital. It invests primarily in common stocks of companies of
any size throughout the world.
Adviser: Janus Capital Corporation
Janus Fund
The Fund seeks long-term growth of capital in a manner consistent with the
preservation of capital. It invests primarily in common stocks selected for
their growth potential. Although the Fund can invest in companies of any size,
it generally invests in larger, more established companies.
Adviser: Janus Capital Corporation
Lou Holland Growth Fund
The Fund primarily seeks long-term growth of capital. The receipt of dividend
income is a secondary consideration. It invests primarily in common stocks of
growth companies.
Adviser: Holland Capital Management, L.P.
MAS Mid Cap Growth Portfolio
The Portfolio seeks long-term capital growth. It invests primarily in common
stocks of companies with capitalizations in the range of companies included in
the S&P MidCap 400 Index.
Adviser: Miller Anderson & Sherrerd, LLP
Putnam Global Growth Fund
The Fund seeks capital appreciation. Current income is only an incidental
consideration in selecting investments for the Fund. The Fund is designed for
investors seeking above-average capital growth potential through a globally
diversified portfolio of common stocks. Dividend and interest income is only an
incidental consideration.
Adviser: Putnam Investment Management, Inc.
Putnam New Opportunities Fund
The Fund seeks long-term capital appreciation. Current income is only an
incidental consideration. The Fund invests principally in common stocks of
companies in sectors of the economy which the Fund's investment adviser believes
possess above-average long-term growth potential.
Adviser: Putnam Investment Management, Inc.
Putnam OTC & Emerging Growth Fund
The Fund seeks capital appreciation by investing primarily in common stocks
traded in the over-the-counter market and common stocks of emerging growth
companies listed on securities exchanges. The Fund is designed for investors
willing to assume above-average risk in return for above-average capital growth
potential.
Adviser: Putnam Investment Management, Inc.
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Sit Mutual Funds:
Sit Mid Cap Growth Fund
The Fund seeks to maximize long-term capital appreciation. It invests at least
65% of its total assets in the common stocks of growth companies with
capitalizations of $2 billion to $15 billion at the time of purchase.
Adviser: Sit Investment Management, Inc.
Sit Small Cap Growth Fund
The Fund seeks to maximize long-term capital appreciation. It invests at least
65% of its total assets in common stocks of small growth companies with
capitalizations of $2.5 billion or less at the time of purchase.
Adviser: Sit Investment Management, Inc.
Templeton Foreign Fund
The Fund seeks long-term capital growth by investing primarily in the equity
securities of companies outside the U.S., including emerging markets.
Adviser: Templeton Global Advisors Limited
Vanguard LifeStrategy Conservative Growth Fund
The Fund seeks current income and low-to-moderate growth of capital by investing
in a relatively fixed combination of other Vanguard funds.
Adviser: Vanguard
Vanguard LifeStrategy Growth Fund
The Fund seeks growth of capital by investing in a relatively fixed combination
of other Vanguard funds.
Adviser: Vanguard
Vanguard LifeStrategy Moderate Growth Fund
The Fund seeks growth of capital and a reasonable level of current income by
investing in a relatively fixed combination of other Vanguard funds.
Adviser: Vanguard
Vanguard Long-Term Corporate Fund
The Fund seeks a high level of current income consistent with the maintenance of
principal and liquidity by investing in a diversified portfolio of investment
grade corporate and Government bonds.
Adviser: Wellington Management Company, LLP
Vanguard Long-Term Treasury Fund
The Fund seeks a high level of current income consistent with the maintenance of
principal and liquidity by investing at least 85% of its total assets in
long-term securities backed by the full faith and credit of the U.S. Government.
Adviser: Vanguard
Vanguard Wellington Fund
The Fund seeks to conserve capital and provide moderate long-term growth in
capital and income by investing approximately 60% to 70% of its assets in
dividend-paying stocks of established, large- and medium-sized companies that,
in the adviser's opinion, are undervalued but whose prospects are improving. The
remaining 30% to 40% of assets are invested primarily in high-quality,
longer-term corporate bonds with some exposure to U.S. Treasury, government
agency, and mortgage-backed bonds.
Adviser: Wellington Management Company, LLP
Vanguard Windsor II Fund
The Fund seeks to provide long-term growth of capital by investing mainly in the
equity securities of large and medium-size companies whose stocks are considered
by the Fund's advisers to be undervalued and out of favor with investors. The
Fund's secondary objective is to provide some dividend income.
Advisers: Vanguard; Barrow, Hanley, Mewhinney, & Strauss, Inc.; Equinox Capital
Management LLC; Tukman Capital Management, Inc.
Warburg Pincus Small Company Growth Fund
The Fund seeks capital growth by investing in the equity securities of small
U.S. companies.
Adviser: Credit Suisse Asset Management, LLC
Portfolio Director Supplement
11/1/2000
Page 13
