<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 3, 2000
--------------------------------------------------------------------------------
REGISTRATION NOS. 333- /811-3240
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
-----------------------------------
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
Post Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 67 [X]
-----------------------------------
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A
(EXACT NAME OF REGISTRANT)
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
2929 ALLEN PARKWAY, HOUSTON, TEXAS 77019
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(713) 831-1230
(DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE)
-----------------------------------
PAULETTA P. COHN, ESQ.
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
2929 ALLEN PARKWAY, HOUSTON, TEXAS 77019
(NAME AND ADDRESS OF AGENT FOR SERVICE)
-----------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AT THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a)
MAY DETERMINE.
<PAGE>
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A
POTENTIA
FORM N-4
UNDER
THE SECURITIES ACT OF 1933 AND
THE INVESTMENT COMPANY ACT OF 1940
-----------------------------------
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
ITEM NO. PROSPECTUS CAPTION
PART A
<C> <S> <C>
1. Cover Page...................................... Cover Page
2. Definitions..................................... About the Prospectus
3. Synopsis........................................ Fee Table
4. Condensed Financial Information................. Selected Purchase Unit Data
5. General Description of Registrant, Depositor Summary, General Information, Variable Account
and Portfolio Companies......................... Options
6. Deductions and Expenses......................... Fees and Charges, Surrender of Account Value
7. General Description of Variable Annuity......... Transfers Between Investment Options, Purchase
Period, Payout Period, Surrender of Account Value,
Other Contract Features
8. Annuity Period.................................. Payout Period
9. Death Benefit................................... Death Benefit
10. Purchase and Contract Value..................... Fees and Charges, Purchase Period
11. Redemptions..................................... Surrender of Account Value
12. Taxes........................................... Federal Tax Matters
13. Legal Proceedings............................... Not Applicable
14. Table of Contents of the Statement of Contents of Statement of Additional Information
Additional Information..........................
PART B
15. Cover Page...................................... Cover Page
16. Table of Contents............................... Table of Contents
17. General Information and History................. General Information
18. Services........................................ Experts; Distribution of Variable Annuity Contracts
19. Purchase of Securities Being Offered............ Purchase Unit Value
20. Underwriters.................................... Distribution of Variable Annuity Contracts
21. Calculation of Performance Data................. Performance Calculations
22. Annuity Payments................................ N/A
23. Financial Statements............................ Financial Statements
</TABLE>
PART C
Information required to be set forth in Part C is set forth under the
appropriate item, so numbered, in Part C of the Registration Statement.
<PAGE>
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
UNITS OF INTEREST UNDER GROUP
FIXED AND VARIABLE ANNUITY CONTRACTS
POTENTIA(R)
SEPARATE ACCOUNT A
_______________, 2000
PROSPECTUS
The Variable Annuity Life Insurance Company ("VALIC") offers certain Series of
Potentia that consist of unallocated group annuity contracts (the "Contracts")
to certain employer sponsored retirement plans. Potentia is available to
Participants in retirement programs that qualify for deferral of federal income
taxes.
Potentia permits Participants to invest in and receive retirement benefits in a
Fixed Account Option and/or an array of Variable Account Options described in
this prospectus. Not all Variable Account Options are available under each
employer's retirement program.
--------------------------------------------------------------------------------
VALIC is a member of the Insurance Marketplace Standards Association ("IMSA").
IMSA is a voluntary membership organization created by the life insurance
industry to promote ethical market conduct for individual life insurance and
annuity products. VALIC's membership in IMSA applies to VALIC only and not to
its products or affiliates.
This prospectus provides information the plan and plan Participants should know
before investing in Potentia. This prospectus is accompanied by the current
prospectuses for the mutual fund options described in this prospectus. Please
read and retain each of these prospectuses for future reference.
A Statement of Additional Information, dated ___________, 2000 contains
additional information about Potentia and is part of this prospectus. Contract
owners may obtain a free copy by calling 1-800-44-VALIC. Participants should
contact their Plan's Administrator. The Statement of Additional Information has
been filed with the Securities and Exchange Commission ("SEC") and is available
along with other related materials at the SEC's internet web site
(http://www.sec.gov).
INVESTMENT IN THE CONTRACTS IS SUBJECT TO RISK THAT MAY CAUSE THE VALUE OF THE
OWNER'S INVESTMENT TO FLUCTUATE, AND WHEN THE CONTRACTS ARE SURRENDERED, THE
VALUE MAY BE HIGHER OR LOWER THAN THE PURCHASE PAYMENTS.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-1-
<PAGE>
<TABLE>
<S> <C>
About the Prospectus........................................ -4-
Fee Table................................................... -5-
Contract Owner/Participant Expenses....................... -5-
Separate Account Charge................................... -5-
Fund Annual Expenses...................................... -5-
Summary..................................................... -8-
FIXED AND VARIABLE OPTIONS................................ -8-
TRANSFERS................................................. -11-
FEES AND CHARGES.......................................... -11-
PAYOUT OPTIONS............................................ -12-
FEDERAL TAX INFORMATION................................... -12-
PURCHASE REQUIREMENTS..................................... -12-
Selected Purchase Unit Data............................... -12-
General Information......................................... -12-
About Potentia............................................ -12-
About VALIC............................................... -13-
About VALIC Separate Account A............................ -13-
Distribution of the Contracts............................. -14-
Variable Account Options.................................... -14-
Purchase Period............................................. -15-
Purchase Payments......................................... -15-
Purchase Units............................................ -15-
Calculation of Purchase Unit Value........................ -16-
Choosing Investment Options............................... -16-
Potentia General Account.................................. -17-
Variable Account Options.................................. -18-
Stopping Purchase Payments................................ -19-
Transfers Between Investment Options........................ -19-
During the Purchase Period................................ -19-
During the Payout Period.................................. -19-
Effective Date of Transfer................................ -19-
Market Timing............................................. -20-
Fees and Charges............................................ -20-
Premium Tax Charge........................................ -20-
Separate Account Charges.................................. -21-
</TABLE>
-2-
<PAGE>
<TABLE>
<S>......................................................... <C>
Fund Annual Expense Charges............................... -21-
Other Tax Charges......................................... -21-
Market Value Adjustment................................... -21-
Payout Period............................................... -22-
Surrender of Account Value................................ -22-
When Surrenders Are Allowed............................... -22-
Surrender Restrictions.................................... -22-
Partial Surrenders........................................ -23-
Death Benefits.............................................. -23-
How to Review Investment Performance of Separate
Account Divisions.......................................... -24-
Types of Investment Performance Information Advertised.... -24-
Total Return Performance Information...................... -24-
Yield Performance Information............................. -26-
Other Contract Features..................................... -26-
Changes That May Not Be Made.............................. -26-
Relationship to Employer's Plan........................... -27-
Voting Rights............................................... -27-
Who May Give Voting Instructions.......................... -27-
Determination of Fund Shares Attributable to
Your Account............................................. -27-
Federal Tax Matters......................................... -28-
Type of Plans............................................. -28-
Tax Consequences in General............................... -28-
Effect of Tax-Deferred Accumulations...................... -29-
</TABLE>
-3-
<PAGE>
ABOUT THE PROSPECTUS
________________________________________________________________________________
Unless otherwise specified in this prospectus, the words we, our, Company, and
VALIC mean The Variable Annuity Life Insurance Company. The term Participant
refers to the individual for whom Purchase Payments are made.
We will use a number of other specific terms in this prospectus. We will, when
that term is used in the prospectus, provide you with a definition of that term.
The terms used in this prospectus for which we will provide you a definition
are:
Defined Terms Page No.
------------- --------
Account Value
Annuitant
Contract Owner
Divisions
Home Office
Mutual Fund or Fund
Participant
Payout Period
Payout Unit
Plan
Potentia General Account
Purchase Payments
Purchase Period
Purchase Unit
VALIC Separate Account A
Variable Account Options
This prospectus is being provided to help Participants make decisions for
selecting various investment options and benefits to plan and save for their
retirement. It is intended to provide information about VALIC, Potentia, and
saving for retirement. Most Participant rights described in this prospectus may
be exercised by contacting the Plan's administrator or another Plan
representative, rather than contacting VALIC directly. This helps ensure
compliance with your employer's plan ("Plan").
The purpose of Variable Account Options is to provide investment returns which
are greater than the effects of inflation. We cannot, however, guarantee that
this purpose will be achieved.
This prospectus describes a contract in which units of interest in VALIC's
Separate Account A are offered. Potentia will allow Participants to accumulate
retirement dollars in the Potentia General Account and/or Variable Account
Options. This prospectus describes only the variable aspects of
-4-
<PAGE>
Potentia except where the Potentia General Account is specifically mentioned.
For specific information about the Variable Account Options, Participants should
refer to the mutual fund prospectuses. Participants should keep all
prospectuses to help answer any questions they may have in the future.
Following this introduction is a summary of the major features and options of
Potentia. It is intended to provide a brief overview of those sections
discussed in more detail in this prospectus.
FEE TABLE
-----------------------------------------------------------------------------
CONTRACT OWNER/PARTICIPANT EXPENSES(1)
Maximum Surrender Charge 0.00%
Account Maintenance Fee $ 0
SEPARATE ACCOUNT CHARGE 1.45%
(as a percentage of Separate Account net assets):
FUND ANNUAL EXPENSES
(as a percentage of net assets):
<TABLE>
<CAPTION>
MANAGEMENT OTHER
FEE EXPENSES TOTAL FUND
(AFTER FEE 12B-1 (AFTER EXPENSE EXPENSES (AFTER
FUND WAIVER) FEES WAIVERS) (2) EXPENSE WAIVER)
---- ---------- ----- ------------ ---------------
<S> <C> <C> <C> <C>
North American - AG Growth & Income Fund
North American - AG MidCap Index Fund
North American - AG1 Money Market Fund
North American - T. Rowe Price Science &
Technology Fund
North American - AG Small Cap Index Fund
North American - AG Social Awareness Fund
North American - AG Stock Index Fund
North American - AG Aggressive Growth
Lifestyle Fund /(3)/
American Century Ultra Fund /(4)/
</TABLE>
-5-
<PAGE>
North American - AG Conservative
Growth Lifestyle Fund /(3)/
North American - AG Core Bond Fund /(3)/
Janus Adviser Worldwide Fund
North American - Goldman Sachs Large Cap
Growth Fund /(5)/
North American - AG Moderate Growth
Lifestyle Fund /(3)/
North American - J. P. Morgan Small Cap
Growth Fund /(5)/
North American - AG Strategic Bond Fund /(5)/
Putnam Global Growth Fund - Class A Shares
Putnam New Opportunities Fund -Class A
Shares
Putnam OTC & Emerging Growth Fund -
Class A Shares
(1) Premium taxes are not shown here, but may be charged by some states. See:
"Premium Tax Charge" in this prospectus.
(2) Other Expenses includes custody, accounting, reports to shareholders,
audit, legal, administrative and other miscellaneous expenses. See each
Fund's prospectus for a detailed explanation of these fees.
(3) Total Combined Operating Expenses based on estimated total average weighted
combined operating expenses for the North American -AG Aggressive Growth
Lifestyle Fund is ___%, for North American - AG Conservative Growth
Lifestyle Fund is ____ %, for North American - AG Growth Lifestyle Fund
____ % and for North American - AG Moderate Growth Lifestyle Fund ___%.
Estimated Total Combined Operating Expenses of each North American - AG
Lifestyle Fund is based on the Total Fund Operating Expenses of the
underlying North American - AG Funds and the North American - AG Lifestyle
Funds, assuming each North American - AG Lifestyle Fund's projected asset
allocation among the underlying North American - AG Funds is maintained.
(4) The American Century Ultra Fund was formerly known as the American Century
Twentieth Century Ultra Fund.
(5) In the absence of management fee waiver, other expense waiver and total
annual portfolio operating expense waiver, management fees, other expenses
and total annual portfolio operating expenses, respectively would be: North
American - AG Core Bond Fund, ___%, ___% and %; North American - Goldman
Sachs Large Cap Growth Fund, ___%, ___ % and ___%; North American - J. P.
Morgan Small Cap Growth Fund,____ %, ____% and %; and North American - AG
Strategic Bond Fund, ___%, ____ % and ___%.
-6-
<PAGE>
EXAMPLE
________________________________________________________________________________
Total Expenses. You would pay the following expenses on a $1,000 investment
under a typical Potentia Contract invested in a single Separate Account Division
as listed below, assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
North American - AG Growth & Income Fund
North American - AG MidCap Index Fund
North American - AG1 Money Market Fund
North American - T. Rowe Price Science & Technology Fund
North American - AG Small Cap Index Fund
North American - AG Social Awareness Fund
North American - AG Stock Index Fund
North American - AG Aggressive Growth
Lifestyle Fund
American Century Ultra Fund
North American - AG Conservative
Growth Lifestyle Fund
North American - AG Core Bond Fund
Janus Adviser Worldwide Fund
North American - Goldman Sachs Large Cap Growth Fund
North American - AG Moderate Growth Lifestyle Fund
North American - J.P. Morgan Small Cap Growth Fund
North American - AG Strategic Bond Fund
Putnam Global Growth Fund - Class A Shares
Putnam New Opportunities Fund -Class A Shares
Putnam OTC & Emerging Growth Fund - Class A Shares
</TABLE>
Note: These examples should not be considered representations of past or future
expenses for VALIC Separate Account A or for any Fund. Actual expenses may be
greater or less than those shown above. Similarly, the 5% annual rate of return
assumed in the examples is not an estimate or guarantee of future investment
performance. The purpose of the Fee Table above is to help Contract Owners and
Participants understand the various expenses of VALIC Separate Account A and the
Funds which are, in effect, passed on to the Contract Owners and Participants.
This Fee Table shows all charges and expenses which may be deducted from the
assets of VALIC Separate Account A and from the Funds in which VALIC Separate
Account A invests. For a further description of these charges and expenses, see
"Fees and Charges" in this prospectus and the descriptions of fees and charges
in each of the Fund's prospectuses. Any and all limitations on total charges
and expenses are reflected in this Fee Table.
-7-
<PAGE>
SUMMARY
________________________________________________________________________________
Potentia is VALIC's combination fixed and variable annuity that offers
Participants a wide choice of investment options and flexibility. A summary of
Potentia's major features is presented below. For a more detailed discussion of
Potentia, please read the entire prospectus carefully.
FIXED AND VARIABLE OPTIONS
Potentia offers a choice from among 19 Variable Account Options. Depending upon
the selection made by a plan, all of the Variable Account Options described
below may not be available within a single contract. An employer's retirement
program will describe which Variable Account Options are available to
Participants. Potentia also offers a Potentia General Account.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
FIXED ACCOUNT
OPTIONS
-------------------------------------------------------------------------------------------------------------------------------
FIXED Potentia General
OPTION Account
-------------------------------------------------------------------------------------------------------------------------------
VARIABLE ACCOUNT INVESTMENT ADVISER SUB-ADVISER
OPTIONS OBJECTIVE
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INDEX EQUITY FUNDS North American Seeks growth of capital through investments VALIC N/A(1)
-AG MidCap primarily in a diversified portfolio of
Index common stocks that, as a group are expected
Fund*(1)(2) to provide investment results closely
corresponding to the performance of the
Standard & Poor's MidCap 400/(R)/Index.
------------------------------------------------------------------------------------------------
North American Seeks growth of capital through investment VALIC N/A(1)
-AG Small Cap primarily in a diversified portfolio of
Index Fund*(2) common stocks that, as a group, are expected
to provide investment results closely
corresponding to the performance of the
Russell 2000/(R)/ Index.
------------------------------------------------------------------------------------------------
North American Seeks long-term capital growth through VALIC N/A
-AG Investment in common Stocks that, as a group
Stock Index are expected to provide investment option
Fund /(2)/ results closely corresponding to the
performance of the Standard & Poor's 500
Stock Index /(R)/.
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* A series of North American Variable Product Series I (NAVPS I)
** A series of North American Variable Product Series II (NAVPS II)
1) Bankers Trust Company ("Bankers Trust") previously served as sub-adviser to
the North American - AG MidCap Index Fund, the North American - AG Small
Cap Index Fund and the North American - AG Stock Index Fund. VALIC re-
assumed direct management of each Fund's investment portfolio on October 1,
1999.
(2) "Standard & Poor's /(R/)", "S&P(R)", "S&P 500(R)" and "S&P MidCap 400
/(R)/" are trademarks of Standard and Poor's ("S&P"). North American - AG
Mid Cap Index Fund and North American - AG Stock Index Fund are not
sponsored, endorsed, sold or promoted by S&P and S&P makes no
representation regarding the advisability of investing in those Funds. The
Russell 2000 /(R)/ Index is a trademark/servicemark of Frank Russell Trust
Company. Russell /(TM)/ is a trademark of the Frank Russell Company.
-8-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
SUMMARY (CONTINUED)
______________________________________________________________________________________________________________________________
ACTIVELY AGSPC Growth & Seeks, long-term growth of capital and, VALIC N/A
MANAGED Income Fund* secondarily, current income through
FUNDS investment in common stocks and
equity-related securities.
------------------------------------------------------------------------------------------------
Seeks capital growth through investments American N/A
American primarily in common stocks that are Century
Century Ultra considered to have better-than-average Investment
Fund prospects for appreciation. Management,
Inc.
------------------------------------------------------------------------------------------------
Janus Adviser Seeks long-term growth of capital in a Janus Capital N/A
Worldwide Fund manner consistent with preservation of
capital.
------------------------------------------------------------------------------------------------
North American Seeks long-term growth of capital through a VALIC Goldman
-Goldman broadly diversified portfolio of equity Sachs Asset
SachsLarge Cap securities of large cap U.S. issuers that Management
Growth Fund** are expected to have better prospects for
earnings growth than the growth rate of the
general domestic economy. Dividend income
is a secondary objective.
===============================================================================================================================
VARIABLE ACCOUNT INVESTMENT ADVISER SUB-ADVISER
OPTIONS OBJECTIVE
-------------------------------------------------------------------------------------------------------------------------------
North American - Seeks long-term growth from a portfolio of VALIC J.P. Morgan
J. P. Morgan equity securities of small capitalization Investment
Small Cap Growth growth companies Management,
Fund** Inc.
-------------------------------------------------------------------------------------------------------------------------------
Putnam Global Seeks capital appreciation. Current Putnam N/A
Growth Fund - income is only an incidental consideration Investment
Class A Shares in selecting investments for the Fund. Management, Inc.
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.
--------------------------------------------------------------------------------------------------------------------------------
Putnam New Seeks long-term capital appreciation. Putnam N/A
Opportunities Current income is only an incidental Investment
Fund - Class A consideration. The Fund invests Management, Inc.
Shares 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.
--------------------------------------------------------------------------------------------------------------------------------
Putnam OTC & Seeks capital appreciation by investing Putnam N/A
Emerging Growth primarily in common stocks traded in the Investment
Fund - Class A over-the-counter market and common stocks Management, Inc.
Shares 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.
--------------------------------------------------------------------------------------------------------------------------------
INCOME FUNDS North American Seeks the highest possible total return VALIC American
-AG Core Bond consistent with conservation of capital General
Fund** through investment in medium to high Investment
quality fixed income securities. Management,
L.P.
--------------------------------------------------------------------------------------------------------------------------------
North American Seeks the highest possible total return VALIC American
-AG Strategic and income consistent with conservation of General
Bond Fund** capital through investment in a Investment
diversified portfolio of income producing Management,
securities. Inc.
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-9-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------------------
SPECIALTY FUNDS North American Seeks long-term growth of capital through VALIC T. Rowe
-T. Rowe Price investment primarily in the common stocks Price
Science & and equity-related securities of companies Associates,
Technology Fund* that are expected to benefit from the Inc.
development, advancement and use of
science and technology.
--------------------------------------------------------------------------------------------------------------------------------
North American Seeks growth of capital through VALIC N/A
-AG Social investment, primarily in common stocks, in
Awareness Fund* companies which meet the social criteria
established for the Fund.
--------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS North American Seeks liquidity, protection of capital VALIC N/A
-AG1 Money Market and current income through investments
Fund* in short-term money market instruments.
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* A series of NAVPS I
** A series of NAVPS II
-10-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
SUMMARY (CONTINUED)
________________________________________________________________________________________________________________________________
VARIABLE ACCOUNT INVESTMENT OBJECTIVE ADVISER SUB-ADVISER
OPTIONS
---------------------------------------------------------------------------------------------------------------------------------
LIFESTYLE North American Seeks growth through investment in NAVPS I or NAVPS II Funds. VALIC N/A
FUNDS Aggressive Growth This fund is suitable for investors seeking the potential for capital
Lifestyle Funds** growth that a fund investing predominately in equity securities may
offer.
---------------------------------------------------------------------------------------------------------------------------------
North American - Seeks growth through investments VALIC N/A
AG Lifestyle
Fund**
---------------------------------------------------------------------------------------------------------------------------------
North American - Seeks growth and current income through investments in NAVPS I `
AG Moderate or NAVPS II Funds.
Growth Lifestyle
Fund**
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
** A series of North American Variable Product Series II (NAVPS II)
A detailed description of the investment objective of each Mutual Fund can be
found in the current prospectus for each Fund mentioned.
TRANSFERS
There is no charge to transfer money among Potentia's investment options.
Account Values may be transferred between Variable Account Options or between a
Variable Account Options and the Potentia General Account at any time during the
Purchase Period (please see the "Purchase Period" section in the Prospectus.).
Transfers can be made by the Plan or its administrator contacting our Home
Office. For more information on account transfers, see the "Transfers Between
Investment Options" section in the prospectus.
LOANS
Although deferred annuity contracts often can be purchased with after-tax
dollars, the Potentia contract is offered primarily in conjunction with
retirement programs which receive favorable tax treatment under federal law.
For a more detailed discussion of these income tax provisions, see the "Federal
Tax Matters" section of the prospectus and of the Statement of Additional
Information.
FEES AND CHARGES
PREMIUM TAX CHARGE
Premium taxes ranging from zero to 3 1/2% are currently imposed by certain
states and municipalities on Purchase Payments made under the contract.
-11-
<PAGE>
SEPARATE ACCOUNT CHARGES
An annual separate account charge will be assessed at an aggregate annualized
rate of 1.45% on the average daily net asset value of VALIC Separate Account A.
More information on Fees may be found in the prospectus under the headings "Fees
and Charges" and "Fee Table."
PAYOUT OPTIONS
Amounts payable under this contract to Participants may be used to buy an
annuity in any form then offered by VALIC. VALIC will use its applicable
settlement option rate based on a minimum 3% assumed interest rate and the
latest group annuity mortality table approved for use in the state where the
contract is issued. More information on payout options can be found in the
"Payout Period" section of the prospectus.
FEDERAL TAX INFORMATION
Although deferred annuity contracts often can be purchased with after-tax
dollars, the Potentia contract is offered primarily in conjunction with
retirement programs which receive favorable tax treatment under federal law.
For a more detailed discussion of these income tax provisions, see the "Federal
Tax Matters" section of the prospectus and of the Statement of Additional
Information.
PURCHASE REQUIREMENTS
Purchase Payments may be made at any time and in any amount, subject to plan
limitations. For more information on PURCHASE PAYMENTS, refer to the "Purchase
Period" section of the prospectus.
SELECTED PURCHASE UNIT DATA
________________________________________________________________________________
The Contract is a new variable annuity product; therefore, there is no selected
Purchase Unit Data available at this time.
GENERAL INFORMATION
________________________________________________________________________________
ABOUT POTENTIA
Potentia was developed to help Participants save money for their retirement. It
offers a combination of fixed and variable investment options that Participants
can invest in to help them reach their retirement savings goals. Contributions
to Potentia can come from different sources, like payroll deductions or money
transfers. The retirement savings process with Potentia will involve two stages:
the Purchase Period; and the Payout Period. The first is when Participants make
contributions into Potentia called "Purchase Payments." The second is when
Participants receive their retirement payouts. For more information, see
"Purchase Period" and "Payout Period" in this prospectus.
Participants may choose, depending upon their retirement savings goals, personal
risk tolerances, and
-12-
<PAGE>
retirement plan, to invest in the Potentia General Account and/or the Variable
Account Options described in this prospectus. The Plan can provide for
Participant retirement benefits by purchasing an annuity for them.
The Potentia contract is unallocated, which means that VALIC will not maintain
separate Participant account records and will not issue a separate contract or
certificate to the Participant. However, the Participant's interest in the
Contract, as reflected in records maintained by or on behalf of the plan
sponsor, are subject to all of the applicable restrictions under Code Section
403(b), and to plan limitations that may be more restrictive than the Code
restrictions. Most Participant rights described in this prospectus may be
exercised by contacting the Plan's administrator or another Plan representative,
rather than contacting VALIC directly. This helps ensure compliance with the
employer's Plan.
ABOUT VALIC
We were originally organized on December 21, 1955 as The Variable Annuity Life
Insurance Company of America, located in Washington, D.C. We re-organized in
the State of Texas on August 20, 1968, as The Variable Annuity Life Insurance
Company. Our main business is issuing and offering fixed and variable
retirement annuity contracts, like Potentia. Our principal offices are located
at 2929 Allen Parkway, Houston, Texas 77019. We have Regional Offices
throughout the United States.
VALIC is a member of the American General Corporation group of companies.
Members of the American General Corporation group of companies operate in each
of the 50 states, the District of Columbia, and Canada and collectively provide
financial services with activities heavily weighted toward insurance.
VALIC is a member of the Insurance Marketplace Standards Association (IMSA).
IMSA is a voluntary membership organization created by the life insurance
industry to promote ethical market conduct for individual life insurance and
annuity products. VALIC's membership in IMSA applies to VALIC only and not its
products or affiliates.
For more information about VALIC, see the Statement of Additional Information.
ABOUT VALIC SEPARATE ACCOUNT A
Money directed into Potentia's Variable Account Options will be sent through
VALIC'S Separate Account A. Money is not invested directly in the Mutual Funds
made available in Potentia. VALIC's Separate Account A invests in the Mutual
Funds on behalf of the Plan. Mutual Fund or Fund refers to the investment
portfolio(s) of a registered open-end management investment company, which
serves as the underlying investment vehicle for each Division represented in
VALIC Separate Account A. VALIC Separate Account A is made up of what we call
"Divisions." Nineteen Divisions are available and represent the Variable
Account Options in Potentia. Each of these Divisions invests in a different
Mutual Fund made available through Potentia. For example, Division [Ten]
represents and invests in the North American - AG Stock Index Fund. The
earnings (or losses) of each Division are credited to (or charged against) the
assets of that Division, and do not affect the performance of the other
Divisions of VALIC Separate Account A.
VALIC established Separate Account A on July 25, 1979 under Texas insurance law.
VALIC Separate Account A is registered with the SEC as a unit investment trust
under the Investment Company Act of 1940 ("Act"). Units of interest in VALIC
Separate Account A are registered as securities under the Securities Act of
1933.
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VALIC Separate Account A is administered and accounted for as part of VALIC's
business operations. However, the income, capital gains or capital losses,
whether or not realized of each Division of VALIC Separate Account A are
credited to or charged against the assets held in that Division without regard
to the income, capital gains or capital losses of any other Division or arising
out of any other business the Company may conduct. In accordance with the terms
of Potentia, VALIC Separate Account A may not be charged with the liabilities of
any other VALIC operation. The Texas Insurance Code requires that the assets of
VALIC Separate Account A attributable to Potentia be held exclusively for the
benefit of the contract owner, Participants, annuitants, and beneficiaries of
Potentia. When we discuss performance information in this prospectus, we mean
the performance of a VALIC Separate Account A Division.
UNITS OF INTERESTS
Investment in a Division of VALIC Separate Account A is represented by units of
interest issued by VALIC Separate Account A. On a daily basis, the units of
interest issued by VALIC Separate Account A are revalued to reflect that day's
performance of the underlying mutual fund minus any applicable fees and charges
to VALIC Separate Account A.
DISTRIBUTION OF THE CONTRACTS
American General Distributors, Inc. (the "Distributor"), an affiliate of VALIC,
acts as VALIC's Separate Account A distributor. The Distributor's address is
2929 Allen Parkway, Houston, Texas 77019. For more information about the
Distributor see "Distribution of Variable Annuity Contracts" in the Statement of
Additional Information.
VARIABLE ACCOUNT OPTIONS
_______________________________________________________________
Potentia provides nineteen Variable Account Options. The Plan may limit the
number of Variable Account Options available to its Participants to a smaller
number. Plans may also limit how many options Participants may be invested in
at any one time or how many of the options Participants are invested in may be
involved in certain transactions at any one time. See "About VALIC Separate
Account A" in this prospectus. Investment returns on Variable Account Options
may be positive or negative depending on the investment performance of the
underlying Mutual Fund.
Each individual Division represents and invests, through VALIC's Separate
Account A, in specific Mutual Funds. These Mutual Funds serve as the investment
vehicles for Potentia and include:
. North American Funds Variable Product Series I (NAVPS I) - offers 7 funds for
which VALIC serves as investment adviser and, for 1 of such funds, T. Rowe Price
Associates, Inc. serves as sub-adviser.
. North American Funds Variable Product Series II (NAVPS II) - offers 7 funds
for which VALIC serves as investment adviser. Four of those funds have one of
the following sub-advisers: American General Investment Management, L.P.,
Goldman Sachs Asset Management, or J.P. Morgan Investment Management Inc.
. American Century Mutual Funds, Inc. - offers 1 fund for which American
Century Investment Management, Inc. serves as investment adviser.
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. Putnam Investments - offers 3 funds for which Putnam Investment Management
Inc., serves as investment adviser.
. Janus Funds offers one fund for which Janus Capital serves as investment
adviser.
Five of the Mutual Funds offered through VALIC's Separate Account A are also
available to the general public.
Each of these Funds (except for the North American - AG Lifestyle Funds, which
are non-diversified Funds) is registered as a diversified open-end, management
investment company and is regulated under the Act. For complete information
about each of these Funds, including charges and expenses, you should refer to
the prospectus for that Fund. Additional copies are available from VALIC.
Shares of certain of the Funds are also sold to separate accounts of other
insurance companies that may or may not be affiliated with us. This is known as
"shared funding." These Funds may also be sold to separate accounts that act as
the underlying investments for both variable annuity contracts and variable life
insurance policies. This is known as "mixed funding." There are certain risks
associated with mixed and shared funding. These risks are discussed in each
Fund's prospectus.
PURCHASE PERIOD
________________________________________________________________________________
The Purchase Period begins when the first Participant Purchase Payment is made
and continues until that Participant begins his Payout Period. The Purchase
Period can also end for any participant when a Potentia account is surrendered
before the Payout Period. The amount, number, and frequency of Purchase
Payments is determined by the retirement plan for which Potentia was purchased.
PURCHASE PAYMENTS
Initial Purchase Payments must be received by VALIC either with, or after, a
completed Plan application. The Contract Owner or the Plan's administrator is
responsible for furnishing instructions to us (a premium flow report) as to the
amount being applied to each account option.
Purchase Payments are received in VALIC's Home Office. When an initial Purchase
Payment is accompanied or preceded by a Plan application, within 2 business
days we will:
. Accept the Application - and issue a contract;
. Reject the Application - and return the Purchase Payment; or
. Request Additional Information - to correct or complete the application.
If we receive Purchase Payments from the Plan before we receive its completed
application, we will not be able to establish a permanent account for the Plan.
Under those circumstances, we will return the Purchase Payment to the employer.
PURCHASE UNITS
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A Purchase Unit is a unit of interest owned by the Plan in a Variable Account
Option. Purchase Units apply only to the Variable Account Options selected by
the Plan. Purchase Unit values are calculated at the close of regular trading
of the New York Stock Exchange (the "Exchange"), currently 4:00 p.m. New York
time (see Calculation of Purchase Unit Value below for more information.) Once
we have established the Plan's account and have applied its initial Purchase
Payment as described above, any subsequent Purchase Payment received by Us, or
the Plan's administrator acting on our behalf, before the close of the Exchange
will be credited the same business day. If not, it will be calculated and
credited the next business day. Purchase Unit values will vary depending on the
net investment results of each of the Variable Account Options. This means the
value of the Variable Account Options will fluctuate.
CALCULATION OF PURCHASE UNIT VALUE
The Purchase Unit value for a Division is calculated as shown below:
Step 1: Calculate the gross investment rate:
Gross Investment Rate
= (equals)
The Division's investment income and capital gains and losses (whether
realized or unrealized) on that day from the assets attributable to the
Division.
/ (divided by)
The value of the Division for the immediately preceding day on
which the values are calculated.
We calculate the gross investment rate as of 4:00 p.m. New York time on each
business day when the Exchange is open.
Step 2: Calculate net investment rate for any day as follows:
Net Investment Rate
= (equals)
Gross Investment Rate (calculated in Step 1)
- (minus)
Separate Account charges and any income tax charges.
Step 3: Determine Purchase Unit Value for that day.
Purchase Unit Value for that day.
= (equals)
Purchase Unit Value for immediate preceding day.
x (multiplied by)
Net Investment Rate (as calculated in Step 2) plus 1.00.
For more information as to how Purchase Unit Values are calculated, see the
Statement of Additional Information.
CHOOSING INVESTMENT OPTIONS
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There are 20 investment options offered in Potentia. This includes the Potentia
General Account and 19 Variable Account Options. The Funds that underlie the
Variable Account Options are registered as investment companies under and are
subject to regulation of the Act. The Potentia General Account is not subject
to regulation under the Act and is not required to be registered under the
Securities Act of 1933. As a result, the SEC has not reviewed data in this
prospectus that relates to the Potentia General Account. However, federal
securities law does require such data to be accurate and complete.
POTENTIA GENERAL ACCOUNT
The Potentia General Account may be invested in either the general assets of the
Company or in a Separate Account of the Company, depending upon state
requirements. A Plan may allocate all or a portion of Participant Purchase
Payments to the Potentia General Account. All payments under Potentia are
initially allocated to the Potentia General Account, before being transferred to
the Variable Account Options as instructed. Purchase Payments allocated to the
Potentia General Account are guaranteed to earn at least a minimum rate of
interest. Interest is paid on the Potentia General Account at declared rates.
With the exception of the market value adjustment, which generally will be
applied to withdrawals after the first plan year in excess of certain amounts,
we bear the entire investment risk for the Potentia General Account. All
Purchase Payments and interest earned on such amounts in the Potentia General
Account will be paid regardless of the investment results experienced by the
Company's general assets.
Here is how you may calculate the value of your Potentia General Account during
the Purchase Period:
Value of The Potentia General Account*
= (equals)
All Purchase Payments made to the Potentia General Account
+ (plus)
Amounts transferred from Variable Account Options to the Fixed
Account Options
+ (plus)
All interest earned
(minus)
Amounts transferred or withdrawn from Potentia General Accounts
(including applicable fees and charges)
__________
* This value may be subject to a market value adjustment. See "Market Value
Adjustment" section below.
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<PAGE>
VARIABLE ACCOUNT OPTIONS
A Plan may allocate all or a portion of Participant Purchase Payments to the
Variable Account Options listed in this prospectus. A complete discussion of
each of the Variable Account Options may be found in the "Summary" and "Variable
Account Options" sections in this prospectus and in each Fund's prospectus.
Based upon a Variable Account Option's Purchase Unit Value the Plan's accounts
will be credited with the applicable number of Purchase Units. The Purchase
Unit Value of each Variable Account Option will change daily depending upon the
investment performance of the underlying fund (which may be positive or
negative) and the deduction of VALIC Separate Account A charges. See the "Fees
and Charges" section in this prospectus. Because Purchase Unit Values change
daily, the number of Purchase Units the Plan's accounts will be credited for
subsequent Purchase Payments will vary. Each Variable Account Option bears its
own investment risk. Therefore, the value of the Plan's accounts may be worth
more or less at retirement or withdrawal.
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<PAGE>
Here is how to calculate the value of each Variable Account Option in an account
during the Purchase Period:
Value of A Variable Account Option
= (equals)
Total Number of Purchase Units
x (multiplied by)
Current Purchase Unit Value
STOPPING PURCHASE PAYMENTS
Purchase Payments may be stopped at any time. Purchase Payments may be resumed
at any time before the Potentia contract has been surrendered. The value of the
Purchase Units will continue to vary. The Plan's Account Value will continue to
be subject to charge.
TRANSFERS BETWEEN INVESTMENT OPTIONS
________________________________________________________________________________
Participants may request a transfer of all or part of their Account Value
between the various Fixed Account and Variable Account Options in Potentia
through the Plan's administrator or another designated representative of the
Plan without a charge. Transfers may be made during the Purchase Period or
during the Payout Period. We reserve the right to limit transfers as discussed
below.
DURING THE PURCHASE PERIOD
During the Purchase Period, We currently permit transfers between Variable
Account Options or between a Variable Account Option and the Potentia General
Account, at any time. We may, however, limit the number of transfers you can
make.
DURING THE PAYOUT PERIOD
During the Payout Period, transfers between Potentia's investment options may be
subject to certain limitations imposed by the annuity purchased. In no event
may transfers be done once payout begins from the Potentia General Account.
We will send the Plan confirmation of the completed transfer within 5 days from
the date of its instruction. When the Plan or its administrator receives its
confirmation, it is the Plan's duty to verify the information shown, and advise
us of any errors within one business day.
EFFECTIVE DATE OF TRANSFER
The effective date of a transfer will be:
. The date of receipt, if received by Us, or the Plan's administrator acting on
our behalf, before the close of regular trading of the Exchange on a day values
are calculated; (Normally, this will be 4:00 P.M. New York time); otherwise
. The next date values are calculated.
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<PAGE>
MARKET TIMING
The Contracts are not designed for professional market timing organizations or
other entities using programmed and frequent transfers. We reserve the right at
any time and without prior notice to any party to terminate, suspend, or modify
our policies or procedures regarding transfer requests.
FEES AND CHARGES
________________________________________________________________________________
By investing in Potentia, Participants may be subject to four basic types of
fees and charges:
. Premium Tax Charge
. Separate Account Charges
. Fund Annual Expense Charge
. Other Tax Charges
These fees and charges are explained below. For additional information about
these fees and charges, see the Fee Table in this prospectus.
In addition, certain charges may apply to the Potentia General Account which are
discussed at the end of this section.
PREMIUM TAX CHARGE
Taxes on Purchase Payments are imposed by some states, cities, and towns. The
rate will range from zero to 3 1/2%.
If the law of a state, city, or town requires premium taxes to be paid when
Purchase Payments are made, we will, of course, comply.
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<PAGE>
Otherwise, such tax will be deducted from the Payout Value when annuity payments
are to begin.
If we deduct an amount for premium taxes, but later find the tax was not due, we
will:
. Adjust the amount deducted in error to reflect investment experience from the
date of the deduction to the date we determined the tax was not due; and
. Apply the excess amount, as adjusted, to increase the number of Pay-in or
Payout Units.
SEPARATE ACCOUNT CHARGES
There will be a separate account charge applied to VALIC Separate Account A.
This is a daily charge at an annualized rate of 1.45% on the average daily net
asset value of VALIC Separate Account A. This charge is guaranteed and cannot
be increased by the Company. The separate account charge is to compensate the
Company for assuming mortality and expense risks under Potentia. The mortality
risk that the Company assumes is the obligation to provide payments during the
Payout Period for a Participant's life no matter how long that might be. The
expense risk is our obligation to cover the cost of issuing and administering
Potentia, no matter how large the cost may be.
The Company may make a profit on the separate account charge.
For more information about the Separate Account Charge, see the Fee Table in
this prospectus.
FUND ANNUAL EXPENSE CHARGES
Investment management charges based on a percentage of each Fund's average daily
net assets are payable by each Fund. Depending on the Variable Account Option
selected, the charges will be paid by each Fund to its investment adviser.
These charges and other Fund charges and expenses are fully described in the
prospectuses for the Funds. These charges indirectly cost you because they
lower your return.
Some of the Mutual Funds or their affiliates may have an agreement with the
Company to pay the Company for administrative and shareholder services it
provides to the underlying Fund.
OTHER TAX CHARGES
We reserve the right to charge for certain taxes (other than premium taxes) that
we may have to pay. This could include federal income taxes. Currently, no
such charges are being made.
MARKET VALUE ADJUSTMENT
The Potentia General Account will be guaranteed to receive a stated rate of
interest through the end of the selected term. We guarantee the Potentia
General Account will earn at least 3%. Withdrawals after the first policy year
in excess of 20% of the Account Value of the Potentia General Account as of the
last anniversary of the Potentia Contract will be subject to a market value
adjustment. This adjustment may be positive or negative, based upon the
differences in selected interest rates at the time the Contract was established
and
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<PAGE>
at the time of the withdrawal. This adjustment will not apply to any withdrawals
of Account Value in the Potentia General Account used to purchase an annuity.
Loans are available from the Potentia General Account if permitted under the
Plan. Please review your contract for additional information on the Potentia
General Account.
PAYOUT PERIOD
_____________________________________________________________
Any amount payable under the Potentia Contract or any amount available under the
Plan may be used by the Contract Owner to purchase an annuity. That annuity can
be in any form then available from VALIC. It will be based on VALIC's
applicable settlement option rate based on a minimum 3% assumed interest rate
and the latest group annuity mortality table approved for use in the state where
the Contract is issued.
SURRENDER OF ACCOUNT VALUE
_____________________________________________________________
WHEN SURRENDERS ARE ALLOWED
The Contract Owner may withdraw all or part of the Participant's Account Value
at any time before Payout begins if:
. allowed under federal or state law
. allowed under the Plan
There is no guarantee that the Surrender Value in a Variable Account Option will
ever equal or exceed the total amount of Purchase Payments received by us.
We will mail the Surrender Value within 7 calendar days after we receive a
properly completed surrender request. However, we may be required to suspend or
postpone payments if redemption of an underlying Fund's shares have been
suspended or postponed. See the current Fund(s)' prospectuses for a discussion
of the reasons why the redemption of shares may be suspended or postponed.
We may receive a surrender for a Purchase Payment which has not cleared the
banking system. We may delay payment of that portion of your Surrender Value
until the check clears. The rest of the Surrender Value will be processed as
usual.
SURRENDER RESTRICTIONS
Generally, Internal Revenue Code Section 403(b)(11) permits total or partial
distributions of elective deferrals or amounts transferred into this contract
from a 403(b)(7) custodial account, from a 403(b) annuity contract, only on
account of hardship (employee contributions only, without accrued interest),
attainment of age 59 1/2, separation from service, death or disability. An
employer's plan may impose additional restrictions on withdrawals of these and
other amounts.
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PARTIAL SURRENDERS
The Contract Owner may request a partial surrender of the Participant's Account
Value at any time, subject to any applicable surrender restrictions. A partial
surrender will reduce the Account Value.
POTENTIAL GENERAL ACCOUNT
For transactions made during the first year of the Contract, no charges or value
adjustments will be made on surrenders. For transactions made after the first
year of the Contracts, up to 20% of the Potential General Account Accumulation
Value as of the last Contract anniversary will be free from any charge or
adjustment in value. All transfers above those limits will be subject to a
market value adjustment as follows:
(1+A)/5/ / (1+B)/5/
A= the average 10 year Treasury Constant Maturity Series rate computed as an
average of such rates of the last business day of the last 60 complete
calendar months or the number of complete months since the Contract
issue, if less, determined at the time of the surrender
B= the 10 year Treasury Constant Maturity Series rate determined as of the
last business day of the calendar month prior to the transaction
DEATH BENEFITS
______________________________________________________________________________
If a Participant dies before withdrawing his or her entire interest in the
Contract, the remaining interest will be paid to the Participant's
beneficiary(ies) as determined under the Plan, in accordance with the Plan and
the Code. If the Participant dies after commencing payments under the annuity
option, the remaining payments under that annuity option, if any, will be paid
to the Participant's beneficiary(ies) as determined under the Plan.
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HOW TO REVIEW INVESTMENT PERFORMANCE
OF SEPARATE ACCOUNT DIVISIONS
_______________________________________________________________________________
We will advertise information about the investment performance of VALIC Separate
Account A Divisions. Our advertising of past investment performance results does
not mean that future performance will be the same. The performance information
will not predict what your actual investment experience will be in that Division
or show past performance under an actual contract. We may also show how the
Divisions rank on the basis of data compiled by independent ranking services.
Some of the Divisions (and underlying Funds) offered in this prospectus were
previously available through other annuity or life insurance products or to the
general public before Potentia was first available to you. We may therefore,
advertise investment performance since the inception of the underlying Funds.
In each case, we will use the charges and fees imposed by Potentia in
calculating the Division's investment performance.
TYPES OF INVESTMENT PERFORMANCE
INFORMATION ADVERTISED
We may advertise the Division's Total Return Performance information and Yield
Performance information.
TOTAL RETURN PERFORMANCE INFORMATION
Total Return Performance Information is based on the overall dollar or
percentage change in value of an assumed investment in a Division over a given
period of time.
There are seven ways Total Return Performance Information may be advertised:
. Standard Average Annual Total Return
. Nonstandard Average Annual Total Return
. Cumulative Total Return
. Annual Change in Purchase Unit Value
. Cumulative Change in Purchase Unit Value
. Total Return Based on Different Investment Amounts
. An Assumed Account Value of $10,000
Each of these is described below.
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<PAGE>
Standard Average Annual Total Return
Standard Average Annual Total Return shows the average percentage change in the
value of an investment in the Division from the beginning to the end of a given
historical period. The results shown are after all charges and fees have been
applied against the Division. Premium taxes are not deducted. This information
is calculated for each Division based on how an initial assumed payment of
$1,000 performed at the end of 1, 5 and 10 year periods. If Standard Average
Annual Return for a Division is not available for a stated period, we may show
the Standard Average Annual Total Return since Division inception.
The return for periods of more than one year are annualized to obtain the
average annual percentage increase (or decrease) during the period.
Annualization assumes that the application of a single rate of return each year
during the period will produce the ending value, taking into account the effect
of compounding.
Nonstandard Average Annual Total Return
Nonstandard Average Annual Total Return is calculated in the same manner as the
Standard Average Annual Total Return. However, Nonstandard Average Annual Total
Return shows only the historic investment results of the Division. Premium
taxes are not deducted. The SEC staff takes the position that performance
information of an underlying Fund reduced by Account fees for a period prior to
the inception of the corresponding Division is nonstandard performance
information regardless of whether all account fees and charges are deducted.
Cumulative Total Return
Cumulative Total Return may be calculated for 1, 5 and 10 year periods. If
Cumulative Total Return for a Division is not available for a stated period, we
may show the Cumulative Total Return since Division inception. It is based on
an assumed initial investment of $10,000. The Cumulative Return will be
calculated without deduction of premium taxes.
Annual Change in Purchase Unit Value
Annual Change in Purchase Unit Value is a percentage change during a one year
period or since inception. This is calculated as follows:
. The Purchase Unit Value at the start of the year is subtracted from the
Purchase Unit Value at the end of the period or year;
. The difference is divided by the Purchase Unit Value at the start of the
period or year.
Premium taxes are not deducted. The effect of these taxes, if deducted, would
reduce the Division's Annual Change in Purchase Unit Value.
Cumulative Change in Purchase Unit Value
Cumulative Change in Purchase Unit Value is a percentage change from the
beginning to the ending of a period usually greater than one year. Otherwise,
it is calculated in the same way as the Annual Change in Purchase Unit Value.
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Total Return Based on Different Investment Amounts
We may show total return information based on different investment amounts. For
example, we may show $200 a month for 10 years, or $100 a month to age 65. Fees
may or may not be included. Each performance illustration will explain the
Potentia charges and fees imposed on the Division.
An Assumed Account Value of $10,000
We may show annual values based on an initial investment of $10,000. This will
not reflect any deduction for account maintenance fees, surrender charges and
premium taxes.
YIELD PERFORMANCE INFORMATION
We may advertise Yield Performance, at a given point in time. A Division's
yield is one way of showing the rate of income the Division is earning as a
percentage of the Division's Purchase Unit Value.
NAVPS 1 Money Market Division
We may advertise the NAVPS 1 Money Market Divisions' Current Yield and Effective
Yield.
The Current Yield refers to the income produced by an investment in the North
American - AG1 Money Market Division over a given 7-day period. The Current
Yield does not take into account premium taxes. The income produced over a 7 day
period is then "annualized." This means we are assuming the amount of income
produced during the 7-day period will continue to be produced each week for an
entire year. The annualized amount is shown as a percentage of the investment.
The Effective Yield is calculated in a manner similar to the Current Yield.
But, when the yield is annualized the income earned is assumed to be reinvested.
The compounding effect will cause the Effective Yield to be higher than the
Current Yield. For the North American - AG1 Money Market Division and the 7-day
Effective Yield for the last 7 days ended December 31, 1999 was ____%.
Divisions Other Than The NAVPS I Money Market Division
We may advertise the standardized yield performance for each Division other than
the North American -AG1 Money Market Division. The yield for each of these
Divisions will be determined as follows:
. We will divide the average daily net investment income per Purchase Unit by
the Purchase Unit Value on the last day of the period; and
. We will annualize the result.
OTHER CONTRACT FEATURES
________________________________________________________________________________
CHANGES THAT MAY NOT BE MADE
The Contract Owner may not be changed once their account has been established:
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<PAGE>
WE RESERVE CERTAIN RIGHTS
We reserve the right to:
. Amend the Contract to conform with substitutions of investments;
. Amend the Contract to comply with tax or other laws;
. Make changes (upon written notice) that would apply only to new Participants
after the effective date of the changes;
. Operate VALIC Separate Account A as a management investment company under the
Act, in consideration of an investment management fee or in any other form
permitted by law;
. Deregister VALIC Separate Account A under the Act, if registration is no
longer required;
. Stop accepting new Participants under a Contract.
RELATIONSHIP TO EMPLOYER'S PLAN
Participants should always refer to the terms and conditions in the Plan,
including any Plan limitations that may limit a Participant's rights with
respect to amounts held under the Potentia Contract, when reviewing the
descriptions of Potentia in this prospectus.
VOTING RIGHTS
________________________________________________________________________________
As discussed in the "About VALIC Separate Account A" section of this prospectus,
VALIC Separate Account A holds on the Plan's behalf shares of the Funds which
comprise the Variable Account Options. From time to time the Funds are required
to hold a shareholder meeting to obtain approval from their shareholders for
certain matters. Subject to any contrary provisions in the Plan, Participants
may be entitled to give voting instructions to us as to how VALIC Separate
Account A should vote its Fund shares on these matters. Those persons entitled
to give voting instructions will be determined before the shareholders meeting
is held. For more information about these shareholder meetings and when they
may be held, see the Funds' prospectuses.
WHO MAY GIVE VOTING INSTRUCTIONS
The Plan will dictate whether Participants will have the right to give voting
instructions for the shareholder meetings. Contract Owners will instruct VALIC
Separate Account A in accordance with these instructions. Plans will receive
proxy material and a form on which voting instructions may be given before the
shareholder meeting is held.
DETERMINATION OF FUND SHARES ATTRIBUTABLE TO YOUR ACCOUNT
During Purchase Period
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The number of Fund shares attributable to an account will be determined on the
basis of the Purchase Units credited to the account on the record date set for
the Fund shareholder meeting.
During Payout Period or After A Death Benefit Has Been Paid
The number of Fund shares attributable to an account will be based on the
liability for future variable annuity payments to the payees on the record date
set for the Fund shareholder meeting.
How Fund Shares Are Voted
The Funds which comprise the Variable Account Options in Potentia may have a
number of shareholders including VALIC Separate Account A, VALIC's other
affiliated insurance company separate accounts and retirement plans within the
American General group of companies and public shareholders.
VALIC Separate Account A will vote all of the shares of the Funds it holds based
on, and in the same proportion as, the instructions given by all the
Participants invested in that Fund entitled to give instructions at that
shareholder meeting. VALIC Separate Account A will vote the shares of the Funds
it holds for which it receives no voting instruction in the same proportion as
the shares for which voting instructions have been received.
In the future, we may decide how to vote the shares of VALIC or VALIC Separate
Account A in a different manner if permitted at that time under federal
securities law.
FEDERAL TAX MATTERS
________________________________________________________________________________
Potentia provides tax-deferred accumulation over time, but is subject to federal
income and excise taxes, mentioned briefly below. You should refer to the
Statement of Additional Information for further details. Section references are
to the Internal Revenue Code ("Code"). We do not attempt to describe any
potential estate or gift tax, or any applicable state, local or foreign tax law
other than possible premium taxes mentioned under "Premium Tax Charge." Remember
that future legislation could modify the rules discussed below, and always
consult your personal tax adviser regarding how the current rules apply to your
specific situation.
TYPE OF PLANS
Potentia contracts are offered primarily to employer-sponsored tax-qualified
retirement programs. The contracts offered with this prospectus are issued
only to Code Section 403(b) annuity plans.
TAX CONSEQUENCES IN GENERAL
Purchase Payments, distributions, withdrawals, transfers and surrender of a
Contract can each have a tax effect under an employer's 403(b) Plan. Please
refer to the detailed explanation in the Statement of Additional Information,
the documents (if any) controlling the retirement arrangement through which the
contract is offered, and your personal tax adviser.
Purchase Payments under Potentia can be made as contributions by employers, or
as pre-tax or after-tax contributions by employees, depending on the type of
retirement program. After-tax employee contributions
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constitute investment in the Contract. Potentia contracts offered under this
prospectus are only offered to 403(b) programs. Contracts offered under such
programs receive deferral of tax on the inside build-up of earnings on invested
Purchase Payments until a distribution occurs. See the Statement of Additional
Information for special rules.
Generally, the portion of a distribution which is not considered a return of
investment in the Contract is subject to income tax. For annuity payments,
investment in the Contract is recovered ratably over the expected payout period.
Special recovery rules might apply in certain situations.
Amounts subject to income tax may also incur excise or penalty taxes, under the
circumstances described in the Statement of Additional Information. Generally,
they would also be subject to some form of federal income tax withholding unless
rolled into another tax-deferred vehicle. Required withholding will vary
according to type of program, type of payment and your tax status. In addition,
amounts received under all Contracts may be subject to state income tax
withholding requirements.
It is the opinion of VALIC and its tax counsel that a Qualified Contract
described in Section 403(b) of the Code does not lose its deferred tax
treatment if purchase payments under the contract are invested in publicly
available mutual funds. In 1999, the IRS confirmed this opinion, reversing its
previous position by modifying a contrary ruling it had issued in 1981.
In its ruling in 1981, the IRS had taken the position that, where purchase
payments under a variable annuity contract are invested in publicly available
mutual funds, the contract owner should be treated as the owner of the mutual
fund shares, and deferred tax treatment under the contract should not be
available. In the opinion of VALIC and its tax counsel, the 1981 ruling was
superseded by subsequent legislation (Code Section 817(h)) which specifically
exempts these Qualified Contracts, and the IRS had no viable legal basis or
reason to apply the theory of the 1981 ruling to these Qualified Contracts under
current law.
EFFECT OF TAX-DEFERRED ACCUMULATIONS
The chart below compares the results from Premium Payments made to:
. Potentia Contract issued to a tax favored retirement program purchased with
pre-tax premium payments;
. A non-qualified Contract purchased with after-tax Premium Payments and;
. Conventional savings vehicles such as savings accounts.
THE POWER OF TAX-DEFERRED GROWTH
[BAR GRAPH]
This hypothetical chart compares the results of (1) contributing $100 per month
to a conventional, non-tax deferred plan, (2) contributing $100 to a
nonqualified, tax-deferred annuity, and (3) contributing $100 per month ($138.89
since contributions are made before tax) to a qualified tax-deferred plan. The
chart assumes a 28% tax rate and an 8% fixed rate of return. Variable options
incur mortality and expense risk fee charges and may also incur account
maintenance fees and surrender charges. The chart does not reflect the
deduction of any such fees. An additional 10% tax penalty may apply to
withdrawals before age 59 1/2. This information is for illustrative purposes
only and is not a guarantee of future return.
-29-
<PAGE>
Unlike savings accounts, Premium Payments made to tax-favored retirement
programs and Non-Qualified Contracts generally provide tax deferred treatment on
earnings. In addition, Premium Payments made to tax-favored retirement programs
ordinarily are not subject to income tax until withdrawn. As shown above,
investing in a tax-favored program increases the accumulation power of savings
over time. The more taxes saved and reinvested in the program, the more the
accumulation power effectively grows over the years.
To further illustrate the advantages of tax deferred savings using a 28% Federal
tax bracket, an annual fixed yield (BEFORE THE DEDUCTION OF ANY FEES OR CHARGES)
of 8% under a tax-favored retirement program in which tax savings were
reinvested has an equivalent after-tax annual fixed yield of 5.76% under a
conventional savings program. THE 8% YIELD ON THE TAX-FAVORED PROGRAM WILL BE
REDUCED BY THE IMPACT OF INCOME TAXES UPON WITHDRAWAL. The yield will vary
depending upon the timing of withdrawals. The previous chart represents
(without factoring in fees and charges) after-tax amounts that would be
received.
By taking into account the current deferral of taxes, contributions to tax-
favored retirement programs increase the amount available for savings by
decreasing the relative current out-of-pocket cost (referring to the effect on
annual net take-home pay) of the investment. The chart below illustrates this
principle by comparing a pre-tax contribution to a tax-favored retirement plan
with an after-tax contribution to a conventional savings account:
PAYCHECK COMPARISON
TAX-FAVORED CONVENTIONAL
RETIREMENT SAVINGS
PROGRAM ACCOUNT
-----------------------------------------------------------------
Annual amount available for $2,500 $2,500
savings before federal taxes
-----------------------------------------------------------------
Current federal income tax due on 0 (700)
Purchase Payments
-----------------------------------------------------------------
Net retirement plan Purchase $2,500 $1,800
Payments
-----------------------------------------------------------------
This chart assumes a 28% federal income tax rate. The $700 which is paid toward
current federal income taxes reduces the actual amount saved in the conventional
savings account to $1,800 while the full $2,500 is contributed to the tax-
qualified program, subject to being taxed upon withdrawal. Stated otherwise, to
reach an annual retirement savings goal of $2,500, the contribution to a tax-
qualified retirement program results in a current out-of-pocket expense of
$1,800 while the contribution to a conventional savings account requires the
full $2,500 out-of-pocket expense. The tax-qualified retirement program
represented in this chart is a plan type, such as one under Section 403(b) of
the Code, which allows Participants to exclude contributions within limits, from
gross income.
-30-
<PAGE>
CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
Page
----
About the Prospectus..................................................... -4-
Fee Table................................................................ -5-
Contract Owner/Participant Expenses.................................... -5-
Separate Account Charge................................................ -5-
Fund Annual Expenses................................................... -5-
Summary.................................................................. -8-
FIXED AND VARIABLE OPTIONS............................................. -8-
TRANSFERS.............................................................. -11-
FEES AND CHARGES....................................................... -11-
PAYOUT OPTIONS......................................................... -12-
FEDERAL TAX INFORMATION................................................ -12-
PURCHASE REQUIREMENTS.................................................. -12-
Selected Purchase Unit Data............................................ -12-
General Information...................................................... -12-
About Potentia......................................................... -12-
About VALIC............................................................ -13-
About VALIC Separate Account A......................................... -13-
Distribution of the Contracts.......................................... -14-
Variable Account Options................................................. -14-
Purchase Period.......................................................... -15-
Purchase Payments...................................................... -15-
Purchase Units......................................................... -15-
Calculation of Purchase Unit Value..................................... -16-
Choosing Investment Options............................................ -16-
Potentia General Account............................................... -17-
Variable Account Options............................................... -18-
Stopping Purchase Payments............................................. -19-
Transfers Between Investment Options..................................... -19-
During the Purchase Period............................................. -19-
During the Payout Period............................................... -19-
Effective Date of Transfer............................................. -19-
Market Timing.......................................................... -20-
Fees and Charges......................................................... -20-
Premium Tax Charge..................................................... -20-
Separate Account Charges............................................... -21-
Fund Annual Expense Charges............................................ -21-
Other Tax Charges...................................................... -21-
Market Value Adjustment................................................ -21-
----
-31-
<PAGE>
Payout Period............................................................ -22-
----
Surrender of Account Value............................................. -22-
----
When Surrenders Are Allowed............................................ -22-
----
Surrender Restrictions................................................. -22-
----
Partial Surrenders..................................................... -23-
----
Death Benefits........................................................... -23-
----
How to Review Investment Performance of Separate Account Divisions....... -24-
----
Types of Investment Performance Information Advertised................. -24-
----
Total Return Performance Information................................... -24-
----
Yield Performance Information.......................................... -26-
----
Other Contract Features.................................................. -26-
----
Changes That May Not Be Made........................................... -26-
----
Relationship to Employer's Plan........................................ -27-
----
Voting Rights............................................................ -27-
----
Who May Give Voting Instructions....................................... -27-
----
Determination of Fund Shares Attributable to Your Account.............. -27-
----
Federal Tax Matters...................................................... -28-
----
Type of Plans.......................................................... -28-
----
Tax Consequences in General............................................ -28-
----
Effect of Tax-Deferred Accumulations................................... -29-
----
-32-
<PAGE>
General Information
Please tear off, complete and return the form below to The Variable Annuity Life
Insurance Company, 2929 Allen Parkway, Houston, Texas 77019. A Statement of
Additional Information may also be ordered by calling 1-888-258-3422.
................................................................................
POTENTIA CONTRACTS
Please send me a free copy of the Statement of Additional Information for The
Variable Annuity Life Insurance Company Separate Account A (Potentia).
(Please Print or Type)
Name:
----------------------------------
G.A.#
----------------------------------
Address:
------------------------------
Policy #
-------------------------------
-33-
<PAGE>
The Variable Annuity Life Insurance Company
2929 Allen Parkway, Houston, Texas 77019
[AMERICAN GENERAL LOGO]
The Variable Annuity Life Insurance Company
is a member of American General Financial Group.
American General Financial Group is the marketing
name for American General Corporation and its subsidiaries.
(C)The Variable Annuity Life Insurance Company, Houston, Texas
VA
------------
-34-
<PAGE>
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A
UNITS OF INTEREST UNDER GROUP
VARIABLE ANNUITY CONTRACTS
POTENTIA
________________________________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
________________________________________________________________________________
FORM N-4 PART B
__________, 2000
This Statement of Additional Information is not a prospectus but contains
information in addition to that set forth in the prospectus for Potentia dated
_______, 2000 ("Contracts") and should be read in conjunction with the
prospectus. The terms used in this Statement of Additional Information have the
same meaning as those set forth in the prospectus. A prospectus may be obtained
by the Contract Owner by calling 1-888-258-3422 or writing the Company, or
American General Distributors, Inc., an affiliate of VALIC, (the "Distributor")
at 2929 Allen Parkway, Houston, Texas 77019. Participants should contact their
Plans Administrator.
VA ___________________
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
GENERAL INFORMATION...................................................................................... 3
Marketing Information................................................................................. 3
Endorsements and Published Ratings.................................................................... 4
TYPES OF VARIABLE ANNUITY CONTRACTS...................................................................... 4
Tax Consequences of Purchase Payments................................................................. 5
Tax Consequences of Distributions..................................................................... 5
Special Tax Consequences -- Early Distribution........................................................ 6
Special Tax Consequences -- Required Distributions.................................................... 6
Tax-Free Rollovers, Transfers From 403(b) Annuities................................................... 6
PURCHASE UNIT VALUE...................................................................................... 7
Illustration of Calculation of Purchase Unit Value.................................................... 7
Illustration of Purchase of Purchase Units (Assuming No State Premium Tax)............................ 7
PERFORMANCE CALCULATIONS................................................................................. 7
North American-AG1 Money Market Divisions Yields...................................................... 7
Calculation of Current Yield for NORTH AMERICAN-AG1 MONEY MARKET DIVISION ______...................... 7
Illustration of Calculation of Current Yield for North American-AG1 Money Market Division ______...... 7
Calculation of Effective Yield for North American-AG1 Money Market Division ______.................... 8
Illustration of Calculation of Effective Yield for North American-AG1 Money Market Division ______.... 8
Standardized Yield for Bond Fund Divisions............................................................ 8
Calculation of Standardized Yield for Bond Fund Divisions............................................. 8
Illustration of Calculation of Standardized Yield for Bond Fund Divisions............................. 8
Calculation of Average Annual Total Return............................................................ 9
Calculation of Potentia General Account............................................................... 9
................................................................................................... 14
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS............................................................... 14
EXPERTS.................................................................................................. 14
COMMENTS ON FINANCIAL STATEMENTS......................................................................... 14
</TABLE>
2
<PAGE>
GENERAL INFORMATION
MARKETING INFORMATION
The Company has targeted organizations in specific market sectors as the
central focus of its marketing efforts for its Contracts. The Company has
utilized as its general marketing theme the concept that the Company is
"America's Retirement Plan Specialists." Specifically, the Company's marketing
thrust is aimed at individuals and groups associated with public and private,
primary and secondary schools, colleges and universities, healthcare
organizations, state and local governments and other organizations.
This marketing concept has proven to be successful. In the aggregate, premium
deposits to the Company have grown from $37,000 in 1956 to more than [$_____
billion as of December 31, 2000]. The number of aggregate participant accounts
has increased from 155,000 accounts in 1980 to [______ accounts as of December
31, 2000]. As of [December 31, 2000], the Company was ranked in the [top 1
percent] of all U.S. life insurance companies with regard to asset size. [As of
December 31, 2000] the Company's assets totaled more than [$______ billion].
The Company's growth can also be reviewed by examining each market segment the
Company targets.
The Company's growth can also be reviewed by examining certain milestones, the
number of participant accounts and cash values amongst the various market
segments or groups the Company targets. These markets include, but are not
limited to, public, primary and secondary schools, colleges, universities, state
and local government groups and healthcare markets.
The Company, in its marketing efforts to each of the market segments may, from
time to time, design sales literature and material specifically for its
particular market segments. The sales literature and material may address
specifically the group's contract and retirement plan.
The Company has utilized as the central focus in its marketing to college and
university faculty and staff members the theme that the Company is the
"Alternative of Choice."
The Company may, from time to time, refer to a general investment strategy
known as indexing. Several of the Divisions employ this investment strategy. The
Company may compare the performance of these Divisions to the S&P 500 Index, S&P
MidCap 400 Index, Russell 1000 Value Index, Russell 2000 Index, Morgan Stanley
Capital International Europe, Australia, and Far East (EAFE) Index, or any other
appropriate market index. The indexes are not managed funds and have no
identifiable investment objectives.
The Company may, from time to time, refer, individually or collectively, to
its package of retirement plan services. Collectively, this package of services
may be referred to as easy Retirement Plan(SM).
The Company may, from time to time, refer to the diversifying process of asset
allocation based on the Modern Portfolio Theory developed by Nobel Prize-winning
economist Harry Markowitz.
When presenting the asset allocation process the Company may outline the
process of personal and investment risk analysis including determining
individual risk tolerances and a discussion of the different types of investment
risk. The Company may classify investors into five categories based on their
personal risk tolerance and will quote various industry experts on which types
of investments are best suited to each of the five risk categories. The industry
experts quoted may include Ibbotson Associates, CDA Investment Technologies,
Lipper Analytical Services, Inc. ("Lipper" Laffer-Cantos, Inc., The Variable
Annuity Research & Data Services ("VARDS") Report, Wilson Associates,
Morningstar, Inc. ("Morningstar") and any other expert which has been deemed by
the Company to be appropriate. The Company may also provide a historical
overview of the performance of a variety of investment market indexes and
different asset categories, such as stocks, bonds, cash equivalents, etc. The
Company may also discuss investment volatility (standard deviation) including
the range of returns for different asset categories and classes over different
time horizons, and the correlation between the returns of different asset
categories and classes. The Company may also discuss the basis of portfolio
optimization including the required inputs and the construction of efficient
portfolios using sophisticated computer-based techniques. Finally, the Company
may describe various investment strategies and methods of implementation such as
the use of index funds vs. actively managed funds, the use of dollar cost
averaging techniques, the tax status of contributions, and the periodic
rebalancing of diversified portfolios.
The Company may, from time to time, refer to the products of various
investment advisers and sub-advisers referenced in the prospectus. The Company
may mention assets under management and others facts specific to each adviser.
3
<PAGE>
The Company may, from time to time, compare the performance of the mutual
funds that serve as the investment vehicles for Potentia to the performance of
certain market indices. These market indices are described in the "Performance
Information" Section of this Statement of Additional Information.
ENDORSEMENTS AND PUBLISHED RATINGS
From time to time, in advertisements or in reports to Contract Owners, the
Company may refer to its endorsements. Endorsements are often in the form of a
list of organizations, individuals or other parties which recommend the Company
or the Contracts. The endorser's name will be used only with the endorser's
consent. It should be noted that the list of endorsements may change from time
to time. The Company may also refer to the term "preferred provider" with the
group's consent.
Also from time to time, the rating of the Company as an insurance company by
A. M. Best may be referred to in advertisements or in reports to Contract
Owners. Each year the A. M. Best Company reviews the financial status of
thousands of insurers, culminating in the assignment of Best's Ratings. These
ratings reflect their current opinion of the relative financial strength and
operating performance of an insurance company in comparison to the norms of the
life/health insurance industry. Best's Ratings range from A++ to F. An A++
rating means, in the opinion of A.M. Best, that the insurer has demonstrated the
strongest ability to meet its respective policyholder and other contractual
obligations.
In addition, the claims-paying ability of the Company as measured by the
Standard and Poor's Ratings Group may be referred to in advertisements or in
reports to Contract Owners. A Standard and Poor's insurance claims-paying
ability rating is an assessment of an operating insurance company's financial
capacity to meet the obligations of its insurance policies in accordance with
their terms. Standard and Poor's ratings range from AAA to D.
Further, from time to time the Company may refer to Moody's Investor's
Service's rating of the Company. Moody's Investor's Service's financial strength
ratings indicate an insurance company's ability to discharge senior policyholder
obligations and claims and are based on an analysis of the insurance company and
its relationship to its parent, subsidiaries and affiliates. Moody's Investor's
Service's ratings range from Aaa to C.
The Company may additionally refer to its Duff & Phelp's rating. A Duff &
Phelp's rating is an assessment of a company's insurance claims paying ability.
Duff & Phelp's ratings range from AAA to CCC.
Ratings relate to the claims paying ability of the Company's General Account
and not the investment characteristics of the Separate Account.
The Company may from time to time, refer to Lipper, Morningstar and
CDA/Wiesenberger Investment Companies ("CDA/Wiesenberger") when discussing the
performance of its Divisions. Lipper, Morningstar and CDA/Wiesenberger are
leading publishers of statistical data about the investment company industry in
the United States.
Additionally, the Company may compare the performance of the Divisions to
categories published by Lipper and Morningstar. The published categories which
may be utilized in comparison with the performance of the Divisions include the
Morningstar Growth and Income Mutual Fund Category, Morningstar Aggressive
Growth Mutual Fund Category, Morningstar Growth Mutual Fund Category,
Morningstar International Stock Mutual Fund Category, Lipper Growth and Income
Mutual Fund Category, Lipper Small Company Growth Mutual Fund Category, Lipper
Growth Mutual Fund Category and Lipper International Mutual Fund Category.
Additional Lipper or Morningstar categories may be utilized if they are deemed
by the Company relevant to the performance of the Company's Divisions.
Finally the Company will utilize as a comparative measure for the performance
of its Funds the Consumer Price Index ("CPI"). The CPI is a measure of change in
consumer prices, as determined in a monthly survey of the U.S. Bureau of Labor
Statistics. Housing costs, transportation, food, electricity, changes in taxes
and labor costs are among the CPI components. The CPI provides a tool for
determining the impact of inflation on an individual's purchasing power.
TYPES OF VARIABLE ANNUITY CONTRACTS
Unallocated flexible payment deferred annuity Contracts are offered in
connection with the prospectus to which this Statement of Additional Information
relates.
Under flexible payment Contracts, Purchase Payments generally are made until
retirement age is reached. However, no Purchase Payments are required to be made
after the first payment.
4
<PAGE>
The Contracts are non-participating and will not share in any of the profits
of the Company. The Contracts are unallocated, which means that VALIC will not
maintain separate participant account records and will not issue a separate
contract or certificate to the participant. However, the participant's interest
in the Contract, as reflected in records maintained by or on behalf of the paln
spnsor, are subject to all of the applicable restrictions under Code Section
403(b), and to plan limitations that may be more restrictive than the Code
restrictions.
FEDERAL TAX MATTERS
This Section summarizes the major tax consequences of contributions, payments,
and withdrawals under Potentia, during life and at death.
It is the opinion of VALIC and its tax counsel that a Qualified Contract
described in Section 403(a), 403(b), or 408(b) of the Code does not lose its
deferred tax treatment if Purchase Payments under the contract are invested in
publicly available mutual funds. In 1999, the Internal Revenue Service ("IRS")
confirmed this opinion, reversing its previous position by modifying a contrary
ruling it had issued in 1981.
In its ruling in 1981, the IRS had taken the position that, where purchase
payments under a variable annuity contract are invested in publicly available
mutual funds, the contract owner should be treated as the owner of the mutual
fund shares, and deferred tax treatment under the contract should not be
available. In the opinion of VALIC and its tax counsel, the 1981 ruling was
superseded by subsequent legislation (Code Section 817(h)) which specifically
exempts these Qualified Contracts, and the IRS had no viable legal basis or
reason to apply the theory of the 1981 ruling to these Qualified Contracts under
current law.
It is also the opinion of VALIC and its tax counsel that for each other type
of Qualified Contract an independent exemption provides tax deferral regardless
of how ownership of the Mutual Fund shares might be imputed for federal income
tax purposes.
TAX CONSEQUENCES OF PURCHASE PAYMENTS TO 403(b) ANNUITIES
Purchase Payments made by Section 501(c)(3) tax-exempt organizations and
public educational institutions toward Contracts for their employees are
excludable from the gross income of employees, to the extent aggregate Purchase
Payments do not exceed applicable tax law limitations on contributions. This
gross income exclusion applies both to employer contributions and to your
voluntary and nonelective salary reduction contributions.
Your voluntary salary reduction contributions are generally limited to $10,500
($9,500 before 1998; $10,000 in 1998 and 1999), although additional, "catch-up"
contributions are permitted under certain circumstances. Combined employer and
salary reduction contributions are generally limited to the smallest of $30,000;
approximately 25% of salary; or an exclusion allowance which takes into account
a number of factors. In addition, after 1988 employer contributions for highly
compensated employees may be further limited by applicable nondiscrimination
rules.
TAX CONSEQUENCES OF DISTRIBUTIONS FROM 403(b) ANNUITIES
Voluntary salary reduction amounts accumulated after December 31, 1988, and
earnings on voluntary contributions before and after that date, may not be
distributed before one of the following:
(1) attainment of age 59 1/2;
(2) separation from service;
(3) death;
(4) disability, or
(5) hardship (hardship distributions are limited to salary reduction
contributions only, exclusive of earnings thereon).
Similar restrictions will apply to all amounts transferred from a section
403(b)(7) custodial account other than rollover contributions.
Distributions are taxed as ordinary income to the recipient, except to the
extent allocable to an employee's after tax contributions (investment in the
contract), in accordance with Section 72.
5
<PAGE>
SPECIAL TAX CONSEQUENCES -- EARLY DISTRIBUTION FROM 403(b)
Taxable distributions received before the recipient attains age 59 1/2
generally are subject to a 10% penalty tax in addition to regular income tax.
Distributions on account of the following generally are excepted from this
penalty tax:
(1) death;
(2) disability;
(3) separation from service after a participant reaches age 55;
(4) separation from service at any age if the distribution is in the form of
substantially equal periodic payments over the life (or life expectancy) of
the Participant (or the Participant and Beneficiary), and
(5) distributions which do not exceed the employee's tax deductible medical
expenses for the taxable year of receipt.
SPECIAL TAX CONSEQUENCES -- REQUIRED DISTRIBUTIONS FROM 403(b) ANNUITIES
Generally, minimum required distributions must commence no later than April 1
of the calendar year following the later of the calendar year in which the
Participant attains age 70 1/2 or the calendar year in which the Participant
retires. Required distributions must be made over a period that does not exceed
the life or life expectancies of the Participant (or lives or joint life
expectancies of the Participant and Beneficiary). The minimum amount payable can
be determined several different ways. A penalty tax of 50% is imposed on the
amount by which the minimum required distribution in any year exceeds the amount
actually distributed in that year.
Amounts accumulated under a Contract on December 31, 1986 may be paid in a
manner that meets the above rule or, alternatively:
(i) must begin to be paid when Participant attains age 75; and
(ii) the present value of payments expected to be made over the life of the
Participant, (under the option chosen) must exceed 50% of the present value
of all payments expected to be made (the "50% rule").
The 50% rule will not apply if a Participant's spouse is the joint annuitant.
Notwithstanding these pre-January 1, 1987 rules the entire contract balance must
meet the minimum distribution incidental benefit requirement of Section
403(b)(10).
At the Participant's death before payout has begun, Contract amounts generally
either must be paid to the Beneficiary within 5 years, or must begin within 1
year of death and be paid over the life or life expectancy of the Beneficiary.
If death occurs after commencement of (but before full) payout, distributions
generally must continue at least as rapidly as under the method elected by the
Participant and in effect at the time of death.
A participant generally may aggregate his or her 403(b) contracts and accounts
for purposes of satisfying these requirements, and withdraw the required
distribution in any combination from such contracts or accounts, unless the
plan, contract, or account otherwise provides.
TAX-FREE ROLLOVERS, TRANSFERS FROM 403(b) ANNUITIES
Tax free transfers between 403(b) annuity contracts and/or 403(b)(7) custodial
accounts, and tax-free rollovers from 403(b) programs to 408(b) IRAs or other
403(b) programs, are permitted under certain circumstances.
6
<PAGE>
PURCHASE UNIT VALUE
The calculation of Purchase Unit value is discussed in the Prospectus under
"Purchase Period." The following illustrations show a calculation of a new Unit
value and the purchase of Purchase Units (using hypothetical examples):
ILLUSTRATION OF CALCULATION OF PURCHASE UNIT VALUE
Example 3.
1. Purchase Unit value, beginning of
period ................................. $ 1.800000
2. Value of Fund share, beginning of
period ................................. $21.200000
3. Change in value of Fund share .......... $ .500000
4. Gross investment return (3)/(2) ........ .023585
5. Daily separate account fee* ............ .000027
*Mortality and expense risk fee and
administration and distribution
fee of 1% per annum used for
illustrative purposes.
6. Net investment return (4)--(5) ......... .023558
7. Net investment factor 1.000000+(6) ..... 1.023558
8. Purchase Unit value, end of period
(1)x(7) ................................ $ 1.842404
ILLUSTRATION OF PURCHASE OF PURCHASE UNITS (ASSUMING NO STATE PREMIUM TAX)
Example 4.
<TABLE>
<S> <C>
1. First Periodic Purchase Payment .............................. $ 100.00
2. Purchase Unit value on effective date of purchase (see
Example 3) ................................................... $ 1.800000
3. Number of Purchase Units purchased (1)/(2) ................... 55.556
4. Purchase Unit value for valuation date following purchase
(see Example 3) .............................................. $ 1.842404
5. Value of Purchase Units in account for valuation date
following purchase (3)x(4) ................................... $ 102.36
</TABLE>
PERFORMANCE CALCULATIONS
NORTH AMERICAN-AG1 MONEY MARKET DIVISIONS YIELDS
CALCULATION OF CURRENT YIELD FOR NORTH AMERICAN-AG1 MONEY MARKET DIVISION ______
7-Day Current Yield: ____%
ILLUSTRATION OF CALCULATION OF CURRENT YIELD FOR NORTH AMERICAN-AG1 MONEY MARKET
DIVISION ______
Example 5.
The current yield quotation above is based on the seven days ended
_______________, 2000 ("base period"). It is computed by determining the net
change, exclusive of capital changes, in the value of a hypothetical pre-
existing account having a balance of one Purchase Unit at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from Contract
Owner accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return and then
multiplying the base period return by 365/7.
__________
7
<PAGE>
CALCULATION OF EFFECTIVE YIELD FOR NORTH AMERICAN-AG1 MONEY MARKET DIVISION ___
7-Day Effective Yield: ____%
ILLUSTRATION OF CALCULATION OF EFFECTIVE YIELD FOR NORTH AMERICAN-AG1 MONEY
MARKET DIVISION ______
Example 6.
The effective yield quotation above is based on the seven days ended
_______________, 2000 ("base period"). It is computed by determining the net
change, exclusive of capital changes, in the value of a hypothetical pre-
existing account having a balance of one Purchase Unit at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from Contract
Owner accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return and then
compounding the base period return by adding 1, raising the sum to a power equal
to 365 divided by 7, and subtracting 1 from the result, according to the
following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) 365/7] --1
STANDARDIZED YIELD FOR BOND FUND DIVISIONS
CALCULATION OF STANDARDIZED YIELD FOR BOND FUND DIVISIONS
DIV. ______ DIV. ______ DIV. ______ DIV. ______
Standardized Yield _____% ______% _____% _____%
ILLUSTRATION OF CALCULATION OF STANDARDIZED YIELD FOR BOND FUND DIVISIONS
Example 7.
The standardized yield quotation based on a 30-day period ended
_______________, 2000 is computed by dividing the net investment income per
Purchase Unit earned during the period by the maximum offering price per Unit on
the last day of the period, according to the following formula:
YIELD = 2 [( a -- b + 1)6 -- 1]
cd
Where:
a = net investment income earned during the period by the Fund
attributable to shares owned by the Division
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of Purchase Units outstanding
during the period
d = the maximum offering price per Purchase Unit on the last day
of the period
Yield on each Division is earned from dividends declared and paid by the Fund,
which are automatically reinvested in Fund shares.
8
<PAGE>
CALCULATION OF AVERAGE ANNUAL TOTAL RETURN
Average Annual Total Return quotations for the 1, 5, and 10 year periods ended
______________, 2000, the date of the most recent balance sheet included in this
registration statement, are computed by finding the average annual compounded
rates of over the 1, 5, and 10 year periods that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
P (1+T)n = ERV
Where:
P = a hypothetical initial Purchase Payment of $1,000
T = average annual total return
n = number of years
ERV = redeemable value at the end of the 1, 5 or 10 year periods
of a hypothetical $1,000 Purchase Payment made at the
beginning of the 1, 5, or 10 year periods (or fractional
portion thereof)
The Company may advertise standardized average annual total return which,
includes the surrender charge of up to 5% of Gross Purchase Payments received
during the most recent 60 months as well as non-standardized average annual
total returns which does not include a surrender charge or maintenance fee.
There is no sales charge for reinvested dividends. All recurring fees have
been deducted. For fees which vary with the account size, an account size equal
to that of the median account size has been assumed. Ending redeemable value has
been determined assuming a complete redemption at the end of the 1, 5 or 10 year
period and deduction of all nonrecurring charges at the end of each such period.
CALCULATION OF POTENTIA GENERAL ACCOUNT VALUE
The effect of the market value adjustment may be positive or negative. If, for
example, on the date of a withdrawal, the index rate described below is higher
than that index rate as of the contract's date of issue, the effect of the
market value adjustment will result in a reduction. If, for example, on the date
of a withdrawal, the index rate value is lower than that index rate as of the
contract's date of issue, the effect of the market value adjustment will result
in an increase. Any negative adjustment will be waived to the extent that it
would decrease the withdrawal value below the minimum guaranteed value.
The market value adjustment is determined by the formula below, using the
following factors:
. A is the average 10 year Treasury Constant Maturity Series rate computed as an
average of such rates as of the last business day of the last 60 complete
months or the number of complete months since the Contract issue if less,
determined as of the time of the transaction; and
. B is the 10 year Treasury Constant Maturity Series rate determined as of the
last business day of the calendar month prior to the transaction.
The market value adjustment will equal:
The amount surrendered or transferred out prior to the end of the MVA term
multiplied by:
(1+A)/5/(1+B)/5/
The market value adjustment will be added to or deducted from the amount
being withdrawn or transferred.
Index rates for any calendar month will equal the average of index rates
for the last 5 trading days of the previous calendar month.]
9
<PAGE>
PERFORMANCE INFORMATION
Additionally, the performance of a Division may from time to time be compared
with other Indexes which have been deemed by the Company relevant to the
Division.
The performance of the intermediate or long-term debt securities may be
compared to the Merrill Lynch Corporate and Government Master Index. The Merill
Lynch Corporate and Government Master Index consists of an index of
approximately 5,000 corporate and government bond holdings. The average
maturity of these corporate bond holdings is approximately 10 years. The
performance of the money market or short-term debt securities sector may be
compared to the Certificate of Deposit Primary Offering by New York City Banks,
30 Day Index.
The performance of North American-AG Growth Division Fifteen, North American-
AG Growth & Income Division 16, North American-T. Rowe Price Science &
Technology Division 17, North American-AG Social Awareness Division 12, North
American-AG Stock Index Division 10, Putnam New Opportunities Division 26, and
Putnam OTC & Emerging Growth Division 27 may be compared to the S&P 500(R)
Index.
The performance of Janus Adviser Worldwide Division 47 may be compared to the
EAFE Index. The EAFE Index, which commenced in 1969, is an unmanaged stock index
consisting of more than 1,000 companies from Europe, Australia and the Far East.
The index is capitalization weighted. It is a well known measure for
international stock performance. Total returns (with income reinvested) for the
EAFE Index are published using two methods. The first method includes gross
income (income earned without subtracting foreign income taxes which may be
withheld from foreign investors). The second method includes net income (income
earned after subtracting estimated foreign taxes). The Division currently
compares its performance with the index using the second method.
The performance of the North American-AG MidCap Index Division 4 may be
compared to the record of the S&P 500/ (R)/ Index and S&P MidCap 400 Index. The
S&P MidCap 400 Index is market weighted and consists of 400 stocks of domestic
companies having a median market capitalization of approximately $____ billion
as of __________, 2000. Stocks included in the S&P MidCap 400 Index are chosen
on the basis of their market size, liquidity and industry group representation.
No stocks included in the S&P 500 Index are included in the S&P MidCap 400
Index.
The performance of North American-AG Money Market Division 6 may be compared
to the Certificate of Deposit Primary Offering by New York City Banks, 30 Day
Index. The index is a money market index which reflects the average rate paid by
New York Banks on certificates of deposit of more than $100,000. The Index for
30 days is published daily.
The performance of the North American-AG Small Cap Index Division 14, North
American - J. P. Morgan Small Cap Growth Division 35 Putnam OTC & Emerging
Growth Division 2 may be compared to the Russell 2000(R) Index ("Russell
2000").** The Russell 2000 was developed in 1984 by the Frank Russell Trust
Company to track the stock market performance of small capitalization domestic
stocks. The Russell 2000 is market weighted and consists of approximately 2000
stocks. Stocks included in the Russell 2000 are chosen by the Frank Russell
Trust Company on the basis of their market size.
The performance of the American Century Ultra Division 31 may be compared to
both the S&P 500(R) Index and the National Association of Securities Dealers
Automated Quotations (NASDAQ) Composite Price Index. The NASDAQ Composite Price
Index was developed by the National Association of Securities Dealers (NASD) on
May 17, 1971 with figures available from February 5, 1971, at which time the
index value was 100. Through NASDAQ, the NASD provides daily, weekly, and
monthly sets of stock price indicators for Over-the-Counter (OTC) securities in
different industry categories. As of the end of 1999, over 4,000 issues were
contained in the NASDAQ Composite Price Index.
The performance of the North American - Goldman Sachs Large Cap Growth
Division Thirty-Nine may be compared to the Russell 1000 Growth Index. The
Russell 10000 Index consists of the largest 1000 companies in the Russell 30000
Index. This Index represents the universe of large capitalization stocks from
which most active money managers typically select. The Index was developed with
a base value of 130,000 as of December 31, 1986. The Russell 3000 Index is
composed of 3000 large U. S. Companies, as determined by market capitalization.
This portfolio of securities represents approximately 98% of the investable U.
S. equity market. The Russell 3000 Index is comprised of stocks within the
Russell 1000 and the Russell 2000 Indices. The Index was developed with a base
value of 140,000 as of December 31, 1986.
10
<PAGE>
The performance of Janus Adviser Worldwide Division 47 and Putnam Global
Growth Division 28 may be compared to the Morgan Stanley Capital International
All Country World Free Index ("MSCI All Country World Free Index"). Total
returns (with income reinvested) for the MSCI All Country World Free Index is
published using two methods. The first method includes gross income (income
earned without subtracting foreign income taxes which may be withheld from
foreign investors). The second method includes net income (income earned after
subtracting estimated foreign taxes. The Division currently compares its
performance with the index using the second method. The unmanaged MSCI All
Country World Free Index is an unmanaged index of global equity securities
available to non-domestic investors, with all values expressed in U.S. dollars.
The performance of the Janus Advisor Worldwide Division 47 may be compared to
the Morgan Stanley Capital International World Index ("MSCI World Index"). The
MSCI World Index is an unmanaged capitalization weighted index consisting of
more than 1,364 issues from 22 countries as well as certain South Africa gold.
Total returns (with income reinvested) for the MSCI World Index are published
using two methods. The first method includes gross income (income earned without
subtracting foreign income taxes which may be withheld from foreign investors).
The second method includes net income (income earned after subtracting estimated
foreign taxes). The Division currently compares its performance with these
indexes using the second method.
PERFORMANCE INFORMATION
AVERAGE ANNUAL TOTAL RETURN AND CUMULATIVE RETURN TABLES
In the prospectus and the sections above we have described a number of ways we
may advertise information about the investment performance of VALIC Separate
Account A Divisions. Certain performance information for each VALIC Separate
Account A Division is printed in the two tables below.
The information presented does not reflect the advantage under Potentia of
deferring federal income tax on increases in Account Value due to earnings
attributable to Purchase Payments (see "Federal Tax Matters" in the prospectus
and in the Statement of Additional Information.) The information presented also
does not reflect the advantage under Qualified Contracts of deferring federal
income tax on Purchase Payments.
The performance results shown in the following tables are not an estimate or
guarantee of future investment performance, and do not represent the actual
experience of amounts invested by a particular Participant.
11
<PAGE>
TABLE I
AVERAGE ANNUAL TOTAL RETURN
IN A HYPOTHETICAL CONTRACT*
(FROM UNDERLYING FUND INCEPTION TO [DECEMBER 31, 2000])
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
FUND INCEPTION SINCE
FUND AND DIVISION DATE INCEPTION 10 YEARS 5 YEARS 1 YEAR
<S> <C> <C> <C> <C> <C>
North American - AG Growth & Income Fund
North American - AG MidCap Index Fund**
North American - AG 1 Money Market Fund
North American - T. Rowe Price Science & Technology Fund
North American - AG Small Cap Index Fund
North American - AG Social Awareness Fund
North American - AG Stock Index Fund
North American - AG Aggressive Growth
Lifestyle Fund
American Century Ultra Fund
North American - AG Conservative
Growth Lifestyle Fund
North American - AG Core Bond Fund
Janus Adviser Worldwide Fund
North American - Goldman Sachs Large Cap Growth Fund
North American - AG Moderate Growth Lifestyle Fund
North American - J.P. Morgan Small Cap Growth Fund
North American - AG Strategic Bond Fund
Putnam Global Growth Fund - Class A Shares
Putnam New Opportunities Fund -Class A Shares
Putnam OTC & Emerging Growth Fund - Class A Shares
</TABLE>
. The performance figures in the Table reflect the investment performance for
the Divisions for the stated periods and should not be used to infer that
future performance will be the same. The Table reflects the historical
performance of each Fund based on investment in a hypothetical Contract from
the date of the Fund's inception. Hypothetical performance is based on the
actual performance of the underlying Fund reduced by Separate Account fees
that would have been incurred during the hypothetical period. The
Standard Average Annual Total Return for all Divisions will be shown when it
becomes available.
** On October 1, 1991, the Fund underlying the North American - AG MidCap Index
Division changed its name from the Capital Accumulation Fund to the MidCap
Index Fund and amended its investment objective, investment program and
investment restrictions accordingly. The performance figures for the North
American - A G. MidCap Index Division reflect the performance of the MidCap
Index Fund since October 1, 1991.
12
<PAGE>
TABLE II
CUMULATIVE RETURN
IN A HYPOTHETICAL CONTRACT*
(FROM UNDERLYING FUND INCEPTION TO DECEMBER 31, 2000)
<TABLE>
<CAPTION>
FUND INCEPTION SINCE
FUND AND DIVISION DATE INCEPTION 10 YEARS 5 YEARS 1 YEAR
<S> <C> <C> <C> <C> <C>
North American - AG Growth & Income Fund
North American - AG MidCap Index Fund
North American - AG1 Money Market Fund
North American - T. Rowe Price Science & Technology Fund
North American - AG Small Cap Index Fund
North American - AG Social Awareness Fund
North American - AG Stock Index Fund
North American - AG Aggressive Growth
Lifestyle Fund
American Century Ultra Fund
North American - AG Conservative
Growth Lifestyle Fund
North American - AG Core Bond Fund
Janus Adviser Worldwide Fund
North American - Goldman Sachs Large Cap Growth Fund
North American - AG Moderate Growth Lifestyle Fund
North American - J.P. Morgan Small Cap Growth Fund
North American - AG Strategic Bond Fund
Putnam Global Growth Fund - Class A Shares
Putnam New Opportunities Fund -Class A Shares
Putnam OTC & Emerging Growth Fund - Class A Shares
</TABLE>
* The performance figures in the Table reflect the investment performance for
the Divisions for the stated periods and should not be used to infer that
future performance will be the same. The Table reflects the historical
performance of each Fund based on investment in a hypothetical Contract from
the date of the Fund's inception. Hypothetical performance is based on the
actual performance of the underlying Fund reduced by Separate Account fees
that would have been incurred during the hypothetical period. The Standard
Average Annual Total Return for all Divisions will be shown when it becomes
available.
** On October 1, 1991, the Fund underlying the North American - AG MidCap Index
Division changed its name from the Capital Accumulation Fund to the MidCap
Index Fund and amended its investment objective, investment program and
investment restrictions accordingly. The performance figures for the North
American - AG MidCap Index Division reflect the performance of the MidCap
Index Fund since October 1, 1991.
13
<PAGE>
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
The Company has qualified or intends to qualify the Contracts for sale in all
fifty states and the District of Columbia and will commence offering the
Contracts promptly upon qualification in each such jurisdiction.
The Contracts are sold in a continuous offering by licensed insurance agents
who are registered representatives of broker-dealers which are members of the
National Association of Securities Dealers, Inc. (the "NASD"). The principal
underwriter for VALIC Separate Account A is the Distributor, an affiliate of
VALIC. The Distributor is known as American General Financial Distributors of
Florida, Inc. and American General Financial Distributors of Illinois, Inc. in
Florida and Illinois, respectively. The address of the Distributor is 2929 Allen
Parkway, Houston, Texas 77019. The Distributor is a Delaware corporation
organized in 1994 and is a member of the NASD.
Pursuant to its underwriting agreement with the Distributor and VALIC Separate
Account A, the Company reimburses the Distributor for reasonable sales expenses,
including overhead expenses. Prior to May 1, 1999, The Variable Annuity
Marketing Company (VAMCO) was the principal underwriter for VALIC Separate
Account A. The sales commission paid for the year 2000 was $_________.
EXPERTS
The consolidated financial statements of the Company at December 31, ____ and
____, and for each of the three years in the period ended December 31, ____,
appearing in this Statement of Additional Information have been audited by _____
___________, independent auditors, as set forth in their reports thereon
appearing elsewhere herein and are included in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.
COMMENTS ON FINANCIAL STATEMENTS
The financial statements of The Variable Annuity Life Insurance Company should
be considered only as bearing upon the ability of the Company to meet its
obligations under the Contracts, which include death benefits, and its
assumption of the mortality and expense risks.
[Financial Statements to Come]
14
<PAGE>
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A
CONTRACT FORM
POTENTIA
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) The financial statements of the Company are included in Part B hereof.
(b) Exhibits
1. -- Resolutions adopted by The Variable Annuity Life Insurance Company
Board of Directors at its Annual Meeting of April 18, 1979
establishing The Variable Annuity Life Insurance Company Separate
Account A, incorporated herein by reference to Contract Form Portfolio
Director, Portfolio Director 2, and Portfolio Director Plus Post-
Effective Statement No. 5 filed with the Securities and Exchange
Commission ("SEC") on March 1, 1996 (File No. 33-75292/811-3240).
2. -- Not Applicable.
3. -- Underwriting Agreement between The Variable Annuity Life Insurance
Company, The Variable Annuity Life Insurance Company, The Variable
Annuity Life Insurance Company Separate Account A and A.G.
Distributors, Inc., incorporated herein by reference to Contract Form
Portfolio Director, Portfolio Director 2, and Portfolio Director Plus
Post-Effective Amendment No. 17 filed with the SEC on April 26, 2000
(File No. 33-75292/811-3240).
4(a)*. -- Specimen Unallocated Group Contract (____).
4(b)*. -- Specimen Section 403(b) Tax Sheltered Annuity Endorsement.
5*. -- Specimen Application.
6(a). -- Copy of Amended and Restated Articles of Incorporation of The
Variable Annuity Life Insurance Company, incorporated herein by
reference to Contract Form Portfolio Director, Portfolio Director 2,
and Portfolio Director Plus Post-Effective Amendment No. 5 filed with
the SEC on March 1, 1996 (File No. 33-75292/811-3240).
6(b). -- Copy of Amendment Number One to Amended and Restated Articles of
Incorporation of The Variable Annuity Life Insurance Company (as
amended through April 28, 1989) effective March 28, 1990, incorporated
herein by reference to Contract Form Portfolio Director, Portfolio
Director 2, and Portfolio Director Plus Post-Effective Amendment No. 5
filed with the SEC on March 1, 1996 (File No. 33-75292/811-3240).
6(c). -- Copy of Amended and Restated Bylaws of The Variable Annuity Life
Insurance Company as amended through March 4, 1992; incorporated
herein by reference to Contract Form Portfolio Director, Portfolio
Director 2, and Portfolio Director Plus Post-Effective Amendment No.
11 filed with the SEC on December 23, 1997 (File No. 33-75292/811-
3240).
7. -- Not Applicable.
8(a). -- (i) Fund Participation Agreement between The Variable Annuity Life
Insurance Company and Putnam Mutual Funds Corp., incorporated herein
by reference to Contract Form Portfolio Director, Portfolio Director
2, and Portfolio Director Plus Post-Effective Amendment No. 8 filed
with the SEC on June 28, 1996 (File No. 33-75292/811-3240).
(ii) Amendment No. 1 to Fund Participation Agreement between The
Variable Annuity Life Insurance Company and Putnam Mutual Funds Corp.,
effective August 18, 1997; incorporated herein by reference to
Contract Form Portfolio Director, Portfolio Director 2, and Portfolio
Director Plus Post-Effective Amendment No. 11 filed with the SEC on
December 23, 1997 (File No. 33-75292/811-3240).
8(b). -- (i) Fund Participation Agreement between The Variable Annuity Life
Insurance Company and Twentieth Century Investors Inc., incorporated
herein by reference to Contract Form Portfolio Director, Portfolio
Director 2, and Portfolio Director Plus Post-Effective Amendment No. 8
filed with the SEC on June 28, 1996 (File No. 33-75292/811-3240).
<PAGE>
(ii) Amendment No. 1 to Fund Participation Agreement between The
Variable Annuity Life Insurance Company, American Century Mutual
Funds, Inc. and American Century Investment Management, Inc.,
effective December 8, 1997; incorporated herein by reference to
Contract Form Portfolio Director, Portfolio Director 2, and Portfolio
Director Plus Post-Effective Amendment No. 11 filed with the SEC on
December 23, 1997 (File No. 33-75292/811-3240).
(iii) Amendment No. 2 dated January 1, 2000 to Fund Participation
Agreement between The Variable Annuity Life Insurance Company,
American Century Mutual Funds, Inc. and American Century Investment
Management, Inc. dated April 30, 1996, as amended December 8, 1997;
incorporated herein by reference to Contract Form Portfolio Director,
Portfolio Director 2, and Portfolio Director Plus Post-Effective
Amendment No. 17 filed with the SEC on April 26, 2000 (File No. 33-
75292/811-3240).
8(c) (i) Form of Services Agreement between The Variable Annuity Life
Insurance Company and Janus Service Corporation incorporated herein by
reference to Contract Form Portfolio Director, Portfolio Director 2,
and Portfolio Director Plus Post-Effective Amendment No. 18 filed with
the SEC on November 3, 2000 (File No. 33-75292/811-3240).
(ii) Form of Participant Administrative Services Agreement between The
Variable Annuity Life Insurance Company and Janus Service Corporation
incorporated herein by reference to Contract Form Portfolio Director,
Portfolio Director 2, and Portfolio Director Plus Post-Effective
Amendment No. 18 filed with the SEC on November 3, 2000 (File No. 33-
75292/811-3240).
(iii) Form of Distribution and Shareholder Services Agreement between
The Variable Annuity Life Insurance Company and Janus Distributors,
Inc. incorporated herein by reference to Contract Form Portfolio
Director, Portfolio Director 2, and Portfolio Director Plus Post-
Effective Amendment No. 18 filed with the SEC on November 3, 2000
(File No. 33-75292/811-3240).
9*. -- Opinion and Consent of Council.
10*. -- Consent of Independent Auditors.
11. -- Not Applicable.
12. -- Not Applicable.
13*. -- Calculation of performance information.
14. -- Not Applicable.
15. -- Supplemental Information Form which discloses Section 403(b)(11)
withdrawal restrictions as set forth in a no-action letter issued by
the SEC on November 28, 1988, and which requires the signed
acknowledgement of participants who purchase Section 403(b) annuities
with regard to these withdrawal restrictions; incorporated herein by
reference to Contract Form Portfolio Director, Portfolio Director 2,
and Portfolio Director Plus Post-Effective Amendment No. 12 filed with
the SEC on April 29, 1998 (File No. 33-75292/811-3240).
16(a). - Copy of manually signed powers of attorney for The Variable Annuity
Life Insurance Company Directors Bruce R. Abrams, Kent E. Barrett,
Rebecca G. Campbell, Robert P. Condon, John A. Graf and Carl J.
Santillo; incorporated herein by reference to Contract Form Portfolio
Director, Portfolio Director 2, and Portfolio Director Plus Post-
Effective Amendment No. 17 filed with the SEC on April 26, 2000 (File
No. 33-75292/811-3240).
* To be filed by Pre-Effective Amendment.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The directors and principal officers of the Company as of October 18, 2000 are
set forth below. The business address of each officer and director is 2929
Allen Parkway, Houston, Texas 77019.
<TABLE>
<CAPTION>
NAME TITLE
<S> <C>
John A. Graf Chairman, Director, President and Chief Executive Officer
Bruce R. Abrams Director and Executive Vice President -- AGAIC Sales
Kent E. Barrett Director, Executive Vice President and Chief Financial
Officer
Robert P. Condon Director and Executive Vice President -- VALIC Sales &
Institutional Marketing
Alice T. Kane Executive Vice President - AG Fund Group
Carl J. Santillo Director and Executive Vice President -- Operations
Kathleen Adamson Senior Vice President -- Customer Service
Michael J. Akers Senior Vice President and Chief Actuary
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Michael A. Betts Senior Vice President -- Systems
Rebecca G. Campbell Director and Senior Vice President -- Human Resources
Mary L. Cavanaugh Director and Senior Vice President -- General Counsel and
Secretary
Jennifer D. Cobbs Senior Vice President - Field Sales Development
Kenneth E. Coffey Senior Vice President -- National Marketing Director
Terry Eleftheriou Senior Vice President -- Finance
Sharla A. Jackson Senior Vice President -- Customer Service Amarillo
Stephen G. Kellison Senior Vice President -- Product Management
Richard J. Lindsay Senior Vice President -- Marketing
Rosalia Nolan Senior Vice President - Institutional Services
Robert E. Steele Senior Vice President -- Specialty Products
Jane E. Bates Vice President & Chief Compliance Officer
Rosemary Beauvais Vice President -- Corporate Technology Services
James D. Bonsall Vice President -- Financial Reporting
Gregory S. Broer Vice President -- Actuarial
Richard A. Combs Vice President -- Actuarial
Neil J. Davidson Vice President -- Actuarial
David H. den Boer Vice President -- Compliance
Jill A. Etta Vice President - Variable Annuity Sales
Terry B. Festervand Vice President & Treasurer
Daniel Fritz Vice President -- Actuarial
Michael D. Gifford Vice President -- Case Development
Joseph G. Girgenti Vice President -- Sales Support
Albert J. Guiterrez Vice President & Investment Officer
Calvin King Vice President -- North Houston Customer Care Center
Traci P. Langford Vice President -- Account Management
Jerry L. Livers Vice President - PPGA Sales
Cindy Moore Vice President - Budget & Expense Management
Thomas G. Norwood Vice President -- Broker/Dealer Operations
Deanna Osmonson Vice President - Insurance Sales Practices, Compliance
Rembert R. Owen, Jr. Vice President and Assistant Secretary
Larry Robinson Vice President - Product Development
Steven D. Rubinstein Vice President -- Financial Planning and Reporting
Keith Schlosser Vice President - Sales Executive Administration
Richard W. Scott Vice President and Chief Investment Officer
Gary N. See Vice President -- Group Actuarial
Nancy K. Shumbera Vice President - Business Solution Development
Brenda Simmons Vice President - Premium Processing
David Snyder Vice President -- Electronic Commerce
Paula F. Snyder Vice President -- AGRS Marketing Communications
James P. Steele Vice President -- Specialty Products
Kenneth R. Story Vice President -- Information Technology
Brian R. Toldan Vice President -- General Auditor
Julia S. Tucker Vice President -- Investment Officer
Krien Verberkmoes Vice President - Sales Compliance
William A. Wilson Vice President -- Government Affairs
Roger E. Hahn Investment Officer
C. Scott Inglis Investment Officer
Gordon S. Massie Investment Officer
Craig R. Mitchell Investment Officer
W. Larry Mask Real Estate Investment Officer and Assistant Secretary
D. Lynne Walters Tax Officer
Kurt Bernlohr Assistant Secretary
Pauletta P. Cohn Assistant Secretary
Lauren W. Jones Assistant Secretary
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Christine W. McGinnis Assistant Secretary
Connie E. Pritchett Assistant Secretary
Daniel R. Cricks Assistant Tax Officer
Eric Alexander Assistant Treasurer
Paul Hoepfl Assistant Treasurer
Kristy L. McWilliams Assistant Treasurer
William H.Murray Assistant Treasurer
Tara S. Rock Assistant Treasurer
Carolyn Roller Assistant Treasurer
Marilyn S. Zlotnick Assistant Controller
Leslie K. Bates Administrative Officer
Mary C. Birmingham Administrative Officer
Donald L. Davis Administrative Officer
Robert A. Demchak Administrative Officer
Ted D. Hennis Administrative Officer
William L. Hinkle Administrative Officer
Joan M. Keller Administrative Officer
William R. Keller, Jr. Administrative Officer
Fred M. Lowery Administrative Officer
James F. McCulloch Administrative Officer
Michael M. Mead Administrative Officer
Kathryn T. Smith Administrative Officer
</TABLE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT.
The following is a list of American General Corporation's subsidiaries as of
September 30, 2000. All subsidiaries listed are corporations, unless otherwise
indicated. Subsidiaries of subsidiaries are indicated by indentations and
unless otherwise indicated, all subsidiaries are wholly owned. Inactive
subsidiaries are denoted by an asterisk (*).
Jurisdiction of
Name Incorporation
------------------------------------------------------------- ----------------
AGC Life Insurance Company................................... Missouri
American General Property Insurance Company/16/.............. Tennessee
American General Property Insurance Company of Florida.... Florida
American General Life and Accident Insurance Company/6/..... Tennessee
American General Life Insurance Company/7/.................. Texas
American General Annuity Service Corporation.............. Texas
American General Life Companies........................... Delaware
American General Life Insurance Company of New York....... New York
The Winchester Agency Ltd. ............................... New York
The Variable Annuity Life Insurance Company............... Texas
Parkway 1999 Trust/17/.................................. Maryland
PESCO Plus, Inc/14/..................................... Delaware
American General Gateway Services, L.L.C./15/........... Delaware
The Variable Annuity Marketing Company.................. Texas
American General Financial Advisors, Inc. .............. Texas
American General Retirement Services Company............ Texas
VALIC Trust Company..................................... Texas
American General Assignment Corporation of New York..... New York
The Franklin Life Insurance Company......................... Illinois
The American Franklin Life Insurance Company.............. Illinois
Franklin Financial Services Corporation................... Delaware
HBC Development Corporation................................. Virginia
Templeton American General Life of Bermuda, Ltd/13/......... Bermuda
<PAGE>
Western National Corporation................................. Delaware
WNL Holding Corp. ......................................... Delaware
American General Annuity Insurance Company............... Texas
American General Assignment Corporation.................. Texas
American General Distributors, Inc. ..................... Delaware
A.G. Investment Advisory Services, Inc. ................. Delaware
American General Financial Institution Group, Inc. ...... Delaware
WNL Insurance Services, Inc. ............................ Delaware
American General Asset Management Corp. ...................... Delaware
American General International, Inc. ......................... Delaware
American General Enterprise Services, Inc. ................... Delaware
American General Corporation* ................................ Delaware
American General Delaware Management Corporation/1/........... Delaware
American General Finance, Inc. ............................... Indiana
HSA Residential Mortgage Services of Texas, Inc. ............ Delaware
AGF Investment Corp. ........................................ Indiana
American General Auto Finance, Inc. ......................... Delaware
American General Finance Corporation/8/...................... Indiana
American General Finance Group, Inc. ...................... Delaware
American General Financial Services, Inc./9/............. Delaware
The National Life and Accident Insurance Company....... Texas
Merit Life Insurance Co. .................................. Indiana
Yosemite Insurance Company................................. Indiana
American General Finance, Inc. .............................. Alabama
A.G. Financial Service Center, Inc. ......................... Utah
American General Bank, FSB................................... Utah
American General Financial Center, Inc.*..................... Indiana
American General Financial Center, Incorporated*............. Indiana
American General Financial Center Thrift Company*............ California
Thrift, Incorporated*........................................ Indiana
American General Funds Distributors, Inc. .................... Delaware
American General Investment Advisory Services, Inc.*.......... Texas
American General Investment Holding Corporation/10/........... Delaware
American General Investment Management, L.P./10/............. Delaware
American General Investment Management Corporation/10/........ Delaware
American General Realty Advisors, Inc. ....................... Delaware
American General Realty Investment Corporation................ Texas
AGLL Corporation/11/......................................... Delaware
American General Land Holding Company........................ Delaware
AG Land Associates, LLC/11/................................ California
GDI Holding, Inc.*/12/....................................... California
Pebble Creek Service Corporation............................. Florida
SR/HP/CM Corporation......................................... Texas
Green Hills Corporation....................................... Delaware
Knickerbocker Corporation..................................... Texas
American Athletic Club, Inc. ................................ Texas
Pavilions Corporation......................................... Delaware
USLIFE Corporation............................................ Delaware
All American Life Insurance Company.......................... Illinois
American General Assurance Company........................... Illinois
American General Indemnity Company......................... Nebraska
USLIFE Credit Life Insurance Company of Arizona............ Arizona
American General Life Insurance Company of Pennsylvania...... Pennsylvania
I.C. Cal*.................................................... California
North Central Administrators, Inc. .......................... Minnesota
North Central Life Insurance Company......................... Minnesota
<PAGE>
North Central Caribbean Life, Ltd. ......................... Nevis
The Old Line Life Insurance Company of America................ Wisconsin
The United States Life Insurance Company in the City of.......
New York.................................................... New York
American General Bancassurance Services, Inc. ................ Illinois
USMRP, Ltd. ................................................ Turks & Caicos
USLIFE Realty Corporation..................................... Texas
USLIFE Real Estate Services Corporation................... Texas
USLIFE Systems Corporation.................................... Delaware
American General Finance Foundation, Inc. is not included on this list. It is a
non-profit corporation.
NOTES
1. The following limited liability companies were formed in the State of
Delaware on March 28, 1995. The limited liability interests of each are
jointly owned by AGC and AGDMC and the business and affairs of each are
managed by AGDMC:
American General Capital, L.L.C.
American General Delaware, L.L.C.
2. On November 26, 1996, American General Institutional Capital A ("AG Cap
Trust A"), a Delaware business trust, was created. On March 10, 1997,
American General Institutional Capital B ("AG Cap Trust B"), also a Delaware
business trust, was created. Both AG Cap Trust A's and AG Cap Trust B's
business and affairs are conducted through their trustees: Bankers Trust
Company and Bankers Trust (Delaware). Capital securities of each are held by
non-affiliated third party investors and common securities of AG Cap Trust A
and AG Cap Trust B are held by AGC.
3. On November 14, 1997, American General Capital I, American General Capital
II, American General Capital III, and American General Capital IV
(collectively, the "Trusts"), all Delaware business trusts, were created.
Each of the Trusts' business and affairs are conducted through its trustees:
Bankers Trust (Delaware) and James L. Gleaves (not in his individual
capacity, but solely as Trustee).
4. On July 10, 1997, the following insurance subsidiaries of AGC became the
direct owners of the indicated percentages of membership units of SBIL B,
L.L.C. ("SBIL B"), a U.S. limited liability company: VALIC (22.6%), FL
(8.1%), AGLA (4.8%) and AGL (4.8%). Through their aggregate 40.3% interest
in SBIL B, VALIC, FL, AGLA and AGL indirectly own approximately 28% of the
securities of SBI, an English company, and 14% of the securities of ESBL, an
English company, SBP, an English company, and SBFL, a Cayman Islands
company. These interests are held for investment purposes only.
5. Effective December 5, 1997, AGC and Grupo Nacional Provincial, S.A. ("GNP")
completed the purchase by AGC of a 40% interest in Grupo Nacional Provincial
Pensions S.A. de C.V., a new holding company formed by GNP, one of Mexico's
largest financial services companies.
6. AGLA owns approximately 12% of Whirlpool Financial Corp. ("Whirlpool")
preferred stock. AGLA's holdings in Whirlpool represents approximately 3% of
the voting power of the capital stock of Whirlpool. The interests in
Whirlpool (which is a corporation that is not associated with AGC) are held
for investment purposes only.
7. AGL owns 100% of the common stock of American General Securities
Incorporated ("AGSI"), a full-service NASD broker-dealer. AGSI, in turn,
owns 100% of the stock of the following insurance agencies:
American General Insurance Agency, Inc. (Missouri)
American General Insurance Agency of Hawaii, Inc. (Hawaii)
American General Insurance Agency of Massachusetts, Inc. (Massachusetts)
In addition, the following agencies are indirectly related to AGSI, but not
owned or controlled by AGSI:
American General Insurance Agency of Ohio, Inc. (Ohio)
<PAGE>
American General Insurance Agency of Texas, Inc. (Texas)
American General Insurance Agency of Oklahoma, Inc. (Oklahoma)
Insurance Masters Agency, Inc. (Texas)
The foregoing indirectly related agencies are not affiliates or subsidiaries of
AGL under applicable holding company laws, but they are part of the AGC group
of companies under other laws.
8. American General Finance Corporation is the parent of an additional 42
wholly-owned subsidiaries incorporated in 25 states for the purpose of
conducting its consumer finance operations, in addition to those noted in
footnote 9 below.
9. American General Financial Services, Inc., is the direct or indirect parent
of an additional 8 wholly-owned subsidiaries incorporated in 5 states and
Puerto Rico for the purpose of conducting its consumer finance operations.
10. American General Investment Management, L.P., a Delaware limited
partnership, is jointly owned by AGIHC and AGIMC. AGIHC holds a 99% limited
partnership interest, and AGIMC owns a 1% general partnership interest.
11. AG Land Associates, LLC is jointly owned by AGLH and AGLL. AGLH holds a
98.75% managing interest and AGLL owns a 1.25% managing interest.
12. AGRI owns a 75% interest in GDI Holding, Inc.
13. AGCL owns 50% of the common stock of TAG Life. Templeton International,
Inc., a Delaware corporation, owns the remaining 50% of TAG Life. Templeton
International, Inc. is not affiliated with AGC.
14. VALIC holds 90% of the outstanding common shares of PESCO Plus, Inc. The
Florida Education Association/United, a Florida teachers union and
unaffiliated third party, holds the remaining 10% of the outstanding common
shares.
15. VALIC holds 90% of the outstanding common shares of American General
Gateway Services, L.L.C. Gateway Investment Services, Inc., a California
corporation and an unaffiliated third party, holds the remaining 10% of the
outstanding common shares.
16. AGPIC is jointly owned by AGCL and AGLA. AGCL owns 51.85% and AGLA owns
48.15% of the issued and outstanding shares of AGPIC.
17. Parkway 1999 Trust was formed as a Maryland business trust to function as
an investment subsidiary. VALIC owns 100% of its common equity.
COMPANY ABBREVIATIONS AS USED IN ITEM 26:
COMPANY ABBREVIATIONS AS USED IN
REGISTRATION STATEMENT AMENDMENT
State/Jur.
Abb. Company of Domicile
------ --------------------------------------------- -----------
AAL All American Life Insurance Company.................... IL
AAth American Athletic Club, Inc............................ TX
AFLI The American Franklin Life Insurance Company........... IL
AGAIC American General Annuity Insurance Company............. TX
AGAMC American General Asset Management Corp................. DE
ASGN-N American General Assignment Corporation of New York.... NY
AGAC American General Assurance Company..................... IL
AGAS American General Annuity Service Corporation........... TX
AGBS American General Distributors, Inc..................... DE
AGB American General Bank, FSB.............................
<PAGE>
AGC American General Corporation........................... TX
AGCL AGC Life Insurance Company............................. MO
AGDMC American General Delaware Management Corporation....... DE
AGES American General Enterprise Services, Inc.............. DE
AGF American General Finance, Inc.......................... IN
AGFC American General Finance Corporation................... IN
AGFCI American General Financial Center, Incorporated........ IN
AGFCT American General Financial Center Thrift Company....... CA
AGFG American General Finance Group, Inc.................... DE
AGFDI American General Funds Distributors, Inc............... DE
AGF Inv AGF Investment Corp.................................... IN
AGFn A.G. Financial Service Center, Inc..................... UT
AGFnC American General Financial Center, Inc................. IN
AGFS American General Financial Services, Inc............... DE
AGFA American General Financial Advisors, Inc............... TX
AGFIG American General Financial Institutions Group, Inc..... DE
AGGS American General Gateway Services, L.L.C............... DE
AGIA American General Insurance Agency, Inc................. MO
AGIAH American General Insurance Agency of Hawaii, Inc....... HI
AGIAM American General Insurance Agency of
Massachusetts, Inc..................................... MA
AGIAO American General Insurance Agency of Ohio, Inc......... OH
AGIAOK American General Insurance Agency of Oklahoma, Inc..... OK
AGIAS A.G. Investment Advisory Services, Inc................. DE
AGIAT American General Insurance Agency of Texas, Inc........ TX
AGII American General International, Inc.................... DE
AGIHC American General Investment Holding Corporation........ DE
AGIM American General Investment Management, L.P............ DE
AGIMC American General Investment Management Corporation..... DE
AGIND American General Indemnity Company..................... NE
AGL American General Life Insurance Company................ TX
AGLC American General Life Companies ....................... DE
AGLA American General Life and Accident Insurance Company... TN
AGLH American General Land Holding Company.................. DE
AGLL AGLL Corporation....................................... DE
AGNY American General Life Insurance Company of New York.... NY
AGPA American General Life Insurance Company of Pennsylvania PA
AGPIC American General Property Insurance Company............ TN
AGRA American General Realty Advisors, Inc.................. DE
AGRI American General Realty Investment Corporation......... TX
AGRSC American General Retirement Services Company........... TX
AGSI American General Securities Incorporated............... TX
AGX American General Exchange, Inc......................... TN
ASGN American General Assignment Corporation................ TX
FFSC Franklin Financial Services Corporation................ DE
FL The Franklin Life Insurance Company.................... IL
GHC Green Hills Corporation................................ DE
HBDC HBC Development Corporation............................ VA
KC Knickerbocker Corporation.............................. TX
ML Merit Life Insurance Co................................ IN
NLA The National Life and Accident Insurance Company....... TX
NCA North Central Administrators, Inc...................... MN
NCL North Central Life Insurance Company................... MN
NCCL North Central Caribbean Life, Ltd...................... T&C
OLL The Old Line Life Insurance Company of America......... WI
PKWY Parkway 1999 Trust..................................... MD
PAV Pavilions Corporation.................................. DE
PCSC Pebble Creek Service Corporation....................... FL
PIFLA American General Property Insurance Company of Florida. FL
PPI PESCO Plus, Inc........................................ DE
RMST HSA Residential Mortgage Services of Texas, Inc........ DE
SRHP SR/HP/CM Corporation................................... TX
TAG Lif Templeton American General Life of Bermuda, Ltd........ BA
TI Thrift, Incorporated................................... IN
UAS American General Bancassurance Services, Inc........... IL
UC USLIFE Corporation..................................... DE
<PAGE>
UCLA USLIFE Credit Life Insurance Company of Arizona........ AZ
URC USLIFE Realty Corporation.............................. TX
URSC USLIFE Real Estate Service Corporation................. TX
USC USLIFE Systems Corporation............................. DE
USL The United States Life Insurance Company in the City of
New York............................................... NY
USMRP USMRP, Ltd............................................. T&C
VALIC The Variable Annuity Life Insurance Company............ TX
VAMCO The Variable Annuity Marketing Company................. TX
VTC VALIC Trust Company.................................... TX
WA The Winchester Agency Ltd.............................. NY
WIS WNL Insurance Services, Inc............................ DE
WNC Western National Corporation........................... DE
WNLH WNL Holding Corp....................................... DE
YIC Yosemite Insurance Company............................. IN
ITEM 27. NUMBER OF CONTRACT OWNERS
As of June 30, 2000, there were no Owners of the Contracts.
ITEM 28. INDEMNIFICATION
Set forth below is a summary of the general effect of applicable provisions of
the Depositor's Bylaws regarding indemnification of, and advancement of legal
expenses to, the Depositor's officers, directors and employees (collectively,
"Indemnitees").
The Depositor shall indemnify any Indemnitee who was or is a named defendant or
respondent or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative (including any action by or in the right of the
Depositor), or any appeal of such action, suit or proceeding and any inquiry or
investigation that could lead to such an action, suit or proceeding, by reason
of the fact that the Indemnitee is or was a director, or officer or employee of
the Depositor, or is or was serving at the request of the Depositor as a
director, officer, partner, venturer, proprietor, trustee, employee, or similar
functionary of another foreign or domestic corporation or nonprofit corporation,
partnership, joint venture, sole proprietorship, trust, employee benefit plan or
other enterprise, against judgments, penalties (including excise and similar
taxes), fines, amounts paid in settlement, and reasonable expenses (including
court costs and attorneys' fees) actually incurred by him in connection with
such action, suit or proceeding, if Indemnitee acted in good faith and in a
manner he reasonably believed, (i) in the case of conduct in his official
capacity as a director of the Depositor, to be in the best interests of the
Depositor and (ii) in all other cases, to be not opposed to the best interests
of the Depositor; and, with respect to any criminal action or proceeding, if
Indemnitee had no reasonable cause to believe his conduct was unlawful;
provided, however that in the case of any threatened, pending or completed
action, suit or proceeding by or in the right of the Depositor, the indemnity
shall be limited to reasonable expenses (including court costs and attorneys'
fees) actually incurred in connection with such action, suit or proceeding; and
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Depositor or
liable on the basis that personal benefit was improperly received by him,
whether or not the benefit resulted from an action taken in the person's
official capacity as a director or officer. The termination of any action, suit
or proceeding by judgment, order, settlement, or conviction, or on a plea of
nolo contendere or its equivalent shall not, of itself, create a presumption
that the Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in the best interests of the Depositor; and, with
respect to any criminal action or proceeding, shall not create a presumption
that the person had reasonable cause to believe that his conduct was unlawful.
Where an Indemnitee of the Depositor or other person entitled to indemnity
hereunder has been wholly successful, on the merits or otherwise, in defense of
any such action, suit or proceeding, Indemnitee shall be indemnified against
reasonable expenses (including court costs and attorneys' fees) actually
incurred by him in connection therewith.
Any indemnification (unless otherwise ordered by a court of competent
jurisdiction) shall be made by the Depositor only as authorized in a specific
case upon a determination that the applicable standard of conduct has been met.
Such determination shall be made (i) by the Board of Directors by a majority
vote of a quorum consisting of directors who at
<PAGE>
the time of the vote have not been named as defendants or respondents in such
action, suit or proceeding, or (ii) if such a quorum cannot be obtained, by a
majority vote of a committee of the Board of Directors, designated to act in the
matter by a majority vote of all directors, consisting solely of two or more
directors who at the time of the vote are not named defendants or respondents in
such action, suit or proceeding, or (iii) by special legal counsel selected by
the Board of Directors (or a committee thereof) by vote in the manner set forth
in subparagraphs (i) and (ii) immediately above or if such a quorum cannot be
obtained and such a committee cannot be established, by a majority vote of all
directors, or (iv) by the shareholders in a vote that excludes the shares held
by any Indemnitee who is named as a defendant or respondent in such action, suit
or proceeding.
Reasonable expenses incurred by an Indemnitee of the Depositor or other person
entitled to indemnity hereunder, who was, is or is threatened to be made a named
defendant or respondent in any such action, suit or proceeding described above
may be paid by the Depositor in advance of the final disposition thereof upon
(i) receipt of a written affirmation by the Indemnitee of his good faith belief
that he has met the standard of conduct necessary for indemnification under this
article and a written undertaking by or on behalf of the Indemnitee to repay
such amount unless it shall ultimately be determined that he is entitled to be
indemnified by the Depositor as authorized under this article and (ii) a
determination that the facts then known to those making the determination would
not preclude indemnification under this article.
Notwithstanding any other provision of this article, the Depositor may pay or
reimburse expenses incurred by any Indemnitee of the Depositor or any other
person entitled to indemnity hereunder in connection with his appearance as a
witness or other participation in any action, suit or a proceeding described
above at a time when he is not named defendant or respondent in such action,
suit or proceeding.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant, as provided above or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification by the Depositor is against public policy, as expressed in the
Act, and therefore may be unenforceable. In the event (a) that a claim for such
indemnification (except insofar as it provides for the payment by the Depositor
of expenses incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted against the
Depositor by such director, officer or controlling person; and (b) the
Securities and Exchange Commission is still of the same opinion that the
Depositor or Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit such cause to a court of
appropriate jurisdiction, the question of whether such indemnification by the
Depositor is against public policy as expressed in the Act will be governed by
the final adjudication of such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) American General Distributors, Inc. acts as exclusive distributor and
principal underwriter of the Registrant and as principal underwriter for the
North American Funds Variable Product Series I and North American Funds Variable
Product Series II, each a registered investment company.
(b) The following information is furnished with respect to each officer and
director of American General Distributors, Inc. The principal address for each
officer and director listed below is 2929 Allen Parkway, Houston, Texas 77019:
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER
Robert P. Condon Director, Chairman of the Board, Chief Executive
Officer and President
Mary Cavanaugh Director and Secretary
Thomas G. Norwood Director, Chief Financial Officer and Treasurer
Jane E. Bates Vice President and Chief Compliance Officer
V. Keith Roberts Vice President -- Operations
D. Lynne Walters Tax Officer
Cheryl G. Hemley Assistant Secretary
Daniel R. Cricks Assistant Tax Officer
<PAGE>
James D. Bonsall Assistant Treasurer
Steven D. Rubinstein Assistant Treasurer
Marylyn S. Zlotnick Assistant Treasurer
(c) American General Distributors, Inc. is the principal underwriter for
the Registrant. The licensed agents who sell the forms of Contract covered by
this registration statement are compensated for such sales by commissions paid
by Depositor. These commissions do not result in any charge to the Registrant or
to Contract Owners, Participants, Annuitants or Beneficiaries in addition to the
charges described in the prospectuses for the Contract.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules promulgated thereunder will be in
the physical possession of:
The Variable Annuity Life Insurance Company
2929 Allen Parkway
Houston, Texas 77019
ITEM 31. MANAGEMENT SERVICES
There have been no management-related services provided to the Separate Account
for the last three fiscal years.
ITEM 32. UNDERTAKINGS
a. VALIC hereby commits itself, on behalf of the Contract Owners, to the
following undertakings:
1. To file a post-effective amendment to this registration statement
as frequently as necessary to ensure that the audited financial statements
in the registration statement are never more than 16 months old for so long
as payments under the variable annuity contracts may be accepted;
2. To include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an applicant can check to
request a Statement of Additional Information; or (2) a post card or
similar written communication affixed to or included in the prospectus that
the applicant can remove to send for a Statement of Additional Information;
3. To deliver any Statement of Additional Information and any
financial statements required to be made available under this form promptly
upon written or oral request.
b. The Company hereby represents that the fees and charges deducted under
the contract, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred and the risks assumed by the
Company.
c. Additional Commitments
The Tax Reform Act of 1986 added to the Internal Revenue Code a new Section
403(b)(11) which applies to tax years beginning after December 31, 1988. This
paragraph provides that withdrawal restrictions apply to contributions made and
interest earned subsequent to December 31, 1988. Such restrictions require that
distributions not begin before age 59 1/2, separation from service, death,
disability, or hardship (only employee contributions without accrued interest
may be withdrawn in case of hardship). These withdrawal restrictions appear in
the Section "Federal Tax Matters" in either the Prospectus or the Statement of
Additional Information for Contracts of this Registration Statement.
The Company relies on a no-action letter issued by the Securities and
Exchange Commission on November 28, 1988 stating that no enforcement action
would be taken under sections 22(e), 27(c)(1), or 27(d) of the Investment
Company Act of 1940 (the "Act") if, in effect, the Company permits restrictions
on cash distributions from elective contributions to the extent necessary to
comply with Section 403(b)(11) of the Internal Revenue Code in accordance with
the following conditions:
<PAGE>
(1) Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in each registration statement, including the
prospectus, used in connection with the offer of the Contract;
(2) Include appropriate disclosure regarding the redemption restrictions
imposed by Section 403(b)(11) in any sales literature used in connection with
the offer of the Contract;
(3) Instruct sales representatives who solicit participants to purchase the
Contract specifically to being the redemption restrictions imposed by Section
403(b)(11) to the attention of the potential participants;
(4) Obtain from each plan participant who purchases a Section 403(b) annuity
Contract, prior to or at the time of such purchase, a signed statement
acknowledging the participant's understanding of (1) the restrictions on
redemption imposed by Section 403(b)(11), and (2) the investment alternatives
available under the employer's Section 403(b) arrangement, to which the
participant may elect to transfer his contract value.
The Company has complied, and is complying, with the provisions of paragraphs
(1)-(4) above.
The Company relies on Rule 6c-7 of the Act which states that a registered
separate account, and any depositor of or underwriter for such account, shall be
exempt from the provisions of sections 22(e), 27(c)(1) and 27(d) of the Act with
respect to this Contract participating in this account to the extent necessary
to permit compliance with the Texas Optional Retirement Program (Program) in
accordance with the following conditions:
(a) include appropriate disclosure regarding the restrictions on
redemption imposed by the Program in each registration statement,
including the prospectus, used in connection with the Program;
(b) include appropriate disclosure regarding the restrictions on
redemption imposed by the Program in any sales literature used in
connection with the offer of this Contract to Program participants;
(c) instruct salespeople who solicit Program participants to purchase
this Contract specifically to bring the restrictions on redemption
imposed by the Program to the attention of potential Program
participants;
(d) obtain from each Program participant who purchases this Contract in
connection with the Program, prior to or at the time of such purchase, a
signed statement acknowledging the restrictions on redemption imposed by
the Program.
The Company has complied, and is complying, with the provisions of
paragraphs (a)-(d) above.
The Company relies on an order issued by the Securities and Exchange
Commission on May 19, 1993 exempting it from the provisions of section 22(e),
27(c)(1) and 27(d) of the Act with respect to this Contract participating in
this account to the extent necessary to permit compliance with the Optional
Retirement Program of the State University System of Florida ("Florida ORP") as
administered by the Division of Retirement of the Florida Department of
Management Services ("Division") in accordance with the following conditions:
(a) include appropriate disclosure regarding the restrictions on
redemption imposed by the Division in each registration statement,
including the prospectus, relating to the Contracts issued in connection
with the Florida ORP;
(b) include appropriate disclosure regarding the restrictions on
redemption imposed by the Division in any sales literature used in
connection with the offer of Contracts to Eligible Employees;
(c) instruct salespeople who solicit Eligible Employees to purchase the
Contracts specifically to bring the restrictions on redemption imposed
by the Division to the attention of the Eligible Employees;
(d) obtain from each Participant in the Florida ORP who purchases a
Contract, prior to or at the time of such purchase, a signed statement
acknowledging the Participant's understanding: (i) of the restrictions
<PAGE>
on redemption imposed by the Division, and (ii) that other investment
alternatives are available under the Florida ORP, to which the
Participant may elect to transfer his or her Contract values.
The Company has complied, and is complying, with the provisions of
paragraphs (a)-(d) above.
<PAGE>
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, The Variable Annuity Life Insurance Company Separate
Account A, has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in the City of Houston, State of Texas, on this 3rd day of
November, 2000.
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A
[seal] THE VARIABLE ANNUITY
LIFE INSURANCE COMPANY
Attest: /s/ Pauletta P. Cohn By: /s/ Mary L. Cavanaugh
________________________ ______________________________________
Pauletta P. Cohn Mary L. Cavanaugh
Assistant Secretary Senior Vice President, General Counsel
and Secretary
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Depositor, The Variable Annuity Life Insurance Company, has duly
caused this amendment to be signed on its behalf by the undersigned thereunto
duly authorized, and its seal to be hereunto affixed and attested, all in the
City of Houston, State of Texas, on this 3rd day of November, 2000.
[seal] THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
Attest: /s/ Pauletta P. Cohn By: /s/ Mary L. Cavanaugh
________________________ ______________________________________
Pauletta P. Cohn Mary L. Cavanaugh
Assistant Secretary Senior Vice President, General Counsel
and Secretary
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this amendment
has been signed below by the following persons in the capacities and on the date
indicated.
SIGNATURE TITLE DATE
--------- ----- ----
* Chairman, Chief Executive November 3, 2000
________________________ Officer and President
John A. Graf
/s/ Kent E. Barrett Director, Executive Vice President November 3, 2000
________________________ and Chief Financial Officer and
Kent E. Barrett Principal Accounting Officer
* Director November 3, 2000
________________________
Bruce R. Abrams
/s/ Mary L. Cavanaugh Director November 3, 2000
________________________
Mary L. Cavanaugh
* Director November 3, 2000
________________________
Carl J. Santillo
* Director November 3, 2000
________________________
Robert P. Condon
* Director November 3, 2000
________________________
Rebecca G. Campbell
*By: /s/ Mary L. Cavanaugh
_______________________
Mary L. Cavanaugh
Attorney-in-Fact
