<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1998
REGISTRATION NO. 33-96668
811-09092
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
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REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 [_]
PRE-EFFECTIVE AMENDMENT NO.
[X]
POST-EFFECTIVE AMENDMENT NO. 2
AND/OR
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
[_]
[X]
AMENDMENT NO. 4
(Check Appropriate box or boxes.)
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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: (212) 278-5800
----------------
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)
[X]On April 30, 1998 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
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
[_]this post-effective amendment designates a new effective date for a pre-
viously filed post-effective amendment.
Title of Securities Being Registered SoGen Overseas Variable Fund--Common
Stock
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<PAGE>
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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<C> <S> <C>
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Not Applicable
Item 3. Condensed Financial Information Financial Highlights; Performance and
Yield Information
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 Dividends, Distributions and Taxes;
Securities Capital Stock; Inquiries
Item 7. Purchase of Securities Being Management of the Company; How to
Offered Purchase Shares; Net Asset Value
Item 8. Redemption or Repurchase How to Redeem Shares
Item 9. Legal Proceedings Not Applicable
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FORM N-1A ITEM NO. STATEMENT OF ADDITIONAL INFORMATION CAPTION
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PART B
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 Investment Objective, Policies and
Policies Restrictions
Item 14. Management of the Registrant Management of the Company
Item 15. Control Persons and Principal Management of the Company
Holders of Securities
Item 16. Investment Adviser and Other Investment Adviser and Other Services;
Services Distribution of the Fund's Shares;
Custody of Portfolio; Independent
Auditors
Item 17. Brokerage Allocation Brokerage Allocation
Item 18. Capital Stock and Other Not Applicable
Securities
Item 19. Purchase, Redemption and Pricing Distribution of the Fund's Shares; How
of Securities Being Offered to Purchase 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, Policies and
Restrictions
Item 23. Financial Statements Financial Statements
</TABLE>
<PAGE>
SOGEN OVERSEAS VARIABLE FUND
----------------------------------
LOGO
----------------------------------
Prospectus
April 30, 1998
<PAGE>
PROSPECTUS
SOGEN OVERSEAS VARIABLE FUND
--------------------------------
LOGO
1221 AVENUE OF THE AMERICAS, NEW YORK, NY 10020
(212) 278-5800
----------------------
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 "Compa-
ny") that offers its shares only to separate accounts of U.S. insurance compa-
nies to serve as an investment medium for variable life insurance policies and
variable annuity contracts issued by the insurance companies ("Variable Con-
tracts") and other qualified buyers. The Company currently offers one portfo-
lio; additional portfolios may be created by the directors from time to time,
and the directors may discontinue the offering of shares of any existing port-
folio at any time.
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR EN-
DORSED BY ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT IN-
SURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
This Prospectus sets forth concisely information about the Fund that an in-
vestor ought to know before investing. This Prospectus should be read in con-
junction 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
April 30, 1998, 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
(212) 278-5800.
----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-
TIES 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. ("SGAM Corp."), the Fund's invest-
ment adviser, is also the investment adviser to SoGen International Fund, Inc.
and SoGen Funds, Inc., each of which is a registered open-end management in-
vestment company.
----------------------
APRIL 30, 1998
<PAGE>
TABLE OF CONTENTS
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PAGE
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<S> <C>
Financial Highlights....................................................... 3
Organization of the Company................................................ 4
Investment Objective and Policies.......................................... 4
Investment Restrictions.................................................... 5
Implementation of Policies and Risks....................................... 5
Management of the Company.................................................. 10
Capital Stock.............................................................. 12
Dividends, Distributions and Taxes......................................... 13
Performance Information.................................................... 13
Net Asset Value............................................................ 14
How to Purchase Shares..................................................... 14
How to Redeem Shares....................................................... 15
Inquiries.................................................................. 15
</TABLE>
----------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATION NOT CONTAINED IN THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL IN-
FORMATION 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.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The following information, which relates to the period from February 3, 1997
(commencement of operations) to December 31, 1997, has been audited by KPMG
Peat Marwick LLP, certified public accountants, whose report thereon is incor-
porated by reference in the Statement of Additional Information. Further in-
formation concerning investment performance is contained in the Fund's 1997
Annual Report to Shareholders, which is available without charge.
FINANCIAL HIGHLIGHTS
FOR THE PERIOD FEBRUARY 3, 1997 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
1997
<TABLE>
<S> <C>
SELECTED PER SHARE DATA
Net asset value, February 3, 1997.................................... $ 10.00
-------
Loss from investment operations:
Net investment loss................................................. (0.01)
Net realized and unrealized losses on investments................... (0.22)
-------
Total loss from investment operations.............................. (0.23)
-------
Net asset value, December 31, 1997................................... $ 9.77
=======
TOTAL RETURN++....................................................... (2.30)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000's).................................... $ 1,391
Ratio of operating expenses to average net assets.................... 2.00 %*+
Ratio of net investment loss to average net assets................... (0.14)%*+
Portfolio turnover rate.............................................. 8.88 %
Average commission rate paido........................................ $0.0098
</TABLE>
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++ Total return for the period ended December 31, 1997 is not annualized.
* Annualized.
+ The annualized ratios of operating expenses to average net assets and net
investment loss to average net assets for the period ended December 31,
1997 would have been 16.07% and (14.20%), respectively, without the effect
of the earnings credits, and the investment advisory fee waiver and expense
reimbursement provided by SGAM Corp. Effective April 30, 1998, SGAM Corp.
has agreed to voluntarily limit the Fund's total expenses (excluding inter-
est, taxes, brokerage and extraordinary expenses) to an annual rate of
1.50% of the Fund's average net assets until April 30, 1999. After April
30, 1999, the expense limitation may be terminated or revised at any time.
o Average commission rate paid is expressed on a per share basis. Not all
commissions are computed on a per share basis; therefore, commissions ex-
pressed as a percentage of transactions may be higher.
3
<PAGE>
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 di-
versified portfolio, SoGen Overseas Variable Fund (the "Fund").
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks long-term growth of capital by investing primarily in securi-
ties 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, Ja-
pan, Canada and the United Kingdom) and in emerging markets (Mexico and Indo-
nesia, 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 pre-
ferred 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 represent-
ing 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 secu-
rities. Such debt securities may include lower-rated securities, commonly re-
ferred 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.
4
<PAGE>
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;
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. Govern-
ment 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 cer-
tain restrictions described herein), the Fund may invest in some or all of the
following securities and employ some or all of the following investment tech-
niques, 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 Informa-
tion.
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. SGAM 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. SGAM 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 SGAM Corp.
FOREIGN SECURITIES.
Under normal conditions, the Fund invests in a diversified portfolio of for-
eign 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.
5
<PAGE>
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 for-
ward 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 ex-
change between the U.S. dollar and foreign currencies; changes in exchange
control regulations or currency restrictions that would prevent cash from be-
ing brought back to the United States; less public information with respect to
issuers of securities; less governmental supervision of stock exchanges, secu-
rities brokers and issuers of securities; different accounting, auditing and
financial reporting standards; different settlement periods and trading prac-
tices; less liquidity and frequently greater price volatility in foreign mar-
kets 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, expropria-
tion 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 coun-
tries 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 for-
eign security investments. If the Fund has less than 20% of its assets in for-
eign 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 for-
eign 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 allo-
cated to at least three different countries. Foreign investments must be allo-
cated to at least four different countries if at least 60% of the Fund's as-
sets 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
6
<PAGE>
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 addi-
tion, the Fund may have no more than 20% of its net assets invested in securi-
ties 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.
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 ex-
change 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 ex-
change market or through a forward currency exchange contract ("forward con-
tract"). 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 cur-
rency movements, the use of such hedges may reduce or eliminate the poten-
tially 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 securi-
ties 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 in-
terest 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 securi-
ties 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 character-
istics. Debt securities that are rated below investment grade or, if unrated,
are considered by SGAM Corp. to be equivalent to below investment grade (often
referred to as "junk bonds"), on balance, are considered predominantly specu-
lative with respect to the issuer's capacity to pay interest and repay princi-
pal according to the terms of the obligation and, therefore, carry greater in-
vestment 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.)
7
<PAGE>
OTHER INVESTMENT COMPANIES.
Certain markets are closed in whole or in part to equity investments by for-
eigners. 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 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. These restrictions do not apply to certain investment companies
known as private investment companies and "qualified purchaser" investment
companies.
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 in-
tend to purchase such securities for speculative purposes and will make com-
mitments to purchase securities on a when-issued or delayed delivery basis
with the intention of actually acquiring the securities. However, the Fund re-
serves 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 securi-
ties have different characteristics and risks than other types of securities
in which the Fund may invest. For example, the coupon, dividend and/or redemp-
tion amounts may be increased or decreased depending on the change in the
value of an underlying instrument. See "Structured Securities" in the State-
ment 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, SGAM
8
<PAGE>
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, multina-
tional currency units) and/or 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 denomi-
nated 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. dol-
lars, 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, sub-
ject to the limitations for illiquid investments stated above, may purchase
securities that have been privately placed but that are not eligible for pur-
chase 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 es-
tablished by the Board of Directors. See "Illiquid Securities" in the State-
ment of Additional Information.
EXPENSES.
The cost of investing in foreign securities is higher than the cost of in-
vesting in U.S. securities. Investing in the Fund is an efficient way for an
individual to participate in foreign markets, but its expenses, including ad-
visory 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 invest-
ment objective.
9
<PAGE>
MANAGEMENT OF THE COMPANY
BOARD OF DIRECTORS.
The business and affairs of the Company are managed under the direction of
its Board of Directors.
INVESTMENT ADVISER.
The Company's investment portfolio is managed by SGAM Corp., 1221 Avenue of
the Americas, New York, New York 10020. SGAM Corp. is a registered investment
adviser which is indirectly owned by Societe Generale, one of France's largest
banks. SGAM Corp. also serves as investment adviser to SoGen International
Fund, Inc. and SoGen Funds, Inc., each of which is a registered open-end man-
agement 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 Presi-
dent or Executive Vice President of SGAM Corp. since prior to 1993.
SGAM Corp. furnishes investment advice to the Fund consistent with the
Fund's stated investment objective and policies. SGAM 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 SGAM Corp. a monthly fee at the annual
rate of 0.75% of the average daily net assets of the Fund.
SGAM Corp. may waive all or a portion of its fee. 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.
YEAR 2000
Like other investment companies, financial and business organizations and
individuals around the world, the Fund could be adversely affected if the com-
puter systems used by SGAM Corp. or other service providers to the Fund do not
properly process and calculate date-related information and data from and af-
ter January 1, 2000. This is commonly known as the "Year 2000 Problem." SGAM
Corp. is taking steps that it believes are reasonably designed to address the
Year 2000 Problem with respect to computer systems that it uses and is taking
steps to obtain reasonable assurances that comparable steps are being taken by
the Fund's other service providers. At this time, however, there can be no as-
surance that these steps will be sufficient to avoid any adverse impact to the
Fund.
The Year 2000 Problem is expected to impact corporations, which may include
issuers of portfolio securities held by the Fund, to varying degrees based
upon various factors, including, but not limited to, the corporation's indus-
try sector and degree of technological sophistication. The Fund is unable to
predict what impact, if any, the Year 2000 Problem will have on issuers of the
portfolio securities held by the Fund.
10
<PAGE>
EXPENSES OF THE COMPANY.
The Company bears all costs of its operations. These costs may include ex-
penses for custody, portfolio accounting, printing, legal and audit fees, fees
payable pursuant to the Fund's Distribution Plan and Agreement (see "Distribu-
tor; Rule 12b-1 Plan", below), fees and expenses of the independent directors,
organizational expenses and other expenses of its operations, and may, if ap-
plicable, include extraordinary expenses such as expenses for special consul-
tants or legal expenses. Company expenses directly attributable to a series of
the Company's common stock are charged to that series; other expenses are al-
located proportionately among all the series in relation to the net assets of
each series. Currently, the Company has shares of one series (the Fund) out-
standing.
PORTFOLIO TRANSACTIONS.
SGAM Corp. selects the brokers and dealers which execute orders for the pur-
chase and sale of the Fund's portfolio securities. SGAM 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 num-
ber of largely judgmental considerations. Consistent with the foregoing, port-
folio 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, SGAM Corp. may consider sales of the Fund's
shares as a factor in the selection of brokers to execute portfolio transac-
tions.
DISTRIBUTOR; RULE 12B-1 PLAN.
The Fund's shares are distributed through Societe Generale Securities Corpo-
ration ("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 ex-
ceed 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 remit-
tance to an insurance company that is the issuer of a Variable Contract in-
vested in shares of the Fund in order to pay or reimburse such insurance com-
pany 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 in-
curred 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
11
<PAGE>
information, any supplements thereto and shareholder reports for existing and
pro- spective 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 includ-
ing materials intended for use within the insurance company, or for broker-
dealer only use or retail use; (c) holding seminars and sales meetings de-
signed to promote the distribution of Fund shares; (d) obtaining information
and providing explanations to Variable Contract owners regarding Fund invest-
ment objectives and policies and other information about the Fund, including
its performance; (e) training sales personnel regarding the Fund; (f) compen-
sating 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 attrib-
utable 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.
As agent, SGSC currently offers shares of the Fund continuously to the sepa-
rate 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 op-
tion of shareholders. Shares have no preemptive or conversion rights and are
freely transferable. The Board of Directors is authorized to classify, reclas-
sify 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 is-
suance of shares of another series or class would be governed by the Invest-
ment 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 dol-
lar of net asset value and a proportionate fraction of a vote for each frac-
tion 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 invest-
ment medium for Variable Contracts. Generally, shares of each series vote to-
gether 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 dif-
ferent way, in which case the shareholders of each series vote separately by
class. If the directors determine that a matter does not affect
12
<PAGE>
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. Cur-
rently, 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 dis-
tributions on a per share basis. On the 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, diver-
sification 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 Sec-
tion 817(h) of the Code that apply to mutual funds underlying Variable Con-
tracts. 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 repre-
sented 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 pro-
spectus 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 litera-
ture and advertisements the Fund's cumulative total return and its average an-
nual total return. Total return for the Fund will not be advertised or in-
cluded in sales literature unless
13
<PAGE>
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 hy-
pothetical annually compounded return that would have produced the same cumu-
lative total return if the Fund's performance had been constant over the en-
tire 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 re-
sults 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.
From time to time the Fund may discuss in sales literature and advertise-
ments its performance ratings or other information as published by recognized
mutual fund statistical services, such as Morningstar, Inc. or Lipper Analyti-
cal 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 cur-
rent 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 in-
surance companies for the purpose of serving as an investment medium for Vari-
able 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 insur-
ance company whose separate account invests in the Fund. For information on
how to purchase shares, please refer to the prospectus of the pertinent sepa-
rate account.
14
<PAGE>
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 par-
ticipating 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 ma-
terial 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 insur-
ance company separate accounts might withdraw their investment in the Fund.
This might force the Fund to sell securities at disadvantageous prices.
HOW TO REDEEM SHARES
Shares of the Fund may be redeemed on any business day. Redemptions are ef-
fected 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 pro-
spectus 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 re-
demption 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 Ex-
change 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 con-
sult the prospectus for the pertinent separate account, or contact your insur-
ance company. To request additional literature about the Fund, please call
(212) 278-5800.
15
<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
(212) 278-5800
LEGAL COUNSEL
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, NY 10112
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
345 Park Avenue
New York, NY 10154
DOMESTIC CUSTODIAN
Investors Fiduciary Trust Company
801 Pennsylvania
Kansas City, MO 64105
GLOBAL CUSTODIAN
The Chase Manhattan Bank
4 Chase MetroTech Center
Brooklyn, NY 11245
<PAGE>
SGC1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
SOGEN OVERSEAS VARIABLE FUND
-------------------------
LOGO
1221 AVENUE OF THE AMERICAS
NEW YORK, NY 10020
(212) 278-5800
----------------
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 ad-
dition to the information contained in the Prospectus of the Fund dated April
30, 1998. This Statement of Additional Information is not a prospectus. It re-
lates 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 (212)
278-5800.
----------------
April 30, 1998
<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 4
INVESTMENT OBJECTIVE, POLICIES AND
RESTRICTIONS .................................. 3 4
MANAGEMENT OF THE COMPANY ...................... 10 10
INVESTMENT ADVISER AND OTHER SERVICES .......... 12 10
DISTRIBUTION OF THE FUND'S SHARES .............. 12 11
COMPUTATION OF NET ASSET VALUE.................. 14 14
HOW TO PURCHASE SHARES.......................... 14 14
TAX STATUS...................................... 14 13
BROKERAGE ALLOCATION............................ 17 11
CUSTODY OF PORTFOLIO............................ 18 --
INDEPENDENT AUDITORS............................ 18 --
FINANCIAL STATEMENTS............................ 18 --
APPENDIX........................................ A-1 --
</TABLE>
2
<PAGE>
ORGANIZATION OF THE FUND
The Fund is a separate portfolio of the Company, which is an open-end man-
agement investment company incorporated under the laws of Maryland in Septem-
ber 1995. The Company's investment adviser is Societe Generale Asset Manage-
ment Corp. (SGAM Corp."), a registered investment adviser. The Company's dis-
tributor 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 incorpora-
tion, 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 require-
ment 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 share-
holders 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 communi-
cate 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 compa-
nies, 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 securi-
ties 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 for-
eign 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 typi-
cally issued by an American bank or trust company evidencing ownership of the
underlying securities. EDRs are European receipts evidencing a similar ar-
rangement. GDRs are global offerings where two securities are issued simulta-
neously 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 Eu-
ropean 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 ex-
penses of the depository and agrees to provide its regular shareholder commu-
nications 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 under-
lying 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
3
<PAGE>
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 the
dollar rises in value relative to the yen, the dollar value of the yen-denomi-
nated 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 gener-
ally denominated in foreign currencies, and utilization of forward foreign
currency exchange contracts involve certain risks and opportunities not typi-
cally associated with investing in U.S. securities. These considerations in-
clude: fluctuations in the rates of exchange between the U.S. dollar and for-
eign currencies; possible imposition of exchange control regulations or cur-
rency 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 is-
suers 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 ar-
rangements.
Although the Fund seeks to invest in companies and governments of countries
having stable political environments, there is the possibility of expropria-
tion or confiscatory taxation, seizure or nationalization of foreign bank de-
posits or other assets, establishment of exchange controls, the adoption of
foreign government restrictions, or other adverse political, social or diplo-
matic 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 con-
ducted 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 for-
ward 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 re-
newed.
Currency exchange transactions may involve currencies of the different coun-
tries in which the Fund may invest, and serve as hedges against possible vari-
ations 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. Trans-
action hedging is the purchase or sale of a Forward
4
<PAGE>
Contract with respect to specific payables or receivables of the Fund accruing
in connection with the purchase or sale 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 denomi-
nated in that currency.
If the Fund enters into a Forward Contract, the custodian bank will segre-
gate 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 secu-
rity and either acquire the currency on the spot market or terminate its con-
tractual obligation to deliver the currency by purchasing an offsetting con-
tract with the same currency trader obligating it to purchase on the same ma-
turity 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 mar-
ket (and bear the expense of such purchase) if the market value of the secu-
rity 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 cur-
rency received upon the sale of the portfolio security if its market value ex-
ceeds 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 for-
ward 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 oppor-
tunity 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 cur-
rency 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, includ-
ing 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 securi-
ties 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 charac-
teristics. 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 in-
volve greater volatility of price and risk of principal and income, including
the possibility of default by, or bankruptcy of, the issuers of the securi-
ties. In addition, the markets in which lower-rated and unrated debt securi-
ties 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
5
<PAGE>
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 lower-rated debt securities, be more dependent upon
such creditworthiness analyses than would be the case if the Fund were invest-
ing in higher rated securities.
Lower-rated debt securities may be more susceptible to real or perceived ad-
verse economic and competitive industry conditions than investment grade secu-
rities. 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 be-
cause 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 Informa-
tion.
BANK OBLIGATIONS. The Fund may invest in bank obligations, which may include
bank certificates of deposit, time deposits or bankers' acceptances. Certifi-
cates 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 ex-
change, normally drawn by an importer or exporter to pay for specific merchan-
dise, which are "accepted" by a bank, meaning in effect that the bank uncondi-
tionally agrees to pay the face value of the instrument on maturity. Invest-
ments in these instruments are limited to obligations of domestic banks (in-
cluding 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 in-
terest 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 secu-
rities, 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 segre-
gated 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 bor-
rowing by the Fund, may increase net asset value fluctuation.
STRUCTURED SECURITIES. The Fund may invest in structured notes and/or pre-
ferred stock, the value of which is linked to currencies, interest rates,
other commodities, indices or other financial indicators. Structured securi-
ties 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 in-
strument 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
6
<PAGE>
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. Re-
stricted 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 as-
sets, including restricted securities, the Fund will take appropriate steps to
protect liquidity.
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. SGAM 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 in-
vesting in illiquid securities. A determination as to whether a Rule 144A se-
curity is liquid or not is a question of fact. In making this determination,
SGAM Corp. will consider the trading markets for the specific security, taking
into account the unregistered nature of a Rule 144A security. In addition,
SGAM Corp. could consider (1) the frequency of trades and quotes, (2) the num-
ber 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 secu-
rities would be reviewed to determine what steps, if any, are required to as-
sure that the Fund does not invest more than the maximum percentage of its as-
sets in illiquid securities. Investing in Rule 144A securities could have the
effect of increasing the amount of the Fund's assets invested in illiquid se-
curities if qualified institutional buyers are unwilling to purchase such se-
curities.
CHANGE OF OBJECTIVE. The investment objective of the Fund is not a fundamen-
tal 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 govern-
ment of the United States, or any of its agencies or instrumentalities,
or acquire securities of any one issuer which, at the time of invest-
ment, represent more than 10% of the voting securities of the issuer;
2. Borrow money except that in exceptional circumstances the Fund may bor-
row 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 se-
curities of companies in any one industry other than U.S. Government Se-
curities;
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 pur-
chase) in parts of issues of bonds, debentures or other obligations of a
type privately placed with financial institutions or (b) lending portfo-
lio 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 re-
sale, 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;
- --------
* The Fund has no present intention of lending its portfolio securities.
7
<PAGE>
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 In-
vestment 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 addition, the Fund is
subject to a number of restrictions that may be changed by the Board of Direc-
tors 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 with-
out value for purposes of this restriction;
d. Pledge, mortgage or hypothecate its assets, except as may be necessary
in connection with permitted borrowings or in connection with short
sales;
e. 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
f. Purchase or sell put and call options on securities or on futures con-
tracts.
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 capi-
tal 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 com-
pany 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 ex-
pressed in terms of the average annual compounded rates of return of a hypo-
thetical 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(1+T)n=ERV
(where P = a hypothetical initial payment of $1000, T = the average annual re-
turn, n = the number of years, and ERV = the ending redeemable value of a hy-
pothetical $1000 payment made at the beginning of the period). This calcula-
tion assumes deduction of a proportional share of Fund expenses on an annual
basis and assumes reinvestment of all income dividends and capital gains dis-
tributions during the period. Under the assumptions utilized in the preceding
calculation, an investment in the Fund during the period from February 3, 1997
(commencement of operations) to December 31, 1997 would have decreased at the
rate of 2.30%.
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 publica-
tions 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 ac-
companied 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.
8
<PAGE>
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 (exclud-
ing 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 (excluding short-term U.S. government obligations and
short-term investments) owned by the Fund during the particular fiscal year.
The Fund's portfolio turnover rate for the period of February 3, 1997 (com-
mencement of operations) to December 31, 1997 was 8.88%. The rate of portfolio
turnover is not a limiting factor when management deems portfolio changes ap-
propriate to achieve the Fund's stated objective.
9
<PAGE>
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 SGAM
Corp., SGSC or Societe Generale, Paris, France, the indirect owner of one hun-
dred percent (100%) of the outstanding voting securities of SGAM 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 SGAM Corp.'s non-voting Series B common stock which represents 19.9% of the
total capital of SGAM 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 Head of Asset Management at
17, cours Valmy Board and Director Societe Generale since September
92972 Paris France 1995. Head of Human Resource
Management at Societe Generale
from prior to 1993.
Jean-Marie Eveillard*(1) President and Director and President or
1221 Avenue of the Director Executive Vice President of SGAM
Americas Corp. from prior to 1993.
New York, NY 10020
Fred J. Meyer(2) Director Chief Financial Officer of
437 Madison Avenue Omnicom Group Inc. from prior to
New York, NY 10022 1993. Director of Novartis
Corporation, and Zurich-American
Insurance Cos.
Dominique Raillard(2) Director President of Act 2 International
15, boulevard Delessert (consulting) since July 1995.
75016 Paris France Group Executive Vice President
of Promodes (consumer
products)--U.S. Companies
Division from prior to 1993 to
1995.
Nathan Snyder(1)(2) Director Independent Consultant, from
163 Parish Rd. S. prior to 1993.
New Canaan, CT 06840
Philip J. Bafundo* Vice President, Secretary and Treasurer, SGAM
1221 Avenue of the Secretary and Corp. from prior to 1993.
Americas Treasurer Certified Public Accountant (New
New York, NY 10020 York).
Ignatius Chithelen* Vice President Securities Analyst, SGAM Corp.
1221 Avenue of the since October 1993. Private
Americas investor from Prior to 1993.
New York, NY 10020
Sean J. McKeown* Vice President Operations Manager, SGAM Corp.
1221 Avenue of the since June 1997. Vice President,
Americas Citibank Investment Products &
New York, NY10020 Distribution from October 1993
to June 1997. Vice President,
Citicorp Investment Services
from prior to October 1993.
Catherine A. Shaffer* Vice President First Vice President, SGSC from
1221 Avenue of the prior to 1993.
Americas
New York, NY 10020
Edwin S. Olsen* Vice President Vice President, SGSC from prior
1221 Avenue of the to 1993.
Americas
New York, NY 10020
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE COMPANY DURING PAST FIVE (5) YEARS
- ---------------- ---------------- --------------------------
<S> <C> <C>
Elizabeth Tobin* Vice President Associate Portfolio Manager from
1221 Avenue of the December 1996, Securities
Americas Analyst, SGAM Corp. from prior
New York, NY 10020 to 1993 to 1996.
Charles de Vaulx* Vice President Associate Portfolio Manager from
1221 Avenue of the December 1996, Securities
Americas Analyst, SGAM Corp. from prior
New York, NY 10020 to 1993 to 1996.
</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 pow-
ers 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
SGAM 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 Direc-
tors and for each meeting of any Committee of the Board that they attend
(other than those held by telephone conference call). Each director is reim-
bursed 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 for the fiscal year ended De-
cember 31, 1997. Officers of the Company and directors who are interested per-
sons 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
FISCAL YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
TOTAL
PENSION OR COMPENSATION
RETIREMENT FROM
BENEFITS ESTIMATED REGISTRANT
AGGREGATE ACCRUED ANNUAL AND FUND
COMPENSATION AS PART OF BENEFITS COMPLEX
FROM FUND UPON PAID TO
NAME OF PERSON, POSITION REGISTRANT# EXPENSES RETIREMENT DIRECTORS
- ------------------------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
Fred J. Meyer*, Director...... $15,000 N/A N/A $41,000(3)
Jean-Marie Eveillard**,
Director and President....... $ -- N/A N/A $ --
Dominique Raillard*,
Director..................... $15,000 N/A N/A $41,000(3)
Nathan Snyder*, Director...... $16,000 N/A N/A $42,000(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 SGAM Corp., the Fund's investment adviser.
# Represents compensation expense incurred from September 1, 1995 (date of
incorporation) through December 31, 1997.
As of March 31, 1998, 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.
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 sub-
stantial 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 fed-
eral securities laws of the United States.
11
<PAGE>
INVESTMENT ADVISER AND OTHER SERVICES
As described in the Company's Prospectus, SGAM Corp. is the Company's in-
vestment adviser and, as such, manages the Fund's portfolio. SGAM 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 affili-
ated persons of SGAM Corp., SGSC or Societe Generale. The capacity in which
such persons are affiliated with the Fund and SGAM Corp., SGSC or Societe
Generale is also indicated.
<TABLE>
<CAPTION>
OFFICE HELD OFFICE HELD WITH SGAM CORP.,
NAME WITH THE COMPANY SGSC OR SOCIETE GENERALE
---- ---------------- ----------------------------
<C> <C> <S>
Philippe Collas Chairman of the Board and Head of Asset Management,
Director Societe Generale. Chairman
of the Board and Director,
SGAM Corp.
Jean-Marie Eveillard President and Director President and Director, SGAM
Corp.
Philip J. Bafundo Vice President, Secretary Secretary and Treasurer, SGAM
and Treasurer Corp.
Ignatius Chithelen Vice President Securities Analyst, SGAM
Corp.
Sean J. McKeown Vice President Operations Manager, SGAM
Corp.
Catherine A. Shaffer Vice President First Vice President, SGSC
Edwin S. Olsen Vice President Vice President, SGSC
Elizabeth Tobin Vice President Associate Portfolio Manager,
SGAM Corp.
Charles de Vaulx Vice President Associate Portfolio Manager,
SGAM Corp.
</TABLE>
Under its investment advisory contract with the Company dated as of August
16, 1996, SGAM Corp. furnishes the Company with investment advice consistent
with the Fund's stated investment objective. SGAM 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 SGAM 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 signifi-
cantly in foreign equity securities. SGAM Corp. waived its advisory fee of
$5,742 in its entirety from February 3, 1997 (commencement of operations)
through December 31, 1997.
Under the investment advisory contract between the Company and SGAM Corp.,
the investment adviser is responsible for the management of the Fund's portfo-
lio and constantly reviews its holdings in the light of its own research anal-
yses 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 invest-
ment adviser ceases to act as the Company's investment adviser or if the in-
vestment adviser so requests.
As of the date of this Statement of Additional Information, SGAM Corp. owned
of record and beneficially 10,000 shares of the Fund.
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 ex-
ceed 0.25% of the average daily value of the Fund's net assets. Under the
terms of the
12
<PAGE>
Plan, the Fund is authorized to make payments to SGSC for remittance to an in-
surance 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 distribu-
tion and shareholder servicing-related expenses incurred or paid by such in-
surance 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.
During the period from February 3, 1997 (commencement of operations) through
December 31, 1997, the Fund incurred distribution related fees for expendi-
tures under the Plan in the aggregate amount of $1,914, which constituted
0.25% of the Fund's average daily net assets during the period. Such amount
was paid or is payable to the insurance companies which issued the Variable
Contracts invested in shares of the Fund.
Expenses payable pursuant to this Plan may include, but are not limited to,
expenses relating to the preparation, printing and distribution of prospec-
tuses to existing and prospective Variable Contract owners; development, prep-
aration, 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 con-
tinuance 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 Di-
rectors, 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 secu-
rities (as defined on page 8) of the Fund. No material amendment to the Plan
will, in any event, be effective unless it is approved by a vote of the direc-
tors 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 stock-
holders, 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 be-
half of the Company by SGAM Corp. These organizational expenses will be de-
ferred and amortized by the Company over a period of 60 months.
The investment advisory contract will continue in effect until August 16,
1998, and thereafter from year to year so long as the continuance of each con-
tract 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 8). 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
SGAM Corp., SGSC or the Company. The investment advisory contract will termi-
nate automatically in the event of its assignment (as defined in the Invest-
ment Company Act of 1940) and may be terminated, without penalty, on sixty
days' written notice at the 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).
13
<PAGE>
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, Rev. Dr. Martin Luther King, Jr.
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 lia-
bilities, by the total number of shares outstanding at the time of such compu-
tation.
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 pric-
es. 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 be-
tween 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 invest-
ments 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 perti-
nent separate account.
TAX STATUS
The Fund intends to qualify annually as a "regulated investment company" un-
der the Code. In order to qualify as a regulated investment company for a tax-
able 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 for-
eign currencies and other income derived with respect to the business of in-
vesting in such stock, securities or currencies; (b) 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 invest-
ment 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 (c) 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 capi-
tal gains (the excess of net long-term capital gains over net short-term capi-
tal losses), if any, that it distributes to shareholders. The Fund intends to
distribute to its shareholders (the separate accounts and other qualified in-
vestors), at least annually, substantially all of its investment company tax-
able 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 ordi-
nary 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 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
14
<PAGE>
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 ob-
ligation 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 con-
tract 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 as-
surance 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 se-
curities 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. In addition, if
the Fund invests in certain high yield original issue discount securities is-
sued by corporations, a portion of the original issue discount accruing on any
such obligation may be eligible for the deduction for dividends received by
corporations. In such event, dividends of investment company taxable income
received from the Fund by its corporate shareholders, to the extent attribut-
able to such portion of accrued original issue discount, may be eligible for
this deduction for dividends received by corporations if so designated by the
Fund in a written notice.
Certain foreign currency contracts in which the Fund may invest may be "sec-
tion 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, sec-
tion 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 af-
fect 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 or-
dinary 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, de-
fer losses and/or accelerate the recognition of gain or losses from the af-
fected straddle positions, the amount which may be distributed to sharehold-
ers, 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.
Newly enacted Section 1259 of the Code causes certain hedging transactions
to be treated as "constructive sales." If the Fund enters into hedging trans-
actions which reduce or eliminate its risk of loss with respect to appreciated
financial positions while holding substantially identical property and the new
constructive sales rules apply, the Fund will be treated as if it had sold and
immediately repurchased the property and would be taxed on any gain (but not
loss) from the constructive sale. The character of gain from a constructive
sale would depend
15
<PAGE>
upon the Fund's holding period in the property. Loss from a constructive sale
would be recognized when the property was subsequently disposed of, and its
character would depend on the Fund's holding period and the application of
various loss deferral provisions of the Code.
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 in-
come or ordinary loss. Similarly, on disposition of debt securities denomi-
nated in a foreign currency and on disposition of certain foreign currency
contracts, gains or losses attributable to fluctuations in the value of for-
eign 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 in-
come to be distributed to its shareholders as ordinary income.
The Fund may be subject to foreign withholding taxes on income and gains de-
rived from their investments outside the United States. Such taxes would re-
duce the yield on the Fund's investments. Tax treaties between certain coun-
tries 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 in-
clude 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 de-
duction) 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 de-
scribed 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 ad-
dition, this foreign tax credit limitation must be applied separately to cer-
tain categories of foreign source income, one of which is foreign source "pas-
sive 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 mini-
mum 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 por-
tion 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.
The Fund may invest in shares of foreign corporations that may be classified
under the Code as passive foreign investment companies ("PFICs"). In general,
a foreign corporation is classified as a PFIC if at least one-half of its as-
sets constitute investment-type assets, or 75% or more of its gross income is
investment-type income. If the Fund receives a so-called "excess distribution"
with respect to PFIC stock, the Fund itself may be subject to a tax on a por-
tion of the excess distribution, whether or not the corresponding income is
distributed by the Fund to shareholders. In general, under the PFIC rules, an
excess distribution is treated as having been realized ratably over the period
during which the Fund held the PFIC shares. The Fund will itself be subject to
tax on the portion, if any, of an excess distribution that is so allocated to
prior Fund taxable years and an interest factor will be added to the tax, as
if the tax had been payable in such prior taxable years. Certain distributions
from a PFIC as well as gain from the sale of PFIC shares are treated as excess
distributions. Excess distributions are characterized as ordinary income even
though, absent application of the PFIC rules, certain excess distributions
might have been classified as capital gain.
The Fund may be eligible to elect alternative tax treatment with respect to
PFIC shares. Under an election that currently is available in some circum-
stances, the Fund would be required to include in its gross income its
16
<PAGE>
share of the earnings of a PFIC on a current basis, regardless of whether dis-
tributions were received from the PFIC in a given year. If this election were
made, the special rules, discussed above, relating to the taxation of excess
distributions, would not apply. In addition, another election would involve
marking to market the Fund's PFIC shares at the end of each taxable year, with
the result that unrealized gains would be treated as though they were realized
and reported as ordinary income. Any mark-to-market losses and any loss from
an actual disposition of PFIC shares would be deductible as ordinary losses to
the extent of any net mark-to-market gains included in income in prior years.
BROKERAGE ALLOCATION
SGAM Corp. is responsible for selecting members of securities exchanges,
brokers and dealers (such members, brokers and dealers being hereinafter re-
ferred 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
SGAM Corp. as being able to achieve "best execution" of such orders. "Best ex-
ecution" means prompt and reliable execution at the most favorable securities
price, taking into account the other considerations as hereinafter set forth.
The determination of what may constitute best execution of a securities trans-
action 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 effi-
ciency 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 SGAM Corp. in determining the overall reasona-
bleness of brokerage commissions. While there is no commitment or understand-
ing 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 se-
curities. SGSC may not, acting as principal, sell any security or other prop-
erty 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.
SGAM 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 SGAM 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 SGAM 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 SGAM Corp.'s overall responsibilities with respect to the Fund and the
other accounts as to which it exercises investment discretion. In reaching
such determination, SGAM 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 demon-
strating that such determinations were made in good faith, SGAM 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 pro-
vide lawful and appropriate assistance to SGAM 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 transac-
tions, but there will be taken into account the Fund's policies that (i) ob-
taining a low commission is deemed secondary to obtaining a favorable securi-
ties 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 SGAM Corp. are useful to SGAM Corp. in performing its services
under the investment advisory contract with the Fund. Research services pro-
vided by brokers to SGAM Corp. are considered to be in addition to, and not in
lieu of, services required to be performed by SGAM Corp. under such investment
advisory contract. Research services provided by brokers include written re-
ports, 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.
17
<PAGE>
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, SGAM Corp. may consider sales of
shares of the Fund as a factor in the selection of brokers to execute portfo-
lio transactions.
The Fund has been advised by SGAM 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 SGAM Corp. for its own account
or from any of its officers, directors or employees.
While SGAM Corp. is primarily responsible for the allocation of the Fund's
portfolio transactions to brokers, its policies 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 SGAM Corp. the commissions paid by the Fund and, in
transactions where the Fund pays commissions which are in excess of the com-
missions other brokers would have charged, SGAM Corp.'s determinations that
such higher commissions are reasonable in relation to the value of the broker-
age and research services.
For the period February 3, 1997 (commencement of operations) through Decem-
ber 31, 1997, the Fund paid a total of $3,828 in brokerage commissions, with
respect to portfolio transactions aggregating $867,702. All of which was
placed with brokers or dealers who provide research and investment informa-
tion. Of such amount, $329 in brokerage commissions (8.594% of the aggregate)
with respect to portfolio transactions aggregating $70,482 (8.1228% of the ag-
gregate) was placed with brokers or dealers who are affiliates of the Company.
CUSTODY OF PORTFOLIO
Domestic portfolio securities of the Fund are held pursuant to a custodian
agreement between the Company and Investors Fiduciary Trust Company, 801 Penn-
sylvania, 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. Pursuant to a Global
Custody Agreement between the Fund and The Chase Manhattan Bank ("Chase"), 4
Chase MetroTech Center, Brooklyn, NY 11245, foreign securities may be held by
certain foreign sub-custodians which are participants in the Global Investor
Services Division of Chase and in certain foreign branches of Chase.
INDEPENDENT AUDITORS
The Company's independent auditors are KPMG Peat Marwick LLP, Certified Pub-
lic Accountants, 345 Park Avenue, New York, NY 10154. KPMG Peat Marwick LLP
audits the Fund's annual financial statements and renders its report thereon,
which is included in the Annual Report to Shareholders.
FINANCIAL STATEMENTS
The Fund's financial statements and notes thereto appearing in the December
31, 1997 Annual Report to Shareholders and the report thereon of KPMG Peat
Marwick LLP, Certified Public Accountants, appearing therein are incorporated
by reference in this Statement of Additional Information. The Fund will fur-
nish, without charge, a copy of such Annual Report to Shareholders on request.
All such requests should be directed to the Secretary of the Fund, at 1221 Av-
enue of the Americas, New York, NY 10020.
18
<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 creditwor-
thiness of an issuer. Consequently, the Company's investment adviser believes
that the quality of debt securities in which the Fund invests should be con-
tinuously 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 rat-
ings 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 sta-
ble 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 prin-
cipal 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 princi-
pal 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 dur-
ing both good and bad times over the future. Uncertainty of position charac-
terizes 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 de-
gree. 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-1
<PAGE>
A--Bonds rated A have a strong capacity to pay principal and interest, al-
though 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 are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this capac-
ity 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 inter-
est and repay principal in accordance with the terms of the obligation. BB in-
dicates 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 ma-
jor risk exposures to adverse conditions.
A-2
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a)(1) Financial Statements
a. Financial Statements Included in Prospectus and Statement of Additional
Information: All financial statements are incorporated by reference to the An-
nual Report to Shareholders for the year ended December 31, 1997.
<TABLE>
<CAPTION>
ANNUAL REPORT
PAGE REFERENCE
--------------
<S> <C>
Schedule of Investments -- December 31, 1997.................... 4-6
Statement of Assets and Liabilities -- December 31, 1997........ 7
Statement of Operations -- Year ended December 31, 1997......... 8
Statements of Changes in Net Assets -- For the Period February
3, 1997
(Commencement of Operations) to December 31, 1997.............. 9
Notes to Financial Statements................................... 10-12
Independent Auditors' Report.................................... 14
</TABLE>
b. Financial Statements Included in Part C of the Registration Statement:
None.
(2) All other financial statements and supporting schedules are omitted be-
cause they are not applicable or the required information is shown in the fi-
nancial statements or the notes thereto.
(b) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
-------
<C> <S>
1 --Articles of Incorporation of the Registrant.*
2 --By-Laws of the Registrant.*
--Specimen Certificates representing shares of Common Stock ($0.001
4 par value).*
5 --Investment Advisory Contract between the Registrant and Societe
Generale Asset Management Corp. ("SGAM Corp.").*
6(a) --Distribution Agreement between the Registrant and Societe Generale
Securities Corporation("SGSC").*
--Form of 12b-1 Servicing Agreement Between SGSC and A Life Insurance
6(b) Company.*
8(a) --Custody, Investment Accounting and Transfer Agency Agreement between
the Registrant and Investors Fiduciary Trust Company.*
--Global Custody Agreement between the Registrant and The Chase
8(b) Manhattan Bank.*
8(c) --Form of Subcustodial Agreement.*
--Participation Agreement among the Registrant, A Life Insurance
9 Company and SGSC.*
10 --Opinion and Consent of Dechert Price & Rhoads.*
11 --Consent of KPMG Peat Marwick LLP.
13 --Investment Representation letter of SGAM. Corp.*
--Rule 12b-1 Distribution Plan and Agreement Between the Registrant
15 and SGSC.*
--Power of Attorney of Messrs. Eveillard*, Collas*, Meyer*, Raillard,*
19 Snyder.*
--Calculation of Performance Data in Statement of Additional
20 Information.
21 --Representation Letter of Dechert Price & Rhoads.
27 --Financial Data Schedule.
</TABLE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
The following information is furnished as of March 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
-------------- --------------
<S> <C>
Shares of Beneficial Interest, Par Value $0.001 per share Four
</TABLE>
- --------
* Previously filed as an Exhibit to the Registration Statement.
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 indemnifica-
tion of directors and officers. Since Registrant has its executive offices in
the State of New York, and is qualified as a foreign corporation doing busi-
ness 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, em-
ployees and agents of the Registrant against legal liability and expenses in-
curred 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 permit-
ted. 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 Sep-
tember 4, 1980.
In referring in its By-Laws to, and making indemnification of directors sub-
ject 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 inter-
pretation 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 indem-
nified ("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 indepen-
dent legal counsel in a written opinion. Also, the Registrant will make ad-
vances 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 Regis-
trant shall be insured against losses arising by reason of any lawful advanc-
es, 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 indemnifi-
cation.
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 de-
liberate dishonest or fraudulent acts and exclusion for fines or penalties im-
posed by law or other matters deemed uninsurable.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
SGAM Corp. is the Registrant's investment adviser. In addition to the Regis-
trant, SGAM Corp., acts as investment adviser to SoGen International Fund,
Inc., SoGen Funds, Inc., and pension funds and sub-adviser to other affiliated
and non-affiliated investment funds.
Reference is made to "Management of the Fund" in the Statement of Additional
Information constituting Part B of this Registration Statement for a descrip-
tion of the business activities and employment of certain
C-2
<PAGE>
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,
17, cours Valmy Societe Generale Asset Management S.A.
92972 Paris
France
Jean Roger Huet.................... President, New York Branch, Societe Generale
1221 Avenue of the Americas
New York, NY 10020
</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 reg-
istered investment company.
(b) The directors and officers of SGSC are as follows:
<TABLE>
<CAPTION>
NAME AND POSITIONS AND OFFICES WITH POSITIONS AND OFFICES
PRINCIPAL BUSINESS ADDRESS PRINCIPAL UNDERWRITER WITH REGISTRANT
- -------------------------- ------------------------------------ ---------------------
<S> <C> <C>
Jacques Bouhet.......... Director --
17, Cours Valmy
92972 Paris
France
Jean-Bernard Director --
Guillebert.............
17, Cours Valmy
92972 Paris
France
Jean Huet............... Director --
1221 Avenue of the
Americas
New York, NY 10020
Alain Joyet............. Director --
1221 Avenue of the
Americas
New York, NY 10020
Robert Leroux........... Director --
17, Cours Valmy
92972, Paris
France
Gerald Lacaze........... Director --
17, Cours Valmy
92972, Paris
France
Jean-Paul Oudet......... Director --
23 Rue De D'Abeville
75009, Paris
France
Yves Tuloup............. Director --
43, rue Taitbout
75009, Paris
France
Curtis Welling.......... Director, President and CEO --
1221 Avenue of the
Americas
New York, NY 10020
James Walsh............. Director and Chief Operating Officer --
1221 Avenue of the
Americas
New York, NY 10020
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITIONS AND OFFICES WITH POSITIONS AND OFFICES
PRINCIPAL BUSINESS ADDRESS PRINCIPAL UNDERWRITER WITH REGISTRANT
- -------------------------- ---------------------------------------------- ---------------------
<S> <C> <C>
Robert S. Pirie......... Vice Chairman --
1221 Avenue of the
Americas
New York, NY 10020
Marc Poirier............ Deputy Chief Operating Officer, Director --
1221 Avenue of the
Americas
New York, NY 10020
Kenneth Lampert......... Chief Compliance Officer, First Vice President --
1221 Avenue of the
Americas
New York, NY 10020
William P. Bowden, Jr. Secretary --
.......................
1221 Avenue of the
Americas
New York, NY 10020
Elisabeth Duncan........ Assistant Secretary --
1221 Avenue of the
Americas
New York, NY 10020
The following officers all have their principal business address at 1221 Av-
enue of the Americas, New York, NY 10020:
<CAPTION>
NAME AND POSITIONS AND OFFICES WITH POSITIONS AND OFFICES
PRINCIPAL BUSINESS ADDRESS PRINCIPAL UNDERWRITER WITH REGISTRANT
- -------------------------- ---------------------------------------------- ---------------------
<S> <C> <C>
Steven Baronoff......... Managing Director --
Richard Greg Managing Director --
Brounstein.............
Matthew E. Czajkowski... Managing Director --
David Michael Feinman... Managing Director --
Ian J. Hardington....... Managing Director --
John L. Kelly........... Managing Director --
James N. Lane........... Managing Director --
Jan B. Lochtenberg...... Managing Director --
David M. Malcolm........ Managing Director --
Nimil Rajnikant Parekh.. Managing Director --
Michael Penfield........ Managing Director --
Vinod Sehgal............ Managing Director --
Paul Wesley Shaum....... Managing Director --
John Sheldon............ Managing Director --
Fiona Jane Tilley....... Managing Director --
Jon Frederic Weber...... Managing Director --
Bradford Carver Yates... Managing Director --
David J. Atkinson....... Director --
Mark Thomas Berry....... Director --
Anna Hayes Connard...... Director --
Robert H. Despirito..... Director --
Katharine H. Flynn...... Director --
David Getzler........... Director --
Geoffrey Alexander Director --
Gimber.................
Lars Hanan.............. Director --
Adam Michael Hodes...... Director --
Glori Holzman........... Director --
Matthew Judson.......... Director --
M. Robin Krasny......... Director --
Meredith Ress Levy...... Director --
Charles E. Mather IV.... Director --
Carl A. Mayer III....... Director --
Patrick Joseph Memmi.... Director --
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITIONS AND OFFICES POSITIONS AND OFFICES
PRINCIPAL BUSINESS ADDRESS WITH PRINCIPAL UNDERWRITER WITH REGISTRANT
-------------------------- -------------------------- ---------------------
<S> <C> <C>
Scott W. Phillips.............. Director --
Peter J. Pinto................. Director --
Claudio Alberto Pupkin......... Director --
Ronald C. Ratcliffe............ Director --
Andrew J. Schoenfeld........... Director --
Frederick W. Searby............ Director --
Joseph Stefanik................ Director --
Jean Philippe Jacque Villa..... Director --
Joseph Mario................... Senior Vice President --
Timothy Moyer.................. Senior Vice President --
Rex Yamamoto................... Senior General Manager --
Dominic Freud.................. First Vice President --
Charles Gushee................. First Vice President --
Paul Meyer..................... First Vice President --
John Monck..................... First Vice President --
Thomas Moyna................... First Vice President --
Rolando E. Pantoja............. First Vice President --
Guillaume Pollet............... First Vice President --
Benoit Ruaudel................. First Vice President --
Catherine A. Shaffer........... First Vice President Vice President
Raz Alon....................... Vice President --
Jean-Marie Barreau............. Vice President --
Isaac Barrocas................. Vice President --
Francois Barthelemy............ Vice President --
Richard Beston................. Vice President --
John Bianco.................... Vice President --
Pascal Bouillon................ Vice President --
Andrew Brummer................. Vice President --
Michael Joseph Casey........... Vice President --
Robert Casey................... Vice President --
Mary Chen...................... Vice President --
D.K. Cockrell II............... Vice President --
Arthur G. Condodina............ Vice President --
Yolanda C. Courtines........... Vice President --
John Enderle................... Vice President --
Lauda Fields................... Vice President --
William Court Frauen........... Vice President --
Gordes Frobenius............... Vice President --
Michael Gelblat................ Vice President --
Adam H. Gooodfriend............ Vice President --
John C. Griffin................ Vice President --
Vincent Gros................... Vice President --
Markus Sebastian Hansen........ Vice President --
Edward N. Heumann.............. Vice President --
Eric Hirshfield................ Vice President --
Tsen-Yu Hung................... Vice President --
McLloyd K. Jensen.............. Vice President --
Andrew Joseph.................. Vice President --
Andres B. Josephsohn........... Vice President --
Paul Kwong..................... Vice President --
Robert J. Lambert.............. Vice President --
Marc Levesque.................. Vice President --
John Joseph Mandy Jr. ......... Vice President --
Robert Marx.................... Vice President --
John T. Maxwell Jr. ........... Vice President --
John A. Montgomery Jr. ........ Vice President --
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITIONS AND OFFICES POSITIONS AND OFFICES
PRINCIPAL BUSINESS ADDRESS WITH PRINCIPAL UNDERWRITER WITH REGISTRANT
-------------------------- -------------------------- ---------------------
<S> <C> <C>
Elizabeth Mulford............ Vice President --
Nancy C. Nakovick............ Vice President --
Kenneth Nora................. Vice President --
Edwin S. Olsen............... Vice President Vice President
Howard Park.................. Vice President --
Philippe Pierson............. Vice President --
Theodore J. Podest........... Vice President --
Stephane Reverre............. Vice President --
Robert Roland................ Vice President --
Bryan L. Sanders............. Vice President --
Gregory Michael Solomon...... Vice President --
David A. Steinschraber....... Vice President --
Nathalie Texier.............. Vice President --
Richard Tramutola............ Vice President --
Matthew C. Zolin............. 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 thereun-
der are maintained at the offices of the Registrant, 1221 Avenue of the Ameri-
cas, New York, NY 10020 with the exception of certain accounts, books and
other documents which are kept by the Registrant's custodian, Investors Fidu-
ciary Trust Company, 127 West 10th Street, Kansas City, MO 64105.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
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-6
<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., CERTIFIES THAT THIS POST-EFFECTIVE AMENDMENT NO. 2 TO ITS REGIS-
TRATION STATEMENT MEETS ALL OF THE REQUIREMENTS FOR EFFECTIVENESS PURSUANT TO
RULE 485(B) UNDER THE SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS POST-EF-
FECTIVE AMENDMENT NO. 2 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THERE-
UNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK AND STATE OF NEW YORK, ON THE
29TH DAY OF APRIL, 1998.
SoGen Variable Funds, Inc.
/s/ Jean-Marie Eveillard
By: _________________________________
(JEAN-MARIE EVEILLARD, PRESIDENT)
PURSUANT TO THE REQUIREMENTS OF THE 1933 ACT, THIS POST-EFFECTIVE AMENDMENT
NO. 2 HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON
THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Jean-Marie Eveillard President and
- ------------------------------------- Director (principal April 29, 1998
(JEAN-MARIE EVEILLARD) executive officer)
/s/ Philip J. Bafundo Vice President and
- ------------------------------------- Treasurer April 29, 1998
(PHILIP J. BAFUNDO) (principal
financial and
accounting officer)
* Chairman of the
- ------------------------------------- Board April 29, 1998
(PHILIPPE COLLAS)
* Director
- ------------------------------------- April 29, 1998
(FRED J. MEYER)
* Director
- ------------------------------------- April 29, 1998
(DOMINIQUE RAILLARD)
* Director
- ------------------------------------- April 29, 1998
(NATHAN SNYDER)
/s/ Jean-Marie Eveillard
*By: ________________________________
(JEAN-MARIE EVEILLARD, ATTORNEY-IN-
FACT)
C-7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S>
11 --Consent of KPMG Peat Marwick LLP.
--Calculation of Performance Data in Statement of Additional
20 Information.
21 --Representation Letter of Dechert Price & Rhoads.
27 --Financial Data Schedule.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> FEB-3-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 1,123,366
<INVESTMENTS-AT-VALUE> 1,042,857
<RECEIVABLES> 45,275
<ASSETS-OTHER> 391,761
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,479,893
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 89,356
<TOTAL-LIABILITIES> 89,356
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,440,168
<SHARES-COMMON-STOCK> 142
<SHARES-COMMON-PRIOR> 10
<ACCUMULATED-NII-CURRENT> 9,480
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,015
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (67,268)
<NET-ASSETS> 1,390,537
<DIVIDEND-INCOME> 12,350
<INTEREST-INCOME> 2,025
<OTHER-INCOME> 0
<EXPENSES-NET> 15,432
<NET-INVESTMENT-INCOME> (1,057)
<REALIZED-GAINS-CURRENT> 18,552
<APPREC-INCREASE-CURRENT> (67,268)
<NET-CHANGE-FROM-OPS> (49,773)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 156,221
<NUMBER-OF-SHARES-REDEEMED> 23,843
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,290,537
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,742
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 123,909
<AVERAGE-NET-ASSETS> 844,646
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> (0.22)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.77
<EXPENSE-RATIO> 2.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of
SoGen Variable Funds, Inc.:
We consent to the use of our report dated February 13, 1998, for SoGen Over-
seas Variable Fund incorporated herein by reference and to the references to
our Firm under the headings "Financial Highlights" in the Prospectus and "Inde-
pendent Auditors" and "Financial Statements" in the Statement of Additional In-
formation.
/s/ KPMG Peat Marwick LLP
_____________________________________
KPMG Peat Marwick LLP
New York, New York
April 29, 1998
<PAGE>
EXHIBIT 20
SOGEN VARIABLE FUNDS, INC.
CALCULATION OF PERFORMANCE DATA
IN STATEMENT OF ADDITIONAL INFORMATION
TOTAL RATE OF RETURN FOR
THE PERIOD FEBRUARY 3, 1997 (COMMENCEMENT OF OPERATIONS)
THROUGH DECEMBER 31, 1997
<TABLE>
<CAPTION>
SOGEN OVERSEAS
VARIABLE FUND
-------------------
<S> <C>
Initial Investment = P $1,000
Ending Redeemable Value
@ 12/31/97 = ERV $ 977
Calculations:
T = the nth root of
(ERV/P) - 1 T = the 1st root of
= ( 977/1000) - 1
= 0.977 - 1
= (.0230)
= (2.30%)
</TABLE>
<PAGE>
EXHIBIT 21
DECHERT PRICE & RHOADS
30 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10112
TEL: (212) 698-3500
FAX: (212) 698-3599
April 22, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: SoGen Variable Funds, Inc. (File No. 33-96668)
Dear Sirs:
The undersigned counsel for SoGen Variable Funds, Inc. (the "Fund") has re-
viewed Post-Effective Amendment No. 2 to the Fund's Registration Statement on
Form N-1A, and hereby represents that such Post-Effective Amendment No. 2 does
not contain disclosures that would render it ineligible to become effective
pursuant to Rule 485(b).
Very truly yours,
/s/ William Goodwin
-------------------------------------
WILLIAM GOODWIN
