<PAGE>
SoGen International Fund
SoGen Overseas Fund
SoGen Gold Fund
SoGen Money Fund
(Picture of a Globe)
This document contains the prospectuses for SoGen International Fund,
Inc. and SoGen Funds, Inc. (individually a "Company" or together the
"Companies"), each of which is an open-end management investment company.
SoGen International Fund, Inc. has a single portfolio, SoGen International
Fund. SoGen Funds, Inc. is a series fund currently comprising three
portfolios, SoGen Overseas Fund, SoGen Gold Fund and SoGen Money Fund.
Prospectuses
July 31, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SoGen International Fund, Inc. Prospectus......................................... 3
Fee Table....................................................................... 4
Financial Highlights............................................................ 5
Organization of the Company..................................................... 6
Investment Objective, Policy and Restrictions................................... 6
Risk Factors.................................................................... 7
SoGen Funds, Inc. Prospectus...................................................... 10
Fee Table....................................................................... 12
Financial Highlights............................................................ 13
Organization of the Company..................................................... 14
Overseas Fund Investment Objective and Policies................................. 14
Gold Fund Investment Objective and Policies..................................... 15
Money Fund Investment Objective and Policies.................................... 16
Investment Restrictions......................................................... 18
Implementation of Policies and Risks............................................ 19
Management of the Companies....................................................... 25
Capital Stock..................................................................... 26
Dividends, Distributions and Taxes................................................ 27
Performance and Yield Information................................................. 29
Net Asset Value................................................................... 30
How to Purchase Shares............................................................ 30
How to Redeem Shares.............................................................. 35
Shareholder Services.............................................................. 38
Inquiries......................................................................... 40
</TABLE>
No person has been authorized to give any information or to make any
representation not contained in these Prospectuses and the Statements of
Additional Information and, if given or made, such information or representation
must not be relied upon as having been authorized by SoGen International Fund,
Inc. or SoGen Funds, Inc. These Prospectuses do not constitute an offer to sell
securities in any jurisdiction to anyone to whom it is unlawful to make such
offer in such jurisdiction.
2
<PAGE>
PROSPECTUS
SOGEN INTERNATIONAL FUND
(Picture of a Globe)
1221 AVENUE OF THE AMERICAS, NEW YORK, NY 10020
(800) 334-2143
Societe Generale Asset Management Corp.
Investment Adviser
Societe Generale Securities Corporation
Principal Underwriter
SoGen International Fund (the "Fund"), is the sole portfolio of SoGen
International Fund, Inc. (the "Company"), an open-end management investment
company. The Fund's investment objective is to provide long-term growth of
capital. The Fund will normally invest its assets primarily in common stocks
(and in securities convertible into common stocks) of United States and foreign
companies.
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
This Prospectus sets forth concisely information about the Fund that an
investor ought to know before investing. It should be read and retained for
future reference. A Statement of Additional Information dated July 31, 1996,
containing additional information about the Fund, has been filed with the
Securities and Exchange Commission. It is incorporated herein by reference and
is available free of charge by contacting the Company at (800) 628-0252.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
JULY 31, 1996
3
<PAGE>
SOGEN INTERNATIONAL FUND, INC.
FEE TABLE
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of public offering
price)..................................................................... 3.75 %
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees.............................................................. 0.75 %
12b-1 Fees................................................................... 0.24 %*
Other Expenses:
Legal, Audit and Insurance......................................... 0.01 %
Custodial and Shareholder Servicing................................ 0.22 %
Printing, Registration, Directors' Fees and Miscellaneous.......... 0.03 %
Total Other Expenses....................................................... 0.26 %
Total Fund Operating Expenses................................................ 1.25 %
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
An investor in the Fund would pay
the following expenses on a $1,000
investment, assuming a 5% annual return,
with or without redemption,
at the end of each time period:.......... $ 50 $76 $ 104 $183
</TABLE>
The information set forth above is to assist an investor in understanding the
various costs and expenses to which an investment in the Fund would be subject.
For further information see "Management of the Companies" and "How to Purchase
Shares."
This example should not be considered a representation of past or future
expenses, and actual expenses may be greater or less than those shown above. The
assumed 5% return is hypothetical and should not be considered a representation
of past or future annual returns, which may be greater or less than the assumed
amount.
*12b-1 fees paid by the Fund may cause long-term shareholders to pay more than
the economic equivalent of the maximum front-end sales charges permitted under
rules adopted by the National Association of Securities Dealers, Inc.
4
<PAGE>
SOGEN INTERNATIONAL FUND, INC.
FINANCIAL HIGHLIGHTS
The following financial highlights and the related financial statements for
each of the years in the seven year period ended March 31, 1996 have been
audited by KPMG Peat Marwick LLP, independent auditors, whose report thereon is
unqualified and appears in the SoGen International Fund, Inc. March 31, 1996
Annual Report to Shareholders, which is incorporated by reference in the
Statement of Additional Information. The financial highlights and the related
financial statements for each of the years in the three year period ended March
31, 1989 have been audited by other auditors whose report thereon dated May 5,
1989 expressed an unqualified opinion. This information should be read in
conjunction with the Financial Statements and notes thereto, which also appear
in the Company's Annual Report to Shareholders.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
1996 1995 1994 1993 1992 1991(A) 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED PER SHARE
DATA
Net asset value,
beginning of
year.............. $23.20 $23.32 $20.12 $18.44 $17.51 $17.71 $17.31 $16.91 $21.47 $19.09
Income from
investment
operations:
Net investment
income............ 1.06 0.10 0.53 0.64 0.69 0.78 0.64 0.71 0.58 0.40
Net realized and
unrealized gains
(losses) on
investments....... 3.37 0.49 3.37 2.02 1.45 0.20 1.48 1.26 (0.97) 4.80
Total from
investment
operations........ 4.43 0.59 3.90 2.66 2.14 0.98 2.12 1.97 (0.39) 5.20
Less distributions:
Dividends from net
investment
income............ (0.81) (0.15) (0.47) (0.64) (0.84) (0.71) (0.71) (0.80) (0.84) (0.60)
Distributions from
capital gains..... (0.73) (0.56) (0.23) (0.34) (0.37) (0.47) (1.01) (0.77) (3.33) (2.22)
Total
distributions..... (1.54) (0.71) (0.70) (0.98) (1.21) (1.18) (1.72) (1.57) (4.17) (2.82)
Net asset value,
end of year....... $26.09 $23.20 $23.32 $20.12 $18.44 $17.51 $17.71 $17.31 $16.91 $21.47
TOTAL RETURN*...... 19.57% 2.63% 19.50% 14.87% 12.53% 6.03 % 12.18% 11.94% (0.70%) 31.16%
RATIOS AND
SUPPLEMENTAL DATA
Net assets, end of
year (millions)... $3,033 $1,922 $1,781 $ 650 $ 355 $ 240 $ 176 $ 126 $ 97 $ 96
Ratio of operating
expenses to
average net
assets............ 1.25%** 1.26% 1.28% 1.31% 1.37% 1.30 % 1.38% 1.39% 1.36% 1.47%
Ratio of net
investment income
to average net
assets............ 3.71%** 2.70% 2.34% 3.69% 4.00% 4.84 % 4.32% 4.23% 3.09% 2.71%
Portfolio turnover
rate.............. 9.64% 12.96% 23.96% 17.94% 24.25% 24.14 % 30.62% 33.05% 42.79% 41.23%
Average commission
rate paid (Circle
logo) ............ $0.013 -- -- -- -- -- -- -- -- --
(Refer to following page for footnotes.)
</TABLE>
5
<PAGE>
SOGEN INTERNATIONAL FUND, INC.
ORGANIZATION OF THE COMPANY
The Company is an open-end diversified management investment company which
was incorporated in Delaware in August 1969 and reincorporated under Maryland
law in May 1985. The Company has a single portfolio, SoGen International Fund
(referred to herein as the "International Fund" or the "Fund").
INVESTMENT OBJECTIVE, POLICY AND RESTRICTIONS
INVESTMENT OBJECTIVE.
The investment objective of the Fund is to provide long-term growth of
capital. In seeking to achieve this objective, the Fund will normally invest its
assets primarily in common stocks (and in securities convertible into common
stocks) of United States and foreign companies. However, the Fund reserves the
right to invest a portion of its assets in fixed-income securities of domestic
or foreign issuers which, in addition to the income they may provide, appear to
offer potential for long-term growth of capital. When deemed appropriate by the
Fund's investment adviser for short-term investment or defensive purposes, the
Fund may hold a portion of its assets (up to 100%) in short-term debt
instruments including commercial paper and certificates of deposit.
INVESTMENT RESTRICTIONS.
The Statement of Additional Information contains more information on the
Fund's investment policies and identifies the restrictions on the Fund's
investment activities, which provide that the Fund shall not, among other
things:
1. Purchase the securities of any issuer if such purchase would cause more
than 25% of the value of its total assets to be invested in securities of any
one issuer or industry, with the exception of the securities of the United
States government and its corporate instrumentalities and, under the
circumstances described below, certificates of deposit and other short-term bank
instruments. In fact, the Fund intends to diversify its investments among
various issuers and industries and will not purchase certificates of deposit or
other short-term bank instruments, except to the extent deemed appropriate for
the short-term investment of cash or as a temporary defensive measure. The
Footnotes from previous page:
(a) Societe Generale Asset Management Corp. became the investment adviser on
April 26, 1990. From August 21, 1978 to April 25, 1990 the investment
adviser was Societe Generale Securities Corporation.
* Does not give effect to deduction of the sales load.
** The ratio of operating expenses to average net assets for the year ended
March 31, 1996 would have remained the same without the effect of earnings
credits. However, the ratio of net investment income to average net assets
would have been 3.70% without the effect of earnings credits for the same
period.
(Circle logo) Average commission rate paid is expressed on a per share basis.
Not all commissions are computed on a per share basis;
therefore, commissions expressed as a percentage of transactions
may be higher. Due to the new Securities and Exchange Commission
disclosure guidelines, average commissions per share are
calculated only for the current year and not for the prior
periods.
6
<PAGE>
SOGEN INTERNATIONAL FUND, INC.
Fund will limit its purchases of certificates of deposit and other short-term
bank instruments to those issued by United States banks and savings and loan
associations, including foreign branches of such banks, and United States
branches or agencies of foreign banks, which have total assets (as of the date
of their most recently published financial statements) of at least $1 billion.
2. Borrow money, except unsecured borrowings from banks as a temporary
measure in exceptional circumstances, and such borrowings may not exceed 10% of
its net assets taken at market or other fair value at the time of the borrowing.
The Fund will not purchase securities while borrowings exceed 5% of the Fund's
total assets.
The foregoing investment objective and investment restrictions (not
including the percentage of the Fund's assets that may be invested in short-term
debt instruments for short-term defensive purposes) are part of the fundamental
policy of the Fund and may not be changed without the approval of a majority of
the outstanding voting securities of the Fund (defined by the Investment Company
Act of 1940 as (I) 67 percent or more of the voting securities present at a
meeting of stockholders, if the holders of more than 50 percent of the
outstanding voting securities of such company are present or represented by
proxy; or (II) more than 50 percent of the outstanding voting securities of such
company, whichever is the less).
OTHER INVESTMENT POLICIES.
The Fund has adopted certain additional investment policies which have not
been deemed fundamental and may, therefore, be changed by the Board of
Directors. Pursuant to these policies, the Fund, among other things, does not
intend, with respect to 100% of its assets, to purchase securities of any
issuer, other than the United States government and its corporate
instrumentalities if, immediately after such purchase, more than 5% of the value
of its total assets would be invested in the securities of such issuer;
additionally, the Fund does not intend to purchase 10% or more of the voting
securities of any one issuer. The Fund also does not intend to purchase illiquid
securities or securities the proceeds from the sale of which could not readily
be repatriated to the United States if, immediately after such purchase, more
than 10% of the value of its net assets would be invested in such securities.
Under normal circumstances, the Fund will invest in at least three foreign
countries.
RISK FACTORS
Because the Fund's investments will be subject to the market fluctuations
and risks inherent in all investments, there can be no assurance that the Fund's
stated objective will be realized. Societe Generale Asset Management Corp.
("SOGEN A.M. Corp."), the Fund's investment adviser, will seek to minimize these
risks through professional management and investment diversification. The Fund
is designed for long-term investors who have the patience and perspective to
accept the investment risks
7
<PAGE>
SOGEN INTERNATIONAL FUND, INC.
involved. As with any long-term investment, the value of shares when sold may be
higher or lower than when purchased.
FOREIGN INVESTMENTS.
While investment by the Fund on an international basis will permit
shareholders to participate in economic developments abroad, such investments
involve certain risks not ordinarily associated with investing in securities of
United States issuers. These may include political instability of some foreign
governments, fluctuation in foreign exchange rates, the imposition of exchange
control regulations, the possibility of expropriation decrees, more limited
information about foreign issuers, different accounting standards, higher
brokerage costs and foreign withholding taxes. Moreover, foreign securities and
their markets may not be as liquid as United States securities and their
markets.
Investors should note that to the extent the Fund's investments are
denominated in and pay interest or dividends in foreign currencies, the value of
their investment in the Fund, as measured in United States dollars, will be
affected favorably or unfavorably by movements in exchange rates between the
dollar and those foreign currencies. From time to time the Fund attempts to
hedge these risks by selling such foreign currencies forward. As a result of
such hedging transactions, it is possible that the Fund's portfolio would not,
in the event of a foreign currency devaluation, depreciate as much as a
portfolio of a fund holding similar investments which did not sell foreign
currencies forward. A forward currency contract is not, however, a perfect hedge
against devaluation. Moreover, foreign currency transactions involve a cost to
the Fund and would diminish the appreciation the Fund's portfolio would
otherwise experience should a foreign currency, which has been sold forward,
thereafter be revalued upward.
RESTRICTED SECURITIES.
The Fund may, from time to time, invest in securities not registered for
sale to the general public but which may be resold to institutional investors.
Where a dealer or institutional trading market in such securities exists, these
restricted securities will not be treated as illiquid securities for purposes of
the Fund's investment policies. While purchases of restricted securities may
offer attractive investment opportunities, the Fund may experience delays in its
attempt to dispose of such securities. Moreover, registration of such securities
under the Securities Act of 1933 may be required for their sale, in which case
the Fund may have to bear the expense of such registration.
LOWER-RATED AND UNRATED DEBT SECURITIES.
The Fund is free to invest in debt securities without regard to credit
rating and may therefore invest in instruments that could experience a default
in the payment of
8
<PAGE>
SOGEN INTERNATIONAL FUND, INC.
principal and interest. The Fund may also purchase debt securities upon which
the issuer has defaulted.
Lower-rated or unrated high yield debt securities are commonly known as
"junk bonds" and are often considered to be of speculative grade. They involve
greater risk of default due to changes in economic conditions, changes in the
issuer's creditworthiness or other circumstances. The market for these
securities is generally more limited and their prices may experience greater
volatility than in the case of debt securities in the higher rating categories.
COMMODITY LINKED SECURITIES.
The Fund may invest up to 5% of its net assets in structured notes and/or
preferred stock, the value of which is linked to the price of gold or other
commodities. Such structured securities have different characteristics and risks
than other types of securities in which the Fund may invest. For example, not
only the coupon and/or dividend but also the redemption amount may be increased
or decreased depending on the change in the price of the referenced commodity.
See "Commodity Linked Securities" in the Statement of Additional Information for
further information.
INVESTMENT IN OTHER INVESTMENT COMPANIES.
The Fund may invest up to 10% of its total assets in other investment
companies, provided that no more than 5% of the Fund's total assets may be
invested in a single investment company and the Fund may not acquire more than
3% of the outstanding voting securities of a single investment company.
Investment in another investment company may involve the payment of a
premium above the value of the issuer's portfolio securities, and is subject to
market availability. In the case of a purchase of shares of such a company in a
public offering, the purchase price may include an underwriting spread. The Fund
does not intend to invest in such an investment company unless, in the judgment
of SOGEN A.M. Corp., the potential benefits of such investment justify the
payment of any applicable premium or sales charge. As a shareholder in another
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time, the Fund would continue to pay its own management fees and other expenses.
9
<PAGE>
PROSPECTUS
SoGen Overseas Fund
SoGen Gold Fund
SoGen Money Fund
(Picture of a Globe)
1221 Avenue of the Americas, New York, NY 10020
(800) 334-2143
Societe Generale Asset Management Corp.
Investment Adviser
Societe Generale Securities Corporation
Principal Underwriter
SoGen Overseas Fund, SoGen Gold Fund and SoGen Money Fund (each
individually a "Fund" or collectively the "Funds") are three portfolios of SoGen
Funds, Inc. (the "Company"), an open-end management investment company.
Additional funds may be created by the directors from time to time.
Shares in the Funds are not deposits or obligations of, or guaranteed or
endorsed by any bank, and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency.
This Prospectus sets forth concisely information about the Funds that an
investor ought to know before investing. It should be read and retained for
future reference. A Statement of Additional Information dated July 31, 1996,
containing additional information about the Funds, has been filed with the
Securities and Exchange Commission. It is incorporated herein by reference and
is available free of charge by contacting the Company at (800) 628-0252.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
10
<PAGE>
SoGen Funds, Inc.
The Funds and their investment objectives are:
SoGen Overseas Fund. Long-term growth of capital by investing primarily in
securities of small and medium size non-U.S. companies. (See pages 14-15.)
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
15-16.)
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
16-18.)
July 31, 1996
11
<PAGE>
SoGen Funds, Inc.
FEE TABLE
<TABLE>
<CAPTION>
SoGen SoGen SoGen
Overseas Gold Money
Fund Fund Fund
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases (as a
percentage of public offering price)................. 3.75% 3.75 % None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees........................................ 0.75% 0.75 % .19 %
12b-1 Fees............................................. 0.25%* 0.25 %* None
Other Expenses......................................... .37% .41 % .56 %
Total Fund Operating Expenses.......................... 1.37% 1.41 % 0.75 %**
</TABLE>
Example
An investor in a Fund would pay the following expenses on a $1,000
investment, assuming a 5% annual return, with or without redemption, at the end
of each time period:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Overseas Fund.............................. $ 51 $79 $ 110 $196
Gold Fund.................................. $ 51 $80 $ 112 $200
Money Fund................................. $ 8 $24 $ 42 $ 93
</TABLE>
The information set forth above is to assist an investor in understanding
the various costs and expenses to which an investment in a Fund would be
subject. "Other Expenses" for the Money Fund have been restated to reflect the
expected level of expense reimbursement for the current fiscal year. For further
information see "Management of the Companies" and "How to Purchase Shares."
Societe Generale Asset Management Corp. ("SOGEN A.M. Corp."), the
investment adviser has voluntarily limited the total expenses of the Money Fund
(excluding interest, taxes, brokerage and extraordinary expenses) to an annual
rate of 0.75% of the Fund's average net assets until July 31, 1997. After July
31, 1997, the expense limitation may be terminated or revised at any time.
This example should not be considered a representation of past or future
expenses, and actual expenses may be greater or less than those shown above. The
assumed 5% return is hypothetical and should not be considered a representation
of past or future annual returns, which may be greater or less than the assumed
amount.
*12b-1 fees paid by a Fund may cause long-term shareholders to pay more than
the economic equivalent of the maximum front-end sales charges permitted under
rules adopted by the National Association of Securities Dealers, Inc.
**After reimbursement of expenses and investment advisory fee waiver. Without
such reimbursement, "Total Fund Operating Expenses" would have been .97%. As
long as this temporary expense limitation continues, it may lower the Fund's
expenses and increase its total return.
12
<PAGE>
SoGen Funds, Inc.
FINANCIAL HIGHLIGHTS
The following Financial Highlights and the related financial statements for
the period from August 31, 1993 to March 31, 1994 and the fiscal years ended
March 31, 1995 and 1996 have been audited by KPMG Peat Marwick LLP, independent
auditors, whose report thereon is unqualified and appears in the SoGen Funds,
Inc. March 31, 1996 Annual Report to Shareholders, which is incorporated by
reference in the Statement of Additional Information. This information should be
read in conjunction with the Financial Statements and notes thereto, which also
appear in the Company's Annual Report to Shareholders.
<TABLE>
<CAPTION>
SoGen SoGen SoGen
Overseas Fund Gold Fund Money Fund
Period Period Period
From From From
Year Year August 31, Year Year August 31, Year Year August 31,
Ended Ended 1993 to Ended Ended 1993 to Ended Ended 1993 to
March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31,
1996 1995 1994 1996 1995 1994 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Selected Per
Share Data
Net asset
value,
beginning of
year/period... $ 11.65 $ 11.54 $ 10.00 $ 11.28 $ 11.42 $ 10.00 $ 1.00 $ 1.00 $ 1.00
Income from
investment
operations:
Net investment
income
(loss)...... 0.48 0.14 (0.01) 0.24 0.08 (0.01) 0.05 0.04 0.01
Net realized
and
unrealized
gains
(losses)
on
investments.. 1.74 0.04 1.55 1.35 (0.10) 1.43 -- -- --
Total from
investment
operations... 2.22 0.18 1.54 1.59 (0.02) 1.42 0.05 0.04 0.01
Less
distributions:
Dividends from
net
investment
income...... (0.44 ) (0.05 ) -- (0.35) (0.04) -- (0.05) (0.04) (0.01)
Distributions
from capital
gains....... (0.17 ) (0.02 ) -- (0.27) (0.08) -- -- -- --
Total
distributions.. (0.61 ) (0.07 ) -- (0.62) (0.12) -- (0.05) (0.04) (0.01)
Net asset
value, end of
year/period... $ 13.26 $ 11.65 $ 11.54 $ 12.25 $ 11.28 $ 11.42 $ 1.00 $ 1.00 $ 1.00
Total Return
(a)........... 19.47% 1.56% 15.35%++ 14.81% (0.14%) 14.15%++ 5.03% 4.13% 1.25%++
Ratios and
Supplemental
Data
Net assets, end
of year/period
(000's)....... $647,398 $439,230 $119,843 $63,261 $50,922 $ 22,406 $ 8,487 $10,445 $6,392
Ratio of
operating
expenses to
average net
assets........ 1.37%** 1.40% 1.72%* 1.41%** 1.46% 2.27%* 0.75%+ 0.75%+ 0.75%*+
Ratio of net
investment
income to
average net
assets........ 3.31%** 2.29% (0.23%)* 1.29%** 0.79% (0.32%)* 4.98%+ 4.14%+ 2.18%*+
Portfolio
turnover
rate.......... 9.46% 3.16% 6.11% 22.40% 11.56% 4.55% -- -- --
Average
commission
rate paid
(Circle logo). $0.0190 -- -- $0.0002 -- -- -- -- --
</TABLE>
(Refer to the following page for footnotes.)
13
<PAGE>
SoGen Funds, Inc.
ORGANIZATION OF THE COMPANY
The Company is an open-end management investment company incorporated under
the laws of Maryland in May 1993. The Company has three portfolios, SoGen
Overseas Fund, SoGen Gold Fund and SoGen Money Fund (referred to herein as the
"Overseas Fund," the "Gold Fund" and the "Money Fund," respectively). Each Fund
is a separate, diversified portfolio of assets and has a different investment
objective which it pursues through separate investment policies, as described
below. The difference in objectives and policies among the Funds affects the
degree of risk and return of each Fund.
OVERSEAS FUND INVESTMENT OBJECTIVE AND POLICIES
The Overseas Fund seeks long-term growth of capital by investing primarily
in securities of small and medium size non-U.S. companies. The Fund particularly
seeks companies that have growth potential, financial strength and stability,
strong management and fundamental value. However, the Fund may invest in
companies that do not have all of these characteristics.
The Fund may invest in securities traded in mature markets (for example,
Japan, Canada and the United Kingdom) and in emerging markets (Mexico and
Indonesia, for example). A list of the mature and emerging markets in which the
Fund may invest is included in the Statement of Additional Information under
"Investment Policies, Techniques and Risks -- Foreign Securities." There are no
limits on the Fund's geographic asset distribution, but the Fund ordinarily
invests in at least three countries outside the United States.
Footnotes from previous page:
(a) Does not give effect to deduction of the sales load.
* Annualized.
** The annualized ratios of operating expenses to average net assets and net
investment income to average net assets for the year ended March 31, 1996
for SoGen Overseas Fund would have been 1.38% and 3.30%, respectively, and
for SoGen Gold Fund 1.43% and 1.26%, respectively, without the effect of the
earnings credits.
+ The ratios (annualized in the case of a partial year) of operating expenses
to average net assets and net investment income to average net assets of
SoGen Money Fund would have been 0.97% and 4.76%, respectively, for the year
ended March 31, 1996, 1.55% and 3.34%, respectively, for the year ended March
31, 1995, and 4.00% and (1.07%), respectively, for the period August 31, 1993
to March 31, 1994 without the effect of the earnings credits, and the
investment advisory fee waiver and expense reimbursement provided by SOGEN
A.M. Corp.
++ Total returns disclosed for the period ended March 31, 1994 are not
annualized. Annualized total returns for the period ended March 31, 1994
were 26.40%, 24.34% and 2.14% for SoGen Overseas Fund, SoGen Gold Fund and
SoGen Money Fund, respectively.
(Circle logo) Average commission rate paid is expressed on a per share basis.
Not all commissions are computed on a per share basis; therefore,
commissions expressed as a percentage of transactions may be
higher. Due to the new Securities and Exchange Commission
disclosure guidelines, average commissions per share are
calculated only for the current year and not for the prior
periods.
14
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SoGen Funds, Inc.
The equity securities in which the Fund may invest include common and
preferred stocks, warrants or other similar rights, and convertible securities.
The Fund may purchase foreign securities in the form of sponsored or unsponsored
American Depository Receipts (ADRs), Global Depository Receipts (GDRs) and
European Depository Receipts (EDRs) or other securities representing underlying
shares of foreign issuers. The Fund may also invest in any other type of
security, including up to 20% of its total assets in debt securities. Such debt
securities may include lower-rated securities, commonly referred to as "junk
bonds" (i.e., securities rated BB or lower by Standard & Poor's Corporation
("S&P") or Ba or lower by Moody's Investors Service, Inc. ("Moody's")), and
securities that are not rated. There are no restrictions as to the ratings of
debt securities acquired by the Fund or the portion of the Fund's assets that
may be invested in debt securities in a particular rating category. Under normal
market conditions, the Fund invests at least 75% of its total assets, taken at
market value, in foreign securities. The Fund may also invest in "structured
securities" in which the value is linked to the price of an underlying
instrument.
GOLD FUND INVESTMENT OBJECTIVE AND POLICIES
The Gold Fund seeks growth of capital by investing primarily in securities
of companies engaged in mining, processing, dealing in or holding gold or other
precious metals such as silver, platinum and palladium, both in the United
States and in foreign countries. Gold-related investments have provided
protection against loss of purchasing power during periods of extensive price
inflation and/or following periods of extensive credit expansion. Under normal
circumstances, at least 65% of the value of the Fund's total assets will be
invested in securities (which may include both equity and, to a limited extent,
debt securities) consisting of issuers engaged in gold operations, including
securities of gold mining finance companies as well as operating companies with
long-, medium- or short-life mines. Up to 35% of the Fund's assets may be
invested in equity and, to a limited extent, debt securities unrelated to the
precious metals industry where the investment adviser believes such securities
are consistent with the Fund's investment objective.
The Fund's investment adviser is of the belief that a gold-based investment
medium will, over the medium term, protect capital from adverse monetary and
political developments of a national or international nature and may offer
better opportunity for capital growth than many other forms of investment.
Investments in gold may provide more of a hedge against currencies with
declining buying power, devaluation and inflation than other types of
investments. In those periods when investments in gold and gold-related
securities appreciate in value relative to the U.S. dollar, the Fund's
investments may serve to offset erosion in the purchasing power of the U.S.
dollar.
As indicated, the investment adviser is of the belief that the price of
gold and gold-related securities generally are likely to experience significant
appreciation during the next three to five years. If, however, this expected
bull market in gold-related
15
<PAGE>
SoGen Funds, Inc.
securities does not develop within the investment adviser's time frame, or
should the investment adviser conclude that any price appreciation that has
occurred is not likely to continue, the investment adviser expects that it will
recommend to the Company's Board of Directors that the Company seek the vote of
the Gold Fund's shareholders to liquidate the Gold Fund. Liquidation would
involve the sale of all of the Gold Fund's assets, followed by the distribution
of the proceeds, less accrued liabilities, to shareholders. The decision to
recommend liquidation will not, however, affect the right of Gold Fund
shareholders to redeem their shares or to exchange their shares for shares of
the Money Fund or the Overseas Fund, in the latter case without payment of any
additional sales charge. Potential investors should carefully weigh the
consequences of investing in, and paying the related sales charge for, a fund
that may have a limited term from the date of this Prospectus.
The Fund anticipates that it will normally invest in common stocks and
securities convertible into common stocks, such as convertible preferreds,
convertible debentures and sponsored or unsponsored American Depository Receipts
(ADRs), Global Depository Receipts (GDRs) and European Depository Receipts
(EDRs) for those securities, all of which may be traded on a securities exchange
or over-the-counter. The Fund may invest up to 20% of its total assets in debt
securities, including lower-rated securities, commonly referred to as "junk
bonds" (i.e., securities rated BB or lower by S&P or Ba or lower by Moody's and
securities that are not rated). There are no restrictions as to the ratings of
debt securities acquired by the Fund or the portion of the Fund's assets that
may be invested in debt securities in a particular rating category. The market
performance of non-convertible debt securities of companies engaged in mining
and processing gold can be expected to be comparable to that of other debt
obligations of similar quality and generally will not react to fluctuations in
the price of gold. An investment in the debt instruments of gold-related
companies, therefore, cannot be expected to provide the hedge against inflation
that may be provided through investment in equity securities of companies
engaged in such activities. Investment in such debt securities can serve to
reduce the risk of fluctuation in net asset value of a portfolio composed
primarily of gold-related equity investments. The Fund may also invest in
"structured securities" in which the value is linked to the price of an
underlying instrument.
Because of the Fund's policy of investing primarily in securities of
companies engaged in gold mining, processing, dealing in or holding gold and
other precious metals, a substantial part of the Fund's assets will generally be
invested in securities of companies domiciled or operating in one or more
foreign countries. (See "Implementation of Policies and Risks.")
MONEY FUND INVESTMENT OBJECTIVE AND POLICIES
The Money Fund seeks as high a level of current income as is considered
consistent with the preservation of capital and liquidity. The Fund pursues its
objective by
16
<PAGE>
SoGen Funds, Inc.
investing exclusively in the following types of U.S. dollar-denominated money
market instruments which mature in 397 days or less and which the Fund's
investment adviser has determined to present minimal credit risk:
1. Bank certificates of deposit, time deposits or bankers' acceptances of
domestic banks (including their foreign branches) and U.S. and foreign branches
of foreign banks having capital surplus and undivided profits in excess of $100
million.
2. Commercial paper rated Prime-1 or Prime-2 by Moody's, A-1 or A-2 by S&P,
Duff 2 or higher by Duff & Phelps, Inc. ("Duff"), or F-2 or higher by Fitch
Investors Service, Inc. ("Fitch"); commercial paper or notes of issuers with an
unsecured debt issue outstanding currently rated Aa or higher by Moody's, AA or
higher by S&P, AA or higher by Duff, or AA or higher by Fitch where the
obligation is on the same or a higher level of priority and collateralized to
the same extent as the rated issue; investments in other corporate obligations
such as publicly traded bonds, debentures and notes rated Aa by Moody's, AA by
S&P, Duff or Fitch; and other similar securities which, if unrated by Moody's,
S&P, Duff or Fitch, are determined by the Fund's investment adviser, using
guidelines approved by the Board of Directors, to be at least equal in quality
to one or more of the above referenced securities. Notwithstanding the
foregoing, the Fund may invest no more than 5% of its total assets in securities
that are accorded the second highest rating by the requisite number of
nationally recognized statistical rating organizations. (For a description of
the ratings, see "Appendix -- Ratings of Investment Securities" in the Statement
of Additional Information.)
3. Obligations of, or guaranteed by, the U.S. or Canadian governments,
their agencies or instrumentalities.
4. Repurchase agreements involving obligations that are suitable for
investment under the categories set forth above.
To the extent that the Fund purchases Eurodollar certificates of deposit,
consideration will be given to their marketability and possible restrictions on
international currency transactions and to regulations imposed by the domicile
country of the foreign issuer. Eurodollar certificates of deposit may not be
subject to the same regulatory requirements as certificates of deposit issued by
U.S. banks and associated income may be subject to the imposition of foreign
taxes.
The Fund may invest in repurchase agreements, which are instruments under
which the Fund acquires ownership of a security from a broker/dealer or bank
that agrees to repurchase the security at a mutually agreed upon time and price
(which price is higher than the purchase price), thereby determining the yield
during the Fund's holding period. Maturity of the securities subject to
repurchase may exceed 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.
17
<PAGE>
SoGen Funds, Inc.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are deemed by the
Fund's investment adviser to be creditworthy.
The Fund may invest in commercial paper issued in reliance on the so-called
"private placement" exemption from registration afforded by Section 4(2) of the
Securities Act of 1933, and resold to qualified institutional buyers under
Securities Act Rule 144A ("Section 4(2) paper"). Section 4(2) paper is
restricted as to disposition under the federal securities laws, and generally is
sold to institutional investors such as the Fund which agree that they are
purchasing the paper for investment and not with a view to public distribution.
Any resale by the purchaser must be in an exempt transaction and may be
accomplished in accordance with Rule 144A. Section 4(2) paper normally is resold
to other institutional investors, like the Fund, through or with the assistance
of the issuer or investment dealers who make a market in the Section 4(2) paper,
thus providing liquidity. The investment adviser will carefully monitor the
Fund's investments in these securities, focusing on such factors, among others,
as valuation, liquidity and availability of information. Investment in Section
4(2) paper could have the effect of reducing the Fund's liquidity to the extent
that qualified institutional buyers become, for a time, uninterested in
purchasing these restricted securities.
The Fund may invest in asset-backed securities, i.e., securities backed by
automobile receivables and credit-card receivables and other securities backed
by other types of receivables. Credit support for asset-backed securities may be
based on the underlying assets or provided by a third party. Credit enhancement
techniques include letters of credit, insurance bonds, limited guarantees (which
are generally provided by the issuer), senior-subordinated structures and over
collateralization. Asset-backed securities purchased by the Fund will be subject
to the same quality requirements as other securities purchased by the Fund.
INVESTMENT RESTRICTIONS
The Funds have adopted certain investment restrictions that may not be
changed without shareholder approval. Among other restrictions, each Fund will
not:
1. With respect to 75% of its total assets, invest more than 5% of its
assets (valued at time of investment) in securities of any one issuer, except in
U.S. government obligations, or acquire securities of any one issuer which at
the time of investment represent more than 10% of the voting securities of the
issuer;
2. Borrow money, except unsecured borrowings from banks as a temporary
measure in exceptional circumstances, and such borrowings may not exceed 10% of
a Fund's net assets at the time of the borrowing. A Fund will not purchase
securities while borrowings exceed 5% of its total assets; or
18
<PAGE>
SoGen Funds, Inc.
3. Invest more than 25% of its assets (valued at time of investment) in
securities of companies in any one industry (other than U.S. Government
Securities), except that the Gold Fund will, as a matter of fundamental policy,
concentrate its investments in the precious metals industry and the Money Fund
may concentrate its investments in U.S. bank obligations.
A complete description of the Funds' investment restrictions is included in
the Statement of Additional Information.
IMPLEMENTATION OF POLICIES AND RISKS
In addition to the investment policies described above (and subject to
certain restrictions described herein), the Funds may invest in some or all of
the following securities and employ some or all of the following investment
techniques, some of which may present special risks as described below. A more
complete discussion of these securities and investment techniques and their
associated risks is contained in the Funds' Statement of Additional Information.
Because the Funds' investments will be subject to the market fluctuations
and risks inherent in all investments, there can be no assurance that the Funds'
stated objectives will be realized. SOGEN A.M. Corp. will seek to minimize these
risks through professional management and investment diversification. The value
of shares of the Overseas Fund and the Gold Fund when sold may be higher or
lower than when purchased. Although the Money Fund is designed to maintain a
stable share price of $1.00, there can be no assurance that the Fund will be
able to do so.
Foreign Investments.
The Overseas Fund and the Gold Fund provide investors with an opportunity
to place a portion of their assets in a diversified portfolio of foreign
securities. In addition, the Money Fund may invest in U.S. dollar-denominated
high-quality foreign debt securities. From time to time, many foreign economies
have grown faster than the U.S. economy, and the returns on investments in these
countries have exceeded those of similar U.S. investments, although there can be
no assurance that these conditions will continue. International investing allows
investors to achieve greater diversification and to take advantage of changes in
foreign economies and market conditions.
Investors should understand and consider carefully the greater risks
involved in foreign investing. Investing in foreign securities and other
positions which are generally denominated in foreign currencies, and utilization
of forward foreign currency exchange contracts (see "Currency Exchange
Transactions" below), involve certain risks and opportunities not typically
associated with investing in U.S. securities. These 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
19
<PAGE>
SoGen Funds, Inc.
with respect to issuers of securities; less governmental supervision of stock
exchanges, securities brokers and issuers of securities; different accounting,
auditing and financial reporting standards; different settlement periods and
trading practices; less liquidity and frequently greater price volatility in
foreign markets than in the United States; imposition of foreign taxes; and
sometimes less advantageous legal, operational and financial protections
applicable to foreign sub-custodial arrangements.
Investing in countries outside the United States entails political risk.
There exists the possibility of restrictions on foreign investors, expropriation
of assets, confiscatory taxation, seizure or nationalization of foreign bank
deposits or other assets, establishment of exchange controls, or other adverse
political or social developments that could affect investment in these nations.
Economies in individual markets may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross domestic product, rates of
inflation, currency depreciation, capital reinvestment, resource
self-sufficiency and balance of payments positions. Many emerging market
countries have experienced extremely high rates of inflation for many years.
That has had and may continue to have very negative effects on the economies and
securities markets of those countries.
The securities markets of emerging countries are substantially smaller,
less developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States. There
also may be a lower level of monitoring and regulation in emerging markets of
traders, insiders and investors. Enforcement of existing regulations has been
extremely limited.
Since the Money Fund will invest only in U.S. dollar-denominated
securities, the return on its shares will not be subject to the risk of adverse
changes in the exchange rates between the U.S. dollar and foreign currencies. In
addition, the Money Fund does not intend to invest in the securities markets of
emerging countries.
Fluctuations in the Price of Gold (Gold Fund).
Due to the Gold Fund's policy of concentrating its investments in gold and
other precious metal-related issuers, investment in the Fund's shares involves
special considerations, including changes in U.S. or foreign tax, currency or
mining laws and increased environmental costs. The price of gold has been
subject to dramatic downward and upward price movements over short periods of
time and may be affected by unpredictable international monetary and political
policies such as currency devaluations or revaluations, economic conditions
within an individual country, trade imbalances, or trade or currency
restrictions between countries. The price of gold, in turn, is likely to affect
the market prices of securities of companies mining or processing gold, 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
20
<PAGE>
SoGen Funds, Inc.
market in general during periods when the U.S. dollar is strong, inflation is
low and general economic conditions are stable.
Currency Exchange Transactions (Overseas Fund and Gold Fund).
A Fund may engage in currency exchange transactions to hedge against losses
in the U.S. dollar value of its portfolio securities resulting from possible
variations in exchange rates and not for speculation. A currency exchange
transaction may be conducted either on a spot (i.e. cash) basis at the spot rate
for purchasing or selling currency prevailing in the foreign exchange market or
through a forward currency exchange contract ("forward contract"). A forward
contract is an agreement to purchase or sell a specified currency at a specified
future date (or within a specified time period) and price set at the time of the
contract. Forward contracts are usually entered into with banks and
broker/dealers, are not exchange-traded and are usually for less than one year,
but may be renewed. Currency exchange transactions may involve currencies of the
different countries in which a Fund may invest. Although forward contracts may
be used to protect a Fund from adverse currency movements, the use of such
hedges may reduce or eliminate the potentially positive effect of currency
revaluations on the Fund's total return.
Investments in Debt Securities (Overseas Fund and Gold Fund).
Each of the Overseas Fund and Gold Fund may invest up to 20% of its total
assets in debt securities that are below investment grade quality. The Funds may
also invest in debt securities which are in default. "Investment grade" debt
securities are those rated within the four highest ratings categories of S&P or
Moody's or, if unrated, determined by the Fund's investment adviser to be of
comparable quality. The market value of debt securities generally varies in
response to changes in interest rates and the financial conditions of each
issuer. During periods of declining interest rates, the value of debt securities
generally increases. Conversely, during periods of rising interest rates, the
value of such securities generally declines. These changes in market value will
be reflected in each Fund's net asset value.
Securities rated BBB by S&P or Baa by Moody's (the lowest investment grade
ratings) are considered to be medium grade and to have speculative
characteristics. Debt securities that are rated below investment grade or, if
unrated, are considered by SOGEN A.M. Corp. to be equivalent to below investment
grade (often referred to as "junk bonds"), on balance, are considered
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal according to the terms of the obligation and, therefore,
carry greater investment risk, including the possibility of issuer default and
bankruptcy. They are likely to be less marketable and more adversely affected by
economic downturns than higher-quality debt securities. (For additional
information on these debt securities see "Lower-Rated Debt Securities" in the
Statement of Additional Information.)
21
<PAGE>
SoGen Funds, Inc.
Other Investment Companies (Overseas Fund).
Certain markets are closed in whole or in part to equity investments by
foreigners. The Overseas Fund may be able to invest in such markets solely or
primarily through governmentally-authorized investment companies. The Fund
generally may invest up to 10% of its assets in shares of other investment
companies and up to 5% of its assets in any one investment company (in each case
measured at the time of investment), as long as no investment represents more
than 3% of the outstanding voting stock of the acquired investment company at
the time of investment.
Investment in another investment company may involve the payment of a
premium above the value of the issuer's portfolio securities, and is subject to
market availability. In the case of a purchase of shares of such a company in a
public offering, the purchase price may include an underwriting spread. The Fund
does not intend to invest in such an investment company unless, in the judgment
of the Fund's investment adviser, the potential benefits of such investment
justify the payment of any applicable premium or sales charge. As a shareholder
in an investment company, the Fund would bear its ratable share of that
investment company's expenses, including its advisory and administration fees.
At the same time, the Fund would continue to pay its own management fees and
other expenses.
"When-Issued" or "Delayed Delivery" Securities.
The Funds may purchase securities on a "when-issued" or "delayed delivery"
basis. When-issued or delayed delivery securities are securities purchased for
future delivery at a stated price and yield. The Funds will generally not pay
for such securities or start earning interest on them until they are received.
Securities purchased on a when-issued or delayed delivery basis are recorded as
assets and are marked-to-market daily. A Fund will not invest more than 25% of
its assets in when-issued or delayed delivery securities, does not intend to
purchase such securities for speculative purposes and will make commitments to
purchase securities on a when-issued or delayed delivery basis with the
intention of actually acquiring the securities. However, the Funds reserve the
right to sell acquired when-issued or delayed delivery securities before their
settlement dates if deemed advisable.
Variable Rate Securities (Money Fund).
The Money Fund may invest in instruments having rates of interest that are
adjusted periodically or which "float" continuously according to formulae
intended to minimize fluctuation in the values of the instruments ("Variable
Rate Securities"). The interest rates of Variable Rate Securities ordinarily are
determined by reference to, or are a percentage of, an objective standard such
as a bank's prime rate, the 90-day U.S. 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
22
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SoGen Funds, Inc.
decrease or increase, the potential for capital appreciation or depreciation is
less than for fixed-rate obligations. Some Variable Rate Securities ("Variable
Rate Demand Securities") have a demand feature entitling the purchaser to resell
the securities at an amount approximately equal to amortized cost or the
principal amount thereof plus accrued interest. The Fund will determine the
maturity of Variable Rate Securities in accordance with Securities and Exchange
Commission rules which allow the Fund to consider certain of such instruments as
having maturities shorter than the maturity date on the face of the instrument.
Under such rules, the maturity date of Variable Rate Demand Securities may be
considered to be the longer of the period remaining until the next readjustment
of the interest rate or the period remaining until the principal amount can be
recovered through demand.
Structured Securities (Overseas Fund and Gold Fund).
The Overseas Fund and the Gold Fund may invest in structured notes and/or
preferred stock, the value of which is linked to the price of an underlying
instrument. Structured securities have different characteristics and risks than
other types of securities in which the Funds may invest. For example, the
coupon, dividend and/or redemption amounts may be increased or decreased
depending on the change in the value of an underlying instrument. (See
"Structured Securities" in the Statement of Additional Information for further
information.)
Temporary Strategies; Cash Reserves (Overseas Fund and Gold Fund).
The Overseas Fund and the Gold Fund each has the flexibility to respond
promptly to changes in market and economic conditions. In the interest of
preserving shareholders' capital, SOGEN A.M. Corp. may employ a temporary
defensive investment strategy if it determines such a strategy to be warranted.
Pursuant to such a defensive strategy, a Fund temporarily may hold cash (U.S.
dollars, foreign currencies, multinational currency units) and/or invest up to
100% of its assets in high quality debt securities or money market instruments
of U.S. or foreign issuers. Most or all of a Fund's investments may be made in
the United States and denominated in U.S. dollars. It is impossible to predict
whether, when or for how long a Fund will employ defensive strategies.
In addition, pending investment of proceeds from new sales of shares or to
meet ordinary daily cash needs, a Fund temporarily may hold cash (U.S. dollars,
foreign currencies or multinational currency units) and may invest any portion
of its assets in money market instruments.
Illiquid Securities.
Each Fund may invest up to 15% (10% in the case of the Money Fund) of its
total assets in illiquid securities, including securities acquired in private
placements. Because an active trading market for such securities may not exist,
the sale of such
23
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SoGen Funds, Inc.
securities may be subject to delay and additional costs. Time deposits and
repurchase agreements maturing in more than seven days are considered to be
illiquid. A Fund, subject to the limitations for illiquid investments stated
above, may purchase securities that have been privately placed but that are not
eligible for purchase and sale under Rule 144A under the Securities Act of 1933.
That rule permits certain qualified institutional buyers, such as the Funds, to
trade in private placed securities that have not been registered for sale under
that Act. Rule 144A securities may or may not be liquid depending on guidelines
established by the Board of Directors. (See "Illiquid Securities" in the
Statement of Additional Information.)
Expenses (Overseas Fund and Gold Fund).
The cost of investing in foreign securities is higher than the cost of
investing in U.S. securities. Investing in each Fund is an efficient way for an
individual to participate in foreign markets, but its expenses, including
advisory and custody fees, are higher than the expenses of a typical domestic
mutual fund.
Change of Objective.
A Fund's investment objective may be changed by the Board of Directors
without shareholder approval. If there were such a change, each shareholder
should consider whether a Fund would remain an appropriate investment in light
of his or her then current financial position and needs. Shareholders will be
notified a minimum of sixty days in advance of any change in investment
objective.
24
<PAGE>
SoGen International Fund, Inc. SoGen Funds, Inc.
MANAGEMENT OF THE COMPANIES
Board of Directors.
The business and affairs of the Companies are managed under the direction
of their respective Boards of Directors.
Investment Adviser.
Each of the Companies' portfolios is managed by SOGEN A.M. Corp., 1221
Avenue of the Americas, New York, New York 10020. SOGEN A.M. Corp. is a
registered investment adviser which is indirectly owned by Societe Generale, one
of France's largest banks. Jean-Marie Eveillard, President and a director of
each of the Companies, is primarily responsible for the day-to-day management of
the Companies' investment portfolios. Mr. Eveillard has been a Director and
President or Executive Vice President of SOGEN A.M. Corp. since prior to 1991.
SOGEN A.M. Corp. furnishes investment advice to the Funds consistent with
each Fund's stated investment objective and policies. SOGEN A.M. Corp. also
furnishes the Companies with office space and certain facilities and services
required for their business and pays any compensation and expenses of the
officers of the Companies.
For these services and facilities, each Fund pays SOGEN A.M. Corp. a fee,
paid quarterly or monthly, as indicated, at an annual rate of the average daily
net assets of that Fund as follows:
<TABLE>
<S> <C>
International Fund (Quarterly)......... 1.00% of the first $25 million and
0.75% of the excess over $25 million
Overseas Fund (Monthly)................ 0.75%
Gold Fund (Monthly).................... 0.75%
Money Fund (Monthly)................... 0.40%
</TABLE>
SOGEN A.M. Corp. may waive all or a portion of its fee, and, if necessary,
reimburse each Fund, by the amount that the Fund's total operating expenses
exceed the most restrictive expense limitation imposed by any state in which the
Fund's shares are qualified for sale. The annual fee rates listed above for the
International Fund, Overseas Fund and Gold Fund are higher than the rate of fees
paid by most United States mutual funds. The Companies believe, however, that
the advisory fee rates are not higher than the rate of fees paid by most other
mutual funds that invest significantly in foreign equity securities. For the
fiscal year ended March 31, 1996, the International Fund, Overseas Fund, Gold
Fund and Money Fund paid advisory fees equal to 0.75%, 0.75%, 0.75% and 0.19%,
respectively, of their average daily net asset values and each of the Funds'
total expenses, including the advisory fee, equaled 1.25%, 1.37%, 1.41% and
0.75%, respectively, of their average daily net asset values.
25
<PAGE>
<TABLE>
<S> <C>
SoGen International Fund, Inc. SoGen Funds, Inc.
</TABLE>
Portfolio Transactions.
SOGEN A.M. Corp. selects the brokers and dealers which execute orders for
the purchase and sale of each Fund's portfolio securities. SOGEN A.M. Corp.
seeks to achieve "best execution" of such orders. "Best execution" means prompt
and reliable execution at the most favorable securities prices, taking into
account a number of largely judgmental considerations. Consistent with the
foregoing, portfolio transactions may be executed by brokers affiliated with
Societe Generale so long as the commission paid to the affiliated broker is
reasonable and fair compared to the commission that would be charged by an
unaffiliated broker in a comparable transaction. In addition, subject to the
consideration of best price and execution and to applicable regulations, SOGEN
A.M. Corp. may consider sales of the Funds' shares as a factor in the selection
of brokers to execute portfolio transactions.
Principal Underwriter.
The Funds' shares are offered, in states and countries in which such offer
is lawful, to investors either through selected securities dealers or directly
by the Funds' principal underwriter, Societe Generale Securities Corporation
("SGSC"), 1221 Avenue of the Americas, New York, New York 10020. SGSC is a
registered broker-dealer and an affiliate of Societe Generale.
Transfer Agent and Dividend Disbursing Agent.
First Data Investor Services Group, Inc. ("First Data") (formerly known as
The Shareholder Services Group, Inc.), P.O. Box 9123, Boston, Massachusetts
02209-9123, serves as transfer agent and dividend disbursing agent for each of
the Funds.
CAPITAL STOCK
The authorized capital stock of SoGen International Fund, Inc. consists of
250,000,000 shares, all of one class and of $0.001 par value. The authorized
capital stock of SoGen Funds, Inc. consists of 1 billion shares of common stock,
par value $0.001 per share of which 150,000,000 shares have been designated as
shares of the Overseas Fund, 150,000,000 shares have been designated as shares
of the Gold Fund and 700,000,000 shares have been designated as shares of the
Money Fund. All shares issued and outstanding are fully paid and non-assessable
and are redeemable at net asset value at the option of shareholders. Shares have
no preemptive or conversion rights and are freely transferable.
With respect to SoGen Funds, Inc., the Board of Directors is authorized to
reclassify and issue any unissued shares of the Funds without shareholder
approval. Accordingly, in the future, the Directors may create additional series
of shares with different investment objectives, policies or restrictions. Any
issuance of shares of another series
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or class would be governed by the Investment Company Act of 1940 and Maryland
law.
Pursuant to their By-Laws, the Companies do not generally hold annual
meetings of shareholders. Shareholder meetings, however, will be held when
required by the Investment Company Act of 1940 or Maryland law, or when called
by the Chairman of the Board, the President or shareholders owning at least 10%
of the outstanding shares of a Fund. The cost of any such notice and meeting
will be borne by the individual Fund for which the meeting was called.
Each share of common stock of SoGen International Fund is entitled to one
vote, and each share of common stock of the Overseas Fund, Gold Fund and Money
Fund is entitled to one vote for each dollar of net asset value and a
proportionate fraction of a vote for each fraction of a dollar of net asset
value. Generally, shares of each Fund within SoGen Funds, Inc. vote together on
any matter submitted to shareholders, except when otherwise required by the
Investment Company Act of 1940 or when a matter affects the interests of each
Fund in a different way, in which case the shareholders of each Fund vote
separately by class. If the directors determine that a matter does not affect
the interests of a Fund, then the shareholders of that Fund will not be entitled
to vote on that matter. Approval of the investment advisory agreement and the
distribution plan and agreement are matters to be determined separately by each
Fund.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Money Fund intends to declare a dividend of its net investment income
daily and pays such dividends monthly. The Money Fund intends to distribute net
realized capital gains, if any, at least annually.
It is the policy of the International Fund, Overseas Fund and Gold Fund to
make annual distributions of net investment income and net realized capital
gains, if any. Unless a shareholder otherwise elects, as permitted in the New
Account Application, income dividends and capital gains distributions will be
reinvested in additional shares of the Funds at net asset value per share
calculated as of the payment date. (Shareholders may change such election by
written notice to First Data.) 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
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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 distributions they
receive from a Fund whether received in additional shares or cash. Dividend
payments representing taxable net investment income and any net short-term
capital gains will be taxable as ordinary income. Certain corporate shareholders
may be entitled to a deduction to the extent dividends paid as designated by the
International Fund or the Gold Fund qualify for the dividends-received
deduction. If any portion of the income of the Overseas Fund or the Money Fund
consists of dividends received from U.S. corporations, a portion of the
dividends paid by such Fund may qualify for the dividends-received deduction
available to corporate shareholders. Distributions of any net long-term capital
gains designated as capital gains distributions will be taxable to shareholders
as long-term capital gains regardless of how long they have held their shares. A
distribution will be treated as paid on December 31 of the current calendar year
if it is declared by a Fund in October, November or December with a record date
in such a month and paid by the Fund during January of the following calendar
year.
Upon the sale or other disposition of shares of a Fund, a shareholder may
realize a capital gain or loss which will be long-term or short-term, generally
depending upon the shareholder's holding period for the shares.
Information regarding the tax status of income dividends and capital gains
distributions will be sent to shareholders by January 31 of each year.
Backup Withholding.
The Funds are generally required by the Internal Revenue Service ("IRS") to
withhold 31% of the amount of taxable income dividends, capital gains
distributions and (except in the case of the Money Fund) redemption proceeds
paid to shareholders who have not complied with IRS regulations. In order to
avoid this withholding requirement, a U.S. shareholder must certify on the New
Account Application or on a separate Form W-9 that his Social Security or
Taxpayer Identification Number is correct and that he is exempt from, or is not
currently subject to, backup withholding. A non-U.S. shareholder is generally
subject to this 31% withholding on capital gains distributions and redemption
proceeds unless he certifies on the New Account Application or on a separate
Form W-8 that he is a non-resident alien and is not engaged in a trade or
business in the United States regarding his Fund shares.
Non-United States Shareholders.
Under current U.S. law, the Funds will ordinarily be obligated to withhold
30% of any ordinary income dividend payments to non-U.S. shareholders unless a
tax treaty exists between the U.S. and the shareholder's country of residence
which provides for withholding on a different basis. Non-U.S. shareholders may
incur a U.S.
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estate tax liability if they die owning a Fund's shares. Such shareholders
should consult their tax counselors as to the tax liability they may incur to
the United States as a result of owning a Fund's shares and as to the
availability of any credits against taxes payable to their own countries for
taxes paid to the United States.
The foregoing information is intended for general information only. Fund
distributions also may be subject to state, local and foreign taxes.
Shareholders should consult their own tax advisers regarding the particular tax
consequences of an investment in a Fund.
PERFORMANCE AND YIELD INFORMATION
International Fund, Overseas Fund and Gold Fund.
From time to time, each of the International Fund, Overseas Fund and Gold
Fund may illustrate in sales literature and advertisements its cumulative total
return and its average annual total return. A cumulative total return reflects a
Fund's performance over a stated period of time based on an assumed initial
investment. An average annual total return reflects the hypothetical annually
compounded return that would have produced the same cumulative total return if a
Fund's performance had been constant over the entire period. Because average
annual returns tend to smooth out variations in a Fund's returns, a prospective
investor should recognize that they are not the same as actual year-by-year
results. Both types of total return will be calculated assuming the deduction of
the maximum sales commission of 3.75% and the reinvestment of all income
dividends and capital gains distributions. A Fund's performance figures will be
based on historical results and are not intended to indicate future performance.
Money Fund.
From time to time quotations of the Money Fund's "current yield" and
"effective yield" may be included in advertisements and communications to
shareholders. Both yield figures are based on historical earnings and are not
intended to indicate future performance. The "yield" of the Fund refers to the
net income generated by an investment in the Fund over a specified seven-day
period. This income is then "annualized", i.e., the amount generated by the
investment during that week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the investment. The "effective yield" is
expressed similarly but, when annualized, the income earned by an investment in
the Fund is assumed to be reinvested. The "effective yield" will be slightly
higher than the "current yield" because of the compounding effect of this
assumed reinvestment. "Current yield" and "effective yield" for the Fund will
vary based on changes in market conditions, the level of interest rates and the
level of the Fund's expenses. The Fund may include in its advertisements and
communications to shareholders total return quotations which include unrealized
gains and losses.
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Performance Ratings.
From time to time the Funds may discuss in sales literature and
advertisements their performance ratings or other information as published by
recognized mutual fund statistical services, such as Morningstar, Inc. or Lipper
Analytical Services, Inc. or by publications of general interest such as
Business Week or Money.
NET ASSET VALUE
Each Fund's net asset value per share is computed as of the close of
trading on the New York Stock Exchange ("NYSE") on each day during which the
NYSE is open for trading. The net asset value per share is computed by dividing
the total current value of the assets of a Fund, less its liabilities, by the
total number of shares outstanding at the time of such computation.
In the case of the International Fund, Overseas Fund and Gold Fund,
portfolio securities are valued primarily based on market quotations where
available. Short-term investments maturing in sixty days or less are valued at
cost plus interest earned, which approximates value. In the case of the Money
Fund, portfolio securities are valued at their amortized cost, which
approximates market value, subject to guidelines and procedures established by
the Board of Directors in accordance with applicable SEC regulations. Securities
for which current market quotations are not readily available are valued at fair
value as determined in good faith by the Boards of Directors of the Companies.
HOW TO PURCHASE SHARES
The minimum initial investment to open a shareholder account is $1,000 for
the International Fund, Overseas Fund and Gold Fund and $10,000 for the Money
Fund, except that (i) the Automatic Investment Program requires a minimum
initial investment of $100 per Fund and (ii) an account with the Money Fund that
is opened by an exchange (see "Shareholder Services -- Exchange Privilege")
requires a minimum investment of $1,000. The minimum amount for subsequent
investments is $100 per Fund. A Fund's shares may be purchased through
authorized dealers or through First Data, the Funds' transfer agent. A New
Account Application should accompany this Prospectus. A completed and signed
application is required for the initial account opened with the Funds.
Purchases Through Dealers.
Investors may purchase a Fund's shares through selected securities dealers
with whom SGSC has sales agreements. A prospective investor may obtain
additional New Account Applications from such authorized dealers. For a list of
authorized dealers, please contact the Funds at (800) 334-2143.
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Financial service firms that do not have a sales agreement with SGSC also
may place orders for purchases of a Fund's shares, but may charge the investor a
transaction fee in addition to the applicable sales load.
Authorized dealers and financial service firms are responsible for promptly
transmitting purchase orders to SGSC.
Purchases Through First Data.
Shares of a Fund may be purchased through First Data by mailing a check
made payable to The SoGen Funds along with the completed New Account Application
to The SoGen Funds, c/o First Data, P.O. Box 9123, Boston, MA 02209-9123.
Public Offering Price.
The public offering price at which transactions will be effected will be
equal to the net asset value per share plus, in the case of the International
Fund, Overseas Fund and Gold Fund, a sales charge as described below. The net
asset value per share of the Money Fund is expected to remain constant at $1.00
per share. Orders for shares received by First Data prior to the close of
trading on the NYSE, or orders received by dealers prior to such time and
transmitted to SGSC prior to the latter's close of business, will be effected
based on the net asset value determined as of the close of trading on the NYSE
that day. Net asset value per share is calculated as set forth in the section of
this Prospectus entitled "Net Asset Value." The sales charges currently in
effect are as follows:
<TABLE>
<CAPTION>
Sales Charge
Sales Charge as Expressed as Dealer Discount
Percent of Approximate as Percent of
Public Offering Percent of Net Public Offering
Investment Amounts Price Amount Invested Price
<S> <C> <C> <C>
Less than $25,000........................... 3.75% 3.90% 3.35%
$25,000 or more but less than $50,000....... 3.25% 3.35% 2.85%
$50,000 or more but less than $100,000...... 2.75% 2.83% 2.35%
$100,000 or more but less than $500,000..... 2.00% 2.04% 1.60%
$500,000 or more but less than $1,000,000... 1.00% 1.01% 0.80%
$1,000,000 and over......................... 0.00% 0.00% 0.00%
</TABLE>
Sales charges applicable to persons residing in countries outside the
United States may vary from those listed above.
SGSC reallows discounts to selected dealers with whom it has sales
agreements and is entitled to retain the balance over the dealer discounts. SGSC
may from time to time reallow the entire sales load, and may provide additional
promotional incentives, to dealers selling a Fund's shares. Such additional
promotional incentive may include financial assistance in connection with
pre-approved conferences or seminars, sales or training programs for invited
sales personnel and payment for travel expenses for such seminars or training
programs. In some instances the entire reallowance or incentives
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may be offered only to certain dealers which have sold or may sell significant
amounts of a Fund's shares. Authorized dealers to whom substantially the entire
sales charge is reallowed may be deemed to be underwriters as that term is
defined under the Securities Act of 1933.
SOGEN A.M. Corp. may from time to time pay a concession to a dealer which
employs a registered representative whose client invests in a Fund. Such amount
will be paid from the resources of SOGEN A.M. Corp.
Reducing the Sales Charge.
As shown in the table above, the size of the total investment in a Fund
will affect the sales charge. Described below are several methods to reduce the
applicable sales charge. In order to obtain a reduction in the sales charge, an
investor must notify, at the time of purchase, his dealer, SGSC or First Data of
the applicability of one of the following:
Aggregation. The investment schedule above applies to the total amount
being invested by any "person," which term includes an individual, his spouse
and children under the age of 21, a trustee or other fiduciary purchasing for a
single trust, estate or single fiduciary account (including a pension,
profit-sharing or other employee benefit trust created pursuant to a plan
qualified under the Internal Revenue Code) although more than one beneficiary is
involved, or any U.S. bank or investment adviser purchasing shares for its
investment advisory clients or customers. Any such person purchasing for several
accounts at the same time may combine these investments into a single
transaction in order to reduce the applicable sales charge.
Concurrent Purchases. The sales load associated with an investment may be
reduced by combining concurrent purchases of shares of the International Fund,
Overseas Fund, Gold Fund and shares of other funds advised by SOGEN A.M. Corp.,
offered subsequent to the date of this Prospectus subject to a sales load
("SoGen Load Funds"), by any "person," as described above under "Aggregation".
The concurrent purchase discount does not apply to purchases of the SoGen Money
Fund. The applicable sales load will be based on the total dollar amount of the
investment in shares of two or more SoGen Load Funds that are concurrently
purchased.
Rights of Accumulation. A Fund's shares may be purchased at a reduced
sales charge by a "person" (as defined above) who is already a shareholder by
taking into account not only the amount then being invested, but also the
current net asset value of the shares of any SoGen Load Fund already held by
such person. If the current net asset value of the qualifying shares already
held plus the net asset value of the current purchase exceeds a point in the
schedule of sales charges at which the charge is reduced to a lower percentage,
the entire current purchase is eligible for the reduced charge. To be entitled
to a reduced sales charge pursuant to the Rights of Accumulation, the investor
must notify his dealer, SGSC or First Data at the time of purchase
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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 or for a minor
child and the specific relationship of each such other person to the investor.
Letter of Intention. An investor may also qualify for a reduced sales
charge by completing the Letter of Intention (the "Letter") contained in the New
Account Application or a form for this purpose which may be obtained by
contacting the Funds at (800) 628-0252. This enables the investor to aggregate
purchases of shares of any SoGen Load Fund during a thirteen-month period for
purposes of calculating the applicable sales charge. Applicable shares of any
SoGen Load Fund currently owned by the investor will be credited as purchases
toward the completion of the Letter at the greater of their net asset value on
the date the Letter is executed or their cost. No retroactive adjustment will be
made if purchases exceed the amount indicated in the Letter. For each investment
made, the investor must notify his dealer, SGSC or First Data that a Letter is
on file along with all account numbers associated with the Letter.
The Letter is not a binding obligation on the investor. However, 5% of the
amount specified in the Letter will be held in escrow, and if the investor's
purchases are less than the amount specified, the investor will be requested to
remit to the appropriate Fund an amount equal to the difference between the
sales charge paid and the sales charge applicable to the aggregate purchases
actually made. If not remitted within 20 days after written request, an
appropriate number of escrowed shares will be redeemed in order to realize the
difference. However, the sales charge applicable to the investment will in no
event be any higher than if the shareholder had not submitted a Letter. Either
the shareholder or the Company may cancel the arrangement at will.
Sales at Net Asset Value. Shares of the International Fund, Overseas Fund
and Gold Fund may be sold at net asset value (i.e., without a sales charge) (i)
to registered representatives or employees (and their immediate families) of
authorized dealers, or to any trust, pension, profit-sharing or other benefit
plan for only such persons, (ii) to banks or trust companies or their affiliates
when the bank, trust company or affiliate is authorized to make investment
decisions on behalf of a client, (iii) to investment advisers and financial
planners who place trades for their own accounts or the accounts of their
clients and who charge a management, consulting or other fee for their services,
(iv) to clients of such investment advisers and financial planners who place
trades for their own accounts if the accounts are linked to the master account
of such investment adviser or financial planner on the books and records of the
broker, agent, investment adviser or financial institution, and (v) to
retirement and deferred compensation plans and trusts used to fund those plans,
including, but not limited to, those defined in Section 401(a), 403(b) or 457 of
the Internal Revenue Code and "rabbi trusts." Investors may be charged a fee if
they effect transactions in Fund shares through a broker or agent. Shares of the
Funds may also be sold at net asset value to current officers, directors and
employees (and their immediate families) of the Companies, SOGEN A.M. Corp.,
SGSC, U.S. branches and affiliates of Societe Generale,
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employees (and their immediate families) of certain firms providing services to
the Funds (such as the custodian and the shareholder servicing agent), and to
any trust, pension, profit-sharing or other benefit plan for only such persons.
A Fund may also issue shares at net asset value in connection with the
acquisition of, or merger or consolidation with, another investment company. The
sales of shares at net asset value described in this section are made upon the
written assurance of the purchaser that the purchase is made for investment
purposes and that the shares will not be resold except through redemption. Such
notice must be given to SGSC or First Data at the time of purchase on a form for
this purpose as available from the Funds.
Reinstatement Privilege.
In addition, an investor is entitled to a one-time per account privilege to
reinvest in any SoGen Load Fund, the proceeds of a full or partial redemption of
shares from a SoGen Load Fund at the then applicable net asset value without
payment of a sales charge. To exercise this privilege the investor must submit
to SGSC or First Data, within 30 days after the redemption, both a written
request for reinstatement and a check in an amount not exceeding the redemption
proceeds. An investor may also transfer an investment in any SoGen Load Fund to
an IRA or other tax qualified retirement plan account in any SoGen Load Fund
without payment of a sales charge. Such a transfer involves a redemption of a
Fund's shares and a reinvestment of the proceeds and, hence, may involve a
taxable transaction for income tax purposes. Reinstatement will not prevent
recognition of a gain realized on the redemption, but a loss may be disallowed
for tax purposes. The amount of gain or loss resulting from the redemption may
be affected by exercise of the reinstatement privilege if the shares redeemed
were held for 90 days or less, or if a shareholder reinvests in the Funds within
30 days.
Bookshare Account Plan.
To facilitate the handling of transactions with shareholders, the Funds use
a bookshare account plan for shareholder accounts. First Data as the Funds'
transfer agent automatically opens and maintains an account for each of the
Funds' shareholders directly registered with a Fund. All interests in shares,
full and fractional (rounded to three decimal places), are reflected in a
shareholder's book account. After any purchase, a confirmation is mailed to the
shareholder indicating the amount of full and fractional shares purchased, the
price per share and a statement of his account. Stock certificates will not be
issued unless the shareholder submits a written request to that effect to First
Data. (No stock certificates will be issued for the Money Fund.) Under no
circumstances will a stock certificate for a fraction of a share be issued.
Conditions of Purchase.
The Companies and SGSC each reserves the right to refuse any order for
purchase of shares and to cancel any purchase due to nonpayment. Share purchases
are not binding on the Companies or SGSC until they are confirmed by First Data
as paid.
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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 does not
clear, the investor will be responsible for any loss a Fund may incur as a
result thereof.
Rule 12b-1 Plan (International Fund, Overseas Fund and Gold Fund).
The International Fund, Overseas Fund and the Gold Fund have each adopted a
Distribution Plan and Agreement (the "Plan") pursuant to Rule 12b-1 under the
Investment Company Act of 1940. Under the Plan, each Fund may pay SGSC a
quarterly distribution related fee at an annual rate not to exceed 0.25% of the
average daily value of a Fund's net assets. SGSC is obligated to use the amounts
received under the Plan for payments to qualifying dealers (not to exceed 0.25%
of the average daily net asset value of accounts originated by such dealers) for
their assistance in the distribution of a Fund's shares and the provision of
shareholder services and for other expenses such as advertising costs and the
payment for the printing and distribution of prospectuses to prospective
investors. SGSC bears distribution expenses to the extent they are not covered
by payments under the Plan. Any distribution expenses incurred by SGSC in any
fiscal year of a Fund which are not reimbursed from payments under the Plan
accrued in such fiscal year, will not be carried over for payment under the Plan
in any subsequent year.
HOW TO REDEEM SHARES
Shareholders have the right to redeem all or any part of their shares of a
Fund for cash at the net asset value next computed after receipt of the
redemption request in proper form as further described below. Neither the
Companies nor SGSC currently charges a fee or commission upon the redemption of
a Fund's shares. Although it does not presently intend to do so, the Boards of
Directors of the Companies are empowered to impose a redemption fee of up to
1.0% of the value of shares being redeemed.
Shareholders may redeem either through authorized dealers, through First
Data or by telephone. Shares held in the dealer's "street name" must be redeemed
through the dealer.
Redemptions Through Dealers.
Shareholders who have an account with an authorized dealer may submit a
redemption request to such dealer. Authorized dealers are responsible for
promptly transmitting redemption requests to SGSC. Dealers may impose a charge
for handling redemption transactions placed through them and may have particular
requirements concerning redemptions. Accordingly, shareholders should contact
their authorized dealers for more information.
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Redemptions Through First Data.
Shareholders may redeem their Fund shares through First Data by
transmitting written redemption instructions to The SoGen Funds, c/o First Data,
P.O. Box 9123, Boston, MA 02209-9123.
Redemptions by Telephone.
Shareholders who have authorized the Telephone Redemption Option may redeem
a Fund's shares in non-retirement accounts (minimum $500) by telephone by
calling First Data at (800) 443-7046. (Authorization is made either in the New
Account Application or by means of a form available by contacting the Funds at
(800) 628-0252). Telephone redemption requests received prior to the close of
business on the NYSE on any Fund business day will be effected on that day. Such
requests received after the close of business on the NYSE will be effected on
the following business day. Shareholders may not make a redemption request by
telephone if the proceeds are to be wired or mailed to a bank account number or
address other than the one previously designated by the shareholder. Such
requests must be in writing accompanied by a signature guarantee. Shareholders
who would like to change wiring instructions or the address to which redemption
checks are mailed, should send written notification, signed by all of the
account's registered shareholders and accompanied by a signature guarantee, to
First Data at the address listed above. (See below for acceptable guarantors.)
There is a $50,000 maximum on telephone redemptions by check. There is no
limitation on redemptions by wire; however, a wire fee will be deducted from
such proceeds. Telephone redemption privileges may be difficult to implement and
may be modified or suspended without notice during periods of drastic economic
or market changes. First Data has instituted procedures it believes are
reasonably designed to ensure that exchange instructions communicated by
telephone are genuine, and could be liable for losses caused by unauthorized or
fraudulent instructions in the absence of such procedures. First Data will
require a form of personal identification prior to acting upon telephone
instructions, will provide a written confirmation of such transaction and will
record a shareholder's instructions. Telephone redemption privileges may be
modified or terminated at any time by the Companies upon 60 days' written notice
to shareholders.
Redemption Price.
Orders to redeem shares received in proper form by First Data prior to the
close of trading on the NYSE, or redemption orders received by dealers prior to
such time and transmitted to SGSC prior to the latter's close of business, will
be effected at the net asset value determined as of the close of trading on the
NYSE that day.
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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 First Data (except for telephone redemptions when the
Telephone Redemption Option has been authorized).
2. A letter or a stock power signed by the registered owner(s) must be
signature guaranteed by an acceptable guarantor. A guarantee is required
for such redemptions greater than $50,000, or where the redemption
proceeds are to be sent to an address other than the address of record
or to a person other than the registered shareholder(s) for the account.
A signature guarantee is not required for any amount redeemed when a
pre-designated bank has been identified by the shareholder. Any one of
the following guarantors is normally acceptable: (a) a commercial bank
or trust company; (b) a member firm of a domestic stock exchange; (c) a
foreign branch of any institution included in paragraph (a) or (b); (d)
a national securities exchange; and (e) a savings association.
Guarantees from a notary public are not acceptable.
3. All certificates, if any, to be redeemed must be received by First Data.
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 First Data.
Receiving Redemption Proceeds.
Payment of the redemption price will generally be made within three days
after receipt of the redemption request in proper form, but the Companies may
suspend the right of redemption and postpone payment during any period when (i)
trading on the NYSE is restricted or such exchange is closed, other than
customary weekend and holiday closings, (ii) the Securities and Exchange
Commission ("SEC") has by order permitted such suspension, or (iii) an
emergency, as defined by the rules of the SEC, exists, making disposal of
portfolio securities or determination of a Fund's net asset value not reasonably
practicable.
The Funds will not mail redemption proceeds for any shares until checks
(including certified or cashier checks) received in payment for such shares have
cleared, which may take up to fifteen days. Investors who wish to avoid any such
delay should purchase shares by wiring federal funds. Redemption proceeds are
normally paid in the form of a check. Should a shareholder desire redemption
proceeds to be wired, a wire fee will be deducted from such proceeds.
The amount realized on a redemption may be more or less than the investor's
cost, depending on the net asset value of a Fund's shares at the time of such
redemption, and a gain or loss may be recognized for tax purposes.
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Minimum Account Size.
Due to the relatively high cost of maintaining smaller accounts, the
Companies reserve the right to redeem shares in any account if the value of that
account drops below $500, except accounts for shareholders currently
participating in the Automatic Investment program described below. A shareholder
will be allowed at least 60 days to make an additional investment to bring his
account value to $500 or more before the redemption is processed.
SHAREHOLDER SERVICES
The Companies offer the following shareholder services:
Exchange Privilege.
Shareholders or authorized parties are entitled to exchange some or all of
their shares for shares of the Money Fund and for shares of other SoGen Load
Funds. Such shares exchanged will be valued at their respective net asset values
computed as of the close of trading on the NYSE on the day the exchange is
requested.
An exchange of shares pursuant to the exchange privilege may result in a
shareholder realizing a taxable gain or loss for income tax purposes. The
exchange privilege is available to shareholders residing in any state in which
the shares of the Fund being acquired may legally be sold. A shareholder wishing
to utilize the exchange privilege should read the prospectus of the Fund being
acquired.
There is no charge for the exchange privilege. Any exchange, however, must
meet the applicable minimum investment amount for the Fund into which the
exchange is being made. The minimum initial investment amount for the
International Fund, Overseas Fund and the Gold Fund, whether by exchange or
purchase, is $1,000. The minimum initial investment amount for the Money Fund is
$10,000 directly and $1,000 by exchange. All subsequent amounts exchanged must
be $100 or more. Upon exchanges of shares of the Money Fund for shares of any
SoGen Load Fund, payment of the appliable sales load must be made, unless a
sales load has already been paid on such shares. For additional information
concerning exchanges, or to effect exchanges, contact First Data in writing at
the appropriate address listed on page 31 or by telephone at (800) 443-7046.
Exchanges by telephone may be difficult to implement in times of drastic
economic or market changes. The exchange privilege should not be used to take
advantage of short-term swings in the securities markets. The Companies reserve
the right to limit or terminate the exchange privilege as to any shareholder who
makes exchanges more than four times a year (other than through dollar cost
averaging or a similar periodic investment program). The Companies can modify or
revoke the exchange
38
<PAGE>
<TABLE>
<S> <C>
SoGen International Fund, Inc. SoGen Funds, Inc.
</TABLE>
privilege for all shareholders upon 60 days' prior written notice or without
notice in times of drastic economic or market changes.
Automatic Investment Program.
Investors may make regular semi-monthly, monthly and quarterly investments
of $100 (or more) in shares of a Fund, automatically from a checking or savings
account. Upon written authorization, First Data will debit the investor's
account as indicated and use the proceeds to purchase shares of a Fund for the
investor's account. Because approval by the investor's bank is required,
establishment of an Automatic Investment Program may require at least thirty
days. The authorized amount may be changed at any time by writing to First Data.
Up to fifteen days may be required after receipt of such instructions to
implement any change. To establish an Automatic Investment Program, an
authorization form (obtained by contacting the Funds at (800) 628-0252) should
be completed, and if a new account is being established, a check (minimum $100),
savings account deposit slip or savings account statement must accompany the
authorization form. Shares purchased through Automatic Investment Program
payments are subject to the redemption restrictions for recent purchases
described in "How to Redeem Shares." The Companies may amend or cease to offer
the Automatic Investment Program at any time.
Dividend Direction Plan.
Shareholders in a Fund may elect to have income dividends and capital gains
distributions on their Fund shares invested without the payment of any sales
charge in shares of the Money Fund or shares of any SoGen Load Fund in which
they have an existing account and maintain a minimum account balance by so
indicating on the New Account Application or on a form for this purpose which
may be obtained by contacting the Funds at (800) 628-0252. 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
First Data in writing at the appropriate address listed on page 31 or by
telephone at (800) 443-7046.
Systematic Withdrawal Plan.
A shareholder who owns shares of a Fund with a current net asset value of
$10,000 or more may use those shares to establish a Systematic Withdrawal Plan
to receive a monthly or quarterly check in a stated amount of not less than $50
on a selected date. Dividends and distributions on shares invested under a
Systematic Withdrawal Plan may not be taken in cash but must be reinvested,
which will be done at net asset value. A Fund's shares will be redeemed as
necessary to meet withdrawal payments. Withdrawals in excess of dividends and
distributions will reduce and may deplete the invested principal and may result
in a gain or loss for tax purposes. (To participate in the Systematic Withdrawal
Plan, a shareholder should complete the appropriate section of the New Account
Application or a form for this purpose which
39
<PAGE>
<TABLE>
<S> <C>
SoGen International Fund, Inc. SoGen Funds, Inc.
</TABLE>
may be obtained by contacting the Funds at (800) 628-0252). Purchases of
additional shares made concurrently with withdrawals of shares are undesirable
because of sales charges incurred when purchases are made. Accordingly, a
shareholder may not maintain a Systematic Withdrawal Plan while simultaneously
making regular purchases. The Companies may amend or cease to offer the
Systematic Withdrawal Plan at any time.
Retirement Plans.
The Companies offer IRA, SEP and 403(b)(7) plans which allow investors to
save for retirement and defer taxes on investment income, if any. The tax
benefits of these plans may not be available for all persons. Investors should
consult their tax advisers regarding their eligibility.
For appropriate applications, please contact the Funds at (800) 628-0252.
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.
INQUIRIES
For information about how to buy shares of a Fund or to request additional
literature about any of the Funds, please call (800) 628-0252. For account
information, shareholder services or information on how to redeem shares, please
call (800) 443-7046.
40
<PAGE>
SOGEN INTERNATIONAL FUND, INC.
SOGEN FUNDS, INC.
1221 Avenue of the Americas
New York, NY 10020
INVESTMENT ADVISER
SOCIETE GENERALE ASSET MANAGEMENT CORP.
1221 Avenue of the Americas
New York, NY 10020
UNDERWRITER
SOCIETE GENERALE SECURITIES CORPORATION
1221 Avenue of the Americas
New York, NY 10020
(800) 334-2143
LEGAL COUNSEL
DECHERT PRICE & RHOADS
477 Madison Avenue
New York, NY 10022
INDEPENDENT AUDITORS
KPMG PEAT MARWICK LLP
345 Park Avenue
New York, NY 10154
DOMESTIC CUSTODIAN
INVESTORS FIDUCIARY TRUST COMPANY
127 West 10th Street
Kansas City, MO 64105
GLOBAL CUSTODIAN
THE CHASE MANHATTAN BANK
4 Chase MetroTech Center
Brooklyn, NY 11245
SHAREHOLDER SERVICING AGENT
FIRST DATA INVESTOR SERVICES GROUP, INC.
P.O. Box 9123
Boston, MA 02209-9123
(800) 443-7046
<PAGE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
SOGEN
INTERNATIONAL
FUND, INC.
(Picture of Globe)
1221 AVENUE OF THE AMERICAS
NEW YORK, NY 10020
(800) 334-2143
Societe Generale Asset Management Corp.
1221 Avenue of the Americas
New York, NY 10020
Investment Adviser
Societe Generale Securities Corporation
1221 Avenue of the Americas
New York, NY 10020
Principal Underwriter
This Statement of Additional Information provides information about SoGen
International Fund, Inc. (the "Fund"), a diversified open-end management
investment company, in addition to the information contained in the Prospectus
of the Fund dated July 31, 1996. This Statement of Additional Information is not
a prospectus. It relates to and should be read in conjunction with the
Prospectus of the Fund, a copy of which can be obtained by writing or by calling
the Fund at (800) 628-0252.
JULY 31, 1996
SN-08
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
STATEMENT OF CROSS-REFERENCED
ADDITIONAL TO CAPTIONS IN
INFORMATION THE PROSPECTUS
PAGE PAGE
<S> <C> <C>
ORGANIZATION OF THE FUND................................................................. 3 6
INVESTMENT OBJECTIVE, POLICY AND RESTRICTIONS............................................ 3 6
MANAGEMENT OF THE FUND................................................................... 7 25
INVESTMENT ADVISER AND OTHER SERVICES.................................................... 9 25
DISTRIBUTION OF THE FUND'S SHARES........................................................ 10 35
COMPUTATION OF NET ASSET VALUE........................................................... 12 30
HOW TO PURCHASE SHARES................................................................... 12 30
TAX STATUS............................................................................... 12 27
BROKERAGE ALLOCATION..................................................................... 15 26
CUSTODY OF PORTFOLIO..................................................................... 16 --
INDEPENDENT AUDITORS..................................................................... 17 --
FINANCIAL STATEMENTS..................................................................... 17 --
</TABLE>
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<PAGE>
ORGANIZATION OF THE FUND
SoGen International Fund, Inc. (the "Fund"), an open-end diversified
management investment company, was incorporated under the laws of Delaware in
August 1969 and reincorporated under Maryland law in May 1985. The Fund's
investment adviser is Societe Generale Asset Management Corp. ("SOGEN A.M.
Corp."), which was incorporated in Delaware in February 1990. SOGEN A.M. Corp.
is a registered investment adviser. The Fund's principal underwriter is Societe
Generale Securities Corporation ("SGSC"), a registered broker dealer located in
New York.
Pursuant to the laws of Maryland, the Fund's jurisdiction of incorporation,
the Board of Directors of the Fund has adopted By-Laws of the Fund that do not
require annual meetings of Fund shareholders. The absence of a requirement that
the Fund hold annual meetings of the Fund's shareholders reduces Fund 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 outstanding
Fund shares. The cost of any such notice and meeting will be borne by the Fund.
Under the provisions of the Investment Company Act of 1940, a vacancy in
the office of director of the Fund may be filled between meetings of the
shareholders of the Fund 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
Fund. In the event that at any time less than a majority of the directors of the
Fund holding office at that time were elected by the shareholders of the Fund,
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 Fund
that it interprets Section 16(c) of the Investment Company Act of 1940, which
provides a means for dissident shareholders of common-law trusts to communicate
with other shareholders of such trusts and to vote upon the removal of trustees
upon the request in writing by the record holders of not less than 10 percent of
the outstanding shares of the trust, to apply to investment companies, such as
the Fund, that are incorporated under Maryland law.
INVESTMENT OBJECTIVE, POLICY AND RESTRICTIONS
The investment objective of the Fund is to provide long-term growth of
capital. In seeking to achieve this objective, the Fund will normally invest its
assets primarily in common stocks (and in securities convertible into common
stocks) of United States and foreign companies. However, the Fund reserves the
right to invest a portion of its assets in fixed-income securities of domestic
or foreign issuers which, in addition to the income they may provide, appear to
offer potential for long-term growth of capital. When deemed appropriate by the
Fund's investment adviser for short-term investment or defensive purposes, the
Fund may hold a portion of its assets (up to 100%) in short-term debt
instruments including commercial paper and certificates of deposit.
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.
HIGH-YIELD/HIGH-RISK SECURITIES. As stated in the Prospectus, the Fund may
invest in lower-rated or unrated high-yield debt securities. The Fund may also
purchase debt securities upon which the issuer has defaulted. In the past the
Fund has invested in lower-rated or unrated bonds for their generally higher
yields and will continue to do so to the extent compatible with acceptable risk.
In general the market for lower-rated or unrated bonds is more limited than the
market for higher-rated bonds, and because the market for lower-rated or unrated
bonds may be thinner and less active, such bonds may be less liquid and their
market prices may fluctuate more than those of higher-rated bonds, particularly
in times of economic change and market stress. In addition, because the market
for lower-rated or unrated corporate debt securities has in recent years
experienced a dramatic increase in the large-scale use of such securities to
fund highly leveraged corporate acquisitions and restructurings, past experience
may not provide an accurate indication of the future performance of that market
or of the frequency of default, especially during periods of economic recession.
Reliable objective pricing data for lower-rated or unrated bonds may tend to be
more limited; in that event, valuation of such securities in the Fund's
portfolio may be more difficult and will require greater reliance on judgment.
While the market for lower-rated or unrated bonds may in general tend to be
less sensitive to interest rate changes, the market prices of lower-rated or
unrated bonds structured as zero-coupon or pay-in-kind securities may
nevertheless be affected to a greater extent by such changes and thus may tend
to be more volatile than those of lower-rated securities paying interest
periodically and in cash. The Fund may invest in zero coupon or pay-in-kind
bonds. Lower-rated or unrated bonds that include call or redemption provisions
may be more susceptible to prepayment during periods of falling interest rates,
requiring replacement by lower-yielding securities.
3
<PAGE>
Since the risk of default is generally higher among lower-rated or unrated
bonds, SOGEN A.M. Corp.'s research and analysis are especially important in the
selection of such bonds, which, if rated BB by Standard & Poor's or Ba by
Moody's or lower, are often described as "high yield bonds" because of their
generally higher yields and referred to figuratively as "junk bonds" because of
their greater risks. In selecting lower-rated bonds for investment by the Fund,
SOGEN A.M. Corp. does not rely on ratings, which in any event evaluate only the
safety of principal and interest, not market value risk, and which, furthermore,
may not accurately reflect an issuer's current financial condition. The Fund
does not have any minimum rating criteria for its investments in bonds. Through
portfolio diversification, good credit analysis and attention to current
developments and trends in interest rates and economic conditions, investment
risk can be reduced, although there is no assurance that losses will not occur.
Legislation may from time to time limit the use, and tax or other
advantages, of lower-rated or unrated securities and could adversely affect the
secondary market for such securities, their market values and the financial
condition of their issuers. However, the extent of these possible effects is
uncertain, as are the final form and probability of passage of any proposed
legislation that has not yet been enacted.
FOREIGN CURRENCY TRANSACTIONS. In an attempt to hedge an investment in an
issuer incorporated or operating in a foreign country or in a security
denominated in the currency of a foreign country against a devaluation of that
country's currency, the Fund may make arrangements with banks to sell such
currency forward. That is, to hedge against a devaluation of a foreign currency,
the Fund may enter into a forward market contract to sell to banks a set amount
of such currency at a fixed price and at a fixed time in the future. If, in
foreign currency transactions, the foreign currency sold forward by the Fund is
devalued below the price of the forward market contract and more than any
devaluation of the United States dollar during the period of the contract, the
Fund will realize a gain as a result of the currency transaction. In this way,
the Fund might reduce the impact of any decline in the market value of its
foreign investments attributable to devaluation of foreign currencies. The Fund
may sell foreign currency forward only as a means of protecting its foreign
investments and may not otherwise trade in the currencies of foreign countries.
Accordingly, the Fund may not sell forward the currency of a particular country
to an extent greater than the aggregate market value (at the time of making such
sale) of the securities held in its portfolio denominated in that particular
foreign currency or issued by companies incorporated or operating in that
particular foreign country.
As a result of hedging through selling foreign currencies forward, in the
event of a devaluation, it is possible that the value of the Fund's portfolio
would not depreciate as much as the portfolio of a fund holding similar
investments which did not sell foreign currencies forward. Even so, the forward
market contract is not a perfect hedge against devaluation because the value of
the Fund's portfolio securities may decrease more than the amount realized by
reason of the foreign currency transaction. To the extent that the Fund sells
forward currencies which are thereafter revalued upward, the value of the Fund's
portfolio would appreciate to a lesser extent than the comparable portfolio of a
fund which did not sell those foreign currencies forward. If, in anticipation of
a devaluation of a foreign currency, the Fund sells the currency forward at a
price lower than the price of that currency on the date of the contract, the
Fund will suffer a loss on the contract if the currency is not devalued, during
the contract period, below the contract price. Moreover, it will not be possible
for the Fund to hedge against devaluation that is so generally anticipated that
the Fund is not able to contract to sell the currency in the future at a price
above the devaluation level it anticipates. It is possible that, under certain
circumstances, the Fund may have to limit its currency transactions to permit
the Fund to qualify as a "regulated investment company" under the Internal
Revenue Code of 1986, as amended (the "Code"). Foreign currency transactions
would involve a cost to the Fund which would vary with such factors as the
currency involved, the length of the contract period and the market conditions
then prevailing.
The Fund will not attempt to hedge all its foreign investments by selling
foreign currencies forward and will do so only to the extent deemed appropriate
by SOGEN A.M. Corp. The Fund may also hedge in connection with the purchase and
sale of foreign securities in which case the Fund's foreign subcustodian enters
into a forward contract to hedge the related currency between the trade date and
the settlement date for the purchase or sale transaction.
RESTRICTED SECURITIES. The Fund may, from time to time, purchase
securities which are subject to restrictions on resale. While such purchases may
be made at an advantageous price and offer attractive opportunities for
investment not otherwise available on the open market, the Fund may not have the
same freedom to dispose of such securities as in the case of the purchase of
securities in the open market or in a public distribution. These securities may
often be resold in a liquid dealer or institutional trading market, but the Fund
may experience delays in its attempts to dispose of such securities and in some
cases registration of such securities under the Securities Act of 1933 may be
required for their sale. In such a case, the Fund may have to bear the expense
of
4
<PAGE>
such registration if the issuer of such securities has not previously registered
or agreed to register such securities at its own expense.
Where registration is required, a considerable period of time may elapse
between the time when the decision may be made to sell securities and the time
when the Fund may be permitted to sell under an effective registration
statement. During such period, if adverse market conditions develop, the Fund
may not be able to obtain as favorable a price as that prevailing at the time
the decision is made to sell. In any case, where a thin market exists for a
particular security, public knowledge of a proposed sale of a large block may
have the effect of depressing the market price of such securities. As stated
below, the Fund does not intend to invest more than 10% of its net assets in
illiquid securities or securities the proceeds from the sale of which could not
readily be repatriated to the United States. In addition to such securities, the
Fund may also, from time to time, invest in securities for which there is a
limited trading market and which might not be resold by the Fund in a short
period of time without adversely affecting the market price of the security.
Notwithstanding the above, the Fund may purchase securities that have been
privately placed but that are eligible for purchase and sale under Rule 144A
under the 1933 Act. That rule permits certain qualified institutional buyers,
such as the Fund to trade in privately placed securities that have not been
registered for sale under the 1933 Act. SOGEN A.M. Corp., under the supervision
of the Board of Directors of the Fund, will consider whether securities
purchased under Rule 144A are illiquid and thus subject to the Fund restriction
on investing in illiquid securities. A determination as to whether a Rule 144A
security is liquid or not is a factual issue requiring an evaluation of a number
of factors. In making this determination, SOGEN A.M. Corp. will consider the
trading markets for the specific security, taking into account the unregistered
nature of a Rule 144A security. In addition, SOGEN A.M. Corp., could consider
(1) the frequency of trades and quotes, (2) the number of dealers and potential
purchasers, (3) the dealer undertakings to make a market, and (4) the nature of
the security and of market place trades (e.g. the time needed to dispose of the
security, the method of soliciting offers and the mechanics of transfer). The
liquidity of Rule 144A securities would be monitored and if, as a result of
changed conditions, it is determined that a Rule 144A security is no longer
liquid, the Fund's holdings of illiquid securities would be reviewed to
determine what steps, if any, are required to assure that the Fund does not
invest more than the maximum percentage of its assets in illiquid securities.
Investing in Rule 144A securities could have the effect of increasing the amount
of the Fund's assets invested in illiquid securities, if qualified institutional
buyers are unwilling to purchase such securities.
COMMODITY LINKED SECURITIES. The 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 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.
FUNDAMENTAL RESTRICTIONS. In carrying out its investment objective, the
Fund will be subject to the following fundamental restrictions. Fundamental
restrictions cannot be changed without the vote of a majority of the outstanding
voting securities of the Fund (defined by the Investment Company Act of 1940 as
(A) 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 (B) more than
50 percent of the outstanding voting securities of such company, whichever is
the less).
1. It may not 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 branches or
5
<PAGE>
agencies of foreign banks, which have total assets (as of the date of
their most recently published financial statements) of at least $1
billion.
2. It may not purchase or sell its portfolio securities from or to any of
its officers, directors or employees, its investment adviser or its
principal underwriter, except to the extent that such purchase or sale
may be permitted by an order, rule or regulation of the Securities and
Exchange Commission.
3. It may not borrow money, except unsecured borrowings from banks as a
temporary measure in exceptional circumstances, and such borrowings may
not exceed 10% of its net assets taken at market or other fair value at
the time of the borrowing. The Fund will not purchase securities while
borrowings are in excess of 5% of the Fund's total assets.
4. It may not engage in the underwriting of securities of other issuers,
except to the extent that it may be deemed to be an underwriter in
selling portfolio securities as part of an offering registered under the
Securities Act of 1933.
5. It may not purchase or sell real estate or interests therein,
commodities or commodity contracts. It 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.)
6. It may not make loans, but this restriction shall not prevent the Fund
from (a) buying a part of an issue of bonds, debentures, or other
obligations that are publicly distributed, or from investing up to an
aggregate of 15% of its total assets (taken at market value at the time
of each purchase) in parts of issues of bonds, debentures or other
obligations of a type privately placed with financial institutions or
(b) lending portfolio securities, provided that the Fund may not lend
securities if, as a result, the aggregate value of all securities loaned
would exceed 33% of its total assets (taken at market value at the time
of such loan).*
7. It may not effect a short sale of any security.
Further, as a diversified investment company, 75% of the Fund's assets are
subject to the following limitations: the Fund may not (a) invest more than 5%
of its total assets in the securities of any one issuer, except obligations of
the United States government, its agencies and its instrumentalities, and (b)
own more than 10% of the outstanding voting securities of any one issuer. These
restrictions may also be amended only by the vote of a majority of the
outstanding voting securities of the Fund.
ADDITIONAL INVESTMENT POLICIES. With respect to 100% of its assets, the
Fund intends to follow the additional investment policies described below.
Unlike the fundamental restrictions, the policies described below may be changed
when deemed appropriate by the Board of Directors of the Fund without
shareholder approval. Certain of the policies have been adopted to permit the
Fund to qualify its shares for sale under state securities or "Blue Sky" laws.
The Fund does not intend to:
1. Purchase securities of any issuer, other than the United States
government and its corporate instrumentalities if, immediately after
such purchase, more than 5% of the value of its total assets would be
invested in the securities of such issuer.
2. Purchase 10% or more of the voting securities of any one issuer.
3. 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.
4. Acquire securities of an issuer if those officers and directors of the
Fund, of its investment adviser or of its principal underwriter
beneficially owning individually more than 1/2 of 1% of the securities
of such issuer together own beneficially more than 5% of such
securities.
5. Invest in the securities of a company for the purpose of exercising
control over or management of such company.
6. Purchase securities on margin.
7. Write put and call options.
* The Fund has no present intention of lending portfolio securities.
6
<PAGE>
8. 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.
9. Purchase securities unless the issuer or any company, the credit of
which is the basis for the purchase, has a record of three years'
continuous operation prior to such purchase, except for 5% of the
Fund's total assets.
10. 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.
In addition, under normal circumstances the Fund will invest in at least
three foreign countries.
Among the types of fixed income securities in which the 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 borrow 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.
TOTAL RETURN. From time to time the Fund advertises its average annual
total return. An investment in the Fund over the ten-year period from March 31,
1986 to March 31, 1996 would have increased at an average annual compounded rate
of return of 12.19%. Quotations of average annual returns for each fund will be
expressed in terms of the average annual compounded rates of return of a
hypothetical investment in the fund over periods of 1, 5 and 10 years,
calculated pursuant to the following formula: P(1+T)n = ERV (where P = a
hypothetical initial payment of $1,000, T = the average annual return, n = the
number of years, and ERV = the ending redeemable value of a hypothetical $1,000
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 Fund over the five year period from March 31, 1991 to March
31, 1996 would have increased at an average annual compounded rate of return of
12.78% and an investment in the Fund over the period from March 31, 1995 to
March 31, 1996 would have increased at an average annual rate of 15.11%.
COMPARISON OF PORTFOLIO PERFORMANCE. From time to time the Fund may
discuss in sales literature and advertisements specific performance grades or
rankings or other information as published by recognized 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 Fund will not make a practice of
short-term trading, purchases and sales of securities will be made whenever
appropriate, in management's view, to achieve the objective of the Fund to
provide long-term growth of capital. 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 United States 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 United States government obligations and other short-term
investments) owned by the Fund during the particular fiscal year. The Fund's
rates of portfolio turnover during the fiscal years ended March 31, 1995 and
1996 were 12.96%, and 9.64%, respectively. The rate of portfolio turnover is not
a limiting factor when management deems portfolio changes appropriate to achieve
the Fund's stated objective. However, it is possible that, under certain
circumstances, the Fund may have to limit its short-term portfolio turnover to
permit it to qualify as a "regulated investment company" under the Code.
MANAGEMENT OF THE FUND
The business of the Fund is managed by its Board of Directors which elects
officers responsible for the day-to-day operations of the Fund and for the
execution of the policies formulated by the Board of Directors. Several
7
<PAGE>
of the directors and officers of the Fund are directors or officers of SOGEN
A.M. Corp., SGSC or Societe Generale, Paris, France, the indirect owner of one
hundred percent (100%) of the outstanding voting securities of SOGEN A.M. Corp.,
and the owner of fifty percent (50%) of the outstanding voting securities of
SGSC. Jean-Marie Eveillard, the President and a director of the Fund, owns 100%
of SOGEN A.M. Corp.'s non-voting Series B common stock which represents 19.9% of
the total capital of SOGEN A.M. Corp.
The following table sets forth the principal occupation or employment of
the members of the Board of Directors and principal officers of the Fund. Each
of the following persons is also a director and/or officer of SoGen Funds, Inc.
and SoGen Variable Funds, Inc.
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION
NAME AND ADDRESS WITH THE FUND DURING PAST FIVE (5) YEARS
<S> <C> <C>
Philippe Collas* Chairman of the Board and Head of Asset Management at Societe Generale
17, cours Valmy Director since September 1995. Head of Human Resource
92972 Paris, Management at Societe Generale from September
France 1991 to 1995. Chief Executive Officer of
Societe Generale Capital Markets (London) from
prior to 1991.
Jean-Marie Eveillard*,(1) President and Director Director and President or Executive Vice
1221 Avenue of the Americas President of SOGEN A.M. Corp. from prior to
New York, NY 10020 1991.
Fred J. Meyer(2) Director Chief Financial Officer of Omnicom Group Inc.
437 Madison Avenue Inc. from prior to 1991. Director of Sandoz
New York, NY 10022 Corporation, SyStemix, Inc. and Zurich-
American Insurance Cos.
Dominique Raillard(2) Director President of Act 2 International (consulting)
15, boulevard Delessert since July 1995. Group Executive Vice
75016 Paris, France President of Promodes (consumer
products) -- U.S. Companies Divisions from
prior to 1991 to 1995.
Nathan Snyder(1),(2) Director Independent Consultant from prior to 1991
163 Parish Rd. S.
New Canaan, CT 06840
Philip J. Bafundo* Vice President, Secretary and Secretary and Treasurer, SOGEN A.M. Corp. since
1221 Avenue of the Americas Treasurer January 1991. Certified Public Accountant (New
New York, NY 10020 York).
Ignatuis Chithelen* Vice President Securities Analyst, SOGEN A.M. Corp. since
1221 Avenue of the Americas October 1993. Reporter at FORBES from prior to
New York, NY 10020 1991 to April 1992. Private investor from May
1992 to September 1993.
Catherine A. Shaffer* Vice President First Vice President, SGSC since January 1991.
1221 Avenue of the Americas
New York, NY 10020
Edwin S. Olsen* Vice President Vice President, SGSC from prior to 1991.
1221 Avenue of the Americas
New York, NY 10020
Elizabeth Tobin* Vice President and Assistant Securities Analyst, SOGEN A.M. Corp. from prior
1221 Avenue of the Americas Secretary to 1991.
New York, NY 10020
Charles de Vaulx* Vice President Securities Analyst, SOGEN A.M. Corp. from prior
1221 Avenue of the Americas to 1991.
New York, NY 10020
</TABLE>
* An "interested person" of the Fund as defined in the Investment Company Act
of 1940, as amended.
(1) Member of the Executive Committee. When the Board of Directors is not in
session, the Executive Committee may generally exercise most of the powers
of the Board of Directors.
(2) Member of the Audit Committee.
8
<PAGE>
The Fund makes no payments to any of its officers for services. However,
currently each of the Fund's directors who is not an officer or employee of
SOGEN A.M. Corp., SGSC or Societe Generale is paid by the Fund an annual fee of
$6,000 and a fee of $1,000 for each meeting of the Fund's Board of Directors and
for each meeting of any Committee of the Board attended (other than those held
by telephone conference call). Each director is reimbursed by the Fund for any
expenses he may incur by reason of attending such meetings or in connection with
services he may perform for the Fund. During the fiscal year ended March 31,
1996, an aggregate of $36,000 was paid or accrued for directors' fees and
expenses. See Note 2 of Notes to Financial Statements on page 32 of the Fund's
Annual Report to Shareholders for a description of various transactions during
the Fund's most recent fiscal year between the Fund 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 Fund and by the
fund complex of which the Fund is a part for the fiscal year ended March 31,
1996. Officers of the Fund and directors who are interested persons of the Fund
do not receive any compensation from the Fund or any other fund in the fund
complex which is a U.S. registered investment company. In the column headed
"Total Compensation From Registrant and Fund Complex Paid to Directors," the
number in parentheses indicates the total number of boards in the fund complex
on which the director serves.
COMPENSATION TABLE
FISCAL YEAR ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS ESTIMATED FROM
AGGREGATE ACCRUED AS ANNUAL REGISTRANT
COMPENSATION PART OF BENEFITS AND FUND
FROM FUND UPON COMPLEX PAID
NAME OF PERSON, POSITION REGISTRANT EXPENSES RETIREMENT TO DIRECTORS
<S> <C> <C> <C> <C>
Fred J. Meyer*, Director................................... $ 11,600 N/A N/A $ 24,200(3)
Jean-Marie Eveillard**, Director and President............. $ -- N/A N/A $ --
Dominique Raillard*, Director.............................. $ 11,600 N/A N/A $ 24,200(3)
Nathan Snyder*, Director................................... $ 11,600 N/A N/A $ 24,200(3)
Philippe Collas**, Director and Chairman................... $ -- N/A N/A $ --
</TABLE>
* Member of the Audit Committee.
** "Interested person" of the Fund, as defined in the Act, because of the
affiliation with SOGEN A.M. Corp., the Fund's investment adviser.
As of June 30, 1996, the officers and directors of the Fund owned less than
1% of the outstanding shares of capital stock of the Fund. The Fund knows of no
person who owns beneficially more than 5% of the capital stock of the Fund.
INVESTMENT ADVISER AND OTHER SERVICES
As described in the Fund's Prospectus, SOGEN A.M. Corp. is the Fund's
investment adviser and, as such, manages the Fund's portfolio. SOGEN A.M. Corp.
was incorporated in Delaware in February 1990, and is indirectly wholly owned by
Societe Generale, one of France's largest banks. SOGEN A.M. Corp. employs
certain individuals who previously served as key personnel performing securities
analysis for the investment advisory division of SGSC, the Fund's principal
underwriter and former investment adviser.
The persons named below are affiliated with the Fund and are also
affiliated persons of SOGEN A.M. Corp., SGSC or Societe Generale. The capacity
in which such persons are affiliated with the Fund and SOGEN A.M. Corp., SGSC or
Societe Generale is also indicated.
<TABLE>
<CAPTION>
OFFICE HELD WITH SOGEN A.M. CORP.,
NAME OFFICE HELD WITH THE FUND SGSC OR SOCIETE GENERALE
<S> <C> <C>
Philippe Collas Chairman of the Board and Head of Asset Management, Societe Generale.
Director Chairman of the Board and Director, SOGEN A.M.
Corp.
Jean-Marie Eveillard President and Director President and Director, SOGEN A.M. Corp.
Philip J. Bafundo Vice President, Secretary and Secretary and Treasurer, SOGEN A.M. Corp.
Treasurer
Ignatius Chithelen Vice President Securities Analyst, SOGEN A.M. Corp.
Catherine A. Shaffer Vice President First Vice President, SGSC
Edwin S. Olsen Vice President Vice President, SGSC
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
OFFICE HELD WITH SOGEN A.M. CORP.,
NAME OFFICE HELD WITH THE FUND SGSC OR SOCIETE GENERALE
Elizabeth Tobin Vice President and Assistant Securities Analyst, SOGEN A.M. Corp.
Secretary
<S> <C> <C>
Charles de Vaulx Vice President Securities Analyst, SOGEN A.M. Corp.
</TABLE>
Under its investment advisory contract with the Fund which became effective
April 26, 1990 and was amended on July 10, 1992, SOGEN A.M. Corp. furnishes the
Fund with investment advice consistent with the Fund's stated investment
objective. SOGEN A.M. Corp. also furnishes the Fund with office space and
certain facilities required for the business of the Fund, and statistical and
research data, and pays any compensation and expenses of the Fund's officers. In
return, the Fund pays SOGEN A.M. Corp. an annual fee equal to the sum of 1.0% of
the first $25,000,000 of the average daily value of the Fund's net assets and
0.75% of the average daily value of the Fund's net assets in excess of
$25,000,000, in each case payable quarterly in amounts equal to 0.25% and
0.1875%, respectively, of the average daily value of the net assets of the Fund
during the preceding quarter. The 1.0% annual fee rate listed above is higher
than the rate of fees paid by most United States mutual funds. The Fund
believes, however, that the effective rate of the advisory fee it pays is not
higher than the rate of fees paid by most other mutual funds that invest
significantly in foreign equity securities. The Advisory Contract has been
approved by the Board of Directors of the Fund after considering, among other
things, the Fund's past investment performance.
To the extent that the Fund's total expenses, excluding taxes, brokerage
expenses, interest and certain extraordinary expenses, in any fiscal year exceed
the permissible limits applicable to the Fund in any state in which its shares
are then qualified for sale, SOGEN A.M. Corp. will, quarterly, waive its fees
and, if necessary to meet the limit, reimburse the Fund. The current most
stringent limit imposed by a state is equal to the sum of (a) 2.5% of the first
$30,000,000 of the Fund's daily average net asset value, (b) 2.0% of the next
$70,000,000 of the Fund's daily average net asset value and (c) 1.5% of the
excess Fund's daily average net asset value in excess of $100,000,000. However,
expenses attributable to payments pursuant to the Rule 12b-1 Distribution Plan
and Agreement (see below under "Distribution of the Fund's Shares"), to legal,
audit and custodian fees associated with foreign investments and to certain
other payments are excluded from the calculation of expenses for purposes of the
limitation pursuant to waivers or orders granted to the Fund by relevant state
securities authorities.
For the Fund's fiscal years ended March 31, 1994, 1995 and 1996, the Fund
paid investment advisory fees of $8,820,942, $13,822,229 and $18,408,301,
respectively.
Under the investment advisory contract between the Fund and SOGEN A.M.
Corp., the adviser is responsible for the management of the Fund's portfolio and
constantly reviews its holdings in the light of its own research analyses and
those of other relevant sources. Reports of portfolio transactions are given
regularly to the directors of the Fund, who review the Fund's portfolio at
meetings held four times a year.
The Fund's Articles of Incorporation acknowledge that the Fund adopted its
corporate name through permission of Societe Generale and that the non-exclusive
right to use the name "SoGen International Fund, Inc." or "SoGen" or any similar
name may be granted by Societe Generale to others.
The Fund may, with the approval of the Fund's Board of Directors, from time
to time enter into arrangements with institutions to provide subtransfer agent
services and other related services where a number of persons hold Fund shares
through one account registered with the Fund's transfer agent, First Data
Investor Services Group, Inc. ("First Data") (formerly known as The Shareholder
Services Group, Inc.) in the name of that institution. Under those arrangements,
the Fund may compensate the institution rendering such services on a per sub-
account basis.
DISTRIBUTION OF THE FUND'S SHARES
The Fund and SGSC have entered into an underwriting contract pursuant to
which SGSC offers, as agent, shares of the Fund to investors, either directly or
through selected securities dealers, in states and countries in which the Fund's
shares are qualified and in which SGSC is qualified as a dealer or where such
qualification is not required.
Pursuant to the Distribution Plan and Agreement (the "Plan") between the
Fund and SGSC, adopted by the Fund in accordance with the provisions of Rule
12b-1 under the Investment Company Act of 1940, the Fund may pay SGSC,
quarterly, a distribution fee of up to, on an annual basis, 0.25% of the average
daily net asset value of the Fund subject to the limitation described below.
Under the Plan, SGSC must apply the full amount of fees received from the Fund
to actual distribution expenses incurred during the fiscal year including the
payment of fees to dealers for their assistance in the sale of shares of the
Fund and for the provision to shareholder services
10
<PAGE>
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. The Plan, which became effective on November 14,
1985, excludes for the purposes of calculating the net asset value for payment
of the fee, Fund assets attributable to Fund shares outstanding before that date
and any subsequent dividends and distributions thereon. For the fiscal year
ended March 31, 1996, the Fund paid SGSC $5,887,277 pursuant to the Plan,
$96,704 of which was paid by SGSC to Societe Generale and subsidiaries of
Societe Generale. SGSC and SOGEN A.M. Corp. bear the Fund's distribution costs
to the extent they exceed payments under the Plan.
Substantially all of the amounts paid to SGSC under the Plan are paid to
dealers selling shares of the Fund, including Societe Generale and certain of
its subsidiaries, for their assistance in selling shares of the Fund. A dealer
selling shares normally receives a fee, calculated on a quarterly basis, subject
to the limitation described above, equal to 0.25% of the average daily net asset
value of the shares of the Fund held by the dealer's customers. SGSC has
retained $1,566,727 of the amount paid to it pursuant to the Plan with respect
to the fiscal year ended March 31, 1996, as reimbursement for expenses incurred
in promoting the sale of Fund shares, including printing and distribution of
prospectuses and sales literature and 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 Fund, and by
the directors who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plan or in any agreements
relating to the Plan (the "Independent Directors"). In the case of an agreement
relating to the Plan, the Plan provides that such agreement may be terminated,
without penalty, by a vote of a majority of the Independent Directors or by a
majority of the Fund's outstanding voting securities on 60 days' written notice
to SGSC, and provides further that such agreement will automatically terminate
in the event of its assignment. The Plan also states that it may not be amended
to increase the maximum amount of the payments thereunder without the approval
of a majority of the outstanding voting securities of the Fund (as defined on
page 5). 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 Fund.
When the Fund seeks an Independent Director to fill a vacancy on 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.
SGSC, as principal underwriter of the Fund's shares, agrees to use its best
efforts (in states where it may lawfully do so) to obtain orders for the Fund's
shares. With respect to the fiscal year ended March 31, 1996, SGSC, Societe
Generale (including its subsidiaries) and SOGEN A.M. Corp. received commissions
and other compensation in connection with the operations of the Fund as follows:
<TABLE>
<CAPTION>
(1) (2) (3)
NAME OF NET UNDERWRITING COMMISSIONS ON (4) (5)
PRINCIPAL UNDERWRITER DISCOUNTS AND DEALER REPURCHASES OR BROKERAGE OTHER
OR AFFILIATE COMMISSIONS REDEMPTIONS COMMISSIONS COMPENSATION
<S> <C> <C> <C> <C>
SGSC................................... $ 3,005,037 $ -- $ 65,697 $ 5,887,277*
Societe Generale
(including subsidiaries)............. $ 36,119 $ -- $ 43,027 $ 96,704**
SOGEN A.M. Corp........................ $ -- $ -- $ -- $ 18,408,301***
</TABLE>
* For the period reported, the Fund's distribution fee paid or payable to SGSC
pursuant to the Plan. Substantially all of such amount was paid or will be
paid to dealers, including Societe Generale and certain subsidiaries,
selling shares of the Fund.
** Amounts paid to Societe Generale as a dealer of Fund shares pursuant to the
Plan, which amount is included in the $5,887,277 paid to SGSC under the
Plan.
*** The Fund's investment advisory fee paid or payable to SOGEN A.M. Corp. for
the fiscal year ended March 31, 1996.
During the three years ended March 31, 1994, 1995, and 1996, the aggregate
amounts of sales charges on sales of Fund shares were $23,608,959, $4,790,032
and $16,232,673, respectively. During the years ended March 31, 1994 and 1995,
SGSC received net underwriting discounts and dealer commissions of $4,440,946
and $941,813, respectively, and Societe Generale received dealer discounts of
$108,094 and $44,234, respectively.
SOGEN A.M. Corp. has entered into an agreement with SGSC, dated April 30,
1990, under which net commissions and fees earned by SGSC in its capacity as
underwriter to the Fund, are remitted to SOGEN A.M.
11
<PAGE>
Corp. In consideration for certain services provided by SGSC, SOGEN A.M. Corp.
pays SGSC a $25,000 per annum fee, payable monthly, and reimburses SGSC for
certain expenses incurred on behalf of SOGEN A.M. Corp. For SOGEN A.M. Corp.'s
fiscal year ended December 31, 1995, such commissions and fees with respect to
the Fund amounted to $3,595,572, and the related reimbursement for services
amounted to $126,442.
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 the Fund (as defined on page 5). In
addition, the terms of each contract and the renewals thereof must be approved
annually by the vote of a majority of the directors who are not "interested
persons" (as defined in the Investment Company Act of 1940) of SOGEN A.M. Corp.,
SGSC or the Fund. Each contract will terminate automatically in the event of its
assignment (as defined in the Investment Company Act of 1940) and may be
terminated, without penalty, on sixty days' written notice, at the option of
either party thereto or by a vote of a majority of the outstanding voting
securities of the Fund.
COMPUTATION OF NET ASSET VALUE
The Fund computes its net asset value once daily on days the New York Stock
Exchange is open for trading. The Exchange is closed on the following days: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. The net asset value per share is
computed by dividing the total current value of the assets of the Fund, less its
liabilities, by the total number of shares outstanding at the time of such
computation.
A portfolio security, other than a bond, which is traded on a United States
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 and any securities subject to restrictions
on resale are valued at fair value as determined in good faith by the Fund's
Board of Directors. A make-up sheet showing the computation of the total
offering price, using as a basis the value of the Fund's portfolio securities
and other assets and its outstanding securities as of March 31, 1996, appears as
the Statement of Assets and Liabilities on page 27 of the March 31, 1996 Annual
Report to Shareholders.
HOW TO PURCHASE SHARES
The methods of buying and selling shares and the sales charges applicable
to purchases of shares of the Fund in the United States and France are described
in the Fund's Prospectus. The sales charge applicable to all sales of Fund
shares in the Republic of China (Taiwan) is 3%.
As stated in the Prospectus, the Fund's shares may be purchased at net
asset value by various persons associated with the Fund, SGSC, SOGEN A.M. Corp.,
branches of Societe Generale, certain firms providing services to the Fund or
affiliates thereof for the purpose of promoting good will with employees and
others with whom the Fund 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
The Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code") for each taxable year.
Such qualification does not involve governmental supervision of management or
investment practices or policies. By complying with the applicable provisions of
the Code, the Fund will not be subject to Federal income tax on taxable income
(including realized capital gains) to the extent distributed to shareholders
within the allowable time limit.
In order to qualify as a regulated investment company for a taxable year
under the laws in effect as of the date of this Statement of Additional
Information and to avoid paying taxes on income the Fund distributes to its
12
<PAGE>
shareholders, the Fund must, among other things, (a) derive at least 90% of its
gross income from dividends, interest, payments with respect to loans of stock
or securities, gains from the sale or other disposition of stock or securities,
foreign currency gains related to investments in stock or securities and other
income (including, but not limited to, gains from options, futures or forward
contracts) derived with respect to the business of investing in stock,
securities or currency; (b) derive less than 30% of its gross income from the
sale or other disposition of stock or securities and options, futures, forward
contracts and foreign currencies held for less than three months (excluding
gains from certain hedging transactions and from foreign currencies (and
options, futures and forward contracts on foreign currencies) that are directly
related to the Fund's principal business of investing in stocks or securities or
options or futures thereon); (c) diversify its holdings so that, at the end of
each fiscal quarter, (i) at least 50% of the market value of its assets is
represented by cash, cash items, United States 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 United States
government securities or other regulated investment companies); and (d)
distribute at least 90% of its investment company taxable income (which
includes, among other items, dividends, interest and net short-term capital
gains in excess of net long-term capital losses and any capital loss
carry-overs, net of expenses) for the year.
As a regulated investment company, the Fund generally will not be subject
to U.S. federal income tax on its investment company taxable income and net
capital gains (the excess of net long-term capital gains over net short-term
capital losses), if any, that it distributes to shareholders. The Fund intends
to distribute to its shareholders, at least annually, substantially all of its
investment company taxable income and net capital gains. Amounts not distributed
on a timely basis in accordance with a calendar year distribution requirement
are subject to a non-deductible 4% excise tax. To prevent imposition of the
excise tax, the Fund must distribute during each calendar year an amount equal
to the sum of (1) at least 98% of its ordinary income (not taking into account
any capital gains or losses) for the calendar year, (2) at least 98% of its
capital gains in excess of its capital losses (adjusted for certain ordinary
losses) for the one-year period ending on October 31 of the calendar year, and
(3) any ordinary income and capital gains for previous years that were not
distributed during those years. A distribution will be treated as paid on
December 31 of the current calendar year if it is declared by a Fund in October,
November or December with a record date in such a month and paid by the Fund
during January of the following calendar year. Such distributions will be
taxable to shareholders in the calendar year in which the distributions are
declared, rather than the calendar year in which the distributions are received.
To prevent application of the excise tax, the Fund intends to make its
distributions in accordance with the calendar year distribution requirement.
All dividends from net investment income and all distributions of net
realized capital gains are paid in shares of the Fund at net asset value
calculated as of the payment date unless a shareholder elects to receive cash.
Shareholders may elect to receive cash in the amount of the dividend or
distribution by so indicating in the respective section of the New Account
Application or by notifying First Data in writing no later than 30 days prior to
a dividend payment date. Once an election has been made all future dividends and
distributions will be paid in accordance with such election unless shareholders
notify First Data in writing to change such election. Shareholders incur no
sales charges on Fund shares reinvested. All dividends or distributions are
taxable for United States federal income tax purposes as though received in
cash. To the extent that they are derived from dividends received from domestic
corporations, dividends paid by the Fund may qualify for the dividends-received
deduction for corporations. For the fiscal year ended March 31, 1996, 10.75% of
the Fund's net investment income qualified for the dividends-received deduction.
Certain foreign currency contracts in which the Fund may invest are
"section 1256 contracts." Gains or losses on section 1256 contracts generally
are considered 60% long-term and 40% short-term capital gains or losses;
however, foreign currency gains or losses (as discussed below) arising from
certain section 1256 contracts may be treated as ordinary income or loss. Also,
section 1256 contracts held by the Fund at the end of each taxable year (and,
generally, for purposes of the 4% excise tax, on October 31 of each year) are
"marked-to-market" (that is, treated as sold at fair market value), resulting in
unrealized gains or losses being treated as though they were realized.
Generally, the hedging transactions undertaken by the Fund may result in
"straddles" for United States federal income tax purposes. The straddle rules
may affect the character of gains (or losses) realized by the Fund. In addition,
losses realized by the Fund on positions that are part of a straddle may be
deferred under the straddle rules, rather than being taken into account in
calculating the taxable income for the taxable year in which the losses are
realized. Because only a few regulations implementing the straddle rules have
been promulgated, the tax consequences to the Fund of engaging in hedging
transactions are not entirely clear. Hedging transactions
13
<PAGE>
may increase the amount of short-term capital gains realized by the Fund which
is taxed as ordinary income when distributed to shareholders.
The Fund may make one or more of the elections available under the Code
which are applicable to certain foreign currency contracts or certain hedging
transactions which may be acquired or undertaken by the Fund. If the Fund makes
any of the elections, the amount, character and timing of the recognition of
gains or losses from such contracts or transactions 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 such contracts or transactions.
Because the above tax rules may affect the character of gains or losses,
defer losses and/or accelerate the recognition of gains or losses from the
affected contracts or transactions, the amount which may be distributed to
shareholders, and which will be taxed to them as ordinary income or long-term
capital gain, may be increased or decreased as compared to a fund that did not
engage in such hedging transactions the Fund may undertake.
The 30% limitation and the diversification requirements applicable to the
Fund's assets may limit the extent to which the Fund will be able to engage in
transactions in foreign currency contracts.
Under the Code, gains or losses attributable to fluctuations in exchange
rates which occur between the time the Fund accrues receivables or liabilities
denominated in a foreign currency and the time the Fund actually collects such
receivables, or pays such liabilities, generally are treated as ordinary income
or ordinary loss. Similarly, on disposition of debt securities denominated in a
foreign currency and on disposition of certain foreign currency contracts, gains
or losses attributable to fluctuations in the value of foreign currency between
the date of acquisition of the security or contract and the date of disposition
also are treated as ordinary gain or loss. These gains or losses, referred to
under the Code as "section 988" gains or losses, will increase or decrease the
amount of the Fund's investment company taxable income to be distributed to its
shareholders as ordinary income.
If more than 50% of the value of the Fund's total assets at the close of
any taxable year consists of stocks or securities of foreign corporations, the
Fund may elect, for U.S. federal income tax purposes, to treat any foreign
country income or withholding taxes paid by the Fund that can be treated as
income taxes under United States income tax principles, as paid by its
shareholders. For any year that the Fund makes such an election, each of its
shareholders will be required to include in his income (in addition to taxable
dividends actually received) his allocable share of such taxes paid by the Fund,
and will be entitled, subject to certain limitations, to credit his portion of
these foreign taxes against his U.S. federal income tax due, if any, or to
deduct it (as an itemized deduction) from his U.S. taxable income, if any.
Generally, a credit for foreign taxes is subject to the limitation that it
may not exceed the shareholder's U.S. tax attributable to his foreign source
taxable income. If the pass-through election described above is made, the
portion of distribution paid by the Fund from its foreign source income will be
treated as foreign source income. Certain of the Fund's gains from the sale of
securities and certain currency fluctuation gains will be treated as derived
from U.S. sources. In addition, this foreign tax credit limitation must be
applied separately to certain categories of foreign source income, one of which
is foreign source "passive income." For this purpose, foreign "passive income"
includes dividends, interest, certain capital gains and certain foreign currency
gains. As a consequence, certain shareholders may not be able to claim a foreign
tax credit for the full amount of their proportionate share of foreign taxes
paid by the Fund. The foreign tax credit can be used to offset only 90% of the
alternative minimum tax (as computed under the Code for purposes of this
limitation) imposed on corporations and individuals. If the Fund is not eligible
to make the pass-through election described above, the foreign taxes it pays
will reduce its income, and distributions by the Fund will be treated as U.S.
source income. Each shareholder will be notified within 60 days after the close
of the Fund's taxable year whether, pursuant to the election described above,
the foreign taxes paid by the Fund will be treated as paid by its shareholders
for that year and, if so, such notification will designate (i) such
shareholder's portion of the foreign taxes paid to such country and (ii) the
portion of the Fund's dividends and distributions that represents income derived
from sources within such country.
Investments by the Fund in stock of certain foreign corporations which
generate largely passive investment-type income, or which hold a significant
percentage of assets which generate such income (referred to as "passive foreign
investment companies" or "PFICs"), are subject to special tax rules designed to
prevent deferral of U.S. taxation of the Fund's share of the PFIC's earnings. In
the absence of certain elections to report these earnings on a current basis,
regardless of whether the Fund actually receives any distributions from the
PFIC, 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 the Fund's holding period for
the stock. Any amount allocated to prior taxable years would be taxable to the
Fund at the highest rate of tax applicable in
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that year (even if distributed to the Fund shareholders), increased by an
interest charge determined as though the amounts were underpayments of tax.
Amounts allocated to the year of the distribution or disposition would be
included in the Fund's net investment income for that year and, to the extent
distributed as a dividend to the Fund's shareholders, would not be taxable to
the Fund.
The Fund may be subject to foreign withholding taxes on income and gains
derived from its investments outside the United States. Such taxes would reduce
the yield on the Fund's investments. Tax treaties between certain countries and
the United States may reduce or eliminate such taxes.
Different tax treatment, including a penalty on pre-retirement
distributions, is accorded accounts maintained as IRAs. Shareholders should
consult their tax advisers for more information.
Any loss realized by a shareholder on the redemption or other disposition
of Fund shares which he has held for six months or less will be treated for
United States federal income tax purposes as a long-term capital loss to the
extent of any long-term capital gains distributions received by the shareholder
(and any amount retained by the Fund which were designated as undistributed
long-term capital gains) with respect to such shares. Any loss realized on a
sale or exchange of Fund shares will be disallowed to the extent that the shares
disposed of are replaced (including, for example, by receipt of dividends paid
in shares) within a 61-day period beginning 30 days before and ending 30 days
after the date the shares are disposed of. In such a case, a shareholder will
adjust the basis of the shares acquired to reflect the disallowed loss. Any
corporate shareholder should consult its tax adviser regarding the possibility
that its basis in its shares may be reduced, by reason of "extraordinary
dividends" received with respect to the shares, for the purpose of computing its
gain or loss on the shares. Corporate shareholders which borrow to acquire or
retain Fund shares may be denied a portion of the dividends-received deduction.
If shares sold and reinvested pursuant to the reinstatement privilege or
exchange privilege have been held for 90 days or less, the sales load incurred
as to those shares will not be taken into account in determining any taxable
gain or loss on the exchange or sale to the extent of the reduction in the sales
load on the shares acquired in the exchange or reinstatement.
Since, at the time of an investor's purchase of the 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.
The 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.
In addition to federal income taxes, shareholders of the Fund may be
subject to state, local or foreign taxes on distributions from the Fund and
redemptions of Fund shares. Shareholders should consult their tax advisers as to
the application of such taxes and as to the tax status of distributions from the
Fund and redemptions of Fund shares in their own states and localities.
Non-United States shareholders, present in the United States for substantial
periods of time during a taxable year, maintaining an office or "tax home" in
the United States, or conducting business in the United States with which their
Fund shares may be "effectively connected," should consult their tax advisers as
to whether such presence or such activities may subject them to United States
tax as a United States shareholder or otherwise. If the income from the Fund is
not treated as "effectively connected", distribution to non-U.S. shareholders
will be subject to a U.S. tax of 30% (or lower treaty rate), which is generally
withheld from such distribution. Each shareholder who is not a United States
person should also consult his tax adviser regarding the United States and
foreign tax consequences of ownership of shares of the Fund.
BROKERAGE ALLOCATION
The Fund's brokerage policy is to place orders for the purchase and sale of
its portfolio securities in such a manner that it will receive the best price
and execution for each transaction, after taking into account research services
provided for the Fund's benefit that are furnished by brokers. Determination as
to the brokers with
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whom the Fund's orders shall be placed are made by officers of SOGEN A.M. Corp.
While there is no commitment or understanding to do so, subject to its policy of
obtaining the best price and execution available, the Fund may use SGSC or
affiliates of Societe Generale as brokers in the purchase and sale of
securities. For the fiscal years ended March 31, 1994, March 31, 1995 and March
31, 1996, the Fund paid SGSC and affiliates of Societe Generale $108,661,
$70,290, $108,724 respectively, in such brokerage commissions for transactions
effected on various exchanges. Such commissions paid for the fiscal year ended
March 31, 1996 represented 4.2% of the aggregate brokerage commissions paid by
the Fund during such year and were paid in connection with transactions
representing 4.2% of the aggregate dollar amount of all transactions effected by
the Fund during such year (including principal transactions for which no direct
brokerage commissions are paid). SGSC may not, acting as principal, sell any
security or other property to, or purchase any security or other property from,
the Fund during such year, except to the extent that such purchase or sale may
be permitted by an order, rule or regulation of the Securities and Exchange
Commission.
In implementing its policy of obtaining the best price and execution, the
Fund may from time to time use the over-the-counter market in effecting
transactions in securities listed on an exchange.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and subject to obtaining prices and execution at least
as favorable as those provided by other qualified brokers, SOGEN A.M. Corp. may
consider sales of shares of the Fund as a factor in the selection of brokers to
execute portfolio transactions. SOGEN A.M. Corp., in determining the best price
and execution for a particular transaction, considers the value of research
services provided to SOGEN A.M. Corp., for the benefit of the Fund, by brokers
and the Fund may pay commissions to such brokers in excess of the commissions
other brokers would have charged for effecting the same transactions if an
officer or officers of SOGEN A.M. Corp. determine in good faith that such higher
commissions are reasonable in relation to the value of the brokerage and
research services provided by such brokers for the benefit of the Fund. 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 managements of companies in the
Fund's portfolio or in which the Fund may invest. Although only research
services provided to SOGEN A.M. Corp. for the benefit of the Fund will be
considered in selecting brokers to effect portfolio transactions for the Fund,
these services may also be used by SOGEN A.M. Corp. in servicing its other
clients. Similarly, research information obtained by SOGEN A.M. Corp. from
brokers executing transactions on behalf of SOGEN A.M. Corp's other clients may
be used by SOGEN A.M. Corp. in advising the Fund. SOGEN A.M. Corp. also
considers the furnishing of comparative performance reports and other
informational reports as a factor in the selection of brokers to execute
portfolio transactions.
The Fund has been advised by SOGEN A.M. Corp. that it may combine brokerage
orders for the Fund with orders from its other customers when placing such
orders with brokers for execution. In the event orders are placed for the Fund
and one or more other customers for the purchase or sale of the same security
the Fund and each such other customer may share in each transaction in the
proportion that each customer's order bears to the aggregate of such orders. The
Fund's orders are accorded priority over those received from SOGEN A.M. Corp.
for its own account or from any of its officers, directors or employees.
While SOGEN A.M. Corp. is primarily responsible for the allocation of the
brokerage business on the Fund's portfolio transactions, its policies and
practices in this regard must be consistent with the foregoing and are
periodically reviewed by the Fund's Board of Directors. In this connection, the
Directors periodically review and discuss with SOGEN A.M. Corp. the commissions
paid by the Fund and, in transactions where the Fund pays commissions which are
in excess of the commissions other brokers would have charged, SOGEN A.M. Corp's
determinations that such higher commissions are reasonable in relation to the
value of the brokerage and research services provided for the benefit of the
Fund. According to the Fund's records, the amount of brokerage commissions paid
by the Fund during the fiscal year ended March 31, 1996, which was attributable
to research services, was $2,366,336 in connection with transactions amounting
to $983,896,840. During the fiscal years ended March 31, 1994, 1995 and 1996,
the Fund paid total brokerage commissions of $1,933,039, $1,387,206 and
$2,468,233, respectively.
CUSTODY OF PORTFOLIO
Domestic portfolio securities of the Fund are held pursuant to a custodian
agreement between the Fund 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 Depository
Trust Company. The Fund's sub-custodian, State Street Bank and Trust, holds
domestic securities issued in physical form. Pursuant to a Global Custody
Agreement between the Fund and The Chase Manhattan Bank ("Chase"), 4 Chase
MetroTech Center, Brooklyn, NY 11245, foreign securities owned by the Fund may
be held by certain
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foreign sub-custodians which are participants in the Global Securities Services
Division of Chase and in certain foreign branches of Chase.
INDEPENDENT AUDITORS
The independent auditors of the Fund are KPMG Peat Marwick LLP, Certified
Public Accountants, 345 Park Avenue New York, NY 10154. KPMG Peat Marwick LLP
audits the Fund's annual financial statements and renders its report thereon,
which is included in the Annual Report to Shareholders.
FINANCIAL STATEMENTS
The Fund's financial statements and notes thereto appearing in the March
31, 1996 Annual Report to Shareholders and the report thereon of KPMG Peat
Marwick LLP, Certified Public Accountants, appearing therein are incorporated by
reference in this Statement of Additional Information. The Fund will furnish,
without charge, a copy of such Annual Report to Shareholders on request. All
such requests should be directed to the Secretary of the Fund, at 1221 Avenue of
the Americas, New York, NY 10020.
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