2<PAGE>
As filed with the Securities and Exchange Commission on August 19, 1996
REGISTRATION NO. 33-96668
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER [X]
THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. 2 [X]
POST-EFFECTIVE AMENDMENT NO. [ ]
AND/OR
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 2 [X]
(CHECK APPROPRIATE BOX OR BOXES.)
SOGEN VARIABLE FUNDS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
1221 AVENUE OF THE AMERICAS
NEW YORK, NY 10020
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (800) 334-2143
JEAN-MARIE EVEILLARD
SOGEN VARIABLE FUNDS, INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NY 10020
(NAME AND ADDRESS OF AGENT FOR SERVICE)
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: AS SOON AS PRACTICABLE AFTER THE
EFFECTIVE DATE OF THIS REGISTRATION STATEMENT. IT IS PROPOSED THAT THIS FILING
WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX):
[ ] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B)
[ ] ON (DATE) PURSUANT TO PARAGRAPH (B)
[ ] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(1)
[ ] ON (DATE) PURSUANT TO PARAGRAPH (A)(1)
[ ] 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(2)
[ ] ON (DATE) PURSUANT TO PARAGRAPH (A)(2) OF RULE 485
REGISTRANT DECLARES THAT AN INDEFINITE NUMBER OF ITS SHARES OF COMMON STOCK
ARE BEING REGISTERED BY THIS REGISTRATION STATEMENT.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS
EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 8(A) OF THE SECURITIES
ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH
DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
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SOGEN VARIABLE FUNDS, INC.
CROSS-REFERENCE SHEET
PURSUANT TO RULE 495(A)
UNDER THE SECURITIES ACT OF 1933
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FORM N-1A ITEM NO. PROSPECTUS CAPTION
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PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Not Applicable
Item 3. Condensed Financial Information Not Applicable
Item 4. General Description of Registrant Organization of the Fund; Investment Objective and
Policies; Investment Restrictions; Implementation of
Policies and Risks
Item 5. Management of the Company Management of the Company
Item 6. Capital Stock and Other Securities Dividends, Distributions and Taxes; Capital Stock;
Inquiries
Item 7. Purchase of Securities Being Offered Management of the Company; How to Purchase Shares;
Net Asset Value
Item 8. Redemption or Repurchase How to Redeem Shares
Item 9. Legal Proceedings Not Applicable
FORM N-1A ITEM NO. STATEMENT OF ADDITIONAL
INFORMATION CAPTION
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PART B
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Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History Organization of the Fund
Item 13. Investment Objectives and Policies Investment Objective, Policies and Restrictions
Item 14. Management of the Registrant Management of the Company
Item 15. Control Persons and Principal Holders of Securities Management of the Company
Item 16. Investment Adviser and Other Services Investment Adviser and Other Services; Distribution
of the Fund's Shares; Custody of Portfolio;
Independent Auditors
Item 17. Brokerage Allocation Brokerage Allocation
Item 18. Capital Stock and Other Securities Not Applicable
Item 19. Purchase, Redemption and Pricing of Securities Being Distribution of the Fund's Shares; How to Purchase
Offered Shares; Computation of Net Asset Value
Item 20. Tax Status Tax Status
Item 21. Underwriters Distribution of the Fund's Shares
Item 22. Calculation of Performance Data Investment Objective, Policy and Restrictions
Item 23. Financial Statements Report of Independent Auditors; Statement of Assets
and Liabilities
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SOGEN OVERSEAS VARIABLE FUND
(Logo appears here)
Prospectus
August 31, 1996
<PAGE>
PROSPECTUS
SOGEN OVERSEAS VARIABLE FUND
(Logo appears here)
1221 AVENUE OF THE AMERICAS, NEW YORK, NY 10020
(800) 334-2143
SOCIETE GENERALE ASSET MANAGEMENT CORP.
INVESTMENT ADVISER
SOCIETE GENERALE SECURITIES CORPORATION
DISTRIBUTOR
SoGen Overseas Variable Fund (the "Fund") is a separate portfolio of SoGen
Variable Funds, Inc., an open-end management investment company (the "Company")
that offers its shares only to separate accounts of U.S. insurance companies to
serve as an investment medium for variable life insurance policies and variable
annuity contracts issued by the insurance companies ("Variable Contracts") and
other qualified buyers. The Company currently offers one portfolio; additional
portfolios may be created by the directors from time to time, and the directors
may discontinue the offering of shares of any existing portfolio at any time.
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
This Prospectus sets forth concisely information about the Fund that an
investor ought to know before investing. This Prospectus should be read in
conjunction with the prospectus of the separate account of the specific
insurance product that accompanies this Prospectus. Both prospectuses should be
read and retained for future reference. A Statement of Additional Information
dated August 31, 1996, containing additional information about the Fund, has
been filed with the Securities and Exchange Commission. It is incorporated
herein by reference and is available free of charge by contacting the Company at
(800) 628-0252.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Fund's investment objective is long-term growth of capital by investing
primarily in securities of small and medium size non-U.S. companies.
Societe Generale Asset Management Corp. ("SOGEN A.M. Corp."), the Fund's
investment adviser, is also the investment adviser to SoGen International Fund,
Inc. and SoGen Funds, Inc., each of which is a registered open-end management
investment company.
AUGUST 31, 1996
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TABLE OF CONTENTS
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Page
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Organization of the Company....................................................... 3
Investment Objective and Policies................................................. 3
Investment Restrictions........................................................... 3
Implementation of Policies and Risks.............................................. 4
Management of the Company......................................................... 8
Capital Stock..................................................................... 11
Dividends, Distributions and Taxes................................................ 11
Performance Information........................................................... 12
Net Asset Value................................................................... 13
How to Purchase Shares............................................................ 13
How to Redeem Shares.............................................................. 14
Inquiries......................................................................... 14
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL
INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL SECURITIES IN ANY JURISDICTION TO ANYONE TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
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ORGANIZATION OF THE COMPANY
The Company is an open-end management investment company incorporated under
the laws of Maryland in September 1995. The purpose of the Company is to serve
as an investment medium for Variable Contracts. The Company has a single
portfolio, SoGen Overseas Variable Fund (the "Fund").
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks long-term growth of capital by investing primarily in
securities of small and medium size non-U.S. companies. The Fund particularly
seeks companies that have growth potential, financial strength and stability,
strong management and fundamental value. However, the Fund may invest in
companies that do not have all of these characteristics.
The Fund may invest in securities traded in mature markets (for example,
Japan, Canada and the United Kingdom) and in emerging markets (Mexico and
Indonesia, for example). A list of the mature and emerging markets in which the
Fund may invest is included in the Statement of Additional Information under
"Investment Policies, Techniques and Risks -- Foreign Securities." There are no
limits on the Fund's geographic asset distribution, but the Fund ordinarily
invests in at least three countries outside the United States.
The equity securities in which the Fund may invest include common and
preferred stocks, warrants or other similar rights, and convertible securities.
The Fund may purchase foreign securities in the form of sponsored or unsponsored
American Depository Receipts (ADRs), Global Depository Receipts (GDRs) and
European Depository Receipts (EDRs) or other securities representing underlying
shares of foreign issuers. The Fund may also invest in any other type of
security, including up to 20% of its total assets in debt securities. Such debt
securities may include lower-rated securities, commonly referred to as "junk
bonds" (i.e., securities rated BB or lower by Standard & Poor's Corporation
("S&P") or Ba or lower by Moody's Investors Service, Inc. ("Moody's")), and
securities that are not rated. There are no restrictions as to the ratings of
debt securities acquired by the Fund or the portion of the Fund's assets that
may be invested in debt securities in a particular rating category. Under normal
market conditions, the Fund invests at least 75% of its total assets, taken at
market value, in foreign securities. The Fund may also invest in "structured
securities" in which the value is linked to the price of an underlying
instrument.
INVESTMENT RESTRICTIONS
The Fund has adopted certain investment restrictions that may not be
changed without shareholder approval. Among other restrictions, the Fund will
not:
1. With respect to 75% of its total assets, invest more than 5% of its
assets (valued at time of investment) in securities of any one issuer,
except in U.S. government obligations, or acquire securities of any one
issuer which at the time of investment represent more than 10% of the
voting securities of the issuer;
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2. Borrow money except that in exceptional circumstances the Fund may
borrow from banks for temporary purposes, provided that such borrowings
shall be unsecured and may not exceed 10% of the Fund's net assets at
the time of borrowing (including the amount borrowed). The Fund will not
purchase securities while borrowings exceed 5% of its total assets; or
3. Invest more than 25% of its assets (valued at time of investment) in
securities of companies in any one industry (other than U.S. Government
Securities).
A complete description of the Fund's investment restrictions is included in
the Statement of Additional Information.
IMPLEMENTATION OF POLICIES AND RISKS
In addition to the investment policies described above (and subject to
certain restrictions described herein), the Fund may invest in some or all of
the following securities and employ some or all of the following investment
techniques, some of which may present special risks as described below. A more
complete discussion of these securities and investment techniques and their
associated risks is contained in the Fund's Statement of Additional Information.
Because the Fund's investments will be subject to the market fluctuations
and risks inherent in all investments, there can be no assurance that the Fund's
stated objectives will be realized. SOGEN A.M. Corp. will seek to minimize these
risks through professional management and investment diversification. The value
of shares of the Fund when sold may be higher or lower than when purchased.
SOGEN A.M. Corp. advises certain other investment companies with the same or
similar investment objectives. The Fund, however, is separately managed and the
investments made by the Fund will not necessarily be the same as those made on
behalf of the other investment companies managed by SOGEN A.M. Corp.
FOREIGN SECURITIES.
Under normal conditions, the Fund invests in a diversified portfolio of
foreign securities. From time to time, many foreign economies have grown faster
than the U.S. economy, and the returns on investments in these countries have
exceeded those of similar U.S. investments, although there can be no assurance
that these conditions will continue. International investing allows investors to
achieve greater diversification and to take advantage of changes in foreign
economies and market conditions.
The greater risks involved in foreign investing should be understood and
carefully considered. Investing in foreign securities and other positions which
are generally denominated in foreign currencies, and utilization of forward
foreign currency exchange contracts (see "Currency Exchange Transactions"
below), involve certain risks and opportunities not typically associated with
investing in U.S. securities. These include: fluctuations in the rates of
exchange between the U.S. dollar and foreign currencies; changes in exchange
control regulations or currency restrictions that would prevent cash from being
brought back to the United States; less public information
4
<PAGE>
with respect to issuers of securities; less governmental supervision of stock
exchanges, securities brokers and issuers of securities; different accounting,
auditing and financial reporting standards; different settlement periods and
trading practices; less liquidity and frequently greater price volatility in
foreign markets than in the United States; imposition of foreign taxes; and
sometimes less advantageous legal, operational and financial protections
applicable to foreign sub-custodial arrangements.
Investing in countries outside the United States entails political risk.
There exists the possibility of restrictions on foreign investors, expropriation
of assets, confiscatory taxation, seizure or nationalization of foreign bank
deposits or other assets, establishment of exchange controls, or other adverse
political or social developments that could affect investment in these nations.
Economies in individual markets may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross domestic product, rates of
inflation, currency depreciation, capital reinvestment, resource
self-sufficiency and balance of payments positions. Many emerging market
countries have experienced extremely high rates of inflation for many years.
That has had and may continue to have very negative effects on the economies and
securities markets of those countries.
The securities markets of emerging countries are substantially smaller,
less developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States. There
also may be a lower level of monitoring and regulation in emerging markets of
traders, insiders and investors. Enforcement of existing regulations has been
extremely limited.
The Fund is subject to the following guidelines for diversification of
foreign security investments. If the Fund has less than 20% of its assets in
foreign issuers, then all of such investment may be in issuers located in one
country. If the Fund has at least 20% but less than 40% of its assets in foreign
issuers, then such investment must be allocated to issuers located in at least
two different countries. Similarly, if the Fund has at least 40% but less than
60% of its assets in foreign issuers, such investment must be allocated to at
least three different countries. Foreign investments must be allocated to at
least four different countries if at least 60% of the Fund's assets are in
foreign issuers, and to at least five different countries if at least 80% are
invested in foreign issuers. For purposes of such allocations, a company will be
considered located in the country in which it is domiciled, in which it is
primarily traded, from which it derives a significant portion of its revenues or
in which a significant portion of its goods or services are produced. In
addition, the Fund may have no more than 20% of its net assets invested in
securities of issuers located in any one country, except that the Fund may have
35% of its net assets invested in securities of issuers located in any one of
the following countries: Australia, Canada, France, Japan, the United Kingdom,
or Germany. The Fund's investment in U.S. issuers is not subject to the foreign
country diversification guidelines.
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<PAGE>
CURRENCY EXCHANGE TRANSACTIONS.
The Fund may engage in currency exchange transactions to hedge against
losses in the U.S. dollar value of its portfolio securities resulting from
possible variations in exchange rates and not for speculation. A currency
exchange transaction may be conducted either on a spot (i.e. cash) basis at the
spot rate for purchasing or selling currency prevailing in the foreign exchange
market or through a forward currency exchange contract ("forward contract"). A
forward contract is an agreement to purchase or sell a specified currency at a
specified future date (or within a specified time period) and price set at the
time of the contract. Forward contracts are usually entered into with banks and
broker/dealers, are not exchange-traded and are usually for less than one year,
but may be renewed. Currency exchange transactions may involve currencies of the
different countries in which the Fund may invest. Although forward contracts may
be used to protect the Fund from adverse currency movements, the use of such
hedges may reduce or eliminate the potentially positive effect of currency
revaluations on the Fund's total return.
INVESTMENTS IN DEBT SECURITIES.
The Fund may invest up to 20% of its total assets in debt securities that
are below investment grade quality. The Fund may also invest in debt securities
which are in default. "Investment grade"debt securities are those rated within
the four highest ratings categories of S&P or Moody's or, if unrated, determined
by the Fund's investment adviser to be of comparable quality. The market value
of debt securities generally varies in response to changes in interest rates and
the financial conditions of each issuer. During periods of declining interest
rates, the value of debt securities generally increases. Conversely, during
periods of rising interest rates, the value of such securities generally
declines. These changes in market value will be reflected in the Fund's net
asset value.
Securities rated BBB by S&P or Baa by Moody's (the lowest investment grade
ratings) are considered to be medium grade and to have speculative
characteristics. Debt securities that are rated below investment grade or, if
unrated, are considered by SOGEN A.M. Corp. to be equivalent to below investment
grade (often referred to as "junk bonds"), on balance, are considered
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal according to the terms of the obligation and, therefore,
carry greater investment risk, including the possibility of issuer default and
bankruptcy. They are likely to be less marketable and more adversely affected by
economic downturns than higher-quality debt securities. (For additional
information on these debt securities see "Lower-Rated Debt Securities" in the
Statement of Additional Information.)
OTHER INVESTMENT COMPANIES.
Certain markets are closed in whole or in part to equity investments by
foreigners. The Fund may be able to invest in such markets solely or primarily
through governmentally-authorized investment companies. The Fund generally may
invest up to
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10% of its assets in shares of other investment companies and up to 5% of its
assets in any one investment company (in each case measured at the time of
investment), as long as no investment represents more than 3% of the outstanding
voting stock of the acquired investment company at the time of investment.
Investment in another investment company may involve the payment of a
premium above the value of the issuer's portfolio securities, and is subject to
market availability. In the case of a purchase of shares of such a company in a
public offering, the purchase price may include an underwriting spread. The Fund
does not intend to invest in such an investment company unless, in the judgment
of the Fund's investment adviser, the potential benefits of such investment
justify the payment of any applicable premium or sales charge. As a shareholder
in an investment company, the Fund would bear its ratable share of that
investment company's expenses, including its advisory and administration fees.
At the same time, the Fund would continue to pay its own management fees and
other expenses.
"WHEN-ISSUED" OR "DELAYED DELIVERY" SECURITIES.
The Fund may purchase securities on a "when-issued" or "delayed delivery"
basis. When-issued or delayed delivery securities are securities purchased for
future delivery at a stated price and yield. The Fund will generally not pay for
such securities or start earning interest on them until they are received.
Securities purchased on a when-issued or delayed delivery basis are recorded as
assets and are marked-to-market daily. The Fund will not invest more than 25% of
its assets in when-issued or delayed delivery securities, does not intend to
purchase such securities for speculative purposes and will make commitments to
purchase securities on a when-issued or delayed delivery basis with the
intention of actually acquiring the securities. However, the Fund reserves the
right to sell acquired when-issued or delayed delivery securities before their
settlement dates if deemed advisable.
STRUCTURED SECURITIES.
The Fund may invest in structured notes and/or preferred stock, the value
of which is linked to the price of an underlying instrument. Structured
securities have different characteristics and risks than other types of
securities in which the Fund may invest. For example, the coupon, dividend
and/or redemption amounts may be increased or decreased depending on the change
in the value of an underlying instrument. See "Structured Securities" in the
Statement of Additional Information for further information.
TEMPORARY STRATEGIES; CASH RESERVES.
The Fund has the flexibility to respond promptly to changes in market and
economic conditions. In the interest of preserving shareholders' capital, SOGEN
A.M. Corp. may employ a temporary defensive investment strategy if it determines
such a strategy to be warranted. Pursuant to such a defensive strategy, the Fund
temporarily may hold cash (U.S. dollars, foreign currencies, multinational
currency units) and/or
7
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invest up to 100% of its assets in high quality debt securities or money market
instruments of U.S. or foreign issuers. Most or all of the Fund's investments
may be made in the United States and denominated in U.S. dollars. It is
impossible to predict whether, when or for how long the Fund will employ
defensive strategies.
In addition, pending investment of proceeds from new sales of shares or to
meet ordinary daily cash needs, the Fund temporarily may hold cash (U.S.
dollars, foreign currencies or multinational currency units) and may invest any
portion of its assets in money market instruments.
ILLIQUID SECURITIES.
The Fund may invest up to 15% of its total assets in illiquid securities,
including securities acquired in private placements. Because an active trading
market for such securities may not exist, the sale of such securities may be
subject to delay and additional costs. Time deposits and repurchase agreements
maturing in more than seven days are considered to be illiquid. The Fund,
subject to the limitations for illiquid investments stated above, may purchase
securities that have been privately placed but that are not eligible for
purchase and sale under Rule 144A under the Securities Act of 1933. That rule
permits certain qualified institutional buyers, such as the Fund, to trade in
private placed securities that have not been registered for sale under that Act.
Rule 144A securities may or may not be liquid depending on guidelines
established by the Board of Directors. See "Illiquid Securities" in the
Statement of Additional Information.
EXPENSES.
The cost of investing in foreign securities is higher than the cost of
investing in U.S. securities. Investing in the Fund is an efficient way for an
individual to participate in foreign markets, but its expenses, including
advisory and custody fees, are higher than the expenses of a typical domestic
mutual fund.
CHANGE OF OBJECTIVE.
The Fund's investment objective may be changed by the Board of Directors
without shareholder approval. If there were such a change, each shareholder
should consider whether the Fund would remain an appropriate investment in light
of his or her then current financial position and needs. Shareholders will be
notified a minimum of sixty days in advance of any change in investment
objective.
MANAGEMENT OF THE COMPANY
BOARD OF DIRECTORS.
The business and affairs of the Company are managed under the direction of
its Board of Directors.
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INVESTMENT ADVISER.
The Company's investment portfolio is managed by SOGEN A.M. Corp., 1221
Avenue of the Americas, New York, New York 10020. SOGEN A.M. Corp. is a
registered investment adviser which is indirectly owned by Societe Generale, one
of France's largest banks. SOGEN A.M. Corp. also serves as investment adviser to
SoGen International Fund, Inc. and SoGen Funds, Inc., each of which is a
registered open-end management investment company. Jean-Marie Eveillard,
President and a director of the Company, is primarily responsible for the
day-to-day management of the Company's investment portfolio. Mr. Eveillard has
been a director and President or Executive Vice President of SOGEN A.M. Corp.
since prior to 1991.
SOGEN A.M. Corp. furnishes investment advice to the Fund consistent with
the Fund's stated investment objective and policies. SOGEN A.M. Corp. also
furnishes the Company with office space and certain facilities and services
required for its business and pays any expenses of the officers of the Company.
For these services and facilities, the Fund pays SOGEN A.M. Corp. a monthly fee
at the annual rate of 0.75% of the average daily net assets of the Fund.
SOGEN A.M. Corp. may waive all or a portion of its fee, and, if necessary,
reimburse the Fund, by the amount that the Fund's total operating expenses
exceed the most restrictive expense limitation imposed by any state in which the
Fund's shares are qualified for sale. The annual fee rate for the Fund is higher
than the rate of fees paid by most United States mutual funds. The Company
believes, however, that the advisory fee rate is not higher than the rate of
fees paid by most other mutual funds that invest significantly in foreign equity
securities.
EXPENSES OF THE COMPANY.
The Company bears all costs of its operations. These costs may include
expenses for custody, portfolio accounting, printing, legal and audit fees, fees
payable pursuant to the Fund's Distribution Plan and Agreement (see
"Distributor; Rule 12b-1 Plan", below), fees and expenses of the independent
directors, organizational expenses and other expenses of its operations, and
may, if applicable, include extraordinary expenses such as expenses for special
consultants or legal expenses. Company expenses directly attributable to a
series of the Company's common stock are charged to that series; other expenses
are allocated proportionately among all the series in relation to the net assets
of each series. Currently, the Company has shares of one series (the Fund)
outstanding.
PORTFOLIO TRANSACTIONS.
SOGEN A.M. Corp. selects the brokers and dealers which execute orders for
the purchase and sale of the Fund's portfolio securities. SOGEN A.M. Corp. seeks
to achieve "best execution" of such orders. "Best execution" means prompt and
reliable execution at the most favorable securities prices, taking into account
a number of
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largely judgmental considerations. Consistent with the foregoing, portfolio
transactions may be executed by brokers affiliated with Societe Generale so long
as the commission paid to the affiliated broker is reasonable and fair compared
to the commission that would be charged by an unaffiliated broker in a
comparable transaction. In addition, subject to the policy of best execution and
to applicable regulations, SOGEN A.M. Corp. may consider sales of the Fund's
shares as a factor in the selection of brokers to execute portfolio
transactions.
DISTRIBUTOR; RULE 12B-1 PLAN.
The Fund's shares are distributed through Societe Generale Securities
Corporation ("SGSC"), 1221 Avenue of the Americas, New York, New York 10020.
SGSC is a registered broker-dealer and an affiliate of Societe Generale.
The Fund has adopted a Distribution Plan and Agreement (the "Plan")
pursuant to Rule 12b-1 of the Investment Company Act of 1940. Under the Plan,
the Fund may pay SGSC a quarterly distribution related fee at an annual rate not
to exceed 0.25% of the average daily value of the Fund's net assets. Under the
terms of the Plan, the Fund is authorized to make payments to SGSC for
remittance to an insurance company that is the issuer of a Variable Contract
invested in shares of the Fund in order to pay or reimburse such insurance
company for distribution and shareholder servicing-related expenses incurred or
paid by such insurance company. SGSC bears distribution expenses to the extent
they are not covered by payments under the Plan. Any distribution expenses
incurred by SGSC in any fiscal year of the Fund, which are not reimbursed from
payments under the Plan accrued in such fiscal year, will not be carried over
for payment under the Plan in any subsequent year.
Expenses payable pursuant to this Plan may include, but are not necessarily
limited to: (a) the printing and mailing of Fund prospectuses, statements of
additional information, any supplements thereto and shareholder reports for
existing and prospective Variable Contract owners; (b) those relating to the
development, preparation, printing and mailing of Fund advertisements, sales
literature and other promotional materials describing and/or relating to the
Fund and including materials intended for use within the insurance company, or
for broker-dealer only use or retail use; (c) holding seminars and sales
meetings designed to promote the distribution of Fund shares; (d) obtaining
information and providing explanations to Variable Contract owners regarding
Fund investment objectives and policies and other information about the Fund,
including its performance; (e) training sales personnel regarding the Fund; (f)
compensating sales personnel in connection with the allocation of cash values
and premiums of the Variable Contracts to the Fund; (g) personal service and/or
maintenance of Variable Contract accounts with respect to Fund shares
attributable to such accounts; and (h) financing any other activity that the
Fund's Board of Directors determines is primarily intended to result in the sale
of shares.
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As agent, SGSC currently offers shares of the Fund continuously to the
separate accounts of insurance companies in all states in which it is registered
or where permitted by applicable law. SGSC accepts orders for shares at net
asset value. SGSC has made no firm commitment to acquire shares of the Fund.
CAPITAL STOCK
The authorized capital stock of the Company consists of one billion shares
of common stock, par value $0.001 per share, of which 150,000,000 shares have
been designated as shares of the Fund. All shares issued and outstanding are
fully paid and non-assessable and are redeemable at net asset value at the
option of shareholders. Shares have no preemptive or conversion rights and are
freely transferable. The Board of Directors is authorized to classify,
reclassify and issue any unissued shares of the Fund without shareholder
approval. Accordingly, in the future, the Directors may create additional series
of shares with different investment objectives, policies or restrictions. Any
issuance of shares of another series or class would be governed by the
Investment Company Act of 1940, as amended, and Maryland law.
Pursuant to its By-Laws, the Company does not generally hold annual
meetings of shareholders. Shareholder meetings, however, will be held when
required by the Investment Company Act of 1940 or Maryland law, or when called
by the Chairman of the Board, the President or shareholders owning at least 10%
of the outstanding shares of the Fund. The cost of any such notice and meeting
will be borne by the Fund.
Each share of common stock of the Fund is entitled to one vote for each
dollar of net asset value and a proportionate fraction of a vote for each
fraction of a dollar of net asset value, unless a different allocation of voting
rights is required under applicable law for a mutual fund that is an investment
medium for Variable Contracts. Generally, shares of each series vote together on
any matter submitted to shareholders, except when otherwise required by the
Investment Company Act of 1940, or (if shares of more than one series are
outstanding), when a matter affects the interests of each series in a different
way, in which case the shareholders of each series vote separately by class. If
the directors determine that a matter does not affect the interests of a
particular series, then the shareholders of that series will not be entitled to
vote on that matter. An insurance company issuing a Variable Contract invested
in shares of the Fund (or any other series issued in the future) will request
voting instructions from Variable Contract owners and will vote shares in
proportion to the voting instructions received. Currently, the Company has
shares of one series outstanding (the Fund).
DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the policy of the Fund to make annual distributions of net investment
income and net realized capital gains, if any. Unless a shareholder otherwise
elects, income dividends and capital gains distributions will be reinvested in
additional shares of the Fund at net asset value per share calculated as of the
payment date. The Fund pays both income dividends and capital gains
distributions on a per share basis. On the
11
<PAGE>
ex-dividend date of such payment, the net asset value per share of the Fund will
be reduced by the amount of such payment.
The Fund intends to qualify and has elected to be treated as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). To qualify, the Fund must meet certain income,
diversification and distribution requirements. As a regulated investment
company, the Fund generally will not be subject to federal income or excise
taxes on income and capital gains distributed to shareholders within applicable
time limits, although foreign source income received by the Fund may be subject
to foreign withholding taxes.
The Fund also intends to comply with diversification regulations under
Section 817(h) of the Code that apply to mutual funds underlying Variable
Contracts. Generally, the Fund will be required to diversify its investments so
that on the last day of each quarter of a calendar year no more than 55% of the
value of its total assets is represented by any one investment, nor more than
70% is represented by any two investments, no more than 80% is represented by
any three investments, and no more than 90% is represented by any four
investments. For this purpose, securities of a given issuer generally are
treated as one investment, but each U.S. Government agency and instrumentality
is treated as a separate issuer.
Tax consequences to the Variable Contract owners are described in the
prospectus for the pertinent separate account. See "Tax Status" in the Fund's
Statement of Additional Information for more information on taxes.
PERFORMANCE INFORMATION
From time to time, the Fund (or the insurance companies that use the Fund
as an investment medium for Variable Contracts) may illustrate in sales
literature and advertisements the Fund's cumulative total return and its average
annual total return. Total return for the Fund will not be advertised or
included in sales literature unless accompanied by comparable performance
information for a separate account to which the Fund offers its shares (to the
extent required). A cumulative total return reflects the Fund's performance over
a stated period of time based on an assumed initial investment. An average
annual total return reflects the hypothetical annually compounded return that
would have produced the same cumulative total return if the Fund's performance
had been constant over the entire period. Because average annual returns tend to
smooth out variations in the Fund's returns, a prospective investor should
recognize that they are not the same as actual year-by-year results. Both types
of total return will be calculated assuming the reinvestment of all income
dividends and capital gains distributions. The Fund's performance figures will
be based on historical results and are not intended to indicate future
performance.
Quotations of total return for the Fund will not take into account charges
or deductions against any separate account to which the Fund's shares are sold
or charges and deductions against the pertinent Variable Contract, although
comparable performance information for the separate account will take such
charges into account.
12
<PAGE>
From time to time the Fund may discuss in sales literature and
advertisements its performance ratings or other information as published by
recognized mutual fund statistical services, such as Morningstar, Inc. or Lipper
Analytical Services, Inc. or by publications of general interest such as
BUSINESS WEEK or MONEY.
NET ASSET VALUE
The Fund's net asset value per share is computed as of the close of trading
on the New York Stock Exchange ("NYSE") on each day during which the NYSE is
open for trading. The net asset value per share is computed by dividing the
total current value of the assets of the Fund, less its liabilities, by the
total number of shares outstanding at the time of such computation.
Portfolio securities are valued primarily based on market quotations where
available. Short-term investments maturing in sixty days or less are valued at
cost plus interest earned, which approximates value. Securities for which
current market quotations are not readily available are valued at fair value as
determined in good faith by the Company's Board of Directors.
HOW TO PURCHASE SHARES
Shares of the Fund may be offered for purchase by separate accounts of
insurance companies for the purpose of serving as an investment medium for
Variable Contracts. Shares of the Fund are sold at their net asset value
(without a sales charge) next computed after a receipt of a purchase order by an
insurance company whose separate account invests in the Fund. For information on
how to purchase shares, please refer to the prospectus of the pertinent separate
account.
Shares of the Fund are sold to insurance company separate accounts funding
both variable annuity contracts and variable life insurance contracts and may be
sold to insurance companies that are not affiliated. The Company currently does
not foresee any disadvantages to Variable Contract owners arising from offering
the Fund's shares to separate accounts of unaffiliated insurers, or separate
accounts funding both life insurance policies and annuity contracts; however,
due to differences in tax treatment or other considerations, it is theoretically
possible that the interests of owners of various contracts participating in the
Fund might at some time be in conflict. However, the Company's Board of
Directors and insurance companies whose separate accounts invest in the Fund are
required to monitor events in order to identify any material conflicts between
variable annuity contract owners and variable life policy owners, and between
separate accounts of unaffiliated insurers. The Board of Directors will
determine what action, if any, should be taken in the event of such a conflict.
If such a conflict were to occur, one or more insurance company separate
accounts might withdraw their investment in the Fund. This might force the Fund
to sell securities at disadvantageous prices.
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<PAGE>
HOW TO REDEEM SHARES
Shares of the Fund may be redeemed on any business day. Redemptions are
effected at the per share net asset value next determined after receipt of the
redemption request by an insurance company whose separate account invests in the
Fund. For information on how to redeem shares, please refer to the prospectus of
the pertinent separate account.
Redemption proceeds normally will be paid to the separate account within
seven days following receipt of instructions in proper form. The right of
redemption may be suspended by the Company or the payment date postponed beyond
seven days when the New York Stock Exchange is closed (other than customary
weekend and holiday closings) or for any period during which trading thereon is
restricted because an emergency exists, as determined by the Securities and
Exchange Commission, making disposal of portfolio securities or valuation of net
assets not reasonably practicable, and whenever the Securities and Exchange
Commission has by order permitted such suspension or postponement for the
protection of shareholders.
INQUIRIES
For information about how to buy or redeem shares of the Fund, please
consult the prospectus for the pertinent separate account, or contact your
insurance company. To request additional literature about the Fund, please call
(800) 628-0252.
14
<PAGE>
SOGEN VARIABLE FUNDS, INC.
1221 AVENUE OF THE AMERICAS
NEW YORK, NY 10020
INVESTMENT ADVISER
SOCIETE GENERALE ASSET MANAGEMENT CORP.
1221 Avenue of the Americas
New York, NY 10020
DISTRIBUTOR
SOCIETE GENERALE SECURITIES CORPORATION
1221 Avenue of the Americas
New York, NY 10020
(800) 334-2143
LEGAL COUNSEL
DECHERT PRICE & RHOADS
477 Madison Avenue
New York, NY 10022
INDEPENDENT AUDITORS
KPMG PEAT MARWICK LLP
345 Park Avenue
New York, NY 10154
DOMESTIC CUSTODIAN
INVESTORS FIDUCIARY TRUST COMPANY
127 West 10th Street
Kansas City, MO 64105
GLOBAL CUSTODIAN
THE CHASE MANHATTAN BANK
4 Chase MetroTech Center
Brooklyn, NY 11245
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
SOGEN OVERSEAS VARIABLE FUND
(Logo appears here)
1221 AVENUE OF THE AMERICAS
NEW YORK, NY 10020
(800) 334-2143
Societe Generale Asset Management Corp.
1221 Avenue of the Americas
New York, NY 10020
Investment Adviser
Societe Generale Securities Corporation
1221 Avenue of the Americas
New York, NY 10020
Distributor
This Statement of Additional Information provides information about SoGen
Overseas Variable Fund (the "Fund"), a separate portfolio of SoGen Variable
Funds, Inc. (the "Company") an open-end management investment company, in
addition to the information contained in the Prospectus of the Fund dated August
31, 1996. This Statement of Additional Information is not a prospectus. It
relates to and should be read in conjunction with the Prospectus of the Company,
a copy of which can be obtained by writing or by calling the Company at (800)
628-0252.
AUGUST 31, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
STATEMENT OF CROSS-REFERENCED
ADDITIONAL TO CAPTIONS IN
INFORMATION THE PROSPECTUS
PAGE PAGE
<S> <C> <C>
ORGANIZATION OF THE FUND.............................................................. 3 3
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS....................................... 3 3
MANAGEMENT OF THE COMPANY............................................................. 9 8
INVESTMENT ADVISER AND OTHER SERVICES................................................. 11 9
DISTRIBUTION OF THE FUND'S SHARES..................................................... 12 10
COMPUTATION OF NET ASSET VALUE........................................................ 13 13
HOW TO PURCHASE SHARES................................................................ 13 13
TAX STATUS............................................................................ 13 11
BROKERAGE ALLOCATION.................................................................. 15 9
CUSTODY OF PORTFOLIO.................................................................. 16 --
INDEPENDENT AUDITORS.................................................................. 17 --
REPORT OF INDEPENDENT AUDITORS........................................................ 18 --
STATEMENT OF ASSETS AND LIABILITIES................................................... 19 --
APPENDIX.............................................................................. A-1 --
</TABLE>
2
<PAGE>
ORGANIZATION OF THE FUND
The Fund is a separate portfolio of the Company, which is an open-end
management investment company incorporated under the laws of Maryland in
September 1995. The Company's investment adviser is Societe Generale Asset
Management Corp. ("SOGEN A.M. Corp."), a registered investment adviser. The
Company's distributor is Societe Generale Securities Corporation ("SGSC"), a
registered broker-dealer located in New York.
Pursuant to the laws of Maryland, the Company's jurisdiction of
incorporation, the Board of Directors of the Company has adopted By-Laws that do
not require annual meetings of the Fund's shareholders. The absence of a
requirement that the Company hold annual meetings of the Fund's shareholders
reduces its expenses. Meetings of shareholders will continue to be held when
required by the Investment Company Act of 1940 or Maryland law or when called by
the Chairman of the Board of Directors, the President or shareholders owning 10%
of the Fund's outstanding shares. The cost of any such notice and meeting will
be borne by the Fund.
Under the provisions of the Investment Company Act of 1940, a vacancy in
the office of director of the Company may be filled between meetings of the
shareholders of the Company by vote of the directors then in office if,
immediately after filling such vacancy, at least two-thirds of the directors
then holding office have been elected to the office of director by the
shareholders of the Company. In the event that at any time less than a majority
of the directors of the Company holding office at that time were elected by the
shareholders of the Company, the Board of Directors or the Chairman of the Board
shall, within sixty days, cause a meeting of shareholders to be held for the
purpose of electing directors to fill any vacancies in the Board of Directors.
The staff of the Securities and Exchange Commission has advised the Company
that it interprets Section 16(c) of the Investment Company Act of 1940, which
provides a means for dissident shareholders of common-law trusts to communicate
with other shareholders of such trusts and to vote upon the removal of trustees
upon the request in writing by the record holders of not less than 10 percent of
the outstanding shares of the trust, to apply to investment companies, such as
the Fund, that are incorporated under Maryland law.
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVE.
The Fund seeks long-term growth of capital by investing primarily in
securities of small and medium size non-U.S. companies. The Fund uses the
techniques and invests in the types of securities described below and in the
Prospectus.
INVESTMENT POLICIES, TECHNIQUES AND RISKS.
FOREIGN SECURITIES. The Fund will invest in foreign securities, which may
entail a greater degree of risk (including risks relating to exchange rate
fluctuations, tax provisions, or expropriation of assets) than does investment
in securities of domestic issuers. The Fund may invest in securities of foreign
issuers directly or in the form of American Depository Receipts (ADRs), Global
Depository Receipts (GDRs), European Depository Receipts (EDRs), or other
securities representing underlying shares of foreign issuers. Positions in these
securities are not necessarily denominated in the same currency as the common
stocks into which they may be converted. ADRs are receipts typically issued by
an American bank or trust company evidencing ownership of the underlying
securities. EDRs are European receipts evidencing a similar arrangement. GDRs
are global offerings where two securities are issued simultaneously in two
markets, usually publicly in non-U.S. markets and privately in the U.S. market.
Generally ADRs, in registered form, are designed for use in the U.S. securities
markets, EDRs, in bearer form, are designed for use in European securities
markets. GDR's are designed for use in the U.S. and European securities markets.
The Fund may invest in both "sponsored" and "unsponsored" ADRs. In a sponsored
ADR, the issuer typically pays some or all of the expenses of the depository and
agrees to provide its regular shareholder communications to ADR holders. An
unsponsored ADR is created independently of the issuer of the underlying
security. The ADR holders generally pay the expenses of the depository and do
not have an undertaking from the issuer of the underlying security to furnish
shareholder communications. Issuers of unsponsored ADRs are not obligated to
disclose material information in the United States and, therefore, there may not
be a correlation between such information and the market value of the ADRs. The
Fund does not expect to invest 5% or more of its total assets in unsponsored
ADRs.
With respect to portfolio securities that are issued by foreign issuers or
denominated in foreign currencies, the investment performance of the Fund is
affected by the strength or weakness of the U.S. dollar against these
currencies. For example, if the dollar falls in value relative to the Japanese
yen, the dollar value of a yen-denominated stock held in the portfolio will rise
even though the price of the stock remains unchanged. Conversely, if
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<PAGE>
the dollar rises in value relative to the yen, the dollar value of the
yen-denominated stock will fall. (See discussion of transaction hedging and
portfolio hedging under "Currency Exchange Transactions.")
Investors should understand and consider carefully the risks involved in
foreign investing. Investing in foreign securities, positions which are
generally denominated in foreign currencies, and utilization of forward foreign
currency exchange contracts involve certain risks and opportunities not
typically associated with investing in U.S. securities. These considerations
include: fluctuations in the rates of exchange between the U.S. dollar and
foreign currencies; possible imposition of exchange control regulations or
currency restrictions that would prevent cash from being brought back to the
United States; less public information with respect to issuers of securities;
less governmental supervision of stock exchanges, securities brokers, and
issuers of securities; different accounting, auditing and financial reporting
standards; different settlement periods and trading practices; less liquidity
and frequently greater price volatility in foreign markets than in the United
States; imposition of foreign taxes; and sometimes less advantageous legal,
operational and financial protections applicable to foreign sub-custodial
arrangements.
Although the Fund seeks to invest in companies and governments of countries
having stable political environments, there is the possibility of expropriation
or confiscatory taxation, seizure or nationalization of foreign bank deposits or
other assets, establishment of exchange controls, the adoption of foreign
government restrictions, or other adverse political, social or diplomatic
developments that could affect investment in these nations.
The countries in which the Fund invests are included in those listed below.
The Fund may not invest in all the countries listed, and it may invest in other
countries as well, when such investments are consistent with the Fund's
investment objective and policies.
<TABLE>
<CAPTION>
MATURE MARKETS EMERGING MARKETS
<S> <C> <C> <C>
Australia Japan Argentina Nigeria
Austria Luxembourg Brazil Pakistan
Belgium Netherlands Chile People's Republic of China
Canada New Zealand Czech Republic Peru
Denmark Norway Ecuador Philippines
Finland Singapore Greece Poland
France Spain Hungary Portugal
Germany Sweden India South Africa
Hong Kong Switzerland Indonesia South Korea
Ireland United Kingdom Israel Sri Lanka
Italy United States Jamaica Taiwan
Jordan Thailand
Kenya Turkey
Malaysia Uruguay
Mexico Venezuela
Morocco Vietnam
</TABLE>
It may not be feasible for the Fund currently to invest in all of these
countries due to restricted access to their securities markets or inability to
implement satisfactory custodial arrangements.
CURRENCY EXCHANGE TRANSACTIONS. A currency exchange transaction may be
conducted either on a spot (I.E., cash) basis at the spot rate for purchasing or
selling currency prevailing in the foreign exchange market or through a forward
currency exchange contract ("Forward Contract"). A Forward Contract is an
agreement to purchase or sell a specified currency at a specified future date
(or within a specified time period) and price set at the time of the contract.
Forward Contracts are usually entered into with banks and broker/dealers, are
not exchange traded and are usually for less than one year, but may be renewed.
Currency exchange transactions may involve currencies of the different
countries in which the Fund may invest, and serve as hedges against possible
variations in the exchange rates between these currencies and the U.S. dollar.
The Fund's currency transactions are limited to transaction hedging and
portfolio hedging involving either specific transactions or portfolio positions.
Transaction hedging is the purchase or sale of a Forward Contract with respect
to specific payables or receivables of the Fund accruing in connection with the
purchase or sale
4
<PAGE>
of portfolio securities. Portfolio hedging is the use of a Forward Contract with
respect to a portfolio security position denominated or quoted in a particular
currency. The Fund may engage in portfolio hedging with respect to the currency
of a particular country in amounts approximating actual or anticipated positions
in securities denominated in that currency.
If the Fund enters into a Forward Contract, the custodian bank will
segregate liquid assets of the Fund having a value equal to the Fund's
commitment under such Forward Contract.
At the maturity of a Forward Contract to deliver a particular currency, the
Fund may either sell the portfolio security related to such contract and make
delivery of the currency, or it may retain the security and either acquire the
currency on the spot market or terminate its contractual obligation to deliver
the currency by purchasing an offsetting contract with the same currency trader
obligating it to purchase on the same maturity date the same amount of the
currency.
It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of a Forward Contract. Accordingly, it
may be necessary for the Fund to purchase additional currency on the spot market
(and bear the expense of such purchase) if the market value of the security is
less than the amount of currency the Fund is obligated to deliver, and if a
decision is made to sell the security and make delivery of the currency.
Conversely, it may be necessary to sell on the spot market some of the currency
received upon the sale of the portfolio security if its market value exceeds the
amount of currency the Fund is obligated to deliver.
If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss to the extent that there has
been movement in Forward Contract prices. If the Fund engages in an offsetting
transaction, it may subsequently enter into a new Forward Contract to sell the
currency. Should forward prices decline during the period between the date the
Fund enters into a Forward Contract for the sale of a currency and the date it
enters into an offsetting contract for the purchase of the currency, the Fund
will realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should forward
prices increase, the Fund will suffer a loss to the extent the price of the
currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell. A default on the contract would deprive the Fund of unrealized
profits or force the Fund to cover its commitments for purchase or sale of
currency, if any, at the current market price.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise. Moreover,
it may not be possible for the Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to sell the currency
at a price above the devaluation level it anticipates. The cost to the Fund of
engaging in currency exchange transactions varies with such factors as the
currency involved, the length of the contract period and prevailing market
conditions. Since currency exchange transactions are usually conducted on a
principal basis, no fees or commissions are involved.
LOWER-RATED DEBT SECURITIES. The Fund may invest in debt securities,
including lower-rated securities (I.E., securities rated BB or lower by Standard
& Poor's Corporation ("S&P") or Ba or lower by Moody's Investors Service, Inc.
("Moody's"), commonly called "junk bonds") and securities that are not rated.
There are no restrictions as to the ratings of debt securities acquired by the
Fund or the portion of the Fund's assets that may be invested in debt securities
in a particular rating category, except that the Fund will not invest more than
20% of its assets in securities rated below investment grade or unrated
securities considered by the investment adviser to be of comparable credit
quality.
Securities rated BBB by S&P or Baa by Moody's (the lowest investment grade
ratings) are considered to be of medium grade and to have speculative
characteristics. Debt securities rated below investment grade are predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal. Although lower-rated debt and comparable unrated debt securities may
offer higher yields than do higher rated securities, they generally involve
greater volatility of price and risk of principal and income, including the
possibility of default by, or bankruptcy of, the issuers of the securities. In
addition, the markets in which lower-rated and unrated debt securities are
traded are more limited than those in which higher rated securities are traded.
Adverse publicity and investors' perceptions, whether or not based on
fundamental analysis, may decrease the values and liquidity of lower-rated debt
securities, especially in a thinly traded market. During periods of thin trading
in these markets, the spread between bid and asked prices is likely to increase
significantly, and the Fund may have greater difficulty selling its portfolio
securities. See "Computation of Net Asset Value." Analyses of the
creditworthiness of issuers of lower-rated debt securities may be more complex
than for issuers of higher rated securities, and the ability of the Fund to
achieve its investment objective may, to the extent of investment in
5
<PAGE>
lower-rated debt securities, be more dependent upon such creditworthiness
analyses than would be the case if the Fund were investing in higher rated
securities.
Lower-rated debt securities may be more susceptible to real or perceived
adverse economic and competitive industry conditions than investment grade
securities. The prices of lower-rated debt securities have been found to be less
sensitive to interest rate changes than higher rated investments, but more
sensitive to adverse economic downturns or individual corporate developments. A
projection of an economic downturn or of a period of rising interest rates, for
example, could cause a decline in lower-rated debt securities' prices because
the advent of a recession could lessen the ability of a highly-leveraged company
to make principal and interest payments on its debt securities. If the issuer of
lower-rated debt securities defaults, the Fund may incur additional expenses
seeking recovery.
A more complete description of the characteristics of bonds in each rating
category is included in the appendix to this Statement of Additional
Information.
BANK OBLIGATIONS. The Fund may invest in bank obligations, which may
include bank certificates of deposit, time deposits or bankers' acceptances.
Certificates of deposit and time deposits are negotiable certificates issued
against funds deposited in a commercial bank for a definite period of time and
earning a specified return. Bankers' acceptances are negotiable drafts or bills
of exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning in effect that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Investments in these instruments are limited to obligations of domestic banks
(including their foreign branches) and U.S. and foreign branches of foreign
banks having capital surplus and undivided profits in excess of $100 million.
WHEN-ISSUED OR DELAYED-DELIVERY SECURITIES. The Fund may purchase
securities on a "when-issued" or "delayed delivery" basis. Although the payment
and interest terms of these securities are established at the time the Fund
enters into the commitment, the securities may be delivered and paid for a month
or more after the date of purchase, when their value may have changed. The Fund
makes such commitments only with the intention of actually acquiring the
securities, but may sell the securities before settlement date if the investment
adviser deems it advisable for investment reasons.
At the time the Fund enters into a binding obligation to purchase
securities on a when-issued basis, liquid assets of the Fund having a value at
least as great as the purchase price of the securities to be purchased will be
segregated on the books of the Fund and held by the custodian throughout the
period of the obligation. The use of these investment strategies, as well as any
borrowing by the Fund, may increase net asset value fluctuation.
STRUCTURED SECURITIES. The Fund may invest in structured notes and/or
preferred stock, the value of which is linked to currencies, interest rates,
other commodities, indices or other financial indicators. Structured securities
differ from other types of securities in which the Fund may invest in several
respects. For example, the coupon dividend and/or redemption amount at maturity
may be increased or decreased depending on changes in the value of the
underlying instrument.
Investment in structured securities involves certain risks. In addition to
the credit risk of the security's issuer and the normal risks of price changes
in response to changes in interest rates, the redemption amount may decrease as
a result of changes in the price of the underlying instrument. Further, in the
case of certain structured securities, the coupon and/or dividend may be reduced
to zero, and any further declines in the value of the underlying instrument may
then reduce the redemption amount payable on maturity. Finally, structured
securities may be more volatile than the price of the underlying instrument.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its total assets in
illiquid securities, including certain securities that are subject to legal or
contractual restrictions on resale ("restricted securities").
Generally, restricted securities may be sold only in privately negotiated
transactions or in a public offering with respect to which a registration
statement is in effect under the Securities Act of 1933 (the "1933 Act"). Where
registration is required, the Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than that which prevailed when it decided to sell. Restricted securities will be
priced at fair value as determined in good faith by the Board of Directors. If,
through the appreciation of illiquid securities or the depreciation of liquid
securities, the Fund should be in a position where more than 15% of the value of
its net assets is invested in illiquid assets, including restricted securities,
the Fund will take appropriate steps to protect liquidity.
6
<PAGE>
Notwithstanding the above, the Fund may purchase securities that have been
privately placed but that are eligible for purchase and sale under Rule 144A
under the 1933 Act. That rule permits certain qualified institutional buyers,
such as the Fund, to trade in privately placed securities that have not been
registered for sale under the 1933 Act. SOGEN A.M. Corp., under the supervision
of the Board of Directors of the Fund, will consider whether securities
purchased under Rule 144A are illiquid and thus subject to the Fund's
restriction on investing in illiquid securities. A determination as to whether a
Rule 144A security is liquid or not is a question of fact. In making this
determination, SOGEN A.M. Corp. will consider the trading markets for the
specific security, taking into account the unregistered nature of a Rule 144A
security. In addition, SOGEN A.M. Corp. could consider (1) the frequency of
trades and quotes, (2) the number of dealers and potential purchasers, (3) the
dealer undertakings to make a market, and (4) the nature of the security and of
market place trades (E.G., the time needed to dispose of the security, the
method of soliciting offers and the mechanics of transfer). The liquidity of
Rule 144A securities would be monitored and if, as a result of changed
conditions, it is determined that a Rule 144A security is no longer liquid, the
Fund's holdings of illiquid securities would be reviewed to determine what
steps, if any, are required to assure that the Fund does not invest more than
the maximum percentage of its assets in illiquid securities. Investing in Rule
144A securities could have the effect of increasing the amount of the Fund's
assets invested in illiquid securities if qualified institutional buyers are
unwilling to purchase such securities.
CHANGE OF OBJECTIVE. The investment objective of the Fund is not a
fundamental policy and, accordingly, may be changed by the Board of Directors
without shareholder approval. Shareholders will be notified a minimum of sixty
days in advance of any change in investment objective.
INVESTMENT RESTRICTIONS.
In pursuing its investment objective, the Fund will not:
1. With respect to 75% of the value of the Fund's total assets, invest more
than 5% of its total assets (valued at time of investment) in securities
of any one issuer, except securities issued or guaranteed by the
government of the United States, or any of its agencies or
instrumentalities, or acquire securities of any one issuer which, at the
time of investment, represent more than 10% of the voting securities of
the issuer;
2. Borrow money except that in exceptional circumstances the Fund may
borrow from banks for temporary purposes, provided that such borrowings
shall be unsecured and may not exceed 10% of the Fund's net assets at
the time of the borrowing (including the amount borrowed). The Fund will
not purchase securities while borrowings exceed 5% of its total assets;
3. Invest more than 25% of its assets (valued at time of investment) in
securities of companies in any one industry other than U.S. Government
Securities;
4. Make loans, but this restriction shall not prevent the Fund from (a)
buying a part of an issue of bonds, debentures, or other obligations
that are publicly distributed, or from investing up to an aggregate of
15% of its total assets (taken at market value at the time of each
purchase) in parts of issues of bonds, debentures or other obligations
of a type privately placed with financial institutions or (b) lending
portfolio securities, provided that the Fund may not lend securities if,
as a result, the aggregate value of all securities loaned would exceed
33% of its total assets (taken at market value at the time of such
loan);*
5. Underwrite the distribution of securities of other issuers; however, the
Fund may acquire "restricted" securities which, in the event of a
resale, might be required to be registered under the Securities Act of
1933 (the "1933 Act") on the grounds that the Fund could be regarded as
an underwriter as defined by the 1933 Act with respect to such resale;
6. Purchase and sell real estate or interests in real estate, although it
may invest in marketable securities of enterprises that invest in real
estate or interests in real estate;
7. Make margin purchases of securities, except for the use of such
short-term credits as are needed for clearance of transactions;
8. Sell securities short or maintain a short position, except short sales
against-the-box.
Restrictions 1 through 8 above (except the portions in parentheses) are
"fundamental," which means that they cannot be changed without the vote of a
majority of the outstanding voting securities of the Fund (defined by the
Investment Company Act of 1940 as the lesser of (i) 67% of the Fund's shares
present at a meeting if more than 50% of the shares outstanding are present or
(ii) more than 50% of the Fund's outstanding shares). In
* The Fund has no present intention of lending its portfolio securities.
7
<PAGE>
addition, the Fund is subject to a number of restrictions that may be changed by
the Board of Directors without shareholder approval. Under those non-fundamental
restrictions, the Fund will not:
a. Invest in companies for the purpose of management or the exercise of
control;
b. Invest in oil, gas or other mineral leases or exploration or development
programs, although it may invest in marketable securities of enterprises
engaged in oil, gas or mineral exploration;
c. Invest more than 10% of its net assets (valued at time of investment) in
warrants, valued at the lower of cost or market; provided that warrants
acquired in units or attached to securities shall be deemed to be
without value for purposes of this restriction;
d. Invest more than 5% of its total assets (valued at time of investment)
in securities of issuers with less than three years' operation
(including predecessors);
e. Purchase or retain securities of a company if all of the directors and
officers of the Fund and of its investment adviser who individually own
beneficially more than 0.5% of the securities of the company
collectively own beneficially more than 5% of such securities;
f. Pledge, mortgage or hypothecate its assets, except as may be necessary
in connection with permitted borrowings or in connection with short
sales;
g. Purchase or sell commodities or commodity contracts, except that it may
enter into forward contracts and may sell commodities received by it as
distributions on portfolio investments; and
h. Purchase or sell put and call options on securities or on futures
contracts.
Notwithstanding the foregoing investment restrictions, the Fund may
purchase securities pursuant to the exercise of subscription rights, provided
that such purchase will not result in the Fund's ceasing to be a diversified
investment company. Japanese and European corporations frequently issue
additional capital stock by means of subscription rights offerings to existing
shareholders at a price substantially below the market price of the shares. The
failure to exercise such rights would result in the Fund's interest in the
issuing company being diluted. The market for such rights is not well developed
in all cases and, accordingly, the Fund may not always realize full value on the
sale of rights. The exception applies in cases where the limits set forth in the
investment restrictions would otherwise be exceeded by exercising rights or
would have already been exceeded as a result of fluctuations in the market value
of the Fund's portfolio securities with the result that the Fund would be forced
either to sell securities at a time when it might not otherwise have done so, or
to forego exercising the rights.
TOTAL RETURN. From time to time the Fund will advertise its average annual
total return. Quotations of average annual returns for each Fund will be
expressed in terms of the average annual compounded rates of return of a
hypothetical investment in the Fund over periods of 1, 5 and 10 years (up to the
life of the Fund), calculated pursuant to the following formula: P(I+T)n=ERV
(where P = a hypothetical initial payment of $1000, T = the average annual
return, n = the number of years, and ERV = the ending redeemable value of a
hypothetical $1000 payment made at the beginning of the period). This
calculation assumes deduction of a proportional share of Fund expenses on an
annual basis and assumes reinvestment of all income dividends and capital gains
distributions during the period.
COMPARISON OF PORTFOLIO PERFORMANCE. From time to time the Fund may discuss
in sales literature and advertisements, specific performance grades or rankings
or other information as published by recognized grades or rankings or other
information as published by recognized mutual fund statistical services, such as
Morningstar, Inc. or Lipper Analytical Services, Inc., or by publications of
general interest such as BARRON'S, BUSINESS WEEK, FINANCIAL WORLD, FORBES,
FORTUNE, KIPLINGER'S PERSONAL FINANCE, MONEY, MORNINGSTAR MUTUAL FUNDS, SMART
MONEY, THE WALL STREET JOURNAL or WORTH. Total return information for the Fund
will not be advertised or included in sales literature unless accompanied by
comparable performance information for a separate account to which the Fund
offers its share. Quotations of total return for the Fund will not take into
account charges and deductions against any separate accounts to which the Fund
shares are sold or charges and deductions against the pertinent variable life
insurance and variable annuity contracts ("Variable Contracts"). The Fund's
total return should not be compared with mutual funds that sell their shares
directly to the public since the figures provided do not reflect charges against
the separate accounts or the Variable Contracts.
PORTFOLIO TURNOVER. Although the Fund will not make a practice of
short-term trading, purchases and sales of securities will be made whenever
appropriate, in the investment adviser's view, to achieve the Fund's investment
objective. The rate of portfolio turnover is calculated by dividing the lesser
of the cost of purchases or the proceeds from sales of portfolio securities
(excluding short-term U.S. government obligations and other short-term
investments) for the particular fiscal year by the monthly average of the value
of the portfolio securities
8
<PAGE>
(excluding short-term U.S. government obligations and short-term investments)
owned by the Fund during the particular fiscal year. The rate of portfolio
turnover is not a limiting factor when management deems portfolio changes
appropriate to achieve the Fund's stated objective. However, it is possible
that, under certain circumstances, the Fund may have to limit its short-term
portfolio turnover to permit it to qualify as a "regulated investment company"
under the Internal Revenue Code of 1986, as amended (the "Code").
MANAGEMENT OF THE COMPANY
The business of the Company is managed by its Board of Directors which
elects officers responsible for the day to day operations of the Fund and for
the execution of the policies formulated by the Board of Directors. Several of
the directors and officers of the Fund are directors or officers of SOGEN A.M.
Corp., SGSC or Societe Generale, Paris, France, the indirect owner of one
hundred percent (100%) of the outstanding voting securities of SOGEN A.M. Corp.,
and the owner of fifty percent (50%) of the outstanding voting securities of
SGSC. Jean-Marie Eveillard, the President and a director of the Company, owns
100% of SOGEN A.M. Corp.'s non-voting Series B common stock which represents
19.9% of the total capital of SOGEN A.M. Corp.
The following table sets forth the principal occupation or employment of
the members of the Board of Directors and principal officers of the Company.
Each of the following persons is also a director and/or officer of SoGen
International Fund, Inc. and SoGen Funds, Inc.
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE COMPANY DURING PAST FIVE (5) YEARS
<S> <C> <C>
Philippe Collas* Chairman of the Board and Head of Asset Management at Societe Generale
17, cours Valmy Director since September 1995. Head of Human Resource
92972 Paris Management at Societe Generale from September
France 1991 to 1995. Chief Executive Officer of
Societe Generale Capital Markets (London) from
prior to 1991.
Jean-Marie Eveillard*(1) President and Director Director and President or Executive Vice
1221 Avenue of the Americas President of SOGEN A.M. Corp. from prior to
New York, NY 10020 1991.
Fred J. Meyer(2) Director Chief Financial Officer of Omnicom Group Inc.
437 Madison Avenue from prior to 1991. Director of Sandoz
New York, NY 10022 Corporation, SyStemix, Inc. and Zurich-
American Insurance Cos.
Dominique Raillard(2) Director President of Act 2 International (consulting)
15, boulevard Delessert since July 1995. Group Executive Vice
75016 Paris President of Promodes (consumer
France products) -- U.S. Companies Division from
prior to 1991 to 1995.
Nathan Snyder(1)(2) Director Independent Consultant, from prior to 1991.
163 Parish Rd. S.
New Canaan, CT 06840
Philip J. Bafundo * Vice President, Secretary and Secretary and Treasurer, SOGEN A.M. Corp. since
1221 Avenue of the Americas Treasury January 1991. Certified Public Accountant (New
New York, NY 10020 York).
Ignatius Chithelen * Vice President Securities Analyst, SOGEN A.M. Corp. since
1221 Avenue of the Americas October 1993. Reporter at FORBES from prior to
New York, NY 10020 1991 to April 1992. Private investor from May
1992 to September 1993.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE COMPANY DURING PAST FIVE (5) YEARS
Catherine A. Shaffer * Vice President First Vice President, SGSC since January 1991.
1221 Avenue of the Americas
New York, NY 10020
<S> <C> <C>
Edwin S. Olsen * Vice President Vice President, SGSC from prior to 1991.
1221 Avenue of the Americas
New York, NY 10020
Elizabeth Tobin * Vice President and Assistant Securities Analyst, SOGEN A.M. Corp. from prior
1221 Avenue of the Americas Secetary to 1991.
New York, NY 10020
Charles de Vaulx * Vice President Securities Analyst, SOGEN A.M. Corp. from prior
1221 Avenue of the Americas to 1991.
New York, NY 10020
</TABLE>
* An "interested person" of the Company as defined in the Investment Company
Act of 1940, as amended.
(1) Member of the Executive Committee. When the Board of Directors is not in
session, the Executive Committee may generally exercise most of the powers
of the Board of Directors.
(2) Member of the Audit Committee.
The Company makes no payments to any of its officers for services. However,
currently each of the Company's directors who are not officers or employees of
SOGEN A.M. Corp., SGSC or Societe Generale are paid by the Company an annual fee
of $6,000 and a fee of $1,000 for each meeting of the Company's Board of
Directors and for each meeting of any Committee of the Board that they attend
(other than those held by telephone conference call). Each director is
reimbursed by the Company for any expenses he may incur by reason of attending
such meetings or in connection with services he may perform for the Company.
COMPENSATION OF DIRECTORS AND CERTAIN OFFICERS. The following table sets
forth information regarding compensation of directors by the Company and by the
fund complex of which the Company is a part that it is estimated will be paid
during the fiscal year ending March 31, 1997. Officers of the Company and
directors who are interested persons of the Company do not receive any
compensation from the Company or any other fund in the fund complex which is a
U.S. registered investment company. In the column headed "Total Compensation
From Registrant and Fund Complex Paid to Directors," the number in parentheses
indicates the total number of boards in the fund complex on which the director
serves.
COMPENSATION TABLE
ESTIMATES FOR
FISCAL YEAR ENDING MARCH 31, 1997
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
PENSION OR FROM
RETIREMENT REGISTRANT
BENEFITS ESTIMATED AND FUND
AGGREGATE ACCRUED ANNUAL COMPLEX
COMPENSATION AS PART OF BENEFITS PAID
FROM FUND UPON TO
NAME OF PERSON, POSITION REGISTRANT EXPENSES RETIREMENT DIRECTORS
<S> <C> <C> <C> <C>
Fred J. Meyer*, Director........................................ $ 10,000 N/A N/A $ 34,000(3)
Jean-Marie Eveillard**, Director and President.................. $ -- N/A N/A $ --
Dominique Raillard*, Director................................... $ 10,000 N/A N/A $ 34,000(3)
Nathan Snyder*, Director........................................ $ 10,000 N/A N/A $ 34,000(3)
Philippe Collas**, Director and Chairman........................ $ -- N/A N/A $ --
</TABLE>
* Member of the Audit Committee.
** "Interested person" of the Company as defined in the Act because of the
affiliation with SOGEN A.M. Corp. the Fund's investment adviser.
As of July 31, 1996, the officers and directors of the Company owned less
than 1% of the outstanding shares of capital stock of the Company. The Company
knows of no person who owns beneficially more than 5% of the capital stock of
the Company.
10
<PAGE>
While the Company is a Maryland corporation, certain of its directors and
officers are non-residents of the United States and may have all, or a
substantial part, of their assets located outside the United States. None of the
officers or directors has authorized an agent for service of process in the
United States. As a result, it may be difficult for U.S. investors to effect
service of process upon non-U.S. directors or officers within the United States
or effectively to enforce judgments of courts of the United States predicated
upon civil liabilities of such officers or directors under the federal
securities laws of the United States.
INVESTMENT ADVISER AND OTHER SERVICES
As described in the Company's Prospectus, SOGEN A.M. Corp. is the Company's
investment adviser and, as such, manages the Fund's portfolio, SOGEN A.M. Corp.
was incorporated in Delaware in February 1990, and is indirectly owned by
Societe Generale, one of France's largest banks.
The persons named below are affiliated with the Company and are also
affiliated persons of SOGEN A.M. Corp., SGSC or Societe Generale. The capacity
in which such persons are affiliated with the Fund and SOGEN A.M. Corp., SGSC or
Societe Generale is also indicated.
<TABLE>
<CAPTION>
OFFICE HELD OFFICE HELD WITH SOGEN A.M. CORP.,
NAME WITH THE COMPANY SGSC OR SOCIETE GENERALE
<S> <C> <C>
Philippe Collas Chairman of the Board and Head of Asset Management, Societe Generale. Chairman of
Director the Board and Director, SOGEN A.M. Corp.
Jean-Marie Eveillard President and Director President and Director, SOGEN A.M. Corp.
Philip J. Bafundo Vice President, Secretary and Secretary and Treasurer, SOGEN A.M. Corp.
Treasurer
Ignatius Chithelen Vice President Securities Analyst, SOGEN A.M. Corp.
Catherine A. Shaffer Vice President First Vice President, SGSC
Edwin S. Olsen Vice President Vice President, SGSC
Elizabeth Tobin Vice President and Assistant Securites Analyst, SOGEN A.M. Corp.
Secretary
Charles de Vaulx Vice President Securities Analyst, SOGEN A.M. Corp.
</TABLE>
Under its investment advisory contract with the Company dated as of August
16, 1996, SOGEN A.M. Corp. furnishes the Company with investment advice
consistent with the Fund's stated investment objective. SOGEN A.M. Corp. also
furnishes the Company with office space and certain facilities required for the
business of the Fund, and statistical and research data, and pays any expenses
of the Company's officers. In return, the Fund pays SOGEN A.M. Corp. a monthly
fee at the annual rate of 0.75% of the average daily value of the Fund's net
assets. This annual fee rate is higher than the rate of fees paid by most U.S.
mutual funds. The Company believes, however, that the advisory fee rate is not
higher than the rate of fees paid by most other mutual funds that invest
significantly in foreign equity securities.
To the extent that the Fund's total expenses, excluding taxes, brokerage
expenses, interest and extraordinary expenses, in any fiscal year exceed the
permissible limits applicable to the Fund in any state in which its shares are
then qualified for sale, SOGEN A.M. Corp. will waive its fees and, if necessary
to meet the limit, reimburse the Fund. The current most stringent limit imposed
by a state is equal to the sum of (a) 2.5% of the first $30,000,000 of the
Fund's daily average net asset value, (b) 2.0% of the next $70,000,000 of the
Fund's daily average net asset value and (c) 1.5% of the excess Fund's daily
average net asset value in excess of $100,000,000. However, expenses
attributable to legal, audit and custodian fees associated with foreign
investments and to certain other payments are excluded from the calculation of
expenses for purposes of the limitation pursuant to waivers or orders granted to
the Fund by relevant state securities authorities.
Under the investment advisory contract between the Company and SOGEN A.M.
Corp., the investment adviser is responsible for the management of the Fund's
portfolio and constantly reviews its holdings in the light of its own research
analyses and those of other relevant sources. Reports of portfolio transactions
are given regularly to the directors of the Company, who review the Fund's
portfolio at meetings held four times a year.
Under the terms of the investment advisory agreement, the Company and each
of its series will discontinue the use of the term "SoGen" in their names or the
use of any marks or symbols owned by the investment adviser if the investment
adviser ceases to act as the Company's investment adviser or if the investment
adviser so requests.
As of the date of this Statement of Additional Information, SOGEN A.M.
Corp. owned of record and beneficially 10,000 shares of the Fund.
11
<PAGE>
DISTRIBUTION OF THE FUND'S SHARES
The Company and SGSC have entered into a distribution contract pursuant to
which SGSC offers, as agent, share of the Fund continuously to the separate
accounts of insurance companies. SGSC is not obligated thereunder to sell any
specific amount of Fund shares.
The Fund has adopted a Distribution Plan and Agreement (the "Plan")
pursuant to Rule 12b-1 of the Investment Company Act of 1940. Under the Plan,
the Fund may pay SGSC a quarterly distribution related fee at an annual rate not
to exceed 0.25% of the average daily value of the Fund's net assets. Under the
terms of the Plan, the Fund is authorized to make payments to SGSC for
remittance to an insurance company that is the issuer of a Variable Contract
invested in shares of the Fund in order to pay or reimburse such insurance
company for distribution and shareholder servicing-related expenses incurred or
paid by such insurance company. Distribution expenses incurred in any fiscal
year, which are not reimbursed from payment under the Plan accrued in such
fiscal year, will not be carried over for payment under the Plan in any
subsequent year.
Expenses payable pursuant to this Plan may include, but are not limited to,
expenses relating to the preparation, printing and distribution of prospectuses
to existing and prospective Variable Contract owners; development, preparation,
printing and mailing of Fund advertisements; expenses relating to holding
seminars and sales meetings designed to promote the distribution of Fund shares;
training sales personnel regarding the Fund; compensating sales personnel in
connection with the allocation of cash values and premiums of the Variable
Contracts to the Fund; and financing any other activity that the Fund's Board of
Directors determines is primarily intended to result in the sale of shares.
The Plan is deemed reasonably likely to benefit the Fund and the Variable
Contract owners in at least one of several ways. Specifically, it is expected
that the insurance companies that issue Variable Contracts invested in shares of
the Fund would have less incentive to educate Variable Contract owners and sales
people concerning the Fund if expenses associated with such services were not
paid by the Fund. In addition, the payment of distribution fees to insurers
should motivate them to maintain and enhance the level of services relating to
the Fund provided to Variable Contract owners, which would, of course, benefit
such Variable Contract owners. The adoption of the Plan would also likely help
to maintain and may lead to an increase in net assets given the foregoing
incentives. Further, it is anticipated that Plan fees may be used to educate
potential and existing owners of Variable Contracts concerning the Fund, the
securities markets and related risks.
The Plan provides that it will continue in effect only so long as its
continuance is approved at least annually by the directors of the Company and by
the directors who are not interested persons of the Company and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements relating to the Plan (the "Independent Directors"). In the case of an
agreement relating to the Plan, the Plan provides that such agreement may be
terminated, without penalty, by a vote of a majority of the Independent
Directors, or by a majority of the Fund's outstanding voting securities on 60
days' written notice to SGSC, and provides further that such agreement will
automatically terminate in the event of its assignment. The Plan also states
that it may not be amended to increase the maximum amount of the payments
thereunder without the approval of a majority of the outstanding voting
securities (as defined on page 7) of the Fund. No material amendment to the Plan
will, in any event, be effective unless it is approved by a vote of the
directors and the Independent Directors of the Company.
When the Company seeks an Independent Director to fill a vacancy on the
board or as an addition to the board or as a nominee for election by
stockholders, the selection or nomination of the Independent Director is, under
resolutions adopted by the directors, contemporaneously with their adoption of
the Plan, committed to the discretion of the Independent Directors.
The expenses incurred by the Company in connection with its organization,
its registration with the Securities and Exchange Commission and any states
where registered, and the public offering of its shares were advanced on behalf
of the Company by SOGEN A.M. Corp. These organizational expenses will be
deferred and amortized by the Company over a period of 60 months.
The investment advisory contract will continue in effect until August 16,
1997, and thereafter from year to year so long as the continuance of each
contract is specifically approved at least annually by the Board of Directors or
by a vote of a majority of the outstanding voting securities of the Fund (and
any other series of the Company with shares then outstanding) (as defined on
page 7). In addition, the terms of the contract and the renewal thereof must be
approved annually by the vote of a majority of the directors who are not
"interested persons" (as defined in the Investment Company Act of 1940) of SOGEN
A.M. Corp., SGSC or the Company. The investment advisory contract will terminate
automatically in the event of its assignment (as defined in the Investment
Company Act of 1940) and may be terminated, without penalty, on sixty days'
written notice at the
12
<PAGE>
option of either party thereto or by a vote of a majority of the outstanding
voting securities of the Fund (or any other series of the Company with shares
then outstanding).
COMPUTATION OF NET ASSET VALUE
The Fund computes its net asset value once daily as of the close of trading
on each day the New York Stock Exchange is open for trading. The Exchange is
closed on the following days: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The net asset value per share is computed by dividing the total current value of
the assets of the Fund, less its liabilities, by the total number of shares
outstanding at the time of such computation.
A portfolio security, other than a bond, which is traded on a U.S. national
securities exchange or a securities exchange abroad is normally valued at the
price of the last sale on the exchange as of the close of business on the date
on which assets are valued. If there are no sales on such date, such portfolio
securities will be valued at the mean between the closing bid and asked prices.
Securities, other than bonds, traded in the over-the-counter market are valued
at the mean between the last bid and asked prices prior to the time of
valuation, except if such unlisted security is among the NASDAQ designated "Tier
1" securities in which case it is valued at its last sale price. All bonds,
whether listed on an exchange or traded in the over-the-counter market, for
which market quotations are readily available are valued at the mean between the
last bid and asked prices received from dealers in the over-the-counter market
in the United States or abroad, except that when no asked price is available,
bonds are valued at the last bid price alone. Short-term investments maturing in
sixty days or less are valued at cost plus interest earned, which approximates
value. Securities for which current market quotations are not readily available
are valued at fair value as determined in good faith by the Company's Board of
Directors.
HOW TO PURCHASE SHARES
The methods of buying and selling shares and the sales charges applicable
to purchases of shares of the Fund are described in the prospectus of the
pertinent separate account.
TAX STATUS
The Fund intends to qualify annually as a "regulated investment company"
under the Code. In order to qualify as a regulated investment company for a
taxable year, the Fund must, among other things, (a) derive at least 90% of its
gross income from dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of stock, securities or foreign
currencies and other income derived with respect to the business of investing in
such stock, securities or currencies; (b) derive less than 30% of its gross
income from the sale or other disposition of stock or securities and options,
futures, forward contracts and foreign currencies held for less than three
months (excluding gains from certain hedging transactions and from foreign
currencies (and options, futures and forward contracts on foreign currencies)
that are directly related to the Fund's principal business of investing in such
stocks or securities or options or futures thereon); (c) diversify its holdings
so that, at the end of each fiscal quarter, (i) at least 50% of the market value
of its assets is represented by cash, cash items, U.S. government securities,
securities of other regulated investment companies and other securities, with
such other securities of any one issuer qualifying only if the Fund's investment
is limited to an amount not greater than 5% of the Fund's assets or 10% of the
voting securities of the issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other than U.S.
government securities or securities of other regulated investment companies);
and (d) distribute at least 90% of its investment company taxable income (which
includes, among other items, dividends, interest and net short-term capital
gains in excess of net long-term capital losses) for the year.
As a regulated investment company, the Fund generally will not be subject
to U.S. federal income tax on its investment company taxable income and net
capital gains (the excess of net long-term capital gains over net short-term
capital losses), if any, that it distributes to shareholders. The Fund intends
to distribute to its shareholders (the separate accounts and other qualified
investors), at least annually, substantially all of its investment company
taxable income and net capital gains. Amounts not distributed on a timely basis
in accordance with a calendar year distribution requirement are subject to a
non-deductible 4% excise tax. To prevent imposition of the excise tax, the Fund
must distribute during each calendar year an amount equal to the sum of (1) at
least 98% of its ordinary income (not taking into account any capital gains or
losses) for the calendar year, (2) at least 98% of its capital gains in excess
of its capital losses (adjusted for certain ordinary losses) for the one-year
period ending on October 31 of the calendar year, and (3) any ordinary income
and capital gains for previous years that were not distributed during those
years. A distribution will be treated as paid on December 31 of the current
calendar year if it is declared by the Fund in October, November or December
with a record date in such a month and paid
13
<PAGE>
by the Fund during January of the following calendar year. Such distributions
will be taxable to shareholders in the calendar year in which the distributions
are declared, rather than the calendar year in which the distributions are
received. To prevent application of the excise tax, the Fund intends to make its
distributions in accordance with the calendar year distribution requirement. In
some circumstances, the Fund may qualify for an exception to the excise tax
distribution requirements, but the Fund has no obligation to seek to maintain
that exception.
The Treasury Department has indicated in published statements that it would
issue future regulations or rulings addressing the circumstances in which a
Variable Contract owner's control of the investments of a separate account may
cause the contract owner, rather than the insurance company, to be treated as
the owner of the assets held by the separate account. If the contract owner is
considered the owner of the securities underlying the separate account, income
and gains produced by those securities would be included currently in the
contract owner's gross income. It is not known what standards will be set forth
in the regulations or rulings.
In the event that the rules or regulations are adopted there can be no
assurance that the Fund will be able to operate as currently described in the
Prospectus, or that the Fund will not have to change its investment objective or
investment policies.
Investments by the Fund in zero coupon securities will result in income to
the Fund equal to a portion of the excess of the face value of the securities
over their issue price (the "original issue discount") each year that the
securities are held, even though the Fund receives no interest payments. This
income is included in determining the amount of income which the Fund must
distribute in order to meet various distribution requirements.
Certain foreign currency contracts in which the Fund may invest are
"section 1256 contracts." Gains or losses on section 1256 contracts generally
are considered 60% long-term and 40% short-term capital gains or losses;
however, foreign currency gains or losses (as discussed below) arising from
certain section 1256 contracts may be treated as ordinary income or loss. Also,
section 1256 contracts held by the Fund at the end of each taxable year (and,
generally, for purposes of the 4% excise tax, on October 31 of each year) are
"marked-to-market" (that is, treated as sold at fair market value), resulting in
unrealized gains or losses being treated as though they were realized.
Generally, the hedging transactions undertaken by the Fund may result in
"straddles" for U.S. federal income tax purposes. The straddle rules may affect
the character of gains (or losses) realized by the Fund. In addition, losses
realized by the Fund on positions that are part of a straddle may be deferred
under the straddle rules, rather than being taken into account in calculating
the taxable income for the taxable year in which the losses are realized.
Because only a few regulations implementing the straddle rules have been
promulgated, the tax consequences to the Fund of engaging in hedging
transactions are not entirely clear. Hedging transactions may increase the
amount of short-term capital gains realized by the Fund which is taxed as
ordinary income when distributed to shareholders.
The Fund may make one or more of the elections available under the Code
which are applicable to straddles. If the Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections may
operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Because the straddle rules may affect the character of gains or losses,
defer losses and/or accelerate the recognition of gain or losses from the
affected straddle positions, the amount which may be distributed to
shareholders, and which will be taxed to them as ordinary income or long-term
capital gains, may be increased or decreased as compared to a fund that did not
engage in such hedging transactions.
The 30% limitation and the diversification requirements applicable to the
Fund's assets may limit the extent to which the Fund will be able to engage in
transactions in foreign currency contracts and to make certain other
investments.
Under the Code, gains or losses attributable to fluctuations in exchange
rates which occur between the time the Fund accrues receivables or liabilities
denominated in a foreign currency and the time the Fund actually collects such
receivables, or pays such liabilities, generally are treated as ordinary income
or ordinary loss. Similarly, on disposition of debt securities denominated in a
foreign currency and on disposition of certain foreign currency contracts, gains
or losses attributable to fluctuations in the value of foreign currency between
the date of acquisition of the security or contract and the date of disposition
also are treated as ordinary gain or loss. These gains or losses, referred to
under the Code as "section 988" gains or losses, may increase or decrease the
amount of the Fund's investment company taxable income to be distributed to its
shareholders as ordinary income.
14
<PAGE>
The Fund may be subject to foreign withholding taxes on income and gains
derived from their investments outside the United States. Such taxes would
reduce the yield on the Fund's investments. Tax treaties between certain
countries and the United States may reduce or eliminate such taxes. If more than
50% of the value of the Fund's total assets at the close of any taxable year
consists of stocks or securities of foreign corporations, the Fund may elect,
for U.S. federal income tax purposes, to treat any foreign country income or
withholding taxes paid by the Fund that can be treated as income taxes under
U.S. income tax principles, as paid by its shareholders. For any year that the
Fund makes such an election, each of its shareholders will be required to
include in his income (in addition to taxable dividends actually received) his
allocable share of such taxes paid by the Fund, and will be entitled, subject to
certain limitations, to credit his portion of these foreign taxes against his
U.S. federal income tax due, if any, or to deduct it (as an itemized deduction)
from his U.S. taxable income, if any.
Generally, a credit for foreign taxes is subject to the limitation that it
may not exceed the shareholder's U.S. tax attributable to his foreign source
taxable income. With respect to the Fund, if the pass through election described
above is made, the source of the Fund's income flows through to its
shareholders. Certain gains from the sale of securities and certain currency
fluctuation gains will not be treated as foreign source taxable income. In
addition, this foreign tax credit limitation must be applied separately to
certain categories of foreign source income, one of which is foreign source
"passive income." For this purpose, foreign "passive income" includes dividends,
interest, capital gains and certain foreign currency gains. As a consequence,
certain shareholders may not be able to claim a foreign tax credit for the full
amount of their proportionate share of foreign taxes paid by the Fund. The
foreign tax credit can be used to offset only 90% of the alternative minimum tax
(as computed under the Code for purposes of this limitation) imposed on
corporations and individuals. If the Fund is not eligible to make the
pass-through election described above, the foreign taxes it pays will reduce its
income, and distributions by the Fund will be treated as U.S. source income.
Each shareholder will be notified within 60 days after the close of the Fund's
taxable year whether, pursuant to the election described above, the foreign
taxes paid by the Fund will be treated as paid by its shareholders for that year
and, if so, such notification will designate (i) such shareholder's portion of
the foreign taxes paid to such country and (ii) the portion of the Fund's
dividends and distributions that represents income derived from sources within
such country.
Investments by the Fund in stock of certain foreign corporations which
generate largely passive investment-type income, or which hold a significant
percentage of assets which generate such income (referred to as "passive foreign
investment companies" or "PFICs"), are subject to special tax rules designed to
prevent deferral of U.S. taxation of the Fund's share of the PFIC's earnings. In
the absence of certain elections to report these earnings on a current basis,
regardless of whether the Fund actually receives any distributions from the
PFIC, the Fund would be required to report certain "excess distributions" from,
and any gain from the disposition of stock of the PFIC, as ordinary income. This
ordinary income would be allocated ratably to the Fund's holding period for the
stock. Any amounts allocated to prior taxable years would be taxable to the Fund
at the highest rate of tax applicable in that year, increased by an interest
charge determined as though the amounts were underpayments of tax. Amounts
allocated to the year of the distribution or disposition would be included in
the Fund's net investment income for that year and, to the extent distributed as
a dividend to the Fund's shareholders, would not be taxable to the Fund.
BROKERAGE ALLOCATION
SOGEN A.M. Corp. is responsible for selecting members of securities
exchanges, brokers and dealers (such members, brokers and dealers being
hereinafter referred to as "brokers") for the execution of the Fund's portfolio
transactions and, when applicable, the negotiation of commissions in connection
therewith.
Purchase and sale orders are usually placed with brokers who are selected
by SOGEN A.M. Corp. as being able to achieve "best execution" of such orders.
"Best execution" means prompt and reliable execution at the most favorable
securities price, taking into account the other considerations as here-in-after
set forth. The determination of what may constitute best execution of a
securities transaction by a broker involves a number of considerations,
including, without limitation, the overall direct net economic result to the
Fund (involving both price paid or received and any commissions and other costs
paid), the efficiency with which the transaction is effected, the ability to
effect the transaction at all where a large block is involved, availability of
the broker to stand ready to execute possibly difficult transactions in the
future, and the financial strength and stability of the broker. Such
considerations are judgmental and are weighed by SOGEN A.M. Corp. in determining
the overall reasonableness of brokerage commissions. While there is no
commitment or understanding to do so, subject to its policy of obtaining best
execution, the Fund may use affiliates of Societe Generale as brokers in the
purchase and sale of securities. SGSC may not, acting as principal, sell any
security or other property to, or purchase any security or other property from,
the Fund, except to the extent that such purchase or sale may be permitted by an
order, rule or regulation of the Securities and Exchange Commission.
15
<PAGE>
SOGEN A.M. Corp. is authorized to allocate brokerage and principal business
to brokers other than SGSC (but not excluding other affiliates of Societe
Generale) who have provided brokerage and research services, as such services
are defined in Section 28(e) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), for the Fund and/or other accounts, if any, for which SOGEN
A.M. Corp. exercises investment discretion (as defined in Section 3(a)(35) of
the 1934 Act) and, as to transactions as to which fixed minimum commission rates
are not applicable, to cause the Fund to pay a commission for effecting a
securities transaction in excess of the amount another broker would have charged
for effecting the transaction, if SOGEN A.M. Corp. in making the selection in
question determines in good faith that such amount of commission is reasonable
in relation to the value of the brokerage and research services provided by such
broker, viewed in terms of either that particular transaction or of SOGEN A.M.
Corp.'s overall responsibilities with respect to the Fund and the other accounts
as to which it exercises investment discretion. In reaching such determination,
SOGEN A.M. Corp. is not required to place or attempt to place a specific dollar
value on the research or execution services of a broker or on the portion of any
commission reflecting either of said services. In demonstrating that such
determinations were made in good faith, SOGEN A.M. Corp. must be prepared to
show that all commissions were allocated and paid for purposes contemplated by
the Fund's brokerage policy; that the research services provide lawful and
appropriate assistance to SOGEN A.M. Corp. in the performance of its investment
decision-making responsibilities; and that the commissions paid were within a
reasonable range. The determination that commissions were within a reasonable
range will be based on any available information as to the level of commissions
known to be charged by other brokers on comparable transactions, but there will
be taken into account the Fund's policies that (i) obtaining a low commission is
deemed secondary to obtaining a favorable securities price, since it is
recognized that usually it is more beneficial to the Fund to obtain a favorable
price than to pay the lowest commission, and (ii) the quality, comprehensiveness
and frequency of research studies which are provided for SOGEN A.M. Corp. are
useful to SOGEN A.M. Corp. in performing its services under the investment
advisory contract with the Fund. Research services provided by brokers to SOGEN
A.M. Corp. are considered to be in addition to, and not in lieu of, services
required to be performed by SOGEN A.M. Corp. under such investment advisory
contract. Research services provided by brokers include written reports,
responses to specific inquiries and interviews with analysts. These services
also include invitations to meetings arranged by such brokers with the
management of companies in the Fund's portfolios or in which the Fund may
invest.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and subject to obtaining prices at least as favorable
as those provided by other qualified brokers, SOGEN A.M. Corp. may consider
sales of shares of the Fund as a factor in the selection of brokers to execute
portfolio transactions.
The Fund has been advised by SOGEN A.M. Corp. that it may combine brokerage
orders for the Fund with orders from its other clients when placing such orders
with brokers for execution. In the event orders are placed for the Fund and one
or more other clients for the purchase or sale of the same security, the Fund
and each such other client may share in each transaction in the proportion that
each customer's order bears to the aggregate of such orders. The Fund's orders
are accorded priority over those received from SOGEN A.M. Corp. for its own
account or from any of its officers, directors or employees.
While SOGEN A.M. Corp. is primarily responsible for the allocation of the
Fund's portfolio transactions to brokers, its polices and practices in this
regard must be consistent with the foregoing and are periodically reviewed by
the Company's Board of Directors. In this connection, the directors periodically
review and discuss with SOGEN A.M. Corp. the commissions paid by the Fund and,
in transactions where the Fund pays commissions which are in excess of the
commissions other brokers would have charged, SOGEN A.M. Corp.'s determinations
that such higher commissions are reasonable in relation to the value of the
brokerage and research services.
CUSTODY OF PORTFOLIO
Portfolio securities of the Fund are held pursuant to a custodian agreement
between the Company and Investors Fiduciary Trust Company, 127 West 10th Street,
Kansas City, MO 64105. Certain of such securities may be deposited in the
book-entry system operated by the Federal Reserve System or with the Depository
Trust Company. The Company's sub-custodian, State Street Bank and Trust, holds
domestic securities issued in physical form. Foreign securities may be held by
certain foreign sub-custodians which are participants in the Global Custody
Division of The Chase Manhattan Bank, N.A. ("Chase"), Woolgate House, Coleman
Street, London, England, EC2P 2HD and in certain foreign branches of Chase.
16
<PAGE>
INDEPENDENT AUDITORS
The Company's independent auditors are KPMG Peat Marwick LLP, Certified
Public Accountants, 345 Park Avenue, New York, NY 10154. KPMG Peat Marwick LLP
will audit the Fund's annual financial statements and renders its report
thereon, which will be included in the Annual Report to Shareholders.
17
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees of
SoGen Variable Funds, Inc:
We have audited the accompanying statement of assets and liabilities of the
SoGen Overseas Variable Fund, a portfolio of the SoGen Variable Funds, Inc. as
of August 9, 1996. This statement of assets and liabilities is the
responsibility of the Fund's management. Our responsibility is to express an
opinion on this statement of assets and liabilities based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of assets and
liabilities is free of material misstatement. An audit of a statement of
assets and liabilities includes examining, on a test basis, evidence supporting
the amounts and disclosures in that statement of assets and liabilities. Our
procedures included confirmation of cash by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit of the statement of assets
and liabilities provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the SoGen
Overseas Variable Fund as of August 9, 1996, in conformity with generally
accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
New York, New York
August 12, 1996
18
<PAGE>
<PAGE>
SOGEN VARIABLE FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 9, 1996
<TABLE>
<CAPTION>
SOGEN OVERSEAS
VARIABLE FUND
<S> <C>
ASSETS
Cash..................................................................... $100,000
Deferred organization and offering costs (Note 1)........................ 47,130
Prepaid expenses (Note 2)................................................ 7,942
Total assets........................................................ 155,072
LIABILITIES
Organization and offering costs payable (Note 1)......................... $ 47,130
Accrued expenses (Note 2)................................................ 7,942
Total liabilities................................................... 55,072
NET ASSETS (Applicable to 10,000 shares of common stock issued and
outstanding, $0.001 par value; 1,000,000,000 shares authorized).......... $100,000
Calculation of Maximum Offering Price
Net asset value and redemption price per share........................... $ 10.00
Maximum sales charge..................................................... None
Maximum offering price................................................... $ 10.00
</TABLE>
NOTE 1. ORGANIZATION
SoGen Variable Funds, Inc. (the "Company") is a newly-organized, open-end,
diversified management investment company incorporated under the laws of
Maryland in September 1995. The Company consists of one portfolio, SoGen
Overseas Variable Fund (the "Fund"). The Company has had no operations other
than the sale of 10,000 shares of common stock of the Fund to Societe Generale
Asset Management Corp. ("SOGEN A.M. Corp.") on August 9, 1996. Costs incurred
and to be incurred in connection with the organization and initial registration
of the Fund have been paid initially by SOGEN A.M. Corp. The Fund will reimburse
SOGEN A.M. Corp. for such costs, which will be deferred and amortized by the
Fund over the period of benefit, not to exceed 60 months from the date the Fund
commences investment operations. If any of the initial 10,000 shares of the
Company are redeemed by a holder thereof during such amortization period, the
proceeds will be reduced by the unamortized organization expenses in the same
ratio as the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of redemption.
NOTE 2. PREPAID EXPENSES
Other costs associated with the start-up of the Fund have been paid
initially by SOGEN A.M. Corp. The Fund will reimburse SOGEN A.M. Corp. for such
costs, which will be deferred and amortized by the Fund over the period of
benefit, not to exceed 12 months from the date the Fund commences investment
operations.
NOTE 3. INVESTMENT ADVISORY AGREEMENT AND DISTRIBUTION PLAN AND AGREEMENT
Under the terms of an investment advisory agreement, the Fund pays SOGEN
A.M. Corp. a monthly advisory fee at an annual rate of 0.75% of the average
daily net assets of the Fund.
SOGEN A.M. Corp. has agreed to waive its fees and, if necessary, reimburse
the Fund to the extent that the aggregate expenses of the Fund (exclusive of
interest, taxes, brokerage, distribution fees and extraordinary expenses, all to
the extent permitted by applicable state law and regulation) exceed the limits
prescribed by any state in which the Fund's shares are qualified for sale. The
Company believes that the most restrictive expense ratio limitation imposed by
any state is 2.5% of the first $30 million of its average net assets, 2.0% of
the next $70 million of its average net assets and 1.5% of its average net
assets in excess of $100 million.
The Company has entered into a Distribution Plan and Agreement (the
"Agreement") with Societe Generale Securities Corporation (the "Principal
Underwriter"), under which the Fund may pay a distribution related fee to the
Principal Underwriter at an annual rate of up to 0.25% of the Fund's average
daily net assets. The Agreement provides that the Principal Underwriter will use
amounts payable by the Fund under the Agreement, in their
19
<PAGE>
entirety for payments to insurance companies which are the issuers of variable
contracts invested in shares of the Fund, in order to pay or reimburse such
insurance companies for distribution and shareholder servicing-related expenses
incurred or paid by such insurance companies.
The Principal Underwriter, SOGEN A.M. Corp. and the Company are affiliates
of Societe Generale.
NOTE 4. INCOME TAXES
No provision has been made for United States federal income taxes since it
is the intention of the Company to comply with the provisions of the Internal
Revenue Code for a regulated investment company.
20
<PAGE>
APPENDIX
RATINGS OF INVESTMENT SECURITIES
The rating of a rating service represents the service's opinion as to the
credit quality of the security being rated. However, the ratings are general and
are not absolute standards of quality or guarantees as to the creditworthiness
of an issuer. Consequently, the Company's investment adviser believes that the
quality of debt securities in which the Fund invests should be continuously
reviewed. A rating is not a recommendation to purchase, sell or hold a security,
because it does not take into account market value or suitability for a
particular investor. When a security has received a rating from more than one
service, each rating should be evaluated independently. Ratings are based on
current information furnished by the issuer or obtained by the ratings services
from other sources which they consider reliable. Ratings may be changed,
suspended or withdrawn as a result of changes in or unavailability of such
information, or for other reasons.
The following is a description of the characteristics of ratings used by
Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Corporation
("S&P").
MOODY'S RATINGS.
Aaa -- Bonds rated Aaa are judged to be the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt-edge."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. Although the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such bonds.
Aa -- Bonds rated Aa are judged to be high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa bonds or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which make the
long-term risk appear somewhat larger than in Aaa bonds.
A -- Bonds rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds rated Baa are considered as medium grade obligations, I.E.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba -- Bonds rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B -- Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa -- Bonds rated Caa are of poor standing. Such bonds may be in default
or there may be present elements of danger with respect to principal or
interest.
Ca -- Bonds rated Ca represent obligations which are speculative in a high
degree. Such bonds are often in default or have other marked shortcomings.
S&P RATINGS.
AAA -- Bonds rated AAA have the highest rating. Capacity to pay principal
and interest is extremely strong.
AA -- Bonds rated AA have a very strong capacity to pay principal and
interest and differ from AAA bonds only in small degree.
A -- Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB -- Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances
A-1
<PAGE>
are more likely to lead to a weakened capacity to pay principal and interest for
bonds in this capacity than for bonds in higher rated categories.
BB -- B -- CCC -- CC -- Bonds rated BB, B, CCC and CC are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the obligation.
BB indicates the lowest degree of speculation among such bonds and CC the
highest degree of speculation. Although such bonds will likely have some quality
and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
A-2
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS
No financial statements are included in this Registration Statement since,
on the date of filing, the Registrant, being a newly-organized corporation, has
no assets or known liabilities and has sold no shares of common stock. Prior to
the effective date of this Registration Statement, the necessary financial
statements will be filed by amendment hereto.
(B) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
<S> <C>
1 -- Articles of Incorporation of the Registrant.*
2 -- By-Laws of the Registrant.*
4 -- Specimen Certificates representing shares of Common Stock ($0.001 par value).*
5 -- Investment Advisory Contract between the Registrant and Societe Generale Asset Management Corp.
("SOGEN A.M. Corp.").*
6 -- Distribution Agreement between the Registrant and Societe Generale Securities Corporation ("SGSC").*
8 (a) -- Custody, Investment Accounting and Transfer Agency Agreement between the Registrant and Investors
Fiduciary Trust Company.*
8 (b) -- Global Custody Agreement between the Registrant and The Chase Manhattan Bank, N.A.*
8 (c) -- Form of Subcustodial Agreement.*
9 -- Participation Agreement among the Registrant, A Life Insurance Company and SGSC.
10 -- Opinion and Consent of Dechert Price & Rhoads.
11 -- Consent of KPMG Peat Marwick LLP.
13 -- Investment Representation letter of SOGEN A.M. Corp.
15 -- Rule 12b-1 Distribution Plan and Agreement Between the Registrant and SGSC.*
19 -- Power of Attorney of Messrs. Eveillard*, Collas, Meyer, Raillard,* Snyder.*
</TABLE>
* Previously filed as an Exhibit to the Registration Statement.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None. The Registrant is a recently organized corporation and SOGEN A.M.
Corp. owns 100% of the issued and outstanding shares of the common stock of
the Registrant as of the date of this filing.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
The following information is furnished as of August 19, 1996
<TABLE>
<CAPTION>
TITLE OF CLASS NUMBER OF RECORD HOLDERS
<S> <C>
Shares of Beneficial One
Interest, Par Value
$0.001 per share
</TABLE>
C-1
<PAGE>
ITEM 27. INDEMNIFICATION
Registrant is incorporated under the laws of the State of Maryland and is
subject to Section 2-418 of the Corporations and Associations Article of the
General Corporation Law of the State of Maryland controlling the indemnification
of directors and officers. Since Registrant has its executive offices in the
State of New York, and is qualified as a foreign corporation doing business in
such State, the persons covered by the foregoing statute may also be entitled to
and subject to the limitations of the indemnification provisions of Section
721-726 of the New York Business Corporation Law.
The general effect of these statutes is to protect directors, officers,
employees and agents of the Registrant against legal liability and expenses
incurred by reason of their positions with the Registrant. The statutes provide
for indemnification for liability for proceedings not brought on behalf of the
corporation and for those brought on behalf of the corporation, and in each case
place conditions under which indemnification will be permitted, including
requirements that the indemnified person acted in good faith. Under certain
conditions, payment of expenses in advance of final disposition may be
permitted. The By-Laws of the Registrant make the indemnification of its
directors, officers, employees and agents mandatory subject only to the
conditions and limitations imposed by the above-mentioned Section 2-418 of
Maryland Law and by the provisions of Section 17(h) of the Investment Company
Act of 1940 as interpreted and required to be implemented by SEC Release No.
IC-11330 of September 4, 1980.
In referring in its By-Laws to, and making indemnification of directors
subject to the conditions and limitations of, both Section 2-418 of the Maryland
Law and Section 17(h) of the Investment Company Act of 1940 (the "1940 Act"),
the Registrant intends that conditions and limitations on the extent of the
indemnification of directors and officers imposed by the provisions of either
Section 2-418 or Section 17(h) shall apply and that any inconsistency between
the two will be resolved by applying the provisions of said Section 17(h) if the
condition or limitation imposed by Section 17(h) is the more stringent. In
referring in its By-Laws to SEC Release No. IC-11330 as the source for
interpretation and implementation of said Section 17(h), the Registrant
understands that it would be required under its By-Laws to use reasonable and
fair means in determining whether indemnification of a director or officer
should be made and undertakes to use either (1) a final decision on the merits
by a court or other body before whom the proceeding was brought that the person
to be indemnified ("indemnitee") was not liable to the Registrant or to its
security holders by reason of willful malfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of his or her office
("disabling conduct") or (2) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the indemnitee was not
liable by reason of such disabling conduct, by (a) the vote of a majority of a
quorum of directors who are neither "interested persons" (as defined in the 1940
Act) of the Registrant nor parties to the proceeding, or (b) an independent
legal counsel in a written opinion. Also, the Registrant will make advances of
attorney's fees or other expenses incurred by a director or officer in his or
her defense only if (in addition to his or her undertaking to repay the advance
if he or she is not ultimately entitled to indemnification) (1) the indemnitee
provides a security for his or her undertaking, (2) the Registrant shall be
insured against losses arising by reason of any lawful advances, or (3) a
majority of a quorum of the non-interested, non-party directors of the
Registrant, or an independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts, that there is reason to
believe that the indemnitee ultimately will be found entitled to
indemnification.
In addition, the Registrant will maintain a directors' and officers' errors
and omissions liability insurance policy protecting directors and officers
against liability for claims made by reason of any acts, errors or omissions
committed in their capacity as directors of officers. The policy will contain
certain exclusions, among which is exclusion from coverage for active or
deliberate dishonest or fraudulent acts and exclusion for fines or penalties
imposed by law or other matters deemed uninsurable.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
SOGEN A.M. Corp. is the Registrant's investment adviser. In addition to the
Registrant, SOGEN A.M. Corp., acts as investment adviser to SoGen International
Fund, Inc., SoGen Funds, Inc., and pension funds and sub-adviser to
non-affiliated investment funds.
C-2
<PAGE>
Reference is made to "Management of the Fund" in the Statement of
Additional Information constituting Part B of this Registration Statement for a
description of the business activities and employment of certain directors and
officers of SOGEN A.M. Corp. within the last two fiscal years of the Registrant.
The directors of SOGEN A.M. Corp. not disclosed in Part B are as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
<S> <C>
Christian d'Allest.............. Director of Foreign Affiliates, Societe Generale Asset
17, cours Valmy Management Corp.
92972 Paris
France
Jean Roger Huet................. President, New York Branch, Societe Generale
1221 Avenue
of the Americas
New York, NY 10020
Jean-Marie Stein................ President of SogeCap, Insurance Division of
17, cours Valmy Societe Generale
92972 Paris
France
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) SGSC, the Registrant's distributor, acts as principal underwriter for
SoGen International Fund, Inc. and SoGen Funds, Inc., each of which is a
registered investment company.
(b) The directors and officers of SGSC are as follows:
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
WITH
NAME AND PRINCIPAL BUSINESS ADDRESS PRINCIPAL UNDERWRITER POSITIONS AND OFFICES WITH REGISTRANT
<S> <C> <C>
Jean-Bernard Guillebert
17, cours Valmy
92972 Paris
France................................................ Chairman of the Board --
Alain Tave
17, cours Valmy
92972 Paris
France................................................ Director --
Curtis Welling
1221 Avenue of the Americas
New York, NY 10020.................................... President & C.E.O. --
Jean-Paul Oudet
23 Rue de d'Abeville
75009 Paris
France................................................ Director --
Jeffrey Fox
1221 Avenue of the Americas
New York, NY 10020.................................... C.F.O. --
Robert LeRoux
17, cours Valmy
92972 Paris
France................................................ Director --
Yves Touloup
43, rue Taitbout
75009 Paris
France................................................ Director --
Dominique Beaupere
Alsthom Alcatel
75382 Paris, Cedex 08................................. Director --
Jean Huet
1221 Avenue of the Americas
New York, NY 10020.................................... Director --
Alain Jovet
1221 Avenue of the Americas
New York, NY 10020.................................... Director --
Pierre Prot
29, Boulevard Haussmann
75009 Paris
France................................................ Director --
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
WITH
NAME AND PRINCIPAL BUSINESS ADDRESS PRINCIPAL UNDERWRITER POSITIONS AND OFFICES WITH REGISTRANT
<S> <C>
Ken Lampert
1221 Avenue of the Americas
New York, NY 10020.................................... First Vice President & --
C.C.O.
</TABLE>
The following officers all have their principal business address at 1221
Avenue of the Americas, New York, NY 10020:
<TABLE>
<S> <C> <C>
Timothy Moyer................................ Senior Vice President --
Jeffrey Fox.................................. Senior Vice President --
Tom Moyna.................................... First Vice President --
Catherine A Shaffer.......................... First Vice President --
Lauda Fields................................. Vice President --
Babak Ghassomlou............................. Vice President --
John Monck................................... Vice President --
Edwin S Olsen................................ Vice President --
Joseph Marino................................ Senior Vice President --
William Lyons................................ Assistant Vice President --
Philip Ferrigno.............................. Assistant Vice President --
Robert Dawson................................ Assistant Vice President --
Kerry Balk................................... Assistant Vice President --
Richard Tramutola............................ Vice President --
Domonic Freud................................ First Vice President --
Mary Chen.................................... Vice President --
Paul Meyer................................... First Vice President --
Elizabeth Mulford............................ Vice President --
William Finan................................ Assistant Vice President --
Anthony Hayes................................ Vice President --
Andrew Joseph................................ Vice President --
Robert Marx.................................. Vice President --
Ken Nora..................................... Vice President --
Paul Kwong................................... Vice President --
Michael Straine.............................. Assistant Vice President --
Nathalie Texier.............................. Assistant Vice President --
Charles Gushee............................... Vice President --
Lina Langley................................. Assistant Vice President --
Marc Levesque................................ Vice President --
Isaac Barrocas............................... Vice President --
Richard Beston............................... Vice President --
Rolando E. Pantoja........................... First Vice President --
Benoit Ruaudel............................... First Vice President --
Vincent Gros................................. Vice President --
Lauda Fields................................. Vice President --
Philippe Pierson............................. Vice President --
David Catenazzo.............................. Vice President --
Joseph Doyle................................. Assistant Vice President --
Peter Vicari................................. Assistant Vice President --
John Enderle................................. Vice President --
Daniel Fields................................ Vice President --
Jean-Marie Barreau........................... Vice President --
Nancy C. Nakovick............................ Vice President --
Robert Roland................................ Vice President --
John Bianco.................................. Vice President --
Tarek Toubale................................ Vice President --
Francois Barthelemy.......................... Vice President --
Fabien Hajjar................................ Vice President --
</TABLE>
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are maintained at the offices of the Registrant, 1221
C-4
<PAGE>
Avenue of the Americas, New York, NY 10020 with the exception of certain
accounts, books and other documents which are kept by the Registrant's
custodian, Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City,
MO 64105.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
The Registrant undertakes to file a Post-Effective Amendment to the
Registration Statement with financial statements within four to six months from
the effective date of the Registration Statement under the Securities Act of
1933.
The Registrant undertakes to call a meeting of shareholders for the purpose
of voting upon the question of removal of a director, if requested to do so by
the holders of at least 10% of the Fund's outstanding shares, and that it will
assist communication with other shareholders as required by Section 16(c) of the
Investment Company Act of 1940.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant, SoGen Variable
Funds, Inc., has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and State of New York, on the 19th day of August, 1996.
SOGEN VARIABLE FUNDS, INC.
BY: /s/ JEAN-MARIE EVEILLARD
(JEAN-MARIE EVEILLARD, PRESIDENT)
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/S/ JEAN-MARIE EVEILLARD President and Director August 19, 1996
JEAN-MARIE EVEILLARD (principal executive officer)
/s/ PHILIP J. BAFUNDO Vice President and Treasurer August 19, 1996
PHILIP J. BAFUNDO (principal financial and
accounting officer)
* Chairman of the Board August 19, 1996
PHILIPPE COLLAS
* Director August 19, 1996
FRED J. MEYER
* Director August 19, 1996
DOMINIQUE RAILLARD
* Director August 19, 1996
NATHAN SNYDER
* By /s/ JEAN-MARIE EVEILLARD
(JEAN-MARIE EVEILLARD, ATTORNEY IN FACT)
</TABLE>
C-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT DESCRIPTION PAGE NO.
<S> <C> <C>
1 -- Articles of Incorporation of the Registrant.*
2 -- By-Laws of the Registrant.*
4 -- Specimen Certificates representing shares of Common Stock ($0.001 par
value).*
5 -- Investment Advisory Contract between the Registrant and Societe Generale
Asset Management Corp. ("SOGEN A.M. Corp.")*
6 -- Distribution Agreement between the Registrant and Societe Generale
Securities Corporation ("SGSC").*
8(a) -- Custody, Investment Accounting and Transfer Agency Agreement between the
Registrant and Investors Fiduciary Trust Fund.*
8(b) -- Global Custody Agreement between the Registrant and The Chase Manhattan
Bank, N.A.*
8(c) -- Form of Subcustodial Agreement.*
9 -- Participation Agreement among the Registrant, A Life Insurance Company
and SGSC.
10 -- Opinion and Consent of Dechert Price & Rhoads.
11 -- Consent of KPMG Peat Marwick LLP.
13 -- Investment Representation letter of SOGEN A.M. Corp.
15 -- Rule 12b-1 Distribution Plan and Agreement Between the Registrant and
SGSC.*
19 -- Power of Attorney of Messrs. Eveillard*, Collas, Meyer, Raillard*,
Snyder.*
</TABLE>
* Previously filed as an Exhibit to the Registration Statement.
PARTICIPATION AGREEMENT
AMONG
------------------------,
SOGEN VARIABLE FUNDS, INC.,
AND
SOCIETE GENERALE SECURITIES CORPORATION
THIS AGREEMENT, dated as of the ____ day of ______, 1996 by and among
_______________________, (the "Company"), an [insert state] life insurance
company, on its own behalf and on behalf of each segregated asset account of the
Company set forth on Schedule A hereto as may be amended from time to time (each
account hereinafter referred to as the "Account"), SoGen Variable Funds, Inc.
(the "Fund"), a corporation organized under the laws of Maryland, and Societe
Generale Securities Corporation (the "Underwriter"), a New York corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is or will be available to act as the investment vehicle
for separate accounts established for variable life insurance and variable
annuity contracts (the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Fund and
Underwriter ("Participating Insurance Companies");
WHEREAS, the shares of common stock of the Fund are divided into
several series of shares, each designated a "Portfolio" and representing the
interest in a particular managed portfolio of securities and other assets;
WHEREAS, the Fund will, to the extent necessary, obtain an order from
the Securities and Exchange Commission (the "SEC") granting Participating
Insurance Companies and variable annuity and variable life insurance separate
accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended, (the "1940 Act") and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, if and to the extent necessary
to permit shares of the Fund to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
life insurance companies (the "Mixed and Shared Funding Exemptive Order");
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and shares of the Portfolios are registered under the
Securities Act of 1933, as amended (the "1933 Act");
<PAGE>
WHEREAS, Societe Generale Asset Management Corp. (the "Adviser"), which
serves as investment adviser to the Fund, is duly registered as an investment
adviser under the federal Investment Advisers Act of 1940, as amended, and any
applicable state securities laws;
WHEREAS, the Company has issued or will issue certain variable life
insurance and/or variable annuity contracts supported wholly or partially by the
Account (the "Contracts"), and said Contracts are listed in Schedule A hereto,
as it may be amended from time to time by mutual written agreement;
WHEREAS, the Account is duly established and maintained as a segregated
asset account, duly established by the Company, on the date shown for such
Account on Schedule A hereto, to set aside and invest assets attributable to the
aforesaid Contracts;
WHEREAS, the Underwriter, which serves as distributor to the Fund, is
registered as a broker dealer with the SEC under the Securities Exchange Act of
1934, as amended (the "1934 Act"), and is a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios listed in
Schedule A hereto, as it may be amended from time to time by mutual written
agreement (the "Designated Portfolios") on behalf of the Account to fund the
aforesaid Contracts, and the Underwriter is authorized to sell such shares to
the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund has granted to the Underwriter
exclusive authority to distribute the Fund's shares, and has agreed to instruct,
and has so instructed, the Underwriter to make available to the Company for
purchase on behalf of the Account Fund shares of those Designated Portfolios
selected by the Underwriter. Pursuant to such authority and instructions, and
subject to Article X hereof, the Underwriter agrees to make available to the
Company for purchase on behalf of the Account, shares of those Designated
Portfolios listed on Schedule A to this Agreement, such purchases to be effected
at net asset value in accordance with Section 1.3 of this Agreement.
Notwithstanding the foregoing, (i) Fund series (other than those listed on
Schedule A) in existence now or that may be established in the future will be
made available to the
-2-
<PAGE>
Company only as the Underwriter may so provide, and (ii) the Board of Directors
of the Fund (the "Board") may suspend or terminate the offering of Fund shares
of any Designated Portfolio or class thereof, if such action is required by law
or by regulatory authorities having jurisdiction or if, in the sole discretion
of the Board acting in good faith and in light of its fiduciary duties under
federal and any applicable state laws, suspension or termination is necessary in
the best interests of the shareholders of such Designated Portfolio.
1.2 The Fund shall redeem, at the Company's request,
any full or fractional Designated Portfolio shares held by the Company on behalf
of the Account, such redemptions to be effected at net asset value in accordance
with Section 1.3 of this Agreement. Notwithstanding the foregoing, (i) the
Company shall not redeem Fund shares attributable to Contract owners except in
the circumstances permitted in [Section 10.3] of this Agreement, and (ii) the
Fund may delay redemption of Fund shares of any Designated Portfolio to the
extent permitted by the 1940 Act, any rules, regulations or orders thereunder,
or the then current Fund Prospectus.
1.3 Purchase and Redemption Procedures
(a) The Fund hereby appoints the Company as
an agent of the Fund for the limited purpose of receiving purchase and
redemption requests on behalf of the Account (but not with respect to
any Fund shares that may be held in the general account of the Company)
for shares of those Designated Portfolios made available hereunder,
based on allocations of amounts to the Account or subaccounts thereof
under the Contracts and other transactions relating to the Contracts or
the Account. Receipt of any such request (or relevant transactional
information therefor) on any day the New York Stock Exchange is open
for trading and on which the Fund calculates it net asset value
pursuant to the rules of the SEC (a "Business Day") by the Company as
such limited agent of the Fund prior to the time that the Fund
calculates its net asset value as described from time to time in the
Fund Prospectus (which as of the date of execution of this Agreement is
4:00 p.m. Eastern Time) shall constitute receipt by the Fund on that
same Business Day, provided that the Fund receives notice of such
request by 9:30 a.m. Eastern Time on the next following Business Day.
(b) The Company shall pay for shares of each
Designated Portfolio on the same day that it notifies the Fund of a
purchase request for such shares. Payment for Designated Portfolio
shares shall be made in federal funds transmitted to the Fund by wire
to be received by the Fund by 4:00 p.m. Eastern Time on the day the
Fund is notified of the purchase request for Designated Portfolio
shares (unless the Fund determines and so advises the Company that
sufficient proceeds are available from redemption of shares of other
-3-
<PAGE>
Designated Portfolios effected pursuant to redemption requests
tendered by the Company on behalf of the Account). If federal funds are
not received on time, such funds will be invested, and Designated
Portfolio shares purchased thereby will be issued, as soon as
practicable and the Company shall promptly, upon the Fund's request,
reimburse the Fund for any charges, costs, fees, interest or other
expenses incurred by the Fund in connection with any advances to, or
borrowing or overdrafts by, the Fund, or any similar expenses incurred
by the Fund, as a result of portfolio transactions effected by the Fund
based upon such purchase request. Upon receipt of federal funds so
wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Fund.
(c) Payment for Designated Portfolio shares
redeemed by the Account or the Company shall be made in federal funds
transmitted by wire to the Company or any other designated person on
the next Business Day after the Fund is properly notified of the
redemption order of such shares (unless redemption proceeds are to be
applied to the purchase of shares of other Designated Portfolio in
accordance with Section 1.3(b) of this Agreement), except that the Fund
reserves the right to redeem Designated Portfolio shares in assets
other than cash and to delay payment of redemption proceeds to the
extent permitted under Section 22(e) of the 1940 Act and any Rules
thereunder, and in accordance with the procedures and policies of the
Fund as described in the then current prospectus. The Fund shall not
bear any responsibility whatsoever for the proper disbursement or
crediting of redemption proceeds by the Company, the Company alone
shall be responsible for such action.
(d) Any purchase or redemption request for
Designated Portfolio shares held or to be held in the Company's general
account shall be effected at the net asset value per share next
determined after the Fund's receipt of such request, provided that, in
the case of a purchase request, payment for Fund shares so requested is
received by the Fund in federal funds prior to close of business for
determination of such value, as defined from time to time in the Fund
Prospectus.
1.4 The Fund shall use its best efforts to make the
net asset value per share for each Designated Portfolio available to the Company
by 6:30 p.m. Eastern Time each Business Day, and in any event, as soon as
reasonably practicable after the net asset value per share for such Designated
Portfolio is calculated, and shall calculate such net asset value in accordance
with the Fund's Prospectus. Neither the Fund, any Designated Portfolio, the
Underwriter, nor any of their affiliates shall be liable for any information
provided to the Company pursuant to this Agreement which information is based on
incorrect information supplied by the Company or any other Participating
Insurance Company to the Fund or the Underwriter.
-4-
<PAGE>
1.5 The Fund shall furnish notice (by wire or
telephone followed by written confirmation) to the Company as soon as reasonably
practicable of any income dividends or capital gain distributions payable on any
Designated Portfolio shares. The Company, on its behalf and on behalf of the
Account, hereby elects to receive all such dividends and distributions as are
payable on any Designated Portfolio shares in the form of additional shares of
that Designated Portfolio. The Company reserves the right, on its behalf and on
behalf of the Account, to revoke this election and to receive all such dividends
and capital gain distributions in cash. The Fund shall notify the Company
promptly of the number of Designated Portfolio shares so issued as payment of
such dividends and distributions.
1.6. Issuance and transfer of Fund shares shall be by
book entry only. Stock certificates will not be issued to the Company or the
Account. Purchase and redemption orders for Fund shares shall be recorded in an
appropriate ledger for the Account or the appropriate subaccount of the Account.
1.7. (a) The parties hereto acknowledge that the
arrangement contemplated by this Agreement is not exclusive; the Fund's
shares may be sold to other insurance companies (subject to Section 1.8
hereof) and the cash value of the Contracts may be invested in other
investment companies, provided, however, that until this Agreement is
terminated pursuant to Article X, the Company shall give equivalent
prominence to the Designated Portfolios as the Company provides to
other funding vehicles available under the Contracts in promotional
materials that describe funding vehicles available under the Contracts
and are published by the Company. Funding vehicles other than those
listed on Schedule A to this Agreement may be available for the
investment of the cash value of the Contract, provided, however, (i)
any such vehicle or series thereof, has investment objectives or
policies that are substantially different from the investment
objectives and policies of the Designated Portfolios available
hereunder; (ii) the Company gives the Fund and the Underwriter 45 days
written notice of its intention to make such other investment vehicle
available as a funding vehicle for the Contracts; and (iii) unless such
other investment company was available as a Funding vehicle for the
Contracts prior to the date of this Agreement and the Company has so
informed the Fund and the Underwriter prior to their signing this
Agreement, the Fund or Underwriter consents in writing to the use of
such other vehicle, such consent not to be unreasonably withheld.
(b) The Company shall not, without prior
notice to the Underwriter (unless otherwise required by applicable law)
take any action to operate the Account as a management investment
company under the 1940 Act.
-5-
<PAGE>
(c) The Company shall not, without prior
notice to the Underwriter (unless otherwise required by applicable
law), induce Contract owners to change or modify the Fund or change the
Fund's distributor or investment adviser.
1.8. The Underwriter and the Fund shall sell Fund
shares only to Participating Insurance Companies and their separate accounts and
to persons or plans ("Qualified Persons") that qualify to purchase shares of the
Fund under Section 817(h) of the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations thereunder without impairing the ability of the
Account to consider the portfolio investments of the Fund as constituting
investments of the Account for the purpose of satisfying the diversification
requirements of Section 817(h). The Underwriter and the Fund shall not sell Fund
shares to any insurance company or separate account unless an agreement
complying with Article VI of this Agreement is in effect to govern such sales.
The Company hereby represents and warrants that it and the Account are Qualified
Persons. The Fund reserves the right to cease offering shares of any Designated
Portfolio in the discretion of the Fund.
ARTICLE II. Representations and Warranties
2.1 The Company represents and warrants that the
Contracts (a) are or, prior to issuance, will be registered under the 1933 Act
or, alternatively (b) are not registered because they are properly exempt from
registration under the 1933 Act or will be offered exclusively in transactions
that are properly exempt from registration under the 1933 Act. The Company
further represents and warrants that the Contracts will be issued and sold in
compliance in all material respects with all applicable federal securities and
state securities and insurance laws and that the sale of the Contracts shall
comply in all material respects with state insurance suitability requirements.
The Company further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law, that it has legally and
validly established the Account prior to any issuance or sale thereof as a
segregated asset account under [insert state] insurance laws, and that it (a)
has registered or, prior to any issuance or sale of the Contracts, will register
the Account as a unit investment trust in accordance with the provisions of the
1940 Act to serve as a segregated investment account for the Contracts, or
alternatively (b) has not registered the Account in proper reliance upon an
exclusion from registration under the 1940 Act. The Company shall register and
qualify the Contracts or interests therein as securities in accordance with the
laws of the various states only if and to the extent deemed advisable by the
Company.
2.2 The Fund represents and warrants that Fund shares
sold pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for
-6-
<PAGE>
issuance and sold in compliance with the laws of the State of [insert state] and
applicable federal securities laws and that the Fund is and shall remain
registered under the 1940 Act. The Fund shall amend the registration statement
for its shares under the 1933 Act and the 1940 Act from time to time as required
in order to effect the continuous offering of its shares. The Fund shall
register and qualify the shares for sale in accordance with the laws of the
various states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3 The Fund intends to make payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act. Prior to
financing distribution expenses pursuant to Rule 12b-1, the Fund will have the
Board, a majority of whom are not interested persons of the Fund, formulate and
approve the Fund's plan pursuant to Rule 12b-1 under the 1940 Act to finance
distribution expenses.
2.4 The Fund makes no representations as to whether
any aspect of its operations, including, but not limited to, investment
policies, fees and expenses, complies with the insurance and other applicable
laws of the various states, except that the Fund represents that the Fund's
investment policies, fees and expenses, are and shall at all times remain in
compliance with the laws of the State of [insert state] to the extent required
to perform this Agreement, provided, however, that the Company shall notify the
Fund with respect to any additional requirements that are specifically directed
to the Company by state insurance departments.
2.5 The Fund represents that it is lawfully organized
and validly existing under the laws of the State of Maryland and that it does
and will comply in all material respects with the 1940 Act.
2.6 The Underwriter represents and warrants that it
is a member in good standing of the NASD and is registered as a broker-dealer
with the SEC. The Underwriter further represents that it will sell and
distribute the Fund shares in accordance with the laws of the State of [insert
state] and any applicable state and federal securities laws.
2.7 The Underwriter represents and warrants that the
Adviser is and shall remain duly registered under all applicable federal and
state securities laws and that the Adviser shall perform its obligations for the
Fund in compliance in all material respects with the laws of the State of
[insert state] and any applicable state and federal securities laws.
2.8 The Fund and the Underwriter represent and
warrant that all of their directors, officers, employees, investment advisers,
and other individuals or entities dealing with the money and/or securities of
the Fund are and shall continue to be
-7-
<PAGE>
at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Fund in an amount not less than the minimum coverage as required
currently by Rule 17g-1 of the 1940 Act or related provisions as may be
promulgated from time to time. The aforesaid bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company.
2.9 The Company represents and warrants that all of
its directors, officers, employees, investment advisers, and other
individuals/entities employed or controlled by the Company dealing with the
money and/or securities of the Account are covered by a blanket fidelity bond or
similar coverage for the benefit of the Account, in an amount not less than $5
million. The aforesaid bond includes coverage for larceny and embezzlement and
is issued by a reputable bonding company.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1 The Underwriter shall provide the Company with as
many copies of the Fund's current prospectus (describing only the Designated
Portfolios listed on Schedule A) as the Company may reasonably request. The
Company shall bear the expense of printing copies of the current prospectus for
the Contracts that will be distributed to existing Contract owners, and the
Company shall bear the expense of printing copies of the Fund's prospectus that
are used in connection with offering the Contracts issued by the Company. If
requested by the Company in lieu thereof, the Fund shall provide such
documentation (including a final copy of the new prospectus on diskette at the
Fund's expense) and other assistance as is reasonably necessary in order for the
Company once each year (or more frequently if the prospectus for the Fund is
amended) to have the prospectus for the Contracts and the Fund's prospectus
printed together in one document (such printing to be at the Company's expense).
3.2 The Fund's prospectus shall state that the
current Statement of Additional Information ("SAI") for the Fund is available,
and the Underwriter (or the Fund), at its expense, shall provide a reasonable
number of copies of such SAI free of charge to the Company for itself and for
any owner of a Contract who requests such SAI.
3.3 The Fund, at its expense, shall provide the
Company with copies of its proxy material, reports to shareholders, and other
communications to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners.
3.4 The Company shall:
(i) solicit voting instructions from
Contract owners;
-8-
<PAGE>
(ii) vote the Fund shares in accordance
with instructions received from
Contract owners; and
(iii) vote Fund shares for which no
instructions have been received in
the same proportion as Fund shares of
such portfolio for which instructions
have been received.
The Company will vote Fund shares held in any segregated asset account in the
same proportion as Fund shares of such portfolio for which voting instructions
have been received from Contract owners, to the extent permitted by law.
3.5 Participating Insurance Companies shall be
responsible for assuring that each of their separate accounts participating in a
Designated Portfolio calculates voting privileges as required by the Shared
Funding Exemptive Order and consistent with any reasonable standards that the
Fund may adopt and provide in writing. The Fund hereby confirms that the manner
in which the Company currently calculates voting privileges is consistent with
the manner in which other Participating Insurance Companies are required to
calculate voting privileges. The Fund and the Underwriter will notify the
Company if either becomes aware that another Participating Insurance Company has
changed the manner in which it so calculates voting privileges.
ARTICLE IV. Sales Material and Information
4.1 The Company shall furnish, or shall cause to be
furnished, to the Fund or its designee, each piece of sales literature or other
promotional material that the Company develops and in which the Fund (or a
Designated Portfolio thereof) or the Adviser or the Underwriter is named. No
such material shall be used until approved by the Fund or its designee, and the
Fund will use its best efforts for it or its designee to review such sales
literature or promotional material within ten Business Days after receipt of
such material. The Fund or its designee reserves the right to reasonably object
to the continued use of any such sales literature or other promotional
material in which the Fund (or a Designated Portfolio thereof) or the Adviser or
the Underwriter is named, and no such material shall be used if the Fund or its
designee so object.
4.2 The Company shall not give any information or
make any representations or statements on behalf of the Fund or concerning the
Fund in connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus or SAI for
the Fund shares, as such registration statement and prospectus or SAI may be
amended or supplemented from time to time, or in reports or proxy statements for
the Fund, or in sales literature or other promotional
-9-
<PAGE>
material approved by the Fund or its designee or by the Underwriter, except
with the permission of the Fund or the Underwriter or the designee of either.
4.3 The Fund and the Underwriter, or their designee,
shall furnish, or shall cause to be, furnished, to the Company, each piece of
sales literature or other promotional material that it develops and in which the
Company, and/or its Account, is named. No such material shall be used until
approved by the Company, and the Company will use its best efforts to review
such sales literature or promotional material within ten Business Days after
receipt of such material. The Company reserves the right to reasonably object to
the continued use of any such sales literature or other promotional material in
which the Company and/or its Account is named, and no such material shall be
used if the Company so objects.
4.4. The Fund and the Underwriter shall not give any
information or make any representations on behalf of the Company or concerning
the Company, the Account, or the Contracts other than the information or
representations contained in a registration statement, prospectus (which shall
include an offering memorandum, if any, if the Contracts issued by the Company
or interests therein are not registered under the 1933 Act), or SAI for the
Contracts, as such registration statement, prospectus, or SAI may be amended or
supplemented from time to time, or in published reports for the Account which
are in the public domain or approved by the Company for distribution to Contract
owners, or in sales literature or other promotional material approved by the
Company or its designee, except with the permission of the Company.
4.5 The Fund will provide to the Company at least one
complete copy of all registration statements, prospectuses, SAIs, reports, proxy
statements, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Fund or its shares, contemporaneously with the filing
of such document(s) with the SEC or other regulatory authorities.
4.6 The Company will provide to the Fund at least one
complete copy of all registration statements, prospectuses (which shall
include an offering memorandum, if any, if the Contracts issued by the
Company or interests therein are not registered under the 1933 Act), SAIs,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Contracts
or the Account, contemporaneously with the filing of such document(s) with
the SEC or other regulatory authorities. The Company shall provide to the Fund
and the Underwriter any complaints received from the Contract owners
pertaining to the Fund or the Designated Portfolio.
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4.7 The Fund will provide the Company with as much
notice as is reasonably practicable of any proxy solicitation for any Designated
Portfolio, and of any material change in the Fund's registration statement,
particularly any change resulting in a change to the registration statement or
prospectus for any Account. The Fund will work with the Company so as to enable
the Company to solicit proxies from Contract owners, or to make changes to its
prospectus or registration statement, in an orderly manner. The Fund will make
reasonable efforts to attempt to have changes affecting Contract prospectuses
become effective simultaneously with the annual
updates for such prospectuses.
4.8 For purposes of this Article IV, the phrase
"sales literature and other promotional materials" includes, but is not limited
to, any of the following that refer to the Fund or any affiliate of the Fund:
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
and sales literature (i.e., any written or electronic communication distributed
or made generally available to customers or the public, including brochures,
circulars, reports, market letters, form letters, telemarketing scripts, seminar
texts, reprints or excerpts of any other advertisement, sales literature, or
published article), distributed or made generally available to customers or to
the public, educational or training materials or other communications
distributed or made generally available to some or all agents or employees, and
registration statements, prospectuses, SAIs, shareholder reports, proxy
materials, and any other communications distributed or made generally available
with regard to the Fund.
ARTICLE V. Fees and Expenses
5.1 The Fund and the Underwriter shall pay no fee or
other compensation to the Company under this Agreement, except that if the Fund
or any Portfolio adopts and implements a plan pursuant to Rule 12b-1 to finance
distribution expenses, then the Underwriter may make payments to the Company or
to the underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing, and such payments will be made out of existing fees
otherwise payable to the Underwriter, past profits of the Underwriter, or other
resources available to the Underwriter. No such payments shall be made directly
by the Fund.
5.2 All expenses incident to performance by the Fund
under this Agreement shall be paid by the Fund. The Fund shall see to it that
all its shares are registered and authorized for issuance in accordance with
applicable federal law and, if and to the extent deemed advisable by the Fund,
in accordance with applicable state laws prior to their sale. The Fund shall
bear the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and
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registration statement, proxy materials and reports, setting the prospectus in
type, setting in type and printing the proxy materials and reports to
shareholders (including the costs of printing a prospectus that constitutes an
annual report), the preparation of all statements and notices required by any
federal or state law, and all taxes on the issuance or transfer of the Fund's
shares.
5.3 The Company shall bear the expenses of
distributing the Fund's prospectus to owners of Contracts issued by the Company
and of distributing the Fund's proxy materials and reports to such Contract
owners.
ARTICLE VI. Diversification and Qualification
6.1 The Fund will invest its assets in such a manner
as to ensure that the Contracts will be treated as annuity or life insurance
contracts, whichever is appropriate, under the Code and the regulations issued
thereunder (or any successor provisions). Without limiting the scope of the
foregoing, each Designated Portfolio has complied and will continue to comply
with Section 817(h) of the Code and Treasury Regulation ss.1.817-5, and any
Treasury interpretations thereof, relating to the diversification requirements
for variable annuity, endowment, or life insurance contracts, and any amendments
or other modifications or successor provisions to such Section or Regulations.
In the event of a breach of this Article VI by the Fund, it will take all
reasonable steps (a) to notify the Company of such breach and (b) to adequately
diversify the Fund so as to achieve compliance within the grace period afforded
by Regulation 817.5.
6.2 The Fund represents that it is or will be
qualified as a Regulated Investment Company under Subchapter M of the Code, and
that it will make every effort to maintain such qualification (under Subchapter
M or any successor or similar provisions) and that it will notify the Company
immediately upon having a reasonable basis for believing that it has ceased to
so qualify or that it might not so qualify in the future.
6.3 The Company represents that the Contracts are
currently, and at the time of issuance shall be, treated as life insurance or
annuity insurance contracts, under applicable provisions of the Code, and that
it will make every effort to maintain such treatment, and that it will notify
the Fund and the Underwriter immediately upon having a reasonable basis for
believing the Contracts have ceased to be so treated or that they might not be
so treated in the future. The Company agrees that any prospectus offering a
contract that is a "modified endowment contract" as that term is defined in
Section 7702A of the Code (or any successor or similar provision), shall
identify such contract as a modified endowment contract.
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ARTICLE VII. Potential Conflicts
The following provisions shall apply only upon issuance of the Mixed and Shared
Funding Order and the sale of shares of the Fund to variable life insurance
separate accounts.
7.1 The Board will monitor the Fund for the existence
of any material irreconcilable conflict between the interests of the Contract
owners of all separate accounts investing in the Fund. An irreconcilable
material conflict may arise for a variety of reasons, including: (a) an action
by any state insurance regulatory authority; (b) a change in applicable federal
or state insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretative letter, or any similar action
by insurance, tax, or securities regulatory authorities; (c) an administrative
or judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or
existing conflicts of which it is aware to the Board. The Company will assist
the Board in carrying out its responsibilities under the Mixed and Shared
Funding Exemptive Order, by providing the Board with all information reasonably
necessary for the Board to consider any issues raised. This includes, but is not
limited to, an obligation by the Company to inform the Board whenever Contract
owner voting instructions are disregarded.
7.3 If it is determined by a majority of the Board,
or a majority of its disinterested members, that a material irreconcilable
conflict exists, the Company and other Participating Insurance Companies shall,
at their expense (to be allocated as near as practicable in proportion to such
parties' respective responsibilities for such conflict) and to the extent
reasonably practicable (as determined by a majority of the disinterested Board
members), take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, up to and including: (1) withdrawing the
assets allocable to some or all of the separate accounts from the Fund or any
Portfolio and reinvesting such assets in a different investment medium,
including (but not limited to) another Portfolio of the Fund, or submitting the
question whether such segregation should be implemented to a vote of all
affected contract owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the
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option of making such a change; and (2) establishing a new registered management
investment company or managed separate account.
7.4 If a material irreconcilable conflict arises
because of a decision by the Company to disregard Contract owner voting
instructions and that decision represents a minority position or would preclude
a majority vote, the Company may be required, at the Fund's election, to
withdraw the Account's investment in the Fund and terminate this Agreement with
respect to each Account; provided, however, that such withdrawal and termination
shall be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
Any such withdrawal and termination must take place within six (6) months after
the Fund gives written notice that this provision is being implemented, and
until the end of that six month period the Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares of
the Fund.
7.5 If a material irreconcilable conflict arises
because a particular state insurance regulator's decision applicable to the
Company conflicts with the majority of other state regulators, then the Company
will withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such Account within six months after the Board informs
the Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Until the end of the foregoing six month period, the Fund shall
continue to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.6 For purposes of Section 7.3 through 7.6 of this
Agreement, a majority of the disinterested members of the Board shall determine
whether any proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Fund be required to establish a new funding
medium for the Contracts. The Company shall not be required by Section 7.3 to
establish a new funding medium for the Contract if an offer to do so has been
declined by vote of a majority of Contract owners materially adversely affected
by the irreconcilable material conflict. In the event that the Board determines
that any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the Account's investment in the Fund
and terminate this Agreement within six (6) months after the Board informs the
Company in writing of the foregoing determination; provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
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<PAGE>
7.7 If and to the extent the Mixed and Shared Funding
Exemption Order or any amendment thereto contains terms and conditions different
from Sections 3.4, 3.5, 3.6, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement, then
the Fund and/or the Participating Insurance Companies, as appropriate, shall
take such steps as may be necessary to comply with the Mixed and Shared Funding
Exemptive Order, and Sections 3.4, 3.5, 3.6, 7.1, 7.2, 7.3, 7.4 and 7.5 of this
Agreement shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in the Mixed and Shared
Funding Exemptive Order or any amendment thereto. If and to the extent that Rule
6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive
relief from any provision of the 1940 Act or the rules promulgated thereunder
with respect to mixed or shared funding (as defined in the Mixed and Shared
Funding Exemptive Order) on terms and conditions materially different from those
contained in the Mixed and Shared Funding Exemptive Order, then (a) the Fund
and/or the Participating Insurance Companies, as appropriate, shall take such
steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and
Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections
3.4, 3.5, 7.1., 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in
effect only to the extent that terms and conditions substantially identical to
such Sections are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1 Indemnification By the Company
8.1(a). The Company agrees to indemnify and hold
harmless the Fund, the Underwriter, the Adviser and each of its directors and
officers, and each person, if any, who controls the Fund or Underwriter within
the meaning of Section 15 of the 1933 Act or who is under common control with
the Underwriter (collectively, the "Indemnified Parties" for purposes of this
Section 8.1) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company) or
litigation (including legal and other expenses), to which the Indemnified
Parties may become subject under any statute or regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue
statement or alleged untrue statements of
any material fact contained in the
registration statement, prospectus (which
shall include an offering memorandum, if
any), or SAI for the Contracts or contained
in the Contracts or sales literature for the
Contracts (or any amendment or supplement to
any of the foregoing), or arise out of or
are based upon the
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omission or the alleged omission to state
therein a material fact required to be
stated therein or necessary to make the
statements therein not misleading, provided
that this agreement to indemnify shall not
apply as to any Indemnified Party if such
statement or omission or such alleged
statement or omission was made in reliance
upon and in conformity with information
furnished to the Company by or on behalf of
the Fund for use in the registration
statement, prospectus or SAI for the
Contracts or in the Contracts or sales
literature (or any amendment or supplement)
or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the
registration statement, prospectus, SAI, or
sales literature of the Fund not supplied by
the Company or persons under its control) or
wrongful conduct of the Company or its
agents or persons under the Company's
authorization or control, with respect to
the sale or distribution of the Contracts or
Fund Shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact
contained in a registration statement,
prospectus, SAI, or sales literature of the
Fund or any amendment thereof or supplement
thereto or the omission or alleged omission
to state therein a material fact required to
be stated therein or necessary to make the
statements therein not misleading if such a
statement or omission was made in reliance
upon information furnished to the Fund by or
on behalf of the Company; or
(iv) arise as a result of any material failure by
the Company to provide the services and
furnish the materials under the terms of
this Agreement (including a failure, whether
unintentional or in good faith or otherwise,
to comply with the qualification
requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material
breach of any representation and/or warranty
made by the Company
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<PAGE>
in this Agreement or arise out of or result
from any other material breach of this
Agreement by the Company,
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(b). The Company shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of its obligations or
duties under this Agreement.
8.1(c). The Company shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Company in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, the Company shall be entitled to participate, at
its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify
the Company of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund shares or the Contracts or the
operation of the Fund.
8.2 Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold
harmless the Company and each of it directors and officer and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the
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Underwriter) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue
statement or alleged untrue statement of any
material fact contained in the registration
statement or prospectus or SAI or sales
literature of the Fund (or any amendment or
supplement to any of the foregoing), or
arise out of or are based upon the omission
or the alleged omission to state therein a
material fact required to be stated therein
or necessary to make the statements therein
not misleading, provided that this agreement
to indemnify shall not apply as to any
Indemnified Party if such statement or
omission or such alleged statement or
omission was made in reliance upon and in
conformity with information furnished to the
Underwriter or Fund by or on behalf of the
Company for use in the registration
statement, prospectus or SAI for the Fund or
in sales literature (or any amendment or
supplement) or otherwise for use in
connection with the sale of the Contracts or
Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or
representations contained in the
registration statement, prospectus, SAI or
sales literature for the Contracts not
supplied by the Underwriter or persons under
its control) or wrongful conduct of the
[Fund or Underwriter] or persons under their
control, with respect to the sale or
distribution of the Contracts or Fund
shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact
contained in a registration statement,
prospectus, SAI or sales literature covering
the Contracts, or any amendment thereof or
supplement thereto, or the omission or
alleged omission to state therein a material
fact required to be stated therein or
necessary to make the statement or
statements therein not misleading, if such
statement or omission was made in reliance
upon information furnished to the Company by
or on behalf of the Fund or the Underwriter;
or
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(iv) arise as a result of any failure by the Fund
or the Underwriter to provide the services
and furnish the materials under the terms of
this Agreement (including a failure of the
Fund, whether unintentional or in good faith
or otherwise, to comply with the
diversification and other qualification
requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material
breach of any representation and/or warranty
made by the Underwriter in this Agreement or
arise out of or result from any other
material breach of this Agreement by the
Underwriter;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance or such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Account, whichever is applicable.
8.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Party, the Underwriter will be entitled to participate,
at its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Underwriter will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party
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<PAGE>
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.2(d). The Company agrees promptly to notify the
Underwriter of the commencement of any litigation or proceedings against it or
any of its officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
ARTICLE IX. Applicable Law
9.1 This Agreement shall be construed and the
provisions hereof interpreted under and in accordance with the laws of the State
of New York.
9.2 This Agreement shall be subject to the provisions
of the 1933, 1934 and 1940 Acts, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and regulations
as the SEC may grant (including, but not limited to, any Mixed and Shared
Funding Exemptive Order) and the terms hereof shall be interpreted and construed
in accordance therewith. If, in the future, the Mixed and Shared Funding
Exemptive Order should no longer be necessary under applicable law, then Article
VII shall no longer apply.
ARTICLE X. Termination
10.1 This Agreement shall continue in full force and
effect until the first to occur of:
(a) termination by any party, for any reason
with respect to some or all Designated
Portfolios, by 120 days advance written
notice delivered to the other parties; or
(b) termination by the Company by written notice
to the Fund and the Underwriter based upon
the Company's determination that shares of
the Fund are not reasonably available to
meet the requirements of the Contracts; or
(c) termination by the Company by written notice
to the Fund and the Underwriter in the event
any of the Designated Portfolio's shares are
not registered, issued or sold in accordance
with applicable state and/or federal law or
such law precludes the use of such shares as
the underlying investment media of the
Contracts issued or to be issued by the
Company; or
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(d) termination by the Fund or Underwriter in
the event that formal administrative
proceedings are instituted against the
Company by the NASD, the SEC, the Insurance
Commissioner or like official of any state
or any other regulatory body regarding the
Company's duties under this Agreement or
related to the sale of the Contracts, the
operation of any Account, or the purchase of
the Fund's shares; provided, however, that
the Fund or Underwriter determines in its
sole judgment exercised in good faith, that
any such administrative proceedings will
have a material adverse effect upon the
ability of the Company to perform its
obligations under this Agreement; or
(e) termination by the Company in the event that
formal administrative proceedings are
instituted against the Fund or Underwriter
by the NASD, the SEC, or any state
securities or insurance department or any
other regulatory body; provided, however,
that the Company determines in its sole
judgment exercised in good faith, that any
such administrative proceedings will have a
material adverse effect upon the ability of
the Fund or Underwriter to perform its
obligations under this Agreement; or
(f) termination by the Company by written notice
to the Fund and the Underwriter with respect
to any Designated Portfolio in the event
that such Portfolio ceases to qualify as a
Regulated Investment Company under
Subchapter M or fails to comply with the
Section 817(h) diversification requirements
specified in Article VI hereof, or if the
Company reasonably believes that such
Portfolio may fail to so qualify or comply;
or
(g) termination by the Fund or Underwriter by
written notice to the Company in the event
that the Contracts fail to meet the
qualifications specified in Article VI
hereof; or
(h) termination by either the Fund or the
Underwriter by written notice to the
Company, if either one or both of the Fund
or the Underwriter respectively, shall
determine, in their sole judgment exercised
in good faith, that the Company has suffered
a material adverse change in its
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business, operations, financial condition,
or prospects since the date of this
Agreement or is the subject of material
adverse publicity; or
(i) termination by the Company by written notice
to the Fund and the Underwriter, if the
Company shall determine, in its sole
judgment exercised in good faith, that the
Fund, Adviser, or the Underwriter has
suffered a material adverse change in its
business, operations, financial condition or
prospects since the date of this Agreement
or is the subject of material adverse
publicity; or
(j) termination by the Fund or the Underwriter
by written notice to the Company, if the
Company gives the Fund and the Underwriter
the written notice specified in Section
1.7(a)(ii) hereof and at the time such
notice was given there was no notice of
termination outstanding under any other
provision of this Agreement; provided,
however, any termination under this Section
10.1(j) shall be effective forty-five days
after the notice specified in Section
1.7(a)(ii) was given; or
(k) termination by the Company upon any
substitution of the shares of another
investment company or series thereof for
shares of a Designated Portfolio of the Fund
in accordance with the terms of the
Contracts, provided that the Company has
given at least 45 days prior written notice
to the Fund and Underwriter of the date of
substitution; or
(l) termination by any party in the event that
the Fund's Board of Directors determines
that a material irreconcilable conflict
exists as provided in Article VII.
10.2 Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall, at the option of the Company,
continue to make available additional shares of the Fund pursuant to the terms
and conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"), unless the Underwriter elects to compel a substitution of other
securities for the shares of the Designated Portfolios. Specifically, the owners
of the Existing Contracts may be permitted to reallocate investments in the
Fund, redeem investments in the Fund and/or invest in the Fund upon the making
of additional purchase payments under the Existing Contracts (subject to any
such election
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by the Underwriter). The parties agree that this Section 10.2 shall not apply to
any terminations under Article VII and the effect of such Article VII
terminations shall be governed by Article VII of this Agreement. The parties
further agree that this Section 10.2 shall not apply to any terminations under
Section 10.1(g) of this Agreement.
10.3 The Company shall not redeem Fund shares
attributable to the Contracts (as opposed to Fund shares attributable to the
Company's assets held in the Account) except (i) as necessary to implement
Contract owner initiated or approved transactions, (ii) as required by state
and/or federal laws or regulations or judicial or other legal precedent of
general application (hereinafter referred to as a "Legally Required
Redemption"), (iii) as permitted by an order of the SEC pursuant to Section
26(b) of the 1940 Act, but only if a substitution of other securities for the
shares of the Designated Portfolios is consistent with the terms of the
Contracts, or (iv) as permitted under the terms of the Contract. Upon request,
the Company will promptly furnish to the Fund and the Underwriter reasonable
assurance that any redemption pursuant to clause (ii) above is a Legally
Required Redemption. Furthermore, except in cases where permitted under the
terms of the Contacts, the Company shall not prevent Contract owners from
allocating payments to a Portfolio that was otherwise available under the
Contracts without first giving the Fund or the Underwriter 45 days notice of its
intention to do so.
10.4 Notwithstanding any termination of this
Agreement, each party's obligation under Article VIII to indemnify the other
parties shall survive.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by
registered or certified mail, postage prepaid, return receipt requested, or by
nationally recognized overnight courier, charges prepaid, with evidence of
delivery, to the other party at the address of such party set forth below or at
such other address as such party may from time to time specify in writing to the
other parties, and such notice shall be effective upon delivery.
If to the Fund:
SoGen Variable Funds, Inc.
1221 Avenue of the Americas
New York, NY 10020
Attention: Jean-Marie Eveillard
If to the Company:
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<PAGE>
If to Underwriter:
Societe Generale Securities Corporation
1221 Avenue of the Americas
New York, NY 10020
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look
solely to the property of the Fund, and in the case of a series company, the
respective Designated Portfolios listed on Schedule A hereto as though each such
Designated Portfolio had separately contracted with the Company and the
Underwriter for the enforcement of any claims against the Fund. The parties
agree that neither the Board, officers, agents or shareholders of the Fund
assume any personal liability or responsibility for obligations entered into by
or on behalf of the Fund.
12.2 Subject to the requirements of legal process and
regulatory authority, each party hereto shall treat as confidential the names
and addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except as
permitted by this Agreement, shall not disclose, disseminate or utilize such
names and addresses and other confidential information without the express
written consent of the affected party until such time as such information has
come into the public domain.
12.3 The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in
two or more counterparts, each of which taken together shall constitute one and
the same instrument.
12.5 If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of the Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each
other party and all appropriate governmental authorities (including without
limitation the SEC, the NASD, and state insurance regulators) and shall permit
such authorities reasonable access to its books and records
-24-
<PAGE>
in connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby. Notwithstanding the generality of the
foregoing, each party hereto further agrees to furnish the [insert state]
Insurance Commissioner with any information or reports in connection with
services provided under this Agreement which such Commissioner may request in
order to ascertain whether the variable annuity operations of the Company are
being conducted in a manner consistent with the [insert state] variable annuity
laws and regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained
in this Agreement are cumulative and are in addition to any and all rights,
remedies, and obligations, at law or in equity, which the parties hereto are
entitled to under state and federal laws.
12.8 This Agreement or any of the rights and
obligations hereunder may not be assigned by any party without the prior written
consent of all parties hereto.
12.9 The Company shall furnish, or shall cause to be
furnished, to the Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared
under statutory accounting principles) and
annual report (prepared under generally
accepted accounting principles) filed with
any state or federal regulatory body or
otherwise made available to the public, as
soon as practicable and in any event within
90 days after the end of each fiscal year;
and
(b) any registration statement (without
exhibits) and financial reports of the
Company filed with the Securities and
Exchange Commission or any state insurance
regulatory, as soon as practicable after the
filing thereof.
-25-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
COMPANY:
By its authorized officer
By:________________________________________
Title:_____________________________________
Date:______________________________________
FUND: SOGEN VARIABLE FUNDS, INC.
By its authorized officer
By:________________________________________
Title:_____________________________________
Date:______________________________________
UNDERWRITER: SOCIETE GENERALE SECURITIES CORPORATION
By its authorized officer
By:________________________________________
Title:_____________________________________
Date:______________________________________
-26-
<PAGE>
SCHEDULE A
Segregated Asset Accounts of the Company
Contracts to be Issued by the Company
Designated Portfolio Shares to be Purchased
SoGen Overseas Variable Fund
Other Funding Vehicles Available Under the Contracts
-27-
<PAGE>
<PAGE>
EXHIBIT 10
Dechert Price & Rhoads
477 Madison Avenue
New York, New York 10022-5891
Tel.: (212) 326-3500
Fax: (212) 308-2041
August 16, 1996
SoGen Variable Funds, Inc.
1221 Avenue of the Americas
New York, New York 10020
Dear Sirs:
We have acted as counsel for SoGen Variable Funds, Inc., a Maryland
corporation (the "Company"), in connection with the organization of the Company,
the registration of the Company under the Investment Company Act of 1940 and the
registration under the Securities Act of 1933 of an indefinite number of shares
of common stock, $.001 par value each, of the Company.
As counsel for the Company, we have participated in the preparation of the
registration statement on Form N-1A relating to such shares and have examined
and relied upon such records of the Company and such other documents we have
deemed to be necessary to render the opinion expressed herein. Based on such
examination, we are of the opinion that:
(i) The Company is a corporation duly organized and existing under the
laws of the State of Maryland;
(ii) The Company is authorized to issue one billion (1,000,000,000) shares
of common stock, par value $.001 per share, of which 150,000,000
shares have been initially allocated to SoGen Overseas Variable Fund,
a series of the Company's common stock, and that such shares have
been duly and validly authorized by all requisite action of the
Directors of the Company, and no action of the shareholders is
required in such connection; and
(iii) Assuming that the Company or its agent receives consideration for
such shares in accordance with the terms of the prospectus forming a
part of the Company's registration statement and the provisions of
its Articles of Incorporation, the shares will be legally and validly
issued and will be fully paid and non-assessable by the Company.
We hereby consent to the use of this opinion as an exhibit to the Company's
registration Statement on Form N-1A filed with the Securities and Exchange
Commission (File No. 33-96668) for the registration under the Securities Act of
1933 of an indefinite number of shares of the Company, and to the use of our
name in the prospectus and statement of additional information contained
therein, any any amendments thereto. In giving such consent, we do not hereby
admit that we are within the category of persons whose consent is required by
Section 7 of the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
Very truly yours,
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Trustees of
SoGen Variable Funds, Inc.:
We consent to the use of our report dated August 12, 1996 included herein
and to the reference to our firm under the heading "Independent Auditors" in the
Statement of Additional Information.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
New York, New York
August 16, 1996
Exhibit 13
<PAGE>
(Societe Generale logo appears here)
SOCIETE GENERALE ASSET MANAGEMENT CORP.
August 8, 1996
SoGen Variable Funds, Inc.
1221 Avenue of the Americas
New York, NY 10020
Gentlemen:
In connection with our purchase of 10,000 shares of beneficial interest
of SoGen Variable Funds, Inc. for cash consideration of one hundred
thousand dollars ($100,000), this will confirm that we are buying such
shares for investment for our own account only, and not with a view to
reselling or otherwise distributing them.
Very truly yours,
Societe Generale Asset Management Corp.
By: /s/ PHILIP J. BAFUNDO
Philip J. Bafundo
Secretary and Treasurer
<PAGE>
Exhibit 19
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of
SOGEN VARIABLE FUNDS, INC., a corporation organized under the laws of the state
of Maryland (the "Company") does hereby constitute and appoint JEAN-MARIE
EVEILLARD, PHILIP J. BAFUNDO AND ELIZABETH TOBIN, and each of them individually,
his true and lawful attorneys and agents to take any and all action and execute
any and all instruments which said attorneys and agents may deem necessary and
advisable
(i) to enable the Company to comply with the
Securities Act of 1933, as amended (the "Securities Act"), and any rules,
regulations, orders or other requirements of the Securities and Exchange
Commission thereunder, in connection with the registration under the Securities
Act of shares of capital stock of the Company and
(ii) in connection with the registration of the Fund
under the Investment Company Act of 1940, as amended (the "Investment Company
Act"),
including specifically, but not without limitation of the foregoing, to sign his
name to any amendment or supplement (including post-effective amendments) to the
registration statement or statements filed with the Securities and Exchange
Commission under the Securities Act and the Investment Company Act, and to
execute any instruments or documents filed or to be filed as a part of or in
connection with such registration statement or statements; and the undersigned
hereby ratifies and confirms all that said attorneys and agents shall do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of the date set forth below.
/s/ PHILIPPE COLLAS
Philippe Collas
Date: April 29, 1996
Attest:
/s/ Philip J. Bafundo
Philip J. Bafundo
Secretary
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of
SOGEN VARIABLE FUNDS, INC., a corporation organized under the laws of the state
of Maryland (the "Company") does hereby constitute and appoint JEAN-MARIE
EVEILLARD, PHILIP J. BAFUNDO AND ELIZABETH TOBIN, and each of them individually,
his true and lawful attorneys and agents to take any and all action and execute
any and all instruments which said attorneys and agents may deem necessary and
advisable
(i) to enable the Company to comply with the
Securities Act of 1933, as amended (the "Securities Act"), and
any rules, regulations, orders or other requirements of the
Securities and Exchange Commission thereunder, in connection
with the registration under the Securities Act of shares of
capital stock of the Company and
(ii) in connection with the registration of the
Company under the Investment Company Act of 1940, as amended
(the "Investment Company Act"),
including specifically, but not without limitation of the foregoing, to sign his
name to any amendment or supplement (including post-effective amendments) to the
registration statement or statements filed with the Securities and Exchange
Commission under the Securities Act and the Investment Company Act, and to
execute any instruments or documents filed or to be filed as a part of or in
connection with such registration statement or statements; and the undersigned
hereby ratifies and confirms all that said attorneys and agents shall do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of the date set forth below.
/s/ FRED MEYER
Fred Meyer
Date: April 29, 1996
Attest:
/s/ Philip J. Bafundo
Philip J. Bafundo
Secretary
