As filed with the Securities and Exchange Commission on July 31, 1998
Registration No. 33-63560
811-7762
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. 6 [X]
and/or
REGISTRATION STATEMENT UNDER INVESTMENT COMPANY ACT OF 1940 [X]
Post-Effective Amendment No. 8
(Check appropriate box or boxes.)
SOGEN FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
1221 Avenue of the Americas
New York, NY 10020
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (800) 334-2143
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Jean-Marie Eveillard
SoGen Funds, Inc.
1221 Avenue of the Americas
New York, NY 10020
(Name and Address of Agent for Service)
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Copy to:
Jack W. Murphy, Esq.
Dechert Price & Rhoads
1775 Eye Street, N.W.
Washington, DC 20006
It is proposed that this filing will become effective (check appropriate box):
Immediately upon filing pursuant to paragraph (b)
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X On July 31, 1998 pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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On (date) pursuant to paragraph (a)(1) of Rule 485
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75 days after filing pursuant to paragraph (a)(2)
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on (date) pursuant to paragraph(a)(2) of Rule 485
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If appropriate, click the following box:
This post-effective amendment designates a new effective date for a
- ---- previously filed post-effective amendment.
Title of Securities Being Registered:
SoGen International Fund - Class A Common Stock
SoGen International Fund - Class I Common Stock
SoGen Overseas Fund - Class A Common Stock
SoGen Overseas Fund - Class I Common Stock
SoGen Gold Fund - Common Stock
SoGen Money Fund - Common Stock
<PAGE>
<TABLE>
<CAPTION>
SOGEN FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a) under the Securities Act of 1933
FORM N-1A ITEM NO. PROSPECTUS CAPTION
- ------------------ ------------------
PART A
------
<S> <C> <C>
Item 1. Cover Page................................Cover Page
Item 2. Synopsis..................................Fee Table
Item 3. Condensed Financial Information...........Financial Highlights; Performance and Yield Information
Item 4. General Description of Registrant.........Organization of the Company; International Fund
Investment Objective and Policies; Overseas Fund
Investment Objective and Policies; Gold Fund Investment
Objective and Policies; Money Fund
Investment Objective and Policies; Investment
Restrictions; Implementation of Policies and Risks
Item 5. Management of the Company.................Management of the Company
Item 6. Capital Stock and Other Securities........Dividends, Capital Gains Distributions and Taxes; Capital
Stock; Inquiries
Item 7. Purchase of Securities Being Offered......Management of the Company; How to Purchase Shares; Net
Asset Value
Item 8. Redemption or Repurchase..................How to Redeem Shares
Item 9. Legal Proceedings.........................Not Applicable
STATEMENT OF ADDITIONAL
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FORM N-1A ITEM NO. INFORMATION CAPTION
- ----------------- -------------------
PART B
------
Item 10. Cover Page................................Cover Page
Item 11. Table of Contents.........................Table of Contents
Item 12. General Information and History...........Organization of the Funds
Item 13. Investment Objectives and Policies........Investment Objectives, Policies and Restrictions
Item 14. Management of the Registrant..............Management of the Company
Item 15. Control Persons and Principal Holders
of Securities.............................Management of the Company
Item 16. Investment Adviser and Other Services.....Investment Adviser and Other Services; Distribution of
the Funds' Shares; Custody of Portfolio; Independent
Auditors
Item 17. Brokerage Allocation......................Brokerage Allocation
Item 18. Capital Stock and Other Securities........Not Applicable
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered..................Distribution of the Funds' Shares; Computation of Net
Asset Value
Item 20. Tax Status................................Tax Status
Item 21. Underwriters..............................Distribution of the Funds' Shares
Item 22. Calculation of Performance Data...........Investment Objectives, Policies and Restrictions
Item 23. Financial Statements......................Financial Statements
</TABLE>
<PAGE>
PROSPECTUS
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SOGEN INTERNATIONAL FUND
SOGEN OVERSEAS FUND
SOGEN GOLD FUND
SOGEN MONEY FUND
-------------------------
[LOGO]
1221 Avenue of the Americas
New York, NY 10020
(800) 334-2143
-------------------------
Societe Generale Asset Management Corp.
Investment Adviser
SG Cowen Securities Corporation
Principal Underwriter
-------------------------
July 31, 1998
SoGen International Fund, SoGen Overseas Fund, SoGen Gold Fund and SoGen
Money Fund (each individually a "Fund" or collectively the "Funds") are four
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, 1998,
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.
1
<PAGE>
The Funds and their investment objectives are:
SoGen International Fund. Long-term growth of capital by investing
primarily in common stocks (and in securities convertible into common stocks) of
the United States and foreign companies (See Page 9).
SoGen Overseas Fund. Long-term growth of capital by investing primarily in
securities of small and medium size non-U.S. companies. (See pages 9 and 10.)
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
10 and 11.)
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
11 through 13.)
TABLE OF CONTENTS
Page
Fee Table.................................................................. 3
Financial Highlights....................................................... 4
Organization of the Company................................................ 9
International Fund Investment Objective and Policies....................... 9
Overseas Fund Investment Objective and Policies............................ 9
Gold Fund Investment Objective and Policies................................ 10
Money Fund Investment Objective and Policies............................... 11
Investment Restrictions.................................................... 13
Implementation of Policies and Risks....................................... 14
Management of the Companies................................................ 19
Capital Stock.............................................................. 21
Dividends, Capital Gains Distributions and Taxes........................... 21
Performance and Yield Information.......................................... 23
Net Asset Value............................................................ 24
How to Purchase Shares..................................................... 24
How to Redeem Shares....................................................... 29
Shareholder Services....................................................... 32
Inquiries.................................................................. 35
Shareholders' Reference Guide.............................................. 36
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No person has been authorized to give any information or to make any
representation not contained in this Prospectus and the Statement of Additional
Information and, if given or made, such information or representation must not
be relied upon as having been authorized by SoGen Funds, Inc. This Prospectus
does not constitute an offer to sell securities in any jurisdiction to anyone to
whom it is unlawful to make such offer in such jurisdiction.
2
<PAGE>
<TABLE>
<CAPTION>
FEE TABLE
SoGen SoGen SoGen SoGen
International International Overseas Overseas SoGen SoGen
Fund Fund Fund Fund Gold Money
Class A Class I Class A Class I Fund Fund
------- ------- ------- ------- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load 3.75% None 3.75% None 3.75% None
===== ==== ===== ==== ===== ====
Imposed on Purchases
(as a percentage of public
offering price)
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management Fees 0.75% 0.75% 0.75% 0.75% 0.75% 0.15%
12b-1 Fees 0.25%* None 0.25%* None 0.25%* None
Other Expenses 0.18% 0.18% 0.22% 0.22% 0.55% 0.60%
----- ----- ----- ----- ----- -----
Total Fund Operating Expenses 1.18% 0.93% 1.22% 0.97% 1.55% 0.75%**
</TABLE>
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* 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 investment advisory fee waiver and the effect of earnings credits.
Without such waivers and credits, "Total Fund Operating Expenses" would
have been 1.01%. As long as this temporary expense limitation continues, it
may lower the Fund's expenses and increase its total return.
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:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
International Fund
Class A $ 49 $ 73 $ 99 $ 172
Class I $ 9 $ 29 $ 50 $ 112
Overseas Fund
Class A $ 49 $ 74 $ 101 $ 177
Class I $ 10 $ 30 $ 53 $ 116
Gold Fund $ 52 $ 84 $ 117 $ 211
Money Fund $ 8 $ 23 $ 41 $ 91
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
3
<PAGE>
current fiscal year. For further information, see "Management of the Company"
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.
Societe Generale Asset Management Corp. ("SGAM Corp."), the investment
adviser, has voluntarily agreed to limit 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, 1999. After July
31, 1999, the expense limitation may be terminated or revised at any time.
FINANCIAL HIGHLIGHTS
The following financial highlights and the related financial statements for
each of the years in the nine year period ended March 31, 1998 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, 1998
Annual Report to Shareholders, which is incorporated by reference in the
Statement of Additional Information and is available without charge from the
Company. The financial highlights and the related financial statements for the
one 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 SoGen International Fund, Inc. Annual
Report to Shareholders. As of July 31, 1998, SoGen International Fund Inc.
became SoGen International Fund, a separate investment portfolio of SoGen Funds,
Inc., pursuant to an Agreement and Plan of Reorganization dated April 27, 1998.
4
<PAGE>
<TABLE>
<CAPTION>
SoGen International Fund Class A Shares
---------------------------------------------------------------------------------------------------------
For the Year Ended March 31,
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994 1993 1992 1991(a) 1990 1989
Selected Per Share
Data
Net asset value,
beginning of year. $26.68 $26.09 $23.20 $23.32 $20.12 $18.44 $17.51 $17.71 $17.31 $16.91
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from
investment
operations:
Net investment
income ........... 1.47 1.03 1.06 0.10 0.53 0.64 0.69 0.78 0.64 0.71
Net realized and
unrealized gains
on investments.... 2.10 1.39 3.37 0.49 3.37 2.02 1.45 0.20 1.48 1.26
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total from investment
operations........ 3.57 2.42 4.43 0.59 3.90 2.66 2.14 0.98 2.12 1.97
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Less distributions:
Dividends from net
investment income. (1.36) (1.09) (0.81) (0.15) (0.47) (0.64) (0.84) (0.71) (0.71) (0.80)
Distributions from
capital gains..... (1.47) (0.74) (0.73) (0.56) (0.23) (0.34) (0.37) (0.47) (1.01) (0.77)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions. (2.83) (1.83) (1.54) (0.71) (0.70) (0.98) (1.21) (1.18) (1.72) (1.57)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of year....... $27.42 $26.68 $26.09 $23.20 $23.32 $20.12 $18.44 $17.51 $17.71 $17.31
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total return* ...... 14.35% 9.48% 19.57% 2.63% 19.50% 14.87% 12.53% 6.03% 12.18% 11.94%
Ratios/Supplemental
data
Net assets, end of
year (millions) .. $4,035 $3,908 $3,033 $1,922 $1,781 $650 $355 $240 $176 $126
Ratios of operating
expenses to average
net assets:......... 1.18%** 1.21%** 1.25%** 1.26% 1.28% 1.31% 1.37% 1.30% 1.38% 1.39%
Ratios of net investment
income to average
net assets:......... 2.80%** 3.08%** 3.71%** 2.70% 2.34% 3.69% 4.00% 4.84% 4.32% 4.23%
Portfolio turnover
rate.............. 20.63% 12.85% 9.64% 12.96% 23.96% 17.94% 24.25% 24.14% 30.62% 33.05%
Average commission
rate paid# ....... $0.028 $0.003 $0.013 ---- ---- ---- ---- ---- ---- ----
</TABLE>
- -----------
* Does not give effect to deduction of the sales load.
** The ratio of operating expenses to average net assets for the years ended
March 31, 1998, 1997 and 1996 would have been 1.19%, 1.21% and 1.25%,
respectively, without the effect of earnings credits. The ratio of net
investment income to average net assets for the years ended March 31, 1998,
1997 and 1996 would have been 2.80%, 3.08% and 3.71%, respectively, without
the effect of earnings credits.
# 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 Securities
and Exchange Commission disclosure guidelines, average commissions per
share are calculated only for the periods subsequent to the year ended
March 31, 1995.
5
<PAGE>
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, 1996, 1997 and 1998 have been audited by KPMG Peat Marwick LLP,
independent auditors, whose report thereon is unqualified and appears in the
SoGen Funds, Inc. March 31, 1998 Annual Report to Shareholders, which is
incorporated by reference in the Statement of Additional Information and is
available without charge from the Company. This information should be read in
conjunction with the Financial Statements and notes thereto, which also appear
in the SoGen Funds, Inc. Annual Report to Shareholders.
<TABLE>
<CAPTION>
SoGen Overseas Fund Class A Shares
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Year Year Year Period From
Ended Ended Ended Ended August 31,
March 31, March 31, March 31, March 31, 1993 to March
1998 1997 1996 1995 31, 1994
Selected Per Share Data
Net asset value, beginning of year............ $13.84 $13.26 $11.65 $11.54 $10.00
------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income (loss)............... 0.88 0.61 0.48 0.14 (0.01)
Net realized and unrealized gains
on investments............................. 0.31 0.95 1.74 0.04 1.55
---- --------- ------- ------- -------
Total from investment operations........... 1.19 1.56 2.22 0.18 1.54
---- -------- ------- ------- -------
Less distributions:
Dividends from net investment income....... (0.83) (0.60) (0.44) (0.05) ----
Distributions from capital gains........... (0.68) (0.38) (0.17) (0.02) ----
------- -------- -------- -------- ---------
Total distributions........................ (1.51) (0.98) (0.61) (0.07) ----
------ -------- -------- -------- ---------
Net asset value, end of year.................. $ 13.52 $ 13.84 $ 13.26 $ 11.65 $ 11.54
======= ======= ======= ======= =======
Total Return***............................... 10.00% 12.16% 19.47% 1.56% 15.35%++
Ratios/Supplemental Data
Net assets, end of year (millions)............ $1,007 $953 $647 $439 $120
Ratio of operating expenses to average net
assets.................................. 1.22%** 1.27%** 1.37% 1.40% 1.72%*
Ratio of net investment income to average net
assets.............Net investment income 2.20%** 2.28%** 3.31% 2.29% (0.23%)*
Portfolio turnover rate....................... 22.13% 15.18% 9.46% 3.16% 6.11%
Average commission rate paid#................. $0.0177 $0.0207 $0.0190 ---- ----
</TABLE>
- -----------
* Annualized.
** The ratios of operating expenses to average net assets and net
investment income to average net assets for the year ended March 31, 1998
for SoGen Overseas Fund would have been the same without the effect of
earnings credits. The ratio of operating expenses to average net assets and
net investment income to average net assets for the year ended March 31,
1997 for SoGen Overseas Fund would have been the same and 2.27%,
respectively, without the effect of earnings credits.
++ Total return disclosed for the period ended March 31, 1994 is not
annualized. The annualized total return for the period ended March 31, 1994
was 26.40% for SoGen Overseas Fund.
*** Does not give effect to deduction of the sales load.
# 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 Securities
and Exchange Commission disclosure guidelines, average commissions per
share are calculated only for the periods subsequent to the year ended
March 31, 1995.
6
<PAGE>
<TABLE>
<CAPTION>
SoGen Gold Fund
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Year Year Year Period From
Ended Ended Ended Ended August 31,
March 31, March 31, March 31, March 31, 1993 to March
1998 1997 1996 1995 31, 1994
Selected Per Share Data
Net asset value, beginning of year............ $10.60 $12.25 $11.28 $11.42 $10.00
------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss)............... 0.13 0.26 0.24 0.08 (0.01)
Net realized and unrealized gains (losses)
on investments............................. (3.03) (1.75) 1.35 (0.10) 1.43
------ ------- ------- ------- -------
Total from investment operations........... (2.90) (1.49) 1.59 (0.02) 1.42
------ ------- ------- ------- -------
Less distributions:
Dividends from net investment income....... (0.39) (0.14) (0.35) (0.04) ----
Distributions from capital gains........... ---- (0.02) (0.27) (0.08) ----
-------- -------- -------- -------- --------
Total distributions........................ (0.39) (0.16) (0.62) (0.12) ----
------ -------- -------- -------- --------
Net asset value, end of year.................. $7.31 $ 10.60 $ 12.25 $ 11.28 $ 11.42
===== ======= ======= ======= =======
Total Return***............................... (27.23%) (12.21)% 14.81% (0.14)% 14.15%++
Ratios/Supplemental Data
Net assets, end of year (millions)............ $31 $53 $63 $51 $22
Ratio of operating expenses to average net
assets.................................. 1.50%** 1.45%** 1.41% 1.46% 2.27%*
Ratio of net investment income to average net
assets.............Net investment income 1.52%** 1.20%** 1.29% 0.79% (0.32%)*
Portfolio turnover rate....................... 11.20% 16.83% 22.40% 11.56% 4.55%
Average commission rate paid# $0.013 $0.0009 $0.0002 ---- ----
</TABLE>
- -----------
* Annualized.
** The ratios of operating expenses to average net assets and net investment
income to average net assets for the year ended March 31, 1998 for SoGen
Gold Fund would have been 1.56% and 1.46%, respectively, without the effect
of earnings credits. The ratio of operating expenses to average net assets
and investment income to average net assets for the year ended March 31,
1997 for SoGen Gold Fund would have been 1.46% and 1.19%, respectively,
without the effect of earnings credits.
++ Total return disclosed for the period ended March 31, 1994 is not
annualized. The annualized total return for the period ended March 31, 1994
was 24.34% for SoGen Gold Fund.
*** Does not give effect to deduction of the sales load.
# 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 Securities
and Exchange Commission disclosure guidelines, average commissions per
share are calculated only for the periods subsequent to the year ended
March 31, 1995.
7
<PAGE>
<TABLE>
<CAPTION>
SoGen Money Fund
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Year Year Year Period From
Ended Ended Ended Ended August 31,
March 31, March 31, March 31, March 31, 1993 to March
1998 1997 1996 1995 31, 1994
Selected Per Share Data
Net asset value, beginning of year............ $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ----- ------
Income from investment operations:
Net investment income (loss)............... 0.05 0.05 0.05 0.04 0.01
Net realized and unrealized gains
on investments............................. ---- ---- ---- ---- ----
------ ------ ------ ------ ------
Total from investment operations........... 0.05 0.05 0.05 0.04 0.01
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income....... (0.05) (0.05) (0.05) (0.04) (0.01)
Distributions from capital gains........... ---- ---- ---- ---- ----
------ ------ ------ ------ ------
Total distributions........................ (0.05) (0.05) (0.05) (0.04) (0.01)
------ ------ ------ ------ ------
Net asset value, end of year.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ======
Total Return.................................. 4.97% 4.61% 5.03% 4.13% 1.25%++
Ratios/Supplemental Data
Net assets, end of year (millions)............ $19 $13 $8 $10 $6
Ratio of operating expenses to average net
assets.................................. 0.75%+ 0.75%+ 0.75%+ 0.75%+ 0.75%*+
Ratio of net investment income to average net
assets............. 4.92%+ 4.63%+ 4.98%+ 4.14%+ 2.18%*+
</TABLE>
- -----------
* Annualized.
+ Without the effect of earnings credits, and the investment advisory fee
waiver and expense reimbursement provided by SGAM Corp., the ratio of
operating expenses to average net assets for SoGen Money Fund for the years
ended March 31, 1998, 1997, 1996, 1995 and for the period ended March 31,
1994 would have been 1.01%, 1.14%, 0.97%, 1.55% and 4.00%, respectively. On
the same basis, the ratio of net investment income to average net assets
for the years ended March 31, 1998, 1997, 1996, 1995 and for the period
ended March 31, 1994 would have been 4.66%, 426%, 4.76%, 3.34% and (1.07%),
respectively.
++ Total return disclosed for the period ended March 31, 1994 is not
annualized. The annualized total return for the period ended March 31, 1994
was 2.14% for SoGen Money Fund.
8
<PAGE>
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 four portfolios, SoGen
International Fund, SoGen Overseas Fund, SoGen Gold Fund and SoGen Money Fund
(referred to herein as the "International Fund," "Overseas Fund," "Gold Fund"
and "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.
INTERNATIONAL FUND INVESTMENT OBJECTIVE AND POLICIES
The International Fund's investment objective 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 in some instances to offer potential for long-term growth of
capital. When deemed appropriate by the Fund's investment adviser or for
short-term investment or defensive purposes, the Fund may hold up to 100% of its
assets in short-term debt instruments including commercial paper and
certificates of deposit.
The foregoing investment objective is 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 less).
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.
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),
9
<PAGE>
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 in the relatively near future. If, however, this expected bull
market in gold-related securities does not develop or if it does but the
investment adviser should conclude that any price appreciation that occurs 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,
the International Fund or the Overseas
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Fund, in the latter two cases 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 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;
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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 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
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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.
Change of Objective. The investment objective of Overseas Fund, Gold Fund
or Money Fund 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.
INVESTMENT RESTRICTIONS
The Funds have adopted the following investment restrictions (not including
the percentage of the International Fund's assets that may be invested in
short-term debt instruments for short-term defensive purposes) 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% 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;
3. (International Fund) -- 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 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
4. (Overseas Fund, Gold Fund and Money Fund) -- 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;
or
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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.
A complete description of the Funds' investment restrictions is included in
the Statement of Additional Information. Unless otherwise stated, each Fund's
investment restrictions and policies may be changed by the Board of Directors
without a vote of shareholders.
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. SGAM Corp. will seek to minimize these risks
through professional management and investment diversification. The value of
shares of the International Fund, 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.
International Fund.
Commodity Linked Securities. The International 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.
Gold Fund.
Fluctuations in the Price of Gold. 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, 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.
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Money Fund.
Variable Rate Securities. 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. 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.
Investment Policies Applicable to More Than One Fund.
The following additional investment policies are applicable to more than
one Fund and supplement those set forth above for the Funds.
Policies Applicable to All Funds:
Foreign Investments. The International Fund, 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 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
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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.
Illiquid Securities. Each Fund may invest up to 15% of its net assets (10%
in the case of the Money Fund and the International Fund) 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.
Policies Applicable to the International Fund, the Overseas Fund and the Gold
Fund:
Currency Exchange Transactions. 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
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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. Each of the International Fund, the
Overseas Fund and the Gold Fund may invest up to 20% (up to 100% in the case of
the International Fund) 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 unrated, are considered by SGAM Corp.
to be equivalent to below investment grade (often referred to as "junk bonds").
On balance, debt securities that are below investment grade are considered
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal according to the terms of the obligation and, therefore,
carry greater investment risk, including the possibility of issuer default and
bankruptcy. They are likely to be less marketable and more adversely affected by
economic downturns than higher-quality debt securities. (For additional
information on these debt securities see "Lower-Rated Debt Securities" in the
Statement of Additional Information.)
Expenses. 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 mutual fund
that invests in domestic equities.
Policies Applicable to the Overseas Fund, the Gold Fund and the Money Fund:
"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 on the day following the purchase 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
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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.
Policies Applicable to the International Fund and the Overseas Fund:
Investment in Other Investment Companies. Certain markets are closed in
whole or in part to equity investments by foreigners. The International Fund and
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. These restrictions do not apply to certain investment companies
known as private investment companies and "qualified purchaser" investment
companies.
Investment in another investment company may involve the payment of a
premium above the value of the issuer's portfolio securities, and is subject to
market availability. In the case of a purchase of shares of such a company in a
public offering, the purchase price may include an underwriting spread. The Fund
does not intend to invest in such an investment company unless, in the judgment
of the Fund's investment adviser, the potential benefits of such investment
justify the payment of any applicable premium or sales charge. As a shareholder
in an investment company, the Fund would bear its ratable share of that
investment company's expenses, including its advisory and administration fees.
At the same time, the Fund would continue to pay its own management fees and
other expenses.
Policies Applicable to the Overseas Fund and the Gold Fund:
Structured Securities. 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. 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, SGAM Corp. may
employ a temporary defensive investment
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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.
MANAGEMENT OF THE COMPANY
Board of Directors.
The business and affairs of the Company are managed under the direction of
its Board of Directors.
Investment Adviser.
The Company's portfolios are managed by SGAM Corp., 1221 Avenue of the
Americas, New York, New York 10020. SGAM Corp. is a registered investment
adviser which is indirectly owned by Societe Generale, one of France's largest
banks. Jean-Marie Eveillard, President and Director of the Company, is primarily
responsible for the day-to-day management of the Company's investment
portfolios. Mr. Eveillard has been a Director and President or Executive Vice
President of SGAM Corp. since prior to 1993.
SGAM Corp. furnishes investment advice to the Funds consistent with each
Fund's stated investment objective and policies. SGAM Corp. also furnishes the
Company with office space and certain facilities and services required for its
business and pays any compensation and expenses of the officers of the Company.
For these services and facilities, each Fund pays SGAM Corp. a fee, paid as
indicated, at an annual rate of the average daily net assets of that Fund as
follows:
International Fund......... 1.00% of the first $25 million and
0.75% of the excess over $25 million
Overseas Fund.............. 0.75%
Gold Fund.................. 0.75%
Money Fund................. 0.40%
Advisory fees are paid monthly, except that the advisory fees for the
International Fund are paid quarterly. 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 that invest in domestic equity
securities. 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. For the fiscal year ended March 31,
1998, the International Fund, Overseas
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Fund, old Fund and Money Fund paid advisory fees equal to 0.75%, 0.75%, 0.75%
and 0.40%, respectively, of their average daily net asset values, and each of
the Funds' total expenses, including the advisory fee, equaled 1.18%, 1.22%,
1.55% and 0.75%, respectively, of their average daily net asset values.
Year 2000.
Like other investment companies, financial and business organizations and
individuals around the world, the Funds could be adversely affected if the
computer systems used by SGAM Corp., SG Cowen Securities Corporation ("SG
Cowen"), the Funds' principal underwriter or other service providers to the
Funds do not properly process and calculate date-related information and data
from and after January 1, 2000. This is commonly known as the "Year 2000
Problem." SGAM Corp. and SG Cowen are taking steps that they believe are
reasonably designed to address the Year 2000 Problem with respect to computer
systems that they use and are taking steps to obtain reasonable assurances that
comparable steps are being taken by the Funds' other service providers. At this
time, however, there can be no assurance that these steps will be sufficient to
avoid any adverse impact to the Funds.
The Year 2000 Problem is expected to impact corporations, which may include
issuers of portfolio securities held by the Funds, to varying degrees based upon
various factors, including, but not limited to, the corporation's industry
sector and degree of technological sophistication. In this regard, the Funds
occasionally invest in issuers located in emerging markets. Such issuers may not
be applying the same diligence to the Year 2000 Problem as are issuers in more
mature markets. The Funds are unable to predict what impact, if any, the Year
2000 Problem will have on the issuers of securities held in the Funds'
portfolios.
Portfolio Transactions.
SGAM Corp. selects the brokers and dealers which execute orders for the
purchase and sale of each Fund's portfolio securities. SGAM Corp. seeks to
achieve "best execution" of such orders. "Best execution" means prompt and
reliable execution at the most favorable securities prices, taking into account
a 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, SGAM 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, SG Cowen, 1221 Avenue of the Americas, New
York, New York 10020. SG Cowen 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.
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CAPITAL STOCK
The authorized capital stock of SoGen Funds, Inc. consists of 3 billion
shares of common stock, par value $0.001 per share, of which 250,000,000 shares
have been designated as Class A shares of the International Fund, 250,000,000
shares have been designated as Class I shares of the International
Fund,150,000,000 shares have been designated as Class A shares of the Overseas
Fund, 150,000,000 shares have been designated as Class I shares of the Overseas
Fund, 200,000,000 shares have been designated as shares of the Gold Fund and
2,000,000,000 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.
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.
Pursuant to its By-Laws, the Company does not generally hold annual
meetings of shareholders. Shareholder meetings, however, will be held when
required by the Investment Company Act of 1940 or Maryland law, or when called
by the Chairman of the Board, the President or shareholders owning at least 10%
of the outstanding shares of 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 the International Fund, 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 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 contracts and the distribution plan
and agreement are matters to be determined separately by each Fund.
DIVIDENDS, CAPITAL GAINS 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 periodic distributions but no less than annual distributions of net
investment income and net realized capital gains, if any. Unless a shareholder
otherwise elects income dividends and capital gains distributions will be
reinvested in additional shares of the Funds at net asset value per share
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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.
Shareholders normally will be taxed on the dividends and capital gains
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. If any portion of
the income of a 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 gain designated as capital gains distributions will
be taxable to individual shareholders at a maximum 20% capital gains rates,
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 may be eligible for reduced federal tax
rates, 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 interest, dividends, and 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 their 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 interest, dividends and 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.
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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 advisers as to the tax liability they may
incur to the United States as a 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% for the Class A shares and the
reinvestment of all income dividends and capital gain 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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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 Board of Directors of the Company.
HOW TO PURCHASE SHARES
The minimum initial and subsequent investment amounts generally required
for each Fund and each class of shares within a Fund are listed in the table
below:
Minimum
Initial Investment Amount
Needed to Open an Minimum Subsequent
Account Investment Amount
-------- -----------------
International Fund
Class A $1,000 $100
Class I* $1 million $100
Overseas Fund
Class A $1,000 $100
Class I* $1 million $100
Gold Fund $1,000 $100
Money Fund $10,000 $100
- ------------
* The current net asset value of a shareholder's account in any class of any
of the SoGen Funds may qualify for purposes of meeting the initial minimum
investment amount for the International Fund Class I shares and the
Overseas Fund Class I shares.
The Automatic Investment Program and Automatic Exchange Program each
require a minimum initial investment of $100 per Fund (see "Shareholder
Services") and an account with the Money Fund that is opened by an exchange (see
"Shareholder Services - Exchange Privilege") requires a minimum investment of
$1,000. "Starter" checks and third-party checks will not be
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accepted for purposes of opening a new account. The Funds reserve the right to
waive the initial minimum investment amounts, at the discretion of the principal
underwriter, for certain investors, including Fund employees and directors and
officers of SGAM Corp. A Fund's shares may be purchased through authorized
dealers or through SG Cowen, the Funds' principal underwriter. A completed and
signed application is required for the initial account opened with the Funds. If
there is no application accompanying this Prospectus, please call (800) 334-2143
to obtain one.
The principal underwriter reserves the right to limit the purchase of a
Fund's shares when it is in the best interest of the Fund.
Purchases Through Dealers.
Investors may purchase a Fund's shares through selected securities dealers
with whom SG Cowen has sales agreements. A prospective investor may obtain
additional New Account Applications from such authorized dealers. For a list of
authorized dealers, please contact SG Cowen at (212) 278-5800. Authorized
dealers and financial service firms 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 SG Cowen, the Funds' principal underwriter.
Purchases Through SG Cowen.
Shares of a Fund may be purchased through SG Cowen 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. Shares
may also be purchased through SG Cowen by Automated Clearing House ("ACH")
transfer or by bank wire. Please call (800) 334-2143 for procedures as to how to
establish and administer the ACH purchase option, and please call prior to
wiring any funds. See "Shareholders' Reference Guide" at the back of this
Prospectus for wiring instructions.
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 Class A shares, the Overseas Fund Class A shares and the Gold Fund shares,
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 SG Cowen 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." Class I shares and shares of the Money Fund are not subject to sales
charges. The sales charges currently in effect are as follows:
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Investment Amounts
- ------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Sales Charge Dealer
Expressed as Discount as
Sales Charge as Approximate Percent of
Percent of Public Percent of Net Public
Offering Price Amount Invested Offering Price
-------------- ---------------- --------------
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.
SG Cowen reallows discounts to selected dealers with whom it has sales
agreements and is entitled to retain the balance over the dealer discounts. SG
Cowen 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 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.
SGAM 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 SGAM 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, SG Cowen 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,
parents and children; 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. Individual accounts and
corporate/partnership accounts may not be aggregated for purposes of reducing
the sales charge.
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Concurrent Purchases. The sales load associated with an investment may be
reduced by combining concurrent purchases of the International Fund Class A
shares, the Overseas Fund Class A shares and the Gold Fund shares and shares of
other funds advised by SGAM Corp., offered subsequent to the date of this
Prospectus subject to a sales load ("SoGen Load Funds"), by any "person," as
described above in "Aggregation." The concurrent purchase discount does not
apply to purchases of the International Fund Class I shares, the Overseas Fund
Class I shares and the Money Fund shares. 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 in "Aggregation") 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, SG Cowen or DST at the time of purchase
that he wishes to take advantage of such entitlement, and give the numbers of
his accounts, and those accounts held in the name of his spouse, parents or
children and the specific relationship of each such other person to the
investor.
Letter of Intention. A person (as defined above in "Aggregation") 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, SG
Cowen 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 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. International Fund Class A shares, Overseas Fund
Class A shares and Gold Fund shares may be sold at net asset value (i.e.,
without a sales charge) (i) to registered representatives or employees of
authorized dealers, the spouse, parents or children of such person, 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
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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 of
the Companies, SGAM Corp., SG Cowen, U.S. branches and affiliates of Societe
Generale, employees of certain firms providing services to the Funds (such as
the custodian and the shareholder servicing agent), and to the spouse, parents
and children of any such person, or 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 SG Cowen 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 SG Cowen or DST, within 60 calendar days after the redemption, both a written
request for reinstatement and a check or bank wire 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
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of his account. Beginning on July 31, 1998, stock certificates will not be
issued for the shares of any Fund.
Conditions of Purchase.
The Company 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 Company or SGSC until they are confirmed by DST as paid.
All 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 or ACH
transfer 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 Class A, Overseas Fund Class A and Gold
Fund).
The International Fund (on behalf of its Class A shares), Overseas Fund (on
behalf of its Class A shares) 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 SG Cowen a quarterly
distribution related fee at an annual rate not to exceed 0.25% of the average
daily net asset value attributable to the participating class of shares. SG
Cowen 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 of participating classes 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. SG Cowen bears distribution expenses to the extent they are not
covered by payments under the Plan. Any distribution expenses incurred by SG
Gowen 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. Class I shares and shares of the Money Fund do
not participate in the Plan and are not charged with any portion of the payments
made under the Plan.
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
Company nor SG Cowen currently charges a fee or commission upon the redemption
of a Fund's shares. Shareholders may redeem either through authorized dealers,
through SG Cowen or by telephone. Shares held in the dealer's "street name" must
be redeemed through the dealer.
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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 SG Cowen. 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.
Redemptions Through SG Cowen.
Shareholders may redeem their Fund shares through SG Cowen by transmitting
written redemption instructions to The SoGen Funds, c/o DST, P.O. Box 419324,
Kansas City, MO 64141-6324.
Redemptions by Telephone.
Unless contrary instructions are elected in the New Account Application or
Special Options Form, shareholders may redeem a Fund's shares in non-retirement
accounts by telephone by calling DST at (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 to a bank account number or mailed to an 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 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 "Redemption Price" below for acceptable
guarantors. See "Receiving Redemption Proceeds" below for change of address
procedures.) There is a $100,000 maximum on telephone redemptions by check.
There is no limitation on redemptions by ACH transfer or by bank wire; however,
a fee will be deducted from proceeds sent by bank wire. 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 company
upon 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 SG Cowen 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.
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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).
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 to be paid by check greater than
$100,000, or where the redemption proceeds are to be sent to an
address other than the address of record, to a person other than the
registered shareholder(s) for the account or to a bank account number
other than the one previously designated by the shareholder. A
signature guarantee is not required for any amount redeemed by ACH
transfer or bank wire 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;
or (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 in
negotiable form.
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
business days after receipt of the redemption request in proper form, but the
Company 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 or
ACH transfers 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 bank wire.
In addition, any change of address will require a fifteen-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 fifteen-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
fifteen-day holding period can also be avoided by establishing bank wire
redemption instructions through the New Account Application or Special Options
Form.
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Redemption proceeds are normally paid in the form of a check. Proceeds can
also be sent to a shareholder's bank account by ACH transfer or by bank wire
when a pre-designated bank has been identified in the New Account Application or
Special Options Form. Proceeds sent by ACH transfer should generally be credited
to a shareholder's account on the second business day after the redemption.
Proceeds sent by bank wire should be credited on the business day following the
redemption; however, a 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
Company 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. The Company
also reserves the right to redeem shares in any Class I account if the value of
that Class I account drops below $100,000. A shareholder will be allowed at
least 60 days to make an additional investment to bring his account value to the
stated minimum before the redemption is processed.
SHAREHOLDER SERVICES
The Company offers the following shareholder services:
Exchange Privilege.
Shareholders or authorized parties are entitled to exchange some or all of
their International Fund Class A shares, Overseas Fund Class A shares or Gold
Fund shares for shares of the Money Fund and shares of other SoGen Load Funds.
Shareholders or authorized parties are also entitled to exchange some or all of
their International Fund Class I shares or Overseas Fund Class I shares for
Class I shares of any other SoGen Fund and shares of the Money Fund. 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. 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 Class A shares,
the Overseas Fund Class A shares and the Gold Fund shares, 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. The minimum initial investment
amount for the International Fund Class I shares and the Overseas Fund Class I
shares whether by exchange or purchase, is $1 million. All
32
<PAGE>
subsequent amounts exchanged (except with respect to International Fund Class I
shares and Overseas Fund Class I shares) must be $100 or more. Upon exchanges of
shares of the Money Fund for shares of any SoGen Load Fund, payment of the
applicable 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.
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 Company reserves
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 the Automatic
Exchange Program or a similar periodic investment program). The Company 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.
Conversion.
Class A shares of the International Fund or the Overseas Fund having an
aggregate value not less than $1 million may be converted into Class I shares of
the same Fund upon the election of the shareholder. Such conversions shall take
place at net asset value, shall not result in the realization of income or gain
for Federal income tax purposes and shall be tax free to shareholders. For
additional information concerning conversions, or to effect a conversion,
contact the Funds at (800) 334-2143.
Automatic Exchange Program.
Shareholders who wish to automatically exchange shares of one Fund for
another on a monthly basis can do so by means of the Automatic Exchange Program.
The minimum exchange amount is $100. If the balance in the account the
shareholder is exchanging from falls below the designated automatic exchange
amount, all remaining shares will be exchanged and the program will be
discontinued. All conditions with respect to exchange transactions apply as
discussed in "Exchange Privilege" above.
Telephone Privileges.
Unless contrary instructions are elected in the New Account Application or
Special Options Form, the account will be entitled to make telephone purchases,
redemptions, exchanges, conversions and account maintenance requests. Neither
the Company nor its 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.
33
<PAGE>
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, (v) designated bank account information 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 telephone privileges.
Automatic Investment Program.
Investors may make regular semi-monthly, monthly or 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 designated
bank 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 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 Company 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 36
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 or about the 25th day of the month. 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. New accounts established by check, after the 10th of the month, will
not begin
34
<PAGE>
distribution until the following month due to the fifteen-day hold on check
purchases. The Company may amend or cease to offer the Systematic Withdrawal
Plan at any time.
Retirement Plans.
The Company offers a variety of retirement plans such as, IRA, Roth, SEP
SIMPLE and Educational IRA 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.
Retirement plans may purchase International Fund Class I shares or Overseas
Fund Class I shares provided they meet the minimum initial investment amount of
$1 million or the plan has or expects to have 100 or more participants and will
be domiciled in an omnibus or pooled account within each Fund and will not
require a Fund to pay any type of administrative fee or payment per participant
account to any third party.
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.
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 about any of the Funds, or for account information, shareholder
services or information on how to redeem shares, please call (800) 334-2143.
35
<PAGE>
Shareholders' Reference Guide
Telephone Numbers:
For Fund Information, Account & Shareholder Services: (800) 334-2143
Mail:
Direct Purchases, Redemptions
and Account Updates: The SoGen Funds
c/o DST Systems, Inc.
P.O. Box 419324
Kansas City, MO 64141-6324
Overnight Mail:
The SoGen Funds
c/o DST Systems, Inc.
330 West 9th Street
Kansas City, MO 64105-1807
Wiring Instructions:
You may wire funds to us at: IFTC, Kansas City, MO
ABA Routing #101003621
Account #7534116
Reference: (Your account number and
fund name)
To avoid rejection of your wire, you must inform us of your intention to
wire funds to us and include the fund name and your SoGen Fund account number in
the reference section of the wire.
Automatic Investment Program -- Regular investments of at least $100,
automatically from your checking or savings account. Because approval by your
bank is required, establishment of an Automatic Investment Program may require
at least thirty days. See the "Automatic Investment Program" section of the
Prospectus for details.
Systematic Withdrawal Plan -- With a minimum net asset value of $10,000,
you may establish a Systematic Withdrawal Plan to receive, not less than $50, on
a monthly or quarterly basis. Distributions are made on or about the 25th of the
month. New accounts established by check after the 10th of the month, will not
begin distribution until the following month due to the fifteen-day hold on
check purchases. Please see the "Systematic Withdrawal Plan" section of the
Prospectus for details.
Investment through ACH -- A convenient way for you to invest or redeem
shares in your SoGen Fund account. Please contact your financial representatives
or the Funds directly at (800) 334-2143 for further information.
36
<PAGE>
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
-----------
SG COWEN SECURITIES CORPORATION
1221 Avenue of the Americas
New York, NY 10020
(212) 278-5800
LEGAL COUNSEL
-------------
DECHERT PRICE & RHOADS
30 Rockefeller Plaza
New York, NY 10112
INDEPENDENT AUDITORS
--------------------
KPMG PEAT MARWICK LLP
757 Third Avenue
New York, NY 10017
DOMESTIC CUSTODIAN
------------------
INVESTORS FIDUCIARY TRUST COMPANY
127 West 10th Street
Kansas City, MO 64105
GLOBAL CUSTODIAN
----------------
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>
[LOGO OF SOGEN APPEARS HERE]
SOGEN FUNDS, INC.
1221 Avenue of the Americas
New York, NY 10020
SGC1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
- -----------------------------------
SOGEN INTERNATIONAL FUND
SOGEN OVERSEAS FUND
SOGEN GOLD FUND
SOGEN MONEY FUND
-------------------------
[LOGO OF SOGEN APPEARS HERE]
1221 Avenue of the Americas
New York, NY 10020
(800) 334-2143
-------------------------
Societe Generale Asset Management Corp.
1221 Avenue of the Americas
New York, NY 10020
Investment Adviser
SG Cowen Securities Corporation
1221 Avenue of the Americas
New York, NY 10020
Principal Underwriter
-------------------------
This Statement of Additional Information provides information about SoGen
International Fund, SoGen Overseas Fund, SoGen Gold Fund and SoGen Money Fund,
four 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, 1998. 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, 1998
SAI - 1
<PAGE>
TABLE OF CONTENTS
Statement of Cross-Referenced
Additional to captions in the
Information Page Prospectus Page
---------------- ---------------
ORGANIZATION OF THE FUNDS 3 9
INVESTMENT OBJECTIVES, POLICIES AND
RESTRICTIONS 4 9
MANAGEMENT OF THE COMPANY 19 19
INVESTMENT ADVISER AND OTHER
SERVICES 22 19
DISTRIBUTION OF THE FUNDS' SHARES 24 29
COMPUTATION OF NET ASSET VALUE 27 24
HOW TO PURCHASE SHARES 29 24
TAX STATUS 29 22
BROKERAGE ALLOCATION 34 20
CUSTODY OF PORTFOLIO 36 --
INDEPENDENT AUDITORS 36 --
FINANCIAL STATEMENTS 36 --
APPENDIX 38 --
SAI - 2
<PAGE>
ORGANIZATION OF THE FUNDS
SoGen International Fund, SoGen Overseas Fund, SoGen Gold Fund and
SoGen Money Fund, (each individually referred to as a "Fund", collectively, the
"Funds" or, alternatively, the "International Fund," the "Overseas Fund," the
"Gold Fund," and the "Money Fund," respectively) are four 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.
("SGAM"), a registered investment adviser. The Company's principal underwriter
is SG Cowen Securities Corporation ("SG Cowen"), 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.
International Fund. The International Fund's investment objective is to
provide long-term growth of capital. In seeking to achieve this objective, the
Fund will normally invest its
SAI - 3
<PAGE>
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 up to 100% of its assets in short-term debt instruments including
commercial paper and certificates of deposits.
Investors should refer to the Fund's Prospectus for further discussion of
the Fund's investment objective and policy. There can be no assurance that the
Fund's stated objective will be realized.
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.
International Fund.
Commodity Linked Securities (International Fund). The International Fund
may invest in structured notes and/or preferred stock, the value of which is
linked to the price of a referenced commodity. Structured notes and/or preferred
stock differ from other types of securities in which the Fund may invest in
several respects. For example, not only the coupon but also the redemption
amount at maturity may be increased or decreased depending on the change in the
price of the referenced commodity.
Investment in commodity linked 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 referenced commodity.
Further, in certain cases, the coupon and/or dividend may be reduced to zero,
and
SAI - 4
<PAGE>
any further decline in the value of the security may then reduce the redemption
amount payable on maturity. Finally, commodity linked securities may be more
volatile than the price of the referenced commodity.
Gold Fund.
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.
Money Fund.
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
SAI - 5
<PAGE>
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 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.
SAI - 6
<PAGE>
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.
Investment Policies Applicable to More Than One Fund.
Policies Applicable to All Funds:
Foreign Securities. Each Fund may (and the International Fund 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 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
SAI - 7
<PAGE>
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. Each Fund
does not expect to invest 5% or more of its total assets in unsponsored ADRs.
With respect to portfolio securities that are issued by foreign issuers or
denominated in foreign currencies, the investment performance of 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 International Fund and the Overseas Fund invest
are included in those listed below. The International Fund and the Overseas Fund
may not invest in all the countries listed, and they may invest in countries
that are not listed, when such investments are consistent with the Funds'
investment objective and policies. In addition, the Gold Fund may invest in
gold-related investments in any countries deemed suitable by the investment
adviser.
SAI - 8
<PAGE>
Mature Markets Emerging Markets
- -------------- ----------------
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
It may not be feasible for the International Fund, 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.
Restricted and Illiquid Securities. Each Fund may invest up to 15% of its
net assets (10% in the case of the Money Fund and the International Fund)
SAI - 9
<PAGE>
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 (10% in the case of the Money Fund and the International Fund) 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. SGAM 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, SGAM Corp. will consider the trading
markets for the specific security, taking into account the unregistered nature
of a Rule 144A security. In addition, SGAM Corp. could consider (1) the
frequency of trades and quotes, (2) the 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.
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.
SAI - 10
<PAGE>
Policies Applicable to the International Fund, the Overseas Fund and
the Gold Fund:
Currency Exchange Transactions. A currency exchange transaction may be
conducted either on a spot (i.e., cash) basis at the spot rate for purchasing or
selling currency prevailing in the foreign exchange market or through a forward
currency exchange contract ("Forward Contract"). A Forward Contract is an
agreement to purchase or sell a specified currency at a specified future date
(or within a specified time period) and price set at the time of the contract.
Forward Contracts are usually entered into with banks and broker/dealers, are
not exchange traded and are usually for less than one year, but may be renewed.
Currency exchange transactions may involve currencies of the different
countries in which the International Fund, 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.
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
SAI - 11
<PAGE>
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. Each of the International Fund, 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 the Overseas Fund and the Gold 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 be less
sensitive to interest rate changes than
SAI - 12
<PAGE>
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.
Policies Applicable to the Overseas Fund, the Gold Fund and the Money Fund:
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.
Policies Applicable to the Overseas Fund and the Gold Fund:
Structured Securities. 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 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.
SAI - 13
<PAGE>
Change of Objective.
The investment objectives of the Overseas Fund, the Gold Fund and the Money
Fund are not fundamental policies of the Funds 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.
The investment objective of the International Fund, on the other hand, is a
fundamental policy of the Fund and may not be changed without shareholder
approval.
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;
3. (Overseas Fund, Gold Fund and Money Fund) -- 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. (International Fund) -- 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 short-term investment of cash or 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.
5. (International Fund) -- Purchase or sell its portfolio securities from
or to any of its officers, directors or employees, its investment
adviser or its principal underwriter,
SAI - 14
<PAGE>
except to the extent that such purchase or sale may be permitted by an
order, rule or regulation of the Securities and Exchange Commission.
6. 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);*
7. (Overseas Fund, Gold Fund and Money Fund) -- 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 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;
8. (International Fund) -- Engage in the underwriting of securities of
other issuers, except to the extent it may be deemed to be an
underwriter in selling portfolio securities as part of an offering
registered under the 1933 Act.
9. (Overseas Fund, Gold Fund and Money Fund) -- 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;
10. (International Fund) -- Purchase or sell real estate or interests
therein, commodities or commodity contracts. The Fund may, however,
invest in real estate investment trusts and companies holding real
estate and may sell commodities received by it as distributions on
portfolio investments. (To the extent the Fund's portfolio includes a
commodity distributed to it, the Fund will be subject to the risk of
change in the value of such commodity.)
11. (Overseas Fund, Gold Fund and Money Fund) -- Make margin purchases of
securities, except for the use of such short term credits as are needed
for clearance of transactions; and
12. Sell securities short or maintain a short position, except, in the case
of the Overseas Fund, the Gold Fund and the Money Fund, short sales
against-the-box.
Restrictions 1 through 12 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 amended ("1940 Act"), 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
___________________
* The Funds have no present intention of lending their portfolio securities.
SAI - 15
<PAGE>
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. (International Fund) -- Purchase Securities on margin;
c. (Overseas Fund, Gold Fund and Money Fund) -- 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;
d. (International Fund) -- Purchase interests in oil, gas or other
mineral exploration programs or leases; however, this policy will
not prohibit the acquisition of securities of companies engaged in
the production or transmission of oil, gas or other minerals.
e. (Overseas Fund, Gold Fund and Money Fund) -- 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;
f. (International Fund) -- Purchase warrants which are not offered in
units or attached to other portfolio securities if, immediately
after such purchase, more than 5% of the Fund's net assets would
be invested in such unattached warrants, valued at the lower of
cost or market. The Fund will not purchase unattached warrants not
listed on the New York or American Stock Exchange if, immediately
after such purchase, more than 2% of the Fund's net assets would
be invested in such unattached, unlisted warrants.
g. (Overseas Fund, Gold Fund and Money Fund) -- Pledge, mortgage or
hypothecate its assets, except as may be necessary in connection
with permitted borrowings or in connection with short sales;
h. (Overseas Fund, Gold Fund and Money Fund) -- 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
i. Purchase or sell put and call options on securities or on futures
contracts.
j (International Fund) -- 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.
In addition, under normal circumstances the International Fund will invest
in at least three foreign countries.
SAI - 16
<PAGE>
Among the types of fixed income securities in which the International Fund
may invest from time to time are United States government obligations. United
States government obligations include Treasury Notes, Bonds and Bills which are
direct obligations of the United States government backed by the full faith and
credit of the United States, and securities issued by agencies and
instrumentalities of the United States government, which may be (i) guaranteed
by the United States Treasury, such as the securities of the Government National
Mortgage Association, or (ii) supported by the issuer's right to borrower from
the Treasury and backed by the credit of the federal agency or instrumentality
itself, such as securities of the Federal Intermediate Land Banks, Federal Land
Banks, Bank of Cooperatives, Federal Home Loan Banks, Tennessee Valley Authority
and Farmers Home Administration.
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 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.
SAI - 17
<PAGE>
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 International Fund, the Overseas Fund
and the Gold Fund advertise their average annual total return. During the one
year period ended March 31, 1998, average annual rates of return were 10.06%,
5.87% and (29.85%), for the International Fund (formerly SoGen International
Fund, Inc.) Class A shares, the Overseas Fund Class A shares and the 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.
Under the same assumptions utilized in the preceding calculation, an
investment in the International Fund (formerly SoGen International Fund, Inc.)
Class A shares over the ten year period from March 31, 1989 to March 31, 1998
would have increased at an average annual compounded rate of return of 11.76%,
an investment in the International Fund (formerly SoGen International Fund,
Inc.) Class A shares over the five year period from March 31, 1993 to March 31,
1998 would have increased at an average annual compounded rate of return of
12.06%, and an investment in the International Fund (formerly SoGen
International Fund, Inc.) Class A shares over the one year period from March 31,
1997 to March 31, 1998 would have increased at an average annual compounded rate
of 10.06%.
SAI - 18
<PAGE>
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, 1998 were 4.86% and 4.98%, respectively.
Current yield and effective yield for the Money Fund will vary based on changes
in market conditions, the level of interest rates 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 International Fund, 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 International Fund, the Overseas Fund and Gold Fund during the
fiscal year ended March 31, 1996 were 9.64%, 9.46% and 22.40%, respectively,
during the fiscal year ended March 31, 1997 were 12.85%, 15.18% and 16.83%,
respectively, and during the fiscal year ended March 31, 1998 were 20.63%,
22.13% and 11.20%, 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 SGAM
Corp., SG Cowen or Societe Generale, Paris, France, the indirect owner of one
hundred percent (100%) of the outstanding voting securities of SGAM Corp., and
SAI - 19
<PAGE>
the owner of one hundred percent (100%) of the outstanding voting securities of
SG Cowen. Jean-Marie Eveillard, the President and a Director of the Company,
owns 100% of SGAM Corp.'s non-voting Series B common stock which represents
19.9% of the total capital of SGAM Corp.
The following table sets forth the principal occupation or employment of
the members of the Board of Directors and principal officers of the Company.
Each of the following persons is also a Director and/or officer of SoGen
Variable Funds, Inc.
<TABLE>
<CAPTION>
Position Held With the Principal Occupation During
Name, Address and Age Company the Past Five (5) Years)
- --------------------- ------- ------------------------
<S> <C> <C>
Philippe Collas, 48,* Chairman of the Board Head of Asset Management at Societe Generale
17, cours Valmy and Director since September 1995. Head of Human Resource
92972 Paris France Management at Societe Generale from prior to
1993.
Jean-Marie Eveillard, 58,*(1) President and Director Director and President or Executive Vice
1221 Avenue of the Americas President of SGAM corp. from prior to 1993.
New York, NY 10020
Fred J. Meyer, 67,(2) Director Chief Financial Officer of Omnicom Group Inc.
437 Madison Avenue from prior to 1993. Director of Novartis
New York, NY 10022 Corporation, and Zurich-American Insurance
Cos.
Dominique Raillard, 59,(2) Director President of Act 2 International (consulting)
15, boulevard Delessert since July 1995. Group Executive Vice
75016 Paris France President of Promodes (consumer Products) --
U.S. Companies Division from prior to 1993
to 1995.
Nathan Snyder, 63,(1)(2) Director Independent Consultant from prior to 1993.
163 Parish Rd. S.
New Canaan, CT 06840
Philip J. Bafundo, 35, Vice President, Secretary and Treasurer, SGAM Corp. from prior
1221 Avenue of the Americas Secretary and Treasurer to 1993. Certified Public Accountant (New
New York, NY 10020 York).
Ignatius Chithelen, 43,* Vice President Securities Analyst, SGAM Corp. since October
1221 Avenue of the Americas 1993. Private investor prior to 1993.
New York, NY 10020
Charles de Vaulx, 36,* Vice President Senior Vice President from May 1998, Associate
1221 Avenue of the Americas Portfolio Manager from December 1996 to
New York, NY 10020 1998, Securities
</TABLE>
SAI - 20
<PAGE>
<TABLE>
<CAPTION>
Position Held With the Principal Occupation During
Name, Address and Age Company the Past Five (5) Years)
- --------------------- ------- ------------------------
<S> <C> <C>
Analyst, SGAM Corp. from prior to
1993 to 1996.
Sean J. McKeown, 42,* Vice President Operations Manager, SGAM Corp. since June 1997.
1221 Avenue of the Americas New York, Vice President, Citibank Investment Products
NY 10020 & Distribution from October 1993 to June
1997. Vice President, Citicorp Investment
Services from prior to October 1993.
Edwin S. Olsen, 58,* Vice President Vice President, SG Cowen from prior to 1993.
1221 Avenue of the Americas
New York, NY 10020
Catherine A. Shaffer, 42,* Vice President First Vice President, SG Cowen from prior to 1993.
1221 Avenue of the Americas
New York, NY 10020
Elizabeth Tobin, 44,* Vice President Senior Vice President from May 1998, Associate
1221 Avenue of the Americas Portfolio Manager from December 1996 to
New York, NY 10020 1998, Securities Analyst, SGAM Corp. from
prior to 1993 to 1996.
- ----------
* An "interested person" of the Company as defined in the 1940 Act.
(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.
</TABLE>
The Company makes no payments to any of its officers for services. However,
currently each of the Company's Directors who are not officers or employees of
SGAM Corp., SG Cowen 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, 1998, an aggregate of $39,000 was paid or
accrued for Directors' fees and expenses by the Company. See Note 2 of Notes to
the Financial Statements on page 22 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.
During the fiscal year ended March 31, 1998, an aggregate of $39,000 was
paid or accrued for Directors' fees and expenses by SoGen International Fund,
Inc. See Note 2 of Notes to the Financial Statements on page 23 of the SoGen
International Fund, Inc.'s Annual
SAI - 21
<PAGE>
Report to Shareholders for a description of various transactions during the
SoGen International Fund, Inc.'s most recent fiscal year between the SoGen
International Fund, Inc. and its Directors and affiliates of its Directors.
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,
1998. 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 served as of March 31, 1998.
Compensation Table
Fiscal Year Ended March 31, 1998
<TABLE>
<CAPTION>
Pension or
Retirement Total
Benefits Estimated Compensation
Aggregate Accrued as Annual From Registrant
Compensation Part of Fund Benefits and Fund Complex
from Fund Upon Paid to
Name of Person, Position Registrant Expenses Retirement Directors
- ------------------------ ---------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Philippe Collas**, Director and Chairman $ -- N/A N/A $ --
Jean-Marie Eveillard**, Director and President $ -- N/A N/A $ --
Fred J. Meyer*, Director $26,000 N/A N/A $39,000(3)
Dominique Raillard*, Director $18,200 N/A N/A $27,300(3)
Nathan Snyder*, Director $26,000 N/A N/A $39,000(3)
- ----------
* Member of the Audit Committee.
** "Interested person" of the Company as defined in the 1940 Act because of the affiliation with SGAM Corp., the
Fund's investment adviser.
</TABLE>
The Directors and officers of the Company, as a group, owned less than 1%
of the outstanding shares of capital stock of the Company at June 30, 1998. 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, SGAM Corp. is the Company's
investment adviser and, as such, manages the International Fund, the Overseas
Fund, the Gold Fund and the
SAI - 22
<PAGE>
Money Fund. SGAM Corp. was incorporated in Delaware in February 1990, and is
indirectly owned by Societe Generale, one of France's largest banks.
The persons named below are affiliated with the Company and are also
affiliated persons of SG Cowen Corp., SGSC or Societe Generale. The capacity in
which such persons are affiliated with the Company and SGAM Corp., SG Cowen or
Societe Generale is also indicated.
<TABLE>
<CAPTION>
Office Held with Office Held with SGAM Corp.,
Name the Company SG Cowen or Societe Generale
- ---- ----------- ----------------------------
<S> <C> <C>
Philippe Collas Chairman of the Board and Head of Asset Management, Societe
Director Generale. Chairman of the
Board and Director, SGAM
Corp.
Jean-Marie Eveillard President and Director President and Director, SGAM Corp.
Philip J. Bafundo Vice President, Secretary and Secretary and Treasurer, SGAM Corp.
Treasurer
Ignatius Chithelen Vice President Securities Analyst, SGAM Corp.
Charles de Vaulx Vice President Senior Vice President, SGAM Corp.
Sean J. McKeown Vice President Operations Manager, SGAM Corp.
Edwin S. Olsen Vice President Vice President, SG Cowen
Catherine A. Shaffer Vice President First Vice President, SG Cowen
Elizabeth Tobin Vice President Senior Vice President, SGAM Corp.
</TABLE>
Under its investment advisory contracts with the Company, which became
effective August 17, 1993 (in the case of SoGen Overseas Fund, SoGen Gold Fund
and SoGen Money Fund) and July 31, 1998 (in the case of SoGen International
Fund), SGAM Corp. furnishes the Company with investment advice consistent with
each Fund's stated investment objective. SGAM 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. Until July 31, 1998, SGAM Corp. provided substantially
similar services for SoGen International Fund, Inc. pursuant to an investment
advisory contract which became effective April 26, 1990 and was amended on July
10, 1992. Pursuant to an Agreement and Plan of Merger dated April 27, 1998,
SoGen International Fund, Inc. became a portfolio of the Company. The Company
adopted a new investment advisory contract, on behalf of SoGen International
Fund, with SGAM Corp. on substantially the same terms as the previous investment
advisory contract in effect for SoGen International Fund, Inc.
In return for the services listed above, each Fund pays SGAM Corp. a fee at
the annual rate of the average daily value of the Fund's net assets as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
International Fund....................................... 1.00% of the first $25 million and
0.75% of the excess over $25 million
Overseas Fund............................................ 0.75%
Gold Fund................................................ 0.75%
Money Fund............................................... 0.40%
</TABLE>
Advisory fees are paid monthly, except that the advisory fees for the
International Fund are paid quarterly. The annual fee rates listed above for the
International Fund, the Overseas Fund and the Gold Fund, respectively, are
higher than the rate of fees paid by most U.S. mutual funds that
SAI - 23
<PAGE>
invest primarily in domestic equity securities. 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.
The Overseas Fund and the Gold Fund paid investment advisory fees for the
fiscal year ended March 31, 1996 in the amount of $3,991,923 and $392,561,
respectively, for the fiscal year ended March 31, 1997, the investment advisory
fees were $5,899,446 and $449,545, respectively, and for the fiscal year ended
March 31, 1998, the investment advisory fees were $7,798,589 and $283,300,
respectively. For the fiscal year ended March 31, 1998, $37,399 of the
investment advisory fee of $60,497 for the Money Fund was waived by SGAM Corp.
SoGen International Fund, Inc. paid investment advisory fees under its
investment advisory contract for the fiscal years ended March 31, 1996, 1997 and
1998 in the amount of $18,408,301, $26,404,805 and $30,954,079, respectively.
Under the investment advisory contracts between the Company and SGAM 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 contracts, 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, SGAM Corp.
owned of record and beneficially, approximately 6,400 shares of the Overseas
Fund, 4,000 shares of the Gold Fund and 18,300 shares of the Money Fund. SGAM
Corp. did not own any shares of the International 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 SG Cowen have entered into an underwriting contract
pursuant to which SG Cowen 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 SG Cowen 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 SG Cowen, adopted by the International Fund (on
SAI - 24
<PAGE>
behalf of its Class A shares), the Overseas Fund (on behalf of its Class A
shares) and the Gold Fund in accordance with the provisions of Rule 12b-1 under
the Investment Company Act of 1940, each participating class of shares of a Fund
may pay SG Cowen a quarterly distribution fee of up to, on an annual basis,
0.25% of the average daily net asset value attributable to that class of shares.
Under the Plan, SG Cowen 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 participating class of the Fund 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. SG Cowen bears a Fund's distribution costs to the
extent they exceed payments under the Plan. For the fiscal year ended March 31,
1998, the Company paid SG Cowen $2,699,569 pursuant to the Plan, $12,600 of
which was paid by SG Cowen to Societe Generale and subsidiaries of Societe
Generale. SG Cowen and SGAM Corp. bear the Company's distribution costs to the
extent they exceed payments under the Plan. The Class I shares of the
International Fund, the Class I shares of the Overseas Fund and the Money Fund
do not participate in the Plan.
Before becoming a portfolio of the Company, SoGen International Fund, Inc.
participated in a substantially similar Distribution Plan and Agreement (the
"Distribution Plan"). For the fiscal year ended March 31, 1998, SoGen
International Fund, Inc. paid SG Cowen $10,136,493 pursuant to the Distribution
Plan, $117,850 of which was paid by SG Cowen to Societe Generale and
subsidiaries of Societe Generale.
Substantially all of the amounts paid to SG Cowen under the Plan (and the
Distribution 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 attributable to the participating classes of shares of a Fund held by the
dealer's customers. SG Cowen has retained $1,122,041 of the amount paid to it
pursuant to the Plan with respect to the fiscal year ended March 31, 1998, 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. SG Cowen has also retained $2,292,442 of the amount paid to it
pursuant to the Distribution Plan with respect to the fiscal year ended March
31, 1998, as reimbursement for expenses incurred in promoting the sale of SoGen
International Fund, Inc.'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 SG Cowen, 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 15) of
SAI - 25
<PAGE>
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, 1998, SG Cowen, the principal
underwriter of the Company's shares and the SoGen International Fund, Inc.'s
shares, Societe Generale (including subsidiaries) and SGAM Corp. received
commissions and other compensation in connection with operation of the Company
and SoGen International Fund, Inc. as follows:
SoGen Funds, Inc.
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Net
Underwriting
Discounts Commissions on
Name of Principal and Dealer Repurchases or Brokerage Other
Underwriter or Affiliate Commissions Redemptions Commissions Compensation
------------------------ ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
SG Cowen $285,064 $ 0 $51,125 $2,699,569*
Societe Generale (including subsidiaries) $ 2,742 $ 0 $18,477 $ 12,600**
SGAM Corp. $ 0 $ 0 $ 0 $ 39,000***
</TABLE>
- ----------
* For the period reported, the Company's distribution fee paid or payable to
SG Cowen 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 $2,699,569 paid to
SG Cowen under the Plan.
*** The Company's investment advisory fee paid or payable to SGAM Corp. for the
fiscal year ended March 31, 1998.
SoGen International Fund, Inc.
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Net
Underwriting
Discounts Commissions on
Name of Principal and Dealer Repurchases or Brokerage Other
Underwriter or Affiliate Commissions Redemptions Commissions Compensation
------------------------ ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
SG Cowen $1,208,699 $ 0 $93,977 $10,136,493*
Societe Generale (including subsidiaries) $ 52,682 $ 0 $ 9,267 $ 117,850**
SGAM Corp. $ 0 $ 0 $ 0 $30,954,079***
</TABLE>
- ----------
* For the period reported, SoGen International Fund, Inc.'s distribution fee
paid or payable to SG Cowen pursuant to its Distribution Plan.
Substantially all of such amount was paid or will be paid to dealers,
including Societe Generale and certain subsidiaries, selling shares of
SoGen International Fund, Inc.
** Amounts paid to Societe Generale as a dealer of SoGen International Fund,
Inc.'s shares pursuant to the Distribution Plan, which amount is included
in the $10,136,493 paid to SG Cowen under the Distribution Plan.
*** SoGen International Fund, Inc.'s investment advisory fee paid or payable to
SGAM Corp. for the fiscal year ended March 31, 1998.
SAI - 26
<PAGE>
During the three years ended March 31, 1996, 1997 and 1998, the aggregate
amount of sales charges on sales of the Company's shares was $2,263,995,
$2,098,953 and $1,523,084, respectively. During the years ended March 31, 1995
and 1996, SG Cowen received net underwriting discounts and dealer commissions of
$747,619, and $477,279, respectively. Societe Generale received dealer discounts
of $8,988 for the fiscal year ended March 31, 1996.
During the three years ended March 31, 1996, 1997 and 1998, the aggregate
amount of sales charges on sales of SoGen International Fund, Inc.'s shares was
$16,232,673, $14,480,187 and $7,485,957, respectively. During the years ended
March 31, 1995 and 1996, SG Cowen received net underwriting discounts and dealer
commissions of $941,813 and $3,005,037, respectively, and Societe Generale
received dealer discounts of $44,234 and $36,119, respectively.
SGAM Corp. has entered into agreements with SG Cowen, dated April 30, 1990,
under which net commissions and fees earned by SG Cowen in its capacity as
underwriter to the Company and SoGen International Fund, Inc., are remitted to
SGAM Corp. In consideration for certain services provided by SG Cowen, SGAM
Corp. pays SG Cowen a $25,000 per annum fee, payable monthly, and reimburses SG
Cowen for certain expenses incurred on behalf of SGAM Corp. For SGAM Corp.'s
fiscal year ended, December 31, 1997,such commissions and fees with respect to
the Company amounted to $1,474,373, and the related reimbursement for services
amounted to $9,929. For SGAM Corp.'s fiscal year ended, December 31, 1997, such
commissions and fees with respect to SoGen International Fund, Inc. amounted to
$3,932,478, and the related reimbursement for services amounted to $37,576.
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 15). 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 1940 Act) of SGAM Corp., SG Cowen or the Company.
Each contract will terminate automatically in the event of its assignment (as
defined in the 1940 Act) 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, Rev. Dr. Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day. The net asset value per share is
computed by dividing the total current value of the assets of 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
SAI - 27
<PAGE>
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, 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, 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, 1998, appears as the
Statement of Assets and Liabilities for the Company and SoGen International
Fund, Inc. on page 18 and 19, respectively, of the March 31, 1998 Annual Report
to Shareholders.
SAI - 28
<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 International Fund, the Overseas
Fund and the Gold Fund may be purchased at net asset value by various persons
associated with the Company, SG Cowen, SGAM 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) 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 (c)
distribute at least 90% of its investment company taxable income (which
includes, among other items, dividends, interest and net short-term capital
gains in excess of net long-term capital losses) for the year.
As a regulated investment company, 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
SAI - 29
<PAGE>
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 International Fund, the Overseas Fund and the Gold Fund
will so qualify. Distributions of net capital gains, if any, designated as
capital gains distributions are taxable to individual shareholders at a maximum
20% capital gains rate, 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
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, 1998, the
percentages of net investment income that qualified for the dividends-received
deduction for the International Fund, the Overseas Fund, Gold Fund and Money
Fund were 6.79%, 0.34%, 28.96% and 0.00%, respectively.
Certain foreign currency contracts in which the International Fund, 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.
SAI - 30
<PAGE>
Generally, the hedging transactions undertaken by the International Fund,
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 International Fund, 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 any of these 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.
Notwithstanding any of the foregoing, a Fund may recognize gain (but not
loss) from a constructive sale of certain "appreciated financial positions" if
the Fund enters into a short sale, offsetting notional principal contract or
forward contract transaction with respect to the appreciated position or
substantially identical property. Appreciated financial positions subject to
this constructive sale treatment are interests (including options and forward
contracts and short sales) in stock, partnership interests, certain actively
traded trust instruments and certain debt instruments. Constructive sale
treatment does not apply to certain transactions closed in the 90-day period
ending with the 30th day after the close of the taxable year, if certain
conditions are met.
If a Fund enters into a short sale of property that becomes substantially
worthless, the Fund will recognize gain at that time as though it had closed the
short sale. Future Treasury regulations may apply similar treatment to other
transactions with respect to property that becomes substantially worthless.
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
SAI - 31
<PAGE>
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 may be eligible for reduced federal tax
rates, 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
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 International Fund, 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 International Fund, 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
SAI - 32
<PAGE>
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 limitation rules do not apply to certain
electing individual taxpayers who have limited creditable foreign taxes and no
foreign source income other than passive investment-type income. The foreign tax
credit is eliminated with respect to foreign taxes withheld on dividends if the
dividend paying shares are held by the Fund for less than 16 days (46 days in
the case of preferred shares) during the 30-day period (90-day period for
preferred shares) beginning 15 days (45 days for preferred shares) before the
shares become ex-dividend. 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.
A Fund may elect to mark to market its foreign investment company stock,
resulting in the stock being treated as sold at fair market value on the last
business day of each taxable year. Any resulting gain would be reported as
ordinary income; any resulting loss and any loss from an actual disposition of
the stock would be reported as ordinary loss to the extent of any net gains
reported in prior years. Alternatively, the Fund may be able to make an
election, in lieu of being taxable in the manner described above, to include
annually in income its pro rata share of the ordinary earnings and net capital
gain of the foreign investment company, regardless of whether it actually
received any distributions from the foreign company. These amounts would be
included in the Fund's investment company taxable income and net capital gain
which, to the extent distributed by the Fund as ordinary or capital gain
dividends, as the case may be, would not be taxable to the Fund. In order to
make this election, the Fund would be required to obtain certain
SAI - 33
<PAGE>
annual information from the foreign investment companies in which it invests,
which in many cases may be difficult to obtain.
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.
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
SGAM 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 SGAM 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 SGAM 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
SAI - 34
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fiscal years ended March 31, 1996, 1997 and 1998, the Company paid SG Cowen and
affiliates of Societe Generale $44,749, $67,054 and $69,602, respectively, in
such brokerage commissions for transactions effected on various exchanges. Such
commissions paid for the fiscal year ended March 31, 1998 represented 5.2% of
the aggregate brokerage commissions paid by the Company during such period and
was paid in connection with transactions representing 4.4% of the aggregate
dollar amount of all transactions effected by the Company (including principal
transactions for which no direct brokerage commissions are paid).
For the fiscal years ended March 31, 1996, 1997and 1998, the SoGen
International Fund, Inc. paid SG Cowen and affiliates of Societe Generale
$108,724, $124,672 and $103,244, respectively, in such brokerage commissions for
transactions effected on various exchanges. Such commissions paid for the fiscal
year ended March 31, 1998 represented 4.5% of the aggregate brokerage
commissions paid by the Company during such period and was paid in connection
with transactions representing 3.1% of the aggregate dollar amount of all
transactions effected by the Company (including principal transactions for which
no direct brokerage commissions are paid).
SG Cowen 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.
SGAM Corp. is authorized to allocate brokerage and principal business to
brokers other than SG Cowen (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 SGAM
Corp. exercises investment discretion (as defined in Section 3(a)(35) of the
1934 Act) and, as to transactions as to which fixed minimum commission rates are
not applicable, to cause 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 SGAM Corp. in making the selection in question
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker, viewed in terms of either that particular transaction or of SGAM Corp.'s
overall responsibilities with respect to a Fund and the other accounts as to
which it exercises investment discretion. In reaching such determination, SGAM
Corp. is not required to place or attempt to place a specific dollar value on
the research or execution services of a broker or on the portion of any
commission reflecting either of said services. In demonstrating that such
determinations were made in good faith, SGAM Corp. must be prepared to show that
all commissions were allocated and paid for purposes contemplated by a Fund's
brokerage policy; that the research services provide lawful and appropriate
assistance to SGAM Corp. in the performance of its investment decision-making
responsibilities; and that the commissions paid were within a reasonable range.
The determination that commissions were within a reasonable range will be based
on any available information as to the level of commissions known to be charged
by other brokers on comparable 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, and (ii) the quality, comprehensiveness and frequency of
research studies which are provided for SGAM Corp. are useful to SGAM Corp. in
performing its services under the investment advisory
SAI - 35
<PAGE>
contracts with the Company. Research services provided by brokers to SGAM Corp.
are considered to be in addition to, and not in lieu of, services required to be
performed by SGAM Corp. under such investment advisory contracts. 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 Conduct Rules of the National Association of Securities
Dealers, Inc. and subject to obtaining prices at least as favorable as those
provided by other qualified brokers, SGAM Corp. may consider sales of shares of
a Fund as a factor in the selection of brokers to execute portfolio
transactions.
Each Fund has been advised by SGAM 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
SGAM Corp. for its own account or from any of its officers, directors or
employees.
While SGAM Corp. is primarily responsible for the allocation of 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 SGAM 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, SGAM 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, 1998,
which was attributable to research services was $1,312,827, in connection with
transactions amounting to $500,043,313. During the fiscal years ended March 31,
1998, 1997 and 1996, the Company paid total brokerage commissions of $1,335,957,
$1,028,722, and $924,146, respectively. The amount of brokerage commissions paid
by SoGen International Fund, Inc. during the fiscal year ended March 31, 1998,
which was attributable to research services was $2,227,348, in connection with
transactions amounting to $1,392,188,983. During the fiscal years ended March
31, 1998, 1997 and 1996, SoGen International Fund, Inc. paid total brokerage
commissions of $2,286,967, $2,138,878 and $2,468,233, 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
SAI - 36
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certain foreign sub-custodians which are participants in the Global Investor
Services Division of Chase and in certain foreign branches of Chase.
INDEPENDENT AUDITORS
The Company's independent auditors are KPMG Peat Marwick LLP, Certified
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, 1998 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 SoGen
International Fund, Inc.'s financial statements and notes thereto appearing in
the March 31, 1998 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 either 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.
SAI - 37
<PAGE>
APPENDIX
RATINGS OF INVESTMENT SECURITIES
The rating of a rating service represents the service's opinion as to the
credit quality of the security being rated. However, the ratings are general and
are not absolute standards of quality or guarantees as to the creditworthiness
of an issuer. Consequently, the 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 "giltedge."
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.
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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.
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.
SAI - 39
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a)(1) Financial Statements
a. Financial Statements included in Prospectus and Statement of
Additional Information: All financial statements are incorporated by
reference to the SoGen Funds, Inc. Annual Report to Shareholders for
the year ended March 31, 1998 and the SoGen International Fund, Inc.
Annual Report to Shareholders for the year ended March 31, 1998.
<TABLE>
SoGen Funds, Inc.
<CAPTION>
ANNUAL REPORT
PAGE REFERENCE
<S> <C>
Schedule of Investments - March 31, 1998..................................................... 6
Statement of Assets and Liabilities -- March 31, 1998........................................18
Statement of Operations -- Fiscal year ended March 31, 1998..................................19
Statements of Changes in Net Assets -- Fiscal years ended March 31, 1997 and 1998...........20
Notes to Financial Statements................................................................21
Independent Auditors' Report.................................................................27
SoGen International Funds, Inc.
ANNUAL REPORT
PAGE REFERENCE
Schedule of Investments - March 31, 1998..................................................... 5
Statement of Assets and Liabilities -- March 31, 1998........................................19
Statement of Operations -- Fiscal year ended March 31, 1998..................................20
Statements of Changes in Net Assets -- Fiscal years ended March 31, 1997 and 1998...........21
Notes to Financial Statements................................................................22
Independent Auditors' Report.................................................................27
b. Financial Statements Included in Part C of the Registration Statement: NONE
</TABLE>
(a)(2) All other financial statements and supporting schedules are omitted
because they are not applicable or the required information is shown in
the financial statements or the notes thereto.
Part C -- 1
<PAGE>
(b) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
<S> <C>
1(a) Articles of Incorporation of the Registrant.*
1(b) Articles of Amendment and Restatement.*
1(c) Articles Supplementary
2 By-Laws of the Registrant as amended through August 17, 1993.*
4 Specimen Certificates representing shares of Common Stock($.001 par value).*
5(a) Investment Advisory Contract between the Registrant and Societe Generale Asset Management Corp.
("SGAM Corp.") (Overseas, Gold and Money funds only)*
5(b) Investment Advisory Contract between Registrant and SGAM Corp. (International Fund only)
6(a) Underwriting Agreement between the Registrant and SG Cowen Securities Corporation
("SG Cowen").
6(b) Form of Selling Group Agreement.*
8(a) Custody Agreement between the Registrant and Investors Fiduciary Trust Company.*
8(b) Transfer Agency and Registrar Agreement between the Registrant and DST Systems, Inc.*
8(c) Global Custody Agreement between the Registrant and The Chase Manhattan Bank, N.A. ("Chase")*
8(d) Amendment to Global Custody Agreement between the Registrant and Chase.
10 Opinion and Consent of Dechert Price & Rhoads.*
11(a) Consent of KPMG Peat Marwick LLP.
13 Investment Representation letter of SGAM Corp.*
15 Rule 12b-1 Distribution Plan and Agreement between the Registrant and SG Cowen.
16 Calculation of Performance Data in Statement of Additional Information.*
17 Form of Multiple Class Plan pursuant to Rule 18f-3
27 Financial Data Schedules*
Other exhibits --Power of Attorney of Messrs. Collas*, Eveillard*, Meyer*, Raillard*, Snyder.*
</TABLE>
- -------------------
* Previously filed as an exhibit to the Registration Statement.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
C -- 2
<PAGE>
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
The following information is furnished as of June 30, 1998.
<TABLE>
<CAPTION>
NUMBER OF RECORD HOLDERS
<S> <C>
Title of Class As of June 30, 1998
- --------------------------------------------------------- --------------------------------------------------------
Shares of Beneficial Interest of the International Fund, Class A, par value $.001 per share 153,773
Shares of Beneficial Interest of the International Fund, Class I, par value $.001 per share 0
Shares of Beneficial Interest of the Overseas Fund, Class A, par value $.001 per share 29,152
Shares of Beneficial Interest of the Overseas Fund, Class I, par value $.001 per share 0
Shares of Beneficial Interest of the Gold Fund, par value $.001 per share 3,287
Shares of Beneficial Interest of the Money Fund, par value $.001 per share 641
</TABLE>
ITEM 27. INDEMNIFICATION
Registrant is incorporated under the laws of the State of Maryland and is
subject to Section 2-418 of the Corporations and Associations Article of the
General Corporation Law of the State of Maryland controlling the indemnification
of directors and officers. Since Registrant has its executive offices in the
State of New York, and is qualified as a foreign corporation doing business in
such State, the persons covered by the foregoing statute may also be entitled to
and subject to the limitations of the indemnification provisions of Section
721-726 of the New York Business Corporation Law.
The general effect of these statutes is to protect directors, officers,
employees and agents of the Registrant against legal liability and expenses
incurred by reason of their positions with the Registrant. The statutes provide
for indemnification for liability for proceedings not brought on behalf of the
corporation and for those brought on behalf of the corporation, and in each case
place conditions under which indemnification will be permitted, including
requirements that the indemnified person acted in good faith. Under certain
conditions, payment of expenses in advance of final disposition may be
permitted. The By-Laws of the Registrant make the indemnification of its
directors, officers, employees and agents mandatory subject only to the
conditions and limitations imposed by the above-mentioned Section 2-418 of
Maryland Law and by the provisions of Section 17(h) of the Investment Company
Act of 1940 as interpreted and required to be implemented by SEC Release No.
IC-11330 of September 4, 1980.
In referring in its By-Laws to, and making indemnification of directors
subject to the conditions and limitations of, both Section 2-418 of the Maryland
Law and Section 17(h) of the Investment Company Act of 1940, as amended (the
"1940 Act"), the Registrant intends that conditions and limitations on the
extent of the indemnification of directors and officers imposed by the
provisions of either Section 2-418 or Section 17(h) shall apply and that any
inconsistency between the two will be resolved by applying the provisions of
said Section 17(h) if the condition or limitation imposed by Section 17(h) is
the more stringent. In referring in its By-Laws to SEC Release No. IC-11330 as
the source for interpretation and implementation of said Section 17(h), the
Registrant understands that it would be required under its By-Laws to use
reasonable and fair means in determining whether indemnification of a director
or officer should be made and undertakes to use either (1) a final decision on
the merits by a court or other body before whom
C -- 3
<PAGE>
the proceeding was brought that the person to be indemnified ("indemnitee") was
not liable to the Registrant or to its security holders by reason of willful
malfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his or her office ("disabling conduct") or (2) in the
absence of such a decision, a reasonable determination, based upon a review of
the facts, that the indemnitee was not liable by reason of such disabling
conduct, by (a) the vote of a majority of a quorum of directors who are neither
"interested persons" (as defined in the 1940 Act) of the Registrant nor parties
to the proceeding, or (b) an independent legal counsel in a written opinion.
Also, the Registrant will make advances of attorney's fees or other expenses
incurred by a director or officer in his or her defense only if (in addition to
his or her undertaking to repay the advance if he or she is not ultimately
entitled to indemnification) (1) the indemnitee provides a security for his or
her undertaking, (2) the Registrant shall be insured against losses arising by
reason of any lawful advances, or (3) a majority of a quorum of the
non-interested, non-party directors of the Registrant, or an independent legal
counsel in a written opinion, shall determine, based on a review of readily
available facts, that there is reason to believe that the indemnitee ultimately
will be found entitled to indemnification.
In addition, the Registrant will maintain a directors' and officers' errors
and omissions liability insurance policy protecting directors and officers
against liability for claims made by reason of any acts, errors or omissions
committed in their capacity as directors of officers. The policy will contain
certain exclusions, among which is exclusion from coverage for active or
deliberate dishonest or fraudulent acts and exclusion for fines or penalties
imposed by law or other matters deemed uninsurable.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
SGAM Corp. is the Registrant's investment adviser. In addition to the
Registrant, SGAM Corp., acts as investment adviser to SoGen Variable Funds, Inc.
and pension funds and sub-adviser to non-affiliated investment funds.
Reference is made to "Management of the Fund" in the Statement of
Additional Information constituting Part B of this Post-Effective Amendment for
a description of the business activities and employment of certain directors and
officers of SGAM Corp. within the last two fiscal years of the Registrant. The
directors of SGAM Corp. not disclosed in Part B are as follows:
<TABLE>
<CAPTION>
Name and Address Principal Occupation
- -------------------------------------------- -------------------------------------------------------------
<S> <C>
Christian d'Allest.......................... Director of Foreign Affiliates, Societe Generale Asset
17, cours Valmy Management
92972 Paris France
Jean Roger Huet............................. President, New York Branch, Societe Generale
1221 Avenue of the Americas
New York, NY 10020
</TABLE>
C -- 4
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) SG Cowen, the Registrant's distributor, also acts as principal
underwriter for SoGen Variable Funds, Inc., a registered investment company.
(b) The directors and officers of SG Cowen are as follows:
<TABLE>
<CAPTION>
POSITIONS AND OFFICES WITH POSITIONS AND OFFICES WITH
NAME AND PRINCIPAL BUSINESS ADDRESS PRINCIPAL UNDERWRITER REGISTRANT
- -------------------------------------------- ------------------------------------ ------------------------------------
<S> <C> <C>
Jacques Bouhet.............................. Director --
17, Cours Valmy
92972 Paris
France
Jean-Bernard Guillebert..................... Director --
17, Cours Valmy
92972 Paris
France
Jean Huet................................... Director --
1221 Avenue of the Americas
New York, NY 10020
Alain Joyet................................. Director --
1221 Avenue of the Americas
New York, NY 10020
Gerald Lacaze............................... Director --
17, Cours Valmy
92972 Paris
France
Robert Leroux............................... Director --
17, Cours Valmy
92972 Paris
France
Jean-Paul Oudet............................. Director --
23 Rue De D'Abeville
75009 Paris
France
</TABLE>
C -- 5
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES WITH POSITIONS AND OFFICES WITH
NAME AND PRINCIPAL BUSINESS ADDRESS PRINCIPAL UNDERWRITER REGISTRANT
- -------------------------------------------- ------------------------------------ ------------------------------------
<S> <C> <C>
Yves Tuloup................................. Director --
43, rue Taitbout
75009 Paris
France
Curtis Welling.............................. Director, President and CEO --
1221 Avenue of the Americas
New York, NY 10020
James Walsh................................. Director, Chief Operating Officer --
1221 Avenue of the Americas
New York, NY 10020
Robert S. Pirie............................. Vice Chairman --
1221 Avenue of the Americas
New York, NY 10020
Marc Poirier................................ Deputy Chief Operating Officer, Director --
1221 Avenue of the Americas
New York, NY 10020
Kenneth Lampert............................. Chief Compliance Officer, First Vice President --
1221 Avenue of the Americas
New York, NY 10020
William P. Bowden, Jr....................... Secretary --
1221 Avenue of the Americas
New York, NY 10020
Elisabeth Duncan............................ Assistant Secretary --
1221 Avenue of the Americas
New York, NY 10020
</TABLE>
C -- 6
<PAGE>
The following officers all have their principal business address at 1221
Avenue of the Americas, New York, NY 10020:
<TABLE>
<CAPTION>
POSITIONS AND OFFICES WITH POSITIONS AND OFFICES WITH
NAME AND PRINCIPAL BUSINESS ADDRESS PRINCIPAL UNDERWRITER REGISTRANT
- -------------------------------------------- ------------------------------------ ------------------------------------
<S> <C> <C>
Steven Baronoff............................. Managing Director --
Richard Greg Brounstein..................... Managing Director --
Matthew Edward Czajkowski................... Managing Director --
David Michael Feinman....................... Managing Director --
Ian J. Hardington........................... Managing Director --
John L. Kelly............................... Managing Director --
James N. Lane............................... Managing Director --
Jan B. Lochtenberg.......................... Managing Director --
David M. Malcolm............................ Managing Director --
Nimil Rajnikant Parekh...................... Managing Director --
Michael Penfield............................ Managing Director --
Vinod Sehgal................................ Managing Director --
Paul Wesley Shaum........................... Managing Director --
John Sheldon................................ Managing Director --
Fiona Jane Tilley........................... Managing Director --
Jon Frederic Weber.......................... Managing Director --
Bradford Carver Yates....................... Managing Director --
David J. Atkinson........................... Director --
Mark Thomas Berry........................... Director --
Anna Hayes Connard.......................... Director
Robert H. Despirito......................... Director --
Katharine H. Flynn.......................... Director --
David Getzler............................... Director --
Geoffrey Alexander Gimber................... Director --
Lars Hanan.................................. Director --
Adam Michael Hodes.......................... Director
Glori Holzman............................... Director --
Matthew Judson.............................. Director --
M. Robin Krasny............................. Director --
Meredith Ress Levy.......................... Director --
Charles E. Mather IV........................ Director --
Carl A. Mayer III........................... Director --
Patrick Joseph Memmi........................ Director --
Scott W. Phillips........................... Director --
Peter J. Pinto.............................. Director --
</TABLE>
C -- 7
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES WITH POSITIONS AND OFFICES WITH
NAME AND PRINCIPAL BUSINESS ADDRESS PRINCIPAL UNDERWRITER REGISTRANT
- -------------------------------------------- ------------------------------------ ------------------------------------
<S> <C> <C>
Claudio A. Pupkin........................... Director --
Ronald C. Ratcliffe......................... Director --
Andrew J. Schoenfeld........................ Director --
Frederick W. Searby......................... Director --
Joseph Stefanik............................. Director --
Jean Philippe Jacque Villa.................. Director --
Joseph Marino............................... Senior Vice President --
Timothy Moyer............................... Senior Vice President --
Rex Yamamoto................................ Senior General Manager
Dominic Freud............................... First Vice President --
Charles Gushee.............................. First Vice President --
Paul Meyer.................................. First Vice President --
John Monck.................................. First Vice President --
Thomas Moyna................................ First Vice President --
Rolando E. Pantoja.......................... First Vice President --
Gillaume Pollet............................. First Vice President --
Benoit Raudel............................... First Vice President --
Catherine A. Shaffer........................ First Vice President Vice President
Raz Alon.................................... Vice President --
Jean Marie Barreau.......................... Vice President --
Isaac Barrocas.............................. Vice President --
Francois Barthelemy......................... Vice President --
Richard Beston.............................. Vice President --
John Bianco................................. Vice President --
Pascal Bouillon............................. Vice President --
Andrew Brummer.............................. Vice President --
Michael Joseph Casey........................ Vice President --
Robert Casey................................ Vice President --
Mary Chen................................... Vice President --
D.K. Cockrell II............................ Vice President --
Arthur G. Condodina......................... Vice President --
Yolanda Cristina Courtines.................. Vice President --
John Enderle................................ Vice President --
Lauda Fields................................ Vice President --
William Court Frauen........................ Vice President --
Gordes Frobenius............................ Vice President --
Michael Gelblat............................. Vice President --
Adam Harold Goodfriend...................... Vice President --
John C. Griffin............................. Vice President --
</TABLE>
C -- 8
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES WITH POSITIONS AND OFFICES WITH
NAME AND PRINCIPAL BUSINESS ADDRESS PRINCIPAL UNDERWRITER REGISTRANT
- -------------------------------------------- ------------------------------------ ------------------------------------
<S> <C> <C>
Vincent Gros................................ Vice President --
Markus Sebastian Hansen..................... Vice President --
Edward N. Heumann........................... Vice President --
Eric Hirshfield............................. Vice President --
Tsen-Yu Hung................................ Vice President --
McLloyd K. Jensen........................... Vice President --
Andrew Joseph............................... Vice President --
Andres B. Josephsohn........................ Vice President --
Paul Kwong.................................. Vice President
Robert J. Lambert........................... Vice President
Marc Levesque............................... Vice President --
John Joseph Mandy Jr........................ Vice President --
Robert Marx................................. Vice President --
John T. Maxwell Jr.......................... Vice President --
John A. Montgomery Jr....................... Vice President --
Elizabeth Mulford........................... Vice President
Nancy C. Nakovick........................... Vice President
Kenneth Nora................................ Vice President --
Edwin S. Olsen.............................. Vice President Vice President
Howard Park................................. Vice President --
Philippe Pierson............................ Vice President --
Theodore J. Podest.......................... Vice President --
Stephane Reverre............................ Vice President --
Robert Roland............................... Vice President --
Bryan L. Sanders............................ Vice President --
Gregory Michael Solomon..................... Vice President --
David A. Steinschraber...................... Vice President --
Nathalie Texier............................. Vice President --
Richard Tramutola........................... Vice President --
Matthew C. Zolin............................ Vice President --
</TABLE>
C -- 9
(c) None.
ITEM 30 LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are maintained at the offices of the Registrant, 1221 Avenue of the
Americas, New York, NY 10020 with the exception of certain accounts, books and
other documents which are kept by the Registrant's custodian, Investors
Fiduciary Trust Company, 127 West 10th Street, Kansas City, MO 64105 and
registrar and shareholder servicing agent, DST Systems, Inc. ("DST"), P.O. Box
419324, Kansas City, Missouri, 64141-6324.
ITEM 31 MANAGEMENT SERVICES
Not applicable.
ITEM 32 UNDERTAKINGS
The Registrant undertakes to call a meeting of shareholders for the purpose
of voting upon the question of removal of a director, if requested to do so by
the holders of at least 10% of a Fund's outstanding shares, and that it will
assist communication with other shareholders as required by Section 16(c) of the
Investment Company Act of 1940.
C -- 9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended (the
"1933 Act"), and the Investment Company Act of 1940, as amended, the Registrant,
SoGen Funds, Inc., certifies that it meets all of the requirements for
effectiveness of this Post-Effective Amendment No. 6 to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 6 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York and State of New
York, on the 31st day of July, 1998.
SOGEN FUNDS, INC.
By: /s/ Jean-Marie Eveillard
----------------------------
JEAN-MARIE EVEILLARD
PRESIDENT)
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post-Effective Amendment No. 6 has been signed below by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Jean-Marie Eveillard President and Director
---------------------------------- (principal executive officer) July 31, 1998
JEAN-MARIE EVEILLARD
/s/ Philip J. Bafundo Vice President and Treasurer
---------------------------------- (principal financial and July 31, 1998
PHILIP J. BAFUNDO accounting officer)
* Chairman of the Board
---------------------------------- July 31, 1998
PHILIPPE COLLAS
*
---------------------------------- DIRECTOR July 31, 1998
FRED J. MEYER
*
---------------------------------- DIRECTOR July 31, 1998
DOMINIQUE RAILLARD
*
---------------------------------- DIRECTOR July 31, 1998
NATHAN SNYDER
* By: /s/ Jean-Marie Eveillard
----------------------------------------
(JEAN-MARIE EVEILLARD, ATTORNEY-IN-FACT)
</TABLE>
C -- 10
<PAGE>
EXHIBITS
- --------
1(c) Articles Supplementary
5(b) Investment Advisory Contract between the Registrant and Societe
Generale Asset Management Corp. (International Fund only)
6(a) Underwriting Agreement between the Registrant and SG Cowen
8(d) Form of Amendment to Global Custody Agreement between the
Registrant and Chase
11(a) Consent of KPMG Peat Marwick LLP
15 Rule 12b-1 Distribution Plan and Agreement between the Registrant and
SG Cowen
17 Multiple Class Plan pursuant to Rule 18f-3
SOGEN FUNDS, INC.
ARTICLES SUPPLEMENTARY
SOGEN FUNDS, INC., a Maryland corporation registered as an open-end
management investment company under the Investment Company Act of 1940 (the
"Act") and having its principal office in Baltimore, Maryland (hereinafter
called the "Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: Immediately prior to the filing of these Articles Supplementary, the
number of authorized shares of stock of the Corporation set forth in the
Corporation's charter was one billion (1,000,000,000) shares, having a par value
of one tenth of one cent ($0.001) per share and an aggregate par value of one
million dollars ($1,000,000). These authorized shares were divided into three
series, 150 million shares having been designated and classified as Gold Fund
Common Stock, 700 million shares having been designated and classified as Money
Fund Common Stock and 150 million shares having been designated and classified
as Overseas Fund Common Stock.
SECOND: The Board of Directors of the Corporation, at a meeting duly
convened and held on April 24, 1998, adopted a resolution increasing the number
of authorized shares of capital stock of the Corporation to three billion
(3,000,000,000) shares having a par value of one tenth of one cent ($0.001) per
share and an aggregate par value of three million dollars ($3,000,000).
THIRD: There is hereby established and designated one additional series of
Common Stock, designated as the International Fund and consisting of five
hundred million (500,000,000) shares of the Corporation's authorized capital
stock. Two hundred fifty million (250,000,000) of those shares are hereby
classified as International Fund Class A Common Stock and two hundred fifty
million (250,000,000) of those shares are hereby classified as International
Fund Class I Common Stock.
FOURTH: The Board of Directors of the Corporation, at a meeting duly
convened and held on April 24, 1998, adopted a resolution to (1) change the
designation and classification of the one hundred fifty million (150,000,000)
shares of stock previously designated as Overseas Fund Common Stock to Overseas
Fund Class A Common Stock; (2) classify one hundred fifty million (150,000,000)
additional authorized shares as Overseas Fund Class I Common Stock; (3) classify
fifty million (50,000,000) additional authorized shares as Gold Fund Common
Stock; and (4) classify one billion three hundred million (1,300,000,000)
additional authorized shares as Money Fund Common Stock.
FIFTH: As amended hereby, until such time as the Board of Directors shall
provide otherwise in accordance with paragraph (f) of Article FIFTH of the
Corporation's Articles of Incorporation, the three billion (3,000,000,000)
authorized shares of the Corporation's
1
<PAGE>
capital stock is designated and classified as follows: two hundred million
(200,000,000) shares are designated and classified as Gold Fund Common Stock,
two billion (2,000,000,000) shares are designated and classified as Money Fund
Common Stock, one hundred fifty million (150,000,000) shares are designated and
classified as Overseas Fund Class A Common Stock, one hundred fifty million
(150,000,000) shares are designated and classified as Overseas Fund Class I
Common Stock, two hundred fifty million (250,000,000) shares are designated and
classified as International Fund Class A Common Stock, and two hundred fifty
million (250,000,000) shares are designated and classified as International Fund
Class I Common Stock. The Board of Directors' power to designate and redesignate
or classify and reclassify any unissued shares of capital stock is not changed
by these Articles Supplementary.
SIXTH: The shares of stock of the Corporation authorized and classified
pursuant to these Articles Supplementary have been authorized and classified by
the Board of Directors under the authority contained in the Articles of
Incorporation. The total number of shares of stock of the various classes that
the Corporation has authority to issue has been increased by the Board of
Directors in accordance with Section 2-105(c) of the Maryland General
Corporation Law.
SEVENTH: The preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption of each class of each series of the Corporation's stock
shall be as set forth in the Corporation's charter and shall be subject to all
provisions thereof relating to shares of the Corporation.
IN WITNESS WHEREOF, SoGen Funds, Inc. has caused these Articles
Supplementary to be signed in its name and on its behalf by its authorized
officers who acknowledge that these Articles Supplementary are the act of the
Corporation, that to the best of their knowledge, information and belief, all
matters and facts set forth herein relating to the authorization and approval of
these Articles Supplementary are true in all material respects and that this
statement is made under the penalties of perjury, on this 23rd day of July,
1998.
SOGEN FUNDS, INC.
By:
Name: Jean-Marie Eveillard
Title: President
ATTEST:
Name: Philip J. Bafundo
Title: Vice President and Treasurer
2
SOGEN FUNDS, INC.
1221 Avenue of the Americas, 8th Floor
New York, New York 10020
July 31, 1998
Societe Generale Asset Management Corp.
1221 Avenue of the Americas, 8th Floor
New York, New York 10020
Investment Advisory Contract
Dear Sirs:
SoGen Funds, Inc. (the "Company"), a Maryland corporation consisting of
four portfolios, SoGen International Fund, SoGen Overseas Fund, SoGen Gold Fund
and SoGen Money Fund, is engaged in the business of an investment company. Its
Board of Directors has selected you to act as the investment adviser of the
Company on behalf of SoGen International Fund (the "Fund") and to provide
certain other services to the Company on behalf of the Fund, as more fully set
forth below, and you are willing to act as such investment adviser and to
perform such services under the terms and conditions hereinafter set forth.
Accordingly, the Company agrees with you as follows:
1. Delivery of Corporate Documents. The Company has furnished you with
copies properly certified or authenticated of each of the following:
(a) Articles of Incorporation of the Company, dated May 3, 1985, as
amended.
(b) Articles Supplementary of the Company, dated July 24, 1998.
(c) By-Laws of the Company as in effect on the date hereof.
(d) Statement of Rules adopted by the Board of Directors of the
Company on March 2, 1970, as subsequently amended.
(e) Resolutions of the Board of Directors of the Company selecting you
as investment adviser and approving the form of this Agreement.
The Company will furnish you from time to time with copies properly certified or
authenticated, of any amendments of or supplements to the foregoing, if any.
2. Advisory Services. You will regularly provide the Company with
investment research, advice and supervision and will furnish continuously an
investment program for the Fund's portfolio consistent with the Fund's
investment objective, policy and restrictions set forth in the Company's
Registration Statement under the Securities Act of 1933, as amended (the
1
<PAGE>
"Registration Statement") , and the current prospectus and statement of
additional information included therein (the "Prospectus"). You will recommend
what securities shall be purchased for the Fund, what portfolio securities shall
be sold by the Fund, and what portion of the Fund's assets shall be held
uninvested, subject always to such investment objective, policy and restrictions
and to the provisions of the Company's Articles of Incorporation, By-Laws,
Statement of Rules and the requirements of the Investment Company Act of 1940,
as amended (the "1940 Act"), as each of the same shall be from time to time in
effect. You shall advise and assist the officers of the Company in taking such
steps as are necessary or appropriate to carry out the decisions of its Board of
Directors and any appropriate committees of such Board regarding the foregoing
matters and general conduct of the investment business of the Company.
3. Allocation of Charges and Expenses. You will pay the compensation and
expenses of all officers of the Company and will furnish, without expense to the
Company, the services of such of your officers and employees as may duly be
elected officers or directors of the Company, subject to their individual
consent to serve and to any limitations imposed by law. You will pay the
Company's office rent and ordinary office expenses and will provide investment,
advisory, research and statistical facilities and all clerical services relating
to research, statistical and investment work. (It is understood that the
foregoing provision does not obligate you to pay for the maintenance of the
Company's general ledger and securities cost ledger or for daily pricing of the
Company's securities, but that it does obligate you, without expense to the
Company, to oversee the provision of such services by the Company's agent.) You
will not be required hereunder to pay any expenses of the Company other than
those above enumerated in this paragraph 3. In particular, but without limiting
the generality of the foregoing, you will not be required to pay hereunder:
brokers' commissions; legal or auditing expenses; taxes or governmental fees;
any direct expenses of issue, sale, underwriting, distribution, redemption or
repurchase of shares of the Company; the expenses of registering or qualifying
securities for sale; the cost of preparing and distributing reports and notices
to stockholders; the fees or disbursements of dividend, disbursing, shareholder,
transfer or other agent; or the fees or disbursements of custodians of the
Company's assets.
4. Compensation of the Adviser. For all services to be rendered and
payments made as provided in paragraphs 2 and 3 hereof, the Fund will promptly
pay you a fee after the last day of March, June, September and December in each
year. The fee to be so paid each calendar Quarter shall be the sum of the
following percentages of the average daily value of the net assets of the Fund
during the three months ending on such days:
.25% of the first $25,000,000
(an annual rate of 1.0%)
.1875% of the excess over $25,000,000
(an annual rate of .75%)
If this Agreement is terminated as of any day not the last day of a calendar
quarter, such fee shall be paid as promptly as possible after such date of
termination. If this Agreement shall be effective for less than the whole of any
quarter, such fee shall be based on the average daily value of the net assets of
the Fund in the part of the quarter for which this Agreement shall be effective
and shall be that proportion of such fee as the number of business days (days on
which the New York Stock Exchange is open all or part of the day for
unrestricted trading) in such period bears to the
2
<PAGE>
number of business days in such quarter. The average daily value of the net
assets of the Fund shall in all cases be based only on business days for the
period or quarter and shall be computed in accordance with applicable provisions
of the Articles of Incorporation of the Company.
5. Purchase and Sale of Securities. You shall purchase securities from or
through and sell securities to or through such persons, brokers or dealers
(including any of your affiliates) as you shall deem appropriate in order to
carry out the Company's brokerage policy as set forth from time to time in the
Registration Statement and Prospectus, or as the Board of Directors of the
Company may require from time to time. When purchasing securities from or
through, and selling securities to or through, any such persons, brokers or
dealers that may be affiliated with you, you shall comply with all applicable
provisions of the 1940 Act, including without limitation Section 17 thereof and
the rules and regulations thereunder, and Section 206 of the Investment Advisers
Act of 1940, as amended (the "Investment Advisers Act") and the rules and
regulations thereunder. In providing the Company with investment management and
supervision, it is recognized that you will seek the best combination of price
(inclusive of brokerage commissions) and execution, and, consistent with such
policy, may give consideration to the research, statistical and other services
furnished by brokers or dealers as such Board may direct or authorize from time
to time
Notwithstanding the above, it is understood that it is desirable for the
Company that you have access to research services provided by brokers who
execute brokerage transactions at a higher cost to the Company than may result
when allocating brokerage to other brokers on the basis of seeking the best
combination of price (inclusive of brokerage commissions) and execution. such
research services include written reports, responses to specific inquiries,
interviews with analysts, invitations to meetings arranged by brokers with the
managements of companies in the Company's portfolio or in which the Company may
invest and may include other types of research from time to time approved by the
Board of Directors of the Company. Only research services provided to you for
the benefit of the Company will be considered in selecting brokers to effect
portfolio transactions for the Company unless otherwise authorized by such
Board. You are authorized to place orders for the purchase and sale of
securities for the Company with brokers who provide such research services,
subject to review by the Board of Directors of the Company from time to time,
but not less frequently than quarterly, with respect to the extent and
continuation of this practice. It is understood that the services provided by
such brokers may be useful to you and your affiliates in connection with their
services to other clients as well as the Company. You acknowledge that you will
comply with all applicable provisions of the 1940 Act, Investment Advisers Act
and the Securities Exchange Act of 1934, as amended, including without
limitation the provisions of Section 28(e) thereof, with respect to the
allocation of portfolio transactions.
Nothing herein shall prohibit the Board of Directors of the Company from
approving the payment by the Company of additional compensation to others for
consulting services, supplemental research and security and economic analysis.
6. Services to Other Accounts. The Company understands that you and your
affiliates now act, will continue to act and may in the future act as investment
adviser to fiduciary
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and other managed accounts, and the Company has no objection to you and your
affiliates so acting, provided that whenever the Fund and one or more other
accounts advised by you (the "Managed Accounts") are prepared to purchase, or
desire to sell, the same security, available investments or opportunities for
sales will be allocated in a manner that is equitable to each entity. In such
situations, you may place orders for the Fund and each Managed Account
simultaneously, and if all such orders are not filled at the same price, you may
cause the Fund and each Managed Account to pay or receive the average of the
prices at which the orders were filled for the Fund and all Managed Accounts. If
all such orders cannot be executed fully under prevailing market conditions, you
may allocate the traded securities between the Fund and the Managed Accounts in
a manner you consider appropriate, taking into account the size of the order
placed for the Fund and each such Managed Account and, in the event of a sale,
the size of the pre-sale position of the Fund and each such Managed Account, as
well as any other factors you deem relevant. The Company recognizes that in some
cases this procedure may affect adversely the price paid or received by the Fund
or the size of the position purchased or sold by the Fund. In addition, the
Company understands that the persons employed by you to provide service to the
Company in connection with the performance of your duties under this Agreement
will not devote their full time to that service. Moreover, nothing contained in
this Agreement will be deemed to limit or restrict your right or the right of
any of your affiliates to engage in and devote time and attention to other
businesses or to render services of whatever kind or natural including serving
as investment adviser to, or employee, officer, director or trustee of, other
investment companies.
7. Avoidance of Inconsistent Position. If any occasion should arise in
which you give any advice to clients of yours concerning the shares of the Fund,
you will act solely as investment counsel for such clients and not in any way on
behalf of the Company except to the extent that you are acting as principal
underwriter of the Capital Stock of the Fund. In connection with purchases or
sales of portfolio securities for the account of the Fund, neither you nor any
of your directors, officers or employees will act as a principal.
8. Limitation of Liability of Adviser. You shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Company in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on your part
in the performance of your duties or from reckless disregard by you of your
obligations and duties under this Agreement.
9. Use of Name. If you cease to act as the Company's investment adviser,
or, in any event, if you so request in writing, the Company agrees to take all
necessary action to change the name of the Company and the Fund to a name not
including the term "SoGen". You may from time to time make available without
charge to the Company for its use such marks or symbols not owned by you,
including the logo in the form of a stylized globe or marks or symbols
containing the term "SoGen" or any variation thereof, as you may consider
appropriate. Any such marks or symbols so made available will remain your
property and you shall have the right, upon notice in writing, to require the
Company to cease the use of such mark or symbol at any time.
10. Duration and Termination of this Agreement. This Agreement shall remain
in force until July 31, 2000, and from year to year thereafter, but only so long
as such continuance is specifically approved at least annually by the Board of
Directors of the Company or by vote of a
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<PAGE>
majority of the outstanding voting securities of the Fund. In addition, the
Company may not renew or perform this Agreement unless the terms thereof and any
renewal thereof have been approved by the vote of a majority of directors of the
Company who are not interested persons of you or of the Company cast in person
at a meeting called for the purpose of voting on such approval. This Agreement
may, on 60 days' written notice, be terminated at any time without the payment
of any penalty, by the Board of Directors of the Company, by vote of a majority
of the outstanding voting securities of the Fund, or by you. This Agreement
shall automatically terminate in the event of its assignment. In interpreting
the provisions of this paragraph 9, the definitions contained in Section 2(a) of
the 1940 Act, as amended, and any Rules thereunder (particularly the definitions
of "interested person", "assignment", "voting security" and "vote of a majority
of the outstanding voting securities") shall be applied.
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the "party" against which enforcement of the change, waiver,
discharge or termination is sought.
12. Notices. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, to you or to the Company at 1221 Avenue of the
Americas, 8th Floor, New York, New York 10020.
13. Governing Law . This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon, either of the parties to do anything in violation of
any applicable laws or regulations.
14. Captions; Counterparts. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
5
<PAGE>
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Company, whereupon this letter shall become a binding
contract.
Yours very truly,
SOGEN FUNDS, INC.
By:
Name:
Title:
The foregoing Agreement is hereby accepted.
SOCIETE GENERALE ASSET MANAGEMENT CORP.
By:
Name:
Title:
6
SOGEN FUNDS, INC.
1221 Avenue of the Americas, 8th Floor
New York, New York 10020
August 17, 1993
As Amended and Restated
July 31, 1998
SG Cowen Securities Corporation
1221 Avenue of the Americas, 8th Floor
New York, New York 10020
Underwriting Agreement
Dear Sirs:
SoGen Funds, Inc. (the "Company"), a Maryland corporation consisting of
four portfolios, SoGen International Fund, SoGen Overseas Fund, SoGen Gold Fund
and SoGen Money Fund, is engaged in the business of an investment company. Its
Board of Directors has selected you to act as principal underwriter (as such
term is defined in Section 2(a)(29) of the Investment Company Act of 1940, as
amended) of the shares of Capital Stock of the Company and you are willing to
act as such principal underwriter and to perform the duties and functions of
underwriter in the manner and on the conditions hereinafter set forth.
Accordingly, the Company hereby agrees with you as follows:
1. Copies of Corporate Documents. The Company will furnish you promptly
with copies of any registration statements filed by it with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, together with any financial
statements and exhibits included therein, and all amendments or supplements
thereto hereafter filed.
2. Registration and Sale of Additional Shares. The Company will from time
to time use its best efforts to register under the Securities Act of 1933, as
amended, such authorized shares of Capital Stock not already so registered as
you may reasonably be expected to sell as agent on behalf of the Company. To the
end that there will be available for sale such number of shares as you may
reasonably be expected to sell, the Company, subject to the
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<PAGE>
necessary approval of its shareholders, will, from time to time as may be
necessary, increase the number of authorized shares. This agreement relates to
the issue and sale of shares that are duly authorized and registered and
available for sale by the Company, including repurchased and redeemed shares if
and to the extent that they may be legally sold and if, but only if, the Company
sees fit to sell them. You and the Company will cooperate in taking such action
as may be necessary from time to time to qualify shares of the Company for sale
in New York and in any other states mutually agreeable to you and the Company,
and to maintain such qualification, provided that such shares are duly
registered under the Securities Act of 1933, as amended.
3. Solicitation of Orders. You will use your best efforts (but only in
states in which you may lawfully do so) to obtain from investors orders for
shares of the Capital Stock of the Company authorized for issue by the Company
and registered under the Securities Act of 1933, as amended, provided that you
may in your discretion refuse to accept orders for shares from any particular
applicant. You may, as agent for the Company, solicit dealers for orders to
purchase shares of the Capital Stock of the Company and may enter into selling
agreements with any such dealers, the form of such agreements to be as mutually
agreed upon, from time to time, by you and the Company. Each dealer must be a
member of the National Association of Securities Dealers, Inc. or a foreign
dealer not eligible for membership in such Association who has agreed in acting
under the selling agreement to abide by the rules and regulations of such
Association and not to use the United States mails or any means of interstate
commerce in connection with the sales of such shares unless such foreign dealer
is registered under the Securities Exchange Act of 1934 or such registration is
not required.
4. Sale of Shares. Subject to the provisions of paragraph 5 hereof and to
such minimum purchase requirements as may from time to time be currently
indicated in the Company's prospectus, you are authorized to sell as agent on
behalf of the Company authorized and unissued shares of the Capital Stock of the
Company registered under the Securities Act of 1933, as amended. Such sales may
be made by you on behalf of the Company by accepting orders to purchase such
shares placed with you by investors. The sales price to the public of such
shares shall be the public offering price as defined in paragraph 6 hereof.
5. Sale of Shares to Investors by the Company. Any right granted to you to
accept orders for shares or make sales on behalf of the Company will not apply
to shares issued in
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<PAGE>
connection with the merger or consolidation of any other investment company with
the Company or its acquisition, by purchase or otherwise, of all or
substantially all the assets of any investment company or substantially all the
outstanding shares of any such company, and such right shall not apply to shares
that may be offered by the Company to shareholders by virtue of their being
shareholders of the Company, including shares issued in payment of any dividend
or distribution by the Company.
6. Public Offering Price. All shares of the Company sold to investors by
you as agent for the Company will be sold at the public offering price. The
public offering price for all accepted orders will be the net asset value per
share next computed after receipt of such an order, plus any applicable sales
charge adjusted to the nearest full cent, as may from time to time be currently
indicated in the Company's prospectus with respect to such order. Net asset
value per share shall be computed in the manner provided in the Company's
Articles of Incorporation, as now in effect or as it may be amended. The time of
receipt of such an order shall be the time of its receipt by you or by a dealer
selected by you as provided in paragraph 3 if transmitted on the day of receipt
by such dealer to you prior to the close of your business on that day. The
Company will not, without your prior consent, change the sales charges or dealer
discounts applicable to the sales of its shares from those set forth in its
Prospectus dated August 31, 1993. You may also purchase as principal shares of
the Company's Capital Stock at net asset value and sell such shares at the
public offering price.
7. Underwriting Discount. The Company shall receive from you the applicable
net asset value on all orders for sales of shares of Capital Stock accepted by
you as agent of the Company if the net sale price thereof has been deemed, in
accordance with the Company's Articles of Incorporation, to be an asset of the
Company in connection with a computation of net asset value for the sale of any
other shares or the purchase or redemption of any shares. You shall be entitled
to retain so much of the difference between the public offering price and the
applicable net asset value as is not reallowed by you as a discount to dealers.
Such reallowance shall be the same for all dealers and shall conform to such
dealer discounts, if any, as may from time to time be currently indicated in the
Company's prospectus. You will reimburse the Company for any increase in any
issue tax paid by it which is attributable to such sales charge.
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<PAGE>
8. Notice of Sale; Delivery of Payments. You will promptly notify the
Company's transfer agent or shareholders' servicing agent of any orders for
sales of shares of Capital Stock accepted by you, and you will deliver to the
Company's shareholders' servicing agent all payments pursuant to orders for
sales accepted by you no later than the first business day following the receipt
by you in your home office of such payments, and, unless payment is not required
under paragraph 7, in no event later than seven days after the receipt by you of
such order, or, in case an extension of time is granted by the National
Association of Securities Dealers, Inc., to the dealer submitting the order, in
no event later than the expiration of such extension of time.
9. Purchase of Shares. You are authorized to purchase as agent on behalf of
the Company shares of the Capital Stock of the Company from record holders
thereof. Such purchases may be made by you on behalf of the Company by accepting
orders placed with you by such holders. The purchase price per share for all
accepted orders will be the net asset value per share next computed after
receipt of such an order, in the manner provided in the Company's Articles of
Incorporation, as now in effect or as it may be amended. The time of receipt of
such an order shall be the time of its receipt by you or by a dealer selected by
you as provided in paragraph 3 if transmitted on the day of receipt by such
dealer to the Company's transfer agent or shareholders' servicing agent prior to
the close of its business on that day. You will promptly notify the Company's
transfer agent or shareholders' servicing agent of any such order accepted by
you and will, if the shares subject to such order have been deemed to be no
longer outstanding in connection with a computation of net asset value for the
sale of any shares by the Company or the purchase or redemption of any shares by
it deliver to such agent a proper request for purchase of such shares by the
Company and any stock certificates for such shares not later than the first
business day following the receipt by you in your home office of such request
and certificates, and in no event later than seven days after the receipt by you
of such order.
10. Suspension of Sales and Purchases. If and whenever the determination of
asset value is suspended pursuant to the Company's Articles of Incorporation,
and such suspension has become effective, until such suspension is terminated no
further orders for the sale or purchase of shares shall be accepted by you
except such orders placed with you before you had knowledge of the suspension.
In addition, the Company reserves the right to suspend sales and
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<PAGE>
purchases and your authority to accept orders for sales and purchases of shares
on behalf of the Company if, in the judgment of a majority of its Board of
Directors or a majority of the Executive Committee of its Board of Directors, if
such Committee exists, it is in the best interests of the Company to do so, such
suspension to continue for such period as may be determined by such majority;
and in that event, no shares will be sold or purchased by the Company or by you
on behalf of the Company while such suspension remains in effect except for
shares necessary to cover orders accepted by you before you had knowledge of the
suspension. The Company will notify you promptly of any such suspension of the
determination of net asset value or of any such suspension of sales and
purchases of shares.
11. Expenses. The Company will pay all fees and expenses in connection with
the preparation and filing of any registration statement and prospectus or
amendments thereto under the Securities Act of 1933, as amended, covering the
issue and sale of its shares and in connection with the qualification of shares
for sale in the various states and countries in which the Company shall
determine it advisable to qualify such shares for sale, the costs of all stock
certificates and the fees and expenses of its transfer agent or shareholders'
servicing agent or registrar. It will also pay any issue taxes (subject to
partial reimbursement under paragraph 7 hereof). You will pay all expenses of
printing prospectuses and other sales literature (except copies of prospectuses
and other sales literature which may from time to time be sent to existing
shareholders of the Fund), all fees and expenses in connection with your
qualification as a dealer in the various states and countries, and all other
expenses in connection with the sale and offering for sale of the shares of the
Company which are not payable by the Company pursuant to the provisions of this
paragraph 11.
12. Conformity with Law. You agree that in selling and purchasing the
shares of the Company you will duly conform in all respects with the laws of the
United States and any state or country in which such shares may be offered for
sale by you pursuant to this agreement.
13. Indemnification. You agree to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act of 1933, as
amended, against any and all losses, claims, damages, liabilities or litigation
expenses (including legal and other expenses) to which the Company or such
directors, officers or controlling person may become subject under such Act,
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<PAGE>
under any other statute, at common law or otherwise, arising out of the
acquisition of any shares by any person or the sale of any shares by any person
to the Company through you which (i) may be based upon any wrongful act by you
or any of your employees or representatives, or (ii) may be based upon any
untrue statement or alleged untrue statement of a material fact contained in a
registration statement or prospectus covering shares of the Company or any
amendment thereof or supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading if such statement or omission was made in
reliance upon information furnished or confirmed in writing to the Company by
you, provided, however, that in no case is your indemnity in favor of a director
or officer or any other person deemed to protect such director or officer or
other person against any liability to which any such person would otherwise be
subject by reason of willful misfeasance, bad faith, or gross negligence in the
performance of his duties or by reason of his reckless disregard of obligations
and duties under this Agreement.
The Company agrees to indemnify and hold harmless you and each of your
directors and officers and each person, if any, who controls you within the
meaning of Section 15 of the Securities Act of 1933, as amended, against any and
all losses, claims, damages, liabilities or litigation expenses (including legal
and other expenses) to which you or such directors, officers or controlling
person may become subject under such Act, under any other statute, at common law
or otherwise, arising out of the acquisition of any shares by any person or the
sale of any shares by any person to the Company through you which (i) may be
based upon any wrongful act by the Company or any of its employees or
representatives, or (ii) except as described in clause (ii) of the preceding
paragraph, may be based upon any untrue statement or alleged untrue statement or
a material fact contained in a registration statement or prospectus covering
shares of the Company or any amendment thereof or supplement thereto or omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, provided,
however, that in no case is the Company's indemnity in favor of a director or
officer or any other person deemed to protect such director or officer or other
person against any liability to which any such person would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of his duties or by reason of his reckless disregard of obligations
and duties under this Agreement. You hereby waive
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<PAGE>
any rights to indemnification concerning your obligations and duties hereunder
to which you might be entitled under the Company's By-Laws.
You are not authorized to give any information or to make any
representations on behalf of the Company in connection with the sale or purchase
of shares of the Company other than the information and representations
contained in a registration statement or prospectus covering shares of the
Company, as such registration statement and prospectus may be amended or
supplemented from time to time. No person other than you is authorized to act as
agent for the Company in connection with the offering or sale of shares of the
Company to the public or otherwise.
14. Duration and Termination of This Agreement. This Agreement shall remain
in force until August 31, 1994 and from year to year thereafter, but only so
long as such continuance is specifically approved at least annually by the Board
of Directors of the Company or by vote of a majority of the outstanding voting
securities of the Company. In addition, the Company may not renew or perform
this Agreement unless the terms thereof and any renewal thereof have been
approved by the vote of a majority of directors of the Company who are not
interested persons of you or of the Company cast in person at a meeting called
for the purpose of voting on such approval. This Agreement may, on 60 days'
written notice, be terminated at any time without the payment of any penalty, by
the Board of Directors of the Company, by vote of a majority of the outstanding
voting securities of the Company, or by you. This Agreement shall automatically
terminate in the event of its assignment. In interpreting the provisions of this
paragraph 14, the definitions contained in Section 2(a) of the 1940 Act, as
amended, and Rules thereunder (particularly the definitions of "interested
person", "assignment", "voting security" and "vote of a majority of the
outstanding voting securities") shall be applied.
15. Amendment of This Agreement. No provision of this agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver
discharge or termination is sought. If the Company should at any time deem it
necessary or advisable in the best interests of the Company that any amendment
of this agreement be made in order to comply with the recommendations or
requirements of the Securities and Exchange Commission or other governmental
authority or to obtain any advantage under state or federal tax laws and should
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<PAGE>
notify you of the form of such amendment, and the reasons therefor, and if you
should decline to assent to such amendment, the Company may terminate this
agreement forthwith. If you should at any time request that a change be made in
the Company's Articles of Incorporation or By-Laws, or in its methods of doing
business, in order to comply with any requirements of federal law or regulations
of the Securities and Exchange Commission or of a national securities
association of which you are or may be a member, relating to the sale of the
shares of the Company, and the Company should not make such necessary change
within a reasonable time, you may terminate this agreement forthwith.
16. Miscellaneous. The captions in this agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
If you are in agreement with the foregoing, please sign the form of
acceptance an the accompanying counterpart of this letter and return such
counterpart to the Company, whereupon this letter shall become a binding
contract. Yours very truly,
SOGEN FUNDS, INC.
By
Vice President
The foregoing Agreement is
hereby accepted as of the
date thereof.
SG COWEN SECURITIES CORPORATION
By
President
8
Amendment to Global Custody Agreement
-------------------------------------
AMENDMENT, dated ___________, 1998 to the ______ 19__ custody agreement
("Agreement"), between _____________________ ("Customer"), having a place of
business at ______________________, and The Chase Manhattan Bank ("Bank"),
having a place of business at 270 Park Ave., New York, N.Y. 10017-2070.
It is hereby agreed as follows:
Section 1. Except as modified hereby, the Agreement is confirmed in all
respects. Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Agreement.
Section 2. The Agreement is amended by deleting the investment company
rider thereto and inserting, in lieu thereof, the following investment company
rider:
A. Add a new Section 15 to the Agreement as follows:
15. Compliance with SEC rule 17f-5.
(a) Customer's board of directors (or equivalent body) (hereinafter
`Board') hereby delegates to Bank, and, except as to the country or countries as
to which Bank may, from time to time, advise Customer that it does not accept
such delegation, Bank hereby accepts the delegation to it, of the obligation to
perform as Customer's `Foreign Custody Manager' (as that term is defined in SEC
rule 17f-5(a)(2)), both for the purpose of selecting Eligible Foreign Custodians
(as that term is defined in SEC rule l7f-5(a)(l), and as the same may be amended
from time to time, or that have otherwise been made exempt pursuant to an SEC
exemptive order) to hold Assets and of evaluating the contractual arrangements
with such Eligible Foreign Custodians (as set forth in SEC rule l7f-5(c)(2));
provided that, the term Eligible Foreign Custodian shall not include any
`Compulsory Depository.' A Compulsory Depository shall mean a securities
depository or clearing agency the use of which is compulsory because: (1) its
use is required by law or regulation, (2) securities cannot be withdrawn from
the depository, or (3) maintaining securities outside the depository is not
consistent with prevailing custodial practices in the country which the
depository serves. Compulsory Depositories used by Chase as of the date hereof
are set forth in Appendix 1-A hereto, and as the same may be amended on notice
to Customer from time to time.
(b) In connection with the foregoing, Bank shall:
(i) provide written reports notifying Customer's Board of the
placement of Assets with particular Eligible Foreign Custodians and of any
material change in the arrangements with such Eligible Foreign Custodians, with
such reports to be provided to Customer's Board at such times as the Board deems
reasonable and appropriate based on the circumstances of Customer's foreign
custody (and until further notice from Customer such reports shall be provided
not less than quarterly with respect to the placement of Assets with particular
Eligible Foreign Custodians
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and with reasonable promptness upon the occurrence of any material change in the
arrangements with such Eligible Foreign Custodians);
(ii) exercise such reasonable care, prudence and diligence in
performing as Customer's Foreign Custody Manager as a person having
responsibility for the safekeeping of Assets would exercise;
(iii) in selecting an Eligible Foreign Custodian, first have
determined that Assets placed and maintained in the safekeeping of such Eligible
Foreign Custodian shall be subject to reasonable care, based on the standards
applicable to custodians in the relevant market, after having considered all
factors relevant to the safekeeping of such Assets, including, without
limitation, those factors set forth in SEC rule 17f-5(c)(l)(i)-(iv);
(iv) determine that the written contract with the Eligible Foreign
Custodian (or, in the case of an Eligible Foreign Custodian that is a securities
depository or clearing agency, such contract, the rules or established practices
or procedures of the depository, or any combination of the foregoing) requires
that the Eligible Foreign Custodian will provide reasonable care for Assets
based on the standards applicable to custodians in the relevant market. In
making this determination, Bank shall consider the provisions of Rule
17f-5(c)(2), together with whether Bank shall be liable to Customer for any loss
which shall occur as the result of the failure of the Eligible Foreign Custodian
to exercise reasonable care with respect to the safekeeping of such Assets to
the same extent that Bank would be liable to Customer if Bank were holding such
Assets in New York; and
(v) have established a system to monitor the continued
appropriateness of maintaining Assets with particular Eligible Foreign
Custodians and of the governing contractual arrangements; it being understood,
however, that in the event that Bank shall have determined that the existing
Eligible Foreign Custodian in a given country would no longer afford Assets
reasonable care and that no other Eligible Foreign Custodian in that country
would afford reasonable care, Bank shall promptly so advise Customer and shall
then act in accordance with the Instructions of Customer with respect to the
disposition of the affected Assets.
Subject to (b)(i)-(v) above, Bank is hereby authorized to place and maintain
Assets on behalf of Customer with Eligible Foreign Custodians pursuant to a
written contract deemed appropriate by Bank.
(c) Except as expressly provided herein, Customer shall be solely
responsible to assure that the maintenance of Assets hereunder complies with the
rules, regulations, interpretations and exemptive orders promulgated by or under
the authority of the SEC.
(d) Bank represents to Customer that it is a U.S. Bank as defined in
Rule 17f-5(a)(7). Customer represents to Bank that: (1) the Assets being placed
and maintained in Bank's custody are subject to the Investment Company Act of
1940, as amended (the '1940 Act'), as the same may be amended from time to time;
(2) its Board has determined that it is reasonable to rely on Bank to perform as
Customer's Foreign Custody Manager, (3) its Board or its Foreign Custody Manager
(other than Bank) shall have determined that Customer may
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maintain Assets in each country in which Customer's Assets shall be held
hereunder and determined to accept the risks arising therefrom (including, but
not limited to, a country's financial infrastructure (and including any
Compulsory Depository operating in such country), prevailing custody and
settlement practices, laws applicable to the safekeeping and recovery of Assets
held in custody, and the likelihood of nationalization, currency controls and
the like).
B. Add the following after the first sentence of Section 3 of the
Agreement:
At the request of Customer, Bank may, but need not, add to Schedule A an
Eligible Foreign Custodian that is either a bank or a non-Compulsory Depository
where Bank has not acted as Foreign Custody Manager with respect to the
selection thereof. Bank shall notify Customer in the event that it elects not to
add any such entity.
C. Add the following language to the end of Section 3 of the Agreement:
The term Subcustodian as used herein shall mean the following:
(a) a 'U.S. Bank,' which shall mean a U.S. bank as defined in SEC rule
17f-5(a)(7); and
(b) an 'Eligible Foreign Custodian,' which shall mean (i) a banking
institution or trust company, incorporated or organized under the laws of a
country other than the United States, that is regulated as such by that
country's government or an agency thereof, (ii) a majority-owned direct or
indirect subsidiary of a U.S. bank or bank holding company which subsidiary is
incorporated or organized under the laws of a country other than the United
States; (iii) a securities depository or clearing agency, incorporated or
organized under the laws of a country other than the United States, that acts as
a system for the central handling of securities or equivalent book-entries in
that country and that is regulated by a foreign financial regulatory authority
as defined under section 2(a)(50) of the 1940 Act, (iv) a securities depository
or clearing agency organized under the laws of a country other than the United
States to the extent acting as a transnational system for the central handling
of securities or equivalent book-entries, and (v) any other entity that shall
have been so qualified by exemptive order, rule or other appropriate action of
the SEC.
For purposes of clarity, it is agreed that as used in Section 12(a)(i), the term
Subcustodian shall include neither any Eligible Foreign Custodian as to which
Bank has not acted as Foreign Custody Manager nor any Compulsory Depository.
D. Insert the following language at the end of the first sentence of
Section 4(d): or, in the case of cash deposits, except for liens or rights in
favor of creditors of the Subcustodian arising under bankruptcy, insolvency or
similar laws.
E. Insert the following language at the beginning of the second sentence of
Section 12(a)(i):
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Except with respect to those countries as to which the parties may from
time to time agree in writing otherwise, .
F. Add the following language to the end of Section 11:
Deposit Account Payments and Custody Account Transactions made pursuant to
Section 5 and 6 of this Agreement may be made only for the purposes listed
below. Instructions must specify the purpose for which any transaction is to be
made and Customer shall be solely responsible to assure that Instructions are in
accord with any limitation or restrictions applicable to the Customer by law or
as may be set forth in its prospectus.
(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise
become payable;
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment;
(d) Upon conversion of Securities pursuant to their terms into other
securities;
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(f) For the payment of interest, taxes, management or supervisory fees,
distributions or operating expenses;
(g) In connection with any borrowings by the Customer requiring a
pledge of Securities, but only against receipt of amounts borrowed;
(h) In connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any restrictions
applicable to the Customer;
(i) For the purpose of redeeming shares of the capital stock of the
Customer and the delivery to, or the crediting to the account of, the Bank, its
Subcustodian or the Customer's transfer agent, such shares to be purchased or
redeemed;
(j) For the purpose of redeeming in kind shares of the Customer
against delivery to the Bank, its Subcustodian or the Customer's transfer agent
of such shares to be so redeemed;
(k) For delivery in accordance with the provisions of any agreement
among the Customer, the Bank and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of The National
Association of Securities Dealers, Inc. ("NASD"), relating to compliance with
the rules of The Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the Customer;
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(l) For release of Securities to designated brokers under covered
call options, provided, however, that such Securities shall be released only
upon payment to the Bank of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of the option, or at
expiration, the Bank will receive from brokers the Securities previously
deposited. The Bank will act strictly in accordance with Instructions in the
delivery of Securities to be held in escrow and will have no responsibility or
liability for any such Securities which are not returned promptly when due other
than to make proper request for such return;
(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related transactions;
(n) For other proper purposes as may be specified in Instructions
issued by an officer of the Customer which shall include a statement of the
purpose for which the delivery or payment is to be made, the amount of the
payment or specific Securities to be delivered, the name of the person or
persons to whom delivery or payment is to be made, and a certification that the
purpose is a proper purpose under the instruments governing the Customer; and
(o) Upon the termination of this Agreement as set forth in Section
14(i).
G. Add the following language to the end of Section 14(c):
Upon reasonable request from the Customer, the Bank shall furnish the Customer
such reports (or portions thereof) of the Bank's system of internal accounting
controls applicable to the Bank's duties under this Agreement. The Bank shall
endeavor to obtain and furnish the Customer with such similar reports as it may
reasonably request with respect to each Subcustodian and securities depository
holding the Customer's assets.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
[Customer] THE CHASE MANHATTAN BANK
By: By:
Name: Name:
Title: Title:
Date: Date:
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Appendix 1 -A
COMPULSORY DEPOSITORIES
Exhibit 11(a)
Independent Auditors' Consent
To the Board of Directors and Shareholders of
SoGen Funds, Inc.:
We consent to the use of our reports dated May 15, 1998, for SoGen International
Fund, Inc., SoGen Overseas Fund, SoGen Gold Fund and SoGen Money Fund,
incorporated herein by reference and to the references to our Firm under the
headings "Financial Highlights" in the Prospectus and "Independent Auditors" and
"Financial Statements" in the Statement of Additional Information.
KPMG Peat Marwick LLP
New York, New York
July 31, 1998
SOGEN FUNDS, INC.
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT
RULE 12b-1 DISTRIBUTION PLAN AND AGREEMENT dated July 31, 1998 between
SOGEN FUNDS, INC., a Maryland corporation (the "Company"), and SG COWEN
SECURITIES CORPORATION, a New York corporation ("SG Cowen").
The Company is an open-end management investment company and is registered
as such under the Investment Company Act of 1940, as amended (the "Act"). The
Company currently offers shares of four separate portfolios: SoGen International
Fund, SoGen Overseas Fund, SoGen Gold Fund and SoGen Money Fund. SG Cowen acts
as the principal underwriter of the Company pursuant to an Underwriting
Agreement dated as of August 17, 1993, as amended July 31, 1998.
As permitted by Rule 12b-1 (the "Rule") under the Act, the Company desires
to adopt a Distribution Plan and Agreement (the "Plan") pursuant to which SoGen
International Fund, SoGen Overseas Fund and SoGen Gold Fund (referred to herein
as "International Fund," "Overseas Fund" and "Gold Fund" or "the Fund(s)") may
make certain payments to SG Cowen for expenses incurred in connection with the
distribution of the Class A shares of each of the Funds. The Company's Board of
Directors has determined that there is a reasonable likelihood that the Plan
will benefit each of the Funds and its shareholders.
Accordingly, the Company hereby adopts this Plan, and the parties hereto
enter into this Plan, on the following terms and conditions:
1. Each of the Funds shall pay SG Cowen a quarterly
distribution-related fee on the first business day of each quarter in
such an amount as SG Cowen may request, provided that each such payment
shall be based upon the average daily value of each Fund's net assets
attributable to each Fund's Class A shares (as determined on each
business day at the time set forth in each Fund's currently effective
prospectus for determining net asset value per share) during the
preceding month and shall be calculated at an annual rate not in excess
of 0.25%. For purposes of calculating each such monthly fee, the value
of a Fund's net assets attributable to Class A shares shall be computed
in the manner specified in that Fund's currently effective Prospectus,
Statement of Additional Information and Articles of Incorporation for
the computation of the value of the Fund's net assets in connection
with the determination of the net asset value of shares of the Fund.
For purposes of this Plan, a "business day" is any day the New York
Stock Exchange is open for trading.
2. SG Cowen shall be obligated to use all amounts received from
each Fund under this Plan for (i) payments to broker-dealers and other
financial intermediaries for their assistance in the distribution of
the Fund's Class A shares and (ii) otherwise promoting the sale of the
Fund's Class A shares, such as by paying for the printing and
distribution of prospectuses sent to prospective investors, the
preparation, printing and
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distribution of sales literature and the expenses associated with media
advertisements and telephone correspondence. No broker-dealer shall
receive payments under the Plan which, on an annualized basis, exceed
0.25% of net asset value of Fund Class A accounts originated by the
broker-dealer. All other agreements relating to the implementation of
this Plan (the "related agreements") shall be in writing, and such
agreements shall be subject to termination, without penalty, on not
more than sixty days' written notice to any other party to the
agreement, in accordance with the provisions of clauses (a) and (b) of
paragraph 6 hereof.
3. This Plan shall become effective only after approval by (a) a
majority of the Board of Directors of each Fund, including a majority
of the directors who are not "interested persons" (as defined in the
Act) of the Fund and who have no direct or indirect financial interest
in the operation of the Plan or in any related agreements (the
"Independent Directors"), pursuant to a vote cast in person at a
meeting called for the purpose of voting on the Plan, and (b) the
holders of a majority of the outstanding voting securities of each
class of shares of that Fund (as defined in the Act). Related
agreements shall be subject to approval by the Company's directors in
the manner provided in clause (a) of the preceding sentence.
4. This Plan and any related agreements shall continue in effect
with respect to a Fund for a period of more than one year from the date
of their adoption or execution only so long as such continuance is
approved at least annually by a majority of the Board of Directors of
the Company, including a majority of Independent Directors, pursuant to
a vote cast in person at a meeting called for the purpose of voting on
the continuance of this Plan and any related agreements.
5. This Plan may be amended at time with respect to a Fund with the
approval of a majority of the Board of Directors of the Company,
provided that (a) any material of this Plan must be approved by the
Company's in accordance with procedures set forth in 4 hereof, and (b)
any amendment to increase materially the amount to be expended by a
Fund pursuant to this Plan must also be approved by the vote of the
holders of a majority of the outstanding voting securities of each
affected class of shares of that Fund (as defined in the Act).
6. This Plan may be terminated with respect to a class or a Fund at
any time, without the payment of any penalty, by (a) the vote of a
majority of the Board of Directors of the Company, (b) the vote of a
majority of the Independent Directors or (c) the vote of the holders of
a majority of the outstanding voting securities of each affected class
of shares of that Fund (as defined in the Act).
7. While this Plan is in effect, the selection and nomination of
the directors who are not "interested persons" of the Company (as
defined in the Act) shall be committed to the discretion of the
directors then in office who are not "interested persons" of the
Company.
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8. To the extent that this Plan constitutes a plan of distribution
adopted pursuant to the Rule, it shall remain in effect as such so as
to authorize the use of a Fund's assets in the amounts and for the
purposes set forth herein, notwithstanding the occurrence of the Plan's
assignment (as defined in the Act). To the extent this Plan
concurrently constitutes an agreement relating to the implementation of
the plan of distribution, it shall terminate automatically in the event
of its assignment, and a Fund may continue to make payments pursuant to
this Plan only (a) upon the approval of the Board of Directors in
accordance with the procedures set forth in paragraph 4 hereof, and (b)
if the obligations of SG Cowen under this Plan are to be performed by
any organization other than SG Cowen, upon such organization's adoption
and assumption in writing of all provisions of this Plan as a party
hereto.
9. SG Cowen shall give the Company the benefit of SG Cowen's best
judgment and efforts in rendering services under this Plan. As an
inducement to SG Cowen's undertaking to render these services, the
Company agrees that SG Cowen shall not be liable under this Plan for
any mistakes in judgment or in any other event whatsoever except for
lack of good faith, provided that nothing in this Plan shall be deemed
to protect or purport to protect SG Cowen against any liability to the
Company or its stockholders to which SG Cowen would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence
in the performance of SG Cowen's duties under this Plan or by reason of
SG Cowen's reckless disregard of its obligation and duties hereunder.
10. SG Cowen may also make payments out of its own funds for costs
and expenses associated with the distribution and sale of a Fund's
Class A shares, including payments to the persons and for the purposes
set forth in Section 2 hereof.
11. SG Cowen shall prepare and furnish to the Company's Board of
Directors, and the Company's Board of Directors shall review at least
quarterly, a written report setting forth all amounts expended pursuant
to this Plan and any related agreements and the purposes for which such
expenditures were made.
12. The Company shall preserve copies of this Plan, any related
agreements and any reports made pursuant to this Plan for a period of
not less than six years from the date of this Plan or any such related
agreement or report. For the first two years, copies of such documents
shall be preserved in an easily accessible place.
13. The provisions of this Plan are severable for each class of
shares and each Fund and if provisions of the Plan applicable to a
particular class or Fund are terminated, the remainder of the Plan
provisions applicable to the other remaining classes or Funds shall not
be invalidated thereby and shall be given full force and effect.
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IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and on its behalf by its duly authorized representatives as
of the date first above written.
SOGEN FUNDS, INC.
By______________________________
Title: President
SG COWEN SECURITIES CORPORATION
By______________________________
Title: President
4
SOGEN FUNDS, INC.
International Fund
Overseas Fund
MULTIPLE CLASS PLAN
PURSUANT TO RULE 18f-3
WHEREAS, SoGen Funds, Inc. (the "Corporation") engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act");
WHEREAS, shares of beneficial interest of the Corporation are currently
divided into four series: the International Fund, the Overseas Fund, the Gold
Fund and the Money Fund;
WHEREAS, the Corporation desires to adopt a Multiple Class Plan pursuant to
Rule 18f-3 under the Act (the "Plan") with respect to each of the International
Fund and the Overseas Fund (the "Funds"); and
WHEREAS, the Corporation employs Societe Generale Asset Management Corp.
(the "Adviser") as its investment adviser and Societe Generale Securities
Corporation, an affiliate of the Adviser ("Underwriter"), as underwriter and
distributor of the securities of which it is the issuer.
NOW, THEREFORE, the Corporation hereby adopts, on behalf of the Funds, the
Plan, in accordance with Rule 18f-3 under the Act, as set forth below:
1. Features of the Classes. The Funds shall each issue their shares of
common stock in two classes: "Class A Common Stock" and "Class I Common Stock."
Shares of each class of a Fund shall represent an equal pro rata interest in
that Fund and, generally, shall have identical voting, dividend, liquidation,
and other rights, preferences, powers, restrictions, limitations,
qualifications, and terms and conditions, except that: (a) each class of a Fund
shall have a different designation; (b) each class of a Fund shall bear any
Class Expenses, as defined in Section 3 below; and (c) each class of a Fund
shall have exclusive voting rights on any matter submitted to shareholders that
relates solely to its distribution arrangement and (d) each class of a Fund
shall have separate voting rights on any matter submitted to shareholders in
which the interests of one class differ from the interests of any other class of
the Fund. In addition, shares of each class of a Fund shall have the features
described in Sections 2, 3, 4 and 5 below.
2. Distribution Plan. The Corporation has adopted a Distribution Plan
with respect to the Class A Common Stock of each Fund pursuant to Rule 12b-1
promulgated under the Act. The Distribution Plan authorizes the Corporation to
make assistance payments to the Underwriter for distribution services, and for
otherwise promoting the sale of the Class A shares of each Fund ("covered
distribution expenses"), at an annual rate of up to .25% of the average daily
net asset value of the assets attributable to the Class A Shares of that Fund
and further authorizes the Adviser to make assistance payments out of the
Adviser's own resources to brokers, financial institutions and other financial
intermediaries for shareholder accounts as to which a payee has
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rendered distribution services to the Corporation. The Class I Shares of each
Fund shall not participate in the Distribution Plan, nor shall any amounts
payable under the Distribution Plan be used to make payments for distribution or
other services incurred in connection with the sale of Class I shares.
As used herein, the term "distribution services" shall include, without
limitation, paying for the printing and distribution of prospectuses sent to
prospective investors, the preparation, printing and distribution of sales
literature and the expenses associated with media advertisements and telephone
correspondence with investors or prospective investors.
3. Allocation of Income and Expenses. (a) The gross income of each Fund
shall, generally, be allocated among the classes of that Fund on the basis of
the relative net assets attributable to each Fund's classes. To the extent
practicable, certain expenses (other than Class Expenses, as defined below,
which shall be allocated more specifically) shall be subtracted from the gross
income on the basis of the relative net assets of each class of the Fund. These
expenses include:
(1) Expenses incurred by the Corporation (for example, fees of
Directors, auditors and legal counsel) not attributable to a particular
Fund or to a particular class of shares of a Fund ("Corporation Level
Expenses") that are allocated to the Fund; and
(2) Expenses incurred by a Fund not attributable to any particular
class of the Fund's shares (for example, advisory fees, custodial fees, or
other expenses relating to the management of the Fund's assets) ("Fund
Expenses").
(b) Expenses attributable to a particular class ("Class Expenses")
shall be limited to: (i) payments made pursuant to a distribution plan and/or a
service plan; (ii) transfer agent fees attributable to a specific class; (iii)
printing and postage expenses related to preparing and distributing materials
such as shareholder reports, prospectuses and proxies to current shareholders of
a specific class; (iv) Blue Sky registration fees incurred by a class; (v) SEC
registration fees incurred by a class; (vi) the expense of administrative
personnel and services to support the shareholders of a specific class; (vii)
litigation or other legal expenses relating solely to one class; and (viii)
directors' fees incurred as a result of issues relating to one class. Expenses
in category (i) above must be allocated to the class for which covered
distribution expenses are incurred. All other "Class Expenses" listed in
categories (ii)-(viii) above may be allocated to a class but only if the
President or Chief Financial Officer has determined, subject to Board approval
or ratification, that such categories of expenses may be treated as Class
Expenses consistent with applicable legal principles under the Act and the
Internal Revenue Code of 1986, as amended.
Accordingly, expenses of a Fund shall be apportioned to each class of
shares depending on the nature of the expense item. Corporation Level Expenses
and Fund Expenses will be allocated among the classes of shares of such Fund
based on their relative net asset values. Class Expenses shall be allocated to
the particular class to which they are attributable. In addition, certain
expenses may be allocated differently if their method of imposition changes.
Thus, if a Class Expense can no longer be attributed to a class, it shall be
charged to a Fund for allocation among the classes, as determined by the Board
of Directors. Any additional Class Expenses not specifically identified above
which are subsequently identified and determined to be properly
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<PAGE>
allocated to one class of shares shall not be so allocated until approved by the
Board of Directors of the Company in light of the requirements of the Act and
the Internal Revenue code of 1986, as amended.
4. Exchange Privileges. Subject to certain limitations disclosed in a
Fund's prospectus or statement of additional information, the shares of each
Fund may be exchanged for the shares of each of the other funds comprising the
SoGen family of funds without payment of additional sales charges. The exchange
privileges may be modified or terminated at any time, or from time to time, upon
60 days' notice to shareholders.
5. Conversion Features. There shall be no conversion features associated
with any of the classes of shares of any Fund.
6. Waiver or Reimbursement of Expenses. Expenses may be voluntarily waived
or reimbursed by the Adviser or any other provider of services to the
Corporation without the prior approval of the Corporation's Board of Directors.
Voluntary waivers or reimbursements may be discontinued at any time, without
prior notice, unless notice is required by disclosures made in the Fund's
prospectus or statement of additional information.
7. Effectiveness of Plan. This Plan shall take effect upon approval by
votes of a majority of both (a) the Directors of the Corporation and (b) the
Directors of the Corporation who are not "interested persons" (as defined in the
Act) of the Corporation, such Directors having determined that the Plan as
proposed to be adopted or amended, including the allocation of expenses, is in
the best interests of each class individually and the Corporation as a whole.
8. Material Modifications. This Plan may be amended to modify materially
its terms, provided that any such amendment will become effective only upon
approval in the manner provided for initial approval in Paragraph 7 hereof.
IN WITNESS WHEREOF, the Corporation, on behalf of the Funds, has adopted
this Multiple Class Plan as of the ____ day of April, 1998, to be effective
_____________, 1998.
SOGEN FUNDS, INC.
By:___________________________
Name:
Title:
3
