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SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
Check the appropriate box:
Preliminary Information Statement
/ / Confidential, for Use of the Commission
Only (as permitted by Rule 14c-5(d)(2))
/X/ Definitive Information Statement
American General Series Portfolio Company 2
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(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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AMERICAN GENERAL SERIES PORTFOLIO COMPANY 2
MID CAP INDEX FUND
SMALL CAP VALUE FUND
INFORMATION STATEMENT
Introduction
This information statement relates to the liquidation of the Mid Cap Index
Fund and the Small Cap Value Fund (together, the "Funds"), each a series of the
American General Series Portfolio Company 2 (the "Trust"). This statement is
being mailed on or about June 1, 2000 to all shareholders of record of the Funds
as of May 19, 2000 (the "Record Date").
Growth in the assets of the Funds since they commenced operations has been
slow, due, in part, to limited demand for the asset class represented by the
each of the Funds. Since the Funds' inception, The Variable Annuity Life
Insurance Company, the Funds' investment advisor (the "Advisor"), has reimbursed
a significant portion of the operating expenses of the Funds. In the absence of
these reimbursements, the investment returns of the Funds would have been
reduced. Despite significant marketing efforts, the Funds' assets have not grown
significantly.
The Board of Trustees of the Trust (the "Board") has carefully considered
each of these factors, and has concluded that it would be in the best interest
of the shareholders of the Funds to liquidate the Funds. Accordingly, on April
18, 2000 the Board approved a Plan of Liquidation and Dissolution (the "Plan"),
which will be adopted by an action by written consent of the majority
shareholders of the Funds on June 30, 2000.
This information statement contains further information about the Funds and
the Plan. Shareholders are encouraged to read the discussions of "Investor
Options" at page 3 and of "General Tax Consequences" at page 4 below.
WE ARE NOT ASKING YOU FOR A PROXY WITH RESPECT TO THE MATTERS DESCRIBED IN
THIS INFORMATION STATEMENT. YOU ARE REQUESTED NOT TO SEND US A PROXY.
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Background
The Mid Cap Index Fund began operations on November 2, 1998. During the
period from commencement of operations through April 17, 2000, the Mid Cap Index
Fund's assets reached a level of $9,384,024. The Small Cap Value Fund also began
operations on November 2, 1998. During the period from commencement of
operations through April 17, 2000, the Small Cap Value Fund's assets reached a
level of $5,912,551.
For the fiscal year ended October 31, 1999, the Mid Cap Index Fund's total
operating expenses were 1.67% for Class A shares and 2.29% for Class B shares
without expense reimbursements from the Advisor. After expense reimbursements,
the Mid Cap Index Fund's net operating expenses were 0.83% for Class A shares
and 1.58% for Class B shares. For the fiscal year ended October 31, 1999, the
Small Cap Value Fund's total operating expenses were 2.61% for Class A shares,
3.08% for Class B shares and 2.68% for Institutional Class I shares without
expense reimbursements from the Advisor. After expense reimbursements, the Small
Cap Value Fund's net operating expenses were 1.23% for Class A shares, 1.98% for
Class B shares and 1.11% for Institutional Class I shares.
At a meeting on April 18, 2000, the Board reviewed the total asset levels
of each of the Funds, the performance of the Funds both before and after
deducting certain expenses arising from their operations and the expenses that
had been assumed by the Advisor during the lives of the Funds. The Board also
considered the effect the relatively small size of the Funds has on the
operating expenses of the Funds and the effect of these operating expenses on
the historic and anticipated returns of shareholders. The Board determined that
an increase in expenses attributable to an eventual discontinuance of the
expense reimbursements in the future would significantly reduce the Funds'
investment returns. In the judgment of the Board, sales of the Funds' shares
have not been sufficient to allow the Funds to spread expenses over a sufficient
asset base to ensure their economic viability. The Board determined that a
merger or transfer of assets would not be a favorable course of action for
unaffiliated shareholders.
After taking these factors into consideration, the Board has concluded that
it would be in the interest of the shareholders of the Funds to liquidate the
Funds promptly, in accordance with the Plan. The Advisor and its affiliates
together own a majority in interest of the outstanding voting securities of each
of the Funds, sufficient to approve the Plan through an action by written
consent of shareholders, to be effective as of June 30, 2000. Accordingly, as
permitted by the federal securities laws, this information statement is being
sent to all the shareholders of record of the Funds as of the Record Date. You
may request a copy of the Trust's most recent annual report free of charge by
writing to American General Series Portfolio Company 2, 2929 Allen Parkway,
Houston, Texas 77019, or by telephone at (877) 999-2434. The Advisor's address
is: VALIC, 2919 Allen Parkway, Houston, Texas 77019.
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<PAGE>
Investor Options
In order to give you an opportunity to minimize the impact of liquidating
the Funds on your individual circumstances, you are being offered three options
for the disposition of your shares of the Funds, which were more fully outlined
in a letter to you dated April 25, 2000, and all of which will be treated as
sales for tax purposes. The available options are:
Option #1 - If you own Class A or Class B shares in either of the Funds, you may
redeem your shares in the Funds and purchase Class A shares of any series of
North American Funds (except the North American Tax-Sensitive Equity Fund or
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the North American Equity-Income Fund), before June 30, 2000.
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. There will be no redemption charge for this transaction.
. North American Funds will waive the sales charge on the purchase of the
Class A shares.
Option #2 - You may exercise your right to exchange your current investment in
the Funds for an investment of equal value in any other fund in the Trust, in
the same class, before June 30, 2000. There will be no charge for such an
exchange. You may obtain information about the other funds in the Trust by
writing to American General Distributors, Inc., the Funds' distributor, whose
address is 2929 Allen Parkway, Houston, Texas 77019.
Option #3 - You may choose to do nothing at this time.
. As soon as is reasonably practicable after June 30, 2000, each shareholder
of record will receive a check, payable to such shareholder, representing
the value of his or her shares as of June 30, 2000.
. There will be no redemption charge.
. If your shares are held in a qualified retirement plan, you must reinvest
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this amount through your retirement plan to avoid possible penalties or
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adverse tax consequences.
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. If your shares are held through any qualified retirement plan, and you call
to request that the check be made payable directly to you, the amount you
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receive will be reduced by any required federal or state income tax
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withholding.
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Plan of Liquidation and Distribution
The Plan, which is summarized here and attached as Exhibit A to this
information statement, will govern the liquidation of the Funds. The Plan will
become effective on June 30, 2000 (the "Effective Date"), following the
execution of an action by written consent of the Funds' majority shareholders.
Once the Plan has become effective, the Funds will discontinue investment
in new assets and will sell the portfolio securities they own in order to
convert their assets into cash. As soon as possible after the Effective Date,
the Trust, on behalf of the Funds, will mail a liquidating distribution in cash
to each shareholder of record of the Funds as of the Effective
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Date. Each distribution will be equal to the shareholder's proportionate
interest in the net assets of the Funds, reduced by any required federal or
state income tax withholding. Once the liquidating distributions have been
mailed, the Trust will effect the dissolution of the Funds.
The Advisor will bear the costs incurred in carrying out the Plan,
including associated legal fees and the cost of mailing this information
statement.
General Tax Consequences
The exercise of any of the three options set forth above will be treated as
a sale for tax purposes, and accordingly each shareholder may recognize a
taxable gain or loss based on the difference between the value of the property
(namely, the shares of the funds into which the shareholder has transferred
shares, or the liquidation proceeds) received and the shareholder's tax basis in
the shares of the Funds. Assuming that such shareholder holds his or her shares
in the Funds as capital assets, such gain or loss will be capital gain or loss
and will be long-term or short-term capital gain, depending on the shareholder's
holding period for the shares.
The tax consequences discussed herein may affect shareholders differently
depending upon their particular tax situations unrelated to the liquidating
distribution, including how recently they purchased their shares. Accordingly,
this summary is not a substitute for careful tax planning on an individual
basis. Shareholders who hold their shares in the Funds through an individual
retirement or other tax-deferred account, and who do not transfer such shares
into shares of any of the American General Funds or North American Funds, should
be aware that the liquidation of the Funds converts their shares to cash. If,
under the terms of the agreement governing the individual retirement or other
tax-deferred account, the liquidation were to result in a distribution from such
account, a shareholder should act promptly (i.e., within 60 days of receiving
the distribution) to roll the distribution into another individual retirement or
other tax-deferred account. SHAREHOLDERS MAY WISH TO CONSULT THEIR PERSONAL TAX
ADVISORS AND THE CUSTODIANS OF THEIR INDIVIDUAL RETIREMENT OR OTHER TAX-DEFERRED
ACCOUNTS CONCERNING THEIR PARTICULAR TAX SITUATIONS AND THE IMPACT THEREON OF
RECEIVING THE LIQUIDATING DISTRIBUTION AS DISCUSSED HEREIN, INCLUDING ANY STATE
AND LOCAL TAX CONSEQUENCES.
The Funds anticipate that they will retain their qualification as regulated
investment companies under the Internal Revenue Code, as amended, during the
liquidation period and, therefore, will not be taxed on any of their net income
from the sale of their assets.
Shareholders are free to redeem their shares prior to the liquidation.
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Ownership of Shares and Voting Information
As of April 17, 2000, the Trust believes that the Board and officers of the
Trust, as a group, owned less than one percent of each class of shares of each
of the Funds and of the Trust as a whole. As of April 17, 2000, the following
persons owned of record or beneficially 5% or more of the noted class of shares
of the noted Fund:
<TABLE>
<CAPTION>
Fund Shareholder % of Class Held
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<S> <C> <C>
Mid Cap Index Fund VALIC Seed Account 86.37%
Class A Shares Attn: Greg Seward
2919 Allen Parkway #L7-01
Houston, Texas 77019-2142
Mid Cap Index Fund VALIC Seed Account 58.85%
Class B Shares Attn: Greg Seward
2919 Allen Parkway #L7-01
Houston, Texas 77019-2142
Small Cap Value Fund VALIC Seed Account 72.37%
Class A Shares Attn: Greg Seward
2919 Allen Parkway #L7-01
Houston, Texas 77019-2142
Growth Lifestyle Fund 11.12%
c/o VALIC
Attn: Greg Seward
2919 Allen Parkway #L7-01
Houston, Texas 77019-2142
Small Cap Value Fund Moderate Growth Lifestyle Fund 6.02%
Class A Shares c/o VALIC
Attn: Greg Seward
2919 Allen Parkway #L7-01
Houston, Texas 77019-2142
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Fund Shareholder % of Class Held
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<S> <C> <C>
Small Cap Value Fund VALIC Seed Account 40.86%
Class B Shares Attn: Greg Seward
2919 Allen Parkway #L7-01
Houston, Texas 77019-2142
Growth Lifestyle Fund 18.91%
c/o VALIC
Attn: Greg Seward
2919 Allen Parkway #L7-01
Houston, Texas 77019-2142
11.18%
Moderate Growth Lifestyle Fund
c/o VALIC
Attn: Greg Seward
2919 Allen Parkway #L7-01
Houston, Texas 77019-2142
7.58%
Conservative Growth Lifestyle Fund
c/o VALIC
Attn: Greg Seward
2919 Allen Parkway #L7-01
Houston, Texas 77019-2142
Small Cap Value Fund VALIC 79.50%
Institutional Class I Shares Attn: Greg Seward
2919 Allen Parkway #L7-01
Houston, Texas 77019-2142
Growth Lifestyle Fund 9.94%
c/o VALIC
Attn: Greg Seward
2919 Allen Parkway #L7-01
Houston, Texas 77019-2142
Moderate Growth Lifestyle Fund 6.44%
c/o VALIC
Attn: Greg Seward
2919 Allen Parkway #L7-01
Houston, Texas 77019-2142
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Fund Shareholder % of Class Held
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<S> <C> <C>
Small Cap Value Fund VALIC 85.65%
Institutional Class II Shares Attn: Greg Seward
2919 Allen Parkway #L7-01
Houston, Texas 77019-2142
Growth Lifestyle Fund 7.43%
C/o VALIC
Attn: Greg Seward
2919 Allen Parkway #L7-01
Houston, Texas 77019-2142
</TABLE>
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