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AMERICAN GENERAL SERIES PORTFOLIO COMPANY 2
INSTITUTIONAL CLASS I
AND
INSTITUTIONAL CLASS II
SUPPLEMENT DATED APRIL 20, 1999
TO PROSPECTUS DATED NOVEMBER 2, 1998
All Funds
Effective May 1, 1999, the Funds' distributor will change from VALIC Investment
Services Company (VISCO) to A.G. Distributors, Inc., an affiliate of VALIC. All
references to VISCO in this prospectus should instead refer to A.G.
Distributors, Inc.
Craig R. Rodby has resigned as a Trustee and Officer of the Funds with the size
of the Board being reset at 11. Nine of the Trustees are independent and two are
VALIC employees.
On January 19, 1999, the Board of Trustees of the Series Company approved
certain changes to the Funds' investment restrictions with respect to illiquid
and restricted securities. Specifically, the section entitled "Illiquid and
Restricted Securities" under "Types of Investments" is re-titled and replaced in
its entirety with the following:
ILLIQUID SECURITIES
An illiquid security is one that may not be frequently traded or cannot be
disposed of promptly within seven days and in the usual course of business
without taking a materially reduced price. Illiquid securities include, but
are not limited to, time deposits and repurchase agreements not maturing
within seven days and restricted securities.
A restricted security is one that has not been registered with the SEC and,
therefore, cannot be sold in the public market. Securities eligible for
sale under Rule 144A and commercial paper offered pursuant to Section 4(2)
of the Securities Act of 1933, as amended, are not deemed by VALIC or the
Sub-adviser to be illiquid solely by reason of being restricted. Instead,
VALIC or the Sub-adviser will determine whether such securities are liquid
based on trading markets and pursuant to guidelines adopted by the Series
Company's Board of Trustees. If VALIC or the Sub-adviser concludes that a
security is not liquid, that investment will be included within the Fund's
limitation on illiquid securities.
All the Funds, except the Lifestyle Funds, may buy illiquid securities, but
are restricted as to how much money they may invest in them.
The related sidebar should only reference illiquid securities.
In the "Fact Sheets" for the Large Cap Value Fund, Mid Cap Value Fund, Socially
Responsible Fund, and Money Market Fund, please disregard all references to
restricted securities under "Investment Strategy." The stated limit should refer
to illiquid securities only.
American General Balanced Fund
R. Bryan Jacoboski is no longer a portfolio manager for the Fund. All of the
other portfolio managers for the Fund identified in this prospectus will
continue to manage the Fund.
American General Core Bond Fund
The "Fund Investments" guidelines included in the "Fact Sheet" should reflect
that short-term investments, such as commercial paper, bankers' acceptances,
bank certificates of deposit and other cash equivalents and cash may constitute
up to 35% of the Fund's total assets, rather than be included among investment
grade fixed-income and other securities that must constitute at least 65% of the
Fund's total assets.
American General Domestic Bond Fund
The "Fund Investments" guidelines included in the "Fact Sheet" should reflect
that short-term investments, such as commercial paper, bankers' acceptances,
bank certificates of deposit and other cash equivalents and cash may constitute
up to 35% of the Fund's total assets, rather than be included among investment
grade fixed-income and other securities that must constitute at least 65% of the
Fund's total assets.
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American General Money Market Fund
The first paragraph of the "Investment Strategy" section of the Fund's "Fact
Sheet" is replaced in its entirety with the following:
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.
American General Small Cap Value Fund
Bankers Trust Company, sub-adviser to the Fund, is a wholly owned subsidiary of
Bankers Trust Corporation. On November 30, 1998, Bankers Trust Corporation
entered into an Agreement and Plan of Merger with Deutsche Bank AG under which
Bankers Trust Corporation would merge with and into a subsidiary of Deutsche
Bank AG. Deutsche Bank AG is a major global banking institution that is engaged
in a wide range of financial services, including investment management, mutual
funds, retail and commercial banking, investment banking and insurance. The
transaction is contingent upon various regulatory approvals. If the transaction
is approved and completed, Deutsche Bank AG, as Bankers Trust's new parent
company, will control the operations of Bankers Trust. Bankers Trust has
informed the Funds that, under this new arrangement, the services provided to
the Funds will be maintained at their current level. As a result of the
foregoing transaction, on April 20, 1999, the Board approved a new investment
sub-advisory agreement with Bankers Trust. The new sub-advisory agreement is
identical to the current agreement with Bankers Trust except for the effective
date.
David C. Faircloth, CFA, is now assisting in the management of the
actively-managed portion of the Fund. Mr. Faircloth, Vice President and
Portfolio Manager, joined Fiduciary Management Associates, Inc. in November
1998. Previously, Mr. Faircloth was Vice President and Portfolio Manager at the
Northern Trust Company from 1990 until November 1998.
Also, Ms. Vorisek's name is not correct as it appears in the prospectus. Her
correct full name is Kathryn A. Vorisek.
American General Socially Responsible Fund
The Fund has made certain changes to its social criteria. The following replaces
the second sentence of the section entitled "Investment Objective" in the Fund's
"Fact Sheet."
The Fund does not invest in companies that are significantly engaged in:
- the production of nuclear energy;
- the manufacture of military weapons or delivery systems;
- the manufacture of alcoholic beverages or tobacco products;
- the operation of gambling casinos; or
- business practices or the production of products that significantly
pollute the environment.
Paul W. Green, CFA has assumed portfolio management responsibility for the Fund.
Mr. Green has been Vice President and Investment Officer of VALIC since February
1999. Previously, Mr. Green was with BARRA, Inc., a financial consulting firm,
since July 1993.
VA 10856-I/IIB
