<PAGE>
As filed with the U.S. Securities and Exchange Commission on November 14, 1997
Securities Act File No. 333-_____
Investment Company Act File No. 811-_____
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER [x]
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. [ ]
(Check appropriate box or boxes)
COWEN SERIES FUNDS, INC.
..............................................
(Exact Name of Registrant as Specified in Charter)
Financial Square
New York, New York 10005
........................................ ................
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code:
(212) 495-6724
Rodd M. Baxter
Cowen Series Funds, Inc.
Financial Square
New York, New York 10005
.........................................
(Name and Address of Agent for Service)
Copy to:
Jon S. Rand, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4677
<PAGE>
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
Title of securities being registered: Common Stock, par value $.001 per share.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended (the "1933 Act"), or until the Registration
Statement shall become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.
<PAGE>
COWEN SERIES FUNDS, INC.
FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Part A
Item No. Prospectus Heading
- -------- ------------------
<S> <C> <C>
1. Cover Page............................. Cover Page
2. Synopsis............................... The Fund's Expenses
3. Condensed Financial Information........ Not Applicable
4. General Description of Registrant...... Cover Page; Investment
Objectives and Policies; Additional
Information
5. Management of the Fund................. Management of the Fund
6. Capital Stock and Other Securities.....
Additional Information
7. Purchase of Securities Being Offered... Net Asset Value; Purchase of Shares
8. Redemption or Repurchase............... Net Asset Value; Redemption of Shares
9. Legal Proceedings...................... Not Applicable
Part B
Item No. Heading for the Statement of Additional Information
- -------- ---------------------------------------------------
10. Cover Page................................. Cover Page
11. Table of Contents...................... Contents
12. General Information and History........ Management of the Fund
13. Investment Objectives and Policies..... Investment Objectives and Policies
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
1. Management of the Registrant........... Management of the Fund; See Prospectus --"Management of the Fund"
2. Control Persons and Principal Holders
of Securities........................... Management of the Fund
3. Investment Advisory and Other Services. Management of the Fund; See Prospectus -- "Management of the Fund"
4. Brokerage Allocation................... Investment Objectives and Policies
5. Capital Stock and Other Securities..... Management of the Fund; See Prospectus -- "Additional Information"
6. Purchase, Redemption and Pricing of Purchase and Redemptions; See Prospectus --"Purchase of Shares"
Securities Being Offered................ and "Redemption of Shares"
7. Tax Status............................. Taxes; See Prospectus -- "Dividends, Distributions and Taxes"
8. Underwriters........................... Management of the Fund; See Prospectus -- "Management of the Fund"
9. Calculation of Performance Data........
Performance Information
10. Financial Statements................... Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth after the
appropriate item, so numbered, in Part C to this Registration Statement.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS JANUARY __, 1998
COWEN
LARGE CAP VALUE
FUND
Financial Square New York, NY 10005-3597 800-262-7116 212-495-6724
Cowen Large Cap Value Fund is a mutual fund that seeks capital appreciation by
investing primarily in equity securities which are deemed to be undervalued.
Current income from dividends is a secondary objective of the Fund.
Cowen Large Cap Value Fund is a series of Cowen Series Funds, Inc.
This Prospectus briefly sets forth certain information about the Fund that
investors should know before investing. Investors are advised to read this
Prospectus and retain it for future reference. For convenience, certain terms
that appear throughout this Prospectus have been abbreviated: Cowen Large Cap
Value Fund will be referred to as the "Fund"; Cowen & Company, the Fund's
principal underwriter, will be referred to as "Cowen"; Cowen, through its
investment management division, Cowen Asset Management, will serve as the Fund's
investment manager and in that capacity will be referred to as "Cowen Asset
Management"; and Investors Fiduciary Trust Company, the Fund's custodian will be
referred to as the "Bank" or "IFTC," and DST, Inc., the Fund's transfer and
dividend agent will be referred to as "DST."
Additional information about the Fund, contained in a Statement of Additional
Information, has been filed with the Securities and Exchange Commission ("SEC")
and is available to investors without charge by calling the Fund's distributor
at 800-262-7116 or 212-495-6724 or by contacting your account representative.
The Statement of Additional Information bears the same date as this Prospectus
and is incorporated by reference into this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[LOGO]
COWEN & COMPANY
PRINCIPAL UNDERWRITER
<PAGE>
CONTENTS
THE FUND'S EXPENSES........................................................3
INVESTMENT OBJECTIVES AND POLICIES.........................................4
MANAGEMENT OF THE FUND.....................................................8
NET ASSET VALUE...........................................................12
PURCHASE OF SHARES........................................................13
REDEMPTION OF SHARES......................................................19
DIVIDENDS, DISTRIBUTIONS AND TAXES........................................22
ADDITIONAL INFORMATION....................................................23
THE COWEN FAMILY OF FUNDS.................................................25
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS. THE STATEMENT OF ADDITIONAL INFORMATION OR THE
FUND'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE
OFFERING OF THE FUND'S SHARES AND, IF GIVEN OR MADE, SUCH
OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED ON AS
HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO
WHOM, SUCH OFFER MAY NOT LAWFULLY BE MADE.
2
<PAGE>
THE FUND'S EXPENSES
Under the Multiple Pricing System, the Fund presently offers
three methods of purchasing shares. When purchasing shares of the Fund,
investors must specify whether the purchase is for Class A shares, Class B
shares or Class C shares, as described below. The following table lists the
costs that an investor will incur, either directly or indirectly, as a
shareholder of the Fund, based upon the Fund's projected annual operating
expenses:
<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales charge imposed on purchases of shares (as
a percentage of offering price)..................... 4.75% 0% 0%
Maximum sales charge imposed on
reinvested dividends................................... 0% 0% 0%
Maximum contingent deferred
sales charge (as a percentage
of redemption proceeds)............................. 0% 5.00% 0%
Redemption fees........................................ $ 0 $ 0 $ 0
Exchange fee (per transaction)......................... $ 0 $ 0 $ 0
Annual Portfolio Operating
Expenses (after expense
reimbursement)
(as percentage of average net
assets)
Management fees........................................ .75% .75% .75%
12b-1 fees (distribution and
service fees).......................................... .25% 1.00% 0%
Other expenses (after expense
reimbursement)*........................................ % % %
Total Fund Operating Expenses
(after expense reimbursement)*........................ % % %
</TABLE>
- --------------------------------------
* Cowen is voluntarily absorbing ___ of all "Other expenses" for each Class.
It is currently anticipated that this arrangement will continue through
1998. Based on the Fund's projected annualized average net assets, if
these expenses are not absorbed, "Other expenses" would be ___%, ___% and
___% for Class A, B and C, respectively, and "Total Fund Operating
Expenses" would be ___%, ___% and ___% for Class A, B and C, respectively.
The nature of the services for which the Fund pays management
fees is described below under "Management of the Fund." The Fund bears an annual
Rule 12b-1 service fee of .25% of the value of the average daily net assets
attributable to Class A shares and an annual Rule 12b-1 fee of 1.00% of the
value of the average daily net assets attributable to Class B shares, consisting
of a .25% service fee and a .75% distribution fee. Long term shareholders of
Class B shares may pay more than the economic equivalent of the maximum front
end sales charge currently permitted by the rules of the National Association of
3
<PAGE>
Securities Dealers, Inc. ("NASD") governing investment company sales charges.
See "Management of the Fund - Distributor".
The percentage of "Other expenses" in the table above is based
on amounts for expenses that include fees for shareholder services, custodial
fees, legal and accounting fees, printing costs and registration fees.
Example
The following example demonstrates the projected dollar amount
of total cumulative expenses that would be incurred over various periods with
respect to a hypothetical $1,000 investment in the Fund assuming (1) a 5% annual
return, (2) payment of the shareholder transaction expenses and annual Fund
operating expenses set forth in the table above and (3) complete redemption at
the end of the period.
1 Year 3 Years 5 Years
------ ------- -------
Class A $ $ $
Class B $ $ $
Class C $ $ $
An investor would pay the following expenses on the same
investment in Class B shares assuming no redemption.
1 Year 3 Years 5 Years
------ ------- -------
$ $ $
The above example is intended to assist an investor in
understanding various costs and expenses that the investor would bear upon
becoming a shareholder of the Fund. The example should not be considered to be a
representation of past or future expenses. Actual expenses of the Fund may be
greater or less than those shown above. The assumed 5% annual return shown in
the example is hypothetical and should not be considered to be a representation
of past or future annual return; the actual return of the Fund may be greater or
less than the assumed return.
INVESTMENT OBJECTIVES AND POLICIES
In General
The primary investment objective of the Fund is to provide
capital appreciation. Current income from dividends is a secondary objective of
the Fund. The Fund seeks to achieve its
4
<PAGE>
investment objectives by investing at least 80 percent of its assets under
normal market conditions in equity securities, such as common or preferred stock
or securities convertible into or exchangeable for common stock, which are
deemed to be undervalued. Cowen Asset Management emphasizes investments in
companies with value characteristics below that of the Russell 1000 Value Index
and capitalization in excess of $1 billion. Cowen Asset Management may also make
temporary investments in investment grade corporate debt obligations and U.S.
Government securities for defensive purposes when it believes market conditions
warrant a temporary defensive posture, and as a cash management technique. See
"Temporary Investments". In addition, Cowen Asset Management may write covered
call options and engage in securities lending transactions in order to generate
additional income for the Fund. See "Covered Call Options" and "Lending of
Securities." The Fund's investment objectives may not be changed without
shareholder approval. There is no assurance that the Fund's investment
objectives will be achieved.
Although a consideration in the selection of the Fund's
investments, current income from dividends is not the primary objective of the
Fund and investors should not expect dividend income comparable to that of
mutual funds with a high level of dividend income as a primary objective.
Because the Fund will invest primarily in equity securities, it will be subject
to general conditions prevailing in securities markets and the net asset value
of the Fund's shares will fluctuate with changes in the market prices of its
portfolio securities. It is anticipated that the securities in which the Fund
will invest will be traded on the New York or American Stock Exchanges, although
the Fund may invest in securities traded in the over-the-counter market. Cowen
Asset Management will attempt to avoid investment in speculative securities or
those with speculative characteristics and the Fund has adopted certain other
policies designed to limit investment risk. See "Investment Restrictions."
Investment Strategy
In managing the Fund's assets, Cowen Asset Management uses the
Cowen Large Cap Value approach, which is a five-step investment process seeking
to identify neglected or out-of-favor companies whose stock prices are low in
relation to current earnings, cashflow, book value and sales.
Stocks are selected out of a universe of approximately 650
stocks worldwide, each with a capitalization in excess of $1 billion. The
discipline screens for these stocks whose price-to- earnings ratios are in the
lower 40% of the market and/or whose price-to-cashflow, price-to-book and/or
price-to-sales ratios are in the lower 20% of the market. In addition,
independent and
5
<PAGE>
fundamental analyses are conducted with the goal of adding value by selecting
those stocks with reasonable prospects when expectations are low and valuations
are temporarily depressed.
Cowen Asset Management adheres to a strict risk management and
sell discipline. The approach attempts to control risk both through
diversification across sectors, industries and issues and also by monitoring
sector and industry weightings relative to appropriate benchmarks. It is the
practice of this approach to sell stocks either when they have achieved a
relative valuation target price or in the event that fundamentals fail to
improve as expected or deteriorate causing undue risk. Cowen Asset Management
may make modifications of its investment strategy for the Fund as it deems
advisable in light of its experience in managing the Fund or in response to
changing market or economic conditions.
Temporary Investments
The Fund may invest up to 20 percent of its assets, and in
excess of that amount when Cowen Asset Management believes market conditions
warrant a temporary defensive posture, in corporate bonds rated at least Baa by
Moody's Investors Service, Inc., or BBB by Standard & Poor's Corporation,
commercial paper rated at least Prime-2 by Moody's or A-2 by Standard & Poor's
and obligations issued or guaranteed by the U.S. Government or by its agencies
or instrumentalities and repurchase agreements in respect of such obligations.
Obligations of certain agencies and instrumentalities of the U.S. Government,
such as the Government National Mortgage Association, are supported by the "full
faith and credit" of the U.S. Government; others, such as those of the Federal
National Mortgage Association, are supported by the discretionary authority of
the U.S. Government to purchase the agency's obligations; and still others, such
as those of the Export-Import Bank of the U.S., are supported by the right of
the issuer to borrow from the U.S. Treasury; and still others, such as those of
the Student Loan Marketing Association, are supported only by the credit of the
instrumentality. No assurance can be given that the U.S. Government would
provide financial support to U.S. Government-sponsored instrumentalities if it
is not obligated to do so by law. Bonds rated Baa by Moody's and BBB by S&P,
while considered "investment grade" obligations, may have speculative
characteristics.
Covered Call Options
In an effort to enhance the Fund's performance through receipt
of premiums and generally to assist in the management of its portfolio, the Fund
may engage without limitation in the writing (selling) of call option contracts
on securities at such times as Cowen Asset Management shall determine to be
6
<PAGE>
appropriate. However, options shall be written solely as "covered" call options;
that is, options on securities that the Fund owns.
A call option gives the purchaser of the option the right to
buy a security from a writer at the exercise price at any time prior to the
expiration of the contract, regardless of the market price of the security
during the option period. The premium paid to the writer is the consideration
for undertaking the obligations under the option contract. The writer forgoes
the opportunity to profit from an increase in the market price of the underlying
security above the exercise price except insofar as the premium represents a
profit. The Fund will write call option contracts only if Cowen Asset Management
believes that the Fund's performance can be increased through receipt of
premiums.
The Fund will purchase options only to close out a call option
position. In order to close out a position the Fund will make a "closing
purchase transaction" which involves the purchase of a call option on the same
security with the same exercise price and expiration date as a call option which
it has previously written. When a security is sold from the Fund's portfolio,
the Fund will effect a closing purchase transaction so as to close out any
existing call option on that security. The Fund will realize a profit or loss
from a closing purchase transaction if the amount paid to purchase a call option
is less or more than the amount received from the sale thereof. There can be no
assurance that the Fund will be able to effect closing purchase transactions at
a time when it desires to do so. To facilitate closing purchase transactions,
however, the Fund will write options only if a secondary market for the options
exists on a national securities exchange.
Securities for the Fund's portfolio will at all times be
bought and sold solely on the basis of investment considerations and
appropriateness to the fulfillment of the Fund's objectives.
Lending of Securities
The Fund may lend its portfolio securities to broker-dealers
and other financial institutions pursuant to agreements requiring that the loans
be continuously secured by cash, letters of credit or U.S. Government securities
of a value equal to at least the fair market value of the securities lent. Such
loans will not be made if as a result the aggregate of all outstanding loan
exceeds 30 percent of the value of the Fund's total assets taken at current
value.
7
<PAGE>
Investment Restrictions
In order to limit investment risk, the Fund has adopted
certain investment restrictions which are changeable only by shareholder vote.
These restrictions, among other things, prohibit the Fund from: purchasing
securities of any issuer, other than U.S. Government securities, if the purchase
would cause more than five percent of the Fund's assets, taken at market value,
to be invested in the securities of that issuer, except that 25 percent of the
Fund's assets may be invested without regard to this limit; purchasing more than
10 percent of the voting securities or any class of securities of any issuer;
engaging in short sales or purchasing securities on margin; borrowing money or
mortgaging or hypothecating the Fund's assets, although the prohibition against
borrowing does not prohibit limited short-term borrowings to meet redemption
requests and the prohibition against mortgaging or hypothecating assets does not
prohibit escrow arrangements contemplated by writing covered call options;
investing more than 10 percent of the Fund's assets in restricted or illiquid
securities, including repurchase agreements of greater than seven days'
duration, or securities that are not readily marketable; concentrating more than
25 percent of the Fund's assets in any one industry; or buying or selling
commodities or commodity contracts.
Portfolio Transactions
All orders for transactions in securities and options on
behalf of the Fund are placed with broker-dealers selected by Cowen Asset
Management. Cowen may serve as the Fund's broker in effecting portfolio
transactions on national securities exchanges and retain commission in
accordance with certain regulations of the SEC. In addition, Cowen Asset
Management may select broker-dealers that provide it with research services and
may cause the Fund to pay these broker-dealers commissions that exceed those
that other broker-dealers may have charged, if it views the commissions as
reasonable in relation to the value of the brokerage and/or research services
received.
MANAGEMENT OF THE FUND
Board of Directors
The business and affairs of the Fund are managed under the
direction of the Board of Directors of Cowen Series Funds, Inc. By virtue of the
responsibilities assumed by Cowen Asset Management under its Investment
Management Agreement with the Fund, the Fund will not require any executive
employees other than its officers, none of whom will devote full time to the
affairs of the Fund.
8
<PAGE>
Investment Manager
Cowen, an investment adviser and broker-dealer registered with
the SEC, through Cowen Asset Management, serves as the Fund's investment
manager. Cowen currently serves as investment manager for six other mutual
funds: Cowen Standby Reserve Fund, Inc., Cowen Standby Tax-Exempt Reserve Fund,
Inc., and Cowen Opportunity Fund, Cowen Intermediate Fixed Income Fund and Cowen
Government Securities Fund (all series of Cowen Funds, Inc.), and Cowen Income +
Growth Fund, Inc. Cowen's principal address is Financial Square, New York, New
York 10005-3597.
Pursuant to the Investment Management Agreement between Cowen
Asset Management and the Fund, Cowen Asset Management has agreed to be
responsible for the Fund's investment program. Subject to the supervision and
direction of the Board of Directors, Cowen Asset Management manages the Fund's
portfolio in accordance with the stated policies of the Fund. Cowen Asset
Management makes investment decisions for the Fund and places the purchase and
sale orders for portfolio transactions. Cowen Asset Management also furnishes
the Fund's statistical and research data, clerical help, data processing,
bookkeeping, internal auditing and certain legal and other services required by
the Fund; prepares reports to shareholders of the Fund, tax returns, reports to
and filings with the SEC and state Blue Sky authorities; calculates the net
asset value of shares of the Fund and generally assists in all aspects of the
Fund's operation. For the services provided pursuant to the Investment
Management Agreement, Cowen Asset Management is entitled to receive a fee,
computed daily and payable monthly, at the annual rate of .75% of one percent of
the Fund's average daily net assets, which exceeds the management fee paid by
most other investment companies.
Benedict Capaldi, Senior Investment Officer, is primarily
responsible for the daily management of the Fund. Mr. Capaldi joined Cowen in
December 1996 as a Managing Director. Mr. Capaldi's prior experience includes
being Portfolio Manager for Provident Capital Management, Inc., Senior Vice
President and Portfolio Manager of Radnor Capital Management, President of
Chestnut Hill Advisors, Inc., Managing Director of Brandywine Asset Management,
Inc. and Portfolio Manager of the Compass Large Cap Value Equity Fund (the
"Compass Fund").
Mr. Capaldi had primary responsibility for day-to-day
portfolio management of the Compass Fund from July 1, 1995 through December 31,
1996. At September 30, 1996, the Compass Fund had approximately $1.217 billion
in net assets. As Portfolio Manager of the Compass Fund, Mr. Capaldi had full
discretionary authority over the selection of investments for that fund.
Quarterly and average annual returns for 1995, 1996 and for the entire period
during which Mr. Capaldi managed the Compass Fund, compared with the performance
of the Russell 1000 Value Index ("Russell 1000 Value") and the Standard & Poor's
500 Composite Stock Total Return Index ("S&P 500") were:
<TABLE>
<CAPTION>
The Compass Fund Russell 1000 Value S&P 500
(a,b) (c) (d)
Quarter Annual Quarter Annual Quarter Annual
<S> <C> <C> <C> <C> <C> <C>
1995 Q1 -- - -
Q2 -- - -
Q3 7.5 8.7% 8.0%
Q4 7.1 15.1%* 6.6 16.0%* 5.9 14.4%*
1996 Q1 5.7% 5.7% 5.4%
Q2 3.4 1.7 4.5
Q3 3.4 2.9 3.1
Q4 9.9 24.2% 10.0 21.6% 8.5 23.2%
</TABLE>
- ----------------------
* - Six months ended December 31, 1995.
9
<PAGE>
(a) Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.
(b) The Compass Fund's ratio of expenses to net assets was 1.31% and 1.22%
before and after fee waivers, respectively, for the year ended September 30,
1996, and was 1.25% and 1.11% before and after fee waivers, respectively, for
the year ended September 30, 1995.
(c) Russell 1000 Value Index measures the performance of the largest companies
in the Russell 3000 Index, which represents approximately 90% of the total
market capitalization of the Russell 3000 Index. As of the latest
reconstitution, the average market capitalization was approximately $6.1
billion; the median market capitalization was approximately $2.6 billion. The
smallest company in the index had an approximate market capitalization of $1.0
billion.
(d) The Standard & Poor's 500 Composite Stock Total Return Index is an unmanaged
index of common stocks that is considered to be generally representative of the
United States stock market. The Index is adjusted to reflect reinvestment of
dividends.
Historical performance is not indicative of future
performance. The Compass Fund is a separate fund and its historical performance
is not indicative of the potential performance of the Fund. Share prices and
investment returns will fluctuate reflecting market conditions, as well as
changes in company-specific fundamentals of portfolio securities.
[Mr. Capaldi's bio]
Distributor
Cowen acts as distributor of the Fund's shares. Cowen is a
member of the NASD and of the New York, American and other principal national
securities exchanges. Cowen is paid monthly fees by the Fund in connection with
(1) the servicing of shareholder accounts in Class A and Class B shares and (2)
providing distribution related services in respect of Class B shares. A monthly
service fee, authorized pursuant to a Shareholder Servicing and Distribution
Plan (the "Plan") adopted by the Fund pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act"), is calculated at
the annual rate of .25% of the value of the average daily net assets of the Fund
attributable to each of Class A and Class B shares and is used by Cowen to
provide compensation for ongoing servicing and/or maintenance of shareholder
accounts with the Fund. Compensation is paid by Cowen to persons, including
Cowen employees, who respond to inquiries of shareholders of the Fund regarding
their ownership of shares or their accounts with the Fund or who provide other
similar services not otherwise required to be provided by the Fund's investment
adviser, transfer agent or other agent of the Fund.
In addition, pursuant to the Plan, the Fund pays to Cowen a
monthly distribution fee at the annual rate of .75% of the Fund's average daily
net assets attributable to Class B shares. The distribution fee is used by Cowen
to provide (1) initial and ongoing sales compensation to its registered
10
<PAGE>
representatives or those of other broker-dealers that enter into selected dealer
agreements with Cowen in respect of sales of Class B shares; (2) costs of
printing and distributing the Fund's Prospectus, Statement of Additional
Information and sales literature to prospective investors in Class B shares; (3)
costs associated with any advertising relating to Class B shares; and (4)
payments to, and expenses of, persons who provide support services in connection
with the distribution of Class B shares.
Payments under the Plan are not tied exclusively to the
service and/or distribution expenses actually incurred by Cowen, and the
payments may exceed expenses actually incurred by Cowen. The Board of Directors
evaluates the appropriateness of the Plan and its payment terms on a continuing
basis and in doing so considers all relevant factors, including expenses borne
by Cowen and amounts it receives under the Plan.
Under its terms, the Plan continues from year to year, so long
as its continuance is approved annually by vote of the Board of Directors,
including a majority of 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 (the "Independent Directors"). The Plan may not be amended to increase
materially the amount to be spent for the services provided by Cowen without
shareholder approval, and all material amendments of the Plan also must be
approved by the Directors in the manner described above. The Plan may be
terminated with respect to a Class at any time, without penalty, by vote of a
majority of the Independent Directors or by a vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) represented by the
Class on not more than 30 days' written notice to Cowen.
Pursuant to the Plan, Cowen will provide the Board of
Directors with periodic reports of amounts expended under the Plan and the
purpose for which the expenditures were made. The Directors believe that the
Fund's expenditures under the Plan will benefit the Fund and its shareholders by
providing better shareholder services and by facilitating the distribution of
shares.
Custodian and Transfer and Dividend Agent
Investors Fiduciary Trust Company, a subsidiary of State
Street Boston Corp., serves as the custodian of the Fund's investments.
Communications to the Bank should be directed at P.O. Box 419111, Kansas City,
Missouri 64141. DST, Inc. serves as the Fund's transfer and dividend agent.
Communications to DST should be directed to ___________________________.
11
<PAGE>
Expenses of the Fund
Operating expenses for the Fund generally consist of all costs
not specifically borne by Cowen Asset Management, including investment
management fees, accounting fees, fees for necessary professional and brokerage
services, the costs of regulatory compliance and costs associated with
maintaining legal existence and shareholder relations. The Fund's Investment
Management Agreement with Cowen Asset Management provides that Cowen Asset
Management will reimburse the Fund to the extent required by applicable state
law for certain expenses that are described in the Statement of Additional
Information. From time to time, Cowen Asset Management, in its sole discretion
and as it deems appropriate, may waive a portion or all of the fees payable to
it by the Fund.
Each Class bears its own expenses, which generally include all
costs not specifically borne by Cowen Asset Management. Included among a Class'
expenses are (1) transfer agency fees as identified by the transfer agent as
being attributable to a specific Class; (2) printing and postage expenses
related to preparing and distributing materials such as shareholder reports,
prospectuses and proxies to current shareholders; (3) Blue Sky registration fees
incurred by a Class; (4) SEC registration fees incurred by a Class; (5) the
expenses of administrative personnel and services as required to support the
shareholders of a specific Class; (6) litigation or other legal expenses
relating solely to one Class; and (7) directors' fees incurred as a result of
issues relating to one Class. In addition, each Class will bear an allocable
portion of all other Fund expenses not attributable to a particular Class based
on the Class' relative net assets.
NET ASSET VALUE
The net asset value per share of the Fund is calculated as of
4:15 p.m. Eastern time, on each day on which the New York Stock Exchange, Inc.
is open. The Exchange is currently open on each Monday through Friday, except
(a) January 1st, Washington's Birthday (the third Monday in February), Good
Friday, Memorial Day (the last Monday in May), July 4th, Labor Day (the first
Monday in September), Thanksgiving Day (the fourth Thursday in November) and
December 25th; and (b) the preceding Friday when one of those holidays falls on
a Saturday or the subsequent Monday when one of those holidays falls on a
Sunday. Net asset value per share is computed by dividing the value of the
Fund's net assets by the total number of its shares outstanding. Assets traded
on a securities exchange or other recognized market are valued on the basis of
market quotations. Assets for which quotations are not readily available are
valued at fair value as determined in good faith under procedures approved by
the Board of Directors. High quality money market instruments with remaining
maturities of 60 days or less are valued on the basis of amortized cost, which
involves valuing a portfolio instrument at its market value on the 61st day
prior to maturity and thereafter assuming a constant amortization to maturity of
any market discount or premium, generally without regard to the effect of
fluctuating interest rates on the market value of the instrument.
12
<PAGE>
PURCHASE OF SHARES
General Information
Shares of the Fund are sold at the net asset value per share
next determined after receipt of an order plus a sales charge in the case of
Class A shares. Investors whose orders are received by Cowen not later than 4:15
p.m., New York time, will become shareholders on that day. Investors whose
orders are received after 4:15 p.m., New York time, will become shareholders on
the following business day. The Fund reserves the right to reject any order to
purchase shares. Certificates for shares will be issued only upon the specific
request of a shareholder.
The minimum initial investment in the Fund is $1,000 and the
minimum subsequent investment is $100 except that the minimum initial and
subsequent investments for purchases of Fund shares through Retirement Plans for
Self-Employed Persons and Individual Retirement Accounts will be $500 and $50,
respectively. The Fund reserves the right to vary these minimums at any time.
Retirement Plans. Shares may be purchased in connection with
various qualified tax-deferred retirement plans. Forms for establishing these
plans are available through any Cowen account representative. Investors are
urged to consult with a tax adviser in connection with the establishment of
retirement plans.
Automatic Investment Plan. The Fund offers an Automatic
Investment Plan whereby the Bank is permitted through preauthorized checks of
$100 or more ($50 in the case of Retirement Plans for Self-Employed Persons and
Individual Retirement Accounts) to charge the regular bank account of a
shareholder on a regular basis to provide systematic additions to the Fund
account of the shareholder. While there is no charge to shareholders for this
service, a charge of $10.00 will be deducted from a shareholder's Fund account
for checks returned for insufficient funds. A shareholder's Automatic Investment
Plan may be terminated at any time without charge or penalty by the shareholder,
the Fund, the Bank or Cowen. Further information regarding the Automatic
Investment Plan may be obtained through any Cowen account representative.
Under the Multiple Pricing System, the Fund presently offers
three methods of purchasing shares, enabling investors to choose the Class that,
given the amount of purchase and intended length of investment, best suits their
needs. Cowen account representatives and other persons remunerated on the basis
of sales of shares may receive different levels of compensation for selling one
Class of shares over another. From time to time,
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<PAGE>
Cowen's registered representatives and those of other broker-dealers that enter
into selected dealer agreements with Cowen will receive additional non-cash
compensation in the form of gifts or prizes such as merchandise or trips. When
purchasing shares of the Fund, investors must specify whether the purchase is
for Class A shares, Class B shares or Class C shares, as described below. [In
addition, the Distributor will from its own resources make additional payments
to Branch Cabell and Company at a maximum rate of .25% of the net asset value of
all shares of the Fund sold by Branch Cabell and Company.]
Class A Shares
The public offering price of Class A shares is the net asset
value per Class A share next determined after a purchase order is received plus
a sales charge, if applicable. Class A shares are subject to a service fee at
the annual rate of .25% of the value of the Fund's average daily net assets
attributable to this Class. See "Management of the Fund - Distributor." The
sales charge payable upon the purchase of Class A shares will vary with the
amount of purchase as set forth below.
<TABLE>
<CAPTION>
Sales Charge as a Sales Charge as a
Percentage of the Percentage of the Net
Shares Purchased in Single Public Offering Price Amount Invested Dealer Reallowance
Transaction
-------------------------- --------------------- --------------------- ------------------
<S> <C> <C>
Up to $49,999.................. 4.75% 5.00% 4.00%
$50,000-$99,999................ 4.00% 4.17% 3.25%
$100,000-$249,999.............. 3.75% 3.90% 3.00%
$250,000-$499,999.............. 2.50% 2.56% 2.00%
$500,000-$999,999.............. 2.00% 2.04% 1.50%
$1,000,000-$2,999,999 0% 0% 1.00%
$3,000,000-$3,999,999* 0% 0% .50%
</TABLE>
- ------------------
* Investors who purchase $4 million or more of shares will receive Class
C shares, which are not subject to any front-end sales charge or service fee.
See "Class C Shares."
The above schedule of sales charges is applicable to purchases in a
single transaction by, among others: (1) an individual; (2) an individual, his
or her spouse and their children under the age of 21 purchasing shares for his
or her own accounts; (3) a trustee or other fiduciary purchasing shares for a
single trust estate or a single fiduciary account; (4) a pension, profit-sharing
or other employee benefit plan qualified or non-qualified under Section 401 of
the Internal Revenue Code of 1986 (the "Code"); (5) tax-exempt organizations
enumerated in Section 501(c)(3) or (13) of the Code; (6) employee benefit plans
qualified under Section 401 of the Code of a single employer or of employers who
are "affiliated persons" of each other, as
14
<PAGE>
defined in the 1940 Act and for investments in Individual Retirement Accounts of
employees of a single employer through Systematic Payroll Deduction plans; or
(7) any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase of redeemable securities of a registered
investment company at a discount.
You may benefit from a reduction of the sales charges in
accordance with the above schedule if the cumulative value (at current net asset
value) of Class A shares purchased in a single transaction, together with those
Class A shares previously purchased subject to payment of a sales charge, plus
Class A shares of Cowen Opportunity Fund, Cowen Intermediate Fixed Income Fund
and Cowen Government Securities Fund, each a series of Cowen Funds, Inc.,
previously or simultaneously purchased subject to a sales charge, amounts to
$50,000 or more. The foregoing schedule of reduced sales charges will also be
available to investors who enter into a written Letter of Intent providing for
the purchase, within a 13-month period, of Class A shares of the Fund, Cowen
Opportunity Fund, Cowen Intermediate Fixed Income Fund and Cowen Government
Securities Fund from Cowen. Class A shares of the Fund, Cowen Opportunity Fund,
Cowen Intermediate Fixed Income Fund and Cowen Government Securities Fund
previously purchased during a 90-day period prior to the date of receipt by
Cowen of the Letter of Intent and still owned by the shareholder may also be
included in determining the applicable reduction.
A shareholder who has redeemed his Class A shares may reinvest
all or part of the redemption proceeds within 30 days without imposition of a
sales charge. This privilege may be exercised only once by a shareholder.
Shareholders should note that no loss will be allowed on the sale of Fund shares
to the extent that the shareholder acquired other shares in the Fund within a
period beginning 30 days before the sale or disposition of the shares in which
the shareholder incurred a loss and ending 30 days after such sale.
The Fund offers Class A shares without imposition of a sales
charge to (1) employees of Cowen and registered representatives of securities
dealers that participate in distribution of the Fund's shares; (2) Individual
Retirement Accounts for those persons; (3) the spouses, children, parents,
grandparents, siblings, spouse's parents and sibling's children of those persons
when purchase orders on their behalf are placed by those persons; (4) directors
and trustees of registered investment companies whose shares are distributed by
Cowen, Individual Retirement Accounts for those persons, employee benefit plans
for those persons, and the spouses and minor children of those persons when
purchase orders on their behalf are placed by those persons; (5) Cowen and its
subsidiaries; (6)
15
<PAGE>
participants in any pension, profit-sharing or other employee benefit plan
qualified or non-qualified under Section 401 of the Code when purchase orders
are placed by such participants pursuant to such plans; (7) officers, directors,
partners and employees of the Fund's counsel or auditors; and (8) investors who
purchase shares of the Fund to the extent that the investment represents (a) the
proceeds from the redemption made within the preceding 60 days of shares of
another mutual fund not affiliated with Cowen Asset Management whose shares were
purchased subject to a sales charge, or (b) the net proceeds of the sale within
the preceding 60 days of shares of any closed-end investment company. The
Distributor pays a sales commission equal to 1.00% of the amount invested to
dealers who sell Class A shares without imposition of a sales charge to
investors described in items (6) and (8).
Class B Shares
The public offering price of Class B shares is the net asset
value per share next determined after a purchase order is received without
imposition of any front-end sales charge. The Distributor pays a sales
commission equal to 4.00% of the amount invested to dealers who sell Class B
shares. Class B shares may be subject upon redemption to a contingent deferred
sales charge ("CDSC"). See "Redemption of Shares." Class B shares are subject to
a service fee at the annual rate of .25%, and a distribution fee at the annual
rate of .75%, of the value of the Fund's average daily net assets attributable
to this Class. See "Management of the Fund - Distributor." Cowen has adopted
guidelines, in view of the relative sales charges, service fees and distribution
fees, directing account representatives that all purchases of shares should be
for Class A shares when the purchase is for $500,000 or more by an investor not
eligible to purchase Class C shares. Cowen reserves the right to vary these
guidelines at any time.
Class C Shares
The public offering price of Class C shares is the net asset
value per share next determined after a purchase order is received without
imposition of any sales charge. Class C shares, which are not subject to any
service fee or distribution fee, are available exclusively to (1) employee
benefit plans for employees of Cowen and securities dealers that participate in
distribution of the Fund's shares; (2) charitable organizations (as defined in
Section 501(c)(3) of the Code) investing $100,000 or more; (3) any pension fund,
corporation, state or local government, Taft-Hartley plan, foundation and/or
endowment which is a client of a consulting firm, if such consulting firm has
contacted the Fund,
16
<PAGE>
Cowen or any subsidiary of Cowen with respect to furnishing advice to the client
of that consulting firm or with respect to the purchase of the securities of the
Fund by such client; (4) investors purchasing $4 million or more of shares of
the Fund; (5) accounts as to which a bank, registered investment adviser or
broker-dealer charges an account management fee, provided the bank, registered
investment adviser or broker-dealer has an agreement with Cowen relating to
investment in the Fund; (6) investors, and their spouses and minor children, who
are investment advisory clients of Cowen or any of its subsidiaries or who are
affiliated persons or sponsoring companies of those clients; and (7) purchasers
placing orders through a broker that maintains an omnibus account with the Fund
and such purchases are made (i) by investment advisers or financial planners
placing trades for their accounts or the accounts of their clients, and who
charge a fee for their services; (ii) clients of such investment adviser or
financial planner who place trades for their own accounts if the accounts are
linked to a master account of such investment adviser or financial planner on
the books and records of the broker or agent, or (iii) for 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 or "rabbi trusts." Investors who purchase pursuant to (7) may be
charged a fee by the broker or agent utilized to effect the transaction. The
Distributor will from its own resources compensate broker-dealers and service
agents at a maximum annual rate of .15%, .15% and .35%, respectively, of the net
asset value of shares purchased pursuant to (3), (5) and (7), respectively.
Exchange Privilege
Shares of the Fund may be exchanged for shares of the same
Class (or the sole class offered) of the mutual funds listed below for which
Cowen serves as a distributor.
- Cowen Standby Reserve Fund, Inc., a money market fund whose
investment objective is the maximization of current income to the
extent consistent with preservation of capital and maintenance of
liquidity.
- Cowen Standby Tax-Exempt Reserve Fund, Inc., a money market fund
whose investment objective is the maximization of current income
that is exempt from federal income taxes to the extent consistent
with the preservation of capital and the maintenance of liquidity.
- Cowen Intermediate Fixed Income Fund, a fund that seeks current
income and stability of principal by investing
17
<PAGE>
primarily in high quality intermediate term fixed income
securities. This fund is a series of Cowen Funds, Inc.
- Cowen Government Securities Fund, a fund that seeks total return
consistent of current income and appreciation of capital through
investing primarily in securities issued or guaranteed by the U.S.
Government, its agencies, authorities or instrumentalities. This
fund is a series of Cowen Funds, Inc.
- Cowen Opportunity Fund, a fund whose investment objective is
appreciation of capital through investing primarily in equity
securities of companies that, in the opinion of its investment
manager, are expected to benefit from scientific and technological
improvements and advances.
- Cowen Income + Growth Fund, Inc., a fund that seeks a higher
level of dividend income, to the extent consistent with prudent
investment management, by investing primarily in income-producing
equity securities.
For purposes of this discussion, Cowen Standby Reserve Fund,
Inc. and Cowen Standby Tax-Exempt Reserve Fund, Inc. are referred to as "money
market funds" and Cowen Opportunity Fund, Cowen Intermediate Fixed Income Fund,
Cowen Government Securities Fund and Cowen Income + Growth Fund, Inc. are
referred to as "non-money market funds."
Shares of these mutual funds are available only to investors
residing in states where these mutual funds are qualified for sale. They are
sold pursuant to separate prospectuses that may be obtained through any Cowen
account representative, through account representatives of Cowen correspondents,
or through any other member of the NASD, or any foreign nonmember of the NASD,
which has entered into a Sales Agreement with Cowen with respect to such funds.
An exchange of shares is treated for federal income tax purposes as a redemption
(sale) of shares given in exchange by the shareholder and an exchanging
shareholder may, therefore, realize a taxable gain or loss in connection with
the exchange. The exchange privilege is subject to termination and its terms are
subject to change upon 60 days' notice to shareholders.
Under the Multiple Pricing System, an exchange of shares of
the Fund with other Cowen funds' shares will be limited to shares of the same
class or the sole class (money market funds only) of shares of a fund from which
the exchange is to be effected. For example, if a holder of Class A shares of a
non-money market fund exchanges his shares for shares of a money market fund and
thereafter wishes to exchange those shares for shares of the Fund, he may
receive only Class A shares in the
18
<PAGE>
latter transaction. As another example, if a holder of shares of a money market
fund acquired as a result of an initial investment and not from an exchange
wishes to exchange his shares for shares of a non-money market fund, he may
receive Class A shares, Class B shares or Class C shares (depending on his
eligibility for Class C shares) in the exchange transaction. Thereafter, any
further exchanges would be subject to the principal described above limiting
subsequent exchanges to the same class or the sole class of shares of other
funds.
Class A Exchanges. A shareholder may effect exchanges among
the mutual funds listed above and the Fund on the basis of relative net asset
values without imposition of a sales charge; provided, however, that where
shares of a money market fund acquired through a direct purchase are exchanged
for Class A shares of the Fund or another non-money market fund, the appropriate
sales charge will be imposed at the time of the exchange. Because a
substantially lower sales charge is paid upon purchase of Class A shares of
Cowen Intermediate Fixed Income Fund, holders of these shares will not be able
to exchange their shares with shares of the Fund or any of the non-money market
funds for a period of 90 days from the date of purchase. After the 90-day
waiting period has expired, Class A shares of Cowen Intermediate Fixed Income
Fund will be exchangeable without the imposition of any additional sales charge.
Class B Exchanges. As described below under "Redemption of
Shares," the CDSC payable by Class B shareholders upon redemption of their
shares will vary with the period of time that the shares are held (the "CDSC
holding period"). For purposes of calculating the CDSC holding period, any Class
B shares received in an exchange will be deemed to have been purchased on the
same date as the Class B shares given in exchange. If, however, a Class B
shareholder exchanges his shares for shares of either money market fund, which
do not offer a class of shares subject to a CDSC, such exchange will toll, or
suspend, the running of the CDSC holding period for as long as the money market
fund shares are held and, if those shares are redeemed, a CDSC will be imposed
based on the CDSC holding period without regard to the period during which the
money market fund shares were held. For example, if a holder of Class B shares
of the Fund who has held those shares for a period of more than four but less
than five years exchanges his shares for shares of a money market fund, holds
those shares of the money market fund for a period of one year, and thereafter
exchanges those shares for Class B shares of the Fund, such shareholder will be
deemed to have held the Class B shares for a period of four full years on the
date of the last exchange. If the shareholder were to then immediately redeem
his Class B shares of the Fund, such redemption would be subject to a 2.00%
CDSC. Similarly, the same CDSC would be imposed if at any time the money market
fund shares
19
<PAGE>
were redeemed. Conversely, if the shareholder had held his Class B shares of the
Fund for the full six year period, no CDSC would have been imposed upon
redemption.
Because a substantially lower CDSC schedule is applicable to
Class B shares of Cowen Intermediate Fixed Income Fund, holders of these shares
will not be able to exchange their shares with shares of the Fund or any of the
non-money market funds for a period of 90 days from the date of purchase. After
the 90-day waiting period has expired, if a holder of these shares wanted to
exchange all or a portion of these shares for Class B shares of the Fund or of
any of the non-money market funds that offer Class B shares subject to a higher
CDSC than that imposed by Cowen Intermediate Fixed Income Fund, the exchanged
Class B shares will not be subject to the higher applicable CDSC. Upon
redemption, the lower CDSC schedule applicable to Class B shares of Cowen
Intermediate Fixed Income Fund will apply.
REDEMPTION OF SHARES
Redemption Procedures
The Fund will redeem shares without charge at the net asset
value per share next determined after receipt of a redemption order in proper
form by Cowen or the Bank, less any CDSC imposed on Class B shares. Any
redemption request received by Cowen prior to 4:15 p.m., New York time, will be
transmitted to the Bank on that day and the proceeds of such redemption will be
transmitted in accordance with the investor's instructions within seven days.
Redemption requests received at or after 4:15 p.m., New York time, will be
effected on the next business day. Proceeds of any redemptions will not be sent
until the check (including a certified or cashier's check) used for investment
has been cleared for payment by the investor's bank, which may take up to 15
days. Pending such clearance, Cowen will hold redemption proceeds under
circumstances resulting in no earnings to investors. Investors can avoid the
inconvenience associated with check clearance delays by purchasing shares with
immediately available funds held in a brokerage account with Cowen or at a
participating securities dealer or by transmitting funds to the Bank by wire
transfer.
Cowen generally will effect redemptions of shares upon oral
instructions received from the shareholders. If shares are to be redeemed
pursuant to an order sent to the Bank by the shareholder, the Bank will require
written redemption instructions signed by the shareholder of record, which
signature must be guaranteed by a commercial bank or trust company (not a
savings bank) located or having a correspondent in New York City, or by a member
organization of the New York Stock Exchange, Inc.
20
<PAGE>
The redemption order must specify which Class of shares is
being redeemed. If certificates have been issued representing the shares to be
redeemed, such certificates must also be endorsed, or a duly executed stock
power must be furnished, with signatures guaranteed as discussed above, and must
be submitted to Cowen or the Bank with the redemption request. Cowen or the Bank
may require further documentation if the shareholder is a corporation,
partnership, trust, estate or other entity. The payment of redemptions may be
wired to a shareholder's commercial bank account. There is a $10 charge for each
federal funds wire transaction. The minimum amount for wire redemptions is
$10,000. A shareholder who wishes to redeem by wire should contact IFTC at
1-800-262-7116.
The Fund may suspend the right of redemption or postpone the
date of payment upon redemption (as well as suspend or postpone the recordation
of the transfer of its shares) for such periods as are permitted under the 1940
Act. The Fund reserves the right to redeem shares in any account, other than an
Individual Retirement Account or other qualified retirement plan, at their net
asset value if the value of the account is less than $250. The shareholder
having the account will first be notified in writing that the account has a
value of less than $250 and will be allowed 60 days to make an additional
investment before the redemption is processed by the Fund.
The Fund offers a Systematic Withdrawal Plan under which a
shareholder with $10,000 or more in the Fund may elect to redeem periodic
payments to himself or a designated payee on a monthly, quarterly or annual
basis. For accounts other than qualified retirement plans, the minimum rate of
withdrawal is $50 per month and the maximum monthly withdrawal is one percent of
the current account value in the Fund as of commencement of participation in the
plan. Maintenance of a Systematic Withdrawal Plan concurrently with purchases of
additional shares of the Fund may be disadvantageous to the shareholder because
of the sale charge on such purchases. A shareholder who elects to use the
Systematic Withdrawal Plan should be aware that such periodic payments will be
made from redemptions of his shares. However, any Class B shares redeemed under
the Systematic Withdrawal Plan will not be subject to a CDSC as described below.
Dividends and distributions paid on his shares may not cover the full amount of
each periodic payment.
Contingent Deferred Sales Charge - Class B Shares
A CDSC payable to Cowen is imposed on any redemption of Class
B shares held less than six years equal to a specified percentage, as set forth
below, of the net asset value of the shares redeemed at the time of purchase or
at the time of redemption, whichever is lower. Class B shares held six years or
21
<PAGE>
longer and Class B shares purchased through reinvestment of dividends or capital
gains distributions are not subject to the CDSC. Furthermore, no CDSC will be
imposed on an amount that represents an increase in value of the shareholder's
account resulting from capital appreciation.
In circumstances in which the CDSC is imposed, the amount of
the charge will depend on the number of years since the shareholder purchased
the shares being redeemed. The following table sets forth the rates of the CDSC
for redemptions of Class B shares by investors:
Year Since Purchase in Which
Redemption is Effected CDSC
------------------------------------------------------ ------
Year 1.................................................. 5.00%
Year 2.................................................... 4.00%
Year 3.................................................... 3.00%
Year 4.................................................... 3.00%
Year 5.................................................... 2.00%
Year 6.................................................... 1.00%
Thereafter................................................ None
In determining the applicability and rate of any CDSC,
redemptions of Class B shares are made first of amounts due to capital
appreciation, next of shares representing reinvestment of dividends and capital
gains distributions, and then of other shares held by the shareholder for the
longest period of time. As a result, the CDSC, if any, will be imposed at the
lowest possible rate. For example, assume that an investor owns 100,000 shares
that he purchased seven years ago, 100,000 shares that he purchased more than
four but less than five years ago at $10 per share and 1,000 shares received in
respect of reinvestment of dividends and distributions. The shares now have a
net asset value of $20 per share. The investor may redeem the 100,000 shares he
purchased seven years ago and the 1,000 shares he acquired through reinvestments
without paying a CDSC. If the investor redeems the balance of his shares, he
would pay a CDSC based on the net asset value at the time of purchase ($10 per
share). Thus, the investor would pay a CDSC equal to $20,000 (100,000 shares
multiplied by $10 per share times the applicable rate of 2%).
Waivers of CDSC. The CDSC, if any, will be waived in the case
of (1) redemptions of Class B shares held at the time a
22
<PAGE>
shareholder dies or becomes disabled, including the Class B shares of a
shareholder who owns the shares with his or her spouse as joint tenants with the
right of survivorship, provided that the redemption is requested within one year
of the death or initial determination of disability and (2) redemptions in
connection with the following retirement plan distributions: (a) lump-sum or
other distributions from a qualified retirement plan following retirement; (b)
distributions from an Individual Retirement Account, Keogh plan or custodial
account under Section 403(b)(7) of the Code following attainment of age 59 1/2;
(c) a tax-free return of an excess contribution to an Individual Retirement
Account, and (d) distributions pursuant to Systematic Withdrawal Plans.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund intends to declare and pay dividends quarterly from
its net investment income. Any net realized long-term capital gains will
generally be paid annually, shortly after the close of the Fund's fiscal year.
Unless a shareholder elects in writing to receive dividends and distributions on
shares of any Class in cash, such amounts will be reinvested automatically in
additional shares of the same Class at net asset value, without a sales charge.
The Fund has qualified and intends to continue to qualify and
elect to be treated each year as a regulated investment company ("RIC") for
federal income tax purposes. A RIC is not taxed on any income or gains
distributed to its shareholders if it distributes 90 percent of its investment
income to them within applicable time periods. In addition, the Fund will be
subject to a nondeductible excise tax of four percent of the amount by which the
Fund fails to distribute specified percentages of its investment income and
capital gains during any applicable 12 month period. The Fund will pay dividends
and distributions more frequently than stated above, if necessary, to avoid
application of the excise tax, if such payments are determined to be in the best
interest of the Fund's shareholders. The per share dividends and distributions
on Class C shares will be higher than those on Class A shares, which in turn
will be higher than those on Class B shares, as a result of the different
service, distribution and transfer agency fees applicable to the Classes. See
"The Fund's Expenses," "Purchase of Shares," "Management of the Fund -
Distributor" and "Additional Information."
For federal income tax purposes, the Fund's dividends and
distributions are taxable to a shareholder whether paid in cash or reinvested in
additional shares. Dividends of the Fund's investment income and distributions
of its short-term capital gains will be taxable as ordinary income.
Distributions of long-term capital gains, if any, will be taxable to a
shareholder as such, regardless of the length of time the shareholder has held
shares of the Fund. The Fund will provide information relating to that portion
of a long-term capital gains distribution that may be treated by investors as
eligible for the reduced capital gains rate for capital assets held for more
than 18 months. If a shareholder receives a distribution taxable as long-term
capital gain with respect to Fund shares, and redeems or exchanges the shares
before holding them for more than six months, any loss on the redemption or
exchange up to the amount of the distribution will be treated as a long-term
capital loss. In general, only dividends that reflect the Fund's income from
certain dividend-paying stock of domestic corporations will be eligible for the
federal dividends-received deduction for corporate shareholders.
23
<PAGE>
Each shareholder will receive an annual statement setting
forth the dollar amounts of dividends and any distributions for the prior
calendar year and the tax status of such dividends and distributions for federal
income tax purposes. Shareholders should consult their own tax advisers as to
the state and local tax consequences of investing in the Fund.
ADDITIONAL INFORMATION
The Fund is a series of Cowen Series Funds, Inc., which was
incorporated on November __, 1997 under the laws of the State of Maryland. All
shares of the Fund have equal rights and privileges as to participation in
dividends and distributions and in the net distributable assets of the Fund on
liquidation.
When issued, shares are fully paid and nonassessable, and have
no preemptive, conversion or exchange rights. Each Class represents an identical
interest in the Fund's investment portfolio. As a result, the Classes have the
same rights, privileges and preferences, except with respect to: (1) the
designation of each Class; (2) the effect of the respective sales charges, if
any, for each Class; (3) the distribution and/or service fees, if any, borne by
each Class; (4) the expenses allocable exclusively to each Class; (5) voting
rights on matters exclusively affecting a single Class; and (6) the exchange
privilege of each Class. The Board of Directors does not anticipate that there
will be any conflicts among the interests of the holders of the different
Classes. The Directors, on an ongoing basis, will consider whether any conflict
exists and, if so, take appropriate action. Certain aspects of the shares may be
changed, upon notice to Fund shareholders, to satisfy certain tax regulatory
requirements, if the change is deemed necessary by the Directors.
When matters are submitted for shareholder vote, shareholders
of each series of Cowen Series Funds, Inc., including the Fund, will have one
vote for each full share held and proportional, fractional votes for each
fractional share held. Shareholders of all series of Cowen Series Funds, Inc.
will vote collectively on certain matters affecting all series, such as the
election of directors and the selection of accountants; shareholders of one
series are not entitled to vote on a matter that does not affect that series but
that does require a separate vote of another series, such as a particular
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<PAGE>
series' investment management agreement. In turn, all matters affecting only the
interests of one Class, such as the terms of the Plan as it relates to a Class,
require a separate vote of the shareholders of that Class. Unless otherwise
required by the 1940 Act, ordinarily it will not be necessary for Cowen Series
Funds, Inc. to hold annual meetings of shareholders. As a result, shareholders
may not consider each year the election of directors or the appointment of
accountants. However, pursuant to the By-Laws of Cowen Series Funds, Inc., the
holders of at least 10 percent of the shares outstanding and entitled to vote
may require a special meeting of shareholders to be held for any purpose,
including that of removing a director from office. Shareholders of Cowen Series
Funds, Inc. may remove a director by the affirmative vote of a majority of the
outstanding voting shares. In addition, the Board of Directors will call a
special meeting of shareholders for the purpose of electing directors if, at any
time, less than a majority of the directors holding office at that time was
elected by shareholders.
25
<PAGE>
THE COWEN FAMILY OF FUNDS
COWEN LARGE CAP VALUE FUND, a series of Cowen Series Funds,
Inc., seeks capital appreciation through investment in equity securities with
earnings growth potential.
COWEN INTERMEDIATE FIXED INCOME FUND, a series of Cowen Funds,
Inc., seeks current income and stability of principal. The Fund seeks to achieve
its objectives through the investment primarily in high quality intermediate
term fixed income securities.
COWEN GOVERNMENT SECURITIES FUND, a series of Cowen Funds,
Inc., seeks total return consisting of current income and appreciation of
capital through investment primarily in securities issued or guaranteed by the
U.S. Government, its agencies, authorities or instrumentalities.
COWEN OPPORTUNITY FUND, a series of Cowen Funds, Inc., seeks
capital appreciation through investment in the equity securities of companies
that are expected to benefit from scientific developments and advances.
COWEN INCOME + GROWTH FUND, INC. seeks a high level of
dividend income, to the extent consistent with prudent investment management, by
investing primarily in income-producing equity securities.
COWEN STANDBY RESERVE FUND, INC., a money market fund whose
investment objective is the maximization of current income to the extent
consistent with preservation of capital and maintenance of liquidity.
COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC., a money market
fund whose investment objective is the maximization of current income that is
exempt from federal income taxes to the extent consistent with the preservation
of capital and the maintenance of liquidity.
For more complete information regarding any of these funds,
including charges and expenses, contact your account representative or call
800-262-7116. From time to time, advertisements or reports to shareholders may
compare the performance of the Classes to that of other mutual funds (or classes
thereof) with a similar investment objective. The performance of the Classes
also might be compared to rankings prepared by Lipper Analytical Services, Inc.
and Morningstar, Inc., which are widely recognized, independent services that
monitor the performance of mutual funds, as well as to various unmanaged
indices, such as the Standard & Poor's 500 Composite Stock Price Index. To the
extent any advertisement or sales literature of a the Fund describes the
expenses or performance of any Class, it will also disclose the information for
26
<PAGE>
other Classes. Performance information may be useful in reviewing the
performance of the Classes and in providing a basis for comparison with other
investment alternatives. Investors should be aware that, because the performance
of the Classes changes in response to fluctuations in interest rates, price
fluctuations in securities markets, each Class' expenses and other factors, a
performance quotation should not be considered representative of the Classes'
performance for any future period. Shareholders may make inquiries regarding the
Fund, including current performance quotations, by calling any Cowen account
representative.
27
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE A
PROSPECTUS.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
January __, 1998
COWEN LARGE CAP VALUE FUND
Financial Square, New York, NY 10005,
(212) 495-6724, (800) 262-7116
CONTENTS
Page
Investment Objectives and Policies................... 2
Purchases and Redemptions............................ 8
Management of the Fund............................... 9
Taxes................................................ 13
Performance Information.............................. 14
Financial Statements................................. 16
This Statement of Additional Information is meant to be read in conjunction with
the Prospectus of Cowen Large Cap Value Fund (the "Fund") dated January __,
1998, and is incorporated by reference in its entirety into that Prospectus.
Because this Statement of Additional Information is not itself a prospectus, no
investment in shares of the Fund should be made solely upon the information
contained herein. Copies of the Fund's Prospectus may be obtained by calling
Cowen & Co. ("Cowen"), the Fund's principal underwriter, at (212) 495-6724 or
(800) 262-7116 or by contacting any Cowen account representative.
COWEN & CO.
Principal Underwriter
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The primary investment objective of the Fund is to provide capital appreciation.
Current income from dividends is a secondary objective of the Fund. Cowen,
through its investment management division, Cowen Asset Management, will serve
as the Fund's investment manager. The Fund is not intended to constitute a
balanced investment program.
Additional Information on Investment Practices
U.S. Government Securities. Examples of the types of U.S.
Government securities that the Fund may hold include, in addition to those
described in the Prospectus and U.S. Treasury Bills, the obligations of the
Federal Housing Administration, Farmers Home Administration, Small Business
Administration, General Services Administration, Central Bank for Cooperatives,
Federal Farm Credit Banks, Federal Home Loan Banks, Federal Home Loan Mortgage
Corporation, Federal Intermediate Credit Banks, Federal Land Banks and Maritime
Administration. It is not anticipated that the Fund will in the foreseeable
future invest in excess of five percent of its net assets in U.S. Government
securities that represent interests in pools of mortgages.
Lending of Securities. The Fund has the authority to lend
securities to brokers, dealers and the other financial organizations. The Fund
will not lend securities to Cowen or its affiliates. By lending its securities,
the Fund can increase its income by continuing to receive interest on the loaned
securities as well as by either investing the cash collateral in short-term
securities or obtaining yield in the form of interest paid by the borrower when
U.S. Government securities are used as collateral. The Fund will adhere to the
following conditions whenever its securities are loaned: (a) the Fund must
receive at least 100 percent cash collateral or equivalent securities from the
borrower; (b) the borrower must increase this collateral whenever the market
value of the securities including accrued interest rises above the level of the
collateral; (c) the Fund must be able to terminate the loan at any time; (d) the
Fund must receive reasonable interest on the loan, as well as any dividends,
interest or other distributions on the loaned securities and any increase in
market value; (e) the Fund may pay only reasonable custodian fees in connection
with the loan; and (f) voting rights on the loaned securities may pass to the
borrower; provided, however, that if a material event adversely affecting the
investment occurs, the Fund's Board of Directors must terminate the loan and
regain the right to vote the securities.
Covered Call Options. Options written by the Fund will
normally have expiration dates between one and nine months from the date
written. So long as the obligation of the Fund as the writer of an option
continues, the Fund may be assigned an exercise notice by the broker-dealer
2
<PAGE>
through which the option was sold, requiring the Fund to deliver the underlying
security against payment of the exercise price. This obligation terminates when
the option expires or the Fund effects a closing purchase transaction. The Fund
can no longer effect a closing purchase transaction with respect to an option
once it has been assigned an exercise notice. To secure its obligation to
deliver the underlying security when it writes a call option the Fund will be
required to deposit in escrow the underlying security or other assets in
accordance with the rules of the Options Clearing Corporation (the "Clearing
Corporation") and of the national securities exchange on which the option is
written.
An option position may be closed out only where there exists a
secondary market for an option of the same series on a recognized national
securities exchange in the over-the-counter market. In light of this fact and
current trading conditions the Fund expects to write options only on national
securities exchanges and in the over-the-counter market. As of the date of this
Statement of Additional Information, the national securities exchanges on which
options are traded are: The Chicago Board Options Exchange, The Board of Trade
of the City of Chicago, American Stock Exchange, Philadelphia Stock Exchange,
Pacific Stock Exchange and New York Stock Exchange ("NYSE"). Options are also
traded on the national securities exchanges with respect to unlisted securities
reported through the Nasdaq system.
Although the Fund will write only those options for which
Cowen Asset Management believes there is an active secondary market so as to
facilitate closing purchase transactions, there is no assurance that sufficient
trading interest to create a liquid secondary market on a securities exchange
will exist for any particular option or at any particular time, and for some
options no such secondary market may exist. A liquid secondary market in an
option may cease to exist for a variety of reasons. In the past, for example,
higher than anticipated trading activity or order flow, or other unforeseen
events, have at times rendered certain of the facilities of the Clearing
Corporation and the national securities exchanges inadequate and resulted in the
institution of special procedures, such as trading rotations, restrictions on
certain types of orders or trading halts or suspensions in one or more options.
There can be no assurance that similar events, or events that may otherwise
interfere with the timely execution of customer orders, will not recur. In such
event, it might not be possible to effect closing purchase transactions in
particular options. If, as a covered call option writer, the Fund is unable to
effect a closing purchase transaction in a secondary market, it will not be able
to sell the underlying securities until the option expires or it delivers the
underlying security upon exercise.
The national securities exchanges have established limitations
governing the maximum number of options of each class which may be held or
written, or exercised within certain time periods, by an investor or group of
3
<PAGE>
investors acting in concert (regardless of whether the options are written on
the same or different national securities exchanges or are held, written or
exercised in one or more accounts or through one or more brokers). It is
possible that the Fund and other clients of Cowen Asset Management and certain
of its affiliates may be considered to be such a group. A national securities
exchange may order the liquidation of positions found to be in violation of
these limits and it may impose certain other sanctions.
In the case of options written by the Fund that are deemed
covered by virtue of the Fund's holding convertible or exchangeable preferred
stock or debt securities, the time required to convert or exchange and obtain
physical delivery of the underlying common stocks with respect to which the Fund
has written options may exceed the time within which the Fund must make delivery
in accordance with an exercise notice. In these instances, the Fund may purchase
or temporarily borrow the underlying securities for purposes of physical
delivery. By so doing, the Fund will not bear any market risk, since the Fund
will have the absolute right to receive from the issuer of the underlying
security an equal number of shares to replace the borrowed stock, but the Fund
may incur additional transaction costs or interest expenses in connection with
any such purchase or borrowing.
Repurchase Agreements. The Fund may engage in repurchase
agreement transactions involving its portfolio securities with banks, registered
broker-dealers and government securities dealers approved by the Fund's Board of
Directors. It is not anticipated that the Fund will in the foreseeable future
invest in excess of five percent of its net assets in repurchase agreements.
Under the terms of a typical repurchase agreement, the Fund would acquire an
underlying debt obligation for a relatively short period (usually not more than
one week) subject to an obligation of the seller to repurchase, and the Fund to
resell, the obligation at an agreed price and time, thereby determining the
yield during the Fund's holding period. Thus, repurchase agreements may be seen
to be loans by the Fund collateralized by the underlying debt obligation. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period. The value of the underlying
securities will be at least equal at all times to the total amount of the
repurchase obligation, including interest. The Fund bears a risk of loss in the
event that the other party to a repurchase agreement defaults on its obligations
and the Fund is delayed in or prevented from exercising its rights to dispose of
the collateral securities, including the risk of a possible decline in the value
of the underlying securities during the period in which the Fund seeks to assert
these rights. Cowen Asset Management, acting under the supervision of the Fund's
Board of Directors, reviews the
4
<PAGE>
credit-worthiness of those banks and dealers with which the Fund enters into
repurchase agreements to evaluate these risks and monitors on an ongoing basis
the value of the securities subject to repurchase agreements to ensure that the
value is maintained at the required level.
Investment Restrictions
The investment restrictions below have been adopted by the
Fund as fundamental policies, which means that they may not be changed without
the vote of a majority of the outstanding voting securities of the Fund, which
is defined as the lesser of (a) 67 percent or more of the shares present at a
shareholders meeting if the holders of more than 50 percent of the outstanding
shares of the Fund are present or represented by proxy, or (b) more than 50
percent of the outstanding shares.
The investment policies adopted by the Fund prohibit it from:
1. With respect to 75 percent of its assets, purchasing the
securities of any issuer, other than U.S. Government securities, if as a result
more than five percent of the Fund's total assets would be invested in the
securities of the issuer.
2. Purchasing more than 10 percent of the voting securities of
any one issuer or more than 10 percent of the securities of any class of any one
issuer. This limitation shall not apply to investments in U.S. Government
securities.
3. Purchasing securities on margin, except that the Fund may
obtain any short-term credit necessary for the clearance of purchases and sales
of securities.
4. Making short sales of securities or maintaining a short
position.
5. Borrowing money, except that the Fund may borrow for
temporary or emergency (but not leveraging) purposes, including the meeting of
redemption requests that might otherwise require the untimely disposition of
securities, in an amount not exceeding 10 percent of the value of the Fund's
total assets (including the amount borrowed) valued at the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. Whenever borrowing exceed five percent of the value of the
Fund's total assets, the Fund will not make any additional investments.
6. Pledging, hypothecating, mortgaging or otherwise
encumbering more than 10 percent of the value of the Fund's total assets, except
that this prohibition shall not prohibit the escrow arrangements contemplated by
writing covered call options or pledging assets to secure permitted borrowings.
5
<PAGE>
7. Underwriting the securities of the issuers, except insofar
as the Fund may be deemed to be an underwriter under the Securities Act of 1933,
as amended, by virtue of disposing of portfolio securities.
8. Making loans to others, except through purchasing qualified
debt obligations or lending portfolio securities.
9. Investing in commodities, except that the Fund may engage
in transactions involving commodity futures and calls and options thereon.
10. Purchasing or selling real estate or interests in real
estate, including interests in real estate limited partnerships, except that the
Fund may purchase and sell securities that are issued by companies that invest
or deal in real estate, including readily-marketable interests in real estate
investment trusts or readily marketable securities of other companies which
invest in real estate.
The Fund also reserves the right to own real estate used
principally for its own office space, although it has no current intention to do
so.
The percentage limitations contained in the restrictions
listed above apply at the time of purchases of securities. If a percentage
restriction is adhered to at the time of an investment, a later increase or
decrease in percentage resulting from a change in values or assets will not
constitute a violation of such restriction.
Portfolio Turnover
The Fund expects its portfolio turnover rate not to exceed __%
in its first year of operations. For regulatory reporting purposes, the Fund's
turnover rate is calculated by dividing the lesser of purchases or sales of
securities for the fiscal year by the monthly average of the value of the Fund's
securities, with certain other obligations with less than one year to maturity
at the time of purchase excluded. Thus, a 100 percent turnover rate would occur,
for example, if all included securities were replaced once during the year. The
Fund will not normally engage in the trading of securities for the purpose of
realizing short-term profits, but will adjust its holdings as considered
advisable in view of prevailing or anticipated market conditions, and turnover
will not be a limiting factor should Cowen Asset Management deem it advisable to
purchase or sell securities.
Portfolio Transactions
Decisions to buy and sell securities and other financial
instruments for the Fund are made by Cowen Asset Management, which also is
responsible for placing these transactions, subject to the overall review of the
Fund's Board of Directors. Although investment requirements for the Fund are
6
<PAGE>
reviewed independently from those of the other accounts managed by Cowen Asset
Management, investments of the type the Fund may make may also be made by these
other accounts. When the Fund and one or more other accounts managed by Cowen
Asset Management are prepared to invest in, or desire to dispose of, the same
security or other financial instrument, available investments or opportunities
for sales will be allocated in a manner believed by Cowen Asset Management to be
equitable to each. In some cases, this procedure may affect adversely the price
paid or received by the Fund or the size of the position obtained or disposed of
by the Fund.
Portfolio transactions are in most cases effected on U.S.
stock exchanges and involve the payment of negotiated brokerage commissions.
There is generally no stated commission in the case of securities traded in the
over-the-counter markets, but the prices of those securities may include
commissions or mark-ups. Purchases and sales of money market instruments and
debt securities usually are principal transactions. These securities are
normally purchased directly from the issuer or from an underwriter or market
maker for the securities. The cost of securities purchased from underwriters
includes an underwriting commission or concession, and the prices at which
securities are purchased from and sold to dealers include a dealer's mark-up or
mark-down. U.S. Government securities are generally purchased from underwriters
or dealers, although certain newly-issued U.S. Government securities may be
purchased directly from the U.S. Treasury or from the issuing agency or
instrumentality.
To the extent consistent with applicable provisions of the
Act, other securities laws and the rules and exemptions adopted by the
Securities and Exchange Commission (the "SEC") thereunder, the Fund's Board of
Directors has determined that portfolio transactions may be effected through
Cowen if, in the judgment of Cowen Asset Management, the use of Cowen normally
is likely to result in price and execution at least as favorable as those of
other qualified broker-dealers, and if, in particular transactions, Cowen
charges the Fund a rate consistent with that charged to comparable unaffiliated
customers in similar transactions. Over-the-counter purchases and sales are
transacted directly with principal market makers except in those cases in which
better prices and executions may be obtained elsewhere, and principal
transactions are not entered into with affiliates of the Fund except pursuant to
exemptive rules or orders adopted by the SEC.
In selecting brokers or dealers to execute portfolio
transactions on behalf of the Fund, Cowen Asset Management seeks the best
overall terms available. In assessing the best overall terms available for any
transaction, Cowen Asset Management will consider the factors it deems relevant,
including the breadth of the market in the investment, the price of the
7
<PAGE>
investment, the financial condition and execution capability of the broker or
dealer and the reasonableness of the commission, if any, for the specific
transaction and on a continuing basis. In addition, Cowen Asset Management is
authorized, in selecting parties to execute a particular transaction and in
evaluating the best overall terms available, to consider the brokerage and
research services, as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, provided to the Fund and/or other accounts over which
Cowen Asset Management or its affiliates exercise investment discretion. Cowen
Asset Management's fees under its agreement with the Fund are not reduced by
reason of its receiving brokerage services. The Fund's Directors periodically
review the commissions paid by the Fund to determine if the commissions paid
over representative periods of time are reasonable in relation to the benefits
inuring to the Fund.
Portfolio Valuation
The assets of the Fund are generally valued on the basis of
market quotations. Securities whose principal market is on an exchange are
valued at the last sales price on the exchange or, in the absence of currently
reported sales on the exchange, at the most recent bid price in the
over-the-counter market or, in the absence of a recent bid price, the bid
equivalent as obtained from one or more of the major market makers for the
securities to be valued. Securities traded principally in the over-the-counter
market are valued at the most recent bid price. Other investments and other
assets, including restricted securities and securities for which market
quotations are not readily available, are valued at fair value under procedures
approved by the Board of Directors. High-quality, short-term securities with
maturities of 60 days or less are valued at amortized cost, which constitutes
fair value as determined by the Board of Directors. Amortized cost valuation
involves initially valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium, regardless of the
impact of fluctuating interest rates on the market value of the instrument.
Although this method provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is higher or lower than the
price the Fund would receive if it sold the instrument.
PURCHASES AND REDEMPTIONS
Purchases
Shares of the Fund are offered on a continuous basis by the
Fund and are distributed on a best efforts basis by Cowen as principal
underwriter for the Fund pursuant to a Distribution Agreement. As noted
elsewhere in this Statement of Additional Information and in the Prospectus,
Cowen receives an investment advisory fee and brokerage commissions for
effecting portfolio transactions on behalf of the Fund.
8
<PAGE>
The word "Cowen" in the Fund's name has been adopted pursuant
to a provision contained in the Distribution Agreement. Under that provision,
Cowen may terminate the Fund's license to use the word "Cowen" in its name when
Cowen ceases to act as the Fund's principal underwriter.
Redemptions
The right of redemption of shares of the Fund may be suspended
or the date of payment postponed (a) for any periods during which the NYSE is
closed (other than for customary weekend and holiday closings), (b) when trading
in the markets the Fund normally utilizes is restricted, or an emergency, as
defined by the rules and regulations of the SEC, exists, making disposal of the
Fund's investments or determination of its net asset value not reasonably
practicable, or (c) for such other periods as the SEC by order may permit for
protection of the Fund's shareholders.
MANAGEMENT OF THE FUND
Board of Directors
The names of Cowen Series Funds, Inc.'s directors and
executive officers, their addresses, principal occupations during the past five
years and other affiliations are set forth below. Each Director who is an
"interested person" of the Fund, as defined in the Act, is indicated by an
asterisk. Each of the directors is also a director of one or more other
investment companies for which Cowen serves as principal underwriter.
Directors of the Fund
James H. Carey, Director, age 64. Managing Director of
Briarcliff Financial Associates, Inc. (since June 1991) and Chief Executive
Officer, Director and Treasurer of National Capital Benefits Corporation (since
March 1994). Mr. Carey is also a Director of Airborne Freight Corporation,
Jonathan Woodner Company, NCB Insurance Limited (Bermuda), The Midland Company,
The Murray & Isabella Rayburn Foundation and the U.S. Committee for UNICEF.
Prior thereto he was President and Chief Executive Officer, The Berkshire Bank
(May 1989 to June 1991). His address is Village View and Canterbury Roads,
Manchester Center, VT 05255.
Joseph M. Cohen, Chairman and Chief Executive Officer of the
Fund, age 59. Principal Executive Officer and since March 1991 Class I Limited
Partner of Cowen and Chairman and President of Cowen Incorporated, the sole
general partner of Cowen. Prior thereto he was the Managing General Partner of
Cowen. Director, Chairman and Chief Executive Officer of the Cowen Mutual Funds.
Until December 15, 1992, he was also President of the Fund and the Cowen Mutual
Funds.
9
<PAGE>
Dr. Peter P. Gil, Director, age 74. Director, Arthur D. little
Management Institute Board since 1991 and currently Acting Dean of the
Institute; Trustee and Executive Committee Member, Plimoth Plantation (Plymouth,
Mass.); member of the Dominion Bridge Corporation's Technology Committee. From
July 1988 to July 1995, Dr. Gil served in a variety of senior administrative
positions at the Sloan School of Management, Massachusetts Institute of
Technology, as Director, Management of Technology Program, the Senior Executive
Program, External Relations of the School; and Senior Lecturer. Prior to July
1988 he was Associate Dean of the School. His address is 79 Main Street, New
Castle, New Hampshire 03854-0651.
Dr. Martin J. Gruber, Director, age 59. Chairman, Department
of Finance and Nomura Professor of Finance, Leonard N. Stern School of Business
Administration, New York University. He is also a Director of BT Pyramid Mutual
Funds, Japan Equity Fund, Inc., and the Taiwan Equity Fund, Inc.; and a trustee
of BT Leadership Trust and T.I.A.A. Board. His address is New York University,
44 West 4th Street, New York, New York 10012.
Burton J. Weiss, Director, age 66. Self-employed consultant
since March 1988. His address is 103 Marin Drive, Chapel Hill, North Carolina
27516.
Officers of the Fund Not Noted Above
Rodd M. Baxter, Secretary. General Counsel of Cowen Asset
Management and Director of Cowen. His address is Financial Square, New York, New
York 10005.
Benedict Capaldi, Senior Investment Officer. Senior Portfolio
Manager of Cowen Asset Management and Managing Director of Cowen. His address is
Financial Square, New York, New York 10005.
William Church, Vice President and Senior Investment Officer.
Class I Limited Partner of Cowen, Managing Director of Cowen Incorporated and
Chief Investment Officer of Cowen Asset Management. His address is Financial
Square, New York, New York 10005.
Creighton H. Peet, Vice President, Treasurer and Senior
Investment Officer. Class I Limited Partner of Cowen, Managing Director of Cowen
Incorporated. His address is Financial Square, New York, New York 10005.
David Sarns, President. Chief Administrative Officer and Class
I Limited Partner of Cowen and Managing Director of Cowen Incorporated. His
address is Financial Square, New York, New York 10005.
10
<PAGE>
Irwood Schlackman, Controller. Mutual Fund Administrator
of Cowen. His address is Financial Square, New York, New York 10005.
Compensation and Holders of Securities
No officer, director, partner or employee of Cowen or its
affiliates will receive any compensation from the Fund for serving as an officer
or director of the Fund. Directors who are not officers, directors, partners,
stockholders or employees of Cowen or its affiliates receive a fee of $3,000 per
annum plus $500 per meeting attended and $375 for each audit committee meeting
attended and reimbursement for travel and out-of pocket expenses.
COMPENSATION TABLE
<TABLE>
<CAPTION>
Name of Aggregate Pension or Estimated Annual Total
Person Compensation From Retirement Benefits Benefits Upon Compensation From
Registrant Accrued as Part of Retirement Registrant and
Fund Expenses Fund Complex Paid
to Directors*
<S> <C> <C> <C> <C>
James H. Carey $5,375 -0- -0- $21,500
Peter Gil $5,375 -0- -0- $21,500
Martin J. Gruber $5,375 -0- -0- $21,500
Burton J. Weiss $5,375 -0- -0- $21,500
</TABLE>
*There are seven funds included in the complex.
Investment Manager
Cowen, through Cowen Asset Management, its investment
management division, serves as investment manager to the Fund pursuant to an
Investment Management Agreement which became effective on the date the Fund
commenced investment operations. Cowen, a limited partnership organized under
the laws of New York, is controlled by its general partner, Cowen Incorporated.
Cowen Incorporated is controlled by Mr. Joseph M. Cohen. The services provided
by, and the fees payable by the Fund to Cowen Asset Management under its
Investment Management Agreement are described in the Prospectus. From time to
time, Cowen, in its sole discretion and as it deems appropriate, may waive a
portion or all of the fees payable to it by the Fund.
Shareholder Servicing and Distribution Plan (the "Plan")
Cowen is paid monthly fees by the Fund in connection with (1)
the servicing of shareholder accounts in Class A and Class B shares and (2)
providing distribution related services in respect of Class B shares. A monthly
service fee, authorized pursuant to the Plan adopted by the Fund pursuant to
11
<PAGE>
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act"), is calculated at the annual rate of .25% of the value of the average
daily net assets of the Fund attributable to each of Class A shares and is used
by Cowen to provide compensation for ongoing servicing and/or maintenance of
shareholder accounts with the Fund. Compensation is paid by Cowen to persons,
including Cowen employees, who respond to inquiries of shareholders of the Fund
regarding their ownership of shares of their accounts with the Fund or who
provide other similar services not otherwise required to be provided by the
Fund's investment adviser, transfer agent or other agent of the Fund.
In addition, pursuant to the Plan, the Fund pays to Cowen a
monthly distribution fee at the annual rate of .75% of the Fund's average daily
net assets attributable to Class B shares. The distribution fee is used by Cowen
to provide (1) initial and ongoing sales compensation to its registered
representative or those of other broker dealers that enter into selected dealer
agreements with Cowen in respect of sales of Class B shares; (2) costs of
printing and distributing the Fund's Prospectus, Statement of Additional
Information and sales literature to prospective investors in Class B shares; (3)
costs associated with any advertising relating to Class B shares; and (4)
payments to, and expenses of, persons who provide support services in connection
with the distribution of Class B shares.
Payments under the Plan are not tied exclusively to the
service and/or distribution expenses actually incurred by Cowen, and the
payments may exceed expenses actually incurred by Cowen. The Board of Directors
evaluates the appropriateness of the Plan and its payment terms on a continuing
basis and in doing so considers all relevant factors, including expenses borne
by Cowen and amounts it received under the Plan.
Custodian and Transfer and Dividend Agent
Investors Fiduciary Trust Company, 127 West 10th Street,
Kansas City, Missouri 64105, is custodian of the Fund's assets pursuant to a
Custody Agreement. Under the Custody Agreement, the Bank (i) maintains a
separate account or accounts in the name of the Fund, (ii) holds and transfers
portfolio securities on account of the Fund, (iii) receives and disburses money
on behalf of the Fund and (iv) collects and receives all income and other
payments and distributions on account of the Fund's portfolio securities.
DST, Inc., [address], has agreed to serve as the Fund's
transfer and dividend disbursing agent pursuant to a Transfer Agency Agreement,
under which it (i) issues and redeems shares of the Fund, (ii) addresses and
mails all communications by the Fund to its shareholders and (iii) maintains
shareholder accounts.
12
<PAGE>
Auditors and Counsel
Ernst & Young LLP, 787 Seventh Avenue, New York, New York
10019, has been selected as the Fund's independent auditors.
Willkie Farr & Gallagher, One Citicorp Center, 153 East
53rd Street, New York, New York 10022, serves as counsel for the Fund.
TAXES
Set forth below is a summary of certain general federal income
tax considerations which may affect the Fund and its shareholders. As the
summary is not intended as a substitute for individual tax planning, investors
are urged to consult their own tax advisers with specific reference to their
particular federal, state or local tax situations.
Taxation of Shareholders
If a shareholder receives a distribution taxable as long-term
capital gain, and redeems or exchanges his or her shares of the Fund before he
or she has held the shares (without hedging them) for more than six months, any
loss on such redemption or exchange up to the amount of the distribution will be
treated as long-term capital loss.
Dividends of investment income from the Fund may qualify for
the dividends-received deduction for corporate shareholders only to the extent
of the aggregate amount of dividends received by the Fund from United States
corporations. The Fund must hold stock for more than 45 days (90 days in the
case of certain preferred stock) during the 90 day period (180 days in the case
of certain preferred stock) beginning 45 days before the stock becomes
ex-dividend, without hedging its investment in the stock in certain ways.
If the Fund is the holder of record of any stock on the record
date for any dividends payable with respect to such stock, such dividends are
included in the Fund's gross income as of the later of (a) the date such stock
became ex-dividend with respect to such dividends (i.e., the date on which a
buyer of the stock would not be entitled to receive the declared, but unpaid,
dividends) or (b) the date the Fund acquired such stock. Accordingly, in order
to satisfy its income distribution requirements, the Fund may be required to pay
dividends based on anticipated earnings, and shareholders may receive dividends
in an earlier year than would otherwise be the case.
If a shareholder (a) incurs a sales charge in acquiring Fund
shares, (b) disposes of those shares within ninety days and (c) acquires shares
in a mutual fund for which the otherwise applicable sales charge is reduced by
reason of reinvestment right (i.e., an exchange privilege), the original sales
13
<PAGE>
charge increases the shareholder's tax basis in the original shares only to the
extent that the otherwise applicable sales charge for the second acquisition is
not reduced. The portion of the original shares would be treated as incurred
with respect to the second acquisition and, as a general rule, would increase
the shareholder's tax basis in the newly acquired shares. Furthermore, the same
rule also applies to a disposition of the newly acquired shares made within
ninety days of the second acquisition. The provision prevents a shareholder from
immediately deducting the sales charge by shifting his investment in a family of
mutual funds.
In general, if a shareholder fails to furnish a correct
taxpayer identification number, fails to report dividend and interest income in
full, or fails to certify that he or she has provided a correct taxpayer
identification number and that he or she is not subject to withholding, then the
shareholder may be subject to a 31 percent federal backup withholding tax on
dividends, capital gains distributions and the proceeds of redemptions or
exchange. An individual's taxpayer identification number is his or her social
security number. The backup withholding tax is not an additional tax and may be
credited against a shareholder's regular federal income tax liability.
Taxation of Fund Investments
Gain or loss on the sale of a security will generally be
long-term capital gain or loss if the Fund has held the security for more than
one year. If a Fund acquires a debt security at a discount, however, the portion
of any gain upon its sale or redemption that reflects the accrued market
discount will be taxed as ordinary income, rather than capital gain.
In general, when the Fund writes a covered call option on a
security, and either the option expires unexercised or the Fund enters into a
closing purchase transaction, the Fund will recognize a short-term capital gain
or loss (except that any losses on certain covered call stock options will be
treated as long-term capital losses). If a call option is exercised, the premium
received will be treated as additional proceeds from the sale of the underlying
security.
Although the Fund expects to be relieved of all or
substantially all federal and state income or franchise taxes, depending upon
the extent of its activities in certain states and localities, that portion of
the Fund's income which is treated as earned in any such state or locality could
be subject to state or local tax.
PERFORMANCE INFORMATION
From time to time, the Fund may advertise its "average annual
total return" for the different Classes over various periods of time. These
total return figures show the average percentage change in value of an
14
<PAGE>
investment in the Fund from the beginning date of the measuring period to the
end of the measuring period. These figures reflect changes in the price of the
Fund's shares and assume that any income dividends and/or capital gains
distributions made by the Fund during the period were invested in shares of the
Fund. Figures will be given for recent one, five and ten year periods, or the
life of the Fund to the extent it has not been in existence for any such
periods, and may be given for other periods as well, such as on a year-by-year
basis. When considering "average" total return figures for periods longer than
one year, it is important to note that the Fund's annual total return for any
one year in the period might have been greater or lesser than the average for
the entire period. The Fund may also use "aggregate" total return figures for
various periods, representing the cumulative period (again reflecting changes in
share prices and assuming reinvestment of dividends and distributions).
Aggregate total returns may be shown by means of schedules, charts, or graphs,
and may indicate subtotals of the various components of total return (i.e.,
change in value of initial investment, income dividends, and capital gains
distributions). The performance of the Fund also might be compared to rankings
prepared by Lipper Analytical Services, Inc., and Morningstar, Inc. which are
widely recognized, independent services that monitor the performance of mutual
funds, as well as to various unmanaged indices, such as the Standard & Poor's
500 Composite Stock Price Index. Performance Information may be useful in
reviewing the performance of the Fund and in providing a basis for comparison
with other investment alternatives. Investors should be aware that, because the
performance of the Fund changes in response to fluctuations in interest rates,
price fluctuations in securities markets, the Fund's expenses and other factors,
a performance quotation should not be considered representative of the Fund's
performance for any future period. To the extent any advertisement or sales
literature of a Fund describes the expenses or performance of any Class, it will
also disclose the information for other Classes. Shareholders may make inquiries
regarding the Fund, including current performance quotations, by calling any
Cowen account representative.
The Fund's "average annual total return" will be computed in
accordance with the following formula prescribed by the Securities and Exchange
Commission:
TOTAL RETURN = P(1+T)n* = ERV
Where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a hypothetical $1,000 investment made at the
beginning of a 1, 5, or 10 year period at the end of the 1, 5, or 10 year
- ------------------
* - As used here, "n" is an exponent.
15
<PAGE>
periods (or fractional portion thereof), assuming reinvestment of all
dividends and distributions.
FINANCIAL STATEMENTS
[TO BE SUPPLIED]
16
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Not Applicable
(b) Exhibits:
Exhibit No. Description of Exhibits
- ----------- -----------------------
1 (i) Articles of Incorporation of Registrant
2 (i) By-Laws of Registrant
3 Not Applicable
4 Not Applicable
5 Form of Investment Management Agreement
6 Form of Distribution Agreement
7 Not Applicable
8 Custody Agreement with Investors Fiduciary Trust Company*
9 Transfer Agency Agreement with Investors Fiduciary Trust
Company*
10 (i) Opinion and Consent of Venable, Baetjer and Howard, LLP*
(ii) Opinion and Consent of Willkie Farr & Gallagher*
11 Consent of Independent Auditors*
12 Not Applicable
13 Form of Subscription Agreement
14 Not Applicable
C-1
<PAGE>
15 (i) Form of Shareholder Servicing and Distribution Plan
(ii) Form of Shareholder Servicing Agreement
(iii) Form of Distribution Related Services Agreement
- ------------------------
* To be filed by amendment.
Item 25. Persons Controlled by or Under Common Control
with Registrant
The majority of the directors who serve on the Registrant's
Board of Directors also comprise the majority of the Board of Directors of Cowen
Standby Reserve Fund, Inc., Cowen Income + Growth Fund, Inc., Cowen Standby
Tax-Exempt Reserve Fund, Inc. and Cowen Funds, Inc. Each of these registered
investment companies was incorporated under the laws of Maryland.
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Class as of November 11, 1997
-------------- ------------------------
Common Stock, par value $.001
per share................... 0
Item 27. Indemnification
Under Article VIII of the Articles or Incorporation (the
"Articles"), the Directors and officers of Registrant shall not have any
liability to Registrant or its stockholders for money damages, to the fullest
extent permitted by the Maryland General Corporation Law. This limitation on
liability applies to events occurring at the time a person serves as a Director
or officer of Registrant whether or not such person is a Director or officer at
the time of any proceeding in which liability is asserted. No provision of
Article VIII shall be effective to protect or purport to protect any Director or
officer of Registrant against any liability to Registrant or its stockholders to
which he would otherwise be subject by reason or willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office. Registrant shall indemnify and advance expenses to its currently
acting and its former Directors to the fullest extent that indemnification of
Directors and advancement of expenses to Directors is permitted by the Maryland
General Corporation Law.
Registrant shall indemnify and advance expenses to its
officers to the same extent as its Directors and to such further extent as
is consistent with such law. The Board of
C-2
<PAGE>
Directors may, through a by-law, resolution or agreement, make further
provisions for indemnification of directors, officers, employees and agents to
the fullest extent permitted by the Maryland General Corporation Law.
Article V of the By-Laws further limits the liability of the
Directors by providing that any person who was or is a party or is threatened to
be made a party in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person is a current or former director or officer of
Registrant, or is or was serving while a director or officer of Registrant at
the request of Registrant as a director, officer, partner, trustee, employee,
agent or fiduciary of another corporation, partnership, joint venture, trust,
enterprise or employee benefit plan, shall be indemnified by Registrant against
judgments, penalties, fines, excise taxes, settlements and reasonable expenses
(including attorneys' fees) actually incurred by such person in connection with
such action, suit or proceeding to the full extent permissible under the
Maryland General Corporation Law, the Securities Act of 1993, as amended, and
the Investment Company Act of 1940, as amended, as such statutes are now or
hereafter in force, except that such indemnity shall not protect any such person
against any liability to Registrant or any stockholder thereof to which such
person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
this office.
Items 28 Business and Other Connections of Investment Manager;
and 29. Principal Underwriter
Cowen & Company ("Cowen"), through Cowen Asset Management,
serves as investment manager to Registrant and is the principal underwriter and
distributor of the Registrant's shares. Cowen is also the investment manager,
principal underwriter and distributor of shares of Cowen Funds, Inc. ("CFI"),
Cowen Income + Growth Fund, Inc. ("CI+G"), Cowen Standby Reserve Fund, Inc.
("CSRF") and Cowen Standby Tax-Exempt Reserve Fund, Inc. ("CSTXF"). Listed below
are the names of all of the General Partners, Class I Limited Partners and
Limited Partners of Cowen as of November 14, 1997, their positions and their
positions with Registrant, if any, and under the heading "Other Business
Activities and Principal Business Addresses", the business profession, vocation
or employment of a substantial nature (other than business of Cowen) in which
they have been engaged for their own account or in the capacity of director,
officer, employee, partner or trustee during the past two fiscal years of the
Registrant (referred to on the following pages as "CSF").
C-3
<PAGE>
<TABLE>
<CAPTION>
NAME, CLASS OF PARTNERS ACTIVITIES AND
AND PRINCIPAL PRINCIPAL BUSINESS
BUSINESS ADDRESS POSITION IF WITH FUNDS LISTED BELOW ADDRESS
----------------------- -------------------------------------------------- ------------------
CSRF CSTXRF CI+G CFI CSF
---- ------ ---- --- ---
<S> <C> <C> <C> <C> <C> <C>
GENERAL PARTNER
Cowen Incorporated (1)
CLASS I LIMITED PARTNERS
Anthony J. Aliberti (1)...... Since 1/1/96--Cowen
Incorporated (1)--MD
Domingo Alonso (1)........... Since 1/1/97--Cowen
Incorporated (1)--MD
Richard A. Altschuler (3).... Since 1/1/96--Cowen
Incorporated (1)--MD
Joseph Augustine (1)......... Since 1/1/97--Cowen
Incorporated (1)--MD
Alice C. Avanian (3)......... Since 1/1/97--Cowen
Incorporated (1)--MD
Michael H. Bassett (1)....... Since 3/30/92--Cowen
Incorporated (1)--MD
William A. Belfiore (1)...... Since 1/1/96--Cowen
Incorporated (1)--MD
Anthony R. Bergamaschi (1)... Since 3/30/92--Cowen
Incorporated (1)--MD
Christopher A. Beyer (1)..... Since 3/30/94--Cowen
Incorporated (1)--MD
Andrew C. Brosseau (3)....... Since 1/1/96--Cowen
Incorporated (1)--MD
Kennedy M. Buckley (1)....... Since 3/30/92--Cowen
Incorporated (1)--MD
Richard S. Chu (3)........... Since 3/30/91--Cowen
Incorporated (1)--MD
William R. Church (1)........ V, SI V, SI V, SI Since 3/30/91--Cowen
Incorporated (1)--MD
Jarrod M. Cohen (1).......... Since 3/30/92--Cowen
Incorporated (1)--MD
Jon M. Cohen (1)............. Since 1/1/97--Cowen
Incorporated (1)--MD
Joseph M. Cohen (1).......... C, D C, D C, D C, D C Since 3/30/91--Cowen
Incorporated (1)--P,D
Peter E. Cohen (1).......... Since 3/30/93--Cowen
Incorporated (1)--MD
Terrence R. Connelly (1)..... Since 1/1/96--Cowen
Incorporated (1)--MD
Philip A. Conti (1).......... Since 3/30/92--Cowen
Incorporated (1)--MD
Arthur Cowen, III (1)........ ETC Enterprises, Inc. (8);
Since 3/30/91 Cowen
Incorporated
(1)--MD
Nancy M. Crowell (6)......... Since 3/30/92--Cowen
Incorporated (1)--MD
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
NAME, CLASS OF PARTNERS ACTIVITIES AND
AND PRINCIPAL PRINCIPAL BUSINESS
BUSINESS ADDRESS POSITION IF WITH FUNDS LISTED BELOW ADDRESS
----------------------- -------------------------------------------------- ------------------
CSRF CSTXRF CI+G CFI CSF
---- ------ ---- --- ---
<S> <C> <C> <C> <C> <C> <C>
Howard Dingley (7)........... Since 1/1/97--Cowen
Incorporated (1)--MD
Kenneth Dowd (1)............. Since 1/1/97--Cowen
Incorporated (1)--MD
John P. Dunphy (1)........... Since 3/30/92--Cowen
Incorporated (1)--MD
Alec D. Green(7)............. Since 1/1/96--Cowen
Incorporated
(1)--MD
Jeremiah Harrington (1)...... Since 1/1/97--Cowen
Incoporated
(1)--MD
Guy E. Heald (3)............. Since 1/1/97--Cowen
Incoporated
(1)--MD
William F. Herbert (3)....... Since 1/1/97--Cowen
Incoporated
(1)--MD
Edward I. Herbst (1)......... Since 3/30/91--Cowen
Incorporated (1)--MD
James M. Hesburgh (1)........ Since 1/1/97--Cowen
Incorporated
(1)--MD
Thomas L. Hgyde (1).......... Since 3/30/93--Cowen
Incorporated (1)--MD
Cornelius Howe (1)........... Since 1/1/97--Cowen
Incoporated
(1)--MD
Gerald P. Kaminsky (1)....... D, SI D, SI Since 3/30/91--Cowen
Incorporated (1)--MD
Kurt B. Karmin (2)........... Since 1/1/97--Cowen
Incoporated
(1)--MD
James C. Kedersha (3)........ Since 1/1/97--Cowen
Incoporated
(1)--MD
Jamie Kiggen (3)............. Since 1/1/97--Cowen
Incoporated
(1)--MD
Jeffrey B. Kiley (1)......... Since 1/1/97--Cowen
Incoporated
(1)--MD
Christopher D. Kirby (6)..... Since 1/1/97--Cowen
Incoporated
(1)--MD
Albert F. Laub (3)........... Since 3/30/91--Cowen
Incorporated (1)--MD
Daniel T. Lamaitre (3)....... Since 3/30/92--Cowen
Incorporated (1)--MD
Maria F. Lewis-Kussmaul (3).. Since 3/30/93--Cowen
Incorporated (1)--MD
Stuart S. Lovejoy (1)........ Since 1/1/96--Cowen
Incorporated
(1)--MD
Arthur S. Lutzke (1)......... Since 3/30/93--Cowen
Incorporated (1)--MD
David E. Mack (1)............ Since 3/30/91--Cowen
Incorporated (1)--MD
Joseph A. Majike, Jr. (3).... Since 1/1/97--Cowen
Incoporated
(1)--MD
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
NAME, CLASS OF PARTNERS ACTIVITIES AND
AND PRINCIPAL PRINCIPAL BUSINESS
BUSINESS ADDRESS POSITION IF WITH FUNDS LISTED BELOW ADDRESS
----------------------- -------------------------------------------------- ------------------
CSRF CSTXRF CI+G CFI CSF
---- ------ ---- --- ---
<S> <C> <C> <C> <C> <C> <C>
Stephen Malfitano (1)........ Since 3/30/94--Cowen
Incorporated (1)--MD
Joseph M. Marinaro (1)....... Since 3/30/96--Cowen
Incorporated (1)--MD
Paul Marsh (1)............... Since 1/1/97--Cowen
Incoporated
(1)--MD
William O. Matthews (1)...... Since 3/30/931--Cowen
Incorporated (1)--D
William K. McCormick (5)..... Since 3/30/91--Cowen
Incorporated (1)--MD
Malcolm G. McDonald (3)...... Since 1/1/97--Cowen
Incoporated
(1)--MD
Kelly McGowen (1)............ Since 1/1/97--Cowen
Incoporated
(1)--MD
Carl A. Mertz (1)............ Since 3/30/92--Cowen
Incorporated (1)--MD
Kathleen Miner (3)........... Since 1/1/97--Cowen
Incoporated
(1)--MD
George G. Montgomery (6)..... Since 1/1/97--Cowen
Incoporated
(1)--MD
Raymond K. Moran (3)......... Since 3/30/91--Cowen
Incorporated (1)--Cowen
Incorporated MD
Adele M. Morrissette (1)..... Since 1/1/97--Cowen
Incoporated
(1)--MD
Michael G. Mullen (3)........ Since 1/1/97--Cowen
Incoporated
(1)--MD
Jerrold B. Newman (6)........ Since 3/30/92--Cowen
Incorporated (1)--MD
Donald F. Novell (1)......... Since 3/30/93--Cowen
Incorporated (1)--MD
Gary S. Pardo (1)............ Since 3/30/96--Cowen
Incorporated (1)--MD
Susan M. Passoni (3)......... Since 1/1/97--Cowen
Incoporated
(1)--MD
Elizabeth T. Pawel (1)....... Since 3/30/96--Cowen
Incorporated (1)--MD
Drew Peck.................... Since 3/30/96--Cowen
Incorporated (1)--MD
Creighton H. Peet (1)........ D, T D, T V, SI, T V, SI, T T Since 3/30/91--Cowen
Incorporated (1)--MD
Antonio G. Pinto (1)......... Since 3/30/91--Cowen
Incorporated (1)--MD
Edward M. Posner (1)......... Since 3/30/92--Cowen
Incorporated (1)--MD
Peter J. Power (1)........... Since 3/30/92--Cowen
Incorporated (1)--MD
Charles J. Pradilla (1)...... Since 1/1/97--Cowen
Incoporated
(1)--MD
</TABLE>
C-6
<PAGE>
<TABLE>
<CAPTION>
NAME, CLASS OF PARTNERS ACTIVITIES AND
AND PRINCIPAL PRINCIPAL BUSINESS
BUSINESS ADDRESS POSITION IF WITH FUNDS LISTED BELOW ADDRESS
----------------------- -------------------------------------------------- ------------------
CSRF CSTXRF CI+G CFI CSF
---- ------ ---- --- ---
<S> <C> <C> <C> <C> <C> <C>
William Rechter (1).......... SI SI Since 3/30/92--Cowen
Incorporated (1)--MD
Stephen E. Reilly (3)........ Since 3/30/93--Cowen
Incorporated (1)--MD
Todd B. Robbins (1).......... Since 3/30/93--Cowen
Incorporated (1)--MD
Richard Lrugani (1 and 3).... Since 3/30/92--Cowen
Incorporated (1)--MD
David R. Sarns (1)........... P P P P P Since 3/30/93--Cowen
Incorporated (1)--MD
Stephen M. Scala (3)......... Since 1/1/97--Cowen
Incoporated
(1)--MD
Thomas R. Schwartz (1)....... Since 1/1/97--Cowen
Incoporated
(1)--MD
Kenneth Sheinberg (1)........ Since 1/1/97--Cowen
Incoporated
(1)--MD
Hugh T. Shytle (3)........... Since 1/1/97--Cowen
Incoporated
(1)--MD
Arthur J. Stavaridis (1 and 3) Since 3/30/92--Cowen
Incorporated (1)--MD
David K. Stone (3)........... Since 3/30/93--Cowen
Incorporated (1)--MD
Robert W. Stone (3).......... Since 1/1/97--Cowen
Incoporated
(1)--MD
Alan Streeter (1)............ Since 1/1/97--Cowen
Incoporated
(1)--MD
Richard S. Striefler (1)..... Since 3/30/93--Cowen
Incorporated (1)--MD
Franklyn Theis (3)........... Since 3/30/92--Cowen
Incorporated (1)--MD
Robert Valdez (6) ........... Since 3/30/94--Cowen
Incorporated (1)--MD
Cai Von Rumohr (3) .......... Since 3/30/91--Cowen
Incorporated (1)--MD
Hans C. Vitzthum (3)......... Since 1/1/97--Cowen Incoporated
(1)--MD
Harold Vogen (1)............. Since 1/1/96--Cowen Incorporated
(1)--MD
Robert S. Walterman (4)...... Since 1/1/97--Cowen Incoporated
(1)--MD
Stephen R. Weber (3)......... Since 3/30/91--Cowen
Incorporated (1)--MD
Miriam C. Willard (1)........ Since 1/1/96--Cowen
Incorporated
(1)--MD
Jonathan H. Zauderer (1) .... Since 1/1/96--Cowen
Incorporated
(1)--MD
Michael Zolezzi (6)......... Since 3/30/94--Cowen
Incorporated (1)--MD
LIMITED PARTNERS
George N. Cowen (4).............. None
Richard B. Frackman (1) ......... None
John B. Greene (5)............... None
Joseph V. Perri (1).............. None
Charles L. Wood (2) ............. None
</TABLE>
C-7
<PAGE>
- -------------
(1) Financial Square, New York, New York 10005
(2) Texaco Heritage Plaza, 111 Bagby St., #2350, Houston, Texas
(3) Two International Place, Boston, Massachusetts 02110
(4) West Building, 31st Floor, 280 Park Avenue, New York, New York 10017
(5) Courthouse Plaza Northeast, Dayton, Ohio 45402
(6) Four Embarcadero Center, Suite 1200, San Francisco, California 9411
(7) One Angel Court, London, England ECZR, 7HJ
(8) 30 West 75th Street, New York, New York 10023
P -- President
C -- Chairman of the Board
D -- Director
V -- Vice President
T -- Treasurer
S -- Secretary
SI -- Senior Investment Officer
AS -- Assistant Secretary
MD -- Managing Director
Item 30. Location of Accounts and Records
(1) Cowen Series Funds, Inc.
Financial Square
New York, New York 10005
C-8
<PAGE>
(2) Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Not Applicable.
(b) Registrant hereby undertakes to file a post-effective
amendment using financial statements which need not be certified, within four to
six months from the effective date of the Registration Statement.
C-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York and the State of
New York, on the 12th day of November, 1997.
COWEN SERIES FUNDS, INC.
By: /s/ Rodd M. Baxter
Rodd M. Baxter
President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the date indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Rodd M. Baxter President, Chairman of the Board of
Rodd M. Baxter Directors and Treasurer November 12, 1997
/s/ James Patrick Cartmel Secretary November 12, 1997
James Patrick Cartmel
</TABLE>
C-10
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits
- ----------- -----------------------
1 (i) Articles of Incorporation of Registrant
2 (i) By-Laws of Registrant
5 Form of Investment Management Agreement
6 Form of Distribution Agreement
8 Custody Agreement with Investors Fiduciary
Trust Company*
9 Transfer Agency Agreement with Investors
Fiduciary Trust Company*
10 (i) Opinion and Consent of Venable, Baetjer and
Howard, LLP*
(ii) Opinion and Consent of Willkie Farr &
Gallagher*
11 Consent of Independent Auditors*
13 Form of Subscription Agreement
15 (i) Form of Shareholder Servicing and
Distribution Plan
(ii) Form of Shareholder Servicing Agreement
(iii) Form of Distribution Related Services
Agreement
- -------------------------
* To be filed by amendment.
<PAGE>
ARTICLES OF INCORPORATION
OF
COWEN SERIES FUNDS, INC.
ARTICLE I.
INCORPORATOR
The undersigned, Mark Prochowski, whose post office address is
c/o Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd Street, New
York, New York 10022, being at least 18 years of age, does hereby act as an
incorporator and forms a corporation under the Maryland General Corporation Law.
ARTICLE II.
NAME
The name of the corporation is Cowen Series Funds, Inc. (the
"Corporation").
ARTICLE III.
PURPOSES AND POWERS
The Corporation is formed for the following purposes:
(1) To conduct and carry on the business of an investment
company.
(2) To hold, invest and reinvest its assets in securities and
other investments or to hold part or all of its assets in cash.
(3) To issue and sell shares of its capital stock in such
amounts, on such terms and conditions, for such purposes and for such amount or
kind of consideration as may now or hereafter be permitted by law.
(4) To redeem, purchase or acquire in any other manner, hold,
dispose of, resell, transfer, reissue or cancel (all without the vote or consent
of the stockholders of the Corporation) shares of its capital stock, in any
manner and to the extent now or hereafter permitted by law and by this Charter.
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(5) To do any and all additional acts and to exercise any and
all additional powers or rights as may be necessary, incidental, appropriate or
desirable for the accomplishment of all or any of the foregoing purposes.
The Corporation shall be authorized to exercise and enjoy all
of the powers, rights and privileges granted to, or conferred upon, corporations
by the Maryland General Corporation Law now or hereafter in force, and the
enumeration of the foregoing shall not be deemed to exclude any powers, rights
or privileges so granted or conferred.
ARTICLE IV.
PRINCIPAL OFFICE AND RESIDENT AGENT
The post office address of the principal office of the
Corporation in the State of Maryland is c/o The Corporation Trust Company
Incorporated, 32 South Street, Baltimore, Maryland 21202. The name and address
of the resident agent of the Corporation in the State of Maryland is The
Corporation Trust Company Incorporated, a Maryland corporation, 32 South Street,
Baltimore, Maryland 21202.
ARTICLE V.
CAPITAL STOCK
(1) The total number of shares of capital stock that the
Corporation shall have authority to issue is three billion (3,000,000,000)
shares, of the par value of one tenth of one cent ($.001) per share and of the
aggregate par value of three million dollars ($3,000,000), all of which three
billion (3,000,000,000) shares are designated Common Stock.
(2) The Board of Directors of the Corporation is authorized,
from time to time, to classify or to reclassify, as the case may be, any
unissued shares of the Corporation, whether now or hereafter authorized, in
separate series and classes. The shares of said series and classes of stock
shall have such preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption as shall be fixed and determined from time to time by
the Board of Directors. The Board of Directors is authorized to increase or
decrease the number of shares of any series or class, but the number of shares
of any series or class shall not be decreased by the Board of Directors below
the number of shares thereof then outstanding.
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(3) The Board of Directors may redesignate a class or series
of shares of capital stock whether or not shares of such class or series are
issued and outstanding, provided that such redesignation does not in itself
affect the preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or terms or conditions of redemption
of such shares of stock.
(4) There is hereby established and classified a series of
stock comprised of five hundred million (500,000,000) shares, of the par value
of one tenth of one cent ($.001), to be known as the "Cowen Large Cap Value
Fund". Without limiting the authority of the Board of Directors set forth herein
to establish and designate any further series or classes, and to classify and
reclassify any unissued shares, and subject to such authority, shares of each
series, now authorized and hereafter authorized, shall be subject to the
following provisions:
(a) As more fully set forth hereafter, the assets and
liabilities and the income and expenses of each series shall be
determined separately and, accordingly, the net asset value, the
dividends payable to holders, and the amounts distributable in the
event of dissolution of the Corporation to holders of shares of the
Corporation's stock may vary from series to series.
(b) All consideration received by the Corporation for the
issue or sale of shares of a particular series, together with all
assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including all proceeds
derived from the sale, exchange or liquidation thereof, and any funds
or payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall irrevocably belong to that series for all
purposes, subject only to the rights of creditors and shall be referred
to as "assets belonging to" that series. The assets belonging to a
particular series shall be so recorded upon the books of the
Corporation.
(c) The assets belonging to each particular series shall be
charged with the liabilities of the Corporation with respect to that
series, all expenses, costs, charges and reserves attributable to that
series and that series' share of the liabilities, expenses, costs,
charges or reserves of the Corporation not attributable to any
particular series, in the latter case in the proportion that the net
asset value of that series (determined without regard to such
liabilities) bears to the net asset value of all series (determined
without regard to such liabilities). The determination of the Board of
Directors shall be
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conclusive as to the allocation of liabilities, including accrued
expenses and reserves, and assets to a particular series or series.
(d) Shares of each series shall be entitled to such dividends
and distributions, in shares or in cash or both, as may be declared
from time to time by the Board of Directors, acting in its sole
discretion, with respect to such series, provided that dividends and
distributions shall be paid on shares of a series only out of lawfully
available assets belonging to that series. Dividends may be declared
daily or otherwise pursuant to a standing resolution or resolutions
adopted only once or with such frequency as the Board of Directors may
determine. Any such dividend or distribution paid in shares will be
paid at the current net asset value thereof.
(e) The Board of Directors shall have the power, in its sole
discretion, to distribute in any fiscal year as dividends (including
dividends designated in whole or in part as capital gain distributions)
an amount sufficient, in the opinion of the Board of Directors, to
enable each series of the Corporation to qualify as a regulated
investment company under the Internal Revenue Code of 1986, as from
time to time amended, or any successor or comparable statute thereto,
and regulations promulgated thereunder, and to avoid liability of each
series of the Corporation for federal income and excise taxes in
respect of that year. However, nothing in the foregoing shall limit the
authority of the Board of Directors to make distributions greater than
or less than the amount necessary to qualify as a regulated investment
company and to avoid liability of any series of the Corporation for
such taxes.
(f) In the event of the liquidation or dissolution of the
Corporation, the stockholders of a series shall be entitled to receive,
as a single class, out of the assets of the Corporation available for
distribution to stockholders, the assets belonging to that series. The
assets so distributable to the stockholders of a series shall be
distributed among such stockholders in proportion to the number of
shares of that series held by them and recorded on the books of the
Corporation or, in the event that the series is divided into classes,
in the manner determined by the Board of Directors in accordance with
the Investment Company Act of 1940, as amended. In the event that there
are any assets available for distribution that are not attributable to
any particular series, such assets shall be allocated to all series in
proportion to the net assets of
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the respective series and then distributed to the holders of stock
of each series as aforesaid.
(g) If a series is divided into multiple classes, the classes
may be invested with one or more other classes in the common investment
portfolio comprising the series. Notwithstanding the foregoing
provisions of this Article V(4) of these Articles of Incorporation, if
two or more classes are invested in a common investment portfolio, the
shares of each such class of stock of the Corporation shall be subject
to the following preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption, and, if there are other classes of
stock invested in a different investment portfolio comprising a
different series, shall also be subject to the provisions of Article
V(4)(a) through (f) of these Articles of Incorporation at the series
level as if the classes invested in the common investment portfolio
were one class:
(i) The income and expenses of the series shall be
allocated among the classes comprising the series in such manner as may
be determined by the Board of Directors in accordance with law.
(ii) As more fully set forth in this Article V(4)(g)
of these Articles of Incorporation, the liabilities and expenses of the
classes comprising the series shall be determined separately from those
of each other and, accordingly, the net asset values, the dividends and
distributions payable to holders, and the amounts distributable in the
event of liquidation of the Corporation or termination of a series to
holders of shares of the Corporation's stock may vary within the
classes comprising the series. Except for these differences and certain
other differences set forth in this Article V(4)(g) or elsewhere in
these Articles of Incorporation, the classes comprising a series shall
have the same preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption.
(iii) The dividends and distributions of investment
income and capital gains with respect to the classes comprising a
series shall be in such amounts as may be declared from time to time by
the Board of Directors, and such dividends and distributions may vary
among the classes comprising the series to reflect differing
allocations of the expenses and liabilities of the Corporation among
the classes and any resultant differences between the net asset
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values per share of the classes, to such extent and for such purposes
as the Board of Directors may deem appropriate. The allocation of
investment income, capital gains, expenses and liabilities of the
Corporation among the classes comprising a series shall be determined
by the Board of Directors in a manner that is consistent with
applicable law.
(h) The proceeds of the redemption of the shares of any class
of stock of the Corporation may be reduced by the amount of any
contingent deferred sales charge, liquidation charge, or other charge
(which charges may vary within and among the classes) payable on such
redemption pursuant to the terms of issuance of such shares, all in
accordance with the Investment Company Act of 1940, as amended, and
applicable rules and regulations of the National Association of
Securities Dealers, Inc. ("NASD").
(i) At such times (which may vary between and among
the holders of particular classes) as may be determined by the Board of
Directors (or with the authorization of the Board of Directors, by the
officers of the Corporation) in accordance with the Investment Company
Act of 1940, as amended, applicable rules and regulations thereunder
and applicable rules and regulations of the NASD and reflected in the
pertinent registration statement of the Corporation, shares of any
particular class of stock of the Corporation may be automatically
converted into shares of another class of stock of the Corporation
based on the relative net asset values of such classes at the time of
conversion, subject, however, to any conditions of conversion that may
be imposed by the Board of Directors (or with the authorization of the
Board of Directors, by the officers of the Corporation) and reflected
in the pertinent registration statement of the Corporation as
aforesaid.
Except as provided above, all provisions of the Articles of
Incorporation relating to stock of the Corporation shall apply to
shares of, and to the holders of, all classes of stock.
(5) All holders of shares of stock shall vote as a single
class except (i) with respect to any matter which affects only one or more
classes or series of stock, in which case only the holders of shares of the
classes or series affected shall be entitled to vote, or (ii) as otherwise may
be required by the Investment Company Act of 1940, as amended.
(6) The presence in person or by proxy of the holders of
one-third (1/3) of the shares of capital stock of the
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Corporation outstanding and entitled to vote thereat shall constitute a quorum
for the transaction of business at a stockholders' meeting, except that where
any provision of law or of the Charter of the Corporation permit or require that
holders of any series or class shall vote as a separate series or class, then
one-third (1/3) of the aggregate number of shares of capital stock of that
series or class, as applicable, outstanding and entitled to vote shall
constitute a quorum for the transaction of business by that series or class, as
applicable.
(7) The Corporation may issue shares in fractional
denominations to the same extent as its whole shares, and any fractional share
shall carry proportionately the rights of a whole share including, without
limitation, the right to vote, the right to receive dividends and distributions
and the right to participate upon liquidation of the Corporation. A fractional
share shall not, however, have the right to receive a certificate evidencing it.
(8) No holder of stock of the Corporation by virtue of being
such a holder shall have any right to purchase, subscribe for, or otherwise
acquire any shares of the Corporation or any other security that the Corporation
may issue or sell (whether out of the number of shares authorized by the Charter
of the Corporation or out of any shares of the Corporation's capital stock that
the Corporation may acquire) other than a right that the Board of Directors in
its discretion may determine to grant.
(9) Notwithstanding any provision of the Maryland General
Corporation Law requiring any action to be taken or authorized by the
affirmative vote of a greater proportion than a majority of the votes of all
classes or of any class of stock of the Corporation, such action shall be
effective and valid if taken or authorized by the affirmative vote of a majority
of the total number of votes entitled to be cast thereon, except as otherwise
provided in the Charter of the Corporation or by law.
(10) All persons who shall acquire stock in the Corporation
shall acquire the same subject to the provisions of the Charter of Corporation
and the By-Laws of the Corporation, as from time to time amended or
supplemented.
ARTICLE VI.
REDEMPTION
Each holder of shares of the Corporation's capital stock shall
be entitled to require the Corporation to redeem all or any part of the shares
of capital stock of the Corporation
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standing in the name of the holder on the books of the Corporation, and all
shares of capital stock issued by the Corporation shall be subject to redemption
by the Corporation, at the redemption price of the shares as in effect from time
to time as may be determined by or pursuant to the direction of the Board of
Directors of the Corporation in accordance with the provisions of Article VII,
subject to the right of the Board of Directors of the Corporation to suspend the
right of redemption or postpone the date of payment of the redemption price in
accordance with provisions of applicable law. Without limiting the generality of
the foregoing, the Corporation shall, to the extent permitted by applicable law,
have the right at any time to redeem the shares owned by any holder of capital
stock of the Corporation (i) if the redemption is, in the opinion of the Board
of Directors of the Corporation, desirable in order to prevent the Corporation
from being deemed a "personal holding company" within the meaning of the
Internal Revenue Code of 1986 or (ii) if the value of the shares in the account
maintained by the Corporation or its transfer agent for any class of stock for
the stockholder is below an amount determined from time to time by the Board of
Directors of the Corporation (the "Minimum Account Balance") and the stockholder
has been given at least 60 (sixty) days' written notice of the redemption and
has failed to make additional purchases of shares in an amount sufficient to
bring the value in his account to at least the Minimum Account Balance before
the redemption is effected by the Corporation. Payment of the redemption price
shall be made in cash by the Corporation at the time and in the manner as may be
determined from time to time by the Board of Directors of the Corporation
unless, in the opinion of the Board of Directors, which shall be conclusive,
conditions exist that make payment wholly in cash unwise or undesirable; in such
event the Corporation may make payment wholly or partly by securities or other
property included in the assets belonging or allocable to the class of the
shares for which redemption is being sought, the value of which shall be
determined as provided herein. The Board of Directors may establish procedures
for redemption of shares.
ARTICLE VII.
BOARD OF DIRECTORS
(1) The number of directors constituting the Board of
Directors shall be one or such other number as may be set forth in the By-Laws
or determined by the Board of Directors pursuant to the By-Laws. The number of
Directors shall at no time be less than the minimum number required under the
Maryland General Corporation Law. Rodd M. Baxter has been appointed director of
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the Corporation to hold office until the first annual meeting of stockholders or
until her successor is elected and qualified.
(2) In furtherance, and not in limitation, of the powers
conferred by the Maryland General Corporation Law, the Board of Directors is
expressly authorized:
(i) To make, alter or repeal the By-Laws of the
Corporation, except where such power is reserved by the By-Laws to the
stockholders, and except as otherwise required by the 1940 Act.
(ii) From time to time to determine whether and to
what extent and at what times and places and under what conditions and
regulations the books and accounts of the Corporation, or any of them
other than the stock ledger, shall be open to the inspection of the
stockholders. No stockholder shall have any right to inspect any
account or book or document of the Corporation, except as conferred by
law or authorized by resolution of the Board of Directors or of the
stockholders.
(iii) Without the assent or vote of the stockholders,
to authorize the issuance from time to time of shares of the stock of
any class of the Corporation, whether now or hereafter authorized, and
securities convertible into shares of stock of the Corporation of any
class or classes, whether now or hereafter authorized, for such
consideration as the Board of Directors may deem advisable.
(iv) Without the assent or vote of the stockholders,
to authorize and issue obligations of the Corporation, secured and
unsecured, as the Board of Directors may determine, and to authorize
and cause to be executed mortgages and liens upon the real or personal
property of the Corporation.
(v) Notwithstanding anything in this Charter to the
contrary, to establish in its absolute discretion the basis or method
for determining the value of the assets belonging to any class, the
value of the liabilities belonging to any class and the net asset value
of each share of any class of the Corporation's stock.
(vi) To determine in accordance with generally
accepted accounting principles and practices what constitutes net
profits, earnings, surplus or net assets in excess of capital, and to
determine what accounting periods shall be used by the Corporation for
any purpose; to set apart out of any funds of the Corporation reserves
for such
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purposes as it shall determine and to abolish the same; to declare and
pay any dividends and distributions in cash, securities or other
property from surplus or any other funds legally available therefor, at
such intervals as it shall determine; to declare dividends or
distributions by means of a formula or other method of determination,
at meetings held less frequently than the frequency of the
effectiveness of such declarations; and to establish payment dates for
dividends or any other distributions on any basis, including dates
occurring less frequently than the effectiveness of declarations
thereof.
(vii) In addition to the powers and authorities
granted herein and by statute expressly conferred upon it, the Board of
Directors is authorized to exercise all powers and do all acts that may
be exercised or done by the Corporation pursuant to the provisions of
the laws of the State of Maryland, this Charter and the By-Laws of the
Corporation.
(3) Any determination made in good faith, and in accordance
with applicable law and generally accepted accounting principles and practices,
if applicable, by or pursuant to the direction of the Board of Directors, with
respect to the amount of assets, obligations or liabilities of the Corporation,
as to the amount of net income of the Corporation from dividends and interest
for any period or amounts at any time legally available for the payment of
dividends, as to the amount of any reserves or charges set up and the propriety
thereof, as to the time of or purpose for creating reserves or as to the use,
alteration or cancellation of any reserves or charges (whether or not any
obligation or liability for which the reserves or charges have been created has
been paid or discharged or is then or thereafter required to be paid or
discharged), as to the value of any security owned by the Corporation, the
determination of the net asset value of shares of any class of the Corporation's
capital stock, or as to any other matters relating to the issuance, sale or
other acquisition or disposition of securities or shares of capital stock of the
Corporation, and any reasonable determination made in good faith by the Board of
Directors regarding whether any transaction constitutes a purchase of securities
on "margin," a sale of securities "short," or an underwriting of the sale of, or
a participation in any underwriting or selling group in connection with the
public distribution of, any securities, shall be final and conclusive, and shall
be binding upon the Corporation and all holders of its capital stock, past,
present and future, and shares of the capital stock of the Corporation are
issued and sold on the condition and understanding, evidenced by the purchase of
shares of capital stock or acceptance of share certificates, that any
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and all such determinations shall be binding as aforesaid. No provision of this
Charter shall be effective to (i) require a waiver of compliance with any
provision of the Securities Act of 1933, as amended, or the 1940 Act, or of any
valid rule, regulation or order of the Securities and Exchange Commission under
those Acts or (ii) protect or purport to protect any director or officer of the
Corporation against any liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office.
ARTICLE VIII.
INDEMNIFICATION AND LIMITATION OF LIABILITY
(1) To the fullest extent that limitations on the liability of
directors and officers are permitted by the Maryland General Corporation Law, no
director or officer of the Corporation shall have any liability to the
Corporation or its stockholders for money damages. This limitation on liability
applies to events occurring at the time a person serves as a director or officer
of the Corporation whether or not such person is a director or officer at the
time of any proceeding in which liability is asserted.
(2) The Corporation shall indemnify and advance expenses to
its currently acting and its former directors to the fullest extent that
indemnification of directors and advancement of expenses to directors is
permitted by the Maryland General Corporation Law. The Corporation shall
indemnify and advance expenses to its officers to the same extent as its
directors and to such further extent as is consistent with such law. The board
of directors may, through a by-law, resolution or agreement, make further
provisions for indemnification of directors, officers, employees and agents to
the fullest extent permitted by the Maryland General Corporation Law.
(3) No provision of this Article VIII shall be effective to
protect or purport to protect any director or officer of the Corporation against
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any liability to the Corporation or its stockholders to which he would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
(4) References to the Maryland General Corporation Law in this
Article VIII are to the law as from time to time amended. No amendment to this
Charter shall affect any right of any person under this Article VIII based on
any event, omission or proceeding prior to such amendment. The term "Charter" as
used herein shall have the meaning set forth in the Maryland General Corporation
Law and includes these Articles of Incorporation and all amendments thereto.
ARTICLE IX.
AMENDMENTS
The Corporation reserves the right from time to time to make
any amendment to its Charter, now or hereafter authorized by law, including any
amendment that alters the contract rights, as expressly set forth in this
Charter, of any outstanding stock, and all rights at any time conferred upon the
stockholders of the Corporation by its Charter are granted subject to the
provisions of this Article and the reservation of the right to amend the Charter
herein contained.
IN WITNESS WHEREOF, I have adopted and signed these Articles
of Incorporation and do hereby acknowledge that the adoption and signing are my
act.
/s/ Mark Prochowski
Incorporator
Dated the 5th day of November, 1997
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BY-LAWS
OF
COWEN SERIES FUNDS, INC.
A Maryland Corporation
ARTICLE I.
STOCKHOLDERS
SECTION 1. Annual Meetings. No annual meeting of the
stockholders of the Corporation shall be held unless required by applicable law
or otherwise determined by the Board of Directors. An annual meeting may be held
at any place within the United States as may be determined by the Board of
Directors and as shall be designated in the notice of the meeting, and at the
time specified by the Board of Directors. Any business of the Corporation may be
transacted at an annual meeting without being specifically designated in the
notice unless otherwise provided by statute, the Corporation's Charter, as
amended or supplemented (the "Charter"), or these By-Laws.
SECTION 2. Special Meetings. Special meetings of the
stockholders for any purpose or purposes, unless otherwise prescribed by statute
or by the Corporation's Charter, may be held at any place within the United
States, and may be called at any time by the Board of Directors or by the
President, and shall be called by the Secretary at the request in writing of a
majority of the Board of Directors or at the request in writing of stockholders
entitled to cast at least 10 (ten) percent of the votes entitled to be cast at
the meeting upon payment by such stockholders to the Corporation of the
reasonably estimated cost of preparing and mailing a notice of the meeting
(which estimated cost shall be provided to such stockholders by the Secretary of
the Corporation). Notwithstanding the foregoing, unless requested by
stockholders entitled to cast a majority of the votes entitled to be cast at the
meeting, a special meeting of the stockholders need not be called at the request
of stockholders to consider any matter which is substantially the same as a
matter voted on at any special meeting of the stockholders held during the
preceding 12 (twelve) months. A written request shall state the purpose or
purposes of the proposed meeting.
SECTION 3. Notice of Meetings. Written or printed notice of
the purpose or purposes and of the time and place of every meeting of the
stockholders shall be given by the Secretary of the Corporation to each
stockholder of record entitled to vote
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at the meeting, by placing the notice in the mail at least 10 (ten) days, but
not more than 90 (ninety) days, prior to the date designated for the meeting
addressed to each stockholder at his address appearing on the books of the
Corporation or supplied by the stockholder to the Corporation for the purpose of
notice. The notice of any meeting of stockholders may be accompanied by a form
of proxy approved by the Board of Directors in favor of the actions or persons
as the Board of Directors may select. Notice of any meeting of stockholders
shall be deemed waived by any stockholder who attends the meeting in person or
by proxy, or who before or after the meeting submits a signed waiver of notice
that is filed with the records of the meeting.
SECTION 4. Quorum. Except as otherwise provided by law or by
the Corporation's Charter, the presence in person or by proxy of stockholders of
the Corporation entitled to cast at least one-third of the votes entitled to be
cast shall constitute a quorum at each meeting of the stockholders; provided,
however, that where any provision of law or the Charter permits or requires that
stockholders of any series or class of capital stock of the Corporation shall
vote as a series or class, stockholders of one-third of the aggregate number of
shares of capital stock of that series or class outstanding and entitled to vote
shall constitute a quorum at such meeting. Except as otherwise required by law,
all questions shall be decided by a majority of the votes cast on such
questions, except for the election of directors. A plurality of all the votes
cast at a meeting at which a quorum is present is sufficient to elect a
director. In the absence of a quorum, the stockholders present in person or by
proxy, by majority vote and without notice other than by announcement at the
meeting, may adjourn the meeting from time to time as provided in Section 5 of
this Article I until a quorum shall attend. The stockholders present at any duly
organized meeting may continue to do business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. The absence
from any meeting in person or by proxy of holders of the number of shares of
stock of the Corporation in excess of one-third that may be required by the laws
of the State of Maryland, the Investment Company Act of 1940, as amended, or
other applicable statute, the Corporation's Charter or these By-Laws, for action
upon any given matter shall not prevent action at the meeting on any other
matter or matters that may properly come before the meeting, so long as there
are present, in person or by proxy, holders of the number of shares of stock of
the Corporation required for action upon the other matter or matters.
SECTION 5. Adjournment. Any meeting of the stockholders may be
adjourned from time to time, without notice other than by announcement at the
meeting at which the
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adjournment is taken to a date not more than 120 (one hundred twenty) days after
the original record date. At any adjourned meeting at which a quorum shall be
present any action may be taken that could have been taken at the meeting
originally called.
SECTION 6. Organization. At every meeting of the stockholders,
the Chairman of the Board, or in his absence or inability to act, the President,
or in his absence or inability to act, a Vice President, or in the absence or
inability to act of the Chairman of the Board, the President and all the Vice
Presidents, a Chairman chosen by the stockholders, shall act as Chairman of the
meeting. The Secretary, or in his absence or inability to act, a person
appointed by the Chairman of the meeting, shall act as secretary of the meeting
and keep the minutes of the meeting.
SECTION 7. Order of Business. The order of business at all
meetings of the stockholders shall be as determined by the chairman of the
meeting.
SECTION 8. Voting. Except as otherwise provided by statute or
the Corporation's Charter, each holder of record of shares of stock of the
Corporation having voting power shall be entitled at each meeting of the
stockholders to one vote for every share of stock standing in his name on the
records of the Corporation as of the record date determined pursuant to Section
9 of this Article I; provided, however, that when required by the Corporation's
Charter, the Investment Company Act of 1940, as amended, or the laws of the
State of Maryland or when the Board of Directors has determined that the matter
affects only the interest of one series or class of stock, matters may be
submitted only to a vote of the stockholders of that particular series or class,
and each stockholder thereof shall be entitled to votes equal to the shares of
stock of that series or class registered in his name on the books of the
Corporation.
Each stockholder entitled to vote at any meeting of
stockholders may authorize another person or persons to act for him by a proxy
signed by the stockholder or his attorney-in-fact. No proxy shall be valid after
the expiration of eleven months from the date thereof, unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the stockholder
executing it, except in those cases in which the proxy states that it is
irrevocable and in which an irrevocable proxy is permitted by law.
If a vote shall be taken on any question then unless required
by statute or these By-Laws, or determined by the Chairman of the meeting to be
advisable, any such vote need not
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be by ballot. On a vote by ballot, each ballot shall be signed by the
stockholder voting, or by his proxy, and shall state the number of shares voted.
SECTION 9. Fixing of Record Date. The Board of Directors may
set a record date for the purpose of determining stockholders entitled to vote
at any meeting of the stockholders. The record date for a particular meeting
shall be not more than 90 (ninety) nor fewer than 10 (ten) days before the date
of the meeting. All persons who were holders of record of shares as of the
record date of a meeting, and no others, shall be entitled to vote at such
meeting and any adjournment thereof.
SECTION 10. Inspectors. The Board of Directors may, in advance
of any meeting of stockholders, appoint one or more inspectors to act at the
meeting or at any adjournment of the meeting. If the inspectors shall not be so
appointed or if any of them shall fail to appear or act, the chairman of the
meeting may appoint inspectors. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath to execute faithfully the
duties of inspector at the meeting with strict impartiality and according to the
best of his ability. The inspectors shall determine the number of shares
outstanding and the voting power of each share, the number of shares represented
at the meeting, the existence of a quorum and the validity and effect of
proxies, and shall receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result, and do those acts
as are proper to conduct the election or vote with fairness to all stockholders.
On request of the chairman of the meeting or any stockholder entitled to vote at
the meeting, the inspectors shall make a report in writing of any challenge,
request or matter determined by them and shall execute a certificate of any fact
found by them. No Director or candidate for the office of Director shall act as
inspector of an election of Directors. Inspectors need not be stockholders of
the Corporation.
SECTION 11. Consent of Stockholders in Lieu of Meeting. Except
as otherwise provided by statute, any action required to be taken at any meeting
of stockholders, or any action that may be taken at any meeting of the
stockholder, may be taken without a meeting, without prior notice and without a
vote, if the following are filed with the records of stockholders' meetings: (i)
a unanimous written consent that sets forth the action and is signed by each
stockholder entitled to vote on the matter and (ii) a written waiver of any
right to dissent signed by each stockholder entitled to notice of the meeting
but not entitled to vote at the meeting.
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ARTICLE II.
BOARD OF DIRECTORS
SECTION 1. General Powers. Except as otherwise provided in the
Corporation's Charter, the business and affairs of the Corporation shall be
managed under the direction of the Board of Directors. All powers of the
Corporation may be exercised by or under authority of the Board of Directors
except as conferred on or reserved to the stockholder by law, by the
Corporation's Charter or by these By-Laws.
SECTION 2. Number of Directors. The number of Directors
initially shall be one, and thereafter shall be fixed from time to time by
resolution of the Board of Directors adopted by a majority of the entire Board
of Directors; provided, however, that the number of Directors shall in no event
be fewer than the number required by the Maryland General Corporation Law nor
more than fifteen. Any vacancy created by an increase in Directors may be filled
in accordance with Section 6 of this Article II. No reduction in the number of
Directors shall have the effect of removing any Director from office prior to
the expiration of his term unless the Director is specifically removed pursuant
to Section 5 of this Article II at the time of the decrease. A Director need not
be a stockholder of the Corporation, a citizen of the United States or a
resident of the State of Maryland.
SECTION 3. Election and Term of Directors. The term of office
of each director shall be from the time of his election and qualification until
his successor shall have been elected and shall have qualified, or until his
death, or until he shall have resigned or have been removed as provided in these
By-Laws, or as otherwise provided by statute or the Corporation's Charter.
SECTION 4. Resignation. A Director of the Corporation may
resign at any time by giving written notice of his resignation to the Board of
Directors or the Chairman of the Board or to the President or the Secretary of
the Corporation. Any resignation shall take effect at the time specified in it
or, should the time when it is to become effective not be specified in it,
immediately upon its receipt. Acceptance of a resignation shall not be necessary
to make it effective unless the resignation states otherwise.
SECTION 5. Removal of Directors. Any Director of the
Corporation may be removed by the stockholders with or without cause at any time
by a vote of a majority of the votes entitled to be cast for the election of
Directors.
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SECTION 6. Vacancies. Subject to the provisions of the
Investment Company Act of 1940, as amended, any vacancies in the Board of
Directors, whether arising from death, resignation, removal or any other cause
except an increase in the number of Directors, shall be filled by a vote of the
majority of the Board of Directors then in office even though that majority is
less than a quorum, provided that no vacancy or vacancies shall be filled by
action of the remaining Directors if, after the filling of the vacancy or
vacancies, fewer than two-thirds of the Directors then holding office shall have
been elected by the stockholders of the Corporation. A majority of the entire
Board in office at the time of increase may fill a vacancy which results from an
increase in the number of Directors. In the event that at any time a vacancy
exists in any office of a Director that may not be filled by the remaining
Directors, a special meeting of the stockholders shall be held as promptly as
possible and in any event within 60 (sixty) days, for the purpose of filling the
vacancy or vacancies. Any Director elected or appointed to fill a vacancy shall
hold office until a successor has been chosen and qualifies or until his earlier
resignation or removal.
SECTION 7. Place of Meetings. Meetings of the Board may be
held at any place that the Board of Directors may from time to time determine or
that is specified in the notice of the meeting.
SECTION 8. Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at the time and place determined by the
Board of Directors.
SECTION 9. Special Meetings. Special meetings of the Board of
Directors may be called by two or more Directors of the Corporation or by the
Chairman of the Board or the President.
SECTION 10. Notice of Special Meetings. Notice of each special
meeting of the Board of Directors shall be given by the Secretary as hereinafter
provided. Each notice shall state the time and place of the meeting and shall be
delivered to each Director, either personally or by telephone or other standard
form of telecommunication, at least 24 (twenty-four) hours before the time at
which the meeting is to be held, or by first-class mail, postage prepaid,
addressed to the Director at his residence or usual place of business, and
mailed at least 3 (three) days before the day on which the meeting is to be
held.
SECTION 11. Waiver of Notice of Meetings. Notice of any
special meeting need not be given to any Director who shall, either before or
after the meeting, sign a written waiver of
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notice that is filed with the records of the meeting or who shall attend the
meeting.
SECTION 12. Quorum and Voting. One-third (but not fewer than 2
(two)) of the members of the entire Board of Directors shall be present in
person at any meeting of the Board in order to constitute a quorum for the
transaction of business at the meeting (unless there is only one director, in
which case that one will constitute a quorum for the transaction of business),
and except as otherwise expressly required by statute, the Corporation's
Charter, these By-Laws, the Investment Company Act of 1940, as amended, or any
other applicable statute, the act of a majority of the Directors present at any
meeting at which a quorum is present shall be the act of the Board. In the
absence of a quorum at any meeting of the Board, a majority of the Directors
present may adjourn the meeting to another time and place until a quorum shall
be present. Notice of the time and place of any adjourned meeting shall be given
to all Directors. At any adjourned meeting at which a quorum is present, any
business may be transacted that might have been transacted at the meeting as
originally called.
SECTION 13. Organization. The Board of Directors may designate
a Chairman of the Board, who shall preside at each meeting of the Board. In the
absence or inability of the Chairman of the Board to act, the President, or, in
his absence or inability to act, another Director chosen by a majority of the
Directors present, shall act as chairman of the meeting and preside at the
meeting. The Secretary, or, in his absence or inability to act, any person
appointed by the chairman, shall act as secretary of the meeting and keep the
minutes thereof.
SECTION 14. Committees. The Board of Directors may designate
one or more committees of the Board of Directors, each consisting of 2 (two) or
more Directors. To the extent provided in the resolution, and permitted by law,
the committee or committees shall have and may exercise the powers of the Board
of Directors in the management of the business and affairs of the Corporation
and may authorize the seal of the Corporation to be affixed to all papers that
may require it. Any committee or committees shall have the name or names
determined from time to time by resolution adopted by the Board of Directors.
Each committee shall keep regular minutes of its meetings and report the same to
the Board of Directors when required. The members of a committee present at any
meeting, whether or not they constitute a quorum, may appoint a Director to act
in the place of an absent member.
SECTION 15. Written Consent of Directors in Lieu of a Meeting.
Subject to the provisions of the Investment Company Act
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of 1940, as amended, any action required or permitted to be taken at any meeting
of the Board of Directors or of any committee of the Board may be taken without
a meeting if all members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
the proceedings of the Board or committee.
SECTION 16. Telephone Conference. Members of the Board of
Directors or any committee of the Board may participate in any Board or
committee meeting by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other at the same time. Participation by such means shall constitute
presence in person at the meeting.
SECTION 17. Compensation. Each Director shall be entitled to
receive compensation, if any, as may from time to time be fixed by the Board of
Directors, including a fee for each meeting of the Board or any committee
thereof, regular or special, he attends. Directors may also be reimbursed by the
Corporation for all reasonable expenses incurred in traveling to and from the
place of a Board or committee meeting.
ARTICLE III.
OFFICERS, AGENTS AND EMPLOYEES
SECTION 1. Number and Qualifications. The officers of the
Corporation shall be a President, a Secretary and a Treasurer, each of whom
shall be elected by the Board of Directors. The Board of Directors may elect or
appoint one or more Vice Presidents and may also appoint any other officers,
agents and employees it deems necessary or proper. Any two or more offices may
be held by the same person, except the offices of President and Vice President,
but no officer shall execute, acknowledge or verify in more than one capacity
any instrument required by law to be executed, acknowledged or verified by more
than one officer. Officers shall be elected by the Board of Directors to hold
office until their successors shall have been duly elected and shall have
qualified. Officers shall serve at the pleasure of the Board of Directors. The
Board of Directors may from time to time elect, or delegate to the President the
power to appoint, such officers (including one or more Assistant Vice President,
one or more Assistant Treasurers and one or more Assistant Secretaries) and such
agents as may be necessary or desirable for the business of the Corporation.
Such other officers and agents shall have such duties and shall hold their
offices for such terms as may be prescribed by the Board or by the appointing
authority.
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SECTION 2. Resignations. Any officer of the Corporation may
resign at any time by giving written notice of his resignation to the Board of
Directors, the Chairman of the Board, the President or the Secretary. Any
resignation shall take effect at the time specified therein or, if the time when
it shall become effective is not specified therein, immediately upon its
receipt. Acceptance of a resignation shall not be necessary to make it effective
unless the resignation states otherwise.
SECTION 3. Removal of Officer, Agent or Employee. Any officer,
agent or employee of the Corporation may be removed by the Board of Directors
with or without cause at any time, and the Board may delegate the power of
removal as to agents and employees not elected or appointed by the Board of
Directors. Removal shall be without prejudice to the person's contract rights,
if any, but the appointment of any person as an officer, agent or employee of
the Corporation shall not of itself create contract rights.
SECTION 4. Vacancies. A vacancy in any office whether arising
from death, resignation, removal or any other cause, may be filled in the manner
prescribed in these By-Laws for the regular election or appointment to the
office.
SECTION 5. Compensation. The compensation of the officers of
the Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any officer with respect to other officers under his control.
SECTION 6. Bonds or Other Security. If required by the Board,
any officer, agent or employee of the Corporation shall give a bond or other
security for the faithful performance of his duties, in an amount and with any
surety or sureties as the Board may require.
SECTION 7. President. The President shall be the chief
executive officer of the Corporation. In the absence or inability of the
Chairman of the Board (or if there is none) to act, the President shall preside
at all meetings of the stockholders and of the Board of Directors. The President
shall have, subject to the control of the Board of Directors, general charge of
the business and affairs of the Corporation, and may employ and discharge
employees and agents of the Corporation, except those elected or appointed by
the Board, and he may delegate these powers.
SECTION 8. Chief Operating Officer. The Chief Operating
Officer shall be the Chief Operating Officer of the Corporation, and shall have
responsibility for the various operational facilities and personnel and related
support services
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of the Corporation. In general, he shall perform all duties incident to the
office of Chief Operating Officer and such other duties as from time to time may
be assigned to him by the Board of Directors or the President.
SECTION 9. Vice President. Each Vice President shall have the
powers and perform the duties that the Board of Directors or the President may
from time to time prescribe.
SECTION 10. Treasurer. Subject to the provisions of any
contract that may be entered into with any custodian pursuant to authority
granted by the Board of Directors, the Treasurer shall have charge of all
receipts and disbursements of the Corporation and shall have or provide for the
custody of the Corporation's funds and securities; he shall have full authority
to receive and give receipts for all money due and payable to the Corporation,
and to endorse checks, drafts and warrants, in its name and on its behalf and to
give full discharge for the same; he shall deposit all funds of the Corporation,
except those that may be required for current use, in such banks or other places
of deposit as the Board of Directors may from time to time designate; and, in
general, he shall perform all duties incident to the office of Treasurer and
such other duties as may from time to time be assigned to him by the Board of
Directors or the President.
SECTION 11. Secretary. The Secretary shall
(a) keep or cause to be kept in one or more books provided for
the purpose, the minutes of all meetings of the Board of Directors, the
committees of the Board and the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the
Corporation and affix and attest the seal to all stock certificates of the
Corporation (unless the seal of the Corporation on such certificates shall be a
facsimile, as hereinafter provided) and affix and attest the seal to all other
documents to be executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and
other documents and records required by law to be kept and filed are properly
kept and filed; and
(e) in general, perform all the duties incident to the office
of Secretary and such other duties as from time to time
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may be assigned to him by the Board of Directors or the President.
SECTION 12. Delegation of Duties. In case of the absence of
any officer of the Corporation, or for any other reason that the Board of
Directors may deem sufficient, the Board may confer for the time being the
powers or duties, or any of them, of such officer upon any other officer or upon
any Director.
ARTICLE IV.
STOCK
SECTION 1. Stock Certificates. Each holder of stock of the
Corporation shall be entitled upon specific written request to such person as
may be designated by the Corporation to have a certificate or certificates, in a
form approved by the Board, representing the number of shares of stock of the
Corporation owned by him; provided, however, that certificates for fractional
shares will not be delivered in any case. The certificates representing shares
of stock shall be signed by or in the name of the Corporation by the Chairman of
the Board, the President or a Vice President and by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer and sealed with
the seal of the Corporation. Any or all of the signatures or the seal on the
certificate may be facsimiles. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate shall be issued, it may be issued by the Corporation with the same
effect as if such officer, transfer agent or registrar were still in the office
at the date of issue.
SECTION 2. Transfers of Shares. Transfers of shares of stock
of the Corporation shall be made on the stock records of the Corporation only by
the registered holder thereof, or by his attorney thereunto authorized by power
of attorney duly executed and filed with the Secretary or with a transfer agent
or transfer clerk, and on surrender of the certificate or certificates, if
issued, for the shares properly endorsed or accompanied by a duly executed stock
transfer power and the payment of all taxes thereon. Except as otherwise
provided by law, the Corporation shall be entitled to recognize the exclusive
right of a person in whose name any share or shares stand on the record of
stockholders as the owner of the share or shares for all purposes, including,
without limitation, the rights to receive dividends or other distributions and
to vote as the owner, and the Corporation shall not be bound to recognize any
equitable or
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legal claim to or interest in any such share or shares on the part of any other
person.
SECTION 3. Regulations. The Board of Directors may make any
additional rules and regulations, not inconsistent with these By-Laws, as it may
deem expedient concerning the issue, transfer and registration of certificates
for shares of stock of the Corporation. It may appoint, or authorize any officer
or officers to appoint, one or more transfer agents or one or more transfer
clerks and one or more registrars and may require all certificates for shares of
stock to bear the signature or signatures of any of them.
SECTION 4. Stolen, Lost, Destroyed or Mutilated Certificates.
The holder of any certificate representing shares of stock of the Corporation
shall immediately notify the Corporation of its theft, loss, destruction or
mutilation and the Corporation may issue a new certificate of stock in the place
of any certificate issued by it that has been alleged to have been stolen, lost
or destroyed or that shall have been mutilated. The Board may, in its
discretion, require the owner (or his legal representative) of a stolen, lost,
destroyed or mutilated certificate to give to the Corporation a bond in a sum,
limited or unlimited, and in a form and with any surety or sureties, as the
Board in its absolute discretion shall determine, to indemnify the Corporation
against any claim that may be made against it on account of the alleged theft,
loss or destruction of any such certificate, or issuance of a new certificate.
Anything herein to the contrary notwithstanding, the Board of Directors, in its
absolute discretion, may refuse to issue any such new certificate, except
pursuant to legal proceedings under the laws of the State of Maryland.
SECTION 5. Fixing of Record Date for Dividends, Distributions,
etc. The Board may fix, in advance, a date not more than 90 (ninety) days
preceding the date fixed for the payment of any dividend or the making of any
distribution or the allotment of rights to subscribe for securities of the
Corporation, or for the delivery of evidences of rights or evidences of
interests arising out of any change, conversion or exchange of common stock or
other securities entitled to receive any such dividend, distribution, allotment,
rights or interests, and in such case only the stockholders of record at the
time so fixed shall be entitled to receive such dividend, distribution,
allotment, rights or interests.
SECTION 6. Information to Stockholders and Others. Any
stockholder of the Corporation or his agent may inspect and copy during the
Corporation's usual business hours the Corporations' By-Laws, minutes of the
proceedings of its
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stockholders, annual statements of its affairs and voting trust agreements on
file at its principal office.
ARTICLE V.
INDEMNIFICATION AND INSURANCE
SECTION 1. Indemnification of Directors and Officers. Any
person who was or is a party or is threatened to be made a party in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is a current or former Director or officer of the Corporation, or is or
was serving while a Director or officer of the Corporation at the request of the
Corporation as a Director, officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust, enterprise
or employee benefit plan, shall be indemnified by the Corporation against
judgments, penalties, fines, excise taxes, settlements and reasonable expenses
(including attorneys' fees) actually incurred by such person in connection with
such action, suit or proceeding to the full extent permissible under the
Maryland General Corporation Law, the Securities Act of 1933 and the Investment
Company Act of 1940, as such statutes are now or hereafter in force, except that
such indemnity shall not protect any such person against any liability to the
Corporation or any stockholder thereof to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office
("disabling conduct").
SECTION 2. Advances. Any current or former Director or officer
of the Corporation claiming indemnification within the scope of this Article V
shall be entitled to advances from the Corporation for payment of the reasonable
expenses incurred by him in connection with proceedings to which he is a party
in the manner and to the full extent permissible under the Maryland General
Corporation Law, the Securities Act of 1933 and the Investment Company Act of
1940, as such statutes are now or hereafter in force; provided, however, that
the person seeking indemnification shall provide to the Corporation a written
affirmation of his good faith belief that the standard of conduct necessary for
indemnification by the Corporation has been met and a written undertaking to
repay any such advance unless it is ultimately determined that he is entitled to
indemnification, and provided further that at least one of the following
additional conditions are met: (1) the person seeking indemnification shall
provide a security in form and amount acceptable to the Corporation for his
undertaking; (2) the Corporation is insured
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against losses arising by reason of the advance; or (3) a majority of a quorum
of Directors of the Corporation who are neither "interested persons" as defined
in Section 2(a)(19) of the Investment Company Act of 1940, as amended, nor
parties to the proceeding ("disinterested non-party directors"), or independent
legal counsel, in a written opinion, shall determine, based on a review of facts
readily available to the Corporation at the time the advance is proposed to be
made, that there is reason to believe that the person seeking indemnification
will ultimately be found to be entitled to indemnification.
SECTION 3. Procedure. At the request of any current or former
Director or officer, or any employee or agent whom the Corporation proposes to
indemnify, the Board of Directors shall determine, or cause to be determined, in
a manner consistent with the Maryland General Corporation Law, the Securities
Act of 1933 and the Investment Company Act of 1940, as such statutes are now or
hereafter in force, whether the standards required by this Article V have been
met; provided, however, that indemnification shall be made only following: (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 was not liable by reason of
disabling conduct or (2) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the person to be
indemnified was not liable by reason of disabling conduct, by (a) the vote of a
majority of a quorum of disinterested non-party Directors or (b) an independent
legal counsel in a written opinion.
SECTION 4. Indemnification of Employees and Agents. Employees
and agents who are not officers or Directors of the Corporation may be
indemnified, and reasonable expenses may be advanced to such employees or
agents, in accordance with the procedures set forth in this Article V to the
extent permissible under the Investment Company Act of 1940, the Securities Act
of 1933 and the Maryland General Corporation Law, as such statutes are now or
hereafter in force, and to such further extent, consistent with the foregoing,
as may be provided by action of the Board of Directors or by contract.
SECTION 5. Other Rights. The indemnification provided by this
Article V shall not be deemed exclusive of any other right, in respect of
indemnification or otherwise, to which those seeking such indemnification may be
entitled under any insurance or other agreement, vote of stockholders or
disinterested Directors or otherwise, both as to action by a Director or officer
of the Corporation in his official capacity and as to action by such person in
another capacity while holding such office or position, and shall continue as to
a person who has
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ceased to be a Director or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person.
SECTION 6. Insurance. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
Director, officer, employee or agent of the Corporation, or who, while a
Director, officer, employee or agent of the Corporation, is or was serving at
the request of the Corporation as a Director, officer, partner, trustee,
employee, agent or fiduciary of another corporation, partnership, joint venture,
trust, enterprise or employee benefit plan, against any liability asserted
against and incurred by him in any such capacity, or arising out of his status
as such.
SECTION 7. Constituent, Resulting or Surviving Corporations.
For the purposes of this Article V, references to the "Corporation" shall
include all constituent corporations absorbed in a consolidation or merger as
well as the resulting or surviving corporation so that any person who is or was
a Director or officer of a constituent corporation or is or was serving at the
request of a constituent corporation as a Director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
shall stand in the same position under this Article V with respect to the
resulting or surviving corporation as he would if he had served the resulting or
surviving corporation in the same capacity.
ARTICLE VI.
SEAL
The seal of the Corporation shall be circular in form and
shall bear the name of the Corporation, the year of its incorporation, the words
"Corporate Seal" and "Maryland" and any emblem or device approved by the Board
of Directors. The seal may be used by causing it or a facsimile to be impressed
or affixed or in any other manner reproduced, or by placing the word "(seal)"
adjacent to the signature of the authorized officer of the Corporation.
ARTICLE VII.
FISCAL YEAR
The Corporation's fiscal year shall be fixed by the Board of
Directors.
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ARTICLE VIII.
AMENDMENTS
These By-Laws may be amended or repealed by the affirmative
vote of a majority of the Board of Directors at any regular or special meeting
of the Board of Directors, subject to the requirements of the Investment Company
Act of 1940, as amended.
Dated: November 6, 1997
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
COWEN LARGE CAP VALUE FUND
A SERIES OF COWEN SERIES FUNDS, INC.
November __, 1997
Cowen Asset Management
Cowen & Company
Financial Square
New York, New York 10005-3597
Dear Sirs:
Cowen Series Funds, Inc. (the "Fund"), a corporation organized under
the laws of the State of Maryland, herewith confirms its agreement with Cowen
Asset Management, a division of Cowen & Company ("Cowen"), as follows:
1. Investment Description; Appointment
-----------------------------------
The Fund desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in its
Articles of Incorporation, as amended, and in its Prospectuses and Statements of
Additional Information as from time to time in effect, and in such manner and to
such extent as may from time to time be approved by the Board of Directors of
the Fund. Copies of the Fund's Prospectuses, Statements of Additional
Information and Articles of Incorporation, as amended, have been or will be
submitted to Cowen. The Fund desires to employ and hereby appoints Cowen to act
as investment manager to its Cowen Large Cap Value Fund (the "Portfolio"). Cowen
accepts the appointment and agrees to furnish the services set forth below for
the compensation set forth below.
2. Services as Investment Manager
------------------------------
Subject to the supervision and direction of the Board of Directors of
the Fund, Cowen will (a) act in strict conformity with the Fund's Articles of
Incorporation and by-laws, the Investment Company Act of 1940 (the "Act") and
the Investment Advisers Act of 1940, as the same may from time to time be
amended, (b) manage the Portfolio in accordance with the Portfolio's investment
objective and policies as stated in the Portfolio's Prospectus and Statement of
Additional Information as from time to time in effect, (c) make general
investment decisions for the Portfolio including decisions concerning (i) the
specific types of securities to be held by the Portfolio and the proportion of
the Portfolio's assets that should be allocated to such investments during
particular market cycles and (ii) the specific issuers whose securities will be
purchased or sold by the Portfolio, and (d) supply office facilities (which may
be in Cowen's own offices); statistical and research data; data processing
services; clerical services; internal auditing and legal services; internal
executive and administrative services; stationery and office supplies;
preparation of reports to
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shareholders of the Portfolio; preparation of tax returns, reports to and
filings with the Securities and Exchange Commission and state Blue Sky
authorities; calculation of the net asset value of shares of the Portfolio; and
general assistance in all aspects of the Portfolio's operations. In providing
those services, Cowen will supervise the Portfolio's investments generally and
conduct a continual program of evaluation of the Portfolio's assets.
In connection with the performance of its duties under this Agreement,
it is understood that Cowen will from time to time employ or associate with
itself such person or persons as Cowen may believe to be particularly fitted to
assist it in the performance of this Agreement, it being understood that the
compensation of such person or persons shall be paid by Cowen and that no
obligation may be incurred on the Portfolio's behalf in any such respect. Cowen,
a limited partnership formed under the laws of the State of New York, will
notify the Fund of any change in its membership within a reasonable time after
such change.
3. Information Provided to the Fund; Books and Records
---------------------------------------------------
(a) Cowen will keep the Fund informed of developments materially
affecting the Portfolio, and will, on its own initiative, furnish the Fund from
time to time with whatever information Cowen believes is appropriate for this
purpose.
(b) In compliance with the requirements of Rule 31a-3 under the Act,
Cowen hereby agrees that all records which it maintains for the Fund are the
property of the Fund and further agrees to surrender promptly to the Fund any of
such records upon the Fund's request.
4. Standard of Care
----------------
Cowen shall exercise its best judgment in rendering the services
listed in paragraph 2 above. Cowen shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, provided that nothing herein shall be
deemed to protect or purport to protect Cowen against any liability to the Fund
or to its shareholders to which Cowen could otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of Cowen's reckless disregard of its
obligations and duties under this Agreement.
Any person, even though also a partner, officer, employee, or agent of
Cowen, who may be or become a Director, officer, employee or agent of the Fund,
shall be deemed, when rendering services to the Fund or acting on any business
of the Fund, to be rendering such services to or acting solely for the Fund and
not as a Director, officer, employee, or agent or one under the control or
direction of Cowen even though paid by it.
2
<PAGE>
5. Compensation
------------
In consideration of the services rendered pursuant to this Agreement,
the Fund will pay Cowen on the first business day of each month a fee for the
previous month, calculated daily, at the annual rate of ___ of 1.00% of the
Portfolio's average daily net assets. The fee for the period from the date the
Portfolio commences investment operations to the end of the month during which
the Portfolio commences investment operations shall be prorated according to the
proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of a month, the fee for such part
of that month shall be prorated according to the proportion that such period
bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees payable to
Cowen, the value of the Portfolio's net assets shall be computed at the times
and in the manner specified in the Portfolio's Prospectus and the Statement of
Additional Information as from time to time in effect.
6. Expenses
--------
Cowen will bear all expenses in connection with the performance of its
services under this Agreement. The Portfolio will bear certain other expenses to
be incurred in its operation, including: taxes, interest, brokerage fees and
commissions, if any; fees of directors of the Fund who are not officers or
employees of Cowen; Securities and Exchange Commission fees and state Blue Sky
qualification fees; management, advisory and administration fees; charges of
custodians and transfer and dividend disbursing agents; outside accounting and
bookkeeping expenses; certain insurance premiums; outside auditing and legal
expenses; costs of maintenance of corporate existence; costs attributable to
investor services, including, without limitation, telephone and personnel
expenses; costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for distribution to existing
shareholders; costs of shareholders' reports and meetings of the shareholders,
officers or Board of Directors of the Fund; and any extraordinary expenses.
7. Reimbursement to the Fund
-------------------------
From time to time Cowen, in its sole discretion and as it deems
appropriate, may assume certain expenses of the Portfolio while retaining the
ability to be reimbursed by the Portfolio for such amounts.
8. Services to Other Companies or Accounts
---------------------------------------
The Fund understands that Cowen now acts and will continue to act as
investment adviser to fiduciary and other managed accounts and now acts and will
continue to act as investment manager, investment adviser, sub-investment
adviser and/or administrator to
3
<PAGE>
one or more other investment companies, and the Fund has no objection to Cowen's
so acting, provided that whenever the Portfolio and one or more other accounts
or investment companies advised by Cowen have available funds for investment,
investments suitable and appropriate for each will be allocated in a manner
believed to be equitable to each entity. The Fund recognizes that in some cases
this procedure may adversely affect the size of the position obtainable for the
Portfolio. In addition, the Fund understands that the persons employed by Cowen
to assist in the performance of Cowen's duties hereunder will not devote their
full time to such service and nothing contained herein shall be deemed to limit
or restrict the right of Cowen or any affiliate of Cowen to engage in and devote
time and attention to other businesses or to render services of whatever kind or
nature.
9. Term of Agreement
-----------------
This Agreement shall become effective on the date the Portfolio
commences investment operations and shall continue for an initial two year term
and thereafter shall continue automatically, provided such continuance is
specifically approved at least annually by (a) the Board of Directors of the
Fund or (b) a vote of a majority of the Portfolio's outstanding voting
securities (as defined in the Act), provided that in either event the
continuance is also approved by a majority of the Board of Directors who are not
"interested persons" (as defined in that Act) of the Fund, by vote cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement is terminable, without penalty, on 60 days' written notice, by the
Board of Directors of the Fund or by vote of holders of a majority of the
Portfolio's shares, or upon 90 days' written notice, by Cowen. This Agreement
will also terminate automatically in the event of its assignment (as defined in
the Act and the Rules thereunder).
10. Amendment of this Agreement
---------------------------
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no material amendment of this Agreement shall be effective until
approved by vote of the holders of a majority of the outstanding voting
securities of the Portfolio.
11. Miscellaneous
-------------
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be invalidated or rendered
unenforceable thereby. This Agreement shall inure to the benefit of the parties
hereto and their respective successors and shall be governed by New
4
<PAGE>
York law without giving effect to the conflict of law provisions thereof.
5
<PAGE>
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning the enclosed copy
hereof.
Very truly yours,
COWEN SERIES FUNDS, INC.
By:_____________________
Name:
Title:
Accepted and Agreed:
COWEN ASSET MANAGEMENT,
A DIVISION OF COWEN & COMPANY
By:____________________________
Name:
Title:
6
<PAGE>
DISTRIBUTION AGREEMENT
November __, 1997
Cowen & Company
Financial Square
New York, New York 10005
Dear Sirs:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, Cowen Series Funds, Inc. (the "Fund"), a corporation
organized under the laws of the State of Maryland, has agreed that Cowen &
Company ("Cowen") shall be, for the period of this Agreement, the distributor of
shares of the Fund.
1. Services as Distributor
-----------------------
1.1 Cowen will act as agent for the distribution of shares of the
Fund covered by the Fund's registration statement on Form N-1A (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"1933 Act"), and the Investment Company Act of 1940, as amended (the "1940
Act").
1.2 Cowen agrees to use its best efforts to solicit orders for
the sale of shares of the Fund at the public offering price, as determined in
accordance with the Registration Statement, and will undertake such advertising
and promotion as it believes is reasonable in connection with such solicitation.
Cowen agrees to bear all selling expenses, including the cost of printing
prospectuses and statements of additional information and distributing them to
prospective shareholders.
1.3 All activities by Cowen as distributor of the Fund's shares
shall comply with all applicable laws, rules and regulations, including, without
limitation, all rules and regulations made or adopted by the Securities and
Exchange Commission (the "SEC") or by any securities association registered
under the Securities Exchange Act of 1934.
1
<PAGE>
1.4 Cowen will provide one or more persons during normal business
hours to respond to telephone questions concerning the Fund.
1.5 Cowen acknowledges that, whenever in the judgment of the
Fund's officers such action is warranted for any reason, including, without
limitation, market, economic or political conditions, those officers may decline
to accept any orders for, or make any sales of, the Fund's shares until such
time as those officers deem it advisable to accept such orders and to make such
sales.
1.6 Cowen will act only on its own behalf as principal should it
choose to enter into selling agreements with selected dealers or others.
2. Duties of the Fund
------------------
2.1 The Fund agrees at its own expense to execute any and all
documents, to furnish any and all information and to take any other actions that
may be reasonably necessary in connection with the qualification of the Fund's
shares for sale in those states that Cowen may designate.
2.2 The Fund shall furnish from time to time, for use in
connection with the sale of the Fund's shares, such information and reports with
respect to the Fund and its shares as Cowen may reasonably request, all of which
shall be signed by one or more of the Fund's duly authorized officers; and the
Fund warrants that the statements contained in any such reports, when so signed
by one or more of the Fund's officers, shall be true and correct. The Fund shall
also furnish Cowen upon request with: (a) annual audits of the Fund's books and
accounts made by independent public accountants regularly retained by the Fund,
(b) semi-annual unaudited financial statements pertaining to the Fund, (c)
quarterly earnings statements prepared by the Fund, (d) a monthly itemized list
of the securities in the Fund's portfolio, (e) monthly balance sheets as soon as
practicable after the end of each month and (f) from time to time such
additional information regarding the Fund's financial condition as Cowen may
reasonably request.
3. Representations and Warranties
------------------------------
The Fund represents to Cowen that the Registration Statement,
including the prospectuses and statement of additional information forming parts
thereof, has been prepared in conformity with the requirements of the 1933 Act,
the 1940 Act and the rules and regulations of
2
<PAGE>
the SEC thereunder. As used in this Agreement the terms "Registration
Statement", "prospectus" and "statement of additional information" shall mean
any registration statement, prospectus and statement of additional information
filed by the Fund with the SEC and any amendments and supplements thereto which
at any time shall have been filed with the SEC. The Fund represents and warrants
to Cowen that the Registration Statement, when such becomes effective, will
include all statements required to be contained therein in conformity with the
1933 Act, the 1940 Act and the rules and regulations of the SEC; that all
statements of fact contained in the Registration Statement will be true and
correct when such becomes effective; and that the Registration Statement when
such becomes effective will include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading to a purchaser of the Fund's shares. Cowen
may, but shall not be obligated to, propose from time to time such amendment or
amendments to the Registration Statement and such supplement or supplements to
any prospectus or statement of additional information as, in the light of future
developments, may, in the opinion of Cowen's counsel, be necessary or advisable.
If the Fund shall not propose such amendment or amendments and/or supplement or
supplements within fifteen days after receipt by the Fund of a written request
from Cowen to do so, Cowen may, at its option, terminate this Agreement. The
Fund shall not file any amendment to the Registration Statement or supplement to
any prospectus or statement of additional information without giving Cowen
reasonable notice thereof in advance; provided, however, that nothing contained
in this Agreement shall in any way limit the Fund's right to file at any time
such amendments to the Registration Statement and/or supplements to any
prospectus or statement of additional information, of whatever character, as the
Fund may deem advisable, such right being in all respects absolute and
unconditional.
4. Indemnification
---------------
4.1 The Fund authorizes Cowen and any dealers with whom Cowen has
entered into dealer agreements to use any prospectus or statement of additional
information furnished by the Fund from time to time, in connection with the sale
of the Fund's shares. The Fund agrees to indemnify, defend and hold Cowen, its
several officers and directors, and any person who controls Cowen within the
meaning of Section 15 of the 1933 Act, free and harmless from and against any
and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any
3
<PAGE>
counsel fees incurred in connection therewith) which Cowen, its officers and
directors, or any such controlling person, may incur under the 1933 Act, the
1940 Act or common law or otherwise, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, any prospectus or any statement of additional
information, or arising out of or based upon any omission or alleged omission to
state a material fact required to be stated in the Registration Statement, any
prospectus or any statement of additional information, or necessary to make the
statements in any of them not misleading; provided, however, that the Fund's
agreement to indemnify Cowen, its officers or directors, and any such
controlling person shall not be deemed to cover any claims, demands, liabilities
or expenses arising out of or based upon any statements or representations made
by Cowen or its representatives or agents other than such statements and
representations as are contained in the Registration Statement, prospectus or
statement of additional information and in such financial and other statements
as are furnished to Cowen pursuant to paragraph 2.2 hereof; and further provided
that the Fund's agreement to indemnify Cowen and the Fund's representations and
warranties hereinbefore set forth in paragraph 3 shall not be deemed to cover
any liability to the Fund or its shareholders to which Cowen would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of Cowen's reckless disregard of its
obligations and duties under this Agreement. The Fund's agreement to indemnify
Cowen, its officers and directors, and any such controlling person, as
aforesaid, is expressly conditioned upon the Fund's being notified of any action
brought against Cowen, its officers or directors, or any such controlling
person, such notification to be given by letter or by telegram addressed to the
Fund at its principal office in New York, New York and sent to the Fund by the
person against whom such action is brought, within ten days after the summons or
other first legal process shall have been served. The failure so to notify the
Fund of any such action shall not relieve the Fund from any liability that the
Fund may have to the person against whom such action is brought by reason of any
such untrue or alleged untrue statement or ommission or alleged omission
otherwise than on account of the Fund's indemnity agreement contained in this
paragraph 4.1. The Fund will be entitled to assume the defense of any suit
brought to enforce any such claim, demand or liability, but, in such case, such
defense shall be conducted by counsel of good standing chosen by the Fund and
approved by Cowen. In the event the Fund elects to assume the defense of
any such suit and retain counsel of good standing approved by Cowen, the
defendant or defendants in such suit
4
<PAGE>
shall bear the fees and expenses of any additional counsel retained by any of
them; but in case the Fund does not elect to assume the defense of any such
suit, or in case Cowen does not approve of counsel chosen by the Fund, the Fund
will reimburse Cowen, its officers and directors, or the controlling person or
persons named as defendant or defendants in such suit, for the fees and expenses
of any counsel retained by Cowen or them. The Fund's indemnification agreement
contained in this paragraph 4.1 and the Fund's representations and warranties in
this Agreement shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of Cowen, its officers and directors, or
any controlling person, and shall survive the delivery of any of the Fund's
shares. This agreement of indemnity will inure exclusively to Cowen's benefit,
to the benefit of its several officers and directors, and their respective
estates, and to the benefit of the controlling persons and their successors. The
Fund agrees to notify Cowen promptly of the commencement of any litigation or
proceedings against the Fund or any of its officers or directors in connection
with the issuance and sale of any of the Fund's shares.
4.2 Cowen agrees to indemnify, defend and hold the Fund, its
several officers and directors, and any person who controls the Fund within the
meaning of Section 15 of the 1933 Act, free and harmless from and against any
and all claims, demands, liabilities and expenses (including the costs of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) that the Fund, its officers or directors
or any such controlling person may incur under the 1933 Act, the 1940 Act or
common law or otherwise, but only to the extent that such liability or expense
incurred by the Fund, its officers or directors or such controlling person
resulting from such claims or demands shall arise out of or be based upon (a)
any unauthorized sales literature, advertisements, information, statements or
representations or (b) any untrue or alleged untrue statement of a material fact
contained in information furnished in writing by Cowen to the Fund and used in
the answers to any of the items of the Registration Statement, or shall arise
out of or be based upon any omission or alleged omission to state a material
fact in connection with such information furnished in writing by Cowen to the
Fund and required to be stated in such answers or necessary to make such
information not misleading. Cowen's agreement to indemnify the Fund, its
officers and directors, and any such controlling person, as aforesaid, is
expressly conditioned upon Cowen's being notified of any action brought against
the Fund, its officers or directors, or any such controlling person, such
notification to be
5
<PAGE>
given by letter or telegram addressed to Cowen at its principal office in New
York, New York and sent to Cowen by the person against whom such action is
brought, within ten days after the summons or other first legal process shall
have been served. Cowen shall have the right of first control of the defense of
such action, with counsel of its own choosing, satisfactory to the Fund, if such
action is based solely upon such alleged misstatement or omission on Cowen's
part, and in any other event the Fund, its officers or directors or such
controlling person shall each have the right to participate in the defense or
preparation of the defense of any such action. The failure so to notify Cowen of
any such action shall not relieve Cowen from any liability that Cowen may have
to the Fund, its officers or directors, or to such controlling person by reason
of any such untrue or alleged untrue statement or omission or alleged omission
otherwise than on account of Cowen's indemnity agreement contained in this
paragraph 4.2. Cowen agrees to notify the Fund promptly of the commencement of
any litigation or proceedings against Cowen or any of its officers or directors
in connection with the issuance and sale of any of the Fund's shares.
5. Effectiveness of Registration
-----------------------------
None of the Fund's shares shall be offered by either Cowen or the
Fund under any of the provisions of this Agreement and no orders for the
purchase or sale of the shares hereunder shall be accepted by the Fund if and so
long as the effectiveness of the Registration Statement or any necessary
amendments thereto shall be suspended under any of the provisions of the 1933
Act or if and so long as a current prospectus as required by Section 5(b)(2) of
the 1933 Act is not on file with the SEC; provided, however, that nothing
contained in this paragraph 5 shall in any way restrict or have an application
to or bearing upon the Fund's obligation to repurchase its shares from any
shareholder in accordance with the provisions of the Fund's prospectuses,
statement of additional information or articles of incorporation.
6. Notice to Cowen
---------------
The Fund agrees to advise Cowen immediately in writing:
(a) of any request by the SEC for amendments to the registration
statement, prospectus or statement of additional information then in effect or
for additional information;
6
<PAGE>
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceeding for that purpose;
(c) of the happening of any event that makes untrue any statement
of a material fact made in the Registration Statement then in effect or that
requires the making of a change in the Registration Statement in order to make
the statements therein not misleading;
(d) of all actions of the SEC with respect to any amendment to
the Registration Statement which may from time to time be filed with the SEC.
7. Term of Agreement
-----------------
This Agreement shall become effective on the date the Fund
commences sales of its shares and shall continue for an initial two year term
and thereafter shall continue automatically, provided such continuance is
specifically approved at least annually by (a) the Fund's Board of Directors or
(b) a vote of a majority (as defined in the 1940 Act) of the Fund's outstanding
voting securities, provided that in either event the continuance is also
approved by a majority of the Directors of the Fund who are not interested
persons (as defined in the 1940 Act) of any party to this Agreement, by vote
cast in person at a meeting called for the purpose of voting on such approval.
This Agreement is terminable, without penalty, on 60 days' written notice, by
the Fund's Board of Directors or by vote of the holders of a majority of the
Fund's shares, or on 90 days' written notice, by Cowen. This agreement will also
terminate automatically in the event of its assignment (as defined in the 1940
Act).
7
<PAGE>
Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us.
Very truly yours,
COWEN SERIES FUNDS, INC.
By:_____________________
President
Accepted and Agreed:
COWEN & COMPANY
By:________________________
Authorized Officer
8
<PAGE>
Subscription Agreement
Subscription Agreement dated November __, 1997 between Cowen
Series Funds, Inc., a Maryland corporation (the "Fund"), and Cowen & Company, a
New York limited partnership ("Cowen").
WHEREAS, the Fund is an investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the fund proposes to issue and sell its common stock
(the "Common Stock") to the public pursuant to a Registration Statement on Form
N-1A (the "Registration Statement") filed with the Securities and Exchange
Commission; and
WHEREAS, Section 14(a) of the 1940 Act requires registered
investment companies to have a net worth of at least $100,000 before making a
public offering of its securities;
NOW, THEREFORE, the Fund and Cowen are as follows:
1. The Fund offers to sell to Cowen, and Cowen agrees to
purchase from the Fund, 10,000 shares of the Common
Stock (the "Shares") at a price of $10.00 per Share
on a date, to be specified by the Fund, prior to the
effective date of the Registration Statement.
2. Cowen represents and warrants to the Fund that Cowen
is acquiring the Shares for investment and not with a
view to resale or further distribution of the Shares.
3. Cowen's right under this Subscription Agreement to purchase
the Shares is not assignable.
IN WITNESS WHEREOF, the Fund and Cowen have caused their duly
authorized officers to execute this Subscription Agreement as of the date first
above written.
COWEN SERIES FUNDS, INC.
By:______________________________
Name:
Title:
COWEN & COMPANY
By:______________________________
Name:
Title:
<PAGE>
SHAREHOLDER SERVICING AND DISTRIBUTION PLAN
-------------------------------------------
This Shareholder Servicing and Distribution Plan (the "Plan") is
adopted by Cowen Series Funds, Inc., a corporation organized under the laws of
the State of Maryland (the "Company"), with respect to Cowen Large Cap Value
Fund (the "Fund"), a series of the Company pursuant to Rule 12b-1 (the "Rule")
under the Investment Company Act of 1940, as amended (the "1940 Act"), subject
to the following terms and conditions:
Section 1. Compensation.
------------
(a) Class A Servicing Fee. The Company will pay Cowen & Company, a
limited partnership organized under the laws of the State of New York ("Cowen"),
a fee in connection with the servicing of Fund shareholder accounts in Class A
shares calculated daily and paid monthly by the Company at the annual rate of
.25% of the value of the average daily net assets of the Fund attributable to
the Class A shares (the "Class A Service Fee").
(b) Class B Servicing Fee. The Company will pay Cowen a fee in
connection with the servicing of Fund shareholder accounts in Class B shares
calculated daily and paid monthly by the Company at the annual rate of .25% of
the value of the average daily net assets of the Fund attributable to the Class
B shares (the "Class B Service Fee" and together with the Class A Service Fee,
the "Service Fees").
(c) Class B Distribution Fee. In addition to the Class B Service Fee,
the Company will pay to Cowen a fee in connection with distribution related
services provided in respect of the Class B shares of the Fund (the
"Distribution Fee") calculated daily and paid monthly at the annual rate of .75%
of the value of the average daily net assets of the Fund attributable to the
Class B shares.
(d) The Service Fees and the Distribution Fee will be calculated daily
and paid monthly by the Fund with respect to the foregoing classes of the Fund's
shares (each a "Class" and together the "Classes") at the annual rates indicated
above.
Section 2. Expenses Covered by the Plan.
----------------------------
(a) With respect to expenses incurred by each Class, its respective
Service Fees will be used by Cowen to provide compensation for ongoing servicing
and/or maintenance of shareholder accounts with the Fund and to cover an
allocable portion of overhead and other Cowen branch office expenses related to
the servicing and/or maintenance of shareholder accounts. Compensation will be
paid by Cowen to persons, including Cowen employees, who respond to inquiries of
shareholders of the Fund regarding their ownership of shares or
1
<PAGE>
their accounts with the Fund or who provide other similar services not otherwise
required to be provided by the Fund's manager, investment adviser, transfer
agent or other agent of the Fund.
(b) The Distribution Fee will be used by Cowen to provide initial and
ongoing sales compensation to its registered representatives in respect of sales
of Class B shares; costs of printing and distributing the Fund's Prospectus,
Statement of Additional Information and sales literature to prospective
investors that are attributable to sales of the Class B shares of the Fund;
costs associated with any advertising relating to the Class B shares of the
Fund; an allocation of overhead and other Cowen branch office expenses related
to the distribution of the Class B shares of Fund shares; and payments to, and
expenses of, persons who provide support services in connection with the
distribution of Class B shares of the Fund.
(c) Payments under the Plan are not tied exclusively to the expenses
for shareholder servicing and distribution related activities actually incurred
by Cowen, so that those payments may exceed expenses actually incurred by Cowen.
The Board of Directors of the Company will evaluate the appropriateness of the
Plan and its payment terms on a continuing basis and in doing so will consider
all relevant factors, including expenses borne by Cowen and amounts it receives
under the Plan.
Section 3. Approval by Shareholders.
------------------------
The Plan will not take effect, and no fee will be payable in
accordance with Section 1 of the Plan, with respect to a Class until the Plan
has been approved by a vote of at least a majority of the outstanding voting
securities represented by that Class. The Plan will be deemed to have been
approved with respect to a Class so long as a majority of the outstanding voting
securities of that Class votes for the approval of the Plan, notwithstanding
that: (a) the Plan has not been approved by a majority of the outstanding voting
securities represented by any other Class, or (b) the Plan has not been approved
by a majority of the outstanding voting securities of the Fund.
2
<PAGE>
Section 4. Approval by Directors.
---------------------
Neither the Plan nor any related agreements will take effect until
approved by a majority vote of both (a) the full Board of Directors of the
Company, and (b) those Directors who are not interested persons of the Company
who have no direct or indirect financial interest in the operation of the Plan
or in any agreements related to it (the "Independent Directors"), cast in person
at a meeting called for the purpose of voting on the Plan and the related
agreements.
Section 5. Continuance of the Plan.
-----------------------
The Plan will continue in effect with respect to each Class from year
to year so long as its continuance is specifically approved annually by vote of
the Board of Directors in the manner described in Section 4 above.
Section 6. Termination.
-----------
The Plan may be terminated with respect to any Class at any time,
without penalty, by vote of a majority of the Independent Directors or by a vote
of a majority of the outstanding voting securities of that Class of the Fund on
not more than 30 days' written notice to Cowen. The Plan may remain in effect
with respect to a particular Class even if the Plan has been terminated in
accordance with this Section 6 with respect to any other Class.
Section 7. Amendments.
----------
The Plan may not be amended with respect to any Class to increase
materially the amount of the fees described in Section 1 above, unless the
amendment is approved by a vote of at least a majority of the outstanding voting
securities of that Class, and all material amendments to the Plan must also be
approved by the Board of Directors in the manner described in Section 4 above.
Section 8. Selection of Certain Directors.
------------------------------
While the Plan is in effect, the selection and nomination of Directors
who are not interested persons of the Company be committed to the discretion of
the Directors then in office who are not interested persons of the Company.
Section 9. Written Reports.
---------------
In each year during which the Plan remains in effect, Cowen and any
person authorized to direct the disposition of monies
3
<PAGE>
paid or payable by the Company with respect to the Fund pursuant to the Plan or
any related agreement will prepare and furnish to the Board of Directors, and
the Board will review, at least quarterly, written reports, complying with the
requirements of the Rule, which set out the amounts expended under the Plan and
the purposes for which those expenditures were made.
Section 10. Preservation of Materials.
-------------------------
The Company will preserve copies of the Plan, any agreement relating
to the Plan and any report made pursuant to Section 9 above, for a period of not
less than six years (the first two years in an easily accessible place) from the
date of the Plan, agreement or report.
Section 11. Meanings of Certain Terms.
-------------------------
As used in the Plan, the terms "interested person" and "majority of
the outstanding voting securities" will be deemed to have the same meaning that
those terms have under the 1940 Act and the rules and regulations under the 1940
Act, subject to any exemption that may be granted to the Company under the 1940
Act by the Securities and Exchange Commission.
Section 12. Dates.
-----
The Plan has been executed by the Company with respect to the Fund as
of November __, 1997 and will become effective, as to a particular Class, as of
the date on which interests in that Class are first offered to or held by the
public.
COWEN SERIES FUNDS, INC.
By:__________________________
President
4
<PAGE>
SHAREHOLDER SERVICING AGREEMENT
Cowen & Company
Financial Square
New York, New York 10005
Dear Sirs:
Cowen Series Funds, Inc. (the "Company") confirms its
agreement with Cowen & Company ("Cowen") implementing the terms of the
Shareholder Servicing and Distribution Plan dated as of November __, 1997 (the
"Plan") adopted by the Company with respect to each of Class A and Class B
shares (the "Classes") of Cowen Large Cap Value Fund (the "Fund"), a series of
the Company, pursuant to Rule 12b-1 (the "Rule") under the Investment Company
Act of 1940, as amended (the "1940 Act"), as follows:
Section 1. Compensation and Services to be Rendered.
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(a) The Company will pay Cowen an annual fee in connection
with the servicing of Fund shareholder accounts. The annual fee paid to Cowen
under this Agreement will be calculated daily and paid monthly by the Company at
the annual rate of .25% of the average daily net assets with respect to each of
the Classes.
(b) The annual fee will be used by Cowen to provide
compensation for ongoing servicing and/or maintenance of shareholder accounts
with the Fund and to cover an allocable portion of overhead and other Cowen
branch office expenses related to the servicing and/or maintenance of
shareholder accounts. Compensation will be paid by Cowen to persons, including
Cowen employees, who respond to inquiries of shareholders of the Fund regarding
their ownership of shares or their accounts with the Fund or who provide other
similar services not otherwise required to be provided by the Fund's manager,
investment adviser, transfer agent or other agent of the Fund.
Section 2. Approval by Directors.
---------------------
This Agreement will not take effect until approved by a
majority vote of both (a) the full Board of Directors of the Company and (b)
those Directors who are not interested persons of the Company and who have no
direct or indirect financial interest in the operation of the Plan or in this
Agreement (the "Independent Directors"), cast in person at a meeting called for
the purpose of voting on this Agreement.
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Section 3. Continuance.
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This Agreement will continue in effect from year to year so
long as its continuance is specifically approved annually by vote of the
Company's Board of Directors in the manner described in Section 2 above.
Section 4. Termination.
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(a) This Agreement may be terminated at any time, with
respect to a particular Class of shares of the Fund without the payment of any
penalty, by vote of a majority of the Independent Directors or by vote of a
majority of the outstanding voting securities represented by the particular
Class of shares of the Fund on not more than 60 days' written notice to Cowen.
This Agreement may remain in effect with respect to a particular Class even if
the Plan has been terminated in accordance with this Section 4 with respect to
any other Class.
(b) This Agreement will terminate automatically in the event
of its assignment.
Section 5. Selection of Certain Directors.
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While this Agreement is in effect, the selection and
nomination of the Company's Directors who are not interested persons of the
Company will be committed to the discretion of the Directors then in office who
are not interested persons of the Company.
Section 6. Written Reports.
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Cowen agrees that, in each year during which this Agreement
remains in effect, Cowen will prepare and furnish to the Company's Board of
Directors, and the Board will review, at least quarterly, written reports,
complying with the requirements of the Rule, that set out the amounts expended
under this Agreement and the purposes for which those expenditures were made.
Section 7. Meaning of Certain Terms.
------------------------
As used in this Agreement, the terms "interested person" and
"majority of the outstanding voting securities" will be deemed to have the same
meaning that those terms have under the 1940 Act and the rules and regulations
under the 1940 Act, subject to any exemption that may be granted to the Company
under the 1940 Act by the Securities and Exchange Commission.
Section 8. Dates.
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This Agreement has been executed by the Company with respect
to the Fund as of November __, 1997 and will become effective, as to any
particular Class, as of the date on which interests in that Class are first
offered to or held by the public.
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* * * * *
If the terms and conditions described above are in accordance
with your understanding, kindly indicate your acceptance of this Agreement by
signing and returning to us the enclosed copy of this Agreement.
Very truly yours,
COWEN SERIES FUNDS, INC.
By:_____________________
President
Accepted:
COWEN & COMPANY
By:______________________
Name:
Title:
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DISTRIBUTION RELATED SERVICES AGREEMENT
Cowen & Company
Financial Square
New York, New York 10005
Dear Sirs:
Cowen Series Funds, Inc. (the "Company") confirms its
agreement with Cowen & Company ("Cowen") implementing the terms of the
shareholder servicing and distribution plan dated as of November __, 1997 (the
"Plan") adopted by the Company with respect to the Class B shares (the "Class B
shares") of Cowen Large Cap Value Fund (the "Fund"), a series of the Company,
pursuant to Rule 12b-1 (the "Rule") under the Investment Company Act of 1940, as
amended (the "1940 Act"), as follows:
Section 1. Compensation and Services to be Rendered.
(a) The Company will pay Cowen an annual fee in connection
with distribution related services provided with respect to the Class B shares
of the Fund. The annual fee paid to Cowen under this Agreement will be
calculated daily and paid monthly by the Company at the annual rate of .75% of
the value of the average daily net assets of the Fund.
(b) The annual fee will be used by Cowen to provide initial
and ongoing sales compensation to its registered representatives in respect of
sales of Class B shares of the Fund; costs of printing and distributing the
Fund's Prospectus, Statement of Additional Information and sales literature to
prospective investors that are attributable to sales of the Class B shares;
costs associated with any advertising relating to the Class B shares of the
Fund; an allocation of overhead and other Cowen branch office expenses related
to the distribution of the Class B shares of the Fund; and payments to, and
expenses of, persons who provide support services in connection with the
distribution of the Class B shares of the Fund.
Section 2. Approval by Directors.
This Agreement will not take effect until approved by a
majority vote of both (a) the full Board of Directors of the Company and (b)
those Directors who are not interested persons of the Company and who have no
direct or indirect financial interest in the operation of the Plan or in this
Agreement (the "Independent Directors"), cast in person at a meeting called for
the purpose of voting on this Agreement.
<PAGE>
Section 3. Continuance.
This Agreement will continue in effect from year to year so
long as its continuance is specifically approved annually by vote of the
Company's Board of Directors in the manner described in Section 2 above.
Section 4. Termination.
(a) This Agreement may be terminated at any time, without the
payment of any penalty, by vote of a majority of the Independent Directors or by
vote of a majority of the outstanding voting securities represented by the Class
B shares of the Fund on not more than 60 days' written notice to Cowen.
(b) This Agreement will terminate automatically in the event
of its assignment.
Section 5. Selection of Certain Directors.
While this Agreement is in effect, the selection and
nomination of the Company's Directors who are not interested persons of the
Company will be committed to the discretion of the Directors then in office who
are not interested persons of the Company.
Section 6. Written Reports.
Cowen agrees that, in each year during which this Agreement
remains in effect, Cowen will prepare and furnish to the Company's Board of
Directors, and the Board will review, at least quarterly, written reports,
complying with the requirements of the Rule, that set out the amounts expended
under this Agreement and the purposes for which those expenditures were made.
Section 7. Meaning of Certain Terms.
As used in this Agreement, the terms "interested person" and
"majority of the outstanding voting securities" will be deemed to have the same
meaning that those terms have under the 1940 Act and the rules and regulations
under the 1940 Act, subject to any exemption that may be granted to the Company
under the 1940 Act by the Securities and Exchange Commission.
Section 8. Dates.
This Agreement has been executed by the Company with respect
to the Fund as of November __, 1997 and will become effective, as to Class B
shares, as of the date on which interests in that Class are first offered to or
held by the public.
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<PAGE>
* * * * *
If the terms and conditions described above are in accordance
with your understanding, kindly indicate your acceptance of this Agreement by
signing and returning to us the enclosed copy of this Agreement.
Very truly yours,
COWEN SERIES FUNDS, INC.
By:_________________________
President
Accepted:
COWEN & COMPANY
By:_______________________
Name:
Title:
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