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AMERICAN GENERAL SERIES PORTFOLIO COMPANY
SUPPLEMENT ISSUED JULY 12, 1999
TO STATEMENT OF ADDITIONAL INFORMATION
DATED OCTOBER 1, 1998
(AS SUPPLEMENTED THROUGH FEBRUARY 22, 1999)
All Funds
Effective May 1, 1999, the Funds' distributor changed from the Variable Annuity
Marketing Company (VAMCO) to A. G. Distributors, Inc., an affiliate of VALIC.
All references to VAMCO in this Statement of Additional Information should
instead refer to A.G. Distributors, Inc.
Craig R. Rodby has resigned as a Director and officer of the Funds.
The following is added to the section entitled "Investment Restrictions" as a
new second paragraph:
Calculation of each Fund's total assets for compliance with any of the following
fundamental or operating policies or any other investment restrictions set forth
in the Company's Prospectus or Statement of Additional Information will not
include cash collateral held in connection with securities lending activities.
Stock Index Fund, MidCap Index Fund, and Small Cap Index Fund
On March 11, 1999, Bankers Trust announced that it had reached an agreement with
the United States Attorney's Office in the Southern District of New York to
resolve an investigation concerning inappropriate transfers of unclaimed funds
and related recordkeeping problems that occurred between 1994 and early 1996.
Pursuant to its agreement with the U.S. Attorney's Office, Bankers Trust pleaded
guilty to misstating entries in the bank's books and records and agreed to pay a
$3.5 million fine to the State of New York. The events leading up to the guilty
pleas did not arise out of the investment advisory or mutual fund management
activities of Bankers Trust or its affiliates.
As a result of the plea, absent an order from the SEC, Bankers Trust would not
be able to continue to provide investment advisory services to the Funds. The
SEC has granted an order to permit Bankers Trust and its affiliates to continue
to provide investment advisory services to registered investment companies.
Asset Allocation Fund, Capital Conservation Fund and Government Securities Fund
The Asset Allocation Fund, Capital Conservation Fund, and Government Securities
Fund may invest in mortgage dollar rolls. In a "dollar roll" transaction, a Fund
sells a mortgage-related security, such as a security issued by the Government
National Mortgage Association, to a dealer and simultaneously agrees to
repurchase a similar security (but not the same security) in the future at a
pre-determined price. A "dollar roll" can be viewed as a collateralized
borrowing in which a Fund pledges a mortgage-related security to a dealer to
obtain cash. The dealer with which a Fund enters into a dollar roll transaction
is not obligated to return the same securities as those originally sold by the
Fund, but only securities which are "substantially identical." To be considered
"substantially identical," the securities returned to a Fund generally must: (1)
be collateralized by the same types of underlying mortgages; (2) be issued by
the same agency and be part of the same program; (3) have a similar original
stated maturity; (4) have identical net coupon rates; (5) have similar market
yields (and therefore price); and (6) satisfy "good delivery" requirements,
meaning that the aggregate principal amounts of the securities delivered and
received must be within 1.0% of the initial amount delivered.
A Fund's obligations under a dollar roll agreement must be covered by segregated
liquid assets equal in value to the securities subject to repurchase by the
Fund. To the extent that positions in dollar roll agreements are not covered by
segregated liquid assets at least equal to the amount of any forward purchase
commitment, such transactions would be subject to the Funds' limitations on
borrowings. Dollar roll transactions for terms exceeding three months may be
deemed "illiquid" and subject to a Fund's overall limitations on investments in
illiquid securities.
