SoGen International Fund
SoGen Overseas Fund
SoGen Gold Fund
SoGen Money Fund
(Picture of a Globe)
This document contains the prospectuses for SoGen International Fund,
Inc. and SoGen Funds, Inc. (individually a "Company" or together the
"Companies"), each of which is an open-end management investment company.
SoGen International Fund, Inc. has a single portfolio, SoGen International
Fund. SoGen Funds, Inc. is a series fund currently comprising three
portfolios, SoGen Overseas Fund, SoGen Gold Fund and SoGen Money Fund.
Prospectuses
July 31, 1996
(Revised Effective November 25, 1996)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SoGen International Fund, Inc. Prospectus......................................... 3
Fee Table....................................................................... 4
Financial Highlights............................................................ 5
Organization of the Company..................................................... 6
Investment Objective, Policy and Restrictions................................... 6
Risk Factors.................................................................... 7
SoGen Funds, Inc. Prospectus...................................................... 11
Fee Table....................................................................... 13
Financial Highlights............................................................ 14
Organization of the Company..................................................... 15
Overseas Fund Investment Objective and Policies................................. 15
Gold Fund Investment Objective and Policies..................................... 16
Money Fund Investment Objective and Policies.................................... 17
Investment Restrictions......................................................... 19
Implementation of Policies and Risks............................................ 20
Management of the Companies....................................................... 26
Capital Stock..................................................................... 27
Dividends, Distributions and Taxes................................................ 28
Performance and Yield Information................................................. 30
Net Asset Value................................................................... 31
How to Purchase Shares............................................................ 31
How to Redeem Shares.............................................................. 36
Shareholder Services.............................................................. 39
Inquiries......................................................................... 42
</TABLE>
No person has been authorized to give any information or to make any
representation not contained in these Prospectuses and the Statements of
Additional Information and, if given or made, such information or representation
must not be relied upon as having been authorized by SoGen International Fund,
Inc. or SoGen Funds, Inc. These Prospectuses do 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>
PROSPECTUS
SOGEN INTERNATIONAL FUND
(Picture of a Globe)
1221 AVENUE OF THE AMERICAS, NEW YORK, NY 10020
(800) 334-2143
Societe Generale Asset Management Corp.
Investment Adviser
Societe Generale Securities Corporation
Principal Underwriter
SoGen International Fund (the "Fund"), is the sole portfolio of SoGen
International Fund, Inc. (the "Company"), an open-end management investment
company. The Fund's investment objective is to provide long-term growth of
capital. The Fund will normally invest its assets primarily in common stocks
(and in securities convertible into common stocks) of United States and foreign
companies.
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
This Prospectus sets forth concisely information about the Fund that an
investor ought to know before investing. It should be read and retained for
future reference. A Statement of Additional Information dated July 31, 1996,
containing additional information about the Fund, has been filed with the
Securities and Exchange Commission. It is incorporated herein by reference and
is available free of charge by contacting the Company at (800) 334-2143.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
JULY 31, 1996
(REVISED EFFECTIVE NOVEMBER 25, 1996)
3
<PAGE>
SOGEN INTERNATIONAL FUND, INC.
FEE TABLE
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of public offering
price)..................................................................... 3.75 %
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees.............................................................. 0.75 %
12b-1 Fees................................................................... 0.24 %*
Other Expenses:
Legal, Audit and Insurance......................................... 0.01 %
Custodial and Shareholder Servicing................................ 0.22 %
Printing, Registration, Directors' Fees and Miscellaneous.......... 0.03 %
Total Other Expenses....................................................... 0.26 %
Total Fund Operating Expenses................................................ 1.25 %
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
An investor in the Fund would pay
the following expenses on a $1,000
investment, assuming a 5% annual return,
with or without redemption,
at the end of each time period:.......... $ 50 $76 $ 104 $183
</TABLE>
The information set forth above is to assist an investor in understanding the
various costs and expenses to which an investment in the Fund would be subject.
For further information see "Management of the Companies" and "How to Purchase
Shares."
This example should not be considered a representation of past or future
expenses, and actual expenses may be greater or less than those shown above. The
assumed 5% return is hypothetical and should not be considered a representation
of past or future annual returns, which may be greater or less than the assumed
amount.
*12b-1 fees paid by the Fund may cause long-term shareholders to pay more than
the economic equivalent of the maximum front-end sales charges permitted under
rules adopted by the National Association of Securities Dealers, Inc.
4
<PAGE>
SOGEN INTERNATIONAL FUND, INC.
FINANCIAL HIGHLIGHTS
The following financial highlights and the related financial statements for
each of the years in the seven year period ended March 31, 1996 have been
audited by KPMG Peat Marwick LLP, independent auditors, whose report thereon is
unqualified and appears in the SoGen International Fund, Inc. March 31, 1996
Annual Report to Shareholders, which is incorporated by reference in the
Statement of Additional Information. The financial highlights and the related
financial statements for each of the years in the three year period ended March
31, 1989 have been audited by other auditors whose report thereon dated May 5,
1989 expressed an unqualified opinion. This information should be read in
conjunction with the Financial Statements and notes thereto, which also appear
in the Company's Annual Report to Shareholders.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
1996 1995 1994 1993 1992 1991(A) 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER SHARE
DATA
Net asset value,
beginning of
year.............. $23.20 $23.32 $20.12 $18.44 $17.51 $17.71 $17.31 $16.91 $21.47 $19.09
Income from
investment
operations:
Net investment
income............ 1.06 0.10 0.53 0.64 0.69 0.78 0.64 0.71 0.58 0.40
Net realized and
unrealized gains
(losses) on
investments....... 3.37 0.49 3.37 2.02 1.45 0.20 1.48 1.26 (0.97) 4.80
Total from
investment
operations........ 4.43 0.59 3.90 2.66 2.14 0.98 2.12 1.97 (0.39) 5.20
Less distributions:
Dividends from net
investment
income............ (0.81) (0.15) (0.47) (0.64) (0.84) (0.71) (0.71) (0.80) (0.84) (0.60)
Distributions from
capital gains..... (0.73) (0.56) (0.23) (0.34) (0.37) (0.47) (1.01) (0.77) (3.33) (2.22)
Total
distributions..... (1.54) (0.71) (0.70) (0.98) (1.21) (1.18) (1.72) (1.57) (4.17) (2.82)
Net asset value,
end of year....... $26.09 $23.20 $23.32 $20.12 $18.44 $17.51 $17.71 $17.31 $16.91 $21.47
TOTAL RETURN*...... 19.57% 2.63% 19.50% 14.87% 12.53% 6.03 % 12.18% 11.94% (0.70%) 31.16%
RATIOS AND
SUPPLEMENTAL DATA
Net assets, end of
year (millions)... $3,033 $1,922 $1,781 $ 650 $ 355 $ 240 $ 176 $ 126 $ 97 $ 96
Ratio of operating
expenses to
average net
assets............ 1.25%** 1.26% 1.28% 1.31% 1.37% 1.30 % 1.38% 1.39% 1.36% 1.47%
Ratio of net
investment income
to average net
assets............ 3.71%** 2.70% 2.34% 3.69% 4.00% 4.84 % 4.32% 4.23% 3.09% 2.71%
Portfolio turnover
rate.............. 9.64% 12.96% 23.96% 17.94% 24.25% 24.14 % 30.62% 33.05% 42.79% 41.23%
Average commission
rate paid......... $0.013 -- -- -- -- -- -- -- -- --
(Refer to following page for footnotes.)
</TABLE>
5
<PAGE>
SOGEN INTERNATIONAL FUND, INC.
ORGANIZATION OF THE COMPANY
The Company is an open-end diversified management investment company which
was incorporated in Delaware in August 1969 and reincorporated under Maryland
law in May 1985. The Company has a single portfolio, SoGen International Fund
(referred to herein as the "International Fund" or the "Fund").
INVESTMENT OBJECTIVE, POLICY AND RESTRICTIONS
INVESTMENT OBJECTIVE.
The investment objective of the Fund is to provide long-term growth of
capital. In seeking to achieve this objective, the Fund will normally invest its
assets primarily in common stocks (and in securities convertible into common
stocks) of United States and foreign companies. However, the Fund reserves the
right to invest a portion of its assets in fixed-income securities of domestic
or foreign issuers which, in addition to the income they may provide, appear to
offer potential for long-term growth of capital. When deemed appropriate by the
Fund's investment adviser for short-term investment or defensive purposes, the
Fund may hold a portion of its assets (up to 100%) in short-term debt
instruments including commercial paper and certificates of deposit.
INVESTMENT RESTRICTIONS.
The Statement of Additional Information contains more information on the
Fund's investment policies and identifies the restrictions on the Fund's
investment activities, which provide that the Fund shall not, among other
things:
1. Purchase the securities of any issuer if such purchase would cause more
than 25% of the value of its total assets to be invested in securities
of any one issuer or industry, with the exception of the securities of
the United States government and its corporate instrumentalities and,
under the circumstances described below, certificates of deposit and
other short-term bank instruments. In fact, the Fund intends to
diversify its investments among various issuers and industries and will
not purchase certificates of deposit or other short-term bank
instruments, except to the extent deemed appropriate for the
Footnotes from previous page:
(a) Societe Generale Asset Management Corp. became the investment adviser on
April 26, 1990. From August 21, 1978 to April 25, 1990 the investment
adviser was Societe Generale Securities Corporation.
* Does not give effect to deduction of the sales load.
** The ratio of operating expenses to average net assets for the year ended
March 31, 1996 would have remained the same without the effect of earnings
credits. However, the ratio of net investment income to average net assets
would have been 3.70% without the effect of earnings credits for the same
period.
(circle with a slash through it) Average commission rate paid is expressed on
a per share basis. Not all commissions are computed on a per share basis;
therefore, commissions expressed as a percentage of transactions may be
higher. Due to the new Securities and Exchange Commission disclosure
guidelines, average commissions per share are calculated only for the
current year and not for the prior periods.
6
<PAGE>
SOGEN INTERNATIONAL FUND, INC.
short-term investment of cash or as a temporary defensive measure. The Fund
will limit its purchases of certificates of deposit and other short-term bank
instruments to those issued by United States banks and savings and loan
associations, including foreign branches of such banks, and United States
branches or agencies of foreign banks, which have total assets (as of the date
of their most recently published financial statements) of at least $1 billion.
2. Borrow money, except unsecured borrowings from banks as a temporary
measure in exceptional circumstances, and such borrowings may not
exceed 10% of its net assets taken at market or other fair value at the
time of the borrowing. The Fund will not purchase securities while
borrowings exceed 5% of the Fund's total assets.
The foregoing investment objective and investment restrictions (not
including the percentage of the Fund's assets that may be invested in short-term
debt instruments for short-term defensive purposes) are part of the fundamental
policy of the Fund and may not be changed without the approval of a majority of
the outstanding voting securities of the Fund (defined by the Investment Company
Act of 1940 as (I) 67 percent or more of the voting securities present at a
meeting of stockholders, if the holders of more than 50 percent of the
outstanding voting securities of such company are present or represented by
proxy; or (II) more than 50 percent of the outstanding voting securities of such
company, whichever is the less).
OTHER INVESTMENT POLICIES.
The Fund has adopted certain additional investment policies which have not
been deemed fundamental and may, therefore, be changed by the Board of
Directors. Pursuant to these policies, the Fund, among other things, does not
intend, with respect to 100% of its assets, to purchase securities of any
issuer, other than the United States government and its corporate
instrumentalities if, immediately after such purchase, more than 5% of the value
of its total assets would be invested in the securities of such issuer;
additionally, the Fund does not intend to purchase 10% or more of the voting
securities of any one issuer. The Fund also does not intend to purchase illiquid
securities or securities the proceeds from the sale of which could not readily
be repatriated to the United States if, immediately after such purchase, more
than 10% of the value of its net assets would be invested in such securities.
Under normal circumstances, the Fund will invest in at least three foreign
countries.
RISK FACTORS
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 objective will be realized. Societe Generale Asset Management Corp.
("SOGEN A.M.
7
<PAGE>
SOGEN INTERNATIONAL FUND, INC.
Corp."), the Fund's investment adviser, will seek to minimize these risks
through professional management and investment diversification. The Fund is
designed for long-term investors who have the patience and perspective to accept
the investment risks involved. As with any long-term investment, the value of
shares when sold may be higher or lower than when purchased.
FOREIGN INVESTMENTS.
While investment by the Fund on an international basis will permit
shareholders to participate in economic developments abroad, such investments
involve certain risks not ordinarily associated with investing in securities of
United States issuers. These may include political instability of some foreign
governments, fluctuation in foreign exchange rates, the imposition of exchange
control regulations, the possibility of expropriation decrees, more limited
information about foreign issuers, different accounting standards, higher
brokerage costs and foreign withholding taxes. Moreover, foreign securities and
their markets may not be as liquid as United States securities and their
markets.
Investors should note that to the extent the Fund's investments are
denominated in and pay interest or dividends in foreign currencies, the value of
their investment in the Fund, as measured in United States dollars, will be
affected favorably or unfavorably by movements in exchange rates between the
dollar and those foreign currencies. From time to time the Fund attempts to
hedge these risks by selling such foreign currencies forward. As a result of
such hedging transactions, it is possible that the Fund's portfolio would not,
in the event of a foreign currency devaluation, depreciate as much as a
portfolio of a fund holding similar investments which did not sell foreign
currencies forward. A forward currency contract is not, however, a perfect hedge
against devaluation. Moreover, foreign currency transactions involve a cost to
the Fund and would diminish the appreciation the Fund's portfolio would
otherwise experience should a foreign currency, which has been sold forward,
thereafter be revalued upward.
RESTRICTED SECURITIES.
The Fund may, from time to time, invest in securities not registered for
sale to the general public but which may be resold to institutional investors.
Where a dealer or institutional trading market in such securities exists, these
restricted securities will not be treated as illiquid securities for purposes of
the Fund's investment policies. While purchases of restricted securities may
offer attractive investment opportunities, the Fund may experience delays in its
attempt to dispose of such securities. Moreover, registration of such securities
under the Securities Act of 1933 may be required for their sale, in which case
the Fund may have to bear the expense of such registration.
8
<PAGE>
SOGEN INTERNATIONAL FUND, INC.
LOWER-RATED AND UNRATED DEBT SECURITIES.
The Fund is free to invest in debt securities without regard to credit
rating and may therefore invest in instruments that could experience a default
in the payment of principal and interest. The Fund may also purchase debt
securities upon which the issuer has defaulted.
Lower-rated or unrated high yield debt securities are commonly known as
"junk bonds" and are often considered to be of speculative grade. They involve
greater risk of default due to changes in economic conditions, changes in the
issuer's creditworthiness or other circumstances. The market for these
securities is generally more limited and their prices may experience greater
volatility than in the case of debt securities in the higher rating categories.
COMMODITY LINKED SECURITIES.
The Fund may invest up to 5% of its net assets in structured notes and/or
preferred stock, the value of which is linked to the price of gold or other
commodities. Such structured securities have different characteristics and risks
than other types of securities in which the Fund may invest. For example, not
only the coupon and/or dividend but also the redemption amount may be increased
or decreased depending on the change in the price of the referenced commodity.
See "Commodity Linked Securities" in the Statement of Additional Information for
further information.
INVESTMENT IN OTHER INVESTMENT COMPANIES.
The Fund may invest up to 10% of its total assets in other investment
companies, provided that no more than 5% of the Fund's total assets may be
invested in a single investment company and the Fund may not acquire more than
3% of the outstanding voting securities of a single investment company.
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 SOGEN A.M. Corp., the potential benefits of such investment justify the
payment of any applicable premium or sales charge. As a shareholder in another
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.
9
<PAGE>
(This Page Left Blank Intentionally)
10
<PAGE>
PROSPECTUS
SoGen Overseas Fund
SoGen Gold Fund
SoGen Money Fund
(Picture of a Globe)
1221 Avenue of the Americas, New York, NY 10020
(800) 334-2143
Societe Generale Asset Management Corp.
Investment Adviser
Societe Generale Securities Corporation
Principal Underwriter
SoGen Overseas Fund, SoGen Gold Fund and SoGen Money Fund (each
individually a "Fund" or collectively the "Funds") are three portfolios of SoGen
Funds, Inc. (the "Company"), an open-end management investment company.
Additional funds may be created by the directors from time to time.
Shares in the Funds are not deposits or obligations of, or guaranteed or
endorsed by any bank, and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency.
This Prospectus sets forth concisely information about the Funds that an
investor ought to know before investing. It should be read and retained for
future reference. A Statement of Additional Information dated July 31, 1996,
containing additional information about the Funds, has been filed with the
Securities and Exchange Commission. It is incorporated herein by reference and
is available free of charge by contacting the Company at (800) 334-2143.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
11
<PAGE>
SoGen Funds, Inc.
The Funds and their investment objectives are:
SoGen Overseas Fund. Long-term growth of capital by investing primarily in
securities of small and medium size non-U.S. companies. (See pages 15-16.)
SoGen Gold Fund. Growth of capital by investing primarily in securities of
companies engaged in mining, processing, dealing in or holding gold or other
precious metals both in the United States and in foreign countries. (See pages
16-17.)
SoGen Money Fund. As high a level of current income as is considered
consistent with the preservation of capital and liquidity by investing
exclusively in U.S. dollar-denominated money market instruments which mature in
397 days or less. An investment in SoGen Money Fund is neither insured nor
guaranteed by the U.S. Government and there can be no assurance that the Fund
will be able to maintain a stable net asset value of $1.00 per share. (See pages
17-19.)
July 31, 1996
(Revised Effective November 25, 1996)
12
<PAGE>
SoGen Funds, Inc.
FEE TABLE
<TABLE>
<CAPTION>
SoGen SoGen SoGen
Overseas Gold Money
Fund Fund Fund
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a
percentage of public offering price)................. 3.75% 3.75 % None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees........................................ 0.75% 0.75 % 0.19 %
12b-1 Fees............................................. 0.25%* 0.25 %* None
Other Expenses......................................... 0.37% 0.41 % 0.56 %
Total Fund Operating Expenses.......................... 1.37% 1.41 % 0.75 %**
</TABLE>
Example
An investor in a Fund would pay the following expenses on a $1,000
investment, assuming a 5% annual return, with or without redemption, at the end
of each time period:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Overseas Fund.............................. $ 51 $79 $ 110 $196
Gold Fund.................................. $ 51 $80 $ 112 $200
Money Fund................................. $ 8 $24 $ 42 $ 93
</TABLE>
The information set forth above is to assist an investor in understanding
the various costs and expenses to which an investment in a Fund would be
subject. "Other Expenses" for the Money Fund have been restated to reflect the
expected level of expense reimbursement for the current fiscal year. For further
information see "Management of the Companies" and "How to Purchase Shares."
Societe Generale Asset Management Corp. ("SOGEN A.M. Corp."), the
investment adviser has voluntarily limited the total expenses of the Money Fund
(excluding interest, taxes, brokerage and extraordinary expenses) to an annual
rate of 0.75% of the Fund's average net assets until July 31, 1997. After July
31, 1997, the expense limitation may be terminated or revised at any time.
This example should not be considered a representation of past or future
expenses, and actual expenses may be greater or less than those shown above. The
assumed 5% return is hypothetical and should not be considered a representation
of past or future annual returns, which may be greater or less than the assumed
amount.
*12b-1 fees paid by a Fund may cause long-term shareholders to pay more than
the economic equivalent of the maximum front-end sales charges permitted under
rules adopted by the National Association of Securities Dealers, Inc.
**After reimbursement of expenses and investment advisory fee waiver. Without
such reimbursement, "Total Fund Operating Expenses" would have been 0.97%. As
long as this temporary expense limitation continues, it may lower the Fund's
expenses and increase its total return.
13
<PAGE>
SoGen Funds, Inc.
FINANCIAL HIGHLIGHTS
The following Financial Highlights and the related financial statements for
the period from August 31, 1993 to March 31, 1994 and the fiscal years ended
March 31, 1995 and 1996 have been audited by KPMG Peat Marwick LLP, independent
auditors, whose report thereon is unqualified and appears in the SoGen Funds,
Inc. March 31, 1996 Annual Report to Shareholders, which is incorporated by
reference in the Statement of Additional Information. This information should be
read in conjunction with the Financial Statements and notes thereto, which also
appear in the Company's Annual Report to Shareholders.
<TABLE>
<CAPTION>
SoGen SoGen SoGen
Overseas Fund Gold Fund Money Fund
Period Period Period
From From From
Year Year August 31, Year Year August 31, Year Year August 31,
Ended Ended 1993 to Ended Ended 1993 to Ended Ended 1993 to
March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31,
1996 1995 1994 1996 1995 1994 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per
Share Data
Net asset
value,
beginning of
year/period... $ 11.65 $ 11.54 $ 10.00 $ 11.28 $ 11.42 $ 10.00 $ 1.00 $ 1.00 $ 1.00
Income from
investment
operations:
Net investment
income
(loss)...... 0.48 0.14 (0.01) 0.24 0.08 (0.01) 0.05 0.04 0.01
Net realized
and
unrealized
gains
(losses)
on
investments.. 1.74 0.04 1.55 1.35 (0.10) 1.43 -- -- --
Total from
investment
operations... 2.22 0.18 1.54 1.59 (0.02) 1.42 0.05 0.04 0.01
Less
distributions:
Dividends from
net
investment
income...... (0.44 ) (0.05 ) -- (0.35) (0.04) -- (0.05) (0.04) (0.01)
Distributions
from capital
gains....... (0.17 ) (0.02 ) -- (0.27) (0.08) -- -- -- --
Total
distributions.. (0.61 ) (0.07 ) -- (0.62) (0.12) -- (0.05) (0.04) (0.01)
Net asset
value, end of
year/period... $ 13.26 $ 11.65 $ 11.54 $ 12.25 $ 11.28 $ 11.42 $ 1.00 $ 1.00 $ 1.00
Total Return
(a)........... 19.47% 1.56% 15.35%++ 14.81% (0.14%) 14.15%++ 5.03% 4.13% 1.25%++
Ratios and
Supplemental
Data
Net assets, end
of year/period
(000's)....... $647,398 $439,230 $119,843 $63,261 $50,922 $ 22,406 $ 8,487 $10,445 $6,392
Ratio of
operating
expenses to
average net
assets........ 1.37%** 1.40% 1.72%* 1.41%** 1.46% 2.27%* 0.75%+ 0.75%+ 0.75%*+
Ratio of net
investment
income to
average net
assets........ 3.31%** 2.29% (0.23%)* 1.29%** 0.79% (0.32%)* 4.98%+ 4.14%+ 2.18%*+
Portfolio
turnover
rate.......... 9.46% 3.16% 6.11% 22.40% 11.56% 4.55% -- -- --
Average
commission
rate paid (circle
with a slash
through it).... $0.0190 -- -- $0.0002 -- -- -- -- --
</TABLE>
(Refer to the following page for footnotes.)
14
<PAGE>
SoGen Funds, Inc.
ORGANIZATION OF THE COMPANY
The Company is an open-end management investment company incorporated under
the laws of Maryland in May 1993. The Company has three portfolios, SoGen
Overseas Fund, SoGen Gold Fund and SoGen Money Fund (referred to herein as the
"Overseas Fund," the "Gold Fund" and the "Money Fund," respectively). Each Fund
is a separate, diversified portfolio of assets and has a different investment
objective which it pursues through separate investment policies, as described
below. The difference in objectives and policies among the Funds affects the
degree of risk and return of each Fund.
OVERSEAS FUND INVESTMENT OBJECTIVE AND POLICIES
The Overseas Fund seeks long-term growth of capital by investing primarily
in securities of small and medium size non-U.S. companies. The Fund particularly
seeks companies that have growth potential, financial strength and stability,
strong management and fundamental value. However, the Fund may invest in
companies that do not have all of these characteristics.
The Fund may invest in securities traded in mature markets (for example,
Japan, Canada and the United Kingdom) and in emerging markets (Mexico and
Indonesia, for example). A list of the mature and emerging markets in which the
Fund may invest is included in the Statement of Additional Information under
"Investment Policies, Techniques and Risks -- Foreign Securities." There are no
limits on the Fund's geographic asset distribution, but the Fund ordinarily
invests in at least three countries outside the United States.
Footnotes from previous page:
(a) Does not give effect to deduction of the sales load.
* Annualized.
** The annualized ratios of operating expenses to average net assets and net
investment income to average net assets for the year ended March 31, 1996
for SoGen Overseas Fund would have been 1.38% and 3.30%, respectively, and
for SoGen Gold Fund 1.43% and 1.26%, respectively, without the effect of the
earnings credits.
+ The ratios (annualized in the case of a partial year) of operating expenses
to average net assets and net investment income to average net assets of
SoGen Money Fund would have been 0.97% and 4.76%, respectively, for the year
ended March 31, 1996, 1.55% and 3.34%, respectively, for the year ended March
31, 1995, and 4.00% and (1.07%), respectively, for the period August 31, 1993
to March 31, 1994 without the effect of the earnings credits, and the
investment advisory fee waiver and expense reimbursement provided by SOGEN
A.M. Corp.
++ Total returns disclosed for the period ended March 31, 1994 are not
annualized. Annualized total returns for the period ended March 31, 1994
were 26.40%, 24.34% and 2.14% for SoGen Overseas Fund, SoGen Gold Fund and
SoGen Money Fund, respectively.
(Circle with a slash through it) Average commission rate paid is expressed on
a per share basis. Not all commissions are computed on a per share basis;
therefore, commissions expressed as a percentage of transactions may be
higher. Due to the new Securities and Exchange Commission disclosure
guidelines, average commissions per share are calculated only for the
current year and not for the prior periods.
15
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SoGen Funds, Inc.
The equity securities in which the Fund may invest include common and
preferred stocks, warrants or other similar rights, and convertible securities.
The Fund may purchase foreign securities in the form of sponsored or unsponsored
American Depository Receipts (ADRs), Global Depository Receipts (GDRs) and
European Depository Receipts (EDRs) or other securities representing underlying
shares of foreign issuers. The Fund may also invest in any other type of
security, including up to 20% of its total assets in debt securities. Such debt
securities may include lower-rated securities, commonly referred to as "junk
bonds" (i.e., securities rated BB or lower by Standard & Poor's Corporation
("S&P") or Ba or lower by Moody's Investors Service, Inc. ("Moody's")), and
securities that are not rated. There are no restrictions as to the ratings of
debt securities acquired by the Fund or the portion of the Fund's assets that
may be invested in debt securities in a particular rating category. Under normal
market conditions, the Fund invests at least 75% of its total assets, taken at
market value, in foreign securities. The Fund may also invest in "structured
securities" in which the value is linked to the price of an underlying
instrument.
GOLD FUND INVESTMENT OBJECTIVE AND POLICIES
The Gold Fund seeks growth of capital by investing primarily in securities
of companies engaged in mining, processing, dealing in or holding gold or other
precious metals such as silver, platinum and palladium, both in the United
States and in foreign countries. Gold-related investments have provided
protection against loss of purchasing power during periods of extensive price
inflation and/or following periods of extensive credit expansion. Under normal
circumstances, at least 65% of the value of the Fund's total assets will be
invested in securities (which may include both equity and, to a limited extent,
debt securities) consisting of issuers engaged in gold operations, including
securities of gold mining finance companies as well as operating companies with
long-, medium- or short-life mines. Up to 35% of the Fund's assets may be
invested in equity and, to a limited extent, debt securities unrelated to the
precious metals industry where the investment adviser believes such securities
are consistent with the Fund's investment objective.
The Fund's investment adviser is of the belief that a gold-based investment
medium will, over the medium term, protect capital from adverse monetary and
political developments of a national or international nature and may offer
better opportunity for capital growth than many other forms of investment.
Investments in gold may provide more of a hedge against currencies with
declining buying power, devaluation and inflation than other types of
investments. In those periods when investments in gold and gold-related
securities appreciate in value relative to the U.S. dollar, the Fund's
investments may serve to offset erosion in the purchasing power of the U.S.
dollar.
As indicated, the investment adviser is of the belief that the price of
gold and gold-related securities generally are likely to experience significant
appreciation during the next three to five years. If, however, this expected
bull market in gold-related
16
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SoGen Funds, Inc.
securities does not develop within the investment adviser's time frame, or
should the investment adviser conclude that any price appreciation that has
occurred is not likely to continue, the investment adviser expects that it will
recommend to the Company's Board of Directors that the Company seek the vote of
the Gold Fund's shareholders to liquidate the Gold Fund. Liquidation would
involve the sale of all of the Gold Fund's assets, followed by the distribution
of the proceeds, less accrued liabilities, to shareholders. The decision to
recommend liquidation will not, however, affect the right of Gold Fund
shareholders to redeem their shares or to exchange their shares for shares of
the Money Fund or the Overseas Fund, in the latter case without payment of any
additional sales charge. Potential investors should carefully weigh the
consequences of investing in, and paying the related sales charge for, a fund
that may have a limited term from the date of this Prospectus.
The Fund anticipates that it will normally invest in common stocks and
securities convertible into common stocks, such as convertible preferreds,
convertible debentures and sponsored or unsponsored American Depository Receipts
(ADRs), Global Depository Receipts (GDRs) and European Depository Receipts
(EDRs) for those securities, all of which may be traded on a securities exchange
or over-the-counter. The Fund may invest up to 20% of its total assets in debt
securities, including lower-rated securities, commonly referred to as "junk
bonds" (i.e., securities rated BB or lower by S&P or Ba or lower by 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. The market
performance of non-convertible debt securities of companies engaged in mining
and processing gold can be expected to be comparable to that of other debt
obligations of similar quality and generally will not react to fluctuations in
the price of gold. An investment in the debt instruments of gold-related
companies, therefore, cannot be expected to provide the hedge against inflation
that may be provided through investment in equity securities of companies
engaged in such activities. Investment in such debt securities can serve to
reduce the risk of fluctuation in net asset value of a portfolio composed
primarily of gold-related equity investments. The Fund may also invest in
"structured securities" in which the value is linked to the price of an
underlying instrument.
Because of the Fund's policy of investing primarily in securities of
companies engaged in gold mining, processing, dealing in or holding gold and
other precious metals, a substantial part of the Fund's assets will generally be
invested in securities of companies domiciled or operating in one or more
foreign countries. (See "Implementation of Policies and Risks.")
MONEY FUND INVESTMENT OBJECTIVE AND POLICIES
The Money Fund seeks as high a level of current income as is considered
consistent with the preservation of capital and liquidity. The Fund pursues its
objective by
17
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SoGen Funds, Inc.
investing exclusively in the following types of U.S. dollar-denominated money
market instruments which mature in 397 days or less and which the Fund's
investment adviser has determined to present minimal credit risk:
1. Bank certificates of deposit, time deposits or bankers' acceptances of
domestic banks (including their foreign branches) and U.S. and foreign
branches of foreign banks having capital surplus and undivided profits
in excess of $100 million.
2. Commercial paper rated Prime-1 or Prime-2 by Moody's, A-1 or A-2 by S&P,
Duff 2 or higher by Duff & Phelps, Inc. ("Duff"), or F-2 or higher by
Fitch Investors Service, Inc. ("Fitch"); commercial paper or notes of
issuers with an unsecured debt issue outstanding currently rated Aa or
higher by Moody's, AA or higher by S&P, AA or higher by Duff, or AA or
higher by Fitch where the obligation is on the same or a higher level of
priority and collateralized to the same extent as the rated issue;
investments in other corporate obligations such as publicly traded
bonds, debentures and notes rated Aa by Moody's, AA by S&P, Duff or
Fitch; and other similar securities which, if unrated by Moody's, S&P,
Duff or Fitch, are determined by the Fund's investment adviser, using
guidelines approved by the Board of Directors, to be at least equal in
quality to one or more of the above referenced securities.
Notwithstanding the foregoing, the Fund may invest no more than 5% of
its total assets in securities that are accorded the second highest
rating by the requisite number of nationally recognized statistical
rating organizations. (For a description of the ratings, see
"Appendix -- Ratings of Investment Securities" in the Statement of
Additional Information.)
3. Obligations of, or guaranteed by, the U.S. or Canadian governments,
their agencies or instrumentalities.
4. Repurchase agreements involving obligations that are suitable for
investment under the categories set forth above.
To the extent that the Fund purchases Eurodollar certificates of deposit,
consideration will be given to their marketability and possible restrictions on
international currency transactions and to regulations imposed by the domicile
country of the foreign issuer. Eurodollar certificates of deposit may not be
subject to the same regulatory requirements as certificates of deposit issued by
U.S. banks and associated income may be subject to the imposition of foreign
taxes.
The Fund may invest in repurchase agreements, which are instruments under
which the Fund acquires ownership of a security from a broker/dealer or bank
that agrees to repurchase the security at a mutually agreed upon time and price
(which price is higher than the purchase price), thereby determining the yield
during the Fund's holding period. Maturity of the securities subject to
repurchase may exceed
18
<PAGE>
SoGen Funds, Inc.
397 days. In the event of a bankruptcy or other default of a seller of a
repurchase agreement, the Fund might have expenses in enforcing its rights, and
could experience losses, including a decline in the value of the underlying
security and loss of income. The Fund will only enter into repurchase agreements
with banks and other recognized financial institutions such as broker/dealers
which are deemed by the Fund's investment adviser to be creditworthy.
The Fund may invest in commercial paper issued in reliance on the so-called
"private placement" exemption from registration afforded by Section 4(2) of the
Securities Act of 1933, and resold to qualified institutional buyers under
Securities Act Rule 144A ("Section 4(2) paper"). Section 4(2) paper is
restricted as to disposition under the federal securities laws, and generally is
sold to institutional investors such as the Fund which agree that they are
purchasing the paper for investment and not with a view to public distribution.
Any resale by the purchaser must be in an exempt transaction and may be
accomplished in accordance with Rule 144A. Section 4(2) paper normally is resold
to other institutional investors, like the Fund, through or with the assistance
of the issuer or investment dealers who make a market in the Section 4(2) paper,
thus providing liquidity. The investment adviser will carefully monitor the
Fund's investments in these securities, focusing on such factors, among others,
as valuation, liquidity and availability of information. Investment in Section
4(2) paper could have the effect of reducing the Fund's liquidity to the extent
that qualified institutional buyers become, for a time, uninterested in
purchasing these restricted securities.
The Fund may invest in asset-backed securities, i.e., securities backed by
automobile receivables and credit-card receivables and other securities backed
by other types of receivables. Credit support for asset-backed securities may be
based on the underlying assets or provided by a third party. Credit enhancement
techniques include letters of credit, insurance bonds, limited guarantees (which
are generally provided by the issuer), senior-subordinated structures and over
collateralization. Asset-backed securities purchased by the Fund will be subject
to the same quality requirements as other securities purchased by the Fund.
INVESTMENT RESTRICTIONS
The Funds have adopted certain investment restrictions that may not be
changed without shareholder approval. Among other restrictions, each 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 unsecured borrowings from banks as a temporary
measure in exceptional circumstances, and such borrowings may not exceed
10%
19
<PAGE>
SoGen Funds, Inc.
of a Fund's net assets at the time of the borrowing. A Fund will not
purchase securities while borrowings exceed 5% of its total assets; or
3. Invest more than 25% of its assets (valued at time of investment) in
securities of companies in any one industry (other than U.S. Government
Securities), except that the Gold Fund will, as a matter of fundamental
policy, concentrate its investments in the precious metals industry and
the Money Fund may concentrate its investments in U.S. bank obligations.
A complete description of the Funds' investment restrictions is included in
the Statement of Additional Information.
IMPLEMENTATION OF POLICIES AND RISKS
In addition to the investment policies described above (and subject to
certain restrictions described herein), the Funds may invest in some or all of
the following securities and employ some or all of the following investment
techniques, some of which may present special risks as described below. A more
complete discussion of these securities and investment techniques and their
associated risks is contained in the Funds' Statement of Additional Information.
Because the Funds' investments will be subject to the market fluctuations
and risks inherent in all investments, there can be no assurance that the Funds'
stated objectives will be realized. SOGEN A.M. Corp. will seek to minimize these
risks through professional management and investment diversification. The value
of shares of the Overseas Fund and the Gold Fund when sold may be higher or
lower than when purchased. Although the Money Fund is designed to maintain a
stable share price of $1.00, there can be no assurance that the Fund will be
able to do so.
Foreign Investments.
The Overseas Fund and the Gold Fund provide investors with an opportunity
to place a portion of their assets in a diversified portfolio of foreign
securities. In addition, the Money Fund may invest in U.S. dollar-denominated
high-quality foreign debt 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.
Investors should understand and consider carefully the greater risks
involved in foreign investing. Investing in foreign securities and other
positions which are generally denominated in foreign currencies, and utilization
of forward foreign currency exchange contracts (see "Currency Exchange
Transactions" below), involve certain risks and opportunities not typically
associated with investing in U.S. securities. These
20
<PAGE>
SoGen Funds, Inc.
include: fluctuations in the rates of exchange between the U.S. dollar and
foreign currencies; changes in exchange control regulations or currency
restrictions that would prevent cash from being brought back to the United
States; less public information with respect to issuers of securities; less
governmental supervision of stock exchanges, securities brokers and issuers of
securities; different accounting, auditing and financial reporting standards;
different settlement periods and trading practices; less liquidity and
frequently greater price volatility in foreign markets than in the United
States; imposition of foreign taxes; and sometimes less advantageous legal,
operational and financial protections applicable to foreign sub-custodial
arrangements.
Investing in countries outside the United States entails political risk.
There exists the possibility of restrictions on foreign investors, expropriation
of assets, confiscatory taxation, seizure or nationalization of foreign bank
deposits or other assets, establishment of exchange controls, or other adverse
political or social developments that could affect investment in these nations.
Economies in individual markets may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross domestic product, rates of
inflation, currency depreciation, capital reinvestment, resource
self-sufficiency and balance of payments positions. Many emerging market
countries have experienced extremely high rates of inflation for many years.
That has had and may continue to have very negative effects on the economies and
securities markets of those countries.
The securities markets of emerging countries are substantially smaller,
less developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States. There
also may be a lower level of monitoring and regulation in emerging markets of
traders, insiders and investors. Enforcement of existing regulations has been
extremely limited.
Since the Money Fund will invest only in U.S. dollar-denominated
securities, the return on its shares will not be subject to the risk of adverse
changes in the exchange rates between the U.S. dollar and foreign currencies. In
addition, the Money Fund does not intend to invest in the securities markets of
emerging countries.
Fluctuations in the Price of Gold (Gold Fund).
Due to the Gold Fund's policy of concentrating its investments in gold and
other precious metal-related issuers, investment in the Fund's shares involves
special considerations, including changes in U.S. or foreign tax, currency or
mining laws and increased environmental costs. The price of gold has been
subject to dramatic downward and upward price movements over short periods of
time and may be affected by unpredictable international monetary and political
policies such as currency devaluations or revaluations, economic conditions
within an individual country, trade imbalances, or trade or currency
restrictions between countries. The price of gold, in turn, is likely to affect
the market prices of securities of companies mining or processing gold,
21
<PAGE>
SoGen Funds, Inc.
and accordingly, the value of the Fund's investments in such securities may also
be affected. Gold-related investments as a group have performed less well than
the stock market in general during periods when the U.S. dollar is strong,
inflation is low and general economic conditions are stable.
Currency Exchange Transactions (Overseas Fund and Gold Fund).
A Fund may engage in currency exchange transactions to hedge against losses
in the U.S. dollar value of its portfolio securities resulting from possible
variations in exchange rates and not for speculation. A currency exchange
transaction may be conducted either on a spot (i.e. cash) basis at the spot rate
for purchasing or selling currency prevailing in the foreign exchange market or
through a forward currency exchange contract ("forward contract"). A forward
contract is an agreement to purchase or sell a specified currency at a specified
future date (or within a specified time period) and price set at the time of the
contract. Forward contracts are usually entered into with banks and
broker/dealers, are not exchange-traded and are usually for less than one year,
but may be renewed. Currency exchange transactions may involve currencies of the
different countries in which a Fund may invest. Although forward contracts may
be used to protect a Fund from adverse currency movements, the use of such
hedges may reduce or eliminate the potentially positive effect of currency
revaluations on the Fund's total return.
Investments in Debt Securities (Overseas Fund and Gold Fund).
Each of the Overseas Fund and Gold Fund may invest up to 20% of its total
assets in debt securities that are below investment grade quality. The Funds may
also invest in debt securities which are in default. "Investment grade" debt
securities are those rated within the four highest ratings categories of S&P or
Moody's or, if unrated, determined by the Fund's investment adviser to be of
comparable quality. The market value of debt securities generally varies in
response to changes in interest rates and the financial conditions of each
issuer. During periods of declining interest rates, the value of debt securities
generally increases. Conversely, during periods of rising interest rates, the
value of such securities generally declines. These changes in market value will
be reflected in each Fund's net asset value.
Securities rated BBB by S&P or Baa by Moody's (the lowest investment grade
ratings) are considered to be medium grade and to have speculative
characteristics. Debt securities that are rated below investment grade or, if
unrated, are considered by SOGEN A.M. Corp. to be equivalent to below investment
grade (often referred to as "junk bonds"), on balance, are considered
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal according to the terms of the obligation and, therefore,
carry greater investment risk, including the possibility of issuer default and
bankruptcy. They are likely to be less marketable and more adversely affected by
economic downturns than higher-quality debt securities. (For
22
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SoGen Funds, Inc.
additional information on these debt securities see "Lower-Rated Debt
Securities" in the Statement of Additional Information.)
Other Investment Companies (Overseas Fund).
Certain markets are closed in whole or in part to equity investments by
foreigners. The Overseas 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.
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 Funds 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 Funds 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. A Fund will not invest more than 25% of
its assets in when-issued or delayed delivery securities, does not intend to
purchase such securities for speculative purposes and will make commitments to
purchase securities on a when-issued or delayed delivery basis with the
intention of actually acquiring the securities. However, the Funds reserve the
right to sell acquired when-issued or delayed delivery securities before their
settlement dates if deemed advisable.
Variable Rate Securities (Money Fund).
The Money Fund may invest in instruments having rates of interest that are
adjusted periodically or which "float" continuously according to formulae
intended to minimize fluctuation in the values of the instruments ("Variable
Rate Securities"). The interest rates of Variable Rate Securities ordinarily are
determined by reference to, or are a percentage of, an objective standard such
as a bank's prime rate, the 90-day U.S.
23
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SoGen Funds, Inc.
Treasury Bill rate, or the rate of return on commercial paper or bank
certificates of deposit. Generally, the changes in the interest rates on
Variable Rate Securities reduce the fluctuations in the market values of such
securities. Accordingly, as interest rates decrease or increase, the potential
for capital appreciation or depreciation is less than for fixed-rate
obligations. Some Variable Rate Securities ("Variable Rate Demand Securities")
have a demand feature entitling the purchaser to resell the securities at an
amount approximately equal to amortized cost or the principal amount thereof
plus accrued interest. The Fund will determine the maturity of Variable Rate
Securities in accordance with Securities and Exchange Commission rules which
allow the Fund to consider certain of such instruments as having maturities
shorter than the maturity date on the face of the instrument. Under such rules,
the maturity date of Variable Rate Demand Securities may be considered to be the
longer of the period remaining until the next readjustment of the interest rate
or the period remaining until the principal amount can be recovered through
demand.
Structured Securities (Overseas Fund and Gold Fund).
The Overseas Fund and the Gold Fund may invest in structured notes and/or
preferred stock, the value of which is linked to the price of an underlying
instrument. Structured securities have different characteristics and risks than
other types of securities in which the Funds may invest. For example, the
coupon, dividend and/or redemption amounts may be increased or decreased
depending on the change in the value of an underlying instrument. (See
"Structured Securities" in the Statement of Additional Information for further
information.)
Temporary Strategies; Cash Reserves (Overseas Fund and Gold Fund).
The Overseas Fund and the Gold Fund each has the flexibility to respond
promptly to changes in market and economic conditions. In the interest of
preserving shareholders' capital, SOGEN A.M. Corp. may employ a temporary
defensive investment strategy if it determines such a strategy to be warranted.
Pursuant to such a defensive strategy, a Fund temporarily may hold cash (U.S.
dollars, foreign currencies, multinational 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 a Fund's investments may be made in
the United States and denominated in U.S. dollars. It is impossible to predict
whether, when or for how long a Fund will employ defensive strategies.
In addition, pending investment of proceeds from new sales of shares or to
meet ordinary daily cash needs, a Fund temporarily may hold cash (U.S. dollars,
foreign currencies or multinational currency units) and may invest any portion
of its assets in money market instruments.
24
<PAGE>
SoGen Funds, Inc.
Illiquid Securities.
Each Fund may invest up to 15% (10% in the case of the Money Fund) 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. A Fund, subject to the limitations for illiquid
investments stated above, may purchase securities that have been privately
placed but that are not eligible for purchase and sale under Rule 144A under the
Securities Act of 1933. That rule permits certain qualified institutional
buyers, such as the Funds, to trade in private placed securities that have not
been registered for sale under that Act. Rule 144A securities may or may not be
liquid depending on guidelines established by the Board of Directors. (See
"Illiquid Securities" in the Statement of Additional Information.)
Expenses (Overseas Fund and Gold Fund).
The cost of investing in foreign securities is higher than the cost of
investing in U.S. securities. Investing in each Fund is an efficient way for an
individual to participate in foreign markets, but its expenses, including
advisory and custody fees, are higher than the expenses of a typical domestic
mutual fund.
Change of Objective.
A 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 a Fund would remain an appropriate investment in light
of his or her then current financial position and needs. Shareholders will be
notified a minimum of sixty days in advance of any change in investment
objective.
25
<PAGE>
SoGen International Fund, Inc. SoGen Funds, Inc.
MANAGEMENT OF THE COMPANIES
Board of Directors.
The business and affairs of the Companies are managed under the direction
of their respective Boards of Directors.
Investment Adviser.
Each of the Companies' portfolios is managed by SOGEN A.M. Corp., 1221
Avenue of the Americas, New York, New York 10020. SOGEN A.M. Corp. is a
registered investment adviser which is indirectly owned by Societe Generale, one
of France's largest banks. Jean-Marie Eveillard, President and a director of
each of the Companies, is primarily responsible for the day-to-day management of
the Companies' investment portfolios. Mr. Eveillard has been a Director and
President or Executive Vice President of SOGEN A.M. Corp. since prior to 1991.
SOGEN A.M. Corp. furnishes investment advice to the Funds consistent with
each Fund's stated investment objective and policies. SOGEN A.M. Corp. also
furnishes the Companies with office space and certain facilities and services
required for their business and pays any compensation and expenses of the
officers of the Companies.
For these services and facilities, each Fund pays SOGEN A.M. Corp. a fee,
paid quarterly or monthly, as indicated, at an annual rate of the average daily
net assets of that Fund as follows:
<TABLE>
<S> <C>
International Fund (Quarterly)......... 1.00% of the first $25 million and
0.75% of the excess over $25 million
Overseas Fund (Monthly)................ 0.75%
Gold Fund (Monthly).................... 0.75%
Money Fund (Monthly)................... 0.40%
</TABLE>
SOGEN A.M. Corp. may waive all or a portion of its fee, and, if necessary,
reimburse each Fund, by the amount that the Fund's total operating expenses
exceed the most restrictive expense limitation imposed by any state in which the
Fund's shares are qualified for sale. The annual fee rates listed above for the
International Fund, Overseas Fund and Gold Fund are higher than the rate of fees
paid by most United States mutual funds. The Companies believe, however, that
the advisory fee rates are not higher than the rate of fees paid by most other
mutual funds that invest significantly in foreign equity securities. For the
fiscal year ended March 31, 1996, the International Fund, Overseas Fund, Gold
Fund and Money Fund paid advisory fees equal to 0.75%, 0.75%, 0.75% and 0.19%,
respectively, of their average daily net asset values and each of the Funds'
total expenses, including the advisory fee, equaled 1.25%, 1.37%, 1.41% and
0.75%, respectively, of their average daily net asset values.
26
<PAGE>
SoGen International Fund, Inc. SoGen Funds, Inc.
Portfolio Transactions.
SOGEN A.M. Corp. selects the brokers and dealers which execute orders for
the purchase and sale of each Fund's portfolio securities. SOGEN A.M. Corp.
seeks to achieve "best execution" of such orders. "Best execution" means prompt
and reliable execution at the most favorable securities prices, taking into
account a number of largely judgmental considerations. Consistent with the
foregoing, portfolio transactions may be executed by brokers affiliated with
Societe Generale so long as the commission paid to the affiliated broker is
reasonable and fair compared to the commission that would be charged by an
unaffiliated broker in a comparable transaction. In addition, subject to the
consideration of best price and execution and to applicable regulations, SOGEN
A.M. Corp. may consider sales of the Funds' shares as a factor in the selection
of brokers to execute portfolio transactions.
Principal Underwriter.
The Funds' shares are offered, in states and countries in which such offer
is lawful, to investors either through selected securities dealers or directly
by the Funds' principal underwriter, Societe Generale Securities Corporation
("SGSC"), 1221 Avenue of the Americas, New York, New York 10020. SGSC is a
registered broker-dealer and an affiliate of Societe Generale.
Transfer Agent and Dividend Disbursing Agent.
DST Systems, Inc. ("DST"), P.O. Box 419324, Kansas City, Missouri, 64141-
6324, serves as transfer agent and dividend disbursing agent for each of the
Funds.
CAPITAL STOCK
The authorized capital stock of SoGen International Fund, Inc. consists of
250,000,000 shares, all of one class and of $0.001 par value. The authorized
capital stock of SoGen Funds, Inc. consists of 1 billion shares of common stock,
par value $0.001 per share of which 150,000,000 shares have been designated as
shares of the Overseas Fund, 150,000,000 shares have been designated as shares
of the Gold Fund and 700,000,000 shares have been designated as shares of the
Money Fund. All shares issued and outstanding are fully paid and non-assessable
and are redeemable at net asset value at the option of shareholders. Shares have
no preemptive or conversion rights and are freely transferable.
With respect to SoGen Funds, Inc., the Board of Directors is authorized to
reclassify and issue any unissued shares of the Funds without shareholder
approval. Accordingly, in the future, the Directors may create additional series
of shares with different investment objectives, policies or restrictions. Any
issuance of shares of another series or class would be governed by the
Investment Company Act of 1940 and Maryland law.
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SoGen International Fund, Inc. SoGen Funds, Inc.
Pursuant to their By-Laws, the Companies do 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 a Fund. The cost of any such notice and meeting
will be borne by the individual Fund for which the meeting was called.
Each share of common stock of SoGen International Fund is entitled to one
vote, and each share of common stock of the Overseas Fund, Gold Fund and Money
Fund is entitled to one vote for each dollar of net asset value and a
proportionate fraction of a vote for each fraction of a dollar of net asset
value. Generally, shares of each Fund within SoGen Funds, Inc. vote together on
any matter submitted to shareholders, except when otherwise required by the
Investment Company Act of 1940 or when a matter affects the interests of each
Fund in a different way, in which case the shareholders of each Fund vote
separately by class. If the directors determine that a matter does not affect
the interests of a Fund, then the shareholders of that Fund will not be entitled
to vote on that matter. Approval of the investment advisory agreement and the
distribution plan and agreement are matters to be determined separately by each
Fund.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Money Fund intends to declare a dividend of its net investment income
daily and pays such dividends monthly. The Money Fund intends to distribute net
realized capital gains, if any, at least annually.
It is the policy of the International Fund, Overseas Fund and Gold Fund to
make annual distributions of net investment income and net realized capital
gains, if any. Unless a shareholder otherwise elects, as permitted in the New
Account Application, income dividends and capital gains distributions will be
reinvested in additional shares of the Funds at net asset value per share
calculated as of the payment date. The Funds pay both income dividends and
capital gains distributions on a per share basis. As a result, on the
ex-dividend date of such payment, the net asset value per share of the
International Fund, Overseas Fund and Gold Fund will be reduced by the amount of
such payment. The net asset value per share of the Money Fund is expected,
however, to remain constant at $1.00 per share.
Each 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. To qualify, a Fund must meet certain income, diversification and
distribution requirements. As a regulated investment company, a 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 a Fund may be subject to foreign withholding
taxes.
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SoGen International Fund, Inc. SoGen Funds, Inc.
Shareholders normally will be taxed on the dividends and distributions they
receive from a Fund whether received in additional shares or cash. Dividend
payments representing taxable net investment income and any net short-term
capital gains will be taxable as ordinary income. Certain corporate shareholders
may be entitled to a deduction to the extent dividends paid as designated by the
International Fund or the Gold Fund qualify for the dividends-received
deduction. If any portion of the income of the Overseas Fund or the Money Fund
consists of dividends received from U.S. corporations, a portion of the
dividends paid by such Fund may qualify for the dividends-received deduction
available to corporate shareholders. Distributions of any net long-term capital
gains designated as capital gains distributions will be taxable to shareholders
as long-term capital gains regardless of how long they have held their shares. A
distribution will be treated as paid on December 31 of the current calendar year
if it is declared by a 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.
Upon the sale or other disposition of shares of a Fund, a shareholder may
realize a capital gain or loss which will be long-term or short-term, generally
depending upon the shareholder's holding period for the shares.
Information regarding the tax status of income dividends and capital gains
distributions will be sent to shareholders by January 31 of each year.
Backup Withholding.
The Funds are generally required by the Internal Revenue Service ("IRS") to
withhold 31% of the amount of taxable income dividends, capital gains
distributions and (except in the case of the Money Fund) redemption proceeds
paid to shareholders who have not complied with IRS regulations. In order to
avoid this withholding requirement, a U.S. shareholder must certify on the New
Account Application or on a separate Form W-9 that his Social Security or
Taxpayer Identification Number is correct and that he is exempt from, or is not
currently subject to, backup withholding. A non-U.S. shareholder is generally
subject to this 31% withholding on capital gains distributions and redemption
proceeds unless he certifies on the New Account Application or on a separate
Form W-8 that he is a non-resident alien and is not engaged in a trade or
business in the United States regarding his Fund shares.
Non-United States Shareholders.
Under current U.S. law, the Funds will ordinarily be obligated to withhold
30% of any ordinary income dividend payments to non-U.S. shareholders unless a
tax treaty exists between the U.S. and the shareholder's country of residence
which provides for withholding on a different basis. Non-U.S. shareholders may
incur a U.S. estate tax liability if they die owning a Fund's shares. Such
shareholders should consult their tax counselors as to the tax liability they
may incur to the United States as a
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SoGen International Fund, Inc. SoGen Funds, Inc.
result of owning a Fund's shares and as to the availability of any credits
against taxes payable to their own countries for taxes paid to the United
States.
The foregoing information is intended for general information only. Fund
distributions also may be subject to state, local and foreign taxes.
Shareholders should consult their own tax advisers regarding the particular tax
consequences of an investment in a Fund.
PERFORMANCE AND YIELD INFORMATION
International Fund, Overseas Fund and Gold Fund.
From time to time, each of the International Fund, Overseas Fund and Gold
Fund may illustrate in sales literature and advertisements its cumulative total
return and its average annual total return. A cumulative total return reflects a
Fund's performance over a stated period of time based on an assumed initial
investment. An average annual total return reflects the hypothetical annually
compounded return that would have produced the same cumulative total return if a
Fund's performance had been constant over the entire period. Because average
annual returns tend to smooth out variations in a 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 deduction of
the maximum sales commission of 3.75% and the reinvestment of all income
dividends and capital gains distributions. A Fund's performance figures will be
based on historical results and are not intended to indicate future performance.
Money Fund.
From time to time quotations of the Money Fund's "current yield" and
"effective yield" may be included in advertisements and communications to
shareholders. Both yield figures are based on historical earnings and are not
intended to indicate future performance. The "yield" of the Fund refers to the
net income generated by an investment in the Fund over a specified seven-day
period. This income is then "annualized", i.e., the amount generated by the
investment during that week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the investment. The "effective yield" is
expressed similarly but, when annualized, the income earned by an investment in
the Fund is assumed to be reinvested. The "effective yield" will be slightly
higher than the "current yield" because of the compounding effect of this
assumed reinvestment. "Current yield" and "effective yield" for the Fund will
vary based on changes in market conditions, the level of interest rates and the
level of the Fund's expenses. The Fund may include in its advertisements and
communications to shareholders total return quotations which include unrealized
gains and losses.
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SoGen International Fund, Inc. SoGen Funds, Inc.
Performance Ratings.
From time to time the Funds may discuss in sales literature and
advertisements their performance ratings or other information as published by
recognized mutual fund statistical services, such as Morningstar, Inc. or Lipper
Analytical Services, Inc. or by publications of general interest such as
Business Week or Money.
NET ASSET VALUE
Each 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 a Fund, less its liabilities, by the
total number of shares outstanding at the time of such computation.
In the case of the International Fund, Overseas Fund and Gold Fund,
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. In the case of the Money
Fund, portfolio securities are valued at their amortized cost, which
approximates market value, subject to guidelines and procedures established by
the Board of Directors in accordance with applicable SEC regulations. Securities
for which current market quotations are not readily available are valued at fair
value as determined in good faith by the Boards of Directors of the Companies.
HOW TO PURCHASE SHARES
The minimum initial investment to open a shareholder account is $1,000 for
the International Fund, Overseas Fund and Gold Fund and $10,000 for the Money
Fund, except that (i) the Automatic Investment Program requires a minimum
initial investment of $100 per Fund and (ii) an account with the Money Fund that
is opened by an exchange (see "Shareholder Services -- Exchange Privilege")
requires a minimum investment of $1,000. The minimum amount for subsequent
investments is $100 per Fund. A Fund's shares may be purchased through
authorized dealers or through DST, the Funds' transfer agent. A New Account
Application should accompany this Prospectus. A completed and signed application
is required for the initial account opened with the Funds.
Purchases Through Dealers.
Investors may purchase a Fund's shares through selected securities dealers
with whom SGSC has sales agreements. A prospective investor may obtain
additional New Account Applications from such authorized dealers. For a list of
authorized dealers, please contact SGSC at (212) 278-5800.
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SoGen International Fund, Inc. SoGen Funds, Inc.
Financial service firms that do not have a sales agreement with SGSC also
may place orders for purchases of a Fund's shares, but may charge the investor a
transaction fee in addition to the applicable sales load.
Authorized dealers and financial service firms are responsible for promptly
transmitting purchase orders to SGSC.
Purchases Through DST.
Shares of a Fund may be purchased through DST by mailing a check made
payable to The SoGen Funds along with the completed New Account Application to
The SoGen Funds, c/o DST, P.O. Box 419324, Kansas City, MO 64141-6324.
Public Offering Price.
The public offering price at which transactions will be effected will be
equal to the net asset value per share plus, in the case of the International
Fund, Overseas Fund and Gold Fund, a sales charge as described below. The net
asset value per share of the Money Fund is expected to remain constant at $1.00
per share. Orders for shares received by DST prior to the close of trading on
the NYSE, or orders received by dealers prior to such time and transmitted to
SGSC prior to the latter's close of business, will be effected based on the net
asset value determined as of the close of trading on the NYSE that day. Net
asset value per share is calculated as set forth in the section of this
Prospectus entitled "Net Asset Value." The sales charges currently in effect are
as follows:
<TABLE>
<CAPTION>
Sales Charge
Sales Charge as Expressed as Dealer Discount
Percent of Approximate as Percent of
Public Offering Percent of Net Public Offering
Investment Amounts Price Amount Invested Price
<S> <C> <C> <C>
Less than $25,000........................... 3.75% 3.90% 3.35%
$25,000 or more but less than $50,000....... 3.25% 3.35% 2.85%
$50,000 or more but less than $100,000...... 2.75% 2.83% 2.35%
$100,000 or more but less than $500,000..... 2.00% 2.04% 1.60%
$500,000 or more but less than $1,000,000... 1.00% 1.01% 0.80%
$1,000,000 and over......................... 0.00% 0.00% 0.00%
</TABLE>
Sales charges applicable to persons residing in countries outside the
United States may vary from those listed above.
SGSC reallows discounts to selected dealers with whom it has sales
agreements and is entitled to retain the balance over the dealer discounts. SGSC
may from time to time reallow the entire sales load, and may provide additional
promotional incentives, to dealers selling a Fund's shares. Such additional
promotional incentive may include financial assistance in connection with
pre-approved conferences or seminars, sales or training programs for invited
sales personnel and payment for travel expenses for such seminars or training
programs. In some instances the entire reallowance or incentives
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SoGen International Fund, Inc. SoGen Funds, Inc.
may be offered only to certain dealers which have sold or may sell significant
amounts of a Fund's shares. Authorized dealers to whom substantially the entire
sales charge is reallowed may be deemed to be underwriters as that term is
defined under the Securities Act of 1933.
SOGEN A.M. Corp. may from time to time pay a concession to a dealer which
employs a registered representative whose client invests in a Fund. Such amount
will be paid from the resources of SOGEN A.M. Corp.
Reducing the Sales Charge.
As shown in the table above, the size of the total investment in a Fund
will affect the sales charge. Described below are several methods to reduce the
applicable sales charge. In order to obtain a reduction in the sales charge, an
investor must notify, at the time of purchase, his dealer, SGSC or DST of the
applicability of one of the following:
Aggregation. The investment schedule above applies to the total amount
being invested by any "person," which term includes an individual, his spouse
and children under the age of 21, a trustee or other fiduciary purchasing for a
single trust, estate or single fiduciary account (including a pension,
profit-sharing or other employee benefit trust created pursuant to a plan
qualified under the Internal Revenue Code) although more than one beneficiary is
involved, or any U.S. bank or investment adviser purchasing shares for its
investment advisory clients or customers. Any such person purchasing for several
accounts at the same time may combine these investments into a single
transaction in order to reduce the applicable sales charge.
Concurrent Purchases. The sales load associated with an investment may be
reduced by combining concurrent purchases of shares of the International Fund,
Overseas Fund, Gold Fund and shares of other funds advised by SOGEN A.M. Corp.,
offered subsequent to the date of this Prospectus subject to a sales load
("SoGen Load Funds"), by any "person," as described above under "Aggregation".
The concurrent purchase discount does not apply to purchases of the SoGen Money
Fund. The applicable sales load will be based on the total dollar amount of the
investment in shares of two or more SoGen Load Funds that are concurrently
purchased.
Rights of Accumulation. A Fund's shares may be purchased at a reduced
sales charge by a "person" (as defined above) who is already a shareholder by
taking into account not only the amount then being invested, but also the
current net asset value of the shares of any SoGen Load Fund already held by
such person. If the current net asset value of the qualifying shares already
held plus the net asset value of the current purchase exceeds a point in the
schedule of sales charges at which the charge is reduced to a lower percentage,
the entire current purchase is eligible for the reduced charge. To be entitled
to a reduced sales charge pursuant to the Rights of Accumulation, the investor
must notify his dealer, SGSC or DST at the time of purchase that he
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SoGen International Fund, Inc. SoGen Funds, Inc.
wishes to take advantage of such entitlement, and give the numbers of his
accounts, and those accounts held in the name of his spouse or for a minor child
and the specific relationship of each such other person to the investor.
Letter of Intention. An investor may also qualify for a reduced sales
charge by completing the Letter of Intention (the "Letter") contained in the New
Account Application or a form for this purpose which may be obtained by
contacting the Funds at (800) 334-2143. This enables the investor to aggregate
purchases of shares of any SoGen Load Fund during a thirteen-month period for
purposes of calculating the applicable sales charge. Applicable shares of any
SoGen Load Fund currently owned by the investor will be credited as purchases
toward the completion of the Letter at the greater of their net asset value on
the date the Letter is executed or their cost. No retroactive adjustment will be
made if purchases exceed the amount indicated in the Letter. For each investment
made, the investor must notify his dealer, SGSC or DST that a Letter is on file
along with all account numbers associated with the Letter.
The Letter is not a binding obligation on the investor. However, 5% of the
amount specified in the Letter will be held in escrow, and if the investor's
purchases are less than the amount specified, the investor will be requested to
remit to the appropriate Fund an amount equal to the difference between the
sales charge paid and the sales charge applicable to the aggregate purchases
actually made. If not remitted within 20 days after written request, an
appropriate number of escrowed shares will be redeemed in order to realize the
difference. However, the sales charge applicable to the investment will in no
event be any higher than if the shareholder had not submitted a Letter. Either
the shareholder or the Company may cancel the arrangement at will.
Sales at Net Asset Value. Shares of the International Fund, Overseas Fund
and Gold Fund may be sold at net asset value (i.e., without a sales charge) (i)
to registered representatives or employees (and their spouses and minor
children) of authorized dealers, or to any trust, pension, profit-sharing or
other benefit plan for only such persons, (ii) to banks or trust companies or
their affiliates when the bank, trust company or affiliate is authorized to make
investment decisions on behalf of a client, (iii) to investment advisers and
financial planners who place trades for their own accounts or the accounts of
their clients and who charge a management, consulting or other fee for their
services, (iv) to clients of such investment advisers and financial planners who
place trades for their own accounts if the accounts are linked to the master
account of such investment adviser or financial planner on the books and records
of the broker, agent, investment adviser or financial institution, and (v) to
retirement and deferred compensation plans and trusts used to fund those plans,
including, but not limited to, those defined in Section 401(a), 403(b) or 457 of
the Internal Revenue Code and "rabbi trusts." Investors may be charged a fee if
they effect transactions in Fund shares through a broker or agent. Shares of the
Funds may also be sold at net asset value to current officers, directors and
employees (and their spouses and minor children) of the Companies, SOGEN A.M.
Corp., SGSC, U.S. branches and affiliates of Societe
34
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SoGen International Fund, Inc. SoGen Funds, Inc.
Generale, employees (and their spouses and minor children) of certain firms
providing services to the Funds (such as the custodian and the shareholder
servicing agent), and to any trust, pension, profit-sharing or other benefit
plan for only such persons. A Fund may also issue shares at net asset value in
connection with the acquisition of, or merger or consolidation with, another
investment company. The sales of shares at net asset value described in this
section are made upon the written assurance of the purchaser that the purchase
is made for investment purposes and that the shares will not be resold except
through redemption. Such notice must be given to SGSC or DST at the time of
purchase on a form for this purpose as available from the Funds.
Reinstatement Privilege.
In addition, an investor is entitled to a one-time per account privilege to
reinvest in any SoGen Load Fund, the proceeds of a full or partial redemption of
shares from a SoGen Load Fund at the then applicable net asset value without
payment of a sales charge. To exercise this privilege the investor must submit
to SGSC or DST, within 30 days after the redemption, both a written request for
reinstatement and a check in an amount not exceeding the redemption proceeds. An
investor may also transfer an investment in any SoGen Load Fund to an IRA or
other tax qualified retirement plan account in any SoGen Load Fund without
payment of a sales charge. Such a transfer involves a redemption of a Fund's
shares and a reinvestment of the proceeds and, hence, may involve a taxable
transaction for income tax purposes. Reinstatement will not prevent recognition
of a gain realized on the redemption, but a loss may be disallowed for tax
purposes. The amount of gain or loss resulting from the redemption may be
affected by exercise of the reinstatement privilege if the shares redeemed were
held for 90 days or less, or if a shareholder reinvests in the Funds within 30
days.
Bookshare Account Plan.
To facilitate the handling of transactions with shareholders, the Funds use
a bookshare account plan for shareholder accounts. DST as the Funds' transfer
agent automatically opens and maintains an account for each of the Funds'
shareholders directly registered with a Fund. All interests in shares, full and
fractional (rounded to three decimal places), are reflected in a shareholder's
book account. After any purchase, a confirmation is mailed to the shareholder
indicating the amount of full and fractional shares purchased, the price per
share and a statement of his account. Stock certificates will not be issued
unless the shareholder submits a written request to that effect to DST. (No
stock certificates will be issued for the Money Fund.) Under no circumstances
will a stock certificate for a fraction of a share be issued.
Conditions of Purchase.
The Companies and SGSC each reserves the right to refuse any order for
purchase of shares and to cancel any purchase due to nonpayment. Share purchases
are not binding on the Companies or SGSC until they are confirmed by DST as
paid. All
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<PAGE>
SoGen International Fund, Inc. SoGen Funds, Inc.
payments must be made in U.S. dollars, and all checks must be drawn on U.S.
banks. No cash will be accepted. As a condition of this offering, if an
investor's purchase is canceled due to nonpayment or because his check does not
clear, the investor will be responsible for any loss a Fund may incur as a
result thereof.
Rule 12b-1 Plan (International Fund, Overseas Fund and Gold Fund).
The International Fund, Overseas Fund and Gold Fund have each adopted a
Distribution Plan and Agreement (the "Plan") pursuant to Rule 12b-1 under the
Investment Company Act of 1940. Under the Plan, each Fund may pay SGSC a
quarterly distribution related fee at an annual rate not to exceed 0.25% of the
average daily value of a Fund's net assets. SGSC is obligated to use the amounts
received under the Plan for payments to qualifying dealers (not to exceed 0.25%
of the average daily net asset value of accounts originated by such dealers) for
their assistance in the distribution of a Fund's shares and the provision of
shareholder services and for other expenses such as advertising costs and the
payment for the printing and distribution of prospectuses to prospective
investors. SGSC bears distribution expenses to the extent they are not covered
by payments under the Plan. Any distribution expenses incurred by SGSC in any
fiscal year of a 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.
HOW TO REDEEM SHARES
Shareholders have the right to redeem all or any part of their shares of a
Fund for cash at the net asset value next computed after receipt of the
redemption request in proper form as further described below. Neither the
Companies nor SGSC currently charges a fee or commission upon the redemption of
a Fund's shares. Although it does not presently intend to do so, the Boards of
Directors of the Companies are empowered to impose a redemption fee of up to
1.0% of the value of shares being redeemed.
Shareholders may redeem either through authorized dealers, through DST or
by telephone. Shares held in the dealer's "street name" must be redeemed through
the dealer.
Redemptions Through Dealers.
Shareholders who have an account with an authorized dealer may submit a
redemption request to such dealer. Authorized dealers are responsible for
promptly transmitting redemption requests to SGSC. Dealers may impose a charge
for handling redemption transactions placed through them and may have particular
requirements concerning redemptions. Accordingly, shareholders should contact
their authorized dealers for more information.
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<PAGE>
SoGen International Fund, Inc. SoGen Funds, Inc.
Redemptions Through DST.
Shareholders may redeem their Fund shares through DST by transmitting
written redemption instructions to The SoGen Funds, c/o DST, P.O. Box 419324,
Kansas City, MO 64141-6324.
Redemptions by Telephone.
Shareholders who have authorized the Telephone Redemption Option may redeem
a Fund's shares in non-retirement accounts (minimum $500) by telephone by
calling DST at (800) 334-2143. (Authorization is made either in the New Account
Application or Special Options Form available by calling (800) 334-2143).
Telephone redemption requests received prior to the close of business on the
NYSE on any Fund business day will be effected on that day. Such requests
received after the close of business on the NYSE will be effected on the
following business day. Shareholders may not make a redemption request by
telephone if the proceeds are to be wired or mailed to a bank account number or
address other than the one previously designated by the shareholder. Such
requests must be in writing accompanied by a signature guarantee. Shareholders
who would like to change wiring instructions or the address to which redemption
checks are mailed, should send written notification, signed by all of the
account's registered shareholders and accompanied by a signature guarantee, to
DST at the address listed above. (See below for acceptable guarantors.) There is
a $50,000 maximum on telephone redemptions by check. There is no limitation on
redemptions by wire; however, a wire fee will be deducted from such proceeds.
Telephone redemption privileges may be difficult to implement and may be
modified or suspended without notice during periods of drastic economic or
market changes. DST has instituted procedures it believes are reasonably
designed to ensure that redemption instructions communicated by telephone are
genuine, and could be liable for losses caused by unauthorized or fraudulent
instructions in the absence of such procedures. DST will require a form of
personal identification prior to acting upon telephone instructions, will
provide a written confirmation of such transaction and will record a
shareholder's instructions. Telephone redemption privileges may be modified or
terminated at any time by the Companies upon 60 days' written notice to
shareholders.
Redemption Price.
Orders to redeem shares received in proper form by DST prior to the close
of trading on the NYSE, or redemption orders received by dealers prior to such
time and transmitted to SGSC prior to the latter's close of business, will be
effected at the net asset value determined as of the close of trading on the
NYSE that day.
37
<PAGE>
SoGen International Fund, Inc. SoGen Funds, Inc.
Redemption requests must meet all the following requirements to be
considered in proper form:
1. Written and signed instructions from the registered owner(s) must be
received by DST (except for telephone redemptions when the Telephone
Redemption Option has been authorized).
2. A letter or a stock power signed by the registered owner(s) must be
signature guaranteed by an acceptable guarantor. A guarantee is required
for such redemptions greater than $50,000, or where the redemption
proceeds are to be sent to an address other than the address of record
or to a person other than the registered shareholder(s) for the account.
A signature guarantee is not required for any amount redeemed when a
pre-designated bank has been identified by the shareholder. Any one of
the following guarantors is normally acceptable: (a) a commercial bank
or trust company; (b) a member firm of a domestic stock exchange; (c) a
foreign branch of any institution included in paragraph (a) or (b); (d)
a national securities exchange; and (e) a savings association.
Guarantees from a notary public are not acceptable.
3. All certificates, if any, to be redeemed must be received by DST.
4. In the case of shares held of record in the name of a corporation,
trust, fiduciary or partnership, evidence of authority to sign and a
stock power with signature(s) guaranteed must be received by DST.
Receiving Redemption Proceeds.
Payment of the redemption price will generally be made within three days
after receipt of the redemption request in proper form, but the Companies may
suspend the right of redemption and postpone payment during any period when (i)
trading on the NYSE is restricted or such exchange is closed, other than
customary weekend and holiday closings, (ii) the Securities and Exchange
Commission ("SEC") has by order permitted such suspension, or (iii) an
emergency, as defined by the rules of the SEC, exists, making disposal of
portfolio securities or determination of a Fund's net asset value not reasonably
practicable.
The Funds will not mail redemption proceeds for any shares until checks
(including certified or cashier checks) received in payment for such shares have
cleared, which may take up to fifteen days. Investors who wish to avoid any such
delay should purchase shares by wiring federal funds. In addition, any change of
address will require a thirty-day holding period before the proceeds of any
redemption will be released to the new address. Shareholders will have the
ability to use the exchange privilege during this holding period. Shareholders
can avoid the thirty-day holding period if either the redemption or change of
address request is signed by all registered owners and is accompanied by a
signature guarantee for each owner. The thirty-day
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<PAGE>
SoGen International Fund, Inc. SoGen Funds, Inc.
holding period can also be avoided by establishing bank wire redemption
instructions through the New Account Application or Special Options Form.
Redemption proceeds are normally paid in the form of a check. Should a
shareholder desire redemption proceeds to be wired, a wire fee will be deducted
from such proceeds.
The amount realized on a redemption may be more or less than the investor's
cost, depending on the net asset value of a Fund's shares at the time of such
redemption, and a gain or loss may be recognized for tax purposes.
Minimum Account Size.
Due to the relatively high cost of maintaining smaller accounts, the
Companies reserve the right to redeem shares in any account if the value of that
account drops below $500, except accounts for shareholders currently
participating in the Automatic Investment program described below. A shareholder
will be allowed at least 60 days to make an additional investment to bring his
account value to $500 or more before the redemption is processed.
SHAREHOLDER SERVICES
The Companies offer the following shareholder services:
Exchange Privilege.
Shareholders or authorized parties are entitled to exchange some or all of
their shares for shares of the Money Fund and for shares of other SoGen Load
Funds. Such shares exchanged will be valued at their respective net asset values
computed as of the close of trading on the NYSE on the day the exchange is
requested.
An exchange of shares pursuant to the exchange privilege may result in a
shareholder realizing a taxable gain or loss for income tax purposes. The
exchange privilege is available to shareholders residing in any state in which
the shares of the Fund being acquired may legally be sold. A shareholder wishing
to utilize the exchange privilege should read the prospectus of the Fund being
acquired.
There is no charge for the exchange privilege. Any exchange, however, must
meet the applicable minimum investment amount for the Fund into which the
exchange is being made. The minimum initial investment amount for the
International Fund, Overseas Fund and Gold Fund, whether by exchange or
purchase, is $1,000. The minimum initial investment amount for the Money Fund is
$10,000 directly and $1,000 by exchange. All subsequent amounts exchanged must
be $100 or more. Upon exchanges of shares of the Money Fund for shares of any
SoGen Load Fund, payment of the appliable sales load must be made, unless a
sales load has already been paid on such shares. For additional information
concerning exchanges, or to effect exchanges, contact the Funds at (800)
334-2143.
39
<PAGE>
SoGen International Fund, Inc. SoGen Funds, Inc.
Exchanges by telephone may be difficult to implement in times of drastic
economic or market changes. The exchange privilege should not be used to take
advantage of short-term swings in the securities markets. The Companies reserve
the right to limit or terminate the exchange privilege as to any shareholder who
makes exchanges more than four times a year (other than through dollar cost
averaging or a similar periodic investment program). The Companies can modify or
revoke the exchange privilege for all shareholders upon 60 days' prior written
notice or without notice in times of drastic economic or market changes.
Telephone Privileges.
In order to request telephone redemptions, exchanges and/or account
maintenance items, investors must have completed and returned to the Funds or
DST, a New Account Application or Special Options Form containing the
appropriate telephone election(s) and signature(s). Unless contrary instructions
are elected, the account will be entitled to make telephone exchanges and
account maintenance requests. Neither the Companies nor their agents will be
liable for following instructions communicated by telephone that are reasonably
believed to be genuine. Reasonable procedures will be employed on behalf of each
Fund to confirm that the instructions are genuine. Such procedures include, but
are not limited to, written confirmation of telephone transactions, tape
recording telephone conversations and requiring specific personal information
prior to acting upon telephone instructions.
Any owner(s), trustee(s) or other fiduciary entity as indicated in the
account registration, investment professional of record and/or other parties
that can provide specific personal information, will be allowed to initiate any
of the above referenced telephone transactions. Personal information may include
a combination of the following items: (i) the fund and account number, (ii) the
account registration, (iii) the social security or tax identification number on
the account, (iv) the address of record and any other information deemed
appropriate to allow access to the account.
Certain retirement accounts are not eligible for all the telephone
privileges referenced above. Please call (800) 334-2143 with all inquiries
pertaining to the legal requirements for any transaction.
Automatic Investment Program.
Investors may make regular semi-monthly, monthly and quarterly investments
of $100 (or more) in shares of a Fund, automatically from a checking or savings
account. Upon written authorization, DST will debit the investor's account as
indicated and use the proceeds to purchase shares of a Fund for the investor's
account. Because approval by the investor's bank is required, establishment of
an Automatic Investment Program may require at least thirty days. To establish
an Automatic Investment Program, indication must be made on the New Account
Application or Special Options Form, and a check (minimum $100 if a new account
is being established), savings account deposit
40
<PAGE>
SoGen International Fund, Inc. SoGen Funds, Inc.
slip or savings account statement must be forwarded to DST. Shares purchased
through Automatic Investment Program payments are subject to the redemption
restrictions for recent purchases described in "How to Redeem Shares." The
Companies may amend or cease to offer the Automatic Investment Program at any
time.
Dividend Direction Plan.
Shareholders in a Fund may elect to have income dividends and capital gains
distributions on their Fund shares invested without the payment of any sales
charge in shares of the Money Fund or shares of any SoGen Load Fund in which
they have an existing account and maintain a minimum account balance. All
dividends and distributions so invested are taxable for U.S. federal income tax
purposes as though received in cash. For further information about this
privilege, contact DST in writing at the appropriate address listed on page 32
or by telephone at (800) 334-2143.
Systematic Withdrawal Plan.
A shareholder who owns shares of a Fund with a current net asset value of
$10,000 or more may use those shares to establish a Systematic Withdrawal Plan
to receive a monthly or quarterly check in a stated amount of not less than $50
on a selected date. Dividends and distributions on shares invested under a
Systematic Withdrawal Plan may not be taken in cash but must be reinvested,
which will be done at net asset value. A Fund's shares will be redeemed as
necessary to meet withdrawal payments. Withdrawals in excess of dividends and
distributions will reduce and may deplete the invested principal and may result
in a gain or loss for tax purposes. Purchases of additional shares made
concurrently with withdrawals of shares are undesirable because of sales charges
incurred when purchases are made. Accordingly, a shareholder may not maintain a
Systematic Withdrawal Plan while simultaneously making regular purchases. The
Companies may amend or cease to offer the Systematic Withdrawal Plan at any
time.
Retirement Plans.
The Companies offer IRA, SEP and 403(b)(7) plans which allow investors to
save for retirement and defer taxes on investment income, if any. The tax
benefits of these plans may not be available for all persons. Investors should
consult their tax advisers regarding their eligibility.
For appropriate applications, please contact the Funds at (800) 334-2143.
Shareholder Statements and Reports.
A confirmation statement is mailed to shareholders for each transaction in
a Fund, and a summary statement and tax reporting are provided at year end. Each
Fund also provides shareholders with an annual Prospectus as well as annual and
semi-annual reports.
41
<PAGE>
SoGen International Fund, Inc. SoGen Funds, Inc.
Account Maintenance.
Shareholders will often need to update certain account information during
their relationship with the Funds. Please call (800) 334-2143 with any questions
concerning the legal requirements necessary to execute your request.
INQUIRIES
For information on how to buy shares of a Fund or to request additional
literature on any of the Funds, or for account information, shareholder services
or information on how to redeem shares, please call (800) 334-2143.
42
<PAGE>
SOGEN INTERNATIONAL FUND, INC.
SOGEN 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
UNDERWRITER
SOCIETE GENERALE SECURITIES CORPORATION
1221 Avenue of the Americas
New York, NY 10020
(212) 278-5800
LEGAL COUNSEL
DECHERT PRICE & RHOADS
477 Madison Avenue
New York, NY 10022
INDEPENDENT AUDITORS
KPMG PEAT MARWICK LLP
345 Park Avenue
New York, NY 10154
DOMESTIC CUSTODIAN
INVESTORS FIDUCIARY TRUST COMPANY
127 West 10th Street
Kansas City, MO 64105
GLOBAL CUSTODIAN
THE CHASE MANHATTAN BANK
4 Chase MetroTech Center
Brooklyn, NY 11245
SHAREHOLDER SERVICING AGENT
DST SYSTEMS, INC.
P.O. Box 419324
Kansas City, MO 64141-6324
(800) 334-2143
<PAGE>
(Picture of a Globe) SoGen International Fund, Inc.
SoGen Funds, Inc.
1221 Avenue of the Americas
New York, NY 10020
SGC1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
SOGEN OVERSEAS FUND
SOGEN GOLD FUND
SOGEN MONEY FUND
(LOGO GOES HERE)
1221 AVENUE OF THE AMERICAS
NEW YORK, NY 10020
(800) 334-2143
Societe Generale Asset Management Corp.
1221 Avenue of the Americas
New York, NY 10020
Investment Adviser
Societe Generale Securities Corporation
1221 Avenue of the Americas
New York, NY 10020
Principal Underwriter
This Statement of Additional Information provides information about SoGen
Overseas Fund, SoGen Gold Fund and SoGen Money Fund, three separate portfolios
of SoGen Funds, Inc. (the "Company"), an open-end management investment company,
in addition to the information contained in the Prospectus of the Company dated
July 31, 1996. This Statement of Additional Information is not a prospectus. It
relates to and should be read in conjunction with the Prospectus of the Company,
a copy of which can be obtained by writing or by calling the Company at
(800)-334-2143.
JULY 31, 1996
(REVISED EFFECTIVE NOVEMBER 25, 1996)
SGC10
<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 FUNDS............................................................. 3 14
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS...................................... 3 14
MANAGEMENT OF THE COMPANY............................................................. 12 25
INVESTMENT ADVISER AND OTHER SERVICES................................................. 14 25
DISTRIBUTION OF THE FUNDS' SHARES..................................................... 15 35
COMPUTATION OF NET ASSET VALUE........................................................ 17 30
HOW TO PURCHASE SHARES................................................................ 18 30
TAX STATUS............................................................................ 18 27
BROKERAGE ALLOCATION.................................................................. 21 26
CUSTODY OF PORTFOLIO.................................................................. 22 --
INDEPENDENT AUDITORS.................................................................. 22 --
FINANCIAL STATEMENTS.................................................................. 22 --
APPENDIX.............................................................................. 23 --
</TABLE>
2
<PAGE>
ORGANIZATION OF THE FUNDS
SoGen Overseas Fund, SoGen Gold Fund and SoGen Money Fund, (each
individually referred to as a "Fund", collectively, the "Funds" or,
alternatively, the "Overseas Fund," the "Gold Fund," and the "Money Fund,"
respectively) are three separate portfolios of SoGen Funds, Inc. (the
"Company"), an open-end management investment company incorporated under the
laws of Maryland in May 1993. Each Fund is a separate, diversified portfolio of
assets and has a different investment objective which it pursues through
separate investment policies, as described below. The Company's investment
adviser is Societe Generale Asset Management Corp. ("SOGEN A.M. Corp."), a
registered investment adviser. The Company's principal underwriter is Societe
Generale Securities Corporation ("SGSC"), a registered broker-dealer located in
New York.
Pursuant to the laws of Maryland, the Company's jurisdiction of
incorporation, the Board of Directors of the Company has adopted By-Laws of the
Company that do not require annual meetings of the Funds' shareholders. The
absence of a requirement that the Company hold annual meetings of the Funds'
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 a Fund's outstanding shares. The cost of any such notice and
meeting will be borne by each Fund.
Under the provisions of the Investment Company Act of 1940, a vacancy in
the office of director of the Company may be filled between meetings of the
shareholders of the Company by vote of the directors then in office if,
immediately after filling such vacancy, at least two-thirds of the directors
then holding office have been elected to the office of director by the
shareholders of the Funds. 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 Funds, 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 Funds
that it interprets Section 16(c) of the Investment Company Act of 1940, which
provides a means for dissident shareholders of common-law trusts to communicate
with other shareholders of such trusts and to vote upon the removal of trustees
upon the request in writing by the record holders of not less than 10 percent of
the outstanding shares of the trust, to apply to investment companies, such as
the Company, that are incorporated under Maryland law.
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
INVESTMENT OBJECTIVES OF THE FUNDS.
OVERSEAS FUND. The Overseas Fund seeks long-term growth of capital by
investing primarily in securities of small and medium size non-U.S. companies.
The Fund uses the techniques and invests in the types of securities described
below and in the Prospectus.
GOLD FUND. The Gold Fund seeks growth of capital by investing primarily in
securities of companies engaged in mining, processing, dealing in or holding
gold or other precious metals such as silver, platinum and palladium, both in
the United States and in foreign countries. Gold-related investments have
provided protection against loss of purchasing power during periods of extensive
price inflation and/or following periods of extensive credit expansion. Under
normal circumstances, at least 65% of the value of the Fund's total assets will
be invested in securities (which may include both equity and, to a limited
extent, debt securities) consisting of issuers engaged in gold operations,
including securities of gold mining finance companies as well as operating
companies with long, medium or short-life mines.
MONEY FUND. The Money Fund seeks as high a level of current income as is
considered consistent with the preservation of capital and liquidity. The Fund
pursues its objective by investing exclusively in U.S. dollar-denominated money
market instruments which mature in 397 days or less.
INVESTMENT POLICIES, TECHNIQUES AND RISKS.
FOREIGN SECURITIES. Each Fund may (and the Overseas 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 Funds may
invest in securities of foreign issuers directly or in the form of American
Depository Receipts (ADRs), Global Depository Receipts (GDRs), European
Depository Receipts (EDRs), or other securities representing underlying shares
of foreign issuers. Positions in these securities are not necessarily
denominated in the same currency as the common stocks into which they may be
converted. ADRs are receipts typically issued by an American bank or trust
company
3
<PAGE>
evidencing ownership of the underlying securities. EDRs are European receipts
evidencing a similar arrangement. GDRs are global offerings where two securities
are issued simultaneously in two markets, usually publicly in non-U.S. markets
and privately in the U.S. market. Generally ADRs, in registered form, are
designed for use in the U.S. securities markets, EDRs, in bearer form, are
designed for use in European securities markets. GDR's are designed for use in
the U.S. and European securities markets. Each of the Funds (except the Money
Fund) may invest in both "sponsored" and "unsponsored" ADRs. In a sponsored ADR,
the issuer typically pays some or all of the expenses of the depository and
agrees to provide its regular shareholder communications to ADR holders. An
unsponsored ADR is created independently of the issuer of the underlying
security. The ADR holders generally pay the expenses of the depository and do
not have an undertaking from the issuer of the underlying security to furnish
shareholder communications. Issuers of unsponsored ADRs are not obligated to
disclose material information in the United States and, therefore, there may not
be a correlation between such information and the market value of the ADRs.
Neither Fund expects 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 a Fund is
affected by the strength or weakness of the U.S. dollar against these
currencies. For example, if the dollar falls in value relative to the Japanese
yen, the dollar value of a yen-denominated stock held in the portfolio will rise
even though the price of the stock remains unchanged. Conversely, if the dollar
rises in value relative to the yen, the dollar value of the yen-denominated
stock will fall. (See discussion of transaction hedging and portfolio hedging
under "Currency Exchange Transactions.")
Investors should understand and consider carefully the risks involved in
foreign investing. Investing in foreign securities, positions which are
generally denominated in foreign currencies, and utilization of forward foreign
currency exchange contracts involve certain risks and opportunities not
typically associated with investing in U.S. securities. These considerations
include: fluctuations in the rates of exchange between the U.S. dollar and
foreign currencies; possible imposition of exchange control regulations or
currency restrictions that would prevent cash from being brought back to the
United States; less public information with respect to issuers of securities;
less governmental supervision of stock exchanges, securities brokers, and
issuers of securities; different accounting, auditing and financial reporting
standards; different settlement periods and trading practices; less liquidity
and frequently greater price volatility in foreign markets than in the United
States; imposition of foreign taxes; and sometimes less advantageous legal,
operational and financial protections applicable to foreign sub-custodial
arrangements.
Although the Funds seek to invest in companies and governments of countries
having stable political environments, there is the possibility of expropriation
or confiscatory taxation, seizure or nationalization of foreign bank deposits or
other assets, establishment of exchange controls, the adoption of foreign
government restrictions, or other adverse political, social or diplomatic
developments that could affect investment in these nations.
The countries in which the Overseas Fund invests are included in those
listed below. The Overseas 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. In addition, the Gold Fund
may invest in gold-related investments in any of such countries deemed suitable
by the investment adviser.
4
<PAGE>
<TABLE>
<CAPTION>
MATURE MARKETS EMERGING MARKETS
<S> <C> <C>
Australia Argentina Nigeria
Austria Brazil Pakistan
Belgium Chile People's Republic of China
Canada Czech Republic Peru
Denmark Ecuador Philippines
Finland Greece Poland
France Hungary Portugal
Germany India South Africa
Hong Kong Indonesia South Korea
Ireland Israel Sri Lanka
Italy Jamaica Taiwan
Japan Jordan Thailand
Luxembourg Kenya Turkey
Netherlands Malaysia Uruguay
New Zealand Mexico Venezuela
Norway Morocco Vietnam
Singapore
Spain
Sweden
Switzerland
United
Kingdom
United States
</TABLE>
It may not be feasible for the Overseas Fund or the Gold Fund currently to
invest in all of these countries due to restricted access to their securities
markets or inability to implement satisfactory custodial arrangements.
Since the Money Fund will invest only in U.S. dollar-denominated
securities, the return on its shares will not be subject to the risk of adverse
changes in the exchange rates between the U.S. dollar and foreign currencies. In
addition, the Money Fund does not intend to invest in the securities markets of
emerging countries.
FLUCTUATIONS IN THE PRICE OF GOLD (GOLD FUND). The price of gold has been
subject to substantial upward and downward price movements over short periods of
time and may be affected by unpredictable international monetary and political
policies, such as currency devaluations or revaluations, economic conditions
within an individual country, trade imbalances or trade or currency restrictions
between countries and world inflation rates and interest rates. The price of
gold, in turn, is likely to affect the market prices of securities of companies
mining, processing or dealing in gold, and accordingly, the value of the Fund's
investments in such securities also may be affected.
CURRENCY EXCHANGE TRANSACTIONS (OVERSEAS FUND AND GOLD FUND). A currency
exchange transaction may be conducted either on a spot (I.E., cash) basis at the
spot rate for purchasing or selling currency prevailing in the foreign exchange
market or through a forward currency exchange contract ("Forward Contract"). A
Forward Contract is an agreement to purchase or sell a specified currency at a
specified future date (or within a specified time period) and price set at the
time of the contract. Forward Contracts are usually entered into with banks and
broker/dealers, are not exchange traded and are usually for less than one year,
but may be renewed.
Currency exchange transactions may involve currencies of the different
countries in which the Overseas Fund and Gold Fund may invest, and serve as
hedges against possible variations in the exchange rates between these
currencies and the U.S. dollar. A Fund's currency transactions are limited to
transaction hedging and portfolio hedging involving either specific transactions
or portfolio positions. Transaction hedging is the purchase or sale of a Forward
Contract with respect to specific payables or receivables of a 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. A Fund may engage in portfolio
hedging with respect to the currency of a particular country in amounts
approximating actual or anticipated positions in securities denominated in that
currency.
5
<PAGE>
If a Fund enters into a Forward Contract, the custodian bank will segregate
liquid assets of the Fund having a value equal to the Fund's commitment under
such Forward Contract.
At the maturity of a Forward Contract to deliver a particular currency, a
Fund may either sell the portfolio security related to such contract and make
delivery of the currency, or it may retain the security and either acquire the
currency on the spot market or terminate its contractual obligation to deliver
the currency by purchasing an offsetting contract with the same currency trader
obligating it to purchase on the same maturity date the same amount of the
currency.
It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of a Forward Contract. Accordingly, it
may be necessary for a Fund to purchase additional currency on the spot market
(and bear the expense of such purchase) if the market value of the security is
less than the amount of currency the Fund is obligated to deliver, and if a
decision is made to sell the security and make delivery of the currency.
Conversely, it may be necessary to sell on the spot market some of the currency
received upon the sale of the portfolio security if its market value exceeds the
amount of currency the Fund is obligated to deliver.
If a 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 a 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 a
Fund enters into a Forward Contract for the sale of a currency and the date it
enters into an offsetting contract for the purchase of the currency, the Fund
will realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should forward
prices increase, the Fund will suffer a loss to the extent the price of the
currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell. A default on the contract would deprive the Fund of unrealized
profits or force the Fund to cover its commitments for purchase or sale of
currency, if any, at the current market price.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise. Moreover,
it may not be possible for a Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to sell the currency
at a price above the devaluation level it anticipates. The cost to a 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 (OVERSEAS FUND AND GOLD FUND). Each of the
Overseas Fund and the Gold Fund may invest in debt securities, including
lower-rated securities (I.E., securities rated BB or lower by Standard & Poor's
Corporation ("S&P") or Ba or lower by Moody's Investors Service, Inc.
("Moody's"), commonly called "junk bonds") and securities that are not rated.
There are no restrictions as to the ratings of debt securities acquired by a
Fund or the portion of a Fund's assets that may be invested in debt securities
in a particular rating category, except that a Fund will not invest more than
20% of its assets in securities rated below investment grade or unrated
securities considered by the investment adviser to be of comparable credit
quality.
Securities rated BBB by S&P or Baa by Moody's (the lowest investment grade
ratings) are considered to be of medium grade and to have speculative
characteristics. Debt securities rated below investment grade are predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal. Although lower-rated debt and comparable unrated debt securities may
offer higher yields than do higher rated securities, they generally involve
greater volatility of price and risk of principal and income, including the
possibility of default by, or bankruptcy of, the issuers of the securities. In
addition, the markets in which lower-rated and unrated debt securities are
traded are more limited than those in which higher rated securities are traded.
Adverse publicity and investors' perceptions, whether or not based on
fundamental analysis, may decrease the values and liquidity of lower-rated debt
securities, especially in a thinly traded market. During periods of thin trading
in these markets, the spread between bid and asked prices is likely to increase
significantly, and a Fund may have greater difficulty selling its portfolio
securities. See "Computation of Net Asset Value." Analyses of the
creditworthiness of issuers of lower-rated debt securities may be more complex
than for issuers of higher rated securities, and the ability of the Fund to
achieve its investment objective may, to the extent of investment in lower-rated
debt securities, be more dependent upon such creditworthiness analyses than
would be the case if the Fund were investing in higher rated securities.
Lower-rated debt securities may be more susceptible to real or perceived
adverse economic and competitive industry conditions than investment grade
securities. The prices of lower-rated debt securities have been found to
6
<PAGE>
be less sensitive to interest rate changes than higher rated investments, but
more sensitive to adverse economic downturns or individual corporate
developments. A projection of an economic downturn or of a period of rising
interest rates, for example, could cause a decline in lower-rated debt
securities' prices because the advent of a recession could lessen the ability of
a highly-leveraged company to make principal and interest payments on its debt
securities. If the issuer of lower-rated debt securities defaults, a Fund may
incur additional expenses seeking recovery.
A more complete description of the characteristics of bonds in each rating
category is included in the appendix to this Statement of Additional
Information.
BANK OBLIGATIONS. Each Fund may invest in bank obligations, which may
include bank certificates of deposit, time deposits or bankers' acceptances.
Certificates of deposit and time deposits are negotiable certificates issued
against funds deposited in a commercial bank for a definite period of time and
earning a specified return. Bankers' acceptances are negotiable drafts or bills
of exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning in effect that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Investments in these instruments are limited to obligations of domestic banks
(including their foreign branches) and U.S. and foreign branches of foreign
banks having capital surplus and undivided profits in excess of $100 million.
ASSET-BACKED SECURITIES (MONEY FUND). The Money Fund can invest a portion
of its assets in debt obligations known as "Asset-Backed Securities" which are
Eligible Securities (as that term is hereinafter defined). The credit quality of
most Asset-Backed Securities depends primarily on the credit quality of the
assets underlying such securities, how well the entity issuing the security is
insulated from the credit risk of the originator (or any other affiliated
entities), and the amount and quality of any credit support provided to the
securities. The rate of principal payments on Asset-Backed Securities generally
depends on the rate of principal payments received on the underlying assets,
which in turn may be affected by a variety of economic and other factors. As a
result, the yield on any Asset-Backed Security is difficult to predict with
precision and actual yield to maturity may be more or less than the anticipated
yield to maturity. Asset-Backed Securities may be classified as "Pass-Through
Certificates" or "Collateralized Obligations." Where deemed appropriate by the
Board of Directors, Asset-Backed Securities may be valued using prices provided
by a pricing service. The stated maturity of a particular Asset-Backed Security
will be treated as the instrument's maturity for purposes of the Fund's
portfolio maturity requirements, unless there exists an associated demand
feature, enabling the Fund to treat the instrument as having a shorter maturity.
"Pass-Through Certificates" are Asset-Backed Securities which represent an
undivided fractional ownership interest in the underlying pool of assets.
Pass-Through Certificates usually provide for payments of principal and interest
received to be passed through to their holders, usually after deduction for
certain costs and expenses incurred in administering the pool. Because
Pass-Through Certificates represent ownership interests in the underlying
assets, the holders thereof bear directly the risk of any defaults by the
obligors on the underlying assets not covered by any credit support.
Asset-Backed Securities issued in the form of debt instruments, also known
as Collateralized Obligations, are generally issued as the debt of a special
purpose entity organized solely for the purpose of owning such assets and
issuing such debt. The assets collateralizing such Asset-Backed Securities are
pledged to a trustee or custodian for the benefit of the holders thereof. Such
issuers generally hold no assets other than those underlying the Asset-Backed
Securities and any credit support provided. As a result, although payments on
such Asset-Backed Securities are obligations of the issuers, in the event of
default on the underlying assets not covered by any credit support, the issuing
entities are unlikely to have sufficient assets to satisfy their obligations on
the related Asset-Backed Securities.
METHODS OF ALLOCATING CASH FLOWS. While many Asset-Backed Securities are
issued with only one class of security, many others are issued in more than one
class, each with different payment terms. Multiple class Asset-Backed Securities
are issued for two main reasons. First, multiple classes may be used as a method
of providing credit-support. This is accomplished typically through creation of
one or more classes whose right to payments on the Asset-Backed Security is made
subordinate to the right to such payments of the remaining class or classes.
Second, multiple classes may permit the issuance of securities with payment
terms, interest rates or other characteristics differing both from those of each
other and from those of the underlying assets. Examples include so-called
"multi-tranche CMOs" (collateralized mortgage obligations with serial maturities
such that all principal payments received on the mortgages underlying the
securities are first paid to the class with the earliest stated maturity, and
then sequentially to the class with the next stated maturity), "Strips"
(Asset-Backed Securities entitling the holder to disproportionate interests with
respect to the allocation of interest and principal of the
7
<PAGE>
assets backing the security), and securities with a class or classes having
characteristics which mimic the characteristics of non-Asset-Backed Securities,
such as floating interest rates (I.E., interest rates which adjust as a
specified benchmark changes) or scheduled amortization of principal.
TYPES OF CREDIT SUPPORT. Asset-Backed Securities are often backed by a pool
of assets representing the obligations of a number of different parties. To
lessen the effect of failures by obligors on these underlying assets to make
payments, such securities may contain elements of credit support. Such credit
support falls into two classes: liquidity protection and protection against
ultimate default on the underlying assets. Liquidity protection refers to the
provision of advances, generally by the entity administering the pool of assets,
to ensure that scheduled payments on the underlying pool are made in a timely
fashion. Protection against ultimate default ensures payment on at least a
portion of the assets in the pool. Such protection may be provided through
guarantees, insurance policies or letters of credit obtained from third parties,
through various means of structuring the transaction, or through a combination
of such approaches. Examples of Asset-Backed Securities with credit support
arising out of the structure of the transaction include "senior-subordinated
securities" (multiple class Asset-Backed Securities with certain classes
subordinate to other classes as to the payment of principal thereon, with the
result that defaults on the underlying assets are borne first by the holders of
the subordinated class) and Asset-Backed Securities that have "reserve funds"
(where cash or investments, sometimes funded from a portion of the initial
payments on the underlying assets, are held in reserve against future losses) or
that have been "over-collateralized" (where the scheduled payments on, or the
principal amount of, the underlying assets substantially exceed that required to
make payment on the Asset-Backed Securities and pay any servicing or other
fees). The degree of credit support provided on each issue is based generally on
historical information respecting the level of credit risk associated with such
payments. Delinquency or loss in excess of that anticipated could adversely
affect the return on an investment in an Asset-Backed Security.
CREDIT CARD RECEIVABLE SECURITIES. The Fund may invest in Asset Backed
Securities backed by receivables from revolving credit card agreements ("Credit
Card Receivable Securities"). Most of the Credit Card Receivable Securities
issued publicly to date have been Pass-Through Certificates. In order to
lengthen the maturity of Credit Card Receivable Securities, most such securities
provide for a fixed period during which only interest payments on the underlying
accounts are passed through to the security holder and principal payments
received on such accounts are used to fund the transfer to the pool of assets
supporting the related Credit Card Receivable Securities of additional credit
card charges made on an account. The initial fixed period usually may be
shortened upon the occurrence of specified events which signal a potential
deterioration in the quality of the assets backing the security, such as the
imposition of a cap on interest rates. The ability of the issuer to extend the
life of an issue of Credit Card Receivable Securities thus depends upon the
continued generation of additional principal amounts in the underlying accounts
during the initial period and the non-occurrence of specified events.
Competitive, regulatory and general economic factors could adversely affect the
rate at which new receivables are created in an account and conveyed to an
issuer, shortening the expected weighted average life of the related Credit Card
Receivable Security and reducing its yield. An acceleration in cardholders'
payment rates or any other event which shortens the period during which
additional credit card charges on an account may be transferred to the pool of
assets supporting the related Credit Card Receivable Security could have a
similar effect on the weighted average life and yield.
Credit card holders are entitled to the protection of a number of state and
federal consumer credit laws, many of which give such holder the right to set
off certain amounts against balances owed on the credit card, thereby reducing
amounts paid on accounts. In addition, unlike most other Asset-Backed
Securities, accounts are unsecured obligations of the cardholder.
WHEN-ISSUED OR DELAYED-DELIVERY SECURITIES. Each Fund may purchase
securities on a "when-issued" or "delayed delivery" basis. Although the payment
and interest terms of these securities are established at the time a 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. A Fund makes
such commitments only with the intention of actually acquiring the securities,
but may sell the securities before settlement date if the investment adviser
deems it advisable for investment reasons.
At the time a Fund enters into a binding obligation to purchase securities
on a when-issued basis, liquid assets of the Fund having a value at least as
great as the purchase price of the securities to be purchased will be segregated
on the books of the Fund and held by the custodian throughout the period of the
obligation. The use of these investment strategies, as well as any borrowing by
a Fund, may increase net asset value fluctuation.
STRUCTURED SECURITIES (OVERSEAS FUND AND GOLD FUND). The Overseas Fund may
invest in structured notes and/or preferred stock, the value of which is linked
to currencies, interest rates, other commodities, indices or other financial
indicators, and the Gold Fund may invest in structured notes and/or preferred
stock, the value of
8
<PAGE>
which is linked to the price of gold or other precious metals. Structured
securities differ from other types of securities in which the Funds may invest
in several respects. For example, the coupon dividend and/or redemption amount
at maturity may be increased or decreased depending on changes in the value of
the underlying instrument.
Investment in structured securities involves certain risks. In addition to
the credit risk of the security's issuer and the normal risks of price changes
in response to changes in interest rates, the redemption amount may decrease as
a result of changes in the price of the underlying instrument. Further, in the
case of certain structured securities, the coupon and/or dividend may be reduced
to zero, and any further declines in the value of the underlying instrument may
then reduce the redemption amount payable on maturity. Finally, structured
securities may be more volatile than the price of the underlying instrument.
ILLIQUID SECURITIES. Each Fund may invest up to 15% (10% in the case of the
Money Fund) 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, a Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than that which prevailed when it decided to sell. Restricted securities will be
priced at fair value as determined in good faith by the Board of Directors. If,
through the appreciation of illiquid securities or the depreciation of liquid
securities, a Fund should be in a position where more than 15% of the value of
its net assets is invested in illiquid assets, including restricted securities,
the Fund will take appropriate steps to protect liquidity.
Notwithstanding the above, a 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 Funds, to trade in privately placed securities that have not been
registered for sale under the 1933 Act. SOGEN A.M. Corp., under the supervision
of the Board of Directors of the Company, will consider whether securities
purchased under Rule 144A are illiquid and thus subject to a Fund's restriction
on investing in illiquid securities. A determination as to whether a Rule 144A
security is liquid or not is a factual issue requiring an evaluation of a number
of factors. In making this determination, SOGEN A.M. Corp. will consider the
trading markets for the specific security, taking into account the unregistered
nature of a Rule 144A security. In addition, SOGEN A.M. Corp. could consider (1)
the frequency of trades and quotes, (2) the number of dealers and potential
purchasers, (3) the dealer undertakings to make a market, and (4) the nature of
the security and of market place trades (E.G., the time needed to dispose of the
security, the method of soliciting offers and the mechanics of transfer). The
liquidity of Rule 144A securities would be monitored and if, as a result of
changed conditions, it is determined that a Rule 144A security is no longer
liquid, a Fund's holdings of illiquid securities would be reviewed to determine
what steps, if any, are required to assure that the Fund does not invest more
than the maximum percentage of its assets in illiquid securities. Investing in
Rule 144A securities could have the effect of increasing the amount of a Fund's
assets invested in illiquid securities if qualified institutional buyers are
unwilling to purchase such securities.
CHANGE OF OBJECTIVE. The investment objective of each Fund is not a
fundamental policy and, accordingly, may be changed by the Board of Directors
without shareholder approval. Shareholders will be notified a minimum of sixty
days in advance of any change in investment objective.
INVESTMENT RESTRICTIONS.
In pursuing its investment objective, each Fund will not:
1. With respect to 75% of the value of a Fund's total assets, invest more
than 5% of its total assets (valued at time of investment) in securities
of any one issuer, except securities issued or guaranteed by the
government of the United States, or any of its agencies or
instrumentalities, or acquire securities of any one issuer which, at the
time of investment, represent more than 10% of the voting securities of
the issuer;
2. Borrow money except unsecured borrowings from banks as a temporary
measure in exceptional circumstances, and such borrowings may not exceed
10% of a Fund's net assets at the time of the borrowing. A Fund will not
purchase securities while borrowings exceed 5% of its total assets;
9
<PAGE>
3. Invest more than 25% of its assets (valued at time of investment) in
securities of companies in any one industry other than U.S. Government
Securities (except that the Gold Fund will, as a matter of fundamental
policy, concentrate its investments in the precious metals industry and
the Money Fund may concentrate its investments in U.S. bank
obligations);
4. Make loans, but this restriction shall not prevent a Fund from (a)
buying a part of an issue of bonds, debentures, or other obligations
that are publicly distributed, or from investing up to an aggregate of
15% of its total assets (taken at market value at the time of each
purchase) in parts of issues of bonds, debentures or other obligations
of a type privately placed with financial institutions or (b) lending
portfolio securities, provided that a 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, a
Fund may acquire "restricted" securities which, in the event of a
resale, might be required to be registered under the Securities Act of
1933 (the "1933 Act") on the grounds that the Fund could be regarded as
an underwriter as defined by the 1933 Act with respect to such resale;
6. Purchase and sell real estate or interests in real estate, although it
may invest in marketable securities of enterprises that invest in real
estate or interests in real estate;
7. Make margin purchases of securities, except for the use of such
short-term credits as are needed for clearance of transactions;
8. Sell securities short or maintain a short position, except short sales
against-the-box.
Restrictions 1 through 8 above (except the portions in parentheses) are
"fundamental," which means that they cannot be changed without the vote of a
majority of the outstanding voting securities of a Fund (defined by the
Investment Company Act of 1940 as the lesser of (i) 67% of a Fund's shares
present at a meeting if more than 50% of the shares outstanding are present or
(ii) more than 50% of a Fund's outstanding shares). In addition, each Fund is
subject to a number of restrictions that may be changed by the Board of
Directors without shareholder approval. Under those non-fundamental
restrictions, a Fund will not:
a. Invest in companies for the purpose of management or the exercise of
control;
b. Invest in oil, gas or other mineral leases or exploration or development
programs, although it may invest in marketable securities of enterprises
engaged in oil, gas or mineral exploration;
c. Invest more than 10% of its net assets (valued at time of investment)
in warrants, valued at the lower of cost or market; provided that
warrants acquired in units or attached to securities shall be deemed to
be without value for purposes of this restriction;
d. Invest more than 5% of its total assets (valued at time of investment)
in securities of issuers with less than three years' operation
(including predecessors);
e. Purchase or retain securities of a company if all of the directors and
officers of the Company and of its investment adviser who individually
own beneficially more than 0.5% of the securities of the company
collectively own beneficially more than 5% of such securities;
f. Pledge, mortgage or hypothecate its assets, except as may be necessary
in connection with permitted borrowings or in connection with short
sales;
g. Purchase or sell commodities or commodity contracts, except that it may
enter into forward contracts and may sell commodities received by it as
distributions on portfolio investments; and
h. Purchase or sell put and call options on securities or on futures
contracts.
The Money Fund will only purchase securities that present minimal credit
risks and which are First Tier or Second Tier Securities (otherwise referred to
as "Eligible Securities"). An Eligible Security is:
(1) a security with a remaining maturity of 397 days or less: (a) that is
rated by the requisite nationally recognized statistical rating organizations
designated by the Securities and Exchange Commission (currently Moody's, S&P,
Duff and Phelps, Inc., Fitch Investors Services, Inc., Thompson Bankwatch, and,
with respect to debt issued by banks, bank holding companies, United Kingdom
building societies, broker/dealers and broker/ dealers' parent companies, and
bank-supported debt, IBCA Limited and its affiliate, IBCA, Inc. -- collectively,
the "NRSROs") in one of the two highest rating categories for short-term debt
obligations (the requisite NRSROs
* The Funds have no present intention of lending their portfolio securities.
10
<PAGE>
being any two or, if only rated by one, that one NRSRO), or (b) that itself was
unrated by any NRSRO, but was issued by an issuer that has outstanding a class
of short-term debt obligations (or any security within that class) meeting the
requirements of subparagraph 1(a) above that is of comparable priority and
security;
(2) a security that at the time of issuance was a long-term security but
has a remaining maturity of 397 days or less and: (a) whose issuer received a
rating in one of the two highest rating categories for short-term debt
obligations from the requisite NRSROs (the requisite NRSROs being any two or, if
only rated by one, that one NRSRO) with respect to a class of short-term debt
obligations (or any security within that class) that is currently comparable in
priority and security with the subject security or (b) which has long-term
ratings from the requisite NRSROs (the requisite NRSROs being any two or, if
only rated by one, that one NRSRO) which are in one of the two highest
categories; or
(3) a security not rated by an NRSRO but deemed by the investment adviser
pursuant to guidelines adopted by the Board of Directors, to be of comparable
quality to securities described in (1) and (2) and to present minimal credit
risks.
A First Tier Security is any Eligible Security which qualifies as such
because it carries (or other relevant securities issued by its issuer carry) top
NRSRO ratings (a single top rating is sufficient if only one NRSRO rates the
security) or has been determined, pursuant to guidelines adopted by the Board of
Directors, to be of comparable quality to such a security. A Second Tier
Security is any other Eligible Security.
The Money Fund will limit its investments in the First Tier Securities of
any one issuer to no more than five percent of its assets. (Repurchase
agreements collateralized by non-Government securities will be taken into
account when making this calculation.) Moreover, the Money Fund's total holdings
of Second Tier Securities will not exceed 5% of its assets, with investment in
the Second Tier Securities of any one issuer being limited to the greater of 1%
of the Fund's assets or $1 million. In addition, the underlying securities
involved in repurchase agreements collateralized by non-Government securities
will be First Tier Securities at the time the repurchase agreements are
executed.
Notwithstanding the foregoing investment restrictions, the Overseas Fund
and the Gold Fund may purchase securities pursuant to the exercise of
subscription rights, provided that such purchase will not result a Fund's
ceasing to be a diversified investment company. Japanese and European
corporations frequently issue additional capital stock by means of subscription
rights offerings to existing shareholders at a price substantially below the
market price of the shares. The failure to exercise such rights would result in
a Fund's interest in the issuing company being diluted. The market for such
rights is not well developed in all cases and, accordingly, a 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 a Fund's portfolio securities with the
result that a 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 Overseas Fund and Gold Fund advertise
their average annual total return. During the one year period ended March 31,
1996, average annual rates of return were 15.03% and 10.50%, for the Overseas
Fund and Gold Fund, respectively. Quotations of average annual returns for each
Fund will be expressed in terms of the average annual compounded rates of return
of a hypothetical investment in each 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 return, n = the number of years, and ERV = the ending redeemable value of
a hypothetical $1000 payment made at the beginning of the period). This
calculation assumes deduction of a proportional share of Fund expenses on an
annual basis and deduction of the maximum sales charge of 3.75% on the amount
initially invested, and assumes reinvestment of all income dividends and capital
gains distributions during the period.
CURRENT YIELD AND EFFECTIVE YIELD. From time to time the Money Fund may
advertise its current yield and effective yield. Current yield will be based on
income per share received by a hypothetical investment over a given 7-day period
(less expenses accrued during the period) and then "annualized" (I.E., assuming
that the 7-day yield would be received over 52 weeks, stated in terms of an
annual percentage return on the investment). Effective yield is calculated in a
manner similar to that used to calculate current yield, but when annualized, the
income earned by an investment in the Money Fund is assumed to be reinvested.
The effective yield will be slightly higher than the current yield because of
this assumed reinvestment. The Money Fund's current and effective 7-day yields
for the seven days ended March 31, 1996 were 4.56% and 4.66%, respectively.
Current yield and effective yield for the Money Fund will vary based on changes
in market conditions, the level of interest rates
11
<PAGE>
and the level of the Fund's expenses and no reported yield figures should be
considered an indication of the performance that may be expected in the future.
COMPARISON OF PORTFOLIO PERFORMANCE. From time to time the Company may
discuss in sales literature and advertisements, specific performance grades or
rankings or other information as published by recognized grades or rankings or
other information as published by recognized mutual fund statistical services,
such as Morningstar, Inc. or Lipper Analytical Services, Inc., or by
publications of general interest such as BARRON'S, BUSINESS WEEK, FINANCIAL
WORLD, FORBES, FORTUNE, KIPLINGER'S PERSONAL FINANCE, MONEY, MORNINGSTAR MUTUAL
FUNDS, SMART MONEY, THE WALL STREET JOURNAL or WORTH.
PORTFOLIO TURNOVER. Although the Overseas Fund and the Gold 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 a Fund's
investment objective. The rate of portfolio turnover is calculated by dividing
the lesser of the cost of purchases or the proceeds from sales of portfolio
securities (excluding short-term U.S. government obligations and other
short-term investments) for the particular fiscal year by the monthly average of
the value of the portfolio securities (excluding short-term U.S. government
obligations and short-term investments) owned by a Fund during the particular
fiscal year. The rates of portfolio turnover for the Overseas Fund and Gold Fund
during the fiscal year ended March 31, 1995 were 3.16% and 11.56%, respectively,
and during the fiscal year ended March 31, 1996 were 9.46% and 22.40%,
respectively. The rate of portfolio turnover is not a limiting factor when
management deems portfolio changes appropriate to achieve a Fund's stated
objective. However, it is possible that, under certain circumstances, a Fund may
have to limit its short-term portfolio turnover to permit it to qualify as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended (the "Code").
MANAGEMENT OF THE COMPANY
The business of the Company is managed by its Board of Directors which
elects officers responsible for the day to day operations of the Funds and for
the execution of the policies formulated by the Board of Directors. Several of
the directors and officers of the Company are directors or officers of SOGEN
A.M. Corp., SGSC or Societe Generale, Paris, France, the indirect owner of one
hundred percent (100%) of the outstanding voting securities of SOGEN A.M. Corp.,
and the owner of fifty percent (50%) of the outstanding voting securities of
SGSC. Jean-Marie Eveillard, the President and a director of the Company, owns
100% of SOGEN A.M. Corp.'s non-voting Series B common stock which represents
19.9% of the total capital of SOGEN A.M. Corp.
The following table sets forth the principal occupation or employment of
the members of the Board of Directors and principal officers of the Company.
Each of the following persons is also a director and/or officer of SoGen
International Fund, Inc. and SoGen Variable Funds, Inc.
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE COMPANY DURING PAST FIVE (5) YEARS
<S> <C> <C>
Philippe Collas* Chairman of the Board and Head of Asset Management at Societe Generale
17, cours Valmy Director since September 1995. Head of Human Resource
92972 Paris Management at Societe Generale from September
France 1991 to 1995. Chief Executive Officer of
Societe Generale Capital Markets (London) from
prior to 1991.
Jean-Marie Eveillard*(1) President and Director Director and President or Executive Vice
1221 Avenue of the Americas President of SOGEN A.M. Corp. from prior to
New York, NY 10020 1991.
Fred J. Meyer(2) Director Chief Financial Officer of Omnicom Group Inc.
437 Madison Avenue from prior to 1991. Director of Sandoz
New York, NY 10022 Corporation, SyStemix, Inc. and Zurich-
American Insurance Cos.
Dominique Raillard(2) Director President of Act 2 International (consulting)
15, boulevard Delessert since July 1995. Group Executive Vice
75016 Paris President of Promodes (consumer
France products) -- U.S. Companies Division from
prior to 1991 to 1995.
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE COMPANY DURING PAST FIVE (5) YEARS
<S> <C> <C>
Nathan Snyder(1)(2) Director Independent Consultant from prior to 1991.
163 Parish Rd. S.
New Canaan, CT 06840
Philip J. Bafundo* Vice President, Secretary and Secretary and Treasurer, SOGEN A.M. Corp. since
1221 Avenue of the Americas Treasurer January 1991. Certified Public Accountant (New
New York, NY 10020 York).
Ignatius Chithelen* Vice President Securities Analyst, SOGEN A.M. Corp. since
1221 Avenue of the Americas October 1993. Reporter at FORBES from prior to
New York, NY 10020 1991 to April 1991. Private investor from May
1992 to September 1993.
Catherine A. Shaffer* Vice President First Vice President, SGSC since January 1991.
1221 Avenue of the Americas
New York, NY 10020
Edwin S. Olsen* Vice President Vice President, SGSC from prior to 1991.
1221 Avenue of the Americas
New York, NY 10020
Elizabeth Tobin* Vice President and Assistant Securities Analyst, SOGEN A.M. Corp. from prior
1221 Avenue of the Americas Secretary to 1991.
New York, NY 10020
Charles de Vaulx* Vice President Securities Analyst, SOGEN A.M. Corp. from prior
1221 Avenue of the Americas to 1991.
New York, NY 10020
</TABLE>
* An "interested person" of the Company as defined in the Investment Company
Act of 1940, as amended.
(1) Member of the Executive Committee. When the Board of Directors is not in
session, the Executive Committee may generally exercise most of the powers
of the Board of Directors.
(2) Member of the Audit Committee.
The Company makes no payments to any of its officers for services. However,
currently each of the Company's directors who are not officers or employees of
SOGEN A.M. Corp., SGSC or Societe Generale are paid by the Company an annual fee
of $6,000 and a fee of $1,000 for each meeting of the Company's Board of
Directors and for each meeting of any Committee of the Board that they attend
(other than those held by telephone conference call). Each director is
reimbursed by the Company for any expenses he may incur by reason of attending
such meetings or in connection with services he may perform for the Company.
During the fiscal year ended March 31, 1996, an aggregate of $36,000 was paid or
accrued for directors' fees and expenses by the Company. See Note 2 of Notes to
the Financial Statements on page 27 of the Company's Annual Report to
Shareholders for a description of various transactions during the Company's most
recent fiscal year between the Company and its directors and affiliates of its
directors.
13
<PAGE>
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 March 31,
1996. Officers of the Company and directors who are interested persons of the
Company do not receive any compensation from the Company of 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 MARCH 31, 1996
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
PENSION OR FROM
RETIREMENT REGISTRANT
BENEFITS ESTIMATED AND FUND
AGGREGATE ACCRUED ANNUAL COMPLEX
COMPENSATION AS PART OF BENEFITS PAID
FROM FUND UPON TO
NAME OF PERSON, POSITION REGISTRANT EXPENSES RETIREMENT DIRECTORS
<S> <C> <C> <C> <C>
Fred J. Meyer*, Director........................................ $ 11,600 N/A N/A $24,200 (3)
Jean-Marie Eveillard**, Director and President.................. $ -- N/A N/A $ --
Dominique Raillard*, Director................................... $ 11,600 N/A N/A $24,200 (3)
Nathan Snyder*, Director........................................ $ 11,600 N/A N/A $24,200 (3)
Philippe Collas**, Director and Chairman........................ $ -- N/A N/A $ --
</TABLE>
* Member of the Audit Committee.
** "Interested person" of the Company as defined in the Act because of the
affiliation with SOGEN A.M. Corp. the Fund's investment adviser.
As of June 30, 1996, the officers and directors of the Company owned less
than 1% of the outstanding shares of capital stock of the Company. The Company
knows of no person who owns beneficially more than 5% of the capital stock of
the Company.
While the Company is a Maryland corporation, certain of its directors and
officers are non-residents of the United States and may have all, or a
substantial part, of their assets located outside the United States. None of the
officers or directors has authorized an agent for service of process in the
United States. As a result, it may be difficult for U.S. investors to effect
service of process upon non-U.S. directors or officers within the United States
or effectively to enforce judgments of courts of the United States predicated
upon civil liabilities of such officers or directors under the federal
securities laws of the United States.
INVESTMENT ADVISER AND OTHER SERVICES
As described in the Company's Prospectus, SOGEN A.M. Corp. is the Company's
investment adviser and, as such, manages the Overseas Fund, the Gold Fund and
the Money Fund. SOGEN A.M. Corp. was incorporated in Delaware in February 1990,
and is indirectly owned by Societe Generale, one of France's largest banks.
The persons named below are affiliated with the Company and are also
affiliated persons of SOGEN A.M. Corp., SGSC or Societe Generale. The capacity
in which such persons are affiliated with the Company and SOGEN A.M. Corp., SGSC
or Societe Generale is also indicated.
<TABLE>
<CAPTION>
OFFICE HELD OFFICE HELD WITH SOGEN A.M. CORP.,
NAME WITH THE COMPANY SGSC OR SOCIETE GENERALE
<S> <C> <C>
Philippe Collas Chairman of the Board and Head of Asset Management, Societe Generale. Chairman of
Director the Board and Director, SOGEN A.M. Corp.
Jean-Marie Eveillard President and Director President and Director, SOGEN A.M. Corp.
Philip J. Bafundo Vice President, Secretary and Secretary and Treasurer, SOGEN A.M. Corp.
Treasurer
Ignatius Chithelen Vice President Securities Analyst, SOGEN A.M. Corp.
Catherine A. Shaffer Vice President First Vice President, SGSC
Edwin S. Olsen Vice President Vice President, SGSC
Elizabeth Tobin Vice President and Assistant Securities Analyst, SOGEN A.M. Corp.
Secretary
Charles de Vaulx Vice President Securities Analyst, SOGEN A.M. Corp.
</TABLE>
14
<PAGE>
Under its investment advisory contract with the Company, which became
effective August 17, 1993, SOGEN A.M. Corp. furnishes the Company with
investment advice consistent with each Fund's stated investment objective. SOGEN
A.M. Corp. also furnishes the Company with office space and certain facilities
required for the business of the Funds, and statistical and research data, and
pays any compensation and expenses of the Company's officers. In return, each
Fund pays SOGEN A.M. Corp. a monthly fee at the annual rate of the average daily
value of the Fund's net assets as follows:
<TABLE>
<S> <C>
Overseas Fund.................................................................... 0.75%
Gold Fund........................................................................ 0.75%
Money Fund....................................................................... 0.40%
</TABLE>
The annual fee rates listed above for the Overseas Fund and the Gold Fund,
respectively, are higher than the rate of fees paid by most U.S. mutual funds.
The Company believes, however, that the advisory fee rates are not higher than
the rate of fees paid by most other mutual funds that invest significantly in
foreign equity securities.
To the extent that a Fund's total expenses, excluding taxes, brokerage
expenses, interest and extraordinary expenses, in any fiscal year exceed the
permissible limits applicable to the Fund in any state in which its shares are
then qualified for sale, SOGEN A.M. Corp. will waive its fees and, if necessary
to meet the limit, reimburse that Fund. The current most stringent limit imposed
by a state is equal to the sum of (a) 2.5% of the first $30,000,000 of a Fund's
daily average net asset value, (b) 2.0% of the next $70,000,000 of a Fund's
daily average net asset value and (c) 1.5% of the excess Fund's daily average
net asset value in excess of $100,000,000. However, expenses attributable to
payments pursuant to the Rule 12b-1 Distribution Plan and Agreement (see below
under "Distribution of the Fund's Shares"), to legal, audit and custodian fees
associated with foreign investments and to certain other payments are excluded
from the calculation of expenses for purposes of the limitation pursuant to
waivers or orders granted to a Fund by relevant state securities authorities.
The Overseas Fund and the Gold Fund paid investment advisory fees for the
period from August 31, 1993 to March 31, 1994 of $190,616 and $42,315,
respectively, for the fiscal year ended March 31, 1995, $2,534,231 and $273,897,
respectively, and for the fiscal year ended March 31, 1996, $3,991,923 and
$392,561, respectively. For the fiscal year ended March 31, 1996, $23,806 of the
investment advisory fee of $44,365 for the Money Fund was waived by SOGEN A.M.
Corp.
Under the investment advisory contract between the Company and SOGEN A.M.
Corp., the investment adviser is responsible for the management of each of the
Funds' portfolios and constantly reviews their holdings in the light of its own
research analyses and those of other relevant sources. Reports of portfolio
transactions are given regularly to the directors of the Company, who review
each Fund's portfolio at meetings held four times a year.
Under the terms of the investment advisory agreement, a Fund will
discontinue the use of the term "SoGen" in a Fund's name or the use of any marks
or symbols owned by the investment adviser if the investment adviser ceases to
act as a Fund's investment adviser or if the investment adviser so requests.
As of the date of this Statement of Additional Information, SOGEN A.M.
Corp. owned of record and beneficially, 5,000 shares of the Overseas Fund, 3,500
shares of the Gold Fund and 15,000 shares of the Money Fund.
A Fund may, with the approval of the Company's Board of Directors, from
time to time enter into arrangements with institutions to provide sub-transfer
agent services and other related services where a number of persons hold Fund
shares through one account registered with the Fund's transfer agent, DST
Systems, Inc. ("DST") in the name of that institution. Under those arrangements,
a Fund may compensate the institution rendering such services on a per
sub-account basis.
DISTRIBUTION OF THE FUNDS' SHARES
The Company and SGSC have entered into an underwriting contract pursuant to
which SGSC offers, as agent, shares of each Fund to investors, either directly
or through selected securities dealers, in states and countries in which a
Fund's shares are qualified and in which SGSC is qualified as a dealer or where
such qualification is not required.
Pursuant to the Distribution Plan and Agreement (the "Plan") between the
Company and SGSC, adopted by the Overseas Fund and the Gold Fund in accordance
with the provisions of Rule 12b-1 under the Investment Company Act of 1940, each
Fund may pay SGSC a quarterly distribution fee of up to, on an annual basis,
0.25% of the average daily net asset value of the Fund. Under the Plan, SGSC
must apply the full amount of fees received from a Fund to the payment of fees
to dealers for their assistance in the sale of the shares of the Fund
15
<PAGE>
and for the provision to shareholder services and for other distribution related
expenses such as the payment of advertising costs and the payment for the
preparation, printing and distribution of prospectuses to investors. SGSC bears
a Fund's distribution costs to the extent they exceed payments under the Plan.
For the fiscal year ended March 31, 1996, the Company paid SGSC $1,458,462
pursuant to the Plan, $3,134 of which was paid by SGSC to Societe Generale and
subsidiaries of Societe Generale. SGSC and SOGEN A.M. Corp. bear the Company's
distribution costs to the extent they exceed payments under the Plan.
Substantially all of the amounts paid to SGSC under the Plan are paid to
dealers selling shares of the Funds, including Societe Generale and certain of
its subsidiaries, for their assistance in selling shares of the Funds. A dealer
selling shares normally receives a fee, calculated on a quarterly basis, equal
to 0.25% of the average daily net asset value of the shares of a Fund held by
the dealer's customers. SGSC has retained $601,737 of the amount paid to it
pursuant to the Plan with respect to the fiscal year ended March 31, 1996, as
reimbursement for expenses incurred in promoting the sale of the Company's
shares, including printing and distribution of prospectuses and sales literature
for advertising. Distribution expenses incurred in any fiscal year 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.
The Plan provides that it will continue in effect only so long as its
continuance is approved at least annually by the directors of the Company and by
the directors who are not interested persons of the Company and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements relating to the Plan (the "Independent Directors"). In the case of an
agreement relating to the Plan, the Plan provides that such agreement may be
terminated, without penalty, by a vote of a majority of the Independent
Directors, or, as to a Fund, by a majority of the Fund's outstanding voting
securities on 60 days' written notice to SGSC, and provides further that such
agreement will automatically terminate in the event of its assignment. The Plan
also states that it may not be amended to increase the maximum amount of the
payments thereunder without the approval of a majority of the outstanding voting
securities (as defined on page 10) of a Fund. No material amendment to the Plan
will, in any event, be effective unless it is approved by a vote of the
directors and the Independent Directors of the Company.
When the Company seeks an Independent Director to fill a vacancy on the
board or as an addition to the board or as a nominee for election by
stockholders, the selection or nomination of the Independent Director is, under
resolutions adopted by the directors, contemporaneously with their adoption of
the Plan, committed to the discretion of the Independent Directors.
With respect to fiscal year ended March 31, 1996, SGSC, the principal
underwriter of the Company's shares, Societe Generale (including subsidiaries)
and SOGEN A.M. Corp. received commissions and other compensation in connection
with operation of the Company as follows:
<TABLE>
<CAPTION>
(1) (2)
NAME OF NET (3)
PRINCIPAL UNDERWRITING COMMISSIONS ON (4) (5)
UNDERWRITER DISCOUNTS AND REPURCHASES BROKERAGE OTHER
OR AFFILIATE DEALER COMMISSIONS OR REDEMPTIONS COMMISSIONS COMPENSATION
<S> <C> <C> <C> <C>
SGSC.............................................. $477,279 $ -- $ 555 $ 1,458,462*
Societe Generale (including subsidiaries)......... $ 8,988 $ -- $44,194 $ 3,134**
SOGEN A.M. Corp................................... $ -- $ -- $ -- $ 4,405,043***
</TABLE>
* For the period reported, the Company's distribution fee paid or payable to
SGSC pursuant to the Plan. Substantially all of such amount was paid or will
be paid to dealers, including Societe Generale and certain subsidiaries,
selling shares of the Company.
** Amounts paid to Societe Generale as a dealer of the Company's shares
pursuant to the Plan, which amount is included in the $1,458,462 paid to
SGSC under the Plan.
*** The Company's investment advisory fee paid or payable to SOGEN A.M. Corp.
for the fiscal year ended March 31, 1996.
During the period from August 31, 1993 to March 31, 1994 and the fiscal
years ended March 31, 1995 and 1996, the aggregate amount of sales charges on
sales of the Company's shares was $2,319,000, $6,522,581 and $2,263,995,
respectively. During the period from August 31, 1993 to March 31, 1994 and the
fiscal year ended March 31, 1995, SGSC received net underwriting discounts and
dealer commissions of $184,871 and $747,619, respectively. Societe Generale
received dealer discounts of $12,051 for the fiscal year ended March 31, 1995.
SOGEN A.M. Corp. has entered into an agreement with SGSC, dated April 30,
1990, under which net commissions and fees earned by SGSC in its capacity as
underwriter to the Funds, are remitted to SOGEN A.M.
16
<PAGE>
Corp. In consideration for certain services provided by SGSC, SOGEN A.M. Corp.
pays SGSC a $25,000 per annum fee, payable monthly, and reimburses SGSC for
certain expenses incurred on behalf of SOGEN A.M. Corp. For SOGEN A.M. Corp.'s
fiscal year ended, December 31, 1995, such commissions and fees with respect to
the Funds amounted to $1,105,578, and the related reimbursement for services
amounted to $33,611.
The investment advisory and underwriting contracts continue in effect from
year to year so long as the continuance of each contract is specifically
approved at least annually by the Board of Directors or by a vote of a majority
of the outstanding voting securities of each Fund (as defined on page 10). In
addition, the terms of each contract and the renewals thereof must be approved
annually by the vote of a majority of the directors who are not "interested
persons" (as defined in the Investment Company Act of 1940) of SOGEN A.M. Corp.,
SGSC or the Company. Each contract will terminate automatically in the event of
its assignment (as defined in the Investment Company Act of 1940) and may be
terminated, without penalty, on sixty days' written notice at the option of
either party thereto or by a vote of a majority of the outstanding voting
securities of a Fund.
COMPUTATION OF NET ASSET VALUE
Each Fund computes its net asset value once daily as of the close of
trading on each day the New York Stock Exchange is open for trading. The
Exchange is closed on the following days: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. The net asset value per share is computed by dividing the total
current value of the assets of a Fund, less its liabilities, by the total number
of shares outstanding at the time of such computation.
The Money Fund values its portfolio instruments at amortized cost, which
means that they are valued at their acquisition cost, as adjusted for
amortization of premium or discount, rather than at current market value.
Calculations are made to compare the value of the Fund's investments valued at
amortized cost with market values. Market valuations are obtained by using
actual quotations provided by market makers, estimates of market value, or
values obtained from yield data relating to classes of money market instruments
published by reputable sources at the mean between the bid and asked prices for
the instruments. The amortized cost method of valuation seeks to maintain a
stable $1.00 per share net asset value even where there are fluctuations in
interest rates that affect the value of portfolio instruments. Accordingly, this
method of valuation can in certain circumstances lead to a dilution of a
shareholder's interest. If a deviation of 1/2 of 1% or more were to occur
between the net asset value per share calculated by reference to market values
and the Money Fund's $1.00 per share net asset value or if there were any other
deviation which the Board of Directors believed would result in a material
dilution to shareholders or purchasers, the Board of Directors would promptly
consider what action, if any, should be initiated. If the Money Fund's net asset
value per share (computed using market values) declined, or were expected to
decline, below $1.00 (computed using amortized cost), the Board of Directors
might temporarily reduce or suspend dividend payments in an effort to maintain
the net asset value at $1.00 per share. As a result of such reduction or
suspension of dividends or other action by the Board of Directors, an investor
would receive less income during a given period than if such a reduction or
suspension had not taken place. Such action could result in investors receiving
no dividend for the period during which they hold their shares and receiving,
upon redemption, a price per share lower than that which they paid. On the other
hand, if the Money Fund's net asset value per share (computed using market
values) were to increase, or were anticipated to increase above $1.00 (computed
using amortized cost), the Board of Directors might supplement dividends in an
effort to maintain the net asset value at $1.00 per share.
A portfolio security, other than a bond, which is traded on a U.S. national
securities exchange or a securities exchange abroad is normally valued at the
price of the last sale on the exchange as of the close of business on the date
on which assets are valued. If there are no sales on such date, such portfolio
securities will be valued at the mean between the closing bid and asked prices.
Securities, other than bonds, traded in the over-the-counter market are valued
at the mean between the last bid and asked prices prior to the time of
valuation, except if such unlisted security is among the NASDAQ designated "Tier
1" securities in which case it is valued at its last sale price. All bonds,
whether listed on an exchange or traded in the over-the-counter market, for
which market quotations are readily available are valued at the mean between the
last bid and asked prices received from dealers in the over-the-counter market
in the United States or abroad, except that when no asked price is available,
bonds are valued at the last bid price alone. Short-term investments maturing in
sixty days or less are valued at cost plus interest earned, which approximates
value. Securities for which current market quotations are not readily available
are valued at fair value as determined in good faith by the Company's Board of
Directors. A make-up sheet showing the computation of the total offering price,
using as a basis the value of the Company's portfolio securities and other
assets and its outstanding securities as of March 31, 1996, appears as the
Statement of Assets and Liabilities on page 22 of the March 31, 1996 Annual
Report to Shareholders.
17
<PAGE>
HOW TO PURCHASE SHARES
The methods of buying and selling shares and the sales charges applicable
to purchases of shares of a Fund are described in the Company's Prospectus.
As stated in the Prospectus, shares of the Overseas Fund and the Gold Fund
may be purchased at net asset value by various persons associated with the
Company, SGSC, SOGEN A.M. Corp., branches of Societe Generale, certain firms
providing services to the Company or affiliates thereof for the purpose of
promoting good will with employees and others with whom the Company has business
relationships, as well as in other special circumstances. Shares are offered to
other persons at net asset value in circumstances where there are economies of
selling efforts and sales related expenses with respect to offers to certain
investors.
TAX STATUS
Each Fund intends to qualify annually as a "regulated investment company"
under the Code. In order to qualify as a regulated investment company for a
taxable year, a Fund must, among other things, (a) derive at least 90% of its
gross income from dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of stock, securities or foreign
currencies and other income derived with respect to the business of investing in
such stock, securities or currencies; (b) derive less than 30% of its gross
income from the sale or other disposition of stock or securities and options,
futures, forward contracts and foreign currencies held for less than three
months (excluding gains from certain hedging transactions and from foreign
currencies (and options, futures and forward contracts on foreign currencies)
that are directly related to each Fund's principal business of investing in such
stocks or securities or options or futures thereon); (c) diversify its holdings
so that, at the end of each fiscal quarter, (i) at least 50% of the market value
of its assets is represented by cash, cash items, U.S. government securities,
securities of other regulated investment companies and other securities, with
such other securities of any one issuer qualifying only if the Fund's investment
is limited to an amount not greater than 5% of the Fund's assets or 10% of the
voting securities of the issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other than U.S.
government securities or securities of other regulated investment companies);
and (d) distribute at least 90% of its investment company taxable income (which
includes, among other items, dividends, interest and net short-term capital
gains in excess of net long-term capital losses) for the year.
As a regulated investment company, each Fund generally will not be subject
to U.S. federal income tax on its investment company taxable income and net
capital gains (the excess of net long-term capital gains over net short-term
capital losses), if any, that it distributes to shareholders. Each Fund intends
to distribute to its shareholders, at least annually, substantially all of its
investment company taxable income and net capital gains. Amounts not distributed
on a timely basis in accordance with a calendar year distribution requirement
are subject to a non-deductible 4% excise tax. To prevent imposition of the
excise tax, each Fund must distribute during each calendar year an amount equal
to the sum of (1) at least 98% of its ordinary income (not taking into account
any capital gains or losses) for the calendar year, (2) at least 98% of its
capital gains in excess of its capital losses (adjusted for certain ordinary
losses) for the one-year period ending on October 31 of the calendar year, and
(3) any ordinary income and capital gains for previous years that were not
distributed during those years. A distribution will be treated as paid on
December 31 of the current calendar year if it is declared by a 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 the distributions are received.
To prevent application of the excise tax, each Fund intends to make its
distributions in accordance with the calendar year distribution requirement.
Different tax treatment, including a penalty on pre-retirement
distributions, is accorded accounts maintained as IRAs. Shareholders should
consult their tax advisors for more information.
Dividends paid out of a Fund's investment company taxable income will be
taxable to a U.S. shareholder as ordinary income. To the extent that a portion
of a Fund's income consists of dividends paid by U.S. corporations, a portion of
the dividends paid by the Fund may be eligible for the corporate
dividends-received deduction. It is expected that a small portion of the
dividends paid by the Overseas Fund and the Gold Fund will so qualify.
Distributions of net capital gains, if any, designated as capital gains
distributions are taxable as long-term capital gains, regardless of how long the
shareholder has held the Fund's shares, and are not eligible for the dividends-
received deduction. Shareholders receiving distributions in the form of
additional shares, rather than cash, generally will have a cost basis in each
such share equal to the net asset value of a share of the Fund on the
reinvestment date. Shareholders will be notified annually as to the U.S. federal
tax status of distributions, and
18
<PAGE>
shareholders receiving distributions in the form of additional shares will
receive a report as to the net asset value of those shares.
Investments by a Fund in zero coupon securities will result in income to
the Fund equal to a portion of the excess of the face value of the securities
over their issue price (the "original issue discount") each year that the
securities are held, even though the Fund receives no interest payments. This
income is included in determining the amount of income which the Fund must
distribute to maintain its status as a regulated investment company and to avoid
the payment of federal income tax and the 4% excise tax. If a Fund invests in
certain high yield original issue discount obligations issued by U.S.
corporations, a portion of the original issue discount accruing on such an
obligation may be eligible for the corporate dividends-received deduction. In
such event, a portion of the dividends of investment company taxable income
received from the Fund by its corporate shareholders may be eligible for this
corporate dividends-received deduction if so designated by the Fund in a written
notice to shareholders. For the fiscal year ended March 31, 1996, the
percentages of net investment income that qualified for the dividends-received
deduction for the Overseas Fund, Gold Fund and Money Fund were 2.19%, 26.09% and
0.00%, respectively.
Certain foreign currency contracts in which the Overseas Fund and the Gold
Fund may invest are "section 1256 contracts." Gains or losses on section 1256
contracts generally are considered 60% long-term and 40% short-term capital
gains or losses; however, foreign currency gains or losses (as discussed below)
arising from certain section 1256 contracts may be treated as ordinary income or
loss. Also, section 1256 contracts held by a 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 Overseas Fund and the
Gold Fund may result in "straddles" for U.S. federal income tax purposes. The
straddle rules may affect the character of gains (or losses) realized by these
Funds. In addition, losses realized by these Funds 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 these Funds of engaging in
hedging transactions are not entirely clear. Hedging transactions may increase
the amount of short-term capital gains realized by a Fund which is taxed as
ordinary income when distributed to shareholders.
The Overseas Fund and the Gold Fund may make one or more of the elections
available under the Code which are applicable to straddles. If either Fund makes
any of the elections, the amount, character and timing of the recognition of
gains or losses from the affected straddle positions will be determined under
rules that vary according to the election(s) made. The rules applicable under
certain of the elections may operate to accelerate the recognition of gains or
losses from the affected straddle positions.
Because the straddle rules may affect the character of gains or losses,
defer losses and/or accelerate the recognition of gain or losses from the
affected straddle positions, the amount which may be distributed to
shareholders, and which will be taxed to them as ordinary income or long-term
capital gains, may be increased or decreased as compared to a fund that did not
engage in such hedging transactions.
The 30% limitation and the diversification requirements applicable to the
Funds' assets may limit the extent to which the Overseas Fund and the Gold Fund
will be able to engage in transactions in foreign currency contracts.
Under the Code, gains or losses attributable to fluctuations in exchange
rates which occur between the time a Fund accrues receivables or liabilities
denominated in a foreign currency and the time the Fund actually collects such
receivables, or pays such liabilities, generally are treated as ordinary income
or ordinary loss. Similarly, on disposition of debt securities denominated in a
foreign currency and on disposition of certain foreign currency contracts, gains
or losses attributable to fluctuations in the value of foreign currency between
the date of acquisition of the security or contract and the date of disposition
also are treated as ordinary gain or loss. These gains or losses, referred to
under the Code as "section 988" gains or losses, may increase or decrease the
amount of a Fund's investment company taxable income to be distributed to its
shareholders as ordinary income.
Upon the sale or other disposition of shares of a Fund, a shareholder may
realize a capital gain or loss which will be long-term or short-term, generally
depending upon the shareholder's holding period for the shares. Any loss
realized on a sale or exchange will be disallowed to the extent the shares
disposed of are replaced (including shares acquired pursuant to a dividend
reinvestment plan) within a period of 61 days beginning 30 days before and
ending 30 days after disposition of the shares. In such a case, the basis of the
shares acquired will be adjusted to reflect the disallowed loss. Any loss
realized by a shareholder on a disposition of Fund shares held by the
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<PAGE>
shareholder for six months or less will be treated as a long-term capital loss
to the extent of any distributions of net capital gains received by the
shareholder with respect to such shares.
Under certain circumstances the sales charge incurred in acquiring shares
of a Fund may not be taken into account in determining the gain or loss on the
disposition of those shares. This rule applies if shares of a Fund are exchanged
within 90 days after the date they were purchased and the new shares are
acquired without a sales charge or at a reduced sales charge. In that case, the
gain or loss recognized on the exchange will be determined by excluding from the
tax basis of the shares exchanged, all or a portion of the amount of the sales
charge that was imposed on the acquisition of those shares. This exclusion
applies to the extent that the otherwise applicable sales charge with respect to
the newly acquired shares is reduced as a result of having incurred the initial
sales charge. The portion of the initial sales charge that is excluded from the
basis of the exchanged shares is instead treated as an amount paid for the new
shares.
The Overseas Fund and the Gold Fund may be subject to foreign withholding
taxes on income and gains derived from their investments outside the United
States. Such taxes would reduce the yield on the Funds' investments. Tax
treaties between certain countries and the United States may reduce or eliminate
such taxes. If more than 50% of the value of a 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 either Fund makes such an election, each of its shareholders will
be required to include in his income (in addition to taxable dividends actually
received) his allocable share of such taxes paid by the Fund, and will be
entitled, subject to certain limitations, to credit his portion of these foreign
taxes against his U.S. federal income tax due, if any, or to deduct it (as an
itemized deduction) from his U.S. taxable income, if any.
Generally, a credit for foreign taxes is subject to the limitation that it
may not exceed the shareholder's U.S. tax attributable to his foreign source
taxable income. With respect to the Overseas Fund and Gold Fund, if the pass
through election described above is made, the source of the electing Fund's
income flows through to its shareholders. Certain gains from the sale of
securities and certain currency fluctuation gains will not be treated as foreign
source taxable income. In addition, this foreign tax credit limitation must be
applied separately to certain categories of foreign source income, one of which
is foreign source "passive income." For this purpose, foreign "passive income"
includes dividends, interest, capital gains and certain foreign currency gains.
As a consequence, certain shareholders may not be able to claim a foreign tax
credit for the full amount of their proportionate share of foreign taxes paid by
the Fund. The foreign tax credit can be used to offset only 90% of the
alternative minimum tax (as computed under the Code for purposes of this
limitation) imposed on corporations and individuals. If a Fund is not eligible
to make the pass-through election described above, the foreign taxes it pays
will reduce its income, and distributions by the Fund will be treated as U.S.
source income. Each shareholder will be notified within 60 days after the close
of the Fund's taxable year whether, pursuant to the election described above,
the foreign taxes paid by the Fund will be treated as paid by its shareholders
for that year and, if so, such notification will designate (i) such
shareholder's portion of the foreign taxes paid to such country and (ii) the
portion of the Fund's dividends and distributions that represents income derived
from sources within such country.
Investments by a Fund in stock of certain foreign corporations which
generate largely passive investment-type income, or which hold a significant
percentage of assets which generate such income (referred to as "passive foreign
investment companies" or "PFICs"), are subject to special tax rules designed to
prevent deferral of U.S. taxation of the Fund's share of the PFIC's earnings. In
the absence of certain elections to report these earnings on a current basis,
regardless of whether the Fund actually receives any distributions from the
PFIC, a Fund would be required to report certain "excess distributions" from,
and any gain from the disposition of stock of the PFIC, as ordinary income. This
ordinary income would be allocated ratably to a Fund's holding period for the
stock. Any amounts allocated to prior taxable years would be taxable to the Fund
at the highest rate of tax applicable in that year, increased by an interest
charge determined as though the amounts were underpayments of tax. Amounts
allocated to the year of the distribution or disposition would be included in a
Fund's net investment income for that year and, to the extent distributed as a
dividend to the Fund's shareholders, would not be taxable to the Fund.
Each Fund may be required to withhold U.S. federal income tax at the rate
of 31% of all taxable distributions payable to shareholders who fail to provide
the Fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the IRS that they are subject to
backup withholding. Corporate shareholders and certain shareholders specified in
the Code generally are exempt from such backup withholding. Backup withholding
is not an additional tax. Any amounts withheld may be credited against the
shareholder's U.S. federal income tax liability.
20
<PAGE>
Since, at the time of an investor's purchase of a Fund's shares, a portion
of the per share net asset value by which the purchase price is determined may
be represented by realized or unrealized appreciation in the Fund's portfolio or
undistributed income of the Fund, subsequent distributions (or a portion
thereof) on such shares may in reality represent a return of his capital.
However, such a subsequent distribution would be taxable to such investor even
if the net asset value of his shares is, as a result of the distributions,
reduced below his cost for such shares. Prior to purchasing shares of the Fund,
an investor should carefully consider such tax liability which he might incur by
reason of any subsequent distributions of net investment income and capital
gains.
Fund shareholders may be subject to state, local and foreign taxes on their
Fund distributions and redemptions of Fund shares. Also, the tax consequences to
a foreign shareholder of an investment in a Fund may be different from those
described above. Shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in a Fund.
BROKERAGE ALLOCATION
SOGEN A.M. Corp. is responsible for selecting members of securities
exchanges, brokers and dealers (such members, brokers and dealers being
hereinafter referred to as "brokers") for the execution of a Fund's portfolio
transactions and, when applicable, the negotiation of commissions in connection
therewith.
Purchase and sale orders are usually placed with brokers who are selected
by SOGEN A.M. Corp. as being able to achieve "best execution" of such orders.
"Best execution" means prompt and reliable execution at the most favorable
securities price, taking into account the other considerations as here-in-after
set forth. The determination of what may constitute best execution of a
securities transaction by a broker involves a number of considerations,
including, without limitation, the overall direct net economic result to a Fund
(involving both price paid or received and any commissions and other costs
paid), the efficiency with which the transaction is effected, the ability to
effect the transaction at all where a large block is involved, availability of
the broker to stand ready to execute possibly difficult transactions in the
future, and the financial strength and stability of the broker. Such
considerations are judgmental and are weighed by SOGEN A.M. Corp. in determining
the overall reasonableness of brokerage commissions. While there is no
commitment or understanding to do so, subject to its policy of obtaining best
execution, a Fund may use affiliates of Societe Generale as brokers in the
purchase and sale of securities. For the period from August 31, 1993 to March
31, 1994 and for the fiscal years ended March 31, 1995 and 1996, the Company
paid SGSC and affiliates of Societe Generale $10,928, $54,019 and $44,749,
respectively in such brokerage commissions for transactions effected on various
exchanges. Such commissions paid for the fiscal year ended March 31, 1996
represented 4.8% of the aggregate brokerage commissions paid by the Company
during such period and was paid in connection with transactions representing
5.5% of the aggregate dollar amount of all transactions effected by the Company
(including principal transactions for which no direct brokerage commissions are
paid). SGSC may not, acting as principal, sell any security or other property
to, or purchase any security or other property from, a 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.
SOGEN A.M. Corp. is authorized to allocate brokerage and principal business
to brokers other than SGSC (but not excluding other affiliates of Societe
Generale) who have provided brokerage and research services, as such services
are defined in Section 28(e) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), for the Company and/or other accounts, if any, for which SOGEN
A.M. Corp. exercises investment discretion (as defined in Section 3(a)(35) of
the 1934 Act) and, as to transactions as to which fixed minimum commission rates
are not applicable, to cause a Fund to pay a commission for effecting a
securities transaction in excess of the amount another broker would have charged
for effecting the transaction, if SOGEN A.M. Corp. in making the selection in
question determines in good faith that such amount of commission is reasonable
in relation to the value of the brokerage and research services provided by such
broker, viewed in terms of either that particular transaction or of SOGEN A.M.
Corp.'s overall responsibilities with respect to a Fund and the other accounts
as to which it exercises investment discretion. In reaching such determination,
SOGEN A.M. Corp. is not required to place or attempt to place a specific dollar
value on the research or execution services of a broker or on the portion of any
commission reflecting either of said services. In demonstrating that such
determinations were made in good faith, SOGEN A.M. Corp. must be prepared to
show that all commissions were allocated and paid for purposes contemplated by a
Fund's brokerage policy; that the research services provide lawful and
appropriate assistance to SOGEN A.M. Corp. in the performance of its investment
decision-making responsibilities; and that the commissions paid were within a
reasonable range. The determination that commissions were within a reasonable
range will be based on any available information as to the level of commissions
known to be charged by other brokers on comparable transactions, but there will
be taken into account the Company's policies that (i) obtaining a low commission
is deemed secondary to obtaining a favorable securities price, since it is
recognized that usually it is more beneficial to a Fund to obtain a favorable
price than to pay the lowest commission,
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and (ii) the quality, comprehensiveness and frequency of research studies which
are provided for SOGEN A.M. Corp. are useful to SOGEN A.M. Corp. in performing
its services under the investment advisory contract with the Company. Research
services provided by brokers to SOGEN A.M. Corp. are considered to be in
addition to, and not in lieu of, services required to be performed by SOGEN A.M.
Corp. under such investment advisory contract. Research services provided by
brokers include written reports, responses to specific inquiries and interviews
with analysts. These services also include invitations to meetings arranged by
such brokers with the management of companies in the Funds' portfolios or in
which the Funds may invest.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and subject to obtaining prices at least as favorable
as those provided by other qualified brokers, SOGEN A.M. Corp. may consider
sales of shares of a Fund as a factor in the selection of brokers to execute
portfolio transactions.
Each Fund has been advised by SOGEN A.M. Corp. that it may combine
brokerage orders for the Fund with orders from its other clients (including the
other Funds) when placing such orders with brokers for execution. In the event
orders are placed for a 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 Funds' orders are accorded priority over those received from
SOGEN A.M. Corp. for its own account or from any of its officers, directors or
employees.
While SOGEN A.M. Corp. is primarily responsible for the allocation of each
Fund's portfolio transactions to brokers, its polices and practices in this
regard must be consistent with the foregoing and are periodically reviewed by
the Company's Board of Directors. In this connection, the directors periodically
review and discuss with SOGEN A.M. Corp. the commissions paid by each Fund and,
in transactions where a Fund pays commissions which are in excess of the
commissions other brokers would have charged, SOGEN A.M. Corp.'s determinations
that such higher commissions are reasonable in relation to the value of the
brokerage and research services. According to the Company's records, the amount
of brokerage commissions paid by the Company during the fiscal year ended March
31, 1996, which was attributable to research services was $923,291, in
connection with transactions amounting to $285,066,164. During the fiscal years
ended March 31, 1996, and March 31, 1995 and during the period from August 31,
1993 to March 31, 1994, the Company paid total brokerage commissions of
$924,146, $944,560 and $277,662, respectively.
CUSTODY OF PORTFOLIO
Domestic portfolio securities of each Fund are held pursuant to a custodian
agreement between the Company and Investors Fiduciary Trust Company, 127 West
10th Street, Kansas City, MO 64105. Certain of such securities may be deposited
in the book-entry system operated by the Federal Reserve System or with the
Depository Trust Company. The Company's sub-custodian, State Street Bank and
Trust, holds domestic securities issued in physical form. Pursuant to a Global
Custody Agreement between the Company 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 Securities
Services Division of Chase and in certain foreign branches of Chase.
INDEPENDENT AUDITORS
The Company's independent auditors are KPMG Peat Marwick LLP, Certified
Public Accountants, 345 Park Avenue, New York, NY 10154. KPMG Peat Marwick LLP
audits each Fund's annual financial statements and renders its report thereon,
which is included in the Annual Report to Shareholders.
FINANCIAL STATEMENTS
The Company's financial statements and notes thereto appearing in the March
31, 1996 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 furnish,
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 Avenue of
the Americas, New York, NY 10020.
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
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creditworthiness of an issuer. Consequently, the Funds' investment adviser
believes that the quality of debt securities in which a Fund invests should be
continuously reviewed. A rating is not a recommendation to purchase, sell or
hold a security, because it does not take into account market value or
suitability for a particular investor. When a security has received a rating
from more than one service, each rating should be evaluated independently.
Ratings are based on current information furnished by the issuer or obtained by
the ratings services from other sources which they consider reliable. Ratings
may be changed, suspended or withdrawn as a result of changes in or
unavailability of such information, or for other reasons.
The following is a description of the characteristics of ratings used by
Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Corporation
("S&P").
MOODY'S RATINGS.
Aaa -- Bonds rated Aaa are judged to be the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt-edge."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. Although the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such bonds.
Aa -- Bonds rated Aa are judged to be high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa bonds or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which make the
long-term risk appear somewhat larger than in Aaa bonds.
A -- Bonds rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba -- Bonds rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B -- Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa -- Bonds rated Caa are of poor standing. Such bonds may be in default
or there may be present elements of danger with respect to principal or
interest.
Ca -- Bonds rated Ca represent obligations which are speculative in a high
degree. Such bonds are often in default or have other marked shortcomings.
S&P RATINGS.
AAA -- Bonds rated AAA have the highest rating. Capacity to pay principal
and interest is extremely strong.
AA -- Bonds rated AA have a very strong capacity to pay principal and
interest and differ from AAA bonds only in small degree.
A -- Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB -- Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this capacity
than for bonds in higher rated categories.
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BB -- B -- CCC -- CC -- Bonds A-1 -- A-rated BB, B, CCC and CC are
regarded, on balance, as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms of the
obligation.
BB indicates the lowest degree of speculation among such bonds and CC the
highest degree of speculation. Although such bonds will likely have some quality
and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
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SOGEN INTERNATIONAL FUND, INC.
SOGEN FUNDS, INC.
SUPPLEMENT TO PROSPECTUSES DATED
JULY 31, 1996
(REVISED EFFECTIVE NOVEMBER 25, 1996)
The accompanying Prospectuses list DST Systems, Inc. ("DST") as the transfer
agent and dividend disbursing agent for SoGen International Fund, SoGen Overseas
Fund, SoGen Gold Fund and SoGen Money Fund (the "Funds"). While DST has been
appointed, the appointment will not become effective until November 25, 1996.
Accordingly, please note that until the close of business on Friday, November
22, 1996 the transfer agent and dividend disbursing agent is:
First Data Investor Services Group, Inc.
P.O. Box 9123
Boston, MA 02209-9123
For further information, please contact the Funds by calling (800) 334-2143.
NOVEMBER 1, 1996
<PAGE>
SoGen Funds, Inc.
SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION DATED
JULY 31, 1996
(REVISED EFFECTIVE NOVEMBER 25, 1996)
The accompanying Statement of Additional Information lists DST Systems, Inc.
("DST") as the transfer agent and dvidiend disbursing agent for SoGen Overseas
Fund, SoGen Gold Fund and SoGen Money Fund (the "Funds"). While DST has been
appointed, the appointment will not become effective until November 25, 1996.
Accordingly, please note that until the close of business on Friday,
November 22, 1996 the transfer agent and divident disbursing agent is:
First Data Investor Services Group, Inc.
P.O. Box 9123
Boston, MA 02209-9123
For further information, please contact the Funds by calling (800) 334-2143.
November 1, 1996
