<PAGE> 1
AMERICAN GENERAL SERIES PORTFOLIO COMPANY 2
CLASS A SHARES
AND
CLASS B SHARES
SUPPLEMENT DATED JULY 12, 1999
TO PROSPECTUS DATED NOVEMBER 2, 1998
(AS SUPPLEMENTED THROUGH APRIL 20, 1999)
All Funds
Effective immediately, all inquiries regarding the prospectus should be
directed, in writing, to American General Fund Group Customer Service, P.O. Box
219502, Kansas City, Missouri 64121-6502, or by calling 1-877-999-2434.
Effective immediately, under "General Redemption Policies," on page 82 of the
prospectus, the amount of a redemption request which must be accompanied by a
signature guarantee has been lowered from an amount in excess of $50,000 to an
amount in excess of $25,000. As always, a signature guarantee will be required
for a redemption request of any amount, where the redemption proceeds are to be
sent somewhere other than the address of record on the Series Company's books or
if the current address of record has not been on the books for 60 days.
Under "Systematic Withdrawals," on page 81 of the prospectus, if you own Class B
Shares you may redeem up to 12% annually of your account value without incurring
a CDSC, which replaces the provision that you may only redeem up to 12% annually
of your initial account without incurring a CDSC. As always, the minimum amount
of a withdrawal under the Systematic Withdrawal program, is $50 and the minimum
account size is $5,000.
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.
American General Stock Index Fund, American General MidCap Index Fund, American
General Small Cap Index Fund and American General Small Cap Value Fund
Effective June 4, 1999, Bankers Trust Corporation, the parent company to Bankers
Trust Company ("Bankers Trust"), the sub-adviser to the above Funds, became a
wholly-owned 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. 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.
Effective as of July 6, 1999, Kathy Condon has assumed portfolio management
responsibilities for the Funds. Ms. Condon is the Managing Director and Head of
Passive Investments of the Sub-adviser. Ms. Condon has been with the Sub-adviser
since 1970.
VA 10856-A
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AMERICAN GENERAL SERIES PORTFOLIO COMPANY 2
INSTITUTIONAL CLASS I
AND
INSTITUTIONAL CLASS II
SUPPLEMENT DATED JULY 12, 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 Small Cap Value Fund
Effective June 4, 1999, Bankers Trust Corporation, the parent company to Bankers
Trust Company ("Bankers Trust"), the sub-adviser to the above Fund, became a
wholly-owned 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. 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.
Effective as of July 6, 1999 Kathy Condon has assumed portfolio management
responsibilities for the Fund. Ms. Condon is the Managing Director and Head of
Passive Investments of the Sub-adviser. Ms. Condon has been with the Sub-adviser
since 1970.
In addition to Kathryn A. Vorisek, Terry B. French, and Douglas G. Madigan, CFA,
David C. Faircloth, CFA, is also primarily responsible for the day-to-day
management of the Fund. Mr. Faircloth, Vice President and Portfolio Manager,
joined the Sub-adviser in November 1998. Previously, Mr. Faircloth was Vice
President and Portfolio Manager at the Northern Trust Company from 1990 until
November 1998.
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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.
VA 10856-I/IIC
