NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES CO I, 497, 2000-10-04

NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES CO I
497, 2000-10-04

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<PAGE> 1

NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES I

2929 ALLEN PARKWAY
HOUSTON, TEXAS 77019
OCTOBER 1, 2000
PROSPECTUS

North American Funds Variable Product Series I, American General Series
Portfolio Company prior to October 1, 2000 (the "Series Company") is a mutual
fund made up of 19 separate Funds (the "Funds"), four of which are described in
the prospectus. Each of the Funds has a different investment objective. Each
Fund is explained in more detail on its Fact Sheet contained in this prospectus.

As of October 1, 2000, the name of each Fund has changed. The investment
objectives, policies, and strategies have not changed, just the Fund names. Here
is a list of the old and new names for the Funds:

<TABLE>
<CAPTION>
NAME PRIOR TO OCTOBER 1, 2000 NAME AS OF OCTOBER 1, 2000
---------------------------------------------------------- ----------------------------------------------------------
<S> <C>
International Equities Fund North American-AG International Equities Fund
MidCap Index Fund North American-AG MidCap Index Fund
Money Market Fund North American-AG 1 Money Market Fund
Stock Index Fund North American-AG Stock Index Fund
</TABLE>

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES NOR HAS IT DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE.
IT IS A CRIMINAL OFFENSE TO STATE OTHERWISE.
<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
COVER PAGE
WELCOME TO AMERICAN GENERAL.................... 1
ABOUT THE FUNDS................................ 1
Growth and Stability Categories........... 1
FUND FACT SHEETS............................... 2
North American-AG International Equities
Fund ("International Equities")......... 2
North American-AG MidCap Index Fund
("MidCap Index")........................ 4
North American-AG 1 Money Market Fund
("Money Market")........................ 6
North American-AG Stock Index Fund ("Stock
Index")................................. 8
MORE ABOUT PORTFOLIO INVESTMENTS............... 10
Equity Securities......................... 10
Fixed Income Securities................... 10
Asset-Backed Securities................... 11
Loan Participations....................... 11
Mortgage-Related Securities............... 11
Variable Rate Demand Notes................ 12
Foreign Securities........................ 12
ADRs...................................... 12
</TABLE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Foreign Currency.......................... 12
Illiquid Securities....................... 12
Futures and Options....................... 12
When-Issued Securities.................... 13
Money Market Securities................... 13
Repurchase Agreements..................... 13
Lending Portfolio Securities.............. 13
Diversification........................... 13
A Word About Risk......................... 13
About Portfolio Turnover.................. 14
ABOUT THE SERIES COMPANY'S MANAGEMENT.......... 15
Investment Adviser........................ 15
How American General Advisers is Paid For
Its Services............................ 15
ABOUT INDEX EQUITY FUNDS....................... 16
ABOUT THE SERIES COMPANY....................... 18
Series Company Shares..................... 18
Net Asset Value of the Series Company
Shares.................................. 18
Dividends and Capital Gains............... 18
Tax Consequences.......................... 19
Redemptions............................... 19
FINANCIAL HIGHLIGHTS........................... 20
</TABLE>

(i)
<PAGE> 3

WELCOME TO AMERICAN GENERAL
--------------------------------------------------------------------------------

American General Corporation, with assets of approximately $121 billion and
shareholders' equity of $7.9 billion as of June 30, 2000, is the parent company
of one of the nation's largest diversified financial services organizations.
American General's operating divisions deliver a wide range of retirement
services, life insurance, and consumer finance products and services to diverse
markets through focused distribution channels. American General, headquartered
in Houston, was incorporated as a general business corporation in Texas in 1980
and is the successor to American General Insurance Company, an insurance company
incorporated in Texas in 1926.

The address of American General Corporation and its subsidiaries, including The
Variable Annuity Life Insurance Company ("VALIC") and American General
Investment Management, L.P. ("AGIM"), is 2929 Allen Parkway, Houston, Texas
77019. American General Advisers, the investment adviser, is a division of
VALIC.

Unless otherwise specified in this prospectus, the words we and our mean
American General Advisers. The words you and your mean the participant.

Individuals can't invest in these Funds directly. Instead, they participate
through an annuity contract, variable life policy, or employer plan
(collectively, the "Contracts" and each a Contract) with VALIC or one of its
affiliates, or employee thrift plans maintained by VALIC or American General
Corporation. Most often employers set up annuity contracts so they can offer
their employees a way to save for retirement or assist them in estate planning.
Retirement plans through employers may be entitled to tax benefits that
individual retirement plans may not be entitled to. These tax benefits are more
fully explained in your contract prospectus.

After you invest in a Fund, you participate in Fund earnings or losses in
proportion to the amount of money you invest. Depending on your contract, if you
withdraw your money before retirement, you may incur charges and additional tax
liabilities. However, to save for retirement, you generally should let your
investments and their earnings build. At retirement, you may withdraw all or a
portion of your money, leave it in the account until you need it, or start
receiving annuity payments. At a certain age you may be required to begin
withdrawals.

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

All inquiries regarding annuity contracts or variable life policies issued by
American General Life Insurance Company (AGL) should be directed to AGL's
Annuity Administration Department, 2727-A Allen Parkway, Houston, Texas
77019-2191 or call 1-800-813-5065. AGL is a member of the American General
Corporation group of companies, as is VALIC.

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

ABOUT THE FUNDS
--------------------------------------------------------------------------------

GROWTH AND STABILITY CATEGORIES

The Funds offered in this prospectus fall into two general investment
categories: growth and stability.

Growth Category

The goal of a Fund in the growth category is to increase the value of your
investment over the long term by investing mostly in stocks. Stocks are a type
of investment that can increase in value over a period of years. Companies sell
stock to get the money they need to grow. These companies often keep some of
their profits to reinvest in their business. As they grow, the value of their
stock may increase. This is how the value of your investment may increase.

Series Company Growth Category includes:

International Equities

MidCap Index

Stock Index

Stability Category

Funds in the stability category provide liquidity, protection of capital and
current income through investments in high quality securities.

Series Company Stability Category includes:

Money Market

1
<PAGE> 4

NORTH AMERICAN -- AG
INTERNATIONAL EQUITIES
FUND
Fact Sheet
-------------------------------------------------
Investment Goal GROWTH THROUGH
INVESTMENTS TRACKING
THE EAFE INDEX
-------------------------------------------------
Investment Category GROWTH

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

INVESTMENT ADVISER
American General Advisers

-----------------------
Additional information
about THE FUND'S
INVESTMENTS is provided
under "More about
Portfolio Investments".
-----------------------

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

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

We follow the guidelines listed below for making the primary investments for the
Fund. For temporary defensive purposes, we may invest up to 100% of the Fund's
assets in high quality foreign and domestic money market securities. We may do
this when we think economic, political or market conditions in foreign countries
make it too risky to follow our general guidelines. Whenever the Fund assumes
such a defensive position the Fund may not achieve its investment objective.

<TABLE>
<CAPTION>
Percent of
Fund Investments Fund's Assets*
----------------------------------------------------
<S> <C>
Stocks in the EAFE Index at least 65%
----------------------------------------------------
Other investments not in
EAFE Index
Foreign equity and no more than 35%
related securities
including common
stocks, convertible
stocks, preferred
stocks and warrants
----------------------------------------------------
Futures and options
Covered put and call no more than 33%
options on foreign
currencies Listed
and unlisted put and
call options on
currency futures
Listed and unlisted
foreign currency
contracts
----------------------------------------------------
High quality foreign and up to 100%
domestic money market
securities
----------------------------------------------------
</TABLE>

* At time of purchase.

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

Market Risk: the risk that the value of the securities purchased by the Fund
will decline as a result of economic, political or market conditions or an
issuer's financial circumstances.

Foreign Securities Risks:

Political Risk: the risk that a change in a foreign government will occur and
that the assets of a company in which the Fund has invested will be affected.

Currency Risk: the risk that a foreign currency will decline in value. The
Fund generally will trade, for hedging purposes, in currencies other than the
U.S. dollar. An increase in the value of the U.S. dollar relative to a
foreign currency will adversely affect the value of the Fund.

Sovereign Risk: the risk that a foreign government will interfere with
currency trading or transferring money out of the country.

Liquidity Risk: foreign markets may be less liquid and more volatile than
U.S. markets.

Limited Information Risk: the risk that foreign companies may not be subject
to accounting standards or governmental supervision comparable to U.S.
companies and that less public information about their operations may exist
and they may offer less protection to investors.

Developing Country Risk: the risks associated with investment in foreign
securities are heightened in connection with investments in the securities of
issuers in developing countries, as these markets are generally more volatile
than the markets of developed countries.

Settlement and Clearance Risk: the risks associated with the clearance and
settlement procedures in non-U.S. markets, which may be unable to keep pace
with the volume of securities transactions and may cause delays.

Manager Risk: like all managed funds, there is a risk that the Fund's management
strategy may not achieve the desired results and the Fund's performance may lag
behind that of similar funds.

2
<PAGE> 5

INTERNATIONAL EQUITIES
--------------------------------------------------------------------------------

PERFORMANCE INFORMATION
-------------------------------------------------

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

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

[Bar chart]

------------
* For the year-to-date through June 30, 2000, the Fund's return was (6.47%).

The highest quarterly return for the Fund from January 1, 1990 to December 31,
1999, was 21.36% (for the quarter ended December 31, 1998) and the lowest
quarterly return was (18.20%) (for the quarter ended March 31, 1990).

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

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

<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
<S> <C> <C> <C>
The Fund 29.19% 13.16% 7.18%
EAFE Index 26.96% 12.83% 7.01%
</TABLE>

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

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

3
<PAGE> 6

NORTH AMERICAN -- AG
MIDCAP INDEX
FUND
Fact Sheet
-------------------------------------------------
Investment Goal GROWTH THROUGH
INVESTMENTS TRACKING
THE S&P 400 MIDCAP
INDEX
-------------------------------------------------
Investment Category GROWTH

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

INVESTMENT ADVISER
American General Advisers

INVESTMENT OBJECTIVE
Seeks to provide growth of capital through investments primarily in a
diversified portfolio of common stocks that, as a group, are expected to provide
investment results closely corresponding to the performance of the Standard &
Poor's MidCap 400 Index (S&P MidCap 400 Index).

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

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

We follow the guidelines listed below for making the primary investments for the
Fund.

<TABLE>
<CAPTION>
Percent of
Fund Investments Fund's Assets*
----------------------------------------------------
<S> <C>
Stocks in the S&P MidCap at least 65%
400 Index
----------------------------------------------------
Futures and options no more than 33%
----------------------------------------------------
Investments not in the
S&P
MidCap 400 Index
Common stock and no more than 35%
related securities
High quality money
market securities
Illiquid securities
----------------------------------------------------
* At time of purchase.
</TABLE>

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

Market Risk: the risk that the value of the securities purchased by the Fund
will decline as a result of economic, political or market conditions or an
issuer's financial circumstances.

Additional information
about THE FUND'S
INVESTMENTS is provided
under "More about
Portfolio Investments".

Additional information
about INDEX FUNDS
is provided under "About
Index Equity Funds".

4
<PAGE> 7

MIDCAP INDEX
--------------------------------------------------------------------------------

PERFORMANCE INFORMATION
-------------------------------------------------

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

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

[Bar chart]

------------
* For the year-to-date through June 30, 2000, the Fund's return was 8.72%.

The highest quarterly return for the Fund from October 1, 1991 to December 31,
1999, was 28.22% (for the quarter ended December 31, 1998) and the lowest
quarterly return was (14.54%) (for the quarter ended September 30, 1998).

This table compares the Fund's average annual returns to the returns of the S&P
400 Midcap 400 Index for the one- and five-calendar year periods and since
inception of the Fund.
-------------------------------------------------

<TABLE>
<CAPTION>
1 YEAR 5 YEARS SINCE INCEPTION**
------ ------- -----------------
<S> <C> <C> <C>
The Fund 14.92% 22.81% 17.31%
S&P Midcap Index 14.72% 23.05% 17.92%
</TABLE>

-------------------------------------------------
** 10/01/91.

5
<PAGE> 8

NORTH AMERICAN -- AG 1
MONEY MARKET FUND
Fact Sheet
-------------------------------------------------
Investment Goal INCOME THROUGH
INVESTMENTS IN SHORT-
TERM MONEY MARKET
SECURITIES
-------------------------------------------------
Investment Category STABILITY

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

INVESTMENT ADVISER
American General Advisers

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

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

The investments this Fund may buy include:

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

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

- Commercial paper sold by corporations and finance companies

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

- Repurchase agreements

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

- Asset-backed securities

- Loan participations

- Adjustable rate securities

- Variable rate demand notes

- Illiquid securities*
---------------
* Limited to 10% of the Fund's net assets.

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

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

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

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

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

Additional information
about THE FUND'S
INVESTMENTS is provided
under "More about
Portfolio Investments".

6
<PAGE> 9

MONEY MARKET
--------------------------------------------------------------------------------

PERFORMANCE INFORMATION
-------------------------------------------------

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

[Bar chart]
------------
* For the year-to-date through June 30, 2000, the Fund's return was 2.81%.

The highest quarterly return for the Fund from January 1, 1990 to December 31,
1999, was 1.93% (for the quarter ended June 30, 1990) and the lowest quarterly
return was 0.66% (for the quarter ended March 31, 1993).

This table compares the Fund's average annual returns to the returns of the
30-day CD Rate for the one-, five- and ten-calendar year periods.
-------------------------------------------------

<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
<S> <C> <C> <C>
The Fund 4.75% 5.13% 4.87%
30-Day CD 4.46% 4.68% 4.61%
</TABLE>

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

7
<PAGE> 10

NORTH AMERICAN -- AG
STOCK INDEX FUND
Fact Sheet
-------------------------------------------------
Investment Goal GROWTH THROUGH
INVESTMENTS TRACKING
THE S&P 500 INDEX
-------------------------------------------------
Investment Category GROWTH

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

INVESTMENT ADVISER
American General Advisers

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

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

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

We follow the guidelines listed below for making the primary investments for the
Fund.

<TABLE>
<CAPTION>
Percent of
Fund Investments Fund's Assets*
----------------------------------------------------
<S> <C>
Stocks in the S&P 500 at least 65%
Index
----------------------------------------------------
Futures and options no more than 33%
----------------------------------------------------
Investments not in the
S&P
500 Index
Common stock and no more than 35%
related securities
High quality money
market securities
----------------------------------------------------
* At time of purchase.
</TABLE>

Market Risk: the risk that the value of the securities purchased by the Fund
will decline as a result of economic, political or market conditions or an
issuer's financial circumstances.

Additional information
about THE FUND'S
INVESTMENTS is provided
under "More about
Portfolio Investments".

Additional information
about INDEX FUNDS
is provided under "About
Index Equity Funds".

8
<PAGE> 11

STOCK INDEX
--------------------------------------------------------------------------------

PERFORMANCE INFORMATION

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

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

[Bar chart]

------------
* For the year-to-date through June 30, 2000, the Fund's return was (0.57%).

The highest quarterly return for the Fund from January 1, 1990 to December 31,
1999, was 21.21% (for the quarter ended December 31, 1998) and the lowest
quarterly return was (14.40%) (for the quarter ended September 30, 1990).

This table compares the Fund's average annual returns to the returns of the S&P
500 Index for the one-, five- and ten-calendar year periods.

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

<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
<S> <C> <C> <C>
The Fund 20.57% 28.28% 17.66%
S&P 500 Index 21.05% 28.56% 18.21%
</TABLE>

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

PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.

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

9
<PAGE> 12

MORE ABOUT PORTFOLIO INVESTMENTS
--------------------------------------------------------------------------------

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

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

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

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

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

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

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

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

All of the Funds may invest in fixed income securities.

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

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

Commercial paper is a specific type of corporate or short term note. In fact,
it's very short term, being paid in less than 270 days. Most commercial paper
matures in 50 days or less.

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

For example, a projected economic downturn or the possibility of an increase in
interest rates could cause a decline in high-yield, high-risk bond prices
because such an event might lessen the ability of highly leveraged high yield
issuers to meet their principal and interest payment obligations, meet projected
business goals, or obtain additional financing. In addition, the secondary
trading market for lower-medium and lower-quality bonds may be less liquid than
the

ISSUED means the
Company (ISSUER) sold it
originally to the public.

For more information about
BONDS AND RATINGS OF
BONDS, see the Statement
of Additional Information.

10
<PAGE> 13

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

market for investment grade bonds. This potential lack of liquidity may make it
more difficult to accurately value certain of these lower-grade portfolio
securities.

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

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

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

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

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

MORTGAGE-RELATED SECURITIES

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

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

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

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

Commercial Mortgage-Backed Securities include securities that reflect an
interest in, and are secured by, mortgage loans on commercial real property.
Many of the risks of investing in commercial mortgage-backed securities reflect
the risks of investing in the real estate securing the underlying mortgage
loans. These risks reflect the effects of local and other economic conditions on
real estate markets, the ability of tenants to make loan payments, and the
ability of a property to attract and retain tenants. Commercial mortgage-backed
securities may be less liquid and exhibit greater price volatility than other
types of mortgage-related or asset-backed securities.

For more information about
ASSET-BACKED SECURITIES
see the Statement of
Additional Information.

For more information about
LOAN PARTICIPATIONS see
the Statement of Additional
Information.

For more information about
MORTGAGE-RELATED SECURITIES,
see the Statement of
Additional Information.

11
<PAGE> 14

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

Mortgage-Related Securities include mortgage pass-through securities described
above and securities that directly or indirectly represent a participation in,
or are secured by and payable from, mortgage loans on real property, such as
mortgage dollar rolls, CMO residuals or stripped mortgage-backed securities.
These securities may be structured in classes with rights to receive varying
proportions of principal and interest.

VARIABLE RATE DEMAND NOTES

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

FOREIGN SECURITIES

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

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

ADRS

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

FOREIGN CURRENCY

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

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

ILLIQUID SECURITIES

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

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

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

FUTURES AND OPTIONS

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

Futures contracts and options may not always be successful hedges; their prices
can be highly

For more information about
ILLIQUID SECURITIES see the
Statement of Additional
Information.

For more information about
FOREIGN SECURITIES, see the
Statement of Additional
information.

For more information on
FUTURES AND OPTIONS,
see the Statement of
Additional information.

For more information about
FOREIGN CURRENCY
EXCHANGE TRANSACTIONS,
see the Statement of
Additional Information.

12
<PAGE> 15

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

volatile; using them could lower fund total return; and the potential loss from
the use of futures can exceed a fund's initial investment in such contracts.

The Funds, except Money Market, may also buy futures and options.

WHEN-ISSUED SECURITIES

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

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

MONEY MARKET SECURITIES

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

These high quality money market securities include:

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

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

- Commercial paper sold by corporations and finance companies.

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

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

REPURCHASE AGREEMENTS

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

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

LENDING PORTFOLIO SECURITIES

Each Fund may lend up to 30% of its total assets to broker-dealers and other
financial institutions to earn more money for the Fund.

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

The Funds will only make loans to broker-dealers and other financial
institutions approved by its Custodian, as monitored by American General
Advisers and authorized by the Board of Directors.

DIVERSIFICATION

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

All of the Funds may invest up to 5% of their total assets in a single issuer.
An issuer, or "company" does not include the U.S. Government or agencies of the
U.S. Government according to the Code and the 1940 Act. For diversification
purposes, repurchase agreements are considered to be issued by the U.S.
Government if backed by U.S. Government securities. Also, these Funds may not
own more than 10% of the voting securities of a company.

A WORD ABOUT RISK

As described in the fact sheet for each Fund, participation in a Fund involves
risk -- even the risk that you will receive a minimal return on your investment
or the value of your investment will decline. It is important for you to
consider carefully the following risks when you allocate purchase payments to
the Funds.

Market Risk

Market risk refers to the loss of capital resulting from changes in the price of
investments. Generally, equity securities are considered to be subject to market
risk. For example, market risk occurs when the expectations of lower corporate
profits in general cause the broad market of stocks to fall in price. When this
happens, even though a company may be experiencing a growth in profits, the
price of its stock could fall.

For more information about
WHEN-ISSUED SECURITIES,
see the Statement of
Additional Information.

For more information about
MONEY MARKET SECURITIES
OF FOREIGN ISSUERS the
Funds may purchase, see
the Statement of Additional
Information.

For more information about
LENDING PORTFOLIO
SECURITIES, see the
Statement of Additional
Information.

For more information about
REPURCHASE AGREEMENTS, see the
Statement of Additional
Information.

13
<PAGE> 16
--------------------------------------------------------------------------------

Credit Risk

Credit risk refers to the risk that an issuer of a fixed income security may be
unable to pay principal or interest payments due on the securities. To help
American General Advisers and the Funds' sub-advisers decide which corporate and
foreign fixed income securities to buy, they rely on Moody's and S&P (two
nationally recognized bond rating services), and on their own research, to lower
the risk of a company that may not pay the interest or principal on the fixed
income security.

The credit risk of a Fund depends on the quality of its investments. Fixed
income securities that are rated as investment grade have ratings ranging from
AAA to BBB. These fixed income securities are considered to have adequate
ability to make interest and principal payments.

Interest Rate Risk

Interest rate risk refers to the risk that fluctuations in interest rates may
affect the value of interest paying securities in a Fund. Fixed income
securities such as U.S. Government bonds are subject to interest rate risk. If a
Fund sells a bond before it matures, it may lose money, even if the bond is
guaranteed by the U.S. Government. Say, for example, a Fund bought an
intermediate government bond last year that was paying interest at a fixed rate
of 6%. Now, intermediate government bonds are paying interest at a rate of 7%.
If the Fund wants to sell the bond paying an interest rate of 6%, it will have
to sell it at a discount (and realize a loss) to attract buyers because they can
buy new bonds paying an interest rate of 7%.

Prepayment Risk

Many types of fixed income securities, including mortgage backed and asset
backed securities, are subject to prepayment risk. Prepayment risk is the risk
that issuers of fixed income securities will make prepayments earlier than
anticipated during periods of falling interest rates requiring a Fund to invest
in new securities with lower interest rates. This will reduce the stream of cash
payments that flow through to the Fund. Securities subject to prepayment risk
also pose a potential for loss when interest rates rise. Rising interest rates
may cause prepayments to occur at a slower rate than expected thereby
lengthening the maturity of the security and making it more sensitive to
interest rate changes.

Risks Associated with Foreign Securities

A foreign security is a security issued by an entity domiciled or incorporated
outside of the U.S. Among the principal risks of owning foreign securities are:

Political Risk -- the risk that a change in a foreign government will occur
and that the assets of a company in which the Fund has invested will be
affected. In some countries there is the risk that the government may take over
the assets or operations of a company and or that the government may impose
taxes or limits on the removal of a Fund's assets from that country.

Currency Risk -- the risk that a foreign currency will decline in value. As
long as a Fund holds a security denominated in a foreign currency, its value
will be affected by the value of that currency relative to the U.S. dollar. An
increase in the value of the U.S. dollar relative to a foreign currency will
adversely affect the value of the Fund.

Sovereign Risk -- the risk that a foreign government will interfere with
currency trading or transferring money out of the country.

Liquidity Risk -- foreign markets may be less liquid and more volatile than
U.S. markets and offer less protection to investors. Certain markets may require
payment for securities before delivery and delays may be encountered in settling
securities transactions. In some foreign markets, there may not be protection
against failure by other parties to complete transactions.

Limited Information Risk -- the risk that less government supervision of
foreign markets may occur. Foreign issuers may not be subject to the uniform
accounting, auditing and financial reporting standards and practices that apply
to U.S. issuers. In addition, less public information about operations may
exist.

Developing Country Risk -- the risks associated with investment in foreign
securities are heightened in connection with investments in the securities of
issuers in developing countries. Developing countries are generally defined as
countries in the initial stages of their industrialization cycles with low per
capita income. Although the markets of developing countries offer higher rates
of return, they also pose additional risks to investors, including immature
economic structures, national policies restricting investments by foreigners and
different legal systems.

ABOUT PORTFOLIO TURNOVER

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

For more information about
INVESTMENT LIMITATIONS,
see the Statement of
Additional Information.

14
<PAGE> 17

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

High portfolio turnover may cause a Fund's expenses to increase. For example, a
Fund may have to pay brokerage fees and other related expenses.

A portfolio turnover rate over 100% a year is higher than the rates of many
other mutual fund companies. A high rate increases a Fund's transaction costs
and expenses.

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

ABOUT THE SERIES COMPANY'S MANAGEMENT
--------------------------------------------------------------------------------

INVESTMENT ADVISER
American General Advisers is a division of VALIC, a stock life insurance
company, which has been in the investment advisory business since 1960 and is
the investment adviser for all the Funds. American General Advisers is a
registered investment adviser with the SEC and had over $48.8 billion in assets
under management as of June 30, 2000. Several of the principal officers,
directors and portfolio managers of American General Advisers hold similar
positions with AGIM.

As Investment Adviser, American General Advisers oversees the day to day
operations of each Fund, supervises the purchase and sale of Fund investments,
and performs the cash management function.

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

William Trimbur, Jr. has been International Equities' Portfolio Manager since
1992. He has been Vice President and Investment Officer for the Series Company
since 1987.

Teresa Moro has been Money Market's Portfolio Manager and Vice President and
Investment Officer for the Series Company since 1991.

American General Advisers serves as investment adviser through an Investment
Advisory Agreement it enters into with each Fund. These agreements are renewed
each year, by the Series Company Board of Directors.

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

HOW AMERICAN GENERAL ADVISERS IS PAID FOR ITS SERVICES

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

Here is a list of the percentages each Fund pays:

<TABLE>
<CAPTION>
Advisory Fee Paid
(as a % of average
Fund Name daily net assets)
--------- ------------------------
<S> <C>
International Equities Fund 0.35% on the first $500 million;
MidCap Index Fund 0.25% on assets over
Stock Index Fund $500 million.

Money Market Fund 0.50%
</TABLE>

The Investment Advisory Agreements we entered into with each Fund do not limit
how much the Funds pay in monthly expenses each year. However, we voluntarily
limit the Funds' monthly expenses as follows:

If a Fund's average monthly expenses, when annualized, are more than 2% of the
Fund's estimated average daily net assets, we will pay the difference. As a
result the Fund's yield or total return will increase. If American General
Advisers decides to stop voluntarily reducing a Fund's expenses, it may do so by
giving 30 days' notice, in writing, to the Series Company. To date, American
General Advisers has not had to reduce expenses of any Fund as a result of this
2% voluntary reduction.

15
<PAGE> 18

ABOUT INDEX EQUITY FUNDS
--------------------------------------------------------------------------------

Three of the Funds are Index Equity Funds investing mostly in stocks. Their
investment strategy is to track the performance of a specific index. This
strategy is followed whether markets go up or down. As part of this investment
strategy, each Fund may also invest in futures contracts and options. Because
these Funds do not have a defensive investment strategy, when the market goes
down, you will bear the risk of such market decline.

Index Funds perform best over the long term. This means you should plan to keep
your money in an Index Fund for a period of years.

WHAT IS AN INDEX?

An index reflects the average performance of a particular class of securities.
Examples of indexes include large company stocks (S&P 500 Index), mid-size
company stocks (S&P MidCap 400 Index), the bond market, or stocks of companies
in specific industries. Indexes are not managed funds, and cannot be bought.
Investment advisers compare the results of the funds they manage to indexes that
are close to the investment style of the fund. Information about the Series
Company's use of Standard & Poor's Indexes is in the Statement of Additional
Information.

WHICH INDEXES DO THESE FUNDS TRY
TO TRACK?

While there are more than a hundred different indexes, the Index Funds in this
prospectus try to track prominent stock indexes:

The Stock Index Fund tracks the
Standard & Poor's 500 Stock Index(R)*

The Standard & Poor's 500 Stock Index(R) tracks the common stock performance of
large U.S. companies in the manufacturing, utilities, transportation, and
financial industries. These companies are usually listed on the New York Stock
Exchange. It also tracks performance of common stocks sold by foreign and
smaller U.S. companies in similar industries. The smaller U.S. companies are
usually listed on the American Stock Exchange. In total, this index tracks 500
common stocks.

This index may periodically change some of the stocks it tracks. And, different
indexes sometimes track some of the same stocks.

The MidCap Index Fund tracks the
Standard & Poor's MidCap 400(R) Index*

The Standard & Poor's MidCap 400(R) Index tracks the common stock performance of
400 medium capitalized U.S. and foreign companies that are in the manufacturing,
utilities, transportation, and financial industries. The average market
capitalization of the S&P MidCap 400 Index was $2.4 billion as of August 31,
2000.

Standard & Poor's created this Index in 1991 to give investors an idea of how
the stocks of medium capitalized companies generally perform.

Standard & Poor's may periodically change some of the stocks in the index. And,
different indexes sometimes include some of the same stocks. This Index does not
track the same stocks as the S&P 500 Index.

The International Equities Fund tracks
The Morgan Stanley Capital International,
Europe, Australasia and the Far East
(EAFE) Index.

The EAFE Index tracks the performance of about 1,000 common stocks of companies
in 20 foreign countries. This index provides a measure of the performance of
companies in the more developed countries in Europe, Australia and the Far East.

Morgan Stanley publishes the EAFE Index daily and, at times, may change some of
the stocks in the index.

HOW CLOSELY CAN INDEX FUNDS TRACK
THE PERFORMANCE OF THEIR INDEX?

The factors that cause a Fund to perform differently from the Index it tries to
track are called tracking differences. There is no assurance that an Index Fund
can track its index.

The coefficient of correlation (r) is an index number which shows how closely
two variables are related. If r = 0 there is no tendency for one variable to
change with the other. A value of +1 means that one variable will vary exactly
with the other. Index funds try to keep their coefficient of correlation as
close to 1 as possible. As a practical matter, any coefficient above 0.95, when
measured against the comparison index, shows good tracking.

------------
* "Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "S&P MidCap 400(R)" are
trademarks of Standard & Poor's ("S&P"). Neither the MidCap Index Fund nor
the Stock Index Fund is sponsored, endorsed, sold or promoted by S&P, and S&P
makes no representation regarding the advisability of investment in these
Funds.

INDEX FUNDS have
outperformed most mutual
funds over consecutive ten
year periods. However,
because they are managed
to track an index they will
rise and fall with the
market.

16
<PAGE> 19

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

The index may remove one stock and substitute another requiring American General
Advisers to do the same. When a stock is sold and the new stock purchased, the
Fund incurs transaction costs. The index incurs no transaction costs. Therefore,
the portfolio manager cannot match exactly the performance of an index.

Also, it may not be possible for a Fund to buy every stock in its index or in
the same proportions. Fund portfolio managers may rely on a statistical
selection technique to figure out, of the stocks tracked by their index, how
many and which ones to buy. Stocks are bought and sold when they are added to or
dropped from the Index. This keeps brokerage fees and other transaction costs
low. For more information, see the "Investment Strategy" sections on each Fund's
Fact Sheet.

17
<PAGE> 20

ABOUT THE SERIES COMPANY
--------------------------------------------------------------------------------

SERIES COMPANY SHARES

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

As a participant, you do not directly buy shares of the Funds. Instead, you buy
units in either a registered or unregistered separate account of VALIC or of its
affiliates. When you buy these units, you specify which Funds you want the
separate account to invest your money in. The separate account, in turn, buys
the shares of the Funds according to your instructions. See your Contract
prospectus for more information on the separate account associated with your
contract.

When the separate accounts buy, sell, or transfer shares of the Funds, they do
not pay any charges related to these transactions. The value of such separate
account transactions is based on the next calculation of net asset value after
its order is placed with the Fund. For more information on how to participate,
see your contract prospectus.

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

NET ASSET VALUE OF THE SERIES
COMPANY SHARES

How Net Asset Value is Calculated

Here is how the Series Company calculates the net asset value of each Fund's
shares:

<TABLE>
<S> <C>
Step 1:
Total value of the
Fund's assets*
(including money owed
to the fund but not yet = The Fund's Total
collected) Net Asset Value

(minus) The Fund's liabilities
(including money owed by
the Fund but not yet paid)

Step 2:
The Fund's total net
asset value (from Step 1)
= NET ASSET VALUE
(divided by) The total PER SHARE
number of the Fund's
shares that are
outstanding.
</TABLE>

* The Series Company uses the fair market value of Fund's investments to
calculate the Fund's total value. However, it uses the amortized cost method
to determine the values of all the Money Market Fund's investments and of any
other Fund's short-term securities maturing within 60 days. The amortized cost
method approximates fair market value.

If a Fund's portfolio includes investments that are not sold often or are not
sold on any exchanges, the Series Company's Board of Directors or its delegate
will, in good faith, estimate fair market value of these investments.

When Net Asset Value is Calculated

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

Some foreign exchanges trade on weekends or other days when the Funds do not
price their shares. For Funds with substantial investments in those markets the
net asset value of the Fund's shares may change on days when the separate
account may not be able to purchase or redeem Fund shares.

DIVIDENDS AND CAPITAL GAINS

Dividends from Net Investment Income

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

18
<PAGE> 21

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

Distributions from Capital Gains

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

TAX CONSEQUENCES

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

REDEMPTIONS

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

19
<PAGE> 22

FINANCIAL HIGHLIGHTS

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

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

INTERNATIONAL EQUITIES FUND
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
-----------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
NET ASSET VALUE, BEGINNING OF PERIOD $11.32 $11.95 $11.44 $11.15 $10.42
-------- -------- -------- -------- --------
INVESTMENT OPERATIONS
Net investment income 0.15 0.22 0.23 0.20 0.17
Net realized & unrealized gain (loss) 1.90 0.30 0.85 0.63 0.97
-------- -------- -------- -------- --------
Total from investment operations 2.05 0.52 1.08 0.83 1.14
-------- -------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.14) (0.25) (0.24) (0.19) (0.17)
Net realized gains (0.68) (0.90) (0.33) (0.35) (0.24)
-------- -------- -------- -------- --------
Total distributions to shareholders (0.82) (1.15) (0.57) (0.54) (0.41)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $12.55 $11.32 $11.95 $11.44 $11.15
======== ======== ======== ======== ========
TOTAL RETURN 18.01% 4.43% 9.92% 7.74% 11.14%
======== ======== ======== ======== ========
RATIOS AND SUPPLEMENTAL DATA
Expenses to average net assets 0.41% 0.43% 0.40% 0.42% 0.42%
Net investment income to average net assets 1.20% 1.89% 1.92% 1.75% 1.65%
Portfolio turnover rate 25% 8% 9% 12% 20%
Net assets at end of year (000's) $162,840 $142,108 $155,469 $181,437 $206,259
</TABLE>

20
<PAGE> 23
FINANCIAL HIGHLIGHTS -- CONTINUED

MIDCAP INDEX FUND
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
----------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
NET ASSET VALUE, BEGINNING OF PERIOD $25.64 $ 25.27 $20.83 $19.09 $15.68
-------- -------- -------- -------- --------
INVESTMENT OPERATIONS
Net investment income 0.22 0.23 0.23 0.24 0.24
Net realized & unrealized gain (loss) 4.49 2.54 5.80 2.95 4.06
-------- -------- -------- -------- --------
Total from investment operations 4.71 2.77 6.03 3.19 4.30
-------- -------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.22) (0.23) (0.23) (0.24) (0.24)
Net realized gains (6.40) (2.17) (1.36) (1.21) (0.65)
-------- -------- -------- -------- --------
Total distributions to shareholders (6.62) (2.40) (1.59) (1.45) (0.89)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $23.73 $ 25.64 $25.27 $20.83 $19.09
======== ======== ======== ======== ========
TOTAL RETURN 21.36% 11.91% 29.62% 17.48% 28.10%
======== ======== ======== ======== ========
RATIOS AND SUPPLEMENTAL DATA
Expenses to average net assets 0.36% 0.38% 0.36% 0.40% 0.41%
Net investment income to average net assets 0.90% 0.92% 0.95% 1.24% 1.36%
Portfolio turnover rate 41% 41% 26% 19% 21%
Net assets at end of year (000's) $922,679 $817,573 $804,318 $607,061 $540,688
</TABLE>

MONEY MARKET FUND
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
---------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- -------
INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.05 0.05
-------- -------- -------- -------- -------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.05) (0.05) (0.05) (0.05) (0.05)
-------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
======== ======== ======== ======== =======
TOTAL RETURN 5.21% 4.84% 5.25% 5.02% 5.26%
======== ======== ======== ======== =======
RATIOS AND SUPPLEMENTAL DATA
Expenses to average net assets 0.56% 0.57% 0.54% 0.57% 0.57%
Net investment income to average net assets 5.13% 4.66% 5.14% 4.95% 5.14%
Net assets at end of year (000's) $484,934 $347,394 $190,975 $128,125 $83,618
</TABLE>

21
<PAGE> 24
FINANCIAL HIGHLIGHTS -- CONTINUED

STOCK INDEX FUND
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
--------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
NET ASSET VALUE, BEGINNING OF PERIOD $39.73 $33.38 $26.09 $20.69 $16.81
---------- ---------- ---------- ---------- ----------
INVESTMENT OPERATIONS
Net investment income 0.41 0.40 0.40 0.39 0.39
Net realized & unrealized gain (loss) 3.59 6.51 7.44 5.57 4.26
---------- ---------- ---------- ---------- ----------
Total from investment operations 4.00 6.91 7.84 5.96 4.65
---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.39) (0.41) (0.40) (0.39) (0.38)
Net realized gains (0.36) (0.15) (0.15) (0.17) (0.39)
---------- ---------- ---------- ---------- ----------
Total distributions to shareholders (0.75) (0.56) (0.55) (0.56) (0.77)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $42.98 $39.73 $33.38 $26.09 $20.69
========== ========== ========== ========== ==========
TOTAL RETURN 10.10% 20.85% 30.30% 29.24% 28.17%
========== ========== ========== ========== ==========
RATIOS AND SUPPLEMENTAL DATA
Expenses to average net assets 0.31% 0.32% 0.31% 0.34% 0.35%
Net investment income to average net assets 0.97% 1.13% 1.33% 1.76% 2.05%
Portfolio turnover rate 6% 2% 3% 3% 3%
Net assets at end of year (000's) $5,373,192 $4,637,628 $3,482,655 $2,444,200 $1,760,786
</TABLE>

22
<PAGE> 25

INTERESTED IN LEARNING MORE?
--------------------------------------------------------------------------------

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

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

American General Advisers can provide you with a free copy of these materials or
other information about the Series Company. You may reach American General
Advisers by calling 1-800-44-VALIC or by writing to 2929 Allen Parkway, Houston,
Texas 77019.

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

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

To review a paper filing or to request that documents be mailed to you,
contact:

SEC Public Reference Room
Washington, D.C. 20549-6009
1-800-SEC-0330

A duplicating fee will be assessed for all copies provided.

The Trust's Investment Company Act filing number is 811-8912. 10/00
<PAGE> 26

NORTH AMERICAN FUNDS VARIABLE
PRODUCT SERIES I
2929 ALLEN PARKWAY
HOUSTON, TEXAS 77019
OCTOBER 1, 2000
PROSPECTUS

North American Funds Variable Product Series I (the "Series Company") is a
mutual fund made up of 19 separate Funds (the "Funds"), seven of which are
described in this prospectus. Each of the Funds has a different investment
objective. Each Fund is explained in more detail on its Fact Sheet contained in
this prospectus. Here is a summary of the goals of the seven Funds:

NORTH AMERICAN -- AG INTERNATIONAL EQUITIES FUND ("INTERNATIONAL EQUITIES")
Growth through investments tracking the EAFE Index.

NORTH AMERICAN -- AG MIDCAP INDEX FUND ("MIDCAP INDEX")
Growth through investments tracking the S&P MidCap 400 Index.

NORTH AMERICAN -- AG 1 MONEY MARKET FUND ("MONEY MARKET")
Income through investments in short-term money market securities.

NORTH AMERICAN -- AG NASDAQ-100(R) INDEX FUND ("NASDAQ-100(R) INDEX")
Growth through investments tracking the Nasdaq-100 Index(R).

NORTH AMERICAN -- T. ROWE PRICE SCIENCE & TECHNOLOGY FUND ("SCIENCE &
TECHNOLOGY")
Growth through investments in stocks of companies which are expected to benefit
from development of science and technology.

NORTH AMERICAN -- AG SMALL CAP INDEX FUND ("SMALL CAP INDEX")
Growth through investments tracking the Russell 2000(R) Index.

NORTH AMERICAN -- AG STOCK INDEX FUND ("STOCK INDEX")
Growth through investments tracking the S&P 500 Index.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
COVER PAGE
WELCOME TO AMERICAN GENERAL.................... 1
ABOUT THE FUNDS................................ 1
Growth and Stability Categories........... 1
FUND FACT SHEETS............................... 2
International Equities.................... 2
MidCap Index.............................. 4
Money Market.............................. 6
Nasdaq-100(R) Index....................... 8
Science & Technology...................... 10
Small Cap Index........................... 12
Stock Index............................... 14
MORE ABOUT PORTFOLIO INVESTMENTS............... 16
Equity Securities......................... 16
Fixed Income Securities................... 16
Asset-Backed Securities................... 17
Loan Participations....................... 17
Mortgage-Related Securities............... 17
Variable Rate Demand Notes................ 18
Foreign Securities........................ 18
ADRs...................................... 18
Foreign Currency.......................... 18
Illiquid Securities....................... 18
</TABLE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Futures and Options....................... 18
When-Issued Securities.................... 19
Money Market Securities................... 19
Repurchase Agreements..................... 19
Reverse Repurchase Agreements and
Borrowings.............................. 19
Lending Portfolio Securities.............. 19
Diversification........................... 20
A Word About Risk......................... 20
About Portfolio Turnover.................. 21
ABOUT THE SERIES COMPANY'S MANAGEMENT.......... 22
Investment Adviser and Sub-Advisers....... 22
How American General Advisers is Paid For
Its Services............................ 23
ABOUT INDEX EQUITY FUNDS....................... 24
ABOUT THE SERIES COMPANY....................... 26
Series Company Shares..................... 26
Net Asset Value of the Series Company
Shares.................................. 26
Dividends and Capital Gains............... 27
Tax Consequences.......................... 27
Redemptions............................... 27
FINANCIAL HIGHLIGHTS........................... 28
</TABLE>

(i)
<PAGE> 28

WELCOME TO AMERICAN GENERAL
--------------------------------------------------------------------------------

Unless otherwise specified in this prospectus, the words we and our mean
American General Advisers. The words you and your mean the participant.

ABOUT THE FUNDS
--------------------------------------------------------------------------------

GROWTH AND STABILITY CATEGORIES

The Funds offered in this prospectus fall into two general investment
categories: growth and stability.

Growth Category

International Equities
MidCap Index
Nasdaq-100(R) Index
Science & Technology
Small Cap Index
Stock Index

Stability Category

Funds in the stability category provide liquidity, protection of capital and
current income through investments in high quality securities.

Series Company Stability Category includes:

Money Market

Investment Objectives

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

1
<PAGE> 29

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

INVESTMENT ADVISER
American General Advisers

<TABLE>
<S> <C>
* At time of purchase.
</TABLE>

Market Risk: the risk that the value of the securities purchased by the Fund
will decline as a result of economic, political or market conditions or an
issuer's financial circumstances.

Foreign Securities Risks:

Political Risk: the risk that a change in a foreign government will occur and
that the assets of a company in which the Fund has invested will be affected.

Sovereign Risk: the risk that a foreign government will interfere with
currency trading or transferring money out of the country.

Liquidity Risk: foreign markets may be less liquid and more volatile than
U.S. markets.

Manager Risk: like all managed funds, there is a risk that the Fund's management
strategy may not achieve the desired results and the Fund's performance may lag
behind that of similar funds.

Additional information
about THE FUND'S
INVESTMENTS is provided
under "More about
Portfolio Investments".

2
<PAGE> 30

INTERNATIONAL EQUITIES
--------------------------------------------------------------------------------

PERFORMANCE INFORMATION
-------------------------------------------------

[Bar chart]

------------
* For the year-to-date through June 30, 2000, the Fund's return was (6.47%).

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

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

<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
<S> <C> <C> <C>
The Fund 29.19% 13.16% 7.18%
EAFE Index 26.96% 12.83% 7.01%
</TABLE>

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

3
<PAGE> 31

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

INVESTMENT ADVISER
American General Advisers

We follow the guidelines listed below for making the primary investments for the
Fund.

<TABLE>
<CAPTION>
Percent of
Fund Investments Fund's Assets*
----------------------------------------------------
<S> <C>
Stocks in the S&P MidCap at least 65%
400 Index
----------------------------------------------------
Futures and options no more than 33%
----------------------------------------------------
Investments not in the
S&P MidCap 400 Index
Common stock and no more than 35%
related securities
High quality money
market securities
Illiquid securities
----------------------------------------------------
* At time of purchase.
</TABLE>

Market Risk: the risk that the value of the securities purchased by the Fund
will decline as a result of economic, political or market conditions or an
issuer's financial circumstances.

Additional information
about THE FUND'S
INVESTMENTS is provided
under "More about
Portfolio Investments".

Additional information
about INDEX FUNDS
is provided under "About
Index Equity Funds".

4
<PAGE> 32

MIDCAP INDEX
--------------------------------------------------------------------------------

PERFORMANCE INFORMATION
-------------------------------------------------

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

[Bar chart]

------------
* For the year-to-date through June 30, 2000, the Fund's return was 8.72%.

<TABLE>
<CAPTION>
1 YEAR 5 YEARS SINCE INCEPTION**
------ ------- -----------------
<S> <C> <C> <C>
The Fund 14.92% 22.81% 17.31%
S&P Midcap Index 14.72% 23.05% 17.92%
</TABLE>

-------------------------------------------------
** 10/01/91.

5
<PAGE> 33

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

INVESTMENT ADVISER
American General Advisers

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

The investments this Fund may buy include:

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

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

- Commercial paper sold by corporations and finance companies

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

- Repurchase agreements

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

- Asset-backed securities

- Loan participations

- Adjustable rate securities

- Variable rate demand notes

- Illiquid securities*
---------------
* Limited to 10% of the Fund's net assets.

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

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

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

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

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

Additional information
about THE FUND'S
INVESTMENTS is provided
under "More about
Portfolio Investments".

6
<PAGE> 34

MONEY MARKET
--------------------------------------------------------------------------------

PERFORMANCE INFORMATION
-------------------------------------------------

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

[Bar chart]
------------
* For the year-to-date through June 30, 2000, the Fund's return was 2.81%.

This table compares the Fund's average annual returns to the returns of the
30-day CD Rate for the one-, five- and ten-calendar year periods.
-------------------------------------------------

<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
<S> <C> <C> <C>
The Fund 4.75% 5.13% 4.87%
30-Day CD 4.46% 4.68% 4.61%
</TABLE>

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

7
<PAGE> 35

NORTH AMERICAN --
AG NASDAQ-100(R)
INDEX FUND
Fact Sheet
-------------------------------------------------
Investment Goal LONG-TERM GROWTH
OF CAPITAL
-------------------------------------------------
Investment Category GROWTH

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

INVESTMENT ADVISER
American General Advisers

INVESTMENT SUB-ADVISER
American General Investment Management L.P.

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

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

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

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

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

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

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

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

Temporary Defensive Investment Strategy: From time to time, the Fund may take
temporary defensive positions that are inconsistent with its principal
investment strategies, in attempting to respond to adverse market, economic,
political, or other conditions. If the Fund takes such a temporary defensive
position, it may not achieve its investment objective.

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

Risks of Concentration: The Fund's investments are concentrated in the
technology sector, as is

8
<PAGE> 36

NASDAQ-100(R)
INDEX
--------------------------------------------------------------------------------

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

Stock Market Risk (Volatility): The value of the stocks and other securities
owned by the Fund will fluctuate depending on the performance of the companies
that issued them, general market and economic conditions, and investor
confidence. The Index changes every day, depending on movement in the stock
market. Stock markets often have times when the prices rise and fall
significantly every day or every few days. There is no guarantee that the value
of your investment will increase.

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

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

PERFORMANCE INFORMATION
Performance information is not shown since this is a brand-new fund.

9
<PAGE> 37

NORTH AMERICAN --
T. ROWE PRICE
SCIENCE &
TECHNOLOGY FUND
Fact Sheet
-------------------------------------------------
Investment Goal GROWTH THROUGH
INVESTMENTS IN
STOCKS OF COMPANIES
WHICH ARE EXPECTED
TO BENEFIT FROM
DEVELOPMENT OF
SCIENCE AND TECHNOLOGY
-------------------------------------------------
Investment Category GROWTH

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

INVESTMENT ADVISER
American General Advisers

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

INVESTMENT OBJECTIVE
Seeks long-term capital appreciation through investment primarily in the common
stocks of companies that are expected to benefit from the development,
advancement and use of science and technology.

INVESTMENT STRATEGY
The Fund invests in companies that are expected to benefit from scientific
breakthroughs and advancements in technology. We believe that stocks of
companies that develop products using new technology or benefit from this
technology may greatly increase in value. Some of the industries likely to be
included in the portfolio are:

- electronics, including hardware, software, and components;

- communications;

- e-commerce;

- information services;

- media;

- life sciences and health care;

- environmental services;

- chemicals and synthetic materials; and

- defense and aerospace.

We follow the guidelines listed below for making the primary investments for the
Fund. For temporary defensive purposes the Fund may invest up to 100% of its
assets in high quality money market securities. Whenever the Fund assumes such a
defensive position the Fund may not achieve its investment objective.

<TABLE>
<CAPTION>
Percent of
Fund Investments Fund's Assets*
----------------------------------------------------
<S> <C>
Common stocks of science at least 65%
and technology companies
----------------------------------------------------
Other equity-related up to 25%
securities of science
and technology companies
including convertible
debt securities, convertible
preferred stock
----------------------------------------------------
</TABLE>

<TABLE>
----------------------------------------------------
<CAPTION>
Percent of
Fund Investments Fund's Assets*
<S> <C>
High quality money up to 100%
market securities
----------------------------------------------------
American Depositary up to 30%
Receipts and foreign
securities
----------------------------------------------------
</TABLE>

* At time of purchase.

Stock selection reflects a growth approach and is based on intensive research
that assesses a company's fundamental prospects for above-average earnings.
Holdings can range from small companies developing new technologies to blue chip
firms with established track records of developing and marketing technology.

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

Tech Company Risk: Companies in the rapidly changing fields of science and
technology often face unusually high price volatility, both in terms of gains
and losses. The potential for wide variation in performance is based on the
special risks common to these stocks. For example, products or services that at
first appear promising may not prove commercially successful
or may become obsolete quickly. Earnings
disappointments can result in sharp price declines. A portfolio focused
primarily on these stocks is, therefore, likely to be much more volatile than
one with broader diversification that includes investments in more economic
sectors.

Market Risk: the risk that the value of the securities purchased by the Fund
will decline as a result of economic, political or market conditions or an
issuer's financial circumstances.

Manager Risk: like all managed funds, there is a risk that the Fund's management
strategy may not achieve the desired results and the Fund's performance may lag
behind that of similar funds.

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

Additional information
about THE FUND'S
INVESTMENTS is provided
under "More about
Portfolio Investments".

10
<PAGE> 38

SCIENCE &
TECHNOLOGY
--------------------------------------------------------------------------------

Foreign Securities Risks:

Currency Risk: The risk that fluctuations in foreign exchange rates will
decrease the value of a fund's investment.

Limited Information Risk: The risk that foreign companies may not be subject
to accounting standards or governmental supervision comparable to U.S.
companies and that less public information about their operations may exist.

Liquidity Risk: Foreign markets may be less liquid and more volatile than U.S.
markets and offer less protection to investors.

Political Risk: The risk that a change in a foreign government will occur and
that the assets of a company in which the Fund has invested will be affected.

Settlement and Clearance Risk: The risks associated with the clearance and
settlement procedures in non-U.S. markets, which may be unable to keep pace
with the volume of securities transactions and may cause delays.

Sovereign Risk: The risk that a foreign government will interfere with
currency trading or transferring money out of the country.

PERFORMANCE INFORMATION
--------------------------------------------------------------------------------

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

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

[Bar chart]

------------
* For the year-to-date through June 30, 2000, the Fund's return was (3.12%).

The highest quarterly return for the Fund from April 29, 1994 to December 31,
1999, was 48.04% (for the quarter ended December 31, 1998) and the lowest
quarterly return was (17.28%) (for the quarter ended September 30, 1998).

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

<TABLE>
<CAPTION>
1 YEAR 5 YEARS SINCE INCEPTION**
------- ------- -----------------
<S> <C> <C> <C>
The Fund 100.95% 40.07% 40.13%
S&P 500 Index 21.05% 28.56% 25.68%
</TABLE>

-------------------------------------------------
** 4/29/94.

11
<PAGE> 39

NORTH AMERICAN -- AG
SMALL CAP INDEX
FUND
Fact Sheet
-------------------------------------------------
Investment Goal GROWTH THROUGH
INVESTMENTS TRACKING
THE RUSSELL 2000
INDEX
-------------------------------------------------
Investment Category GROWTH

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

INVESTMENT ADVISER
American General Advisers

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

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

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

We follow the guidelines listed below for making the primary investments for the
Fund.

<TABLE>
<CAPTION>
Percent of
Fund Investments Fund's Assets*
----------------------------------------------------
<S> <C>
Stocks in the Russell at least 65%
2000 Index
----------------------------------------------------
Futures and options no more than 33%
----------------------------------------------------
Investments not in the
Russell 2000 Index
Common stock and no more than 35%
related securities
High quality money
market securities
Illiquid securities
----------------------------------------------------
* At time of purchase.
</TABLE>

INVESTMENT RISK

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

Smaller Capitalization Company Risk: the risk that smaller companies may be
subject to more abrupt or erratic market movements than securities of larger,
more established companies or markets, generally.

Market Risk: the risk that the value of the securities purchased by the Fund
will decline as a result of economic, political or market conditions or an
issuer's financial
circumstances.

Additional information
about THE FUND'S
INVESTMENTS is provided
under "More about
Portfolio Investments".

Additional information
about INDEX FUNDS
is provided under "About
Index Equity Funds".

12
<PAGE> 40

SMALL CAP INDEX
--------------------------------------------------------------------------------

PERFORMANCE INFORMATION
-------------------------------------------------

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

[Bar chart]

------------
* For the year-to-date through June 30, 2000, the Fund's return was 2.34%.

The highest quarterly return for the Fund from May 1, 1992 to December 31, 1999,
was 18.58% (for the quarter ended December 31, 1999) and the lowest quarterly
return was (19.75%)% (for the quarter ended September 30, 1998).

This table compares the Fund's average annual returns to the returns of the
Russell 2000 Index for the one- and five-calendar year periods and since
inception of the Fund.
-------------------------------------------------

<TABLE>
<CAPTION>
1 YEAR 5 YEARS SINCE INCEPTION**
-------- ------- -----------------
<S> <C> <C> <C>
The Fund 21.29% 16.75% 13.82%
Russell 2000 Index 21.26% 16.69% 14.80%
</TABLE>

-------------------------------------------------
** 5/01/92.

13
<PAGE> 41

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

INVESTMENT ADVISER
American General Advisers

We follow the guidelines listed below for making the primary investments for the
Fund.

<TABLE>
<CAPTION>
Percent of
Fund Investments Fund's Assets*
----------------------------------------------------
<S> <C>
Stocks in the S&P 500 at least 65%
Index
----------------------------------------------------
Futures and options no more than 33%
----------------------------------------------------
Investments not in the
S&P 500 Index
Common stock and no more than 35%
related securities
High quality money
market securities
----------------------------------------------------
* At time of purchase.
</TABLE>

Market Risk: the risk that the value of the securities purchased by the Fund
will decline as a result of economic, political or market conditions or an
issuer's financial circumstances.

Additional information
about THE FUND'S
INVESTMENTS is provided
under "More about
Portfolio Investments".

Additional information
about INDEX FUNDS
is provided under "About
Index Equity Funds".

14
<PAGE> 42

STOCK INDEX
--------------------------------------------------------------------------------

PERFORMANCE INFORMATION
-------------------------------------------------

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

[Bar chart]

------------
* For the year-to-date through June 30, 2000, the Fund's return was (0.57%).

This table compares the Fund's average annual returns to the returns of the S&P
500 Index for the one-, five- and ten-calendar year periods.

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

<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
<S> <C> <C> <C>
The Fund 20.57% 28.28% 17.66%
S&P 500 Index 21.05% 28.56% 18.21%
</TABLE>

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

15
<PAGE> 43

MORE ABOUT PORTFOLIO INVESTMENTS
--------------------------------------------------------------------------------

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

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

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

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

All of the Funds may invest in fixed income securities.

Commercial paper is a specific type of corporate or short term note. In fact,
it's very short term, being paid in less than 270 days. Most commercial paper
matures in 50 days or less.

ISSUED means the
Company (ISSUER) sold it
originally to the public.

For more information about
BONDS AND RATINGS OF
BONDS, see the Statement
of Additional Information.

16
<PAGE> 44

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

market for investment grade bonds. This potential lack of liquidity may make it
more difficult to accurately value certain of these lower-grade portfolio
securities.

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

MORTGAGE-RELATED SECURITIES

For more information about
ASSET-BACKED SECURITIES
see the Statement of
Additional Information.

For more information about
LOAN PARTICIPATIONS see
the Statement of Additional
Information.

For more information about
MORTGAGE-RELATED SECURITIES,
see the Statement of
Additional Information.

17
<PAGE> 45

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

VARIABLE RATE DEMAND NOTES

FOREIGN SECURITIES

ADRS

FOREIGN CURRENCY

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

ILLIQUID SECURITIES

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

FUTURES AND OPTIONS

Futures contracts and options may not always be successful hedges; their prices
can be highly

For more information about
ILLIQUID SECURITIES see the
Statement of Additional
Information.

For more information about
FOREIGN SECURITIES, see the
Statement of Additional
information.

For more information on
FUTURES AND OPTIONS,
see the Statement of
Additional information.

For more information about
FOREIGN CURRENCY
EXCHANGE TRANSACTIONS,
see the Statement of
Additional Information.

18
<PAGE> 46

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

volatile; using them could lower fund total return; and the potential loss from
the use of futures can exceed a fund's initial investment in such contracts.

The Funds, except Money Market, may also buy futures and options.

WHEN-ISSUED SECURITIES

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

MONEY MARKET SECURITIES

These high quality money market securities include:

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

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

- Commercial paper sold by corporations and finance companies.

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

REPURCHASE AGREEMENTS

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

REVERSE REPURCHASE AGREEMENTS AND BORROWINGS

A reverse repurchase agreement involves the sale of a security by a Fund and its
agreement to repurchase the instrument at a specified time and price. Under a
reverse repurchase agreement, the Fund continues to receive any principal and
interest payments on the underlying security during the term of the agreement.
Science & Technology may enter into Reverse Repurchase Agreements.

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

LENDING PORTFOLIO SECURITIES

Each Fund except Science & Technology may lend up to 30% of its total assets to
broker-dealers and other financial institutions to earn more money for the Fund.
Science & Technology may lend up to 33 1/3% of its total assets.

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

The Funds will only make loans to broker-dealers and other financial
institutions approved by its Custodian, as monitored by American General
Advisers and authorized by the Board of Directors.

For more information about
WHEN-ISSUED SECURITIES,
see the Statement of
Additional Information.

For more information about
MONEY MARKET SECURITIES
OF FOREIGN ISSUERS the
Funds may purchase, see
the Statement of Additional
Information.

For more information about
LENDING PORTFOLIO
SECURITIES, see the
Statement of Additional
Information.

For more information about
REPURCHASE AGREEMENTS, see the
Statement of Additional
Information.

For more information about
REVERSE REPURCHASE AGREEMENTS
AND BORROWINGS, see the
Statement of Additional
Information.

19
<PAGE> 47

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

DIVERSIFICATION

All of the Funds except Nasdaq-100(R) Index and Science & Technology may invest
up to 5% of their total assets in a single issuer. An issuer, or "company" does
not include the U.S. Government or agencies of the U.S. Government according to
the Code and the 1940 Act. For diversification purposes, repurchase agreements
are considered to be issued by the U.S. Government if backed by U.S. Government
securities. Also, these Funds may not own more than 10% of the voting securities
of a company.

Science & Technology may invest more than 5% of its total assets in one company
or more than 10% of their total assets in the voting securities of one company
as long as the total of these investments does not exceed 25% of total assets.

Nasdaq-100(R) Index is a non-diversified Fund, and is able to invest more than
25% in the technology industry as explained in its Fact Sheet.

A WORD ABOUT RISK

Market Risk

Credit Risk

Interest Rate Risk

Prepayment Risk

Risks Associated with Foreign Securities

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

For more information about
INVESTMENT LIMITATIONS,
see the Statement of
Additional Information.

20
<PAGE> 48

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

U.S. Among the principal risks of owning foreign securities are:

Sovereign Risk -- the risk that a foreign government will interfere with
currency trading or transferring money out of the country.

ABOUT PORTFOLIO TURNOVER

High portfolio turnover may cause a Fund's expenses to increase. For example, a
Fund may have to pay brokerage fees and other related expenses.

A portfolio turnover rate over 100% a year is higher than the rates of many
other mutual fund companies. A high rate increases a Fund's transaction costs
and expenses.

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

21
<PAGE> 49

ABOUT THE SERIES COMPANY'S MANAGEMENT
--------------------------------------------------------------------------------

INVESTMENT ADVISER

American General Advisers is a division of VALIC, a stock life insurance
company, which has been in the investment advisory business since 1960 and is
the investment adviser for all the Funds. American General Advisers is a
registered investment adviser with the SEC and had over $48.8 billion in assets
under management as of June 30, 2000. Several of the principal officers,
directors and portfolio managers of American General Advisers hold similar
positions with AGIM.

As Investment Adviser, American General Advisers oversees the day to day
operations of each Fund, supervises the purchase and sale of Fund investments,
and performs the cash management function. American General Advisers employs
Investment Sub-Advisers who make investment decisions for the Funds, including
Nasdaq-100(R) Index and Science & Technology.

William Trimbur, Jr. has been International Equities' Portfolio Manager since
1992. He has been Vice President and Investment Officer for the Series Company
since 1987.

Teresa Moro has been Money Market's Portfolio Manager and Vice President and
Investment Officer for the Series Company since 1991.

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

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

INVESTMENT SUB-ADVISERS

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

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

22
<PAGE> 50

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

THE SUB-ADVISERS ARE:

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

T. ROWE PRICE ASSOCIATES, INC. ("T. ROWE PRICE")

Since May 1, 1994, T. Rowe Price has been the Sub-adviser for the Science &
Technology Fund.

The firm, which was founded by Thomas Rowe Price, Jr. in 1937, is one of the
pioneers of the growth stock theory of investing. T. Rowe Price, one of the
nation's leading no-load fund managers, and its affiliates manage over $179
billion of assets as of June 30, 2000. Its approach to managing money is based
on proprietary research and a strict investment discipline developed over six
decades.

The Science & Technology Fund is managed by an Investment Advisory Committee
chaired by Charles A. Morris. He has been chairman of this committee since it
was started in 1994. Mr. Morris joined T. Rowe Price in 1987 as an investment
analyst. He has been managing investments since 1991.

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

AMERICAN GENERAL INVESTMENT MANAGEMENT, L.P. ("AGIM") is the sub-adviser for the
North American -- AG Nasdaq-100(R) Index Fund. AGIM was formed in 1998 as a
successor to the investment management division of American General Corporation,
and is an indirect wholly-owned subsidiary of American General Corporation. AGIM
also provides investment management and advisory services to pension and profit
sharing plans, financial institutions and other investors.

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

HOW AMERICAN GENERAL ADVISERS IS PAID FOR ITS SERVICES

Here is a list of the percentages each Fund pays:

<TABLE>
<CAPTION>
Advisory Fee Paid
(as a % of average
Fund Name daily net assets)
--------- ----------------------------------
<S> <C>
International Equities Fund 0.35% on the first $500 million;
0.25% on assets over $500 million
MidCap Index Fund 0.35% on the first $500 million;
0.25% on assets over $500 million
Money Market Fund 0.50%
Nasdaq-100(R) Index 0.40%
Science & Technology Fund 0.90%
Small Cap Index Fund 0.35% on the first $500 million;
0.25% on assets over $500 million
Stock Index Fund 0.35% on the first $500 million;
0.25% on assets over $500 million
</TABLE>

T. ROWE PRICE'S
PRINCIPAL OFFICES
are located at
100 East Pratt Street,
Baltimore, Maryland
21202.

23
<PAGE> 51

ABOUT INDEX EQUITY FUNDS
--------------------------------------------------------------------------------

Several of the Funds in this Prospectus are Index Equity Funds investing mostly
in stocks. Their investment strategy is to track the performance of a specific
index. This strategy is followed whether markets go up or down. As part of this
investment strategy, each Fund may also invest in futures contracts and options.
Because these Funds do not have a defensive investment strategy, when the market
goes down, you will bear the risk of such market decline.

Index Funds perform best over the long term. This means you should plan to keep
your money in an Index Fund for a period of years.

WHAT IS AN INDEX?
An index reflects the average performance of a particular class of securities.
Examples of indexes include large company stocks (S&P 500 Index), mid-size
company stocks (S&P MidCap 400 Index), the bond market, or stocks of companies
in specific industries. Indexes are not managed funds, and cannot be bought.
Investment advisers compare the results of the funds they manage to indexes that
are close to the investment style of the fund. Information about the Series
Company's use of Standard & Poor's Indexes is in the Statement of Additional
Information.

WHICH INDEXES DO THESE FUNDS TRY
TO TRACK?

While there are more than a hundred different indexes, the Index Funds in this
prospectus try to track prominent stock indexes:

Stock Index tracks the
Standard & Poor's 500 Stock Index(R)*

This index may periodically change some of the stocks it tracks. And, different
indexes sometimes track some of the same stocks.

MidCap Index tracks the
Standard & Poor's MidCap 400(R) Index*

Standard & Poor's created this Index in 1991 to give investors an idea of how
the stocks of medium capitalized companies generally perform.

Small Cap Index tracks
The Russell 2000(R) Index**

The Russell 2000 Index is provided by The Frank Russell Company. This Index
tracks the common stock performance of 2,000 small capitalized U.S. companies in
various industries. Small capitalized means these companies have a market value
below $1 billion.

The Frank Russell Company created this Index in 1979 to give investors an idea
of how the stocks of small capitalized companies generally perform. The average
market capitalization of the Russell 2000 Index was $580 million as of June 30,
2000.

The stocks tracked by this Index are updated annually because many small
capitalized companies eventually become medium capitalized companies and some
fail.

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

INDEX FUNDS have
outperformed most mutual
funds over consecutive ten
year periods. However,
because they are managed
to track an index they will
rise and fall with the
market.

24
<PAGE> 52

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

International Equities tracks
The Morgan Stanley Capital International,
Europe, Australasia and the Far East
(EAFE) Index.

Morgan Stanley publishes the EAFE Index daily and, at times, may change some of
the stocks in the index.

NASDAQ-100 INDEX(R)

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

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

HOW CLOSELY CAN INDEX FUNDS TRACK
THE PERFORMANCE OF THEIR INDEX?

The factors that cause a Fund to perform differently from the Index it tries to
track are called tracking differences. There is no assurance that an Index Fund
can track its index.

25
<PAGE> 53

ABOUT THE SERIES COMPANY
--------------------------------------------------------------------------------

SERIES COMPANY SHARES

As a participant, you do not directly buy shares of the Funds that make up the
Series Company. Instead, you buy units in either a registered or unregistered
separate account of VALIC or of its affiliates. When you buy these units, you
specify which Funds you want the separate account to invest your money in. The
separate account, in turn, buys the shares of the Funds according to your
instructions. See your Contract prospectus for more information on the separate
account associated with your contract.

NET ASSET VALUE OF THE SERIES
COMPANY SHARES

How Net Asset Value is Calculated

Here is how the Series Company calculates the net asset value of each Fund's
shares:

Step 1:

<TABLE>
<S> <C> <C>
Total value of the
Fund's assets*
(including money owed
to the fund but not yet The Fund's
collected) = Total
-- The Fund's liabilities Net Asset Value
(including money owed
by the Fund but not yet
paid)
Step 2:
The Fund's total net
asset value (from
Step 1) NET ASSET VALUE
/ The total number of the = PER SHARE
Fund's shares that are
outstanding.
</TABLE>

When Net Asset Value is Calculated

26
<PAGE> 54
--------------------------------------------------------------------------------

DIVIDENDS AND CAPITAL GAINS

Dividends from Net Investment Income

Distributions from Capital Gains

TAX CONSEQUENCES

REDEMPTIONS

27
<PAGE> 55

FINANCIAL HIGHLIGHTS

INTERNATIONAL EQUITIES FUND
--------------------------------------------------------------------------------

28
<PAGE> 56
FINANCIAL HIGHLIGHTS -- CONTINUED

MIDCAP INDEX FUND
--------------------------------------------------------------------------------

MONEY MARKET FUND
--------------------------------------------------------------------------------

29
<PAGE> 57
FINANCIAL HIGHLIGHTS -- CONTINUED

SCIENCE & TECHNOLOGY FUND
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
----------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
NET ASSET VALUE, BEGINNING OF PERIOD $29.95 $22.07 $19.88 $20.48 $14.43
---------- ---------- ---------- -------- --------
INVESTMENT OPERATIONS
Net investment income (loss) (0.11) (0.10) (0.09) -- --
Net realized & unrealized gain 16.37 10.36 2.28 0.33 8.08
---------- ---------- ---------- -------- --------
Total from investment operations 16.26 10.26 2.19 0.33 8.08
---------- ---------- ---------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- -- -- -- --
Net realized gains (5.07) (2.38) -- (0.93) (2.03)
---------- ---------- ---------- -------- --------
Total distributions to shareholders (5.07) (2.38) -- (0.93) (2.03)
---------- ---------- ---------- -------- --------
NET ASSET VALUE, END OF PERIOD $41.14 $29.95 $22.07 $19.88 $20.48
========== ========== ========== ======== ========
TOTAL RETURN $52.65 48.34% 10.85% 1.81% 58.28%
========== ========== ========== ======== ========
RATIOS AND SUPPLEMENTAL DATA
Expenses to average net assets 0.96% 0.96% 0.95% 0.96% 0.94%
Net investment income to average net assets (0.40%) (0.46%) (0.46%) (0.29%) (0.07%)
Portfolio turnover rate 130% 149% 128% 122% 116%
Net assets at end of year (000's) $3,314,052 $1,683,585 $1,023,141 $804,982 $567,187
</TABLE>

SMALL CAP INDEX FUND
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
----------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
NET ASSET VALUE, BEGINNING OF PERIOD $15.84 $17.94 $16.18 $16.25 $12.49
-------- -------- -------- -------- --------
INVESTMENT OPERATIONS
Net investment income 0.18 0.19 0.19 0.19 0.20
Net realized & unrealized gain (loss) 1.43 (0.74) 3.17 0.93 4.04
-------- -------- -------- -------- --------
Total from investment operations 1.61 (0.55) 3.36 1.12 4.24
-------- -------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.18) (0.19) (0.19) (0.19) (0.20)
Net realized gains (1.61) (1.36) (1.41) (1.00) (0.28)
-------- -------- -------- -------- --------
Total distributions to shareholders (1.79) (1.55) (1.60) (1.19) (0.48)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $15.66 $15.84 $17.94 $16.18 $16.25
======== ======== ======== ======== ========
TOTAL RETURN 10.22% (2.45%) 21.34% 7.51% 34.50%
======== ======== ======== ======== ========
RATIOS AND SUPPLEMENTAL DATA
Expenses to average net assets 0.40% 0.41% 0.39% 0.41% 0.41%
Net investment income to average net assets 1.12% 1.20% 1.05% 1.34% 1.36%
Portfolio turnover rate 35% 36% 36% 42% 31%
Net assets at end of year (000's) $228,602 $220,002 $247,183 $192,459 $180,785
</TABLE>

30
<PAGE> 58
FINANCIAL HIGHLIGHTS -- CONTINUED

STOCK INDEX FUND
--------------------------------------------------------------------------------

31
<PAGE> 59

INTERESTED IN LEARNING MORE?
--------------------------------------------------------------------------------

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

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

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

To review a paper filing or to request that documents be mailed to you,
contact:

SEC Public Reference Room
Washington, D.C. 20549-6009
1-800-SEC-0330

A duplicating fee will be assessed for all copies provided.

Investment Company Act filing number 811-8912. VA 9017 VER 10/00