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AMERICAN GENERAL SERIES PORTFOLIO COMPANY
SUPPLEMENT DATED MARCH 19, 1999
TO PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION
DATED OCTOBER 1, 1998
(AS USED IN AMERICAN GENERAL LIFE INSURANCE COMPANY VARIABLE LIFE PRODUCTS)
This Supplement incorporates certain information provided in a previous
supplement dated November 24, 1998.
FOR THE PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION OF ALL FUNDS:
The following individuals were recently elected by the shareholders to
serve as directors of the Series Company:
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Dr. Judith L. Craven Physician, Administrator; President, United Way of Texas
3212 Ewing Street Gulf Coast (1992-1998); Director, A.H. Belo Corporation
Houston, Texas 77004 (1993-Present); Director, Sysco Corporation (1996-Present);
Date of Birth: 10/06/45 Director, Sisters of Charity of the Incarnate Word
(1996-Present).
Dr. Timothy J. Ebner Professor, Departments of Neurosurgery and Physiology,
17994 NW Union Street University of Minnesota (1991-Present). Formerly, Consultant
Elk River, Minnesota 55330 EMPI Inc. (1994-1995) and Medtronic Inc. (1997-1998).
Date of Birth: 07/15/49
Judge Gustavo E. Gonzales, Jr. Municipal Court Judge, Dallas, Texas; Director, Downtown
8320 Coolgreen Drive Dallas YMCA Board (1996-Present); Director, Dallas Easter
Dallas, Texas 75228 Seals Society (1997-Present).
Date of Birth: 07/27/40
John A. Graf* President and Director, The Variable Annuity Life Insurance
2929 Allen Parkway Company ("VALIC") and American General Annuity Insurance
Houston, Texas 77019 Company ("AGAIC") (1998 to Present). Director, Boy Scouts of
Date of Birth: 09/14/59 America. Formerly, Director (1993-1998), President and Chief
Executive Officer (1997-1998), Vice Chairman (1996-1997),
Chief Marketing Officer (1993-1997) and Executive Vice
President (1993-1996), Western National Life Insurance
Corporation and Senior Vice President, Conseco,
Inc.(1987-1993).
Dr. John E. Maupin, Jr. President, Meharry Medical College, Nashville, Tennessee;
2 Morningside Court Nashville Advisory Board Member, First American National
Nashville, Tennessee 37215 Bank (1996- Present); Director, Monarch Dental Corporation
Date of Birth: 10/28/46 (1997-Present). Formerly, Executive Vice President,
Morehouse School of Medicine, Atlanta, Georgia (1989-1994).
Craig R. Rodby* Vice Chairman (1997-Present) and Chief Financial Officer
2929 Allen Parkway (1998- Present), VALIC and AGAIC (1998-Present). Formerly,
Houston, Texas 77019 Senior Vice President-Financial Management, ReliaStar
Date of Birth: 07/05/49 (1994-1997) and President and Chief Executive Officer,
Northern Life Insurance Company (1990-1994).
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* Interested persons of the Series Company as defined in the 1940 Act
specifically because of their capacity as officers, directors or consultants
of the Series Company, VALIC or American General Corporation.
Joe C. Osborne and Peter V. Tuters did not stand for re-election to the Board.
VA 9017-D
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FOR THE PROSPECTUS ONLY:
FOR THE MONEY MARKET FUND ONLY:
The Board of Directors recently approved an amendment to the Money Market
Fund's non-fundamental investment restriction relating to maturity standards of
investments to include securities subject to demand features. The section in the
Prospectus entitled "Types of Investments" is supplemented as follows:
Variable Rate Demand Notes
Variable rate demand notes ("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. The Money Market Fund 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 the conditions established by the SEC under which such
securities may be considered to have remaining maturities of 397 days or
less.
FOR ALL FUNDS:
On January 19, 1999, the Board of Directors of the Series Company approved
certain changes to the Funds' investment restrictions with respect to illiquid
and restricted securities. Specifically, the section in the Prospectus 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 Directors. 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 may buy illiquid securities, but are restricted as to
how much money they may invest in them. See "Limitations" below.
The related sidebar should only reference illiquid securities.
In the "Fact Sheets" for each Fund, please disregard all references to
restricted securities under "Investment Strategy." The stated limit should refer
to illiquid securities only.
In addition, the "Fact Sheets" for the MIDCAP INDEX FUND and STOCK INDEX
FUND should reflect under "Investment Strategy" that up to 10% of their net
assets may be invested in illiquid securities.
Year 2000 Risks
Year 2000 Risk disclosure has been updated through December 31, 1998.
YEAR 2000 RISKS
VALIC initiated its Year 2000 readiness plan in 1995. Since that time,
VALIC management along with a team of skilled information technology and
business professionals have been dedicated to achieving the objectives of
the plan. This plan calls for the renovation, upgrade and/or replacement of
our mission
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critical computer systems, whether developed internally or otherwise. It
includes the five steps that we believe are essential to Year 2000
readiness: inventory and discovery; analysis; construction; testing; and
implementation. As of December 31, 1998, we have substantially completed
all steps with respect to our critical systems.
VALIC's plan also includes an evaluation of the status of our key
third party relationships and their efforts in addressing Year 2000 issues.
Throughout 1999 we will continue to work with critical third party
dependencies and to develop contingency plans for any identified risks or
shortcomings. If significant third parties fail to achieve Year 2000
readiness on a timely basis, then the Year 2000 issue could have a material
adverse impact on the operations of VALIC and the Series Company. However,
the third party contingency plans we develop are meant to identify those
risks and provide alternative actions should a third party not achieve
readiness. While we believe no one can predict with certainty outcomes as
to all the issues that may arise, VALIC is confident that its comprehensive
plan and resource commitment will allow it to meet its Year 2000
objectives.
Through December, 1998, VALIC has incurred and expensed $26.7 million
(pretax) related to Year 2000 readiness, including $20.2 million incurred
during 1998. VALIC currently anticipates that it will incur future costs of
$2.1 million for additional internal staff, third party vendors, and other
expenses to maintain readiness and complete third party contingency plans.
FOR THE STATEMENT OF ADDITIONAL INFORMATION OF ALL FUNDS:
The following Euro Conversion disclosure has been updated and moved to the
Statement of Additional Information.
EURO CONVERSION
Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, the Netherlands, Portugal, and Spain are members of the
European Economic and Monetary Union (the "EMU"). The EMU has established a
common European currency for participating countries which will be known as
the "euro." Each participating country has supplemented its existing
currency with the euro on January 1, 1999, and will replace its existing
currency with the euro on July 1, 2002. Any other European country which is
a member of the EMU may elect to participate in the EMU and may supplement
its existing currency with the euro after January 1, 1999.
The ongoing introduction of the euro presents unique risks and
uncertainties, including whether the payment and operational systems of
banks and other financial institutions will function properly; how
outstanding financial contracts will be treated after January 1, 1999; the
establishment of exchange rates for existing currencies and the euro; and
the creation of suitable clearing and settlement systems for the euro.
These and other factors could cause market disruptions and could adversely
affect the value of securities held by certain of the Funds.
The following non-fundamental investment restriction applicable to each
Fund is hereby added in the Statement of Additional Information:
The Fund may not invest more than 10% (15% in the case of the Growth Fund,
Growth & Income Fund and Science & Technology Fund) of the Fund's net assets
(taken at the greater of cost or market value) in securities that are illiquid
or not readily marketable including time deposits and repurchase agreements not
maturing within seven days or restricted securities, but excluding (a) Rule 144A
securities that have been determined to be liquid by VALIC or the Sub-adviser,
in accordance with guidelines adopted by the Company's Board of Directors, and
(b) commercial paper that is sold under Section 4(2) of the 1933 Act which: (i)
is not traded flat or in default as to interest or principal; (ii) is rated in
one of the two highest categories by at least two nationally recognized
statistical rating organizations and VALIC or the Sub-adviser, in accordance
with guidelines adopted by the Company's Board of Directors, has determined the
commercial paper to be liquid; or (iii) is rated in one of the two highest
categories by one nationally recognized statistical rating agency and VALIC or
the Sub-adviser, in accordance with guidelines adopted by the Company's Board of
Directors, has determined that the commercial paper is of equivalent quality and
is liquid.
