-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RNW933/mDp8QngUuTHY/xRwER+qZg1QPbHdDG2gR9/y+hZmaT7Bi8trQwXc0TFH+ L5YA1Bv26z870jRNAqMFPQ== 0000950130-97-003308.txt : 19970728 0000950130-97-003308.hdr.sgml : 19970728 ACCESSION NUMBER: 0000950130-97-003308 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19970725 EFFECTIVENESS DATE: 19970725 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOGEN INTERNATIONAL FUND INC/SOCIETE GENERALE TOUCHE REMNANT CENTRAL INDEX KEY: 0000091612 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 132672902 STATE OF INCORPORATION: MD FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 002-34329 FILM NUMBER: 97645866 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-01922 FILM NUMBER: 97645867 BUSINESS ADDRESS: STREET 1: 1221 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10020 BUSINESS PHONE: 2123978561 FORMER COMPANY: FORMER CONFORMED NAME: SOGEN INTERNATIONAL FUND INC DATE OF NAME CHANGE: 19930610 485BPOS 1 SOGEN INTERNATIONAL FUND INC.- FORM N-1A AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 25, 1997 REGISTRATION NO. 2-34329 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-1A ---------------- REGISTRATION STATEMENT UNDER [X] THE SECURITIES ACT OF 1933 PRE-EFFECTIVE AMENDMENT NO. [_] [X] POST-EFFECTIVE AMENDMENT NO. 41 AND/OR REGISTRATION STATEMENT UNDER [X] THE INVESTMENT COMPANY ACT OF 1940 AMENDMENT NO. 25 (Check appropriate box or boxes.) ---------------- SOGEN INTERNATIONAL FUND, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) ---------------- 1221 AVENUE OF THE AMERICAS NEW YORK, NY 10020 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (800) 334-2143 ---------------- JEAN-MARIE EVEILLARD SOGEN INTERNATIONAL FUND, INC. 1221 AVENUE OF THE AMERICAS NEW YORK, NY 10020 (NAME AND ADDRESS OF AGENT FOR SERVICE) ---------------- IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX): [_] Immediately upon filing pursuant to paragraph (b) [X] On July 31, 1997 pursuant to paragraph (b) [_] 60 days after filing pursuant to paragraph (a) [_] On (date) pursuant to paragraph (a) of Rule 485 ---------------- PURSUANT TO THE PROVISIONS OF RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT OF 1940, REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF SHARES UNDER THE SECU- RITIES ACT OF 1933, AND REGISTRANT'S RULE 24F-2 NOTICE FOR FISCAL YEAR ENDED MARCH 31, 1997 WAS FILED ON MAY 23, 1997. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SOGEN INTERNATIONAL FUND, INC. CROSS-REFERENCE SHEET PURSUANT TO RULE 495(A) UNDER THE SECURITIES ACT OF 1933
FORM N-1A ITEM NO. PROSPECTUS CAPTION ------------------ ------------------ PART A Item 1. Cover Page Cover Page Item 2. Synopsis Fee Table Item 3. Condensed Financial Information Financial Highlights; Performance and Yield Information Item 4. General Description of Registrant Organization of the Company; Investment Objective, Policy and Restrictions; Risk Factors Item 5. Management of the Fund Management of the Companies Item 6. Capital Stock and Other Dividends, Capital Gain Distribution and Securities Taxes; Capital Stock; Inquiries Item 7. Purchase of Securities Being Management of the Companies; How to Offered Purchase Shares; Net Asset Value Item 8. Redemption or Repurchase How to Redeem Shares Item 9. Legal Proceedings Not Applicable FORM N-1A ITEM NO. STATEMENT OF ADDITIONAL INFORMATION CAPTION ------------------ ------------------------------------------- PART B Item 10. Cover Page Cover Page Item 11. Table of Contents Table of Contents Item 12. General Information and History Organization of the Fund Item 13. Investment Objectives and Investment Objective, Policy and Policies Restrictions Item 14. Management of the Registrant Management of the Fund Item 15. Control Persons and Principal Management of the Fund Holders of Securities Item 16. Investment Advisory and Other Investment Adviser and Other Services; Services Distribution of the Fund's Shares; Custody of Portfolio; Independent Auditors Item 17. Brokerage Allocation Brokerage Allocation Item 18. Capital Stock and Other Not Applicable Securities Item 19. Purchase, Redemption and Pricing Distribution of the Fund's Shares; of Securities Being Offered Computation of Net Asset Value Item 20. Tax Status Tax Status Item 21. Underwriters Distribution of the Fund's Shares Item 22. Calculation of Performance Data Investment Objective, Policy and Restrictions Item 23. Financial Statements Financial Statements
SOGEN INTERNATIONAL FUND SOGEN OVERSEAS FUND SOGEN GOLD FUND SOGEN MONEY FUND ---------------------------------- [LOGO OF SOGEN APPEARS HERE] 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 Interna- tional 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, 1997 TABLE OF CONTENTS
PAGE ---- SoGen International Fund, Inc. Prospectus Fee Table................................................................. 4 Financial Highlights...................................................... 5 Organization of the Company............................................... 6 Investment Objective, Policy and Restrictions............................. 6 Risk Factors.............................................................. 8 SoGen Funds, Inc. Prospectus Fee Table................................................................. -- Financial Highlights...................................................... -- Organization of the Company............................................... -- Overseas Fund Investment Objective and Policies........................... -- Gold Fund Investment Objective and Policies............................... -- Money Fund Investment Objective and Policies.............................. -- Investment Restrictions................................................... -- Implementation of Policies and Risks...................................... -- Management of the Companies................................................ 10 Capital Stock.............................................................. 11 Dividends, Capital Gain Distributions and Taxes............................ 12 Performance and Yield Information.......................................... 14 Net Asset Value............................................................ 15 How to Purchase Shares..................................................... 15 How to Redeem Shares....................................................... 20 Shareholder Services....................................................... 23 Inquiries.................................................................. 26
---------------------- 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 PROSPECTUS SOGEN INTERNATIONAL FUND --------------------------------- LOGO 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 Inter- national Fund, Inc. (the "Company"), an open-end management investment compa- ny. 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 compa- nies. SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR EN- DORSED BY ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT IN- SURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. This Prospectus sets forth concisely information about the Fund that an in- vestor ought to know before investing. It should be read and retained for fu- ture reference. A Statement of Additional Information dated July 31, 1997, containing additional information about the Fund, has been filed with the Se- curities and Exchange Commission. It is incorporated herein by reference and is available free of charge by contacting the Company at (800) 334-2143. ---------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI- TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------------------- JULY 31, 1997 3 SOGEN INTERNATIONAL FUND, INC. FEE TABLE 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.............................. 0.19% Printing, Registration, Directors' Fees and Miscellaneous........ 0.02% ---- Total Other Expenses.................................................. 0.22% ---- Total Fund Operating Expenses.......................................... 1.21% ====
1 YEAR 3 YEARS 5 YEARS 10 YEARS EXAMPLE ------ ------- ------- -------- 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:.............. $49 $74 $102 $179
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 sub- ject. 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 ex- penses, and actual expenses may be greater or less than those shown above. The assumed 5% return is hypothetical and should not be considered a representa- tion 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 un- der rules adopted by the National Association of Securities Dealers, Inc. 4 SOGEN INTERNATIONAL FUND, INC. FINANCIAL HIGHLIGHTS The following financial highlights and the related financial statements for each of the years in the eight year period ended March 31, 1997 have been au- dited by KPMG Peat Marwick LLP, independent auditors, whose report thereon is unqualified and appears in the SoGen International Fund, Inc. March 31, 1997 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 two 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 con- junction with the Financial Statements and notes thereto, which also appear in the Company's Annual Report to Shareholders.
YEAR ENDED MARCH 31, ----------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 1992 1991(A) 1990 1989 1988 ------ ------ ------ ------ ------ ------ ------- ------ ------ ------ SELECTED PER SHARE DATA Net asset value, beginning of year...... $26.09 $23.20 $23.32 $20.12 $18.44 $17.51 $17.71 $17.31 $16.91 $21.47 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Income from investment operations: Net investment income... 1.03 1.06 0.10 0.53 0.64 0.69 0.78 0.64 0.71 0.58 Net realized and unrealized gains (losses) on investments............ 1.39 3.37 0.49 3.37 2.02 1.45 0.20 1.48 1.26 (0.97) ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Total from investment operations............. 2.42 4.43 0.59 3.90 2.66 2.14 0.98 2.12 1.97 (0.39) ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Less distributions: Dividends from net investment income...... (1.09) (0.81) (0.15) (0.47) (0.64) (0.84) (0.71) (0.71) (0.80) (0.84) Distributions from capital gains.......... (0.74) (0.73) (0.56) (0.23) (0.34) (0.37) (0.47) (1.01) (0.77) (3.33) ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Total distributions..... (1.83) (1.54) (0.71) (0.70) (0.98) (1.21) (1.18) (1.72) (1.57) (4.17) ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Net asset value, end of year................... $26.68 $26.09 $23.20 $23.32 $20.12 $18.44 $17.51 $17.71 $17.31 $16.91 ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== TOTAL RETURN*........... 9.48% 19.57% 2.63% 19.50% 14.87% 12.53% 6.03% 12.18% 11.94% (0.70)% RATIOS AND SUPPLEMENTAL DATA Net assets, end of year (millions)............. $3,908 $3,033 $1,922 $1,781 $ 650 $ 355 $ 240 $ 176 $ 126 $ 97 Ratio of operating expenses to average net assets................. 1.21%** 1.25%** 1.26% 1.28% 1.31% 1.37% 1.30% 1.38% 1.39% 1.36% Ratio of net investment income to average net assets................. 3.08%** 3.71%** 2.70% 2.34% 3.69% 4.00% 4.84% 4.32% 4.23% 3.09% Portfolio turnover rate................... 12.85% 9.64% 12.96% 23.96% 17.94% 24.25% 24.14% 30.62% 33.05% 42.79% Average commission rate paid(o)................ $0.003 $0.013 -- -- -- -- -- -- -- --
(Refer to following page for footnotes.) 5 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 capi- tal. 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 in- struments 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 in- vestment 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 secu- rities of any one issuer or industry, with the exception of the secu- rities of the United States government and its corporate instrumental- ities and, under the cir- - ----------- 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 ad- viser 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, 1997 and 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 3.07% and 3.70% without the effect of earnings credits for the years ended March 31, 1997 and 1996, respectively. (O)Average commission rate paid is expressed on a per share basis. Not all commissions are computed on a per share basis; therefore, commissions ex- pressed as a percentage of transactions may be higher. Due to the new Secu- rities and Exchange Commission disclosure guidelines, average commissions per share are calculated only for the years ended March 31, 1997 and 1996, and not for the prior periods. 6 SOGEN INTERNATIONAL FUND, INC. cumstances described below, certificates of deposit and other short- term bank instruments. In fact, the Fund intends to diversify its in- vestments 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 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 ex- ceed 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 includ- ing 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 fundamen- tal policy of the Fund and may not be changed without the approval of a major- ity of the outstanding voting securities of the Fund (defined by the Invest- ment 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 repre- sented by proxy; or (ii) more than 50 percent of the outstanding voting secu- rities 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 Direc- tors. Pursuant to these policies, the Fund, among other things, does not in- tend, with respect to 100% of its assets, to purchase securities of any issu- er, other than the United States government and its corporate instrumentali- ties if, immediately after such purchase, more than 5% of the value of its to- tal 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 repa- triated 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 coun- tries. 7 SOGEN INTERNATIONAL FUND, INC. 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. ("SGAM 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 per- spective to accept the investment risks involved. As with any long-term in- vestment, the value of shares when sold may be higher or lower than when pur- chased. FOREIGN INVESTMENTS. While investment by the Fund on an international basis will permit share- holders to participate in economic developments abroad, such investments in- volve 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 bro- kerage costs and foreign withholding taxes. Moreover, foreign securities and their markets may not be as liquid as United States securities and their mar- kets. Investors should note that to the extent the Fund's investments are denomi- nated 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 port- folio of a fund holding similar investments which did not sell foreign curren- cies 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 other- wise experience should a foreign currency, which has been sold forward, there- after 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 se- curities may offer attractive investment opportunities, the Fund may experi- ence delays in its attempt to dispose of such securities. Moreover, 8 SOGEN INTERNATIONAL FUND, INC. registration of such securities under the Securities Act of 1933 may be re- quired 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 rat- ing and may therefore invest in instruments that could experience a default in the payment of principal and interest. The Fund may also purchase debt securi- ties 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 securi- ties is generally more limited and their prices may experience greater vola- tility 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 exam- ple, 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 compa- nies, 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. These re- strictions do not apply to certain investment companies known as private in- vestment companies and "qualified purchaser" investment companies. Investment in another investment company may involve the payment of a pre- mium 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 SGAM 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 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 SGAM Corp., 1221 Avenue of the Americas, New York, New York 10020. SGAM Corp. is a registered investment adviser which is indirectly owned by Societe Generale, one of France's largest banks. Jean-Marie Eveillard, President and Director of each of the Companies, is primarily responsible for the day-to-day management of the Companies' in- vestment portfolios. Mr. Eveillard has been a Director and President or Execu- tive Vice President of SGAM Corp. since prior to 1992. SGAM Corp. furnishes investment advice to the Funds consistent with each Fund's stated investment objective and policies. SGAM 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 SGAM Corp. a fee, paid quarterly or monthly, as indicated, at an annual rate of the average daily net assets of that Fund as follows: 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%
SGAM Corp. may waive all or a portion of its fee. 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 Com- panies 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 for- eign equity securities. For the fiscal year ended March 31, 1997, the Interna- tional Fund, Overseas Fund, Gold Fund and Money Fund paid advisory fees equal to 0.75%, 0.75%, 0.75% and 0.04%, respectively, of their average daily net as- set values, and each of the Funds' total expenses, including the advisory fee, equaled 1.21%, 1.27%, 1.45% and 0.75%, respectively, of their average daily net asset values. 10 SOGEN INTERNATIONAL FUND, INC. SOGEN FUNDS, INC. PORTFOLIO TRANSACTIONS. SGAM Corp. selects the brokers and dealers which execute orders for the pur- chase and sale of each Fund's portfolio securities. SGAM Corp. seeks to achieve "best execution" of such orders. "Best execution" means prompt and re- liable execution at the most favorable securities prices, taking into account a number of largely judgmental considerations. Consistent with the foregoing, portfolio transactions may be executed by brokers affiliated with Societe Generale so long as the commission paid to the affiliated broker is reasonable and fair compared to the commission that would be charged by an unaffiliated broker in a comparable transaction. In addition, subject to the consideration of best price and execution and to applicable regulations, SGAM Corp. may con- sider sales of the Funds' shares as a factor in the selection of brokers to execute portfolio transactions. PRINCIPAL UNDERWRITER. The Funds' shares are offered, in states and countries in which such offer is lawful, to investors either through selected securities dealers or directly by the Funds' principal underwriter, Societe Generale Securities Corporation ("SGSC"), 1221 Avenue of the Americas, New York, New York 10020. SGSC is a registered broker-dealer and an affiliate of Societe Generale. TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. DST Systems, Inc. ("DST"), P.O. Box 419324, Kansas City, Missouri, 64141- 6324, serves as transfer agent and dividend disbursing agent for each of the Funds. CAPITAL STOCK The authorized capital stock of SoGen International Fund, Inc. consists of 250,000,000 shares, all of one class and of $0.001 par value. The authorized capital stock of SoGen Funds, Inc. consists of 1 billion shares of common stock, par value $0.001 per share of which 150,000,000 shares have been desig- nated 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 share- holders. Shares have no preemptive or conversion rights and are freely trans- ferable. With respect to SoGen Funds, Inc., the Board of Directors is authorized to reclassify and issue any unissued shares of the Funds without shareholder ap- proval. Accordingly, in the future, the Directors may create additional series of shares with different investment objectives, policies or restrictions. Any issuance of shares of another series or class would be governed by the Invest- ment Company Act of 1940 and Maryland law. 11 SOGEN INTERNATIONAL FUND, INC. SOGEN FUNDS, INC. Pursuant to their By-Laws, the Companies do not generally hold annual meet- ings of shareholders. Shareholder meetings, however, will be held when re- quired 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 meet- ing 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 propor- tionate 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 In- vestment 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 sep- arately 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, CAPITAL GAIN 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 cal- culated as of the payment date. The Funds pay both income dividends and capi- tal gains distributions on a per share basis. As a result, on the ex-dividend date of such payment, the net asset value per share of the International Fund, Overseas Fund and Gold Fund will be reduced by the amount of such payment. The net asset value per share of the Money Fund is expected, however, to remain constant at $1.00 per share. Each Fund intends to qualify and has elected to be treated as a "regulated investment company" under Subchapter M of the Internal Revenue Code of 1986, as amended. To qualify, a Fund must meet certain income, diversification and distribution requirements. As a regulated investment company, a Fund generally will not be subject to federal income or excise taxes on income and capital gains distributed to shareholders within applicable time limits, although for- eign source income received by a Fund may be subject to foreign withholding taxes. 12 SOGEN INTERNATIONAL FUND, INC. SOGEN FUNDS, INC. Shareholders normally will be taxed on the dividends and capital gain dis- tributions they receive from a Fund whether received in additional shares or cash. Dividend payments representing taxable net investment income and any net short-term capital gains will be taxable as ordinary income. If any portion of the income of a Fund consists of dividends received from U.S. corporations, a portion of the dividends paid by such Fund may qualify for the dividends-re- ceived deduction available to corporate shareholders. Distributions of any net long-term capital gains designated as capital gains distributions will be tax- able 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, gener- ally 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 distri- butions 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 Ac- count Application or on a separate Form W-9 that his Social Security or Tax- payer Identification Number is correct and that he is exempt from, or is not currently subject to, backup withholding. A non-U.S. shareholder is generally subject to this 31% withholding on capital gains distributions and redemption proceeds unless he certifies on the New Account Application or on a separate Form W-8 that he is a non-resident alien and is not engaged in a trade or business in the United States regarding his Fund shares. NON-UNITED STATES SHAREHOLDERS. Under current U.S. law, the Funds will ordinarily be obligated to withhold 30% of any ordinary income dividend payments to non-U.S. shareholders unless a tax treaty exists between the U.S. and the shareholder's country of residence which provides for withholding on a different basis. Non-U.S. shareholders may incur a U.S. estate tax liability if they die owning a Fund's shares. Such shareholders should consult their tax counselors as to the tax liability they may incur to the United States as a 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. 13 SOGEN INTERNATIONAL FUND, INC. SOGEN FUNDS, INC. The foregoing information is intended for general information only. Fund distributions also may be subject to state, local and foreign taxes. Share- holders 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 to- tal return and its average annual total return. A cumulative total return re- flects 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. Be- cause average annual returns tend to smooth out variations in a Fund's re- turns, 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 as- suming the deduction of the maximum sales commission of 3.75% and the rein- vestment 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 "effec- tive yield" may be included in advertisements and communications to sharehold- ers. 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 in- come 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 ex- pressed similiarly 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 as- sumed 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. PERFORMANCE RATINGS. From time to time the Funds may discuss in sales literature and advertise- ments, their performance ratings or other information as published by recog- nized mutual 14 SOGEN INTERNATIONAL FUND, INC. SOGEN FUNDS, INC. 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 to- tal number of shares outstanding at the time of such computation. In the case of the International Fund, Overseas Fund and Gold Fund, portfo- lio securities are valued primarily based on market quotations where avail- able. 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 and Automatic Exchange Program each requires a minimum initial investment of $100 per Fund (see "Shareholder Services") 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. "Starter" checks and third-party checks will not be accepted for purposes of opening a new account. The minimum amount for sub- sequent investments is $100 per Fund. A Fund's shares may be purchased through authorized dealers or through SGSC, the Funds' underwriter. A completed and signed application is required for the initial account opened with the Funds. If there is no application accompanying this Prospectus, call (800) 334-2143 to obtain one. 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 addi- tional New Account Applications from such authorized dealers. For a list of authorized dealers, please contact the SGSC at (212) 278-5800. 15 SOGEN INTERNATIONAL FUND, INC. SOGEN FUNDS, INC. Financial service firms that do not have a sales agreement with SGSC also may place orders for purchases of a Fund's shares, but may charge the investor a transaction fee in addition to the applicable sales load. Authorized dealers and financial service firms are responsible for promptly transmitting purchase orders to SGSC. PURCHASES THROUGH SGSC. Shares of a Fund may be purchased through SGSC by mailing a check made pay- able to The SoGen Funds along with the completed New Account Application to The SoGen Funds, c/o DST, P.O. Box 419324, Kansas City, MO 64141-6324. Shares may also be purchased through SGSC by Automated Clearing House ("ACH") transfer or by bank wire. Please call (800) 334-2143 for procedures as to how to establish and administer the ACH purchase option, and please call prior to wiring any funds. See "Shareholders' Reference Guide" at the back of this Prospectus for wiring instructions. PUBLIC OFFERING PRICE. The public offering price at which transactions will be effected will be equal to the net asset value per share plus, in the case of the International Fund, Overseas Fund and Gold Fund, a sales charge as described below. The net asset value per share of the Money Fund is expected to remain constant at $1.00 per share. Orders for shares received by DST prior to the close of trading on the NYSE, or orders received by dealers prior to such time and transmitted to SGSC prior to the latter's close of business, will be effected based on the net asset value determined as of the close of trading on the NYSE that day. Net as- set value per share is calculated as set forth in the section of this Prospec- tus entitled "Net Asset Value." The sales charges currently in effect are as follows:
SALES CHARGE DEALER SALES CHARGE EXPRESSED AS DISCOUNT AS AS PERCENT OF APPROXIMATE PERCENT OF PUBLIC OFFERING PERCENT OF NET PUBLIC OFFERING INVESTMENT AMOUNTS PRICE AMOUNT INVESTED PRICE - ------------------ --------------- --------------- --------------- Less than $25,000............. 3.75% 3.90% 3.35% $25,000 or more but less than $50,000..................... 3.25% 3.35% 2.85% $50,000 or more but less than $100,000.................... 2.75% 2.83% 2.35% $100,000 or more but less than $500,000.................... 2.00% 2.04% 1.60% $500,000 or more but less than $1,000,000.................. 1.00% 1.01% 0.80% $1,000,000 and over........... 0.00% 0.00% 0.00%
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 promo- tional incen- 16 SOGEN INTERNATIONAL FUND, INC. SOGEN FUNDS, INC. tives, to dealers selling a Fund's shares. Such additional promotional incen- tive may include financial assistance in connection with pre-approved confer- ences or seminars, sales or training programs for invited sales personnel and payment for travel expenses for such seminars or training programs. In some instances the entire reallowance or incentives may be offered only to certain dealers which have sold or may sell significant amounts of a Fund's shares. Authorized dealers to whom substantially the entire sales charge is reallowed may be deemed to be underwriters as that term is defined under the Securities Act of 1933. SGAM Corp. may from time to time pay a concession to a dealer which employs a registered representative whose client invests in a Fund. Such amount will be paid from the resources of SGAM Corp. REDUCING THE SALES CHARGE. As shown in the table above, the size of the total investment in a Fund will affect the sales charge. Described below are several methods to reduce the ap- plicable sales charge. In order to obtain a reduction in the sales charge, an investor must notify, at the time of purchase, his dealer, SGSC or DST of the applicability of one of the following: AGGREGATION. The investment schedule above applies to the total amount being invested by any "person," which term includes an individual, his spouse, par- ents and children; a trustee or other fiduciary purchasing for a single trust, estate or single fiduciary account (including a pension, profit-sharing or other employee benefit trust created pursuant to a plan qualified under the Internal Revenue Code) although more than one beneficiary is involved; or any U.S. bank or investment adviser purchasing shares for its investment advisory clients or customers. Any such person purchasing for several accounts at the same time, may combine these investments into a single transaction in order to reduce the applicable sales charge. Individual accounts and corporate/partnership accounts may not be aggregated for purposes of reducing the sales charge. CONCURRENT PURCHASES. The sales load associated with an investment may be reduced by combining concurrent purchases of shares of the International Fund, Overseas Fund and Gold Fund and shares of other funds advised by SGAM Corp., offered subsequent to the date of this Prospectus subject to a sales load ("SoGen Load Funds"), by any "person," as described above in "Aggregation". The concurrent purchase discount does not apply to purchases of 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 in "Aggregation") who is already a 17 SOGEN INTERNATIONAL FUND, INC. SOGEN FUNDS, INC. 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 al- ready 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 Ac- cumulation, the investor must notify his dealer, SGSC or DST at the time of purchase that he wishes to take advantage of such entitlement, and give the numbers of his accounts, and those accounts held in the name of his spouse, parents or children, and the specific relationship of each such other person to the investor. LETTER OF INTENTION. A person (as defined above in "Aggregation") may also qualify for a reduced sales charge by completing the Letter of Intention (the "Letter") contained in the New Account Application or a form for this purpose which may be obtained by contacting the Funds at (800) 334-2143. This enables the investor to aggregate purchases of shares of any SoGen Load Fund during a thirteen-month period for purposes of calculating the applicable sales charge. Applicable shares of any SoGen Load Fund currently owned by the investor will be credited as purchases toward the completion of the Letter at the greater of their net asset value on the date the Letter is executed or their cost. No retroactive adjustment will be made if purchases exceed the amount indicated in the Letter. For each investment made, the investor must notify his dealer, SGSC or DST that a Letter is on file along with all account numbers associated with the Letter. The Letter is not a binding obligation on the investor. However, 5% of the amount specified in the Letter will be held in escrow, and if the investor's purchases are less than the amount specified, the investor will be requested to remit to the appropriate Fund an amount equal to the difference between the sales charge paid and the sales charge applicable to the aggregate purchases actually made. If not remitted within 20 days after written request, an appro- priate number of escrowed shares will be redeemed in order to realize the dif- ference. However, the sales charge applicable to the investment will in no event be higher than if the shareholder had not submitted a Letter. Either the shareholder or the Company may cancel the arrangement at will. SALES AT NET ASSET VALUE. 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 of authorized dealers, the spouse, parents or children of such person, or to any trust, pension, profit- sharing or other benefit plan for only such persons, (ii) to banks or trust companies or their affiliates when the bank, trust company or affiliate is au- thorized to make investment decisions on behalf of a client, (iii) to invest- ment advisers and financial planners who place trades for 18 SOGEN INTERNATIONAL FUND, INC. SOGEN FUNDS, INC. their own accounts or the accounts of their clients and who charge a manage- ment, consulting or other fee for their services, (iv) to clients of such in- vestment advisers and financial planners who place trades for their own ac- counts if the accounts are linked to the master account of such investment ad- viser or financial planner on the books and records of the broker, agent, in- vestment adviser or financial institution, and (v) to retirement and deferred compensation plans and trusts used to fund those plans, including, but not limited to, those defined in Section 401(a), 403(b) or 457 of the Internal Revenue Code and "rabbi trusts." Investors may be charged a fee if they effect transactions in Fund shares through a broker or agent. Shares of the Funds may also be sold at net asset value to current officers, directors and employees of the Companies, SGAM Corp., SGSC, U.S. branches and affiliates of Societe Generale, employees of certain firms providing services to the Funds (such as the custodian and the shareholder servicing agent), and to the spouse, parents and children of any such person, or to any trust, pension, profit-sharing or other benefit plan for only such persons. A Fund may also issue shares at net asset value in connection with the acquisition of, or merger or consolidation with, another investment company. The sales of shares at net asset value de- scribed in this section are made upon the written assurance of the purchaser that the purchase is made for investment purposes and that the shares will not be resold except through redemption. Such notice must be given to SGSC or DST at the time of purchase on a form for this purpose as available from the Funds. REINSTATEMENT PRIVILEGE. In addition, an investor is entitled to a one-time per account privilege to reinvest in any SoGen Load Fund, the proceeds of a full or partial redemption of shares from a SoGen Load Fund at the then applicable net asset value with- out payment of a sales charge. To exercise this privilege the investor must submit to SGSC or DST, within 30 calendar days after the redemption, both a written request for reinstatement and a check or bank wire in an amount not exceeding the redemption proceeds. An investor may also transfer an investment in any SoGen Load Fund to an IRA or other tax qualified retirement plan ac- count in any SoGen Load Fund without payment of a sales charge. Such a trans- fer involves a redemption of a Fund's shares and a reinvestment of the pro- ceeds and, hence, may involve a taxable transaction for income tax purposes. Reinstatement will not prevent recognition of a gain realized on the redemp- tion, 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 rein- statement privilege if the shares redeemed were held for 90 days or less, or if a shareholder reinvests in the Funds within 30 days. BOOKSHARE ACCOUNT PLAN. To facilitate the handling of transactions with shareholders, the Funds use a bookshare account plan for shareholder accounts. DST, as the Funds' transfer agent, automatically opens and maintains an account for each of the Funds' shareholders 19 SOGEN INTERNATIONAL FUND, INC. SOGEN FUNDS, INC. directly registered with a Fund. All interests in shares, full and fractional (rounded to three decimal places), are reflected in a shareholder's book ac- count. After any purchase, a confirmation is mailed to the shareholder indicat- ing the amount of full and fractional shares purchased, the price per share and a statement of his account. Stock certificates will not be issued unless the shareholder submits a written request to that effect to DST. (No stock certifi- cates will be issued for the Money Fund or tax-sheltered accounts.) 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 pur- chase of shares and to cancel any purchase due to nonpayment. Share purchases are not binding on the Companies or SGSC until they are confirmed by DST as paid. All payments must be made in U.S. dollars, and all checks must be drawn on U.S. banks. No cash will be accepted. As a condition of this offering, if an investor's purchase is canceled due to nonpayment or because his check or ACH transfer does not clear, the investor will be responsible for any loss a Fund incurs as a result thereof. RULE 12B-1 PLAN. (INTERNATIONAL FUND, OVERSEAS FUND AND GOLD FUND). The International Fund, Overseas Fund and Gold Fund have each adopted a Dis- tribution Plan and Agreement (the "Plan") pursuant to Rule 12b-1 under the In- vestment Company Act of 1940. Under the Plan, each Fund may pay SGSC a quar- terly distribution related fee at an annual rate not to exceed 0.25% of the av- erage 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 redemp- tion 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. 20 SOGEN INTERNATIONAL FUND, INC. SOGEN FUNDS, INC. Shareholders may redeem either through authorized dealers, through SGSC 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 re- demption 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 particu- lar requirements concerning redemptions. Accordingly, shareholders should con- tact their authorized dealers for more information. REDEMPTIONS THROUGH SGSC. Shareholders may redeem their Fund shares through SGSC by transmitting writ- ten redemption instructions to The SoGen Funds, c/o DST, P.O. Box 419324, Kan- sas City, MO 64141-6324. REDEMPTIONS BY TELEPHONE. Unless contrary instructions are elected in the New Account Application or Special Options Form, shareholders may redeem a Fund's shares in non-retire- ment accounts by telephone by calling DST at (800) 334-2143. Telephone redemp- tion 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 should send written notification, signed by all of the ac- count's registered shareholders and accompanied by a signature guarantee, to DST at the address listed above. (See "Redemption Price" below for acceptable guarantors. See "Receiving Redemption Proceeds" below for change of address procedures.) There is a $100,000 maximum on telephone redemptions by check. There is no limitation on redemptions by ACH transfer or by bank wire; howev- er, a fee will be deducted from proceeds sent by bank wire. Telephone redemp- tion privileges may be difficult to implement and may be modified or suspended without notice during periods of drastic economic or market changes. DST has instituted procedures it believes are reasonably designed to ensure that re- demption instructions communicated by telephone are genuine, and could be lia- ble for losses caused by unauthorized or fraudulent instructions in the ab- sence of such procedures. DST will require a form of personal identification prior to acting upon telephone instructions, will provide a written confirma- tion of such transaction and 21 SOGEN INTERNATIONAL FUND, INC. SOGEN FUNDS, INC. will record a shareholder's instructions. TELEPHONE REDEMPTION PRIVILEGES MAY BE MODIFIED OR TERMINATED AT ANY TIME BY THE COMPANIES UPON 60 DAYS' WRITTEN NOTICE TO SHAREHOLDERS. REDEMPTION PRICE. Orders to redeem shares received in proper form by DST prior to the close of trading on the NYSE, or redemption orders received by dealers prior to such time and transmitted to SGSC prior to the latter's close of business, will be effected at the net asset value determined as of the close of trading on the NYSE that day. Redemption requests must meet all the following requirements to be consid- ered in proper form: 1. Written and signed instructions from the registered owner(s) must be received by DST (except for telephone redemptions). 2. A letter or a stock power signed by the registered owner(s) must be signature guaranteed by an acceptable guarantor. A guarantee is re- quired for such redemptions to be paid by check greater than $100,000, or where the redemption proceeds are to be sent to an address other than the address of record, to a person other than the registered shareholder(s) for the account or to a bank account number other than the one previously designated by the shareholder. A signature guarantee is not required for any amount redeemed by ACH transfer or bank wire when a pre-designated bank has been identified by the shareholder. Any one of the following guarantors is normally acceptable: (a) a commer- cial bank or trust company; (b) a member firm of a domestic stock ex- change; (c) a foreign branch of any institution included in paragraph (a) or (b); (d) a national securities exchange; or (e) a savings asso- ciation. Guarantees from a notary public are not acceptable. 3. All certificates, if any, to be redeemed must be received by DST. 4. In the case of shares held of record in the name of a corporation, trust, fiduciary or partnership, evidence of authority to sign and a stock power with signature(s) guaranteed must be received by DST. RECEIVING REDEMPTION PROCEEDS. Payment of the redemption price will generally be made within three business 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 emer- gency, as defined by the rules of the SEC, exists, making disposal of portfo- lio securities or determination of a Fund's net asset value not reasonably practicable. 22 SOGEN INTERNATIONAL FUND, INC. SOGEN FUNDS, INC. The Funds will not mail redemption proceeds for any shares until checks or ACH transfers received in payment for such shares have cleared, which may take up to fifteen days. Investors who wish to avoid any such delay should purchase shares by bank wire. In addition, any change of address will require a fif- teen-day holding period before the proceeds of any redemption will be released to the new address. Shareholders will have the ability to use the exchange privilege during this holding period. Shareholders can avoid the fifteen-day holding period if either the redemption or change of address request is signed by all registered owners and is accompanied by a signature guarantee for each owner. The fifteen-day holding period can also be avoided by establishing bank wire redemption instructions through the New Account Application or Special Options Form. Redemption proceeds are normally paid in the form of a check. Proceeds can also be sent to a shareholder's bank account by ACH transfer or by bank wire when a pre-designated bank has been identified in the New Account Application or Special Options Form. Proceeds sent by ACH transfer should gen- erally be credited to a shareholder's account on the second business day after the redemption. Proceeds sent by bank wire should be credited on the business day following the redemption; however, a fee will be deducted from such pro- ceeds. 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 a loss may be recognized for tax purposes. MINIMUM ACCOUNT SIZE. Due to the relatively high cost of maintaining smaller accounts, the Compa- nies reserve the right to redeem shares in any account if the value of that account drops below $500, except accounts for shareholders currently partici- pating in the Automatic Investment Program described below. A shareholder will be allowed at least 60 days to make an additional investment to bring his ac- count 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 shares of other SoGen Load Funds. Such shares exchanged will be valued at their respective net asset val- ues 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 ex- change privilege is available to shareholders resident in any state in which the shares of the Fund being acquired may legally be sold. A shareholder wish- ing to utilize the exchange privilege should read the prospectus of the Fund being acquired. 23 SOGEN INTERNATIONAL FUND, INC. SOGEN FUNDS, INC. There is no charge for the exchange privilege. Any exchange, however, must meet the applicable minimum investment amount for the Fund into which the ex- change is being made. The minimum initial investment amount for the Interna- tional Fund, Overseas Fund and Gold Fund, whether by exchange or purchase, is $1,000. The minimum initial investment amount for the Money Fund is $10,000 directly and $1,000 by exchange. All subsequent amounts exchanged must be $100 or more. Upon exchanges of shares of the Money Fund for shares of any SoGen Load Fund, payment of the applicable sales load must be made unless a sales load has already been paid on such shares. For additional information concern- ing exchanges or to effect exchanges, contact the Funds at (800) 334-2143. Exchanges by telephone may be difficult to implement in times of drastic economic or market changes. The exchange privilege should not be used to take advantage of short-term swings in the securities markets. The Companies re- serve the right to limit or terminate the exchange privilege as to any share- holder who makes exchanges more than four times a year (other than through the Automatic Exchange Program or a similar periodic investment program). The Com- panies can modify or revoke the exchange privilege for all shareholders upon 60 days' prior written notice or without notice in times of drastic economic or market changes. AUTOMATIC EXCHANGE PROGRAM. Shareholders who wish to automatically exchange shares of one Fund for an- other on a monthly basis can do so by means of the Automatic Exchange Program. The minimum exchange amount is $100. If the balance in the account the share- holder is exchanging from falls below the designated automatic exchange amount, all remaining shares will be exchanged and the program will be discon- tinued. All other conditions with respect to exchange transactions apply as discussed in "Exchange Privilege" above. TELEPHONE PRIVILEGES. Unless contrary instructions are elected in the New Account Application or Special Option Form, the account will be entitled to make telephone redemp- tions, exchanges and account maintenance requests. Neither the Companies nor their agents will be liable for following instructions communicated by tele- phone that are reasonably believed to be genuine. Reasonable procedures will be employed on behalf of each Fund to confirm that the instructions are genu- ine. Such procedures include, but are not limited to, written confirmation of telephone transactions, tape recording telephone conversations and requiring specific personal information prior to acting upon telephone instructions. Any owner(s), trustee(s) or other fiduciary entity as indicated in the ac- count registration, investment professional of record and/or other parties that can provide specific personal information will be allowed to initiate any of the above referenced telephone transactions. Personal information may in- clude a combination of the following items: (i) the fund and account number, (ii) the account registration, (iii) the 24 SOGEN INTERNATIONAL FUND, INC. SOGEN FUNDS, INC. social security or tax identification number on the account, (iv) the address of record and any other information deemed appropriate to allow access to the account. Certain retirement accounts are not eligible for all the telephone privi- leges referenced above. Please call (800) 334-2143 with all inquiries pertain- ing to the legal requirements for any transaction. AUTOMATIC INVESTMENT PROGRAM. Investors may make regular semi-monthly, monthly or quarterly investments of $100 (or more) in shares of a Fund, automatically from a checking or savings account. Upon written authorization, DST will debit the investor's account as indicated and use the proceeds to purchase shares of a Fund for the investor's account. Because approval by the investor's bank is required, establishment of an Automatic Investment Program may require at least thirty days. To establish an Automatic Investment Program, indication must be made on the New Account Application or Special Options Form, and a check (minimum $100 if a new ac- count is being established), savings account deposit slip or savings account statement must be forwarded to DST. Shares purchased through Automatic Invest- ment Program payments are subject to the redemption restrictions for recent purchases described in "How to Redeem Shares." The Companies may amend or cease to offer the Automatic Investment Program at any time. DIVIDEND DIRECTION PLAN. Shareholders in a Fund may elect to have income dividends and capital gains distributions on their Fund shares invested without the payment of any sales charge in shares of the Money Fund or shares of any SoGen Load Fund in which they have an existing account and maintain a minimum account balance. All div- idends and distributions so invested are taxable for U.S. federal income tax purposes as though received in cash. For further information about this privi- lege, contact DST in writing at the appropriate address listed on page 16 or by telephone at (800) 334-2143. SYSTEMATIC WITHDRAWAL PLAN. A shareholder who owns shares of a Fund with a current net asset value of $10,000 or more may use those shares to establish a Systematic Withdrawal Plan to receive a monthly or quarterly check in a stated amount of not less than $50 on or about the 25th day of the month. Dividends and distributions on shares invested under a Systematic Withdrawal Plan may not be taken in cash but must be reinvested, which will be done at net asset value. A Fund's shares will be redeemed as necessary to meet withdrawal payments. Withdrawals in ex- cess of dividends and distributions will reduce and may deplete the invested principal and may result in a gain or loss for tax purposes. Purchases of ad- ditional shares made concurrently with withdrawals of shares are undesirable because of sales charges incurred when pur - 25 SOGEN INTERNATIONAL FUND, INC. SOGEN FUNDS, INC. chases are made. Accordingly, a shareholder may not maintain a Systematic Withdrawal Plan while simultaneously making regular purchases. New accounts established by check after the 10th of the month, will not begin distribution until the following month due to the fifteen-day hold on check 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 ben- efits of these plans may not be available for all persons. Investors should consult their tax advisers regarding their eligibility. For appropriate applications, please contact the Funds at (800) 334-2143. SHAREHOLDER STATEMENTS AND REPORTS. A confirmation statement is mailed to shareholders for each transaction in a Fund, and a summary statement and tax reporting are provided at year end. Each Fund also provides shareholders with an annual Prospectus as well as annual and semi-annual reports. ACCOUNT MAINTENANCE. Shareholders will often need to update certain account information during their relationship with the Funds. Please call (800) 334-2143 with any ques- tions concerning the legal requirements necessary to execute your request. INQUIRIES For information on how to buy shares of a Fund or to request additional lit- erature about any of the Funds, or for account information, shareholder serv- ices or information on how to redeem shares, please call (800) 334-2143. 26 SOGEN FUNDS, INC. SOGEN INTERNATIONAL FUND, INC. SHAREHOLDERS' REFERENCE GUIDE TELEPHONE NUMBERS: For Fund Information, Account & Shareholder Services (800) 334-2143 MAIL: Direct Purchases, Redemptions and Account Updates: The SoGen Funds c/o DST Systems, Inc. P.O. Box 419324, Kansas City, MO 64141-6324 Overnight Mail: The SoGen Funds c/o DST Systems, Inc. 1004 Baltimore Kansas City, MO 64105-1807 WIRING INSTRUCTIONS: You may wire funds to us at: IFTC, Kansas City, MO ABA Routing #101003621 Account #7534116 Reference: (Your account number and trade confirmation number) To avoid rejection of your wire, you must inform us of your intention to wire when you place your purchase order AND include your SoGen Fund account number and the trade confirmation number in the reference section of the wire. AUTOMATIC INVESTMENT PROGRAM--regular investments of at least $100, automat- ically from your checking or savings account. Because approval by your bank is required, establishment of an Automatic Investment Program may require at least thirty days. See the "Automatic Investment Program" section of the Pro- spectus for details. SYSTEMATIC WITHDRAWAL PLAN--With a minimum net asset value of $10,000, you may establish a Systematic Withdrawal Plan to receive, not less than $50, on a monthly or quarterly basis. Distributions are made on or about the 25th of the month. New accounts established by check after the 10th of the month, will not begin distribution until the following month due to the fifteen-day hold on check purchases. Please see the "Systematic Withdrawal Plan" section of the Prospectus for details. INVESTMENT THROUGH ACH--A convenient way for you to invest or redeem shares in your SoGen Fund account. Please contact your financial representatives or the Funds directly at (800) 334-2143 for further information. 27 SOGEN INTERNATIONAL FUND, INC. SOGEN FUNDS, INC. 1221 AVENUE OF THE AMERICAS NEW YORK, NY 10020 INVESTMENT ADVISER ------------------ Societe Generale Asset Management Corp. 1221 Avenue of the Americas New York, NY 10020 UNDERWRITER ----------- Societe Generale Securities Corporation 1221 Avenue of the Americas New York, NY 10020 (212) 278-5800 LEGAL COUNSEL ------------- Dechert Price & Rhoads 30 Rockefeller Plaza New York, NY 10112 INDEPENDENT AUDITORS -------------------- KPMG Peat Marwick LLP 345 Park Avenue New York, NY 10154 DOMESTIC CUSTODIAN ------------------ Investors Fiduciary Trust Company 127 West 10th Street Kansas City, MO 64105 GLOBAL CUSTODIAN ---------------- The Chase Manhattan Bank 4 Chase MetroTech Center Brooklyn, NY 11245 SHAREHOLDER SERVICING AGENT --------------------------- DST Systems, Inc. P.O. Box 419324 Kansas City, MO 64141-6324 (800) 334-2143 [LOGO OF SOGEN APPEARS HERE] SoGen International Fund, Inc. ------------------------------ SoGen Funds, Inc. 1221 Avenue of the Americas New York, NY 10020 SGC1 STATEMENT OF ADDITIONAL INFORMATION SOGEN INTERNATIONAL FUND, INC. ------------------------- [LOGO OF SOGEN APPEARS HERE] 1221 AVENUE OF THE AMERICAS NEW YORK, NY 10020 (800) 334-2143 ---------------- Societe Generale Asset Management Corp. 1221 Avenue of the Americas New York, NY 10020 Investment Adviser 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 in- vestment company, in addition to the information contained in the Prospectus of the Fund dated July 31, 1997. 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 call- ing the Fund at (800) 334-2143. ---------------- July 31, 1997 TABLE OF CONTENTS
CROSS- STATEMENT OF REFERENCED ADDITIONAL TO CAPTIONS IN INFORMATION THE PROSPECTUS PAGE PAGE ------------ -------------- ORGANIZATION OF THE FUND........................... 3 6 INVESTMENT OBJECTIVE, POLICY AND RESTRICTIONS...... 3 6 MANAGEMENT OF THE FUND............................. 8 10 INVESTMENT ADVISER AND OTHER SERVICES.............. 9 10 DISTRIBUTION OF THE FUND'S SHARES.................. 10 20 COMPUTATION OF NET ASSET VALUE..................... 12 15 HOW TO PURCHASE SHARES............................. 12 15 TAX STATUS......................................... 13 12 BROKERAGE ALLOCATION............................... 16 11 CUSTODY OF PORTFOLIO............................... 17 -- INDEPENDENT AUDITORS............................... 17 -- FINANCIAL STATEMENTS............................... 17 --
2 ORGANIZATION OF THE FUND SoGen International Fund, Inc. (the "Fund"), an open-end diversified manage- ment 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. ("SGAM Corp."), which was incorporated in Delaware in February 1990. SGAM Corp. is a registered invest- ment 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 ex- penses. 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 out- standing 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 share- holders of the Fund by vote of the directors then in office if immediately af- ter filling such vacancy at least two-thirds of the directors then holding of- fice 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 communi- cate with other shareholders of such trusts and to vote upon the removal of trustees upon the request in writing by the record holders of not less than 10 percent of the outstanding shares of the trust, to apply to investment compa- nies, such as the Fund, that are incorporated under Maryland law. INVESTMENT OBJECTIVE, POLICY AND RESTRICTIONS The investment objective of the Fund is to provide long-term growth of capi- tal. 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 in- struments 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, be- cause 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 perfor- mance 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 3 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. Since the risk of default is generally higher among lower-rated or unrated bonds, SGAM Corp.'s research and analysis are especially important in the se- lection 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, SGAM Corp. does not rely on ratings, which in any event evaluate only the safety of principal and interest, not market value risk, and which, fur- thermore, 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 advan- tages, 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 denomi- nated 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 curren- cy, 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 for- eign investments and may not otherwise trade in the currencies of foreign countries. Accordingly, the Fund may not sell forward the currency of a par- ticular 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 op- erating 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 in- vestments 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. More- over, 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 in- vestment 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 con- tract 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 appropri- ate by SGAM Corp. The Fund may also hedge in connection with the purchase and sale of foreign securities in which case the Fund's foreign subcustodian en- ters into a forward contract to hedge the related currency between the trade date and the settlement date for the purchase or sale transaction. 4 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 re- sold in a liquid dealer or institutional trading market, but the Fund may ex- perience 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 such registration if the issuer of such securities has not previously reg- istered or agreed to register such securities at its own expense. Where registration is required, a considerable period of time may elapse be- tween 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 state- ment. 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 par- ticular 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 securi- ties, 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 se- curity. Notwithstanding the above, the Fund may purchase securities that have been privately placed but that are eligible for purchase and sale under Rule 144A under the 1933 Act. That rule permits certain qualified institutional buyers, such as the Fund to trade in privately placed securities that have not been registered for sale under the 1933 Act. SGAM Corp., under the supervision of the Board of Directors of the Fund, will consider whether securities purchased under Rule 144A are illiquid and thus subject to the Fund restriction on in- vesting in illiquid securities. A determination as to whether a Rule 144A se- curity is liquid or not is a factual issue requiring an evaluation of a number of factors. In making this determination, SGAM Corp. will consider the trading markets for the specific security, taking into account the unregistered nature of a Rule 144A security. In addition, SGAM Corp., could consider (1) the fre- quency of trades and quotes, (2) the number of dealers and potential purchas- ers, (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 deter- mine 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. Invest- ing 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 addi- tion 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. Fur- ther, 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 redemp- tion 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 re- strictions 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 5 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 se- curities of the United States government and its corporate instrumental- ities and, under the circumstances described below, certificates of de- posit 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 in- struments except to the extent deemed appropriate for the short-term in- vestment of cash or as a temporary defensive measure. The Fund will limit its purchases of certificates of deposit and other short-term bank instruments to those issued by United States banks and savings and loan associations, including foreign branches of such banks, and United States branches or agencies of foreign banks, which have total assets (as of the date of their most recently published financial statements) of at least $1 billion. 2. 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 sell- ing portfolio securities as part of an offering registered under the Se- curities Act of 1933. 5. It may not purchase or sell real estate or interests therein, commodi- ties or commodity contracts. It may, however, invest in real estate in- vestment trusts and companies holding real estate and may sell commodi- ties 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 commodi- ty.) 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 obli- gations that are publicly distributed, or from investing up to an aggre- gate 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 obliga- tions of a type privately placed with financial institutions or (b) lending portfolio securities, provided that the Fund may not lend secu- rities 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 govern- ment and its corporate instrumentalities if, immediately after such pur- chase, 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, immedi- ately after such purchase, more than 10% of the value of its net assets would be invested in such securities. - -------- * The Fund has no present intention of lending portfolio securities. 6 4. Invest in the securities of a company for the purpose of exercising con- trol over or management of such company. 5. Purchase securities on margin. 6. Write put and call options. 7. 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 unat- tached warrants not listed on the New York or American Stock Exchange if, immediately after such purchase, more than 2% of the Fund's net as- sets would be invested in such unattached, unlisted warrants. 8. Purchase interests in oil, gas or other mineral exploration programs or leases; however, this policy will not prohibit the acquisition of secu- rities 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 govern- ment obligations include Treasury Notes, Bonds and Bills which are direct ob- ligations 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 Trea- sury 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, 1987 to March 31, 1997 would have increased at an average annual compounded rate of return of 10.19%. Quotations of average annual returns for each fund will be expressed in terms of the average annual compounded rates of return of a hypo- thetical investment in the fund over periods of 1, 5 and 10 years, 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, 1992 to March 31, 1997 would have increased at an average annual compounded rate of return of 12.16% and an investment in the Fund over the period from March 31, 1996 to March 31, 1997 would have increased at an average annual rate of 5.37%. 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 serv- ices, 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 Mu- tual 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 divid- ing the lesser of the cost of purchases or the proceeds from sales of portfo- lio 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, 1996 and 1997 were 9.64%, and 12.85%, 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. 7 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 ex- ecution of the policies formulated by the Board of Directors. Several of the directors and officers of the Fund are directors or officers of SGAM Corp., SGSC or Societe Generale, Paris, France, the indirect owner of one hundred percent (100%) of the outstanding voting securities of SGAM Corp., and the owner of fifty percent (50%) of the outstanding voting securities of SGSC. Jean-Marie Eveillard, the President and a director of the Fund, owns 100% of SGAM Corp.'s non-voting Series B common stock which represents 19.9% of the total capital of SGAM Corp. The following table sets forth the principal occupation or employment of the members of the Board of Directors and principal officers of the Fund. Each of the following persons is also a director and/or officer of SoGen Funds, Inc. and SoGen Variable Funds, Inc.
POSITION HELD PRINCIPAL OCCUPATION NAME AND ADDRESS WITH THE FUND DURING PAST FIVE (5) YEARS ---------------- ------------- -------------------------- Philippe Collas* Chairman of the Board Head of Asset Management at 17, cours Valmy and Director Societe Generale since September 92972 Paris, 1995. Head of Human Resource France Management at Societe Generale from prior to 1992. Jean-Marie President and Director Director and President or Eveillard*,(1) Executive Vice President of SGAM 1221 Avenue of the Corp. from prior to 1992. Americas New York, NY 10020 Fred J. Meyer(2) Director Chief Financial Officer of 437 Madison Avenue Omnicom Group Inc. from prior to New York, NY 10022 1992. Director of Novartis Corporation, and Zurich-American Insurance Cos. Dominique Raillard(2) Director President of Act 2 International 15, boulevard Delessert (consulting) since July 1995. 75016 Paris, France Group Executive Vice President of Promodes (consumer products) -- U.S. Companies Divisions from prior to 1992 to 1995. Nathan Snyder(1),(2) Director Independent Consultant from prior 163 Parish Rd. S. to 1992 New Canaan, CT 06840 Philip J. Bafundo* Vice President, Secretary and Treasurer, SGAM 1221 Avenue of the Secretary and Treasurer Corp. from prior to 1992. Americas Certified Public Accountant (New New York, NY 10020 York). Ignatius Chithelen* Vice President Securities Analyst, SGAM Corp. 1221 Avenue of the since October 1993. Reporter at Americas Forbes from prior to 1992 to New York, NY 10020 April 1992. Private investor from May 1992 to September 1993. Sean J. McKeown Vice President Operations Manager, SGAM Corp. 1221 Avenue of the since June 1997. Vice President, Americas Citibank Investment Products & New York, NY 10020 Distribution from October 1993 to June 1997. Vice President, Citicorp Investment Services from prior to October 1993. Catherine A. Shaffer* Vice President First Vice President, SGSC from 1221 Avenue of the prior to 1992. Americas New York, NY 10020 Edwin S. Olsen* Vice President Vice President, SGSC from prior 1221 Avenue of the to 1992. Americas New York, NY 10020
8
POSITION HELD PRINCIPAL OCCUPATION NAME AND ADDRESS WITH THE FUND DURING PAST FIVE (5) YEARS ---------------- ------------- -------------------------- Elizabeth Tobin* Vice President and Securities Analyst, SGAM Corp. 1221 Avenue of the Assistant Secretary from prior to 1992. Americas New York, NY 10020 Charles de Vaulx* Vice President Securities Analyst, SGAM Corp. 1221 Avenue of the from prior to 1992. Americas New York, NY 10020
- -------- * 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. 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 SGAM 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 con- nection with services he may perform for the Fund. During the fiscal year ended March 31, 1997, an aggregate of $36,000 was paid or accrued for direc- tors' fees and expenses. See Note 2 of Notes to Financial Statements on page 29 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, 1997. 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 Direc- tors," 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, 1997
PENSION OR TOTAL RETIREMENT COMPENSATION BENEFITS ESTIMATED FROM AGGREGATE ACCRUED ANNUAL REGISTRANT COMPENSATION AS PART OF BENEFITS AND FUND FROM FUND UPON COMPLEX PAID NAME OF PERSON, POSITION REGISTRANT EXPENSES RETIREMENT TO DIRECTORS - ------------------------ ------------ ---------- ---------- ------------ Fred J. Meyer*, Director...... $11,000 N/A N/A $25,000(3) Jean-Marie Eveillard**, Director and President....... $ -- N/A N/A $ -- Dominique Raillard*, Director..................... $12,000 N/A N/A $27,000(3) Nathan Snyder*, Director...... $12,000 N/A N/A $28,000(3) Philippe Collas**, Director and Chairman................. $ -- N/A N/A $ --
- -------- * Member of the Audit Committee. ** "Interested person" of the Fund, as defined in the Act, because of the af- filiation with SGAM Corp., the Fund's investment adviser. As of June 30, 1997, the officers and directors of the Fund owned less than 1% of the outstanding shares of capital stock of the Fund. The following per- sons owned of record 5% or more of the outstanding shares of capital stock of the Company as of June 30, 1997:
TYPE OF OWNERSHIP OWNER SHARE OWNERSHIP ----------------- ----- --------------- Of Record Only Charles Schwab & Co. Inc. 18.07% 101 Montgomery Street San Francisco, CA 94104-4122
INVESTMENT ADVISER AND OTHER SERVICES As described in the Fund's Prospectus, SGAM Corp. is the Fund's investment adviser and, as such, manages the Fund's portfolio. SGAM Corp. was incorpo- rated in Delaware in February 1990, and is indirectly wholly owned by Societe Generale, one of France's largest banks. SGAM Corp. employs certain individu- als who 9 previously served as key personnel performing securities analysis for the in- vestment advisory division of SGSC, the Fund's principal underwriter and for- mer investment adviser. The persons named below are affiliated with the Fund and are also affiliated persons of SGAM Corp., SGSC or Societe Generale. The capacity in which such persons are affiliated with the Fund and SGAM Corp., SGSC or Societe Generale is also indicated.
OFFICE HELD WITH SGAM CORP., NAME OFFICE HELD WITH THE FUND SGSC OR SOCIETE GENERALE - ---- ------------------------- ---------------------------- Philippe Collas Chairman of the Board Head of Asset Management, Societe and Director Generale. Chairman of the Board and Director, SGAM Corp. Jean-Marie Eveillard President and Director President and Director, SGAM Corp. Philip J. Bafundo Vice President, Secretary and Treasurer Secretary and Treasurer, SGAM Corp. Ignatius Chithelen Vice President Securities Analyst, SGAM Corp. Sean J. McKeown Vice President Operations Manager, SGAM Corp. Catherine A. Shaffer Vice President First Vice President, SGSC Edwin S. Olsen Vice President Vice President, SGSC Elizabeth Tobin Vice President and Assistant Secretary Securities Analyst, SGAM Corp. Charles de Vaulx Vice President Securities Analyst, SGAM Corp.
Under its investment advisory contract with the Fund which became effective April 26, 1990 and was amended on July 10, 1992, SGAM Corp. furnishes the Fund with investment advice consistent with the Fund's stated investment objective. SGAM 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 SGAM 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%, respective- ly, of the average daily value of the net assets of the Fund during the pre- ceding 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 for- eign 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. For the Fund's fiscal years ended March 31, 1995, 1996 and 1997, the Fund paid investment advisory fees of $13,822,229, $18,408,301 and $26,404,805, re- spectively. Under the investment advisory contract between the Fund and SGAM Corp., the adviser is responsible for the management of the Fund's portfolio and con- stantly 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-exclu- sive 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, DST Systems, Inc. ("DST") in the name of that institution. Under those arrangements, the Fund may compensate the institution rendering such services on a per sub-ac- count 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. 10 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 and for other distribution related ex- penses such as the payment of advertising costs and the payment for the prepa- ration, 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 distribu- tions thereon. For the fiscal year ended March 31, 1997, the Fund paid SGSC $8,571,548 pursuant to the Plan, $104,809 of which was paid by SGSC to Societe Generale and subsidiaries of Societe Generale. SGSC and SGAM 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, sub- ject 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 $2,180,099 of the amount paid to it pursuant to the Plan with respect to the fiscal year ended March 31, 1997, 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 contin- uance 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 un- less 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 ad- dition 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, 1997, SGSC, Societe Generale (including its subsidiaries) and SGAM Corp. received commissions and other compensation in connection with the operations of the Fund as follows:
(1) (2) (3) (4) (5) NAME OF NET UNDERWRITING COMMISSIONS ON PRINCIPAL UNDERWRITER DISCOUNTS AND DEALER REPURCHASES OR BROKERAGE OTHER OR AFFILIATE COMMISSIONS REDEMPTIONS COMMISSIONS COMPENSATION --------------------- -------------------- -------------- ----------- ------------ SGSC.................... $2,670,354 $-- $107,519 $ 8,571,548* Societe Generale (including subsidiaries).......... $ 126,060 $-- $ 17,153 $ 104,809** SGAM Corp............... $ -- $-- $ -- $26,404,805***
- -------- * 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 subsidiar- ies, 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 $8,571,548 paid to SGSC under the Plan. *** The Fund's investment advisory fee paid or payable to SGAM Corp. for the fiscal year ended March 31, 1997. 11 During the three years ended March 31, 1995, 1996, and 1997, the aggregate amounts of sales charges on sales of Fund shares were $4,790,032, $16,232,673 and $14,840,187, respectively. During the years ended March 31, 1995 and 1996, SGSC received net underwriting discounts and dealer commissions of $941,813 and $3,005,037, respectively, and Societe Generale received dealer discounts of $44,234 and $36,119, respectively. SGAM Corp. has entered into an agreement with SGSC, dated April 30, 1990, under which net commissions and fees earned by SGSC in its capacity as under- writer to the Fund, are remitted to SGAM Corp. In consideration for certain services provided by SGSC, SGAM Corp. pays SGSC a $25,000 per annum fee, pay- able monthly, and reimburses SGSC for certain expenses incurred on behalf of SGAM Corp. For SGAM Corp.'s fiscal year ended December 31, 1996, such commis- sions and fees with respect to the Fund amounted to $5,056,361, and the re- lated reimbursement for services amounted to $74,523. The investment advisory and underwriting contracts continue in effect from year to year so long as the continuance of each contract is specifically ap- proved 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 SGAM 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 se- curities 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, Rev. Dr. Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The net asset value per share is computed by dividing the total current value of the assets of the Fund, less its 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 val- ued 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 inter- est earned, which approximates value. Securities for which current market quo- tations 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 of- fering price, using as a basis the value of the Fund's portfolio securities and other assets and its outstanding securities as of March 31, 1997, appears as the Statement of Assets and Liabilities on page 24 of the March 31, 1997 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 are described in the Fund's Prospectus. As stated in the Prospectus, the Fund's shares may be purchased at net asset value by various persons associated with the Fund, SGSC, SGAM Corp., branches of Societe Generale, certain firms providing services to the Fund or affili- ates 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 cir- cumstances where there are economies of selling efforts and sales related ex- penses with respect to offers to certain investors. 12 TAX STATUS The Fund intends to qualify as a "regulated investment company" under the In- ternal 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 in- come (including realized capital gains) to the extent distributed to sharehold- ers within the allowable time limit. In order to qualify as a regulated investment company for a taxable year un- der the laws in effect as of the date of this Statement of Additional Informa- tion and to avoid paying taxes on income the Fund distributes to its sharehold- ers, 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 se- curities, gains from the sale or other disposition of stock or securities, for- eign currency gains related to investments in stock or securities and other in- come (including, but not limited to, gains from options, futures or forward contracts) derived with respect to the business of investing in stock, securi- ties 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 con- tracts 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 op- tions 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 rep- resented 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 lim- ited 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 gov- ernment 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 capi- tal gains (the excess of net long-term capital gains over net short-term capi- tal losses), if any, that it distributes to shareholders. The Fund intends to distribute to its shareholders, at least annually, substantially all of its in- vestment 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 ex- cise 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 share- holders in the calendar year in which the distributions are declared, rather than the calendar year in which the distributions are received. To prevent ap- plication of the excise tax, the Fund intends to make its distributions in ac- cordance with the calendar year distribution requirement. All dividends from net investment income and all distributions of net real- ized 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. Sharehold- ers may elect to receive cash in the amount of the dividend or distribution by notifying DST through the appropriate form or by telephone in accordance with the procedures detailed in the Prospectus. Once an election has been made all future dividends and distributions will be paid in accordance with such elec- tion unless shareholders notify DST otherwise. 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 corpora- tions, dividends paid by the Fund may qualify for the dividends-received deduc- tion for corporations. For the fiscal year ended March 31, 1997, 6.75% 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 con- sidered 60% long-term and 40% short-term capital gains or losses; however, for- eign currency gains or losses (as discussed below) arising from certain section 1256 contracts 13 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 addi- tion, 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 re- alized. Because only a few regulations implementing the straddle rules have been promulgated, the tax consequences to the Fund of engaging in hedging transactions are not entirely clear. Hedging transactions may increase the amount of short-term capital gains realized by the Fund which is taxed as ordi- nary 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 trans- actions 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, de- fer losses and/or accelerate the recognition of gains or losses from the af- fected contracts or transactions, the amount which may be distributed to share- holders, and which will be taxed to them as ordinary income or long-term capi- tal gain, may be increased or decreased as compared to a fund that did not en- gage 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 dis- tributed 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 ac- tually 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 por- tion 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 ap- plied 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 cur- rency 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 eligi- ble 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 14 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 des- ignate (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 gener- ate largely passive investment-type income, or which hold a significant per- centage 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 ba- sis, 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 in- come. This ordinary income would be allocated ratably to the Fund's holding pe- riod for the stock. Any amount allocated to prior taxable years would be tax- able to the Fund at the highest rate of tax applicable in that year (even if distributed to the Fund shareholders), increased by an interest charge deter- mined 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 in- vestment 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 de- rived 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 ex- change 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 af- ter the date the shares are disposed of. In such a case, a shareholder will ad- just the basis of the shares acquired to reflect the disallowed loss. Any cor- porate shareholder should consult its tax adviser regarding the possibility that its basis in its shares may be reduced, by reason of "extraordinary divi- dends" 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 ex- change 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. How- ever, 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 in- vestor 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 withhold- ing 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 appli- cation 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 sub- 15 stantial 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 whom the Fund's orders shall be placed are made by officers of SGAM 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, 1995, March 31, 1996 and March 31, 1997, the Fund paid SGSC and affiliates of Societe Generale $70,290, $108,724 and $124,672, respectively, in such brokerage commissions for transac- tions effected on various exchanges. Such commissions paid for the fiscal year ended March 31, 1997 represented 5.8% of the aggregate brokerage commissions paid by the Fund during such year and were paid in connection with transactions representing 4.1% of the aggregate dollar amount of all transactions effected by the Fund during such year (including principal transactions for which no di- rect 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 Ex- change 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 trans- actions in securities listed on an exchange. Consistent with the Rules of Fair Practice of the National Association of Se- curities Dealers, Inc. and subject to obtaining prices and execution at least as favorable as those provided by other qualified brokers, SGAM Corp. may con- sider sales of shares of the Fund as a factor in the selection of brokers to execute portfolio transactions. SGAM Corp., in determining the best price and execution for a particular transaction, considers the value of research serv- ices provided to SGAM 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 SGAM Corp. determine in good faith that such higher commissions are reasonable in relation to the value of the brokerage and research services pro- vided by such brokers for the benefit of the Fund. Research services provided by brokers include written reports, responses to specific inquiries and inter- views with analysts. These services also include invitations to meetings ar- ranged by such brokers with the managements of companies in the Fund's portfo- lio or in which the Fund may invest. Although only research services provided to SGAM Corp. for the benefit of the Fund will be considered in selecting bro- kers to effect portfolio transactions for the Fund, these services may also be used by SGAM Corp. in servicing its other clients. Similarly, research informa- tion obtained by SGAM Corp. from brokers executing transactions on behalf of SGAM Corp's other clients may be used by SGAM Corp. in advising the Fund. SGAM 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 SGAM 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 SGAM Corp. for its own account or from any of its officers, directors or employees. While SGAM Corp. is primarily responsible for the allocation of the 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 periodi- cally review and discuss with SGAM Corp. the commissions paid by the Fund and, in transactions where the Fund pays commissions which are in excess of the com- missions other brokers would have charged, SGAM Corp's determinations that such higher commissions are reasonable in relation to the value of the brokerage and research 16 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, 1997, which was partially attributable to research services, was $2,121,994 in connection with transactions amounting to $1,127,569,932. During the fiscal years ended March 31, 1995, 1996 and 1997, the Fund paid to- tal brokerage commissions of $1,387,206, $2,468,233 and $2,138,878, respective- ly. 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 do- mestic securities issued in physical form. Pursuant to a Global Custody Agree- ment 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 foreign sub-custodians which are participants in the Global Investor 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, 1997 Annual Report to Shareholders and the report thereon of KPMG Peat Marwick LLP, Certified Public Accountants, appearing therein are incorporated by refer- ence in this Statement of Additional Information. The Fund will furnish, with- out 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. 17 (This Page Left Blank Intentionally) 18 (This Page Left Blank Intentionally) 19 (This Page Left Blank Intentionally) 20 PART C OTHER INFORMATION ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS (a)(1) Financial Statements a. Financial Statements Included in Prospectus and Statement of Additional Information: All financial statements are incorporated by reference to the An- nual Report to Shareholders for the year ended March 31, 1997.
ANNUAL REPORT PAGE REFERENCE -------------- Schedule of Investments -- March 31, 1997...................... 5-23 Statement of Assets and Liabilities -- March 31, 1997.......... 24 Statement of Operations -- Year ended March 31, 1997........... 25 Statements of Changes in Net Assets -- Years ended March 31, 1996 and 1997................................................. 26 Notes to Financial Statements.................................. 27-30 Independent Auditors' Report................................... 32
b. Financial Statements Included in Part C of the Registration Statement: None (2) All other financial statements and supporting schedules are omitted be- cause they are not applicable or the required information is shown in the fi- nancial statements or the notes thereto. (b) Exhibits
EXHIBIT ------- 1 --Articles of Incorporation of the Registrant. (Filed as Exhibit 1 to Post-Effective Amendment No. 28 to this Registration Statement.) 1(a) --Articles of Amendment of the Registrant as filed with the Maryland State Department of Assessments and Taxation on February 15, 1990. (Filed as Exhibit 1(a) to Post-Effective Amendment No. 34 to this Registration Statement.) 1(b) --Articles of Amendment of the Registrant as filed with the Maryland State Department of Assessments and Taxation on March 29, 1993. (Filed as Exhibit 1(b) to Post-Effective Amendment No. 37 to this Registration Statement.) 1(c) --Articles of Amendment of the Registrant as filed with the Maryland State Department of Assessments and Taxation on September 20, 1993. (Filed as Exhibit 1(c) to Post-Effective Amendment No. 38 to this Registration Statement.) 1(d) --Articles of Amendment of the Registrant as filed with the Maryland State Department of Assessments and Taxation on March 3, 1995. (Filed as Exhibit 1(d) to Post-Effective Amendment No. 39 to this Registration Statement.) 2 --By-Laws of the Registrant. (Filed as Exhibit 2 to Post-Effective Amendment No. 36 to this Registration Statement.) 5 --Investment Advisory Contract, dated April 26, 1990, as amended and restated July 10, 1992, of the Registrant with Societe Generale Touche Remnant Corporation, now called Societe Generale Asset Management Corp. (Filed as Exhibit 5 to Post-Effective Amendment No. 37 to this Registration Statement.) 6(a) --Form of Underwriting Agreement, dated as of August 21, 1978, between the Registrant and Hudson Securities Corp., now called Societe Generale Securities Corp. (Filed as Exhibit 1(g) to Post- Effective Amendment No. 15 to this Registration Statement.) 6(b) --Form of Domestic Selling Group Agreement. (Filed as Exhibit 6(b) to Post-Effective Amendment No. 38 to this Registration Statement.) 6(c) --Form of Foreign Selling Group Agreement. (Filed as Exhibit 1(h)(ii) to Post-Effective Amendment No. 15 to this Registration Statement.) 8(a) --Custodial Agreement, dated as of April 1, 1987, between the Registrant and Investors Fiduciary Trust Company. (Filed as Exhibit 8(a) to Post-Effective Amendment No. 31 to this Registration Statement.)
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EXHIBIT ------- 8(b) --Transfer Agency and Registrar Agreement, dated as of November 25, 1996, between the Registrant and DST Systems, Inc. 8(c) --Global Custody Agreement, dated as of November 1, 1995 between the Registrant and The Chase Manhattan Bank, N.A. (Filed as Exhibit 8(c) to Post-Effective Amendment No. 40 to this Registration Statement.) 8(d) --Form of Subcustodial Agreement. (Filed as Exhibit 8(d) to Post- Effective Amendment No. 34 to this Registration Statement.) 10 --Opinion and Consent of Dechert Price & Rhoads (Previously filed with the Registrants 24f-2 Notice.) 11(a) --Consent of KPMG Peat Marwick LLP. 11(b) --Report and consent of the Registrant's previous auditors with respect to the Statement of Changes in Net Assets for the year ended March 31, 1989 and selected per share data and ratios for each of the nine years prior to the period ended March 31, 1989. (Filed as Exhibit 11(b) to Post-Effective Amendment No. 34 to this Registration Statement.) 11(c) --Representation Letter of Dechert Price & Rhoads. 13 --Power of Attorney. (Filed as Exhibit 13 to Post-Effective Amendment No. 40 to this Registration Statement.) 15 --Form of Rule 12b-1 Distribution Plan and Agreement as amended through February 4, 1994. (Filed as Exhibit 15 to Post-Effective Amendment No. 38 to this Registration Statement.) 16 --Calculation of Performance Data in Statement of Additional Information. (Average Annual Total Rate of Return for 1 year and Average Annual Compounded Total Rates of Return for 5 and 10 years.)
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT None. ITEM 26. NUMBER OF HOLDERS OF SECURITIES
NUMBER OF RECORD HOLDERS TITLE OF CLASS AS OF JUNE 30, 1997 -------------- ------------------------ Capital Stock, $0.001 par value....................... 168,379
ITEM 27. INDEMNIFICATION Registrant is incorporated under the laws of the State of Maryland and is subject to Section 2-418 of the Corporations and Associations Article of the General Corporation Law of the State of Maryland controlling the indemnifica- tion of directors and officers. Since Registrant has its executive offices in the State of New York, and is qualified as a foreign corporation doing busi- ness in such State, the persons covered by the foregoing statute may also be entitled to and subject to the limitations of the indemnification provisions of Section 721-726 of the New York Business Corporation Law. The general effect of these statutes is to protect directors, officers, em- ployees and agents of the Registrant against legal liability and expenses in- curred by reason of their positions with the Registrant. The statutes provide for indemnification for liability for proceedings not brought on behalf of the corporation and for those brought on behalf of the corporation, and in each case place conditions under which indemnification will be permitted, including requirements that the indemnified person acted in good faith. Under certain conditions, payment of expenses in advance of final disposition may be permit- ted. The By-Laws of the Registrant make the indemnification of its directors, officers, employees and agents mandatory subject only to the conditions and limitations imposed by the above-mentioned Section 2-418 of Maryland Law and by the provisions of Section 17(h) of the Investment Company Act of 1940 as interpreted and required to be implemented by SEC Release No. IC-11330 of Sep- tember 4, 1980. In referring in its By-Laws to, and making indemnification of directors sub- ject to the conditions and limitations of, both Section 2-418 of the Maryland Law and Section 17(h) of the Investment Company Act of 1940, the Registrant intends that conditions and limitations on the extent of the indemnification of directors and officers imposed by the provisions of either Section 2-418 or Section 17(h) shall apply and that any inconsistency between the two will be resolved by applying the provisions of said Section 17(h) if the condition or limitation imposed by Section 17(h) is the more stringent. In referring in its By-Laws to SEC Release No. IC-11330 as the C-2 source for interpretation and implementation of said Section 17(h), the Regis- trant understands that it would be required under its By-Laws to use reason- able and fair means in determining whether indemnification of a director or officer should be made and undertakes to use either (1) a final decision on the merits by a court or other body before whom the proceeding was brought that the person to be indemnified ("indemnitee") was not liable to the Regis- trant or to its security holders by reason of willful malfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office ("disabling conduct") or (2) in the absence of such a de- cision, a reasonable determination, based upon a review of the facts, that the indemnitee was not liable by reason of such disabling conduct, by (a) the vote of a majority of a quorum of directors who are neither "interested persons" (as defined in the 1940 Act) of the Registrant nor parties to the proceeding, or (b) an independent legal counsel in a written opinion. Also, the Registrant will make advances of attorneys' fees or other expenses incurred by a director or officer in his or her defense only if (in addition to his or her undertak- ing to repay the advance if he or she is not ultimately entitled to indemnifi- cation) (1) the indemnitee provides a security for his or her undertaking, (2) the Registrant shall be insured against losses arising by reason of any lawful advances, or (3) a majority of a quorum of the non-interested, non-party di- rectors of the Registrant, or an independent legal counsel in a written opin- ion, shall determine, based on a review of readily available facts, that there is reason to believe that the indemnitee ultimately will be found entitled to indemnification. In addition, the Registrant maintains a directors' and officers' errors and omissions liability insurance policy protecting directors and officers against liability for claims made by reason of any acts, errors or omissions committed in their capacity as directors or officers. The policy contains certain exclu- sions, among which is exclusion from coverage for active or deliberate dishon- est or fraudulent acts and exclusion for fines or penalties imposed by law or other matters deemed uninsurable. ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER SGAM Corp. is the Registrant's investment adviser. In addition to the Regis- trant, SGAM Corp., acts as investment adviser to SoGen Funds, Inc., SoGen Variable Funds, Inc. and pension funds and sub-adviser to non-affiliated in- vestment funds. Reference is made to "Management of the Fund" in the Statement of Additional Information constituting Part B of this Post-Effective Amendment for a de- scription of the business activities and employment of certain directors and officers of SGAM Corp. within the last two fiscal years of the Registrant. The directors of SGAM Corp. not disclosed in Part B are as follows:
NAME AND ADDRESS PRINCIPAL OCCUPATION - ---------------- -------------------- Christian d'Allest................. Director of Foreign Affiliates, 17, cours Valmy Societe Generale Asset Management 92972 Paris, France Jean Roger Huet.................... President, New York Branch, Societe Generale 1221 Avenue of the Americas New York, NY 10020
ITEM 29. PRINCIPAL UNDERWRITERS (a) SGSC, the Registrant's principal underwriter, also acts as principal un- derwriter for SoGen Funds, Inc., and SoGen Variable Fund, Inc., each a regis- tered investment company. (b) The directors and officers of SGSC are as follows:
NAME AND POSITIONS AND OFFICES POSITIONS AND OFFICES PRINCIPAL BUSINESS ADDRESS WITH PRINCIPAL UNDERWRITER WITH REGISTRANT -------------------------- -------------------------- --------------------- Jacques Bouhet............. Chairman of the Board -- 17, Cours Valmy 92972 Paris France Dominique Beaupere......... Director -- Alsthorn Alcatel 75382 Paris Cedex 08
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NAME AND POSITIONS AND OFFICES POSITIONS AND OFFICES PRINCIPAL BUSINESS ADDRESS WITH PRINCIPAL UNDERWRITER WITH REGISTRANT - -------------------------- ------------------------------ --------------------- Gerard de la Riviere.... Director -- 17, Cours Valmy 92972 Paris France Jean-Bernard Director -- Guillebert............. 17, Cours Valmy 92972 Paris France Jean Huet............... Director -- 1221 Avenue of the Americas New York, NY 10020 Alain Joyet............. Director -- 1221 Avenue of the Americas New York, NY 10020 Robert Leroux........... Director -- 17, Cours Valmy 92972, Paris France Jean-Paul Oudet......... Director -- 23 Rue De D'Abeville 75009, Paris France Pierre Prot............. Director -- 29, Boulevard Haussmann 75009, Paris France Alain Tave.............. Director -- 17, Cours Valmy 92972, Paris France Yves Tuloup............. Director -- 43, rue Taitbout 75009 Paris, France Curtis Welling.......... Director, President and CEO -- 1221 Avenue of the Americas New York, NY 10020 James Walsh............. Chief Operating Officer -- 1221 Avenue of the Americas New York, NY 10020 Marc Poirier............ Deputy Chief Operating Officer -- 1221 Avenue of the Americas New York, NY 10020 Jeffrey Fox............. Chief Financial Officer -- 1221 Avenue of the Americas New York, NY 10020 Kenneth Lampert......... Compliance Officer -- 1221 Avenue of the Americas New York, NY 10020 Pierre Bergeron......... Secretary -- 1221 Avenue of the Americas New York, NY 10020
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NAME AND POSITIONS AND OFFICES POSITIONS AND OFFICES PRINCIPAL BUSINESS ADDRESS WITH PRINCIPAL UNDERWRITER WITH REGISTRANT -------------------------- -------------------------- --------------------- Governor Tipton............ Assistant Secretary -- 1221 Avenue of the Americas New York, NY 10020 Sibyl Peyer................ Assistant Secretary -- 1221 Avenue of the Americas New York, NY 10020
The following officers all have their principal business address at 1221 Av- enue of the Americas, New York, NY 10020:
NAME AND POSITIONS AND OFFICES POSITIONS AND OFFICES PRICIPAL BUSINESS ADDRESSN WITH PRINCIPAL UNDERWRITER WITH REGISTRANT - -------------------------- -------------------------- --------------------- Dominic Freud................. First Vice President -- Charles Gushee................ First Vice President -- Kenneth Lampert............... First Vice President -- Paul Meyer.................... First Vice President -- John Monck.................... First Vice President -- Thomas Moyna.................. First Vice President -- Rolando E. Pantoja............ First Vice President -- Gillaume Pollet............... First Vice President -- Benoit Raudel................. First Vice President -- Catherine A. Shaffer.......... First Vice President Vice President Richard B. Amoils............. Director -- David J. Atkinson............. Director -- Mark Thomas Berry............. Director -- Robert H. Despirito........... Director -- Katharine Hazard Flynn........ Director -- David Getzler................. Director -- Geoffrey Alexander Gimber..... Director -- Lars Hanan.................... Director -- Anna Hayes Connard............ Director -- Glori Holzman................. Director -- Matthew Judson................ Director -- M. Robin Krasny............... Director -- Meredith Ress Levy............ Director -- Jose Maria Linares-Perou...... Director -- Charles E. Mather IV.......... Director -- Carl A. Mayer III............. Director -- Patrick Joseph Memmi.......... Director -- Scott W. Phillips............. Director -- Peter J. Pinto................ Director -- Marc Poirier.................. Director -- Claudio A. Pupkin............. Director -- Ronald C. Ratcliffe........... Director -- Andrew John Schoenfeld........ Director -- Frederick Wright Searby....... Director -- Joseph Stefanik............... Director -- Jean Philippe Jacque Villa.... Director -- Steven Baronoff............... Managing Director -- Richard Greg Brounstein....... Managing Director -- Matthew Edward Czajkowski..... Managing Director -- David Michael Feinman......... Managing Director -- Ian J. Hardington............. Managing Director -- John L. Kelly................. Managing Director -- James N. Lane................. Managing Director -- Jan B. Lochtenberg............ Managing Director -- David M. Malcolm.............. Managing Director --
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NAME AND POSITIONS AND OFFICES POSITIONS AND OFFICES PRINCIPAL BUSINESS ADDRESS WITH PRINCIPAL UNDERWRITER WITH REGISTRANT -------------------------- -------------------------- --------------------- Nimil Rajnikant Parekh..... Managing Director -- Michael Penfield........... Managing Director -- Vinod Sehgal............... Managing Director -- Paul Wesley Shaum.......... Managing Director -- John Sheldon............... Managing Director -- Fiona Jane Tilley.......... Managing Director -- James M. Walsh............. Managing Director -- Jon Frederic Weber......... Managing Director -- Bradford Carver Yates...... Managing Director -- Rex Yamamoto............... Senior General Manager -- Jeffrey Fox................ Senior Vice President -- Joseph Marino.............. Senior Vice President -- Timothy Moyer.............. Senior Vice President -- Robert S. Pirie............ Vice Chairman -- Raz Alon................... Vice President -- Jean Marie Barreau......... Vice President -- Isaac Barrocas............. Vice President -- Francois Barthelemy........ Vice President -- Richard Beston............. Vice President -- John Bianco................ Vice President -- Pascal Bouillon............ Vice President -- Andrew Clark Brummer....... Vice President -- Michael Joseph Casey....... Vice President -- Robert Casey............... Vice President -- Mary Chen.................. Vice President -- D.K. Cockrell II........... Vice President -- Arthur G. Condodina........ Vice President -- Yolanda Cristina Courtines................. Vice President -- John Enderle............... Vice President -- Lauda Fields............... Vice President -- William Court Frauen....... Vice President -- Gordes Frobenius........... Vice President -- Michael Gelblat............ Vice President -- Adam Harold Goodfriend..... Vice President -- John C. Griffin............ Vice President -- Vincent Gros............... Vice President -- Markus Sebastian Hansen.... Vice President -- Edward Nelson Heumann...... Vice President -- Eric Hirshfield............ Vice President -- Tsen-Yu Hung............... Vice President -- McLloyd K. Jensen.......... Vice President -- Andrew Joseph.............. Vice President -- Andres B. Josephsohn....... Vice President -- Marc Levesque.............. Vice President -- John Joseph Mandy Jr. ..... Vice President -- Robert Marx................ Vice President -- John T. Maxwell Jr. ....... Vice President -- John Anthony Montgomery Jr. ...................... Vice President -- Kenneth Nora............... Vice President -- Edwin S. Olsen............. Vice President Vice President Howard Chin Ho Park........ Vice President -- Philippe Pierson........... Vice President -- Theodore James Podest...... Vice President -- Stephane Reverre........... Vice President -- Robert Roland.............. Vice President -- Jeffrey Prescott Salmon.... Vice President --
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NAME AND POSITIONS AND OFFICES POSITIONS AND OFFICES PRINCIPAL BUSINESS ADDRESS WITH PRINCIPAL UNDERWRITER WITH REGISTRANT -------------------------- -------------------------- --------------------- Bryan L. Sanders............. Vice President -- Gregory Michael Solomon...... Vice President -- John A. Spettell............. Vice President -- Christopher Stala............ Vice President -- David A. Steinschraber....... Vice President -- Nathalie Texier.............. Vice President -- Richard Tramutola............ Vice President -- Martin B. Yallop............. Vice President -- Matthew C. Zolin............. Vice President --
(c) None. ITEM 30. LOCATION OF ACCOUNTS AND RECORDS All accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated thereun- der are maintained at the offices of the Registrant, 1221 Avenue of the Ameri- cas, New York, New York 10020 with the exception of certain accounts, books and other documents which are kept by the Registrant's custodian, Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, MO 64105 and reg- istrar and shareholder servicing agent, DST Systems, Inc. ("DST"), P.O. Box 419324, Kansas City, Missouri, 64141-6324. ITEM 31. MANAGEMENT SERVICES Not applicable. ITEM 32. UNDERTAKINGS The Registrant undertakes to call a meeting of shareholders for the purpose of voting upon the question of removal of a director, if requested to do so by the holders of at least 10% of the Fund's outstanding shares, and that it will assist communication with other shareholders as required by Section 16(c) of the Investment Company Act of 1940. C-7 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "1993 ACT"), AND THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED, THE REGIS- TRANT, SOGEN INTERNATIONAL FUND, INC., CERTIFIES THAT THIS POST-EFFECTIVE AMENDMENT TO ITS REGISTRATION STATEMENT (NO. 2-34329) MEETS ALL OF THE RE- QUIREMENTS FOR EFFECTIVENESS PURSUANT TO PARAGRAPH (B) OF RULE 485 UNDER THE 1933 ACT, AND HAS DULY CAUSED IT TO BE SIGNED ON ITS BEHALF BY THE UNDER- SIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, AND STATE OF NEW YORK, ON THE 25TH DAY OF JULY, 1997. SoGen International Fund, Inc. /s/ Jean-Marie Eveillard By: _________________________________ (JEAN-MARIE EVEILLARD, PRESIDENT) PURSUANT TO THE REQUIREMENTS OF THE 1933 ACT, THIS POST-EFFECTIVE AMENDMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED. SIGNATURE TITLE DATE /s/ Jean-Marie Eveillard President and - ------------------------------------- Director (principal July 25, 1997 (JEAN-MARIE EVEILLARD) executive officer) /s/ Philip J. Bafundo Vice President and - ------------------------------------- Treasurer July 25, 1997 (PHILIP J. BAFUNDO) (principal financial and accounting officer) Philippe Collas* Chairman of the - ------------------------------------- Board July 25, 1997 (PHILIPPE COLLAS) Fred J. Meyer* Director - ------------------------------------- July 25, 1997 (FRED J. MEYER) Dominique Raillard* Director - ------------------------------------- July 25, 1997 (DOMINIQUE RAILLARD) Nathan Snyder* Director - ------------------------------------- July 25, 1997 (NATHAN SNYDER) /s/ Jean-Marie Eveillard *By: ________________________________ (JEAN-MARIE EVEILLARD, ATTORNEY-IN- FACT) C-8 EX-99.8B 2 TRANSFER AGENCY AND REGISTER AGREEMENT EXHIBIT 99.8(b) AGENCY AGREEMENT THIS AGREEMENT made the 25th of November, 1996, by and between SOGEN INTERNATIONAL FUND, INC., a corporation existing under the laws of the State of Maryland, having its principal place of business at 1221 Avenue of the Americas, New York, NY 10020 (the "Fund"), and DST SYSTEMS, INC., a corporation existing under the laws of the State of Delaware, having its principal place of business at 1055 Broadway, Kansas City, Missouri 64105 ("DST"): WITNESSETH: WHEREAS, the Fund desires to appoint DST as Transfer Agent and Dividend Disbursing Agent, and DST desires to accept such appointment; NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows: 1. Documents to be Filed with Appointment. -------------------------------------- In connection with the appointment of DST as Transfer Agent and Dividend Disbursing Agent for the Fund, there will be filed with DST the following documents: A. A certified copy of the resolutions of the Board of Directors of the Fund appointing DST as Transfer Agent and Dividend Disbursing Agent, approving the form of this Agreement, and designating certain persons to sign stock certificates, if any, and give written instructions and requests on behalf of the Fund; B. A certified copy of the Articles of Incorporation of the Fund and all amendments thereto; C. A certified copy of the Bylaws of the Fund; D. Copies of Registration Statements and amendments thereto, filed with the Securities and Exchange Commission. E. Specimens of all forms of outstanding stock certificates, in the forms approved by the Board of Directors of the Fund, with a certificate of the Secretary of the Fund, as to such approval; F. Specimens of the signatures of the officers of the Fund authorized to sign stock certificates and individuals authorized to sign written instructions and requests; G. An opinion of counsel for the Fund with respect to: (1) The Fund's organization and existence under the laws of its state of organization, (2) The status of all shares of stock of the Fund covered by the appointment under the Securities Act of 1933, as amended, and any other applicable federal or state statute, and (3) That all issued shares are, and all unissued shares will be, when issued, validly issued, fully paid and nonassessable. 2. Certain Representations and Warranties of DST. --------------------------------------------- DST represents and warrants to the Fund that: A. It is a corporation duly organized and existing and in good standing under the laws of Delaware. B. It is duly qualified to carry on its business in the State of Missouri. C. It is empowered under applicable laws and by its Articles of Incorporation and Bylaws to enter into and perform the services contemplated in this Agreement. D. It is registered as a transfer agent to the extent required under the Securities Exchange Act of 1934. E. All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement. F. It has and will continue to have and maintain the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement. 3. Certain Representations and Warranties of the Fund. -------------------------------------------------- The Fund represents and warrants to DST that: A. It is a corporation duly organized and existing and in good standing under the laws of the State of Maryland. B. It is an open-end diversified management investment company registered under the Investment Company Act of 1940, as amended. C. A registration statement under the Securities Act of 1933 has been filed and will be effective with respect to all shares of the Fund being offered for sale. D. All requisite steps have been and will continue to be taken to register the Fund's shares for sale in all applicable states and such registration will be effective at all times shares are offered for sale in such state. E. The Fund is empowered under applicable laws and by its charter and Bylaws to enter into and perform this Agreement. 4. Scope of Appointment. -------------------- A. Subject to the conditions set forth in this Agreement, the Fund hereby appoints DST as Transfer Agent and Dividend Disbursing Agent. B. DST hereby accepts such appointment and agrees that it will act as the Fund's Transfer Agent and Dividend Disbursing Agent. DST agrees that it will also act as agent in connection with the Fund's periodic withdrawal payment accounts and other open accounts or similar plans for shareholders, if any. C. The Fund agrees to use its reasonable efforts to deliver to DST in Kansas City, Missouri, as soon as they are available, all of its shareholder account records. D. DST, utilizing TA2000/TM/, DST's computerized data processing system for securityholder accounting (the "TA2000 System"), will perform the following services as transfer and dividend disbursing agent for the Fund, and as agent of the Fund for shareholder accounts thereof, in a timely manner: (i) issuing (including countersigning), transferring and canceling share certificates; (ii) maintaining on the TA2000 System shareholder accounts; (iii) accepting and effectuating the registration and maintenance of accounts through Networking and the purchase, redemption, transfer and exchange of shares in such accounts through Fund/SERV (Networking and Fund/SERV being programs operated by the National Securities Clearing Corporation ("NSCC") on behalf of NSCC's participants, including the Funds), in accordance with instructions transmitted to and received by DST by transmission from NSCC on behalf of broker-dealers and banks which have been established by, or in accordance with the instructions of, an Authorized Person, as hereinafter defined, on the Dealer File maintained by DST; (iv) issuing instructions to the Funds' banks for the settlement of transactions between the Funds and NSCC (acting on behalf of its broker-dealer and bank participants); (v) providing account and transaction information from each affected Fund's records on TA2000 in accordance with NSCC's Networking and Fund/SERV rules for those broker-dealers; (vi) maintaining shareholder accounts on TA2000 through Networking; (vii) providing transaction journals; (viii) once annually preparing shareholder meeting lists for use in connection with the annual meeting and certifying a copy of such list; (ix) mailing shareholder reports and prospectuses; (x) withholding, as required by federal law, taxes on shareholder accounts, preparing, filing and mailing U.S. Treasury Department Forms 1099, 1042, and 1042S and performing and paying backup withholding as required for all shareholders; (xi) disbursing income dividends and capital gains distributions to shareholders and recording reinvestment of dividends and distributions in shares of the Fund; (xii) preparing and mailing confirmation forms to shareholders and dealers, as instructed, for all purchases and liquidations of shares of the Fund and other confirmable transactions in shareholders' accounts; (xiii) providing or making available on-line daily and monthly reports as provided by the TA2000 System and as requested by the Fund or its management company; (xiv) maintaining those records necessary to carry out DST's duties hereunder, including all information reasonably required by the Fund to account for all transactions in the Fund shares; (xv) calculating the appropriate sales charge with respect to each purchase of the Fund shares as instructed by an Authorized Person, as hereinafter defined, determining the portion of each sales charge payable to the dealer participating in a sale in accordance with schedules and instructions delivered to DST by the Fund's principal underwriter or distributor (hereinafter "principal underwriter") or an Authorized Person from time to time, disbursing dealer commissions collected to such dealers, determining the portion of each sales charge payable to such principal underwriter and disbursing such commissions to the principal underwriter; (xvi) receiving correspondence pertaining to any former, existing or new shareholder account, processing such correspondence for proper recordkeeping, and responding promptly to shareholder correspondence; mailing to dealers confirmations of wire order trades; mailing copies of shareholder statements to shareholders and registered representatives of dealers in accordance with the instructions of an Authorized Person; (xvii) processing, generally on the date of receipt, purchases or redemptions or instructions to settle any mail or wire order purchases or redemptions received in proper order as set forth in the prospectus, rejecting promptly any requests not received in proper order (as defined by an Authorized Person or the Procedures as hereinafter defined), and causing exchanges of shares to be executed in accordance with the instructions of Authorized Persons, the applicable prospectus and the general exchange privilege applicable; (xix) providing to the person designated by an Authorized Person the daily Blue Sky reports generated by the Blue Sky module of TA2000 with respect to purchases of shares of the Funds on TA2000; and (xx) providing to the Fund escheatment reports as requested by an Authorized Person with respect to the status of accounts and outstanding checks on TA2000. E. At the request of an Authorized Person, DST shall use reasonable efforts to provide the services set forth in Section 4.D. in connection with transactions (i) on behalf of retirement plans and participants in retirement plans and transactions ordered by brokers as part of a "no transaction fee" program ("NTF"), the processing of which transactions require DST to use methods and procedures other than those usually employed by DST to perform shareholder servicing agent services, (ii) involving the provision of information to DST after the commencement of the nightly processing cycle of the TA2000 System or (iii) which require more manual intervention by DST, either in the entry of data or in the modification or amendment of reports generated by the TA2000 System than is usually required by non- retirement plan, non-NTF and pre-nightly transactions, (the "Exception Services"). F. DST shall use reasonable efforts to provide, reasonably promptly under the circumstances, the same services with respect to any new, additional functions or features or any changes or improvements to existing functions or features as provided for in the Fund's instructions, prospectus or application as amended from time to time, for the Fund provided (i) DST is advised in advance by the Fund of any changes therein and (ii) the TA2000 System and the mode of operations utilized by DST as then constituted supports such additional functions and features. If any addition to, improvement of or change in the features and functions currently provided by the TA2000 System or the operations as requested by the Fund requires an enhancement or modification to the TA2000 System or to operations as presently conducted by DST, DST shall not be liable therefore until such modification or enhancement is installed on the TA2000 System or new mode of operation is instituted. If any new, additional function or feature or change or improvement to existing functions or features or new service or mode of operation measurably increases DST's cost of performing the services required hereunder at the current level of service, DST shall advise the Fund of the amount of such increase and if the Fund elects to utilize such function, feature or service, DST shall be entitled to increase its fees by the amount of the increase in costs. In no event shall DST be responsible for or liable to provide any additional function, feature, improvement or change in method of operation until it has consented thereto in writing. G. The Fund shall have the right to add new series to the TA2000 System upon at least thirty (30) days' prior written notice to DST provided that the requirements of the new series are generally consistent with services then being provided by DST under this Agreement. Rates or charges for additional series shall be as set forth in Exhibit A, as hereinafter defined, for the remainder of the contract term except as such series use functions, features or characteristics for which DST has imposed an additional charge as part of its standard pricing schedule. In the latter event, rates and charges shall be in accordance with DST's then-standard pricing schedule. 5. Limit of Authority. ------------------ Unless otherwise expressly limited by the resolution of appointment or by subsequent action by the Fund, the appointment of DST as Transfer Agent will be construed to cover the full amount of authorized stock of the class or classes for which DST is appointed as the same will, from time to time, be constituted, and any subsequent increases in such authorized amount. In case of such increase the Fund will file with DST: A. If the appointment of DST was theretofore expressly limited, a certified copy of a resolution of the Board of Directors of the Fund increasing the authority of DST; B. A certified copy of the amendment to the Articles of Incorporation of the Fund authorizing the increase of stock; C. A certified copy of the order or consent of each governmental or regulatory authority required by law to consent to the issuance of the increased stock, and an opinion of counsel that the order or consent of no other governmental or regulatory authority is required; D. Opinion of counsel for the Fund stating: (1) The status of the additional shares of stock of the Fund under the Securities Act of 1933, as amended, and any other applicable federal or state statute; and (2) That the additional shares are, or when issued will be, validly issued, fully paid and nonassessable. 6. Compensation and Expenses. ------------------------- A. In consideration for its services hereunder as Transfer Agent and Dividend Disbursing Agent, the Fund will pay to DST from time to time a reasonable compensation for all services rendered as Agent, and also, all its reasonable billable expenses, charges, counsel fees, and other disbursements ("Compensation and Expenses") incurred in connection with the agency. Such compensation is set forth in a separate schedule to be agreed to by the Fund and DST, a copy of which is attached hereto as Exhibit A. If the Fund has not paid such Compensation and Expenses to DST within a reasonable time, DST may charge against any monies held under this Agreement, the amount of any Compensation and/or Expenses for which it shall be entitled to reimbursement under this Agreement. B. The Fund also agrees promptly to reimburse DST for all reasonable billable expenses or disbursements incurred by DST in connection with the performance of services under this Agreement including, but not limited to, expenses for postage, express delivery services, freight charges, envelopes, checks, drafts, forms (continuous or otherwise), specially requested reports and statements, telephone calls, telegraphs, stationery supplies, counsel fees, outside printing and mailing firms (including Output Technology, Inc. and Support Resources, Inc.), magnetic tapes, reels or cartridges (if sent to the Fund or to a third party at the Fund's request) and magnetic tape handling charges, off-site record storage, media for storage of records (e.g., microfilm, microfiche, optical platters, computer tapes), computer equipment installed at the Fund's request at the Fund's or a third party's premises, telecommunications equipment, telephone/telecommunication lines between the Fund and its agents, on one hand, and DST on the other, proxy soliciting, processing and/or tabulating costs, second-site backup computer facility, transmission of statement data for remote printing or processing, and National Securities Clearing Corporation ("NSCC") transaction fees to the extent any of the foregoing are paid by DST. The Fund agrees to pay postage expenses at least one day in advance if so requested. In addition, any other expenses incurred by DST at the request or with the consent of the Fund will be promptly reimbursed by the Fund. C. Amounts due hereunder shall be due and paid on or before the thirtieth (30th) business day after receipt of the statement therefor by the Fund (the "Due Date"). The Fund is aware that its failure to pay all amounts in a timely fashion so that they will be received by DST on or before the Due Date will give rise to costs to DST not contemplated by this Agreement, including but not limited to carrying, processing and accounting charges. Accordingly, subject to Section 6.D. hereof, in the event that any amounts due hereunder are not received by DST by the Due Date, the Fund shall pay a late charge equal to the lesser of the maximum amount permitted by applicable law or the product of that rate announced from time to time by State Street Bank and Trust Company as its "Prime Rate" plus three (3) percentage points times the amount overdue, times the number of days from the Due Date up to and including the day on which payment is received by DST divided by 365. The parties hereby agree that such late charge represents a fair and reasonable computation of the costs incurred by reason of late payment or payment of amounts not properly due. Acceptance of such late charge shall in no event constitute a waiver of the Fund's or DST's default or prevent the non-defaulting party from exercising any other rights and remedies available to it. D. In the event that any charges are disputed, the Fund shall, on or before the Due Date, pay all undisputed amounts due hereunder and notify DST in writing of any disputed charges for billable expenses which it is disputing in good faith. Payment for such disputed charges shall be due on or before the close of the fifth (5th) business day after the day on which DST provides to the Fund documentation which an objective observer would agree reasonably supports the disputed charges (the "Revised Due Date"). Late charges shall not begin to accrue as to charges disputed in good faith until the first business day after the Revised Due Date. E. The fees and charges set forth on Exhibit A shall increase or may be increased as follows: (1) On the first day of each new term, in accordance with the "Fee Increases" provision in Exhibit A; (2) DST may increase the fees and charges set forth on Exhibit A upon at least ninety (90) days prior written notice, if changes in existing laws, rules or regulations: (i) require substantial system modifications or (ii) materially increase cost of performance hereunder; (3) DST may charge for additional features of TA2000 used by the Fund which features are not consistent with the Fund's current processing requirements; and (4) In the event DST, at the Fund's request or direction, performs Exception Services, DST shall be entitled to increase the fees and charges for such Exception Services from those set forth on Exhibit A to the extent such Exception Services increase DST's cost of performance. If DST notifies the Fund of an increase in fees or charges pursuant to subparagraph (2) of this Section 6.E., the parties shall confer, diligently and in good faith and agree upon a new fee to cover the amount necessary, but not more than such amount, to reimburse DST for the Fund's aliquot portion of the cost of developing the new software to comply with regulatory charges and for the increased cost of operation. If DST notifies the Fund of an increase in fees or charges under subparagraphs (3) or (4) of this Section 6.E., the parties shall confer, diligently and in good faith, and agree upon a new fee to cover such new fund feature. 7. Operation of DST System. ----------------------- In connection with the performance of its services under this Agreement, DST is responsible for such items as: A. That entries in DST's records, and in the Fund's records on the TA2000 System created by DST, reflect the orders, instructions, and other information received by DST from the Fund, the Fund's distributor, manager or principal underwriter, the Fund's investment adviser, the Fund's sponsor, the Fund's custodian, or the Fund's administrator (each an "Authorized Person"), broker-dealers or shareholders; B. That shareholder lists, shareholder account verifications, confirmations and other shareholder account information to be produced from its records or data be available and accurately reflect the data in the Fund's records on the TA2000 System; C. The accurate and timely issuance of dividend and distribution checks in accordance with instructions received from the Fund and the data in the Fund's records on the TA2000 System; D. That redemption transactions and payments be effected timely, under normal circumstances on the day of receipt, and accurately in accordance with redemption instructions received by DST from Authorized Persons, broker-dealers or shareholders and the data in the Fund's records on the TA2000 System; E. The deposit daily in the Fund's appropriate special bank account of all checks and payments received by DST from NSCC, broker-dealers or shareholders for investment in shares; F. Notwithstanding anything herein to the contrary, with respect to "as of" adjustments, DST will not assume one hundred percent (100%) responsibility for losses resulting from "as ofs" due to clerical errors or misinterpretations of shareholder instructions, but DST will discuss with the Fund DST's accepting liability for an "as of" on a case-by-case basis and may accept financial responsibility for a particular situation resulting in a financial loss to the Fund where DST in its discretion deems that to be appropriate; G. The requiring of proper forms of instructions, signatures and signature guarantees and any necessary documents supporting the opening of shareholder accounts, transfers, redemptions and other shareholder account transactions, all in conformance with DST's present procedures as set forth in its Legal Manual, Third Party Check Procedures, Checkwriting Draft Procedures, and Signature Guarantee Procedures (collectively the "Procedures") with such changes or deviations therefrom as may be from time to time required or approved by the Fund, its investment adviser or principal underwriter, or its or DST's counsel and the rejection of orders or instructions not in good order in accordance with the applicable prospectus or the Procedures; H. The maintenance of customary records in connection with its agency, and particularly those records required to be maintained pursuant to subparagraph (2)(iv) of paragraph (b) of Rule 31a-1 under the Investment Company Act of 1940, if any; and I. The maintenance of a current, duplicate set of the Fund's essential records at a secure separate location, in a form available and usable forthwith in the event of any breakdown or disaster disrupting its main operation. 8. Indemnification. --------------- A. DST shall at all times use reasonable care, due diligence and act in good faith in performing its duties under this Agreement. DST shall provide its services as Transfer Agent in accordance with Section 17A of the Securities Exchange Act of 1934, and the rules and regulations thereunder. In the absence of bad faith, willful misconduct, knowing violations of applicable law pertaining to the manner in which transfer agency services are to be performed by DST (excluding any violations arising directly or indirectly out of the actions or omissions to act of third parties unaffiliated with DST), reckless disregard of the performance of its duties, or negligence on its part, DST shall not be liable for any action taken, suffered, or omitted by it or for any error of judgment made by it in the performance of its duties under this Agreement. For those activities or actions delineated in the Procedures, DST shall be presumed to have used reasonable care, due diligence and acted in good faith if it has acted in accordance with the Procedures, copies of which have been provided to the Fund and reviewed and approved by the Fund's counsel, as amended from time to time with approval of counsel, or for any deviation therefrom approved by the Fund or DST counsel. B. DST shall not be responsible for, and the Fund shall indemnify and hold DST harmless from and against, any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability which may be asserted against DST or for which DST may be held to be liable, arising out of or attributable to: (1) All actions of DST required to be taken by DST pursuant to this Agreement, provided that DST has acted in good faith and with due diligence and reasonable care; (2) The Fund's refusal or failure to comply with the terms of this Agreement, the Fund's negligence or willful misconduct, or the breach of any representation or warranty of the Fund hereunder; (3) The good faith reliance on, or the carrying out of, any written or oral instructions or requests of persons designated by the Fund in writing (see Exhibit B) from time to time as authorized to give instructions on its behalf or representatives of an Authorized Person or DST's good faith reliance on, or use of, information, data, records and documents received from, or which have been prepared and/or maintained by the Fund, its investment advisor, its sponsor or its principal underwriter; (4) Defaults by dealers or shareowners with respect to payment for share orders previously entered; (5) The offer or sale of the Fund's shares in violation of any requirement under federal securities laws or regulations or the securities laws or regulations of any state or in violation of any stop order or other determination or ruling by any federal agency or state with respect to the offer or sale of such shares in such state (unless such violation results from DST's failure to comply with written instructions of the Fund or of any officer of the Fund that no offers or sales be input into the Fund's securityholder records in or to residents of such state); (6) The Fund's errors and mistakes in the use of the TA2000 System, the data center, computer and related equipment used to access the TA2000 System (the "DST Facilities"), and control procedures relating thereto in the verification of output and in the remote input of data; (7) Errors, inaccuracies, and omissions in, or errors, inaccuracies or omissions of DST arising out of or resulting from such errors, inaccuracies and omissions in, the Fund's records, shareholder and other records, delivered to DST hereunder by the Fund or its prior agent(s); (8) Actions or omissions to act by the Fund or agents designated by the Fund with respect to duties assumed thereby as provided for in Section 21 hereof; and (9) DST's performance of Exception Services except where DST acted or omitted to act in bad faith, with reckless disregard of its obligations or with gross negligence. C. Except where DST is entitled to indemnification under Section 8.B. hereof and with respect to "as ofs" set forth in Section 7.F., DST shall indemnify and hold the Fund harmless from and against any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of DST's failure to comply with the terms of this Agreement or arising out of or attributable to DST's negligence or willful misconduct or breach of any representation or warranty of DST hereunder. D. EXCEPT FOR VIOLATIONS OF SECTION 23, IN NO EVENT AND UNDER NO CIRCUMSTANCES SHALL EITHER PARTY TO THIS AGREEMENT BE LIABLE TO ANYONE, INCLUDING, WITHOUT LIMITATION TO THE OTHER PARTY, FOR CONSEQUENTIAL DAMAGES FOR ANY ACT OR FAILURE TO ACT UNDER ANY PROVISION OF THIS AGREEMENT EVEN IF ADVISED OF THE POSSIBILITY THEREOF. E. Promptly after receipt by an indemnified person of notice of the commencement of any action, such indemnified person will, if a claim in respect thereto is to be made against an indemnifying party hereunder, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party will not relieve an indemnifying party from any liability that it may have to any indemnified person for contribution or otherwise under the indemnity agreement contained herein except to the extent it is prejudiced as a proximate result of such failure to timely notify. In case any such action is brought against any indemnified person and such indemnified person seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, assume the defense thereof (in its own name or in the name and on behalf of any indemnified party or both with counsel reasonably satisfactory to such indemnified person); provided, however, if the defendants in any such action include both the indemnified person and an indemnifying party and the indemnified person shall have reasonably concluded that there may be a conflict between the positions of the indemnified person and an indemnifying party in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified persons which are inconsistent with those available to an indemnifying party, the indemnified person or indemnified persons shall have the right to select one separate counsel (in addition to local counsel) to assume such legal defense and to otherwise participate in the defense of such action on behalf of such indemnified person or indemnified persons at such indemnified party's sole expense. Upon receipt of notice from an indemnifying party to such indemnified person of its election so to assume the defense of such action and approval by the indemnified person of counsel, which approval shall not be unreasonably withheld (and any disapproval shall be accompanied by a written statement of the reasons therefor), the indemnifying party will not be liable to such indemnified person hereunder for any legal or other expenses subsequently incurred by such indemnified person in connection with the defense thereof. An indemnifying party will not settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified persons are actual or potential parties to such claim, action, suit or proceeding) unless such settlement, compromise or consent includes an unconditional release of each indemnified person from all liability arising out of such claim, action, suit or proceeding. An indemnified party will not, without the prior written consent of the indemnifying party settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder. If it does so, it waives its right to indemnification therefor. 9. Certain Covenants of DST and the Fund. ------------------------------------- A. All requisite steps will be taken by the Fund from time to time when and as necessary to register the Fund's shares for sale in all states in which the Fund's shares shall at the time be offered for sale and require registration. If at any time the Fund will receive notice of any stop order or other proceeding in any such state affecting such registration or the sale of the Fund's shares, or of any stop order or other proceeding under the federal securities laws affecting the sale of the Fund's shares, the Fund will give prompt notice thereof to DST. B. DST hereby agrees to perform such transfer agency functions as are set forth in Section 4.D. above and establish and maintain facilities and procedures reasonably acceptable to the Fund for safekeeping of stock certificates, check forms, and facsimile signature imprinting devices, if any; and for the preparation or use, and for keeping account of, such certificates, forms and devices, and to carry such insurance as it considers adequate and reasonably available. C. To the extent required by Section 31 of the Investment Company Act of 1940 as amended and Rules thereunder, DST agrees that all records maintained by DST relating to the services to be performed by DST under this Agreement are the property of the Fund and will be preserved and will be surrendered promptly to the Fund on request. D. DST agrees to furnish the Fund annual reports of its parent's financial condition, consisting of a balance sheet, earnings statement and any other financial information reasonably requested by the Fund. The annual financial statements will be certified by DST's certified public accountants. E. DST represents and agrees that it will use its reasonable efforts to keep current on the trends of the investment company industry relating to shareholder services and will use its reasonable efforts to continue to modernize and improve. F. DST will permit the Fund and its authorized representatives to make periodic inspections of its operations as such would involve the Fund at reasonable times during business hours. G. DST agrees to use its reasonable efforts to provide in Kansas City at the Fund's expense two (2) man weeks of training for the Fund's personnel in connection with use and operation of the TA2000 System. All travel and reimbursable expenses incurred by the Fund's personnel in connection with and during training at DST's Facility shall be borne by the Fund. At the Fund's option and expense, DST also agrees to use its reasonable efforts to provide an additional two (2) man weeks of training at the Fund's facility for the Fund's personnel in connection with the conversion to the TA2000 System. Reasonable travel, per diem and reimbursable expenses incurred by DST personnel in connection with and during training at the Fund's facility or in connection with the conversion shall be borne by the Fund. 10. Recapitalization or Readjustment. -------------------------------- In case of any recapitalization, readjustment or other change in the capital structure of the Fund requiring a change in the form of stock certificates, DST will issue or register certificates in the new form in exchange for, or in transfer of, the outstanding certificates in the old form, upon receiving: A. Written instructions from an officer of the Fund; B. Certified copy of the amendment to the Articles of Incorporation or other document effecting the change; C. Certified copy of the order or consent of each governmental or regulatory authority, required by law to the issuance of the stock in the new form, and an opinion of counsel that the order or consent of no other government or regulatory authority is required; D. Specimens of the new certificates in the form approved by the Board of Directors of the Fund, with a certificate of the Secretary of the Fund as to such approval; E. Opinion of counsel for the Fund stating: (1) The status of the shares of stock of the Fund in the new form under the Securities Act of 1933, as amended and any other applicable federal or state statute; and (2) That the issued shares in the new form are, and all unissued shares will be, when issued, validly issued, fully paid and nonassessable. 11. Stock Certificates. [STRIKE IF THE FUND WILL NOT ISSUE STOCK CERTIFICATES] ------------------ The Fund will furnish DST with a sufficient supply of blank stock certificates and from time to time will renew such supply upon the request of DST. Such certificates will be signed manually or by facsimile signatures of the officers of the Fund authorized by law and by bylaws to sign stock certificates, and if required, will bear the corporate seal or facsimile thereof. 12. Death, Resignation or Removal of Signing Officer. ------------------------------------------------ The Fund will file promptly with DST written notice of any change in the officers authorized to sign stock certificates, written instructions or requests, together with two signature cards bearing the specimen signature of each newly authorized officer. In case any officer of the Fund who will have signed manually or whose facsimile signature will have been affixed to blank stock certificates will die, resign, or be removed prior to the issuance of such certificates, DST may issue or register such stock certificates as the stock certificates of the Fund notwithstanding such death, resignation, or removal, until specifically directed to the contrary by the Fund in writing. In the absence of such direction, the Fund will file promptly with DST such approval, adoption, or ratification as may be required by law. 13. Future Amendments of Charter and Bylaws. --------------------------------------- The Fund will promptly file with DST copies of all material amendments to its Articles of Incorporation or Bylaws made after the date of this Agreement. 14. Instructions, Opinion of Counsel and Signatures. ----------------------------------------------- At any time DST may apply to any person authorized by the Fund to give instructions to DST, and may with the approval of a Fund officer consult with legal counsel for the Fund, or DST's own legal counsel at the expense of the Fund, with respect to any matter arising in connection with the agency and it will not be liable for any action taken or omitted by it in good faith in reliance upon such instructions or upon the opinion of such counsel. DST will be protected in acting upon any paper or document reasonably believed by it to be genuine and to have been signed by the proper person or persons and will not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Fund. It will also be protected in recognizing stock certificates which it reasonably believes to bear the proper manual or facsimile signatures of the officers of the Fund, and the proper countersignature of any former Transfer Agent or Registrar, or of a co-Transfer Agent or co- Registrar. 15. Force Majeure and Disaster Recovery Plans. ------------------------------------------ A. DST shall not be responsible or liable for its failure or delay in performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation: any interruption, loss or malfunction or any utility, transportation, computer (hardware or software) or communication service; inability to obtain labor, material, equipment or transportation, or a delay in mails; governmental or exchange action, statute, ordinance, rulings, regulations or direction; war, strike, riot, emergency, civil disturbance, terrorism, vandalism, explosions, labor disputes, freezes, floods, fires, tornados, acts of God or public enemy, revolutions, or insurrection; or any other cause, contingency, circumstance or delay not subject to DST's reasonable control which prevents or hinders DST's performance hereunder. B. DST currently maintains an agreement with a third party whereby DST is to be permitted to use on a "shared use" basis a "hot site" (the "Recovery Facility") maintained by such party in event of a disaster rendering the DST Facilities inoperable. DST has developed and is continually revising a business contingency plan (the "Business Contingency Plan") detailing which, how, when, and by whom data maintained by DST at the DST Facilities will be installed and operated at the Recovery Facility. Provided the Fund is paying its pro rata portion of the charge therefor, DST would, in event of a disaster rendering the DST Facilities inoperable, use reasonable efforts to convert the TA2000 System containing the designated the Fund data to the computers at the Recovery Facility in accordance with the then current Business Contingency Plan. C. DST also currently maintains, separate from the area in which the operations which provides the services to the Fund hereunder are located, a Crisis Management Center consisting of phones, computers and the other equipment necessary to operate a full service transfer agency business in the event one of its operations areas is rendered inoperable. The transfer of operations to other operating areas or to the Crisis Management Center is also covered in DST's Business Contingency Plan. 16. Certification of Documents. -------------------------- The required copy of the Articles of Incorporation of the Fund and copies of all amendments thereto will be certified by the Secretary of State (or other appropriate official) of the State of Incorporation, and if such Articles of Incorporation and amendments are required by law to be also filed with a county, city or other officer of official body, a certificate of such filing will appear on the certified copy submitted to DST. A copy of the order or consent of each governmental or regulatory authority required by law to the issuance of the stock will be certified by the Secretary or Clerk of such governmental or regulatory authority, under proper seal of such authority. The copy of the Bylaws and copies of all amendments thereto, and copies of resolutions of the Board of Directors of the Fund, will be certified by the Secretary or an Assistant Secretary of the Fund under the Fund's seal. 17. Records. ------- DST will maintain customary records in connection with its agency, and particularly will maintain those records required to be maintained pursuant to subparagraph (2) (iv) of paragraph (b) of Rule 31a-1 under the Investment Company Act of 1940, if any. 18. Disposition of Books, Records and Canceled Certificates. ------------------------------------------------------- DST may send periodically to the Fund, or to where designated by the Secretary or an Assistant Secretary of the Fund, all books, documents, and all records no longer deemed needed for current purposes and stock certificates which have been canceled in transfer or in exchange, upon the understanding that such books, documents, records, and stock certificates will be maintained by the Fund under and in accordance with the requirements of Section 17Ad-7 adopted under the Securities Exchange Act of 1934. Such materials will not be destroyed by the Fund without the consent of DST (which consent will not be unreasonably withheld), but will be safely stored for possible future reference. 19. Provisions Relating to DST as Transfer Agent. -------------------------------------------- A. DST will make original issues of stock certificates upon written request of an officer of the Fund and upon being furnished with a certified copy of a resolution of the Board of Directors authorizing such original issue, an opinion of counsel as outlined in subparagraphs 1.D. and G. of this Agreement, any documents required by Sections 5. or 10. of this Agreement, and necessary funds for the payment of any original issue tax. B. Before making any original issue of certificates the Fund will furnish DST with sufficient funds to pay all required taxes on the original issue of the stock, if any. The Fund will furnish DST such evidence as may be required by DST to show the actual value of the stock. If no taxes are payable DST will be furnished with an opinion of outside counsel to that effect. C. Shares of stock will be transferred and new certificates issued in transfer, or shares of stock accepted for redemption and funds remitted therefor, or book entry transfer be effected, upon surrender of the old certificates in form or receipt by DST of instructions deemed by DST properly endorsed for transfer or redemption accompanied by such documents as DST may deem necessary to evidence the authority of the person making the transfer or redemption. DST reserves the right to refuse to transfer or redeem shares until it is satisfied that the endorsement or signature on the certificate or any other document is valid and genuine, and for that purpose it may require a guaranty of signature in accordance with the Signature Guarantee Procedures. DST also reserves the right to refuse to transfer or redeem shares until it is satisfied that the requested transfer or redemption is legally authorized, and it will incur no liability for the refusal in good faith to make transfers or redemptions which, in its judgment, are improper or unauthorized. DST may, in effecting transfers or redemptions, rely upon Simplification Acts, Uniform ------- Commercial Code or other statutes which protect it and the Fund in not --------------- requiring complete fiduciary documentation. In cases in which DST is not directed or otherwise required to maintain the consolidated records of shareholder's accounts, DST will not be liable for any loss which may arise by reason of not having such records. D. When mail is used for delivery of stock certificates, DST will forward stock certificates in "nonnegotiable" form by first class or registered mail and stock certificates in "negotiable" form by registered mail, all such mail deliveries to be covered while in transit to the addressee by insurance arranged for by DST. E. DST will issue and mail subscription warrants, certificates representing stock dividends, exchanges or split ups, or act as Conversion Agent upon receiving written instructions from any officer of the Fund and such other documents as DST deems necessary. F. DST will issue, transfer, and split up certificates and will issue certificates of stock representing full shares upon surrender of scrip certificates aggregating one full share or more when presented to DST for that purpose upon receiving written instructions from an officer of the Fund and such other documents as DST may deem necessary. G. DST may issue new certificates in place of certificates represented to have been lost, destroyed, stolen or otherwise wrongfully taken upon receiving instructions from the Fund and indemnity satisfactory to DST and the Fund, and may issue new certificates in exchange for, and upon surrender of, mutilated certificates. Such instructions from the Fund will be in such form as will be approved by the Board of Directors of the Fund and will be in accordance with the provisions of law and the bylaws of the Fund governing such matter. H. DST will supply a shareholder's list to the Fund for its annual meeting upon receiving a request from an officer of the Fund. It will also, at the expense of the Fund, supply lists at such other times as may be requested by an officer of the Fund. I. Upon receipt of written instructions of an officer of the Fund, DST will, at the expense of the Fund, address and mail notices to shareholders. J. In case of any request or demand for the inspection of the stock books of the Fund or any other books in the possession of DST, DST will endeavor to notify the Fund and to secure instructions as to permitting or refusing such inspection. DST reserves the right, however, to exhibit the stock books or other books to any person in case it is advised by its counsel that it may be held responsible for the failure to exhibit the stock books or other books to such person. 20. Provisions Relating to Dividend Disbursing Agency. ------------------------------------------------- A. DST will, at the expense of the Fund, provide a special form of check containing the imprint of any device or other matter desired by the Fund. Said checks must, however, be of a form and size convenient for use by DST. B. If the Fund desires to include additional printed matter, financial statements, etc., with the dividend checks, the same will be furnished DST within a reasonable time prior to the date of mailing of the dividend checks, at the expense of the Fund. C. If the Fund desires its distributions mailed in any special form of envelopes, sufficient supply of the same will be furnished to DST but the size and form of said envelopes will be subject to the approval of DST. If stamped envelopes are used, they must be furnished by the Fund; or if postage stamps are to be affixed to the envelopes, the stamps or the cash necessary for such stamps must be furnished by the Fund. D. DST shall establish and maintain on behalf of the Fund one or more deposit accounts as Agent for the Fund, into which DST shall deposit the funds DST receives for payment of dividends, distributions, redemptions or other disbursements provided for hereunder and to draw checks against such accounts. E. DST is authorized and directed to stop payment of checks theretofore issued hereunder, but not presented for payment, when the payees thereof allege either that they have not received the checks or that such checks have been mislaid, lost, stolen, destroyed or through no fault of theirs, are otherwise beyond their control, and cannot be produced by them for presentation and collection, and, to issue and deliver duplicate checks in replacement thereof. 21. Assumption of Duties By the Fund or Agents Designated By the Fund. ----------------------------------------------------------------- A. The Fund or its designated agents other than DST may assume certain duties and responsibilities of DST or those services of Transfer Agent and Dividend Disbursing Agent as those terms are referred to in Section 4.D. of this Agreement including but not limited to answering and responding to telephone inquiries from shareholders and brokers, accepting shareholder and broker instructions (either or both oral and written) and transmitting orders based on such instructions to DST, preparing and mailing confirmations, obtaining certified TIN numbers, classifying the status of shareholders and shareholder accounts under applicable tax law, establishing shareholder accounts on the TA2000 System and assigning social codes and Taxpayer Identification Number codes thereof, and disbursing monies of the Fund, said assumption to be embodied in writing to be signed by both parties. B. To the extent the Fund or its agent or affiliate assumes such duties and responsibilities, DST shall be relieved from all responsibility and liability therefor and is hereby indemnified and held harmless against any liability therefrom and in the same manner and degree as provided for in Section 8 hereof. C. Initially the Fund or its designees shall be responsible for the following: [LIST RESPONSIBILITIES OR DELETE AS APPROPRIATE.] (i) answer and respond to phone calls from shareholders and broker- dealers, and (ii) scan items into DST's AWD/TM/ System as such calls or items are received by the Fund, and (iii) enter and confirm wire order trades. 22. Termination of Agreement. ------------------------ A. This Agreement shall be in effect for an initial period of five (5) years and thereafter may be terminated by either party upon receipt of one (1) year's written notice from the other party, provided, however, that the effective date of any termination shall not occur during the period from December 15 through March 30 of any year to avoid adversely impacting year end. B. Each party, in addition to any other rights and remedies, shall have the right to terminate this Agreement forthwith upon the occurrence at any time of any of the following events with respect to the other party: (1) The bankruptcy of the other party or its assigns or the appointment of a receiver for the other party or its assigns; or (2) Failure by the other party or its assigns to perform its duties in accordance with the Agreement, which failure materially adversely affects the business operations of the first party and which failure continues for thirty (30) days after receipt of written notice from the first party. C. In the event of termination, the Fund will promptly pay DST all amounts due to DST hereunder. In addition, if this Agreement is terminated by the Fund for any reason other than those set forth in Section 22.B. hereof, then the Fund shall pay to DST a termination fee equal to the lesser of (i) the aggregate of the fees charged to the Fund during the previous six (6) calendar months preceding receipt of the notice or (ii) the average monthly fee over the preceding six (6) months times the number of months remaining in the then current term after termination. If the Fund shall not have been billed for six (6) months before termination, the average monthly fee shall be calculated by dividing the aggregate fees charged to the Fund during whatever period it was billed by the number of months in that period and that average monthly fee shall be multiplied by six (6) in order to determine the aggregate fees in subparagraph 22.C.(i). In any event, the effective date of any deconversion as a result of termination hereof shall not occur during the period from December 15th through March 30th of any year to avoid adversely impacting year end. D. In the event of termination, DST will use its reasonable efforts to transfer the records of the Fund to the designated successor transfer agent, to provide reasonable assistance to the Fund and its designated successor transfer agent, and to provide other information relating to its services provided hereunder (subject to the recompense of DST for such assistance at its standard rates and fees for personnel then in effect at that time); provided, however, as used herein "reasonable assistance" and "other information" shall not include assisting any new service or system provider to modify, alter, enhance, or improve its system or to improve, enhance, or alter its current system, or to provide any new, functionality or to require DST to disclose any DST Confidential Information, as hereinafter defined, or any information which is otherwise confidential to DST. 23. Confidentiality. --------------- A. DST agrees that, except as provided in the last sentence of Section 19.J. hereof, or as otherwise required by law, DST will keep confidential all records of and information in its possession relating to the Fund or its shareholders or shareholder accounts and will not disclose the same to any person except at the request or with the consent of the Fund. B. The Fund agrees to keep confidential all financial statements and other financial records received from DST, the terms and provisions of this Agreement, all accountant's reports relating to DST, and all manuals, systems and other technical information and data, not publicly disclosed, relating to DST's operations and programs furnished to it by DST pursuant to this Agreement and will not disclose the same to any person except at the request or with the consent of DST. C. (1) The Fund acknowledges that DST has proprietary rights in and to the TA2000 System used to perform services hereunder including, but not limited to the maintenance of shareholder accounts and records, processing of related information and generation of output, including, without limitation any changes or modifications of the TA2000 System and any other DST programs, data bases, supporting documentation, or procedures (collectively "DST Confidential Information") which the Fund's access to the TA2000 System or computer hardware or software may permit the Fund or its employees or agents to become aware of or to access and that the DST Confidential Information constitutes confidential material and trade secrets of DST. The Fund agrees to maintain the confidentiality of the DST Confidential Information. (2) The Fund acknowledges that any unauthorized use, misuse, disclosure or taking of DST Confidential Information which is confidential as provided by law, or which is a trade secret, residing or existing internal or external to a computer, computer system, or computer network, or the knowing and unauthorized accessing or causing to be accessed of any computer, computer system, or computer network, may be subject to civil liabilities and criminal penalties under applicable state law. The Fund will advise all of its employees and agents who have access to any DST Confidential Information or to any computer equipment capable of accessing DST or DST hardware or software of the foregoing. (3) The Fund acknowledges that disclosure of the DST Confidential Information may give rise to an irreparable injury to DST inadequately compensable in damages. Accordingly, DST may seek (without the posting of any bond or other security) injunctive relief against the breach of the foregoing undertaking of confidentiality and nondisclosure, in addition to any other legal remedies which may be available, and the Fund consents to the obtaining of such injunctive relief. All of the undertakings and obligations relating to confidentiality and nondisclosure, whether contained in this Section or elsewhere in this Agreement shall survive the termination or expiration of this Agreement for a period of ten (10) years. 24. Changes and Modifications. ------------------------- A. During the term of this Agreement DST will use on behalf of the Fund without additional cost all modifications, enhancements, or changes which DST may make to the TA2000 System in the normal course of its business and which are applicable to functions and features offered by the Fund, unless substantially all DST clients are charged separately for such modifications, enhancements or changes, including, without limitation, substantial system revisions or modifications necessitated by changes in existing laws, rules or regulations. The Fund agrees to pay DST promptly for modifications and improvements which are charged for separately at the rate provided for in DST's standard pricing schedule which shall be identical for substantially all clients, if a standard pricing schedule shall exist. If there is no standard pricing schedule, the parties shall mutually agree upon the rates to be charged. B. DST shall have the right, at any time and from time to time, to alter and modify any systems, programs, procedures or facilities used or employed in performing its duties and obligations hereunder; provided that the Fund will be notified as promptly as possible prior to implementation of such alterations and modifications and that no such alteration or modification or deletion shall materially adversely change or affect the operations and procedures of the Fund in using or employing the TA2000 System or DST Facilities hereunder or the reports to be generated by such system and facilities hereunder, unless the Fund is given thirty (30) days prior notice to allow the Fund to change its procedures and DST provides the Fund with revised operating procedures and controls. C. All enhancements, improvements, changes, modifications or new features added to the TA2000 System however developed or paid for shall be, and shall remain, the confidential and exclusive property of, and proprietary to, DST. 25. Subcontractors. --------------- Nothing herein shall impose any duty upon DST in connection with or make DST liable for the actions or omissions to act of unaffiliated third parties such as, by way of example and not limitation, Airborne Services, the U.S. mails and telecommunication companies, provided, if DST selected such company, DST shall have exercised due care in selecting the same. 26. Limitations on Liability. ------------------------- A. If the Fund is comprised of more than one Portfolio, each Portfolio shall be regarded for all purposes hereunder as a separate party apart from each other Portfolio. Unless the context otherwise requires, with respect to every transaction covered by this Agreement, every reference herein to the Fund shall be deemed to relate solely to the particular Portfolio to which such transaction relates. Under no circumstances shall the rights, obligations or remedies with respect to a particular Portfolio constitute a right, obligation or remedy applicable to any other Portfolio. The use of this single document to memorialize the separate agreement of each Portfolio is understood to be for clerical convenience only and shall not constitute any basis for joining the Portfolios for any reason. [DELETE IF NOT APPLICABLE] B. Notice is hereby given that a copy of the Fund's Trust Agreement and all amendments thereto is on file with the Secretary of State of the state of its organization; that this Agreement has been executed on behalf of the Fund by the undersigned duly authorized representative of the Fund in his/her capacity as such and not individually; and that the obligations of this Agreement shall only be binding upon the assets and property of the Fund and shall not be binding upon any trustee, officer or shareholder of the Fund individually. [DELETE IF NOT APPLICABLE] 27. Miscellaneous. ------------- A. This Agreement shall be construed according to, and the rights and liabilities of the parties hereto shall be governed by, the laws of the State of Missouri, excluding that body of law applicable to choice of law. B. All terms and provisions of this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns. C. The representations and warranties, and the indemnification extended hereunder, if any, are intended to and shall continue after and survive the expiration, termination or cancellation of this Agreement. D. No provisions of this Agreement may be amended or modified in any manner except by a written agreement properly authorized and executed by each party hereto. E. The captions in this Agreement are included for convenience of reference only, and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. F. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. G. If any part, term or provision of this Agreement is by the courts held to be illegal, in conflict with any law or otherwise invalid, the remaining portion or portions shall be considered severable and not be affected, and the rights and obligations of the parties shall be construed and enforced as if the Agreement did not contain the particular part, term or provision held to be illegal or invalid. H. This Agreement may not be assigned by the Fund or DST without the prior written consent of the other. I. Neither the execution nor performance of this Agreement shall be deemed to create a partnership or joint venture by and between the Fund and DST. It is understood and agreed that all services performed hereunder by DST shall be as an independent contractor and not as an employee of the Fund. This Agreement is between DST and the Fund and neither this Agreement nor the performance of services under it shall create any rights in any third parties. There are no third party beneficiaries hereto. J. Except as specifically provided herein, this Agreement does not in any way affect any other agreements entered into among the parties hereto and any actions taken or omitted by any party hereunder shall not affect any rights or obligations of any other party hereunder. K. The failure of either party to insist upon the performance of any terms or conditions of this Agreement or to enforce any rights resulting from any breach of any of the terms or conditions of this Agreement, including the payment of damages, shall not be construed as a continuing or permanent waiver of any such terms, conditions, rights or privileges, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred. L. This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement, draft or agreement or proposal with respect to the subject matter hereof, whether oral or written, and this Agreement may not be modified except by written instrument executed by both parties. M. All notices to be given hereunder shall be deemed properly given if delivered in person or if sent by U.S. mail, first class, postage prepaid, or if sent by facsimile and thereafter confirmed by mail as follows: If to DST: DST Systems, Inc. 1055 Broadway, 7th Fl. Kansas City, Missouri 64105 Attn: Senior Vice President-Full Service Facsimile No.: 816-435-3455 With a copy of non-operational notices to: DST Systems, Inc. 1055 Broadway, 9th Fl. Kansas City, Missouri 64105 Attn: Legal Department Facsimile No.: 816-435-8630 If to the Fund: SoGen International Fund, Inc. 1221 Avenue of the Americas New York, NY 10020 Attn: Philip J. Bafundo, Vice President Facsimile No.: ________________ or to such other address as shall have been specified in writing by the party to whom such notice is to be given. N. The representations and warranties contained herein shall survive the execution of this Agreement. The representations and warranties contained herein and the provisions of Section 8 hereof shall survive the termination of the Agreement and the performance of services hereunder until any statute of limitations applicable to the matter at issues shall have expired. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective duly authorized officers, to be effective as of the day and year first above written. DST SYSTEMS, INC. By:_____________________________________ Title:__________________________________ SOGEN INTERNATIONAL FUND, INC. By:____________________________________ Title:__________________________________ EX-99.11A 3 CONSENT OF KPMG PEAT MARWICK LLP EXHIBIT 99.11(A) INDEPENDENT AUDITORS' CONSENT The Board of Directors and Shareholders of SoGen International Funds, Inc. We consent to the use of our report dated May 16, 1997 for the SoGen Interna- tional Fund, Inc. incorporated herein by reference in this registration state- ment on Form N-1A and to the references to our Firm under the headings "Finan- cial Highlights" in the Prospectus and "Independent Auditors" and "Financial Statements" in the Statement of Additional Information. KPMG Peat Marwick LLP New York, New York July 18, 1997 EX-99.11C 4 REPRESENTATION LETTER OF DECHERT PRICE & RHOADS EXHIBIT 11(C) DECHERT PRICE & RHOADS 30 Rockefeller Plaza New York, New York 10112 Tel: (212) 698-3500 Fax: (212) 698-3599 July 25, 1997 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: SoGen International Fund, Inc. (File No. 2-34329) Dear Sirs: The undersigned counsel for SoGen International Fund, Inc. (the "Fund") has reviewed Post-Effective Amendment No. 41 to the Fund's Registration Statement on Form N-1A, and hereby represents that such Post-Effective Amendment No. 41 does not contain disclosures that would render it ineligible to become effective pursuant to Rule 485(b). Very truly yours, /s/ William Goodwin William Goodwin EX-99.16 5 DATA IN STATEMENT OF ADDITIONAL INFORMATION EXHIBIT 99.16 SOGEN INTERNATIONAL FUND, INC. CALCULATION OF PERFORMANCE DATA IN STATEMENT OF ADDITIONAL INFORMATION AVERAGE ANNUAL TOTAL RATE OF RETURN FOR 1 YEAR AND AVERAGE ANNUAL COMPOUNDED TOTAL RATES OF RETURN FOR 5 AND 10 YEARS
1 YEAR 5 YEARS 10 YEARS (3/31/96) (3/31/92) (3/31/87) ------------------------- ------------------------- ------------------------- Initial Investment = P.. $1,000 $1,000 $1,000 Ending Redeemable Value @ 3/31/97 = ERV........ $1,054 $1,775 $2,639 Calculations: T = the nth root of T = the 1st T = the fifth T = the tenth (ERV/P) - 1............ root of (1,054/1,000) - 1 root of (1,775/1,000) - 1 root of (2,639/1,000) - 1 = 1.054-1 = 1.1216-1 = 1.1019-1 = 0.0537 = 0.1216 = 0.1019 = 5.37% = 12.16% = 10.19%
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