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As filed with the U.S. Securities and Exchange Commission on December 24, 1997
Securities Act File No. 333-40327
Investment Company Act File No. 811-8487
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. 1 [x]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER [x]
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 1 [x]
(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
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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.
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COWEN SERIES FUNDS, INC.
FORM N-1A
CROSS REFERENCE SHEET
Part A
Item No. Prospectus Heading
- ------------------------------------ --------------------------------------
1. Cover Page....................... Cover Page
2. Synopsis......................... The Fund's Expenses
3. Condensed Financial Not Applicable
Information......................
4. General Description of Cover Page; Investment Objectives
Registrant....................... 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 Net Asset Value; Purchase of Shares
Offered..........................
8. Redemption or Repurchase......... Net Asset Value; Redemption of Shares
9. Legal Proceedings................ Not Applicable
Part B Heading for the Statement of
Item No. 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
14. Management of the Registrant..... Management of the Fund; See Prospectus
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--"Management of the Fund"
15. Control Persons and Principal
Holders of Securities........... Management of the Fund
16. Investment Advisory and Management of the Fund; See Prospectus
Other Services.................. -- "Management of the Fund"
17. Brokerage Allocation............ Investment Objectives and Policies
18. Capital Stock and Other Management of the Fund; See Prospectus
Securities...................... -- "Additional Information"
19. Purchase, Redemption and Purchase and Redemptions;
Pricing of Securities Being See Prospectus --"Purchase of Shares"
Offered......................... and "Redemption of Shares"
20. Tax Status...................... Taxes; See Prospectus -- "Dividends,
Distributions and Taxes"
21. Underwriters.................... Management of the Fund; See Prospectus
-- "Management of the Fund"
22. Calculation of Performance
Data............................ Performance Information
23. Financial Statements............ Financial Statements
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.
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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.
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PROSPECTUS JANUARY 2, 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
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CONTENTS
THE FUND'S EXPENSES............................................................3
INVESTMENT OBJECTIVES AND POLICIES.............................................4
MANAGEMENT OF THE FUND.........................................................8
NET ASSET VALUE...............................................................11
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.
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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:
Class A Class B Class 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)* .22% .22% .22%
Total Fund Operating Expenses
(after expense reimbursement)* 1.22% 1.97% .97%
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* Cowen is voluntarily absorbing all "Other expenses" for each Class in
excess of .22% of average daily net assets. 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 .70%, 1.45% and .77% for Class A, B and
C, respectively, and "Total Fund Operating Expenses" would be 1.70%, 2.45%
and 1.52% 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
Securities Dealers, Inc. ("NASD") governing investment company sales charges.
See "Management of the Fund - Distributor".
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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
------ -------
Class A $60 $85
Class B $71 $94
Class C $10 $32
An investor would pay the following expenses on the same
investment in Class B shares assuming no redemption.
1 Year 3 Years
------ -------
$21 $64
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 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, as described under "Investment Strategy"
below. Under normal market conditions, at least 80% of the Fund's assets
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will be invested in securities of issuers that, at the time of purchase, have
market capitalizations in excess of $2 billion and all of the equity securities
held in the Fund's portfolio will have market capitalizations in excess of $1
billion at the time of purchase. It is expected that the average weighted market
capitalization of the Fund's portfolio will be in excess of $20 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. For these purposes, the "market" is
defined as the Russell 1000 Value Index. The composition and characteristics of
this index may vary from time to time, but it is not anticipated that these
variations ordinarily would prompt a change in the Fund's value screening
methodology. In addition, independent and fundamental analyses are conducted
with the goal
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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
appropriate. However, options shall be written solely as "covered" call options;
that is, options on securities that the Fund owns.
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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.
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
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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.
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
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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
January 1997 as a Managing Director. From July 1995 to December 1996, Mr.
Capaldi was Portfolio Manager for Provident Capital Management, Inc. and served
as portfolio manager for the Compass Large Cap Value Equity Fund. Prior to that,
Mr. Capaldi was Senior Vice President and Portfolio Manager of Radnor Capital
Management from June 1994 to May 1995, President of Chestnut Hill Advisors, Inc.
from January 1994 to December 1994, and Managing Director of Brandywine Asset
Management, Inc. from June 1986 to December 1993.
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.
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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
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 210 West 10th Street, Kansas City, Missouri 64105.
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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 of each Class is computed by dividing the
value of the Fund's net assets attributable to the Class by the total number of
its shares of the Class 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
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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.
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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, 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
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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.
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.
Sales Charge as a Sales Charge as a
Percentage of the Percentage of the Dealer
Shares Purchased in Public Offering Net Amount Invested Reallowance
Single Transaction Price
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%
- ------------------
* 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 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
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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) 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).
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<PAGE>
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, 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
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<PAGE>
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 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,
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<PAGE>
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 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
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<PAGE>
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 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.
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<PAGE>
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. 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
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<PAGE>
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
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
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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 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 intends 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."
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<PAGE>
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 20% 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.
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 6, 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.
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<PAGE>
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 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.
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<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
other Classes. Performance information may be useful in reviewing the
performance of the Classes and in providing a basis for
-25-
<PAGE>
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.
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<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 2, 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 2, 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
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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 through which the option was
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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
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<PAGE>
periods, by an investor or group of 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 credit-worthiness of those banks and dealers
with which the Fund enters into repurchase agreements to evaluate these risks
and monitors
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<PAGE>
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 entering into
repurchase agreements, 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 75% 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
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<PAGE>
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 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
7
<PAGE>
consider the factors it deems relevant, including the breadth of the market in
the investment, the price of the 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
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<PAGE>
advisory fee and brokerage commissions for effecting portfolio transactions on
behalf of the Fund.
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.
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Until December 15, 1992, he was also President of the Fund and the Cowen Mutual
Funds.
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.
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<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
Name of Aggregate Pension or Estimated Annual Total
Person Compensation Retirement Benefits Upon Compensation
From Registrant Benefits Retirement From
Accrued as Part Registrant
of Fund Expenses and Fund
Complex Paid
to Directors*
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
*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
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pursuant to 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 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.
I 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., 333 West 11th Street, Kansas City, Missouri 64105, 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.
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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
charge
13
<PAGE>
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. The Fund
will designate in a written notice to shareholders the portion of long-term
capital gains distributions that may be eligible for the 20% maximum capital
gains tax rate on gains realized by individuals from capital assets held for
more than 18 months.
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.
14
<PAGE>
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
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.
15
<PAGE>
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 periods (or fractional portion thereof),
assuming reinvestment of all dividends and distributions.
- --------------------
* - As used here, "n" is an exponent.
16
<PAGE>
FINANCIAL STATEMENTS
COWEN SERIES FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 23, 1997
COWEN
LARGE CAP
VALUE
FUND
ASSETS
CASH $ 100,000
DEFERRED ORGANIZATION COSTS 96,335
------------------
196,335
LIABILITIES
ORGANIZATION COSTS PAYABLE 96,335
------------------
NET ASSETS APPLICABLE TO
10,000 CLASS A SHARES OF
COMMON STOCK ISSUED AND
OUTSTANDING $.001 PAR VALUE,
250,000,000 SHARES AUTHORIZED $ 100,000
------------------
NET ASSET VALUE PER SHARE $ 10
------------------
NOTE 1 - ORGANIZATION
THE COWEN LARGE CAP VALUE FUND IS A SERIES OF COWEN SERIES FUNDS, INC. (THE
"FUND") WHICH WAS INCORPORATED IN MARYLAND ON NOVEMBER 6, 1997. THE FUND IS AN
OPEN-END, DIVERSIFIED MANAGEMENT INVESTMENT COMPANY, WHICH OPERATES AS A SERIES
COMPANY. THE ONLY PORTFOLIO OF THE FUND AT THE PRESENT TIME IS THE COWEN LARGE
CAP VALUE FUND ("LARGE CAP VALUE"). LARGE CAP VALUE IS AUTHORIZED TO ISSUE
250,000,000 SHARES EACH OF CLASS A, CLASS B AND CLASS C COMMON STOCK, AND HAS
ISSUED 10,000 SHARES OF CLASS A COMMON STOCK TO COWEN & COMPANY FOR $100,000 ON
DECEMBER 23, 1997. COSTS INCURRED AND TO BE INCURRED IN CONNECTION WITH ITS
ORGANIZATION AND REGISTRATION WILL BE DEFERRED AND AMORTIZED BY LARGE CAP VALUE
OVER THE PERIOD OF BENEFIT NOT TO EXCEED 60 MONTHS FROM THE DATE IT COMMENCES
OPERATIONS. COWEN & COMPANY HAS AGREED THAT IF ANY OF THE INITIAL SHARES ARE
REDEEMED PRIOR TO AMORTIZATION OF THE ORGANIZATION COSTS, IT WILL REIMBURSE
LARGE CAP VALUE FOR ANY UNAMORTIZED ORGANIZATIONAL COSTS IN THE SAME PROPORTION
AS THE NUMBER OF INITIAL SHARES BEING REDEEMED BEARS TO THE NUMBER OF INITIAL
SHARES OUTSTANDING AT THE TIME OF REDEMPTION.
17
<PAGE>
NOTE 2 - INVESTMENT ADVISORY AGREEMENT
LARGE CAP VALUE HAS ENTERED INTO AN INVESTMENT ADVISORY AGREEMENT WITH COWEN &
COMPANY ("THE ADVISOR"). THE BASIC FEE PAYABLE TO THE ADVISOR UNDER THE
INVESTMENT ADVISORY AGREEMENT IS COMPUTED DAILY AND PAID MONTHLY AT THE ANNUAL
RATE OF .75% OF LARGE CAP VALUE'S AVERAGE DAILY NET ASSETS.
LARGE CAP VALUE HAS ALSO ENTERED INTO A SHAREHOLDER SERVICING AND DISTRIBUTION
PLAN WITH COWEN & COMPANY UNDER WHICH ITS SHARES WILL BE CONTINUOUSLY OFFERED BY
THE ADVISOR. A MONTHLY SERVICE FEE IS CALCULATED AT THE ANNUAL RATE OF .25% OF
THE VALUE OF ITS AVERAGE DAILY NET ASSETS ATTRIBUTABLE TO EACH CLASS A AND B
SHARES, AND A MONTHLY DISTRIBUTION FEE IS CALCULATED AT THE ANNUAL RATE OF .75%
OF THE VALUE OF ITS AVERAGE DAILY NET ASSETS ATTRIBUTABLE TO CLASS B SHARES.
18
<PAGE>
Report of Independent Auditors
Shareholders and Board of Directors
Cowen Series Funds, Inc.
We have audited the accompanying statement of assets and liabilities of Cowen
Large Cap Value Fund, a portfolio of Cowen Series Funds, Inc., as of December
23, 1997. This statement of assets and liabilities is the responsibility of the
Fund's management. Our responsibility is to express an opinion on this statement
of assets and liabilities based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of Cowen Large
Cap Value Fund at December 23, 1997, in conformity with generally accepted
accounting principles.
/s/ ERNST & YOUNG LLP
New York, New York
December 24, 1997
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Included in the Statement of Additional Information are (i)
Statement of Assets and Liabilities as of December 23, 1997,
(ii) Footnotes to the Statement of Assets and Liabilities, and
(iii) Report of Independent Auditors dated December 24, 1997.
(b) Exhibits:
Exhibit No. Description of Exhibits
- ----------- -----------------------
1 (i) Articles of Amendment and Restatement of
Articles of Incorporation of Registrant
2 (i) By-Laws of Registrant*
3 Not Applicable
4 Not Applicable
5 Form of Investment Management Agreement*
6 Revised Form of Distribution Agreement
7 Not Applicable
8 Custody and Investment Accounting Agreement
with Investors Fiduciary Trust Company**
9 Not Applicable
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*
- ------------------------
* Incorporated by reference to the Fund's Registration Statement on Form N-1A
filed with the Securities and Exchange Commission on November 14, 1997 (No.
333-40327).
** 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 December 24, 1997
-------------- ------------------------
Common Stock, par value $.001
per share................... 1
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.
C-2
<PAGE>
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 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 Address", 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>
OTHER BUSINESS
NAME, CLASS OF PARTNERS ACTIVITIES AND
AND PRINCIPAL POSITION IF WITH FUNDS LISTED BELOW PRINCIPAL BUSINESS
BUSINESS ADDRESS CSRF CSTXRF CI+G CFI CSF ADDRESS
GENERAL PARTNER
Cowen Incorporated (1)
<S> <C> <C> <C> <C> <C> <C>
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>
OTHER BUSINESS
NAME, CLASS OF PARTNERS ACTIVITIES AND
AND PRINCIPAL POSITION IF WITH FUNDS LISTED BELOW PRINCIPAL BUSINESS
BUSINESS ADDRESS CSRF CSTXRF CI+G CFI CSF ADDRESS
<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 Incorporated
(1)--MD
Guy E. Heald (3)............. Since 1/1/97--Cowen Incorporated
(1)--MD
William F. Herbert (3)....... Since 1/1/97--Cowen Incorporated
(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 Incorporated
(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 Incorporated
(1)--MD
James C. Kedersha (3)........ Since 1/1/97--Cowen Incorporated
(1)--MD
Jamie Kiggen (3)............. Since 1/1/97--Cowen Incorporated
(1)--MD
Jeffrey B. Kiley (1)......... Since 1/1/97--Cowen Incorporated
(1)--MD
Christopher D. Kirby (6)..... Since 1/1/97--Cowen Incorporated
(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 Incorporated
(1)--MD
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
OTHER BUSINESS
NAME, CLASS OF PARTNERS ACTIVITIES AND
AND PRINCIPAL POSITION IF WITH FUNDS LISTED BELOW PRINCIPAL BUSINESS
BUSINESS ADDRESS CSRF CSTXRF CI+G CFI CSF ADDRESS
<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 Incorporated
(1)--MD
William O. Matthews (1)...... Since 3/30/931--Cowen Incorporated
(1)--MD
William K. McCormick (5)..... Since 3/30/91--Cowen Incorporated
(1)--MD
Malcolm G. McDonald (3)...... Since 1/1/97--Cowen Incorporated
(1)--MD
Kelly McGowen (1)............ Since 1/1/97--Cowen Incorporated
(1)--MD
Carl A. Mertz (1)............ Since 3/30/92--Cowen Incorporated
(1)--MD
Kathleen Miner (3)........... Since 1/1/97--Cowen Incorporated
(1)--MD
George G. Montgomery (6)..... Since 1/1/97--Cowen Incorporated
(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 Incorporated
(1)--MD
Michael G. Mullen (3)........ Since 1/1/97--Cowen Incorporated
(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 Incorporated
(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 Incorporated
(1)--MD
</TABLE>
C-6
<PAGE>
<TABLE>
<CAPTION>
OTHER BUSINESS
NAME, CLASS OF PARTNERS ACTIVITIES AND
AND PRINCIPAL POSITION IF WITH FUNDS LISTED BELOW PRINCIPAL BUSINESS
BUSINESS ADDRESS CSRF CSTXRF CI+G CFI CSF ADDRESS
<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 Incorporated
(1)--MD
Thomas R. Schwartz (1)....... Since 1/1/97--Cowen Incorporated
(1)--MD
Kenneth Sheinberg (1)........ Since 1/1/97--Cowen Incorporated
(1)--MD
Hugh T. Shytle (3)........... Since 1/1/97--Cowen Incorporated
(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 Incorporated
(1)--MD
Alan Streeter (1)............ Since 1/1/97--Cowen Incorporated
(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 Incorporated
(1)--MD
Harold Vogen (1)............. Since 1/1/96--Cowen Incorporated
(1)--MD
Robert S. Walterman (4)...... Since 1/1/97--Cowen Incorporated
(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
</TABLE>
C-7
<PAGE>
<TABLE>
<CAPTION>
OTHER BUSINESS
NAME, CLASS OF PARTNERS ACTIVITIES AND
AND PRINCIPAL POSITION IF WITH FUNDS LISTED BELOW PRINCIPAL BUSINESS
BUSINESS ADDRESS CSRF CSTXRF CI+G CFI CSF ADDRESS
<S> <C> <C> <C> <C> <C> <C>
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>
- -------------
(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
(2) Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
Item 31. Management Services
C-8
<PAGE>
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 24th day of December, 1997.
COWEN SERIES FUNDS, INC.
By: /s/ Joseph M. Cohen
By: Rodd M. Baxter
Attorney-in-Fact
Joseph M. Cohen, Chairman
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act, as amended, the Registrant has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of New York, and State of New
York, on the 24th day of December, 1997.
Signature Title Date
- --------- ----- ----
/s/ Joseph M. Cohen Chairman (Chief Executive December 24, 1997
by Rodd M. Baxter Officer)and Director
Attorney-in-Fact
Joseph M. Cohen
/s/ James H. Carey Director December 24, 1997
by Rodd M. Baxter
Attorney-in-Fact
James H. Carey
/s/ Peter P. Gil Director December 24, 1997
by Rodd M. Baxter
Attorney-in-Fact
Peter P. Gil
/s/ Martin J. Gruber Director December 24, 1997
by Rodd M. Baxter
Attorney-in-Fact
Martin J. Gruber
10
<PAGE>
/s/ Burton Weiss Director December 24, 1997
by Rodd M. Baxter
Attorney-in-Fact
Burton Weiss
/s/ Creighton H. Peet Treasurer (Chief Financial December 24, 1997
by Rodd M. Baxter Officer)
Attorney-in-Fact
Creighton H. Peet
11
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned in his capacity as a
Director of Cowen Series Funds, Inc. (the "Fund"), hereby appoints Joseph M.
Cohen, David R. Sarns and Rodd M. Baxter severally, his true and lawful attorney
to execute in his name, place and stead, in his capacity as a Director of the
Fund (1) any pre-effective or post-effective amendments to the Fund's
Registration Statement on Form N-1A or any other form adopted for such purpose
by the Securities and Exchange Commission (the "Commission") and (2) any
instrument necessary or incidental in connection with filing such amendments
with Commission. Each of the attorneys named above shall have the power to act
hereunder with or without the other, and shall have full power of substitution
and resubstitution. In addition, each of the attorneys named above shall have
full the power and authority to do and perform in the name and on behalf of the
undersigned in any and all capacities as fully and for all intents and purposes
as the undersigned might or could do in person, and the undersigned hereby
ratifies and approves the acts of those attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 15th day of November, 1997.
/s/ Joseph M. Cohen
Joseph M. Cohen
12
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned in his capacity as a
Director of Cowen Series Funds, Inc. (the "Fund"), hereby appoints Joseph M.
Cohen, David R. Sarns and Rodd M. Baxter severally, his true and lawful attorney
to execute in his name, place and stead, in his capacity as a Director of the
Fund (1) any pre-effective or post-effective amendments to the Fund's
Registration Statement on Form N-1A or any other form adopted for such purpose
by the Securities and Exchange Commission (the "Commission") and (2) any
instrument necessary or incidental in connection with filing such amendments
with Commission. Each of the attorneys named above shall have the power to act
hereunder with or without the other, and shall have full power of substitution
and resubstitution. In addition, each of the attorneys named above shall have
full the power and authority to do and perform in the name and on behalf of the
undersigned in any and all capacities as fully and for all intents and purposes
as the undersigned might or could do in person, and the undersigned hereby
ratifies and approves the acts of those attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 15th day of November, 1997.
/s/ James H. Carey
James H. Carey
13
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned in his capacity as a
Director of Cowen Series Funds, Inc. (the "Fund"), hereby appoints Joseph M.
Cohen, David R. Sarns and Rodd M. Baxter severally, his true and lawful attorney
to execute in his name, place and stead, in his capacity as a Director of the
Fund (1) any pre-effective or post-effective amendments to the Fund's
Registration Statement on Form N-1A or any other form adopted for such purpose
by the Securities and Exchange Commission (the "Commission") and (2) any
instrument necessary or incidental in connection with filing such amendments
with Commission. Each of the attorneys named above shall have the power to act
hereunder with or without the other, and shall have full power of substitution
and resubstitution. In addition, each of the attorneys named above shall have
full the power and authority to do and perform in the name and on behalf of the
undersigned in any and all capacities as fully and for all intents and purposes
as the undersigned might or could do in person, and the undersigned hereby
ratifies and approves the acts of those attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 15th day of November, 1997.
/s/ Peter P. Gil
Peter P. Gil
14
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned in his capacity as a
Director of Cowen Series Funds, Inc. (the "Fund"), hereby appoints Joseph M.
Cohen, David R. Sarns and Rodd M. Baxter severally, his true and lawful attorney
to execute in his name, place and stead, in his capacity as a Director of the
Fund (1) any pre-effective or post-effective amendments to the Fund's
Registration Statement on Form N-1A or any other form adopted for such purpose
by the Securities and Exchange Commission (the "Commission") and (2) any
instrument necessary or incidental in connection with filing such amendments
with Commission. Each of the attorneys named above shall have the power to act
hereunder with or without the other, and shall have full power of substitution
and resubstitution. In addition, each of the attorneys named above shall have
full the power and authority to do and perform in the name and on behalf of the
undersigned in any and all capacities as fully and for all intents and purposes
as the undersigned might or could do in person, and the undersigned hereby
ratifies and approves the acts of those attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 15th day of November, 1997.
/s/ Martin J. Gruber
Martin J. Gruber
15
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned in his capacity as a
Director of Cowen Series Funds, Inc. (the "Fund"), hereby appoints Joseph M.
Cohen, David R. Sarns and Rodd M. Baxter severally, his true and lawful attorney
to execute in his name, place and stead, in his capacity as a Director of the
Fund (1) any pre-effective or post-effective amendments to the Fund's
Registration Statement on Form N-1A or any other form adopted for such purpose
by the Securities and Exchange Commission (the "Commission") and (2) any
instrument necessary or incidental in connection with filing such amendments
with Commission. Each of the attorneys named above shall have the power to act
hereunder with or without the other, and shall have full power of substitution
and resubstitution. In addition, each of the attorneys named above shall have
full the power and authority to do and perform in the name and on behalf of the
undersigned in any and all capacities as fully and for all intents and purposes
as the undersigned might or could do in person, and the undersigned hereby
ratifies and approves the acts of those attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 15th day of November, 1997.
/s/ Burton Weiss
Burton Weiss
16
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned in his capacity as an
Officer of Cowen Series Funds, Inc. (the "Fund"), hereby appoints Joseph M.
Cohen, David R. Sarns and Rodd M. Baxter severally, his true and lawful attorney
to execute in his name, place and stead, in his capacity as a Director of the
Fund (1) any pre-effective or post-effective amendments to the Fund's
Registration Statement on Form N-1A or any other form adopted for such purpose
by the Securities and Exchange Commission (the "Commission") and (2) any
instrument necessary or incidental in connection with filing such amendments
with Commission. Each of the attorneys named above shall have the power to act
hereunder with or without the other, and shall have full power of substitution
and resubstitution. In addition, each of the attorneys named above shall have
full the power and authority to do and perform in the name and on behalf of the
undersigned in any and all capacities as fully and for all intents and purposes
as the undersigned might or could do in person, and the undersigned hereby
ratifies and approves the acts of those attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney on
the 15th day of November, 1997.
/s/ Creighton H. Peet
Creighton H. Peet
17
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits
- ----------- -----------------------
1 (i) Articles of Amendment and Restatement of Articles of
Incorporation of Registrant
2 (i) By-Laws of Registrant*
5 Form of Investment Management Agreement*
6 Revised Form of Distribution Agreement
8 Custody and Investment Accounting 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*
- -------------------------
* Incorporated herein by reference to the Fund's Registration Statement on
Form N-1A filed with the Securities and Exchange Commission on November 14,
1997 (File No. 333-40327).
** To be filed by amendment.
18
<PAGE>
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
ARTICLES OF INCORPORATION
OF
COWEN SERIES FUNDS, INC.
Cowen Series Funds, Inc., a Maryland corporation having its
principal office in the City of Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessment and
Taxation of Maryland that:
FIRST: The Charter of the Corporation is amended and as so
amended is restated in its entirety by striking out Article I through Article IX
and inserting in lieu thereof the following:
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
<PAGE>
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.
(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, 300 E. Lombard 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, 300 E. Lombard
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 Common Stock 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), of
which seven hundred fifty million (750,000,000) shares shall be classified as
the "Cowen Large Cap Value Fund", of which 250,000,000 shares shall be
classified as Class A Common Stock, 250,000,000 shares shall be classified as
Class B Common Stock, and 250,000,000 shares shall be classified as Class C
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, or
-2-
<PAGE>
otherwise. 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.
(3) The Board of Directors, through such charter document filings
as may be required by Maryland law, 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) 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
-3-
<PAGE>
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), or in such other manner as may be
determined by the Board of Directors in accordance with law. The
determination of the Board of Directors shall be 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
-4-
<PAGE>
the respective series, or in such other manner as may be determined by
the Board of Directors in accordance with law, 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 values per share of the
classes, to such extent and for such purposes as the Board of Directors
may deem appropriate.
-5-
<PAGE>
The allocation of investment income, realized and unrealized capital
gains and losses, 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 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
-6-
<PAGE>
stock of that series or class, as applicable, outstanding and entitled to vote
shall constitute a quorum for the transaction of that 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 any 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 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
-7-
<PAGE>
the foregoing, the Corporation shall, to the extent permitted by applicable law,
have the right at any time, at its option, to redeem in whole or in part 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. With respect to any redemption effected to collect fees to be paid
to the Corporation by any stockholder whose account has fallen below such
Minimum Account Balance, the entire redemption value of the shares so redeemed
may be retained by the Corporation to the extent of such fees. The Corporation,
at its option, also may cause the redemption of outstanding shares of capital
stock of any series or class if the Board of Directors has determined that it is
in the best interests of the Corporation and its stockholders to discontinue
issuance of shares of stock of such series or class. 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. Purchase and redemption of shares of stock of the
Corporation is conditioned upon the Corporation having funds or property legally
available therefor. 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
is currently 5. The number of Directors may be changed pursuant to the By-Laws
of the Corporation but shall at no time be less than the minimum number required
under the Maryland General Corporation Law.
(2) In furtherance, and not in limitation, of the powers
conferred by the Maryland General Corporation Law, the Board of Directors is
expressly authorized:
-8-
<PAGE>
(i) Exclusively, to make, alter or repeal the By-Laws of
the Corporation, 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 or attributable to
any series or class, the value of the liabilities belonging to or
attributable to any series or 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 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.
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<PAGE>
(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 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.
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<PAGE>
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
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
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<PAGE>
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.
SECOND: The Corporation desires to amend and restate its Charter
as currently in effect. The provisions set forth in the Articles of Amendment
and Restatement are all of the provisions of the Charter currently in effect as
herein amended. The current name and address of the Corporation's resident agent
are as set forth herein. The number of directors is currently set at 5 and their
names are Joseph M. Cohen, James Carey, Peter P.
Gil, Martin J. Gruber and Burton Weiss.
THIRD: The amendment and restatement of the Charter of the
Corporation as hereinabove set forth has been duly approved by the Board of
Directors of the Corporation by a Unanimous Written Consent dated December 16,
1997. No stock entitled to be voted on the matter was outstanding or subscribed
for at the time of approval.
FOURTH: These Articles of Amendment and Restatement do not
increase the total number of shares the Corporation is authorized to issue or
the aggregate par value thereof.
IN WITNESS WHEREOF, Cowen Series Funds, Inc. has caused these
Articles of Amendment and Restatement to be signed in its name and on its behalf
by its President and witnessed by its Secretary, as of this 16th day of
December, 1997.
The undersigned President acknowledges these Articles of
Amendment and Restatement to be the corporate act of the Corporation and states
that to the best of his knowledge, information and belief, the matters and facts
set forth in these Articles with respect to the authorization and approval of
the amendment and restatement of the Corporation's Charter are true in all
material respects and that this statement is made under penalties of perjury.
COWEN SERIES FUNDS, INC.
By: /s/ David R. Sarns
Name: David R. Sarns
Title: President
Witness:
/s/ Rodd M. Baxter
Name: Rodd M. Baxter
Title: Secretary
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<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
<PAGE>
Exchange Commission (the "SEC") or by any securities association registered
under the Securities Exchange Act of 1934.
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.
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<PAGE>
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 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 not 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
---------------
-3-
<PAGE>
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 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
-4-
<PAGE>
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 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
-5-
<PAGE>
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 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
-6-
<PAGE>
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;
(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'
-7-
<PAGE>
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).
-8-
<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
-9-
<PAGE>
Venable, Baetjer and Howard, LLP
1800 Mercantile Bank and Trust Building
2 Hopkins Plaza
Baltimore, Maryland 21201
December 23, 1997
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022-4677
Re: Cowen Series Funds, Inc.
Ladies and Gentlemen:
We have acted as special Maryland counsel for Cowen Series
Funds, Inc., a Maryland corporation (the "Fund"), in connection with the
organization of the Fund and the issuance of shares of Class A Common Stock,
Class B Common Stock, and Class C Common Stock of Cowen Large Cap Value Fund,
par value $.001 per share (the "Cowen Large Cap Value Fund"), a series of the
Fund, (each a "Class" and collectively, the "Shares").
As special Maryland counsel for the Fund, we are familiar with
its Charter and Bylaws. We have examined its Registration Statement on form
N-1A, Securities Act File No. 333-40327 and Investment Company Act File No.
811-8487, including the prospectus and statement of additional information
contained therein, substantially in the form in which it is to become effective
(the "Registration Statement"). We have further examined and relied upon a
certificate of the Maryland State Department of Assessments and Taxation to the
effect that the Fund is duly incorporated and existing under the laws of the
State of Maryland and is in good standing and duly authorized to transact
business in the State of Maryland.
We have also examined and relied upon such corporate records
of the Fund and other documents and certificates with respect to factual and
other matters as we have deemed necessary to render the opinion expressed
herein. We have assumed, without independent verification, the genuineness of
all signatures on documents submitted to us, the authenticity of all documents
submitted to us as originals, and the conformity with originals of all documents
submitted to us as copies.
<PAGE>
Willkie Farr & Gallagher
December 23, 1997
Page 2
Based upon the foregoing and subject to the limitations set
forth below, we are of the opinion that:
1. The Fund is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Maryland.
2. The Shares of the Fund to be offered for sale pursuant to
the Registration Statement are, to the extent of the respective number of Shares
of each Class authorized to be issued by the Fund in its Charter, duly
authorized and, when sold, issued and paid for as contemplated by the
Registration Statement, will have been validly and legally issued and will be
fully paid and non-assessable.
This letter expresses our opinion with respect to the Maryland
General Corporation Law governing matters such as due organization and the
authorization and issuance of stock. It does not extend to the securities or
"blue sky" laws of Maryland, to federal securities laws or to other laws.
You may rely upon our foregoing opinion in rendering your
opinion to the Fund that is to be filed as an exhibit to the Registration
Statement. We consent to the filing of this opinion as an exhibit to the
Registration Statement. This opinion may not be relied upon by any other person
or used for any other purpose without our prior written consent.
Very truly yours,
/s/ Venable Baetjer and Howard, LLP
<PAGE>
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4677
December 24, 1997
Cowen Series Funds, Inc.
Financial Square
New York, New York 10005
Re: Cowen Series Funds, Inc.
Registration Statement on Form N-1A
(File No. 333-40327)
Dear Sirs:
We have acted as counsel for Cowen Series Funds, Inc., a Maryland
corporation (the Fund"), in connection with the preparation and filing with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"), and the Investment Company Act of 1940, as
amended, of a Registration Statement on Form N-1A (File No. 333-40327) (the
"Registration Statement"), relating to the public offering of an indefinite
number of shares of the common stock, par value $.001 per share (the "Shares"),
of the Fund.
We have examined and relied upon the originals, or copies certified or
otherwise identified to our satisfaction, of such corporate records, documents,
certificates and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below.
Based upon the foregoing, we are of the opinion that:
1. The Fund is duly organized, validly existing and in good
standing under the laws of the State of Maryland.
<PAGE>
2. The Shares to be offered for sale pursuant to the Registration
Statement are, to the extent of the number of Shares of each
class authorized to be issued by the Fund in its charter, duly
authorized and, when sold, issued and paid for as contemplated
by the Registration Statement, will have been validly issued,
fully paid and nonassessable.
Insofar as this opinion relates to the law of the State of Maryland, we
are relying upon the opinion of Venable, Baetjer and Howard, a copy of which is
being delivered with this opinion and which we believe to be satisfactory in
form and substance.
We consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to us in the Statement of Additional
Information forming a part of the Registration Statement. In giving our consent,
however, we do not concede that we are within the category of persons whose
consent is required under Section 7 of the Act or the Rules and Regulations of
the Commission thereunder.
Very truly yours,
/s/ Willkie Farr & Gallagher
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Auditors and Counsel"
and to the use of our report dated December 24, 1997, in this Registration
Statement (Form N-1A, File #333-40327) of Cowen Large Cap Value Fund, a
portfolio of Cowen Series Funds, Inc.
/s/ ERNST & YOUNG LLP
New York, New York
December 24, 1997
