<PAGE>
As filed with the Securities and Exchange Commission
on March 23, 2000 (to be effective April 1, 2000)
Securities Act File No. 333-40327
Investment Company Act File No 811-8487
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 2 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [ X ]
Amendment No. 3 [ X ]
(Check appropriate box or boxes)
SG COWEN SERIES FUNDS, INC.
.................................................................
(Exact Name of Registrant as Specified in Charter)
560 Lexington Avenue
New York, New York 10022
...................................... ........
(address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 278-7500
Rodd M. Baxter, Esq.
SG Cowen Series Funds, Inc.
1221 Avenue of the Americas
New York, New York 10020
...........................................
(Name and Address of Agent for Service)
Copies to:
Jon S. Rand, Esq.
Willkie, Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Approximate Date of Proposed Public Offering
As soon as practicable after the effective
date of this Registration Statement
<PAGE>
It is proposed that this filing will become effective (check appropriate box):
Immediately upon filing pursuant to paragraph (b), or
- ---
X on April 1, 2000 pursuant to paragraph (b), or
- ---
60 days after filing pursuant to paragraph (a), or
- ---
on pursuant to paragraph (a)(1)
- ---
75 days after filing pursuant to paragraph (a)(2)
- ---
on (date) pursuant to paragraph (a)(2) of Rule 485.
- ---
2
<PAGE>
PROSPECTUS APRIL 1, 2000
SG COWEN LARGE CAP VALUE
FUND
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS, AND ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
[LOGO] [LOGO]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----------
<S> <C>
FUND PROFILE............................................. 3
HOW WE MANAGE THE FUND................................... 6
Our investment strategies................................ 6
The securities in which we typically invest.............. 6
Temporary defensive position............................. 6
The risks of investing in the Fund....................... 7
WHO MANAGES THE FUND..................................... 7
Investment adviser....................................... 7
Management fees.......................................... 7
Portfolio manager........................................ 7
ABOUT YOUR ACCOUNT....................................... 8
Choosing a share class................................... 8
How to reduce your sales charge.......................... 9
How to buy shares........................................ 9
How to sell shares....................................... 10
Account minimum.......................................... 10
Special services......................................... 10
DIVIDENDS, DISTRIBUTIONS AND TAXES....................... 11
FINANCIAL HIGHLIGHTS..................................... 12
</TABLE>
2
<PAGE>
FUND PROFILE:
WHAT ARE THE FUND'S GOALS?
The Fund seeks primarily capital appreciation, with a secondary goal of
current income. Although the Fund will strive to achieve these goals, there is
no assurance that it will.
WHAT ARE THE FUND'S MAIN INVESTMENT STRATEGIES?
Under normal conditions, we invest at least 80 percent of the Fund's assets
in equity securities of companies with market capitalizations over $2 billion.
We focus on companies that we believe have the potential for above-average
growth. We focus on stocks that we believe are undervalued at the time we
purchase them.
Additional information about the Fund's investments is available in the
Fund's annual and semi-annual reports to shareholders and the statement of
additional information.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND?
Investing in any mutual fund involves risk, including the risk that you may
lose part or all of the money you invest. The price of Fund shares will increase
and decrease according to changes in the value of the Fund's investments. The
Fund will be particularly affected by changes in stock prices, which tend to
fluctuate more than bond prices. For further discussion of risk, see "How We
Manage the Fund."
You should keep in mind that an investment in the Fund is not a complete
investment program; it should be considered just one part of your total
investment program. You may wish to discuss this Fund with your financial
adviser to determine whether it is an appropriate choice for you.
3
<PAGE>
HOW HAS THE FUND PERFORMED?
THE BAR CHART AND TABLE below can help you evaluate the potential risks and
rewards of investing in the Fund. We show you the Fund's return over its initial
calendar years, as well as the average annual return of all of the Fund's
shares -- compared to the performance of the S&P 500 Index and the Russell 1000
Index. You should remember that unlike the Fund, the S&P 500 Index and the
Russell 1000 Index are unmanaged and do not include the costs of buying,
selling, and holding the securities. The Fund's past performance is not
necessarily an indication of how it will perform in the future.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
YEAR BY YEAR CLASS A RETURNS
<S> <C>
Year-end return
1998 -3.27%
1999 9.34%
</TABLE>
During the years illustrated above, the Fund's highest return in one quarter
was +16.00% (6/30/99) and its lowest return in one calendar quarter (9/30/98)
was -16.39%.
CALENDAR YEAR RETURN (CLASS A)
The maximum Class A sales charge of 4.75%, assessed when you purchase
shares, is not reflected in the total return noted above. If this fee were
included, the returns would be less than that shown. The average annual returns
shown below do include the sales charge.
ANNUAL RETURNS AS OF 12/31/99
<TABLE>
<CAPTION>
1 Year Inception
----------- -----------
<S> <C> <C>
SG Cowen Large Cap Value Fund, Class A................................ 4.12% 0.36%*
S&P 500............................................................... 21.14% 24.89%*
Russell 1000 Value Index.............................................. 7.35% 11.41%*
SG Cowen Large Cap Value Fund, Class B................................ 3.49% (5.87)%**
SG Cowen Large Cap Value Fund, Class I................................ 10.41% 4.88%***
</TABLE>
* from January 2, 1998
** from April 16, 1998
*** from January 30, 1998
4
<PAGE>
WHAT ARE THE FUND'S FEES AND EXPENSES?
These tables describe the fees and expenses you may pay in connection with
an investment in the Fund.
SHAREHOLDERS FEES are paid directly from your investment. The Fund may waive
or reduce sales charges. Please see the Statement of Additional Information for
additional information on sales charges.
<TABLE>
<CAPTION>
Share Class A B I
- ------------------------------------------------------------- --------- --------- ------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a % of
offering price)............................................ 4.75%(1) None None
Maximum Contingent Deferred Sales Charge (Load) (as a % of
purchase price or redemption price, whichever is lower).... None 5.00%(2) None
Maximum Sales Charge (Load) on Reinvested Dividends.......... None None None
Redemption Fee(3)............................................ None None None
Exchange Fee................................................. None None None
</TABLE>
ANNUAL FUND OPERATING EXPENSES are expenses that are deducted from the
Fund's assets.
<TABLE>
<CAPTION>
Share Class A B I
- ---------------------------------------------------------------------- ------ ------ ------
<S> <C> <C> <C>
Management Fees....................................................... 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees................................. 0.25% 1.00% 0.0%
Other Expenses........................................................ 1.41% 1.56% 1.40%
Total Operating Expenses(4)........................................... 2.41% 3.31% 2.15%
</TABLE>
EXAMPLE(5)
This example is intended to help you compare the cost of investing in the
Fund to the cost of investing in other mutual funds. We show the cumulative
amount of Fund expenses on a hypothetical investment of $10,000 assuming an
annual 5% return and the Fund's operating expenses remaining the same. Unless
otherwise indicated, the example assumes that you redeem all of your shares at
the end of each period. This is an example only, and does not represent future
expenses, which may be greater or less than those shown here.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------- ------- ------- ---------
<S> <C> <C> <C> <C>
Class A............................... $ 708 $1,191 $1,699 $ 3,091
Class B (assumes redemption at end of
period)............................. $ 834 $1,318 $1,926 $ 3,604
Class B (assumes no redemption)....... $ 334 $1,018 $1,726 $ 3,604
Class I............................... $ 218 $ 673 $1,154 $ 2,483
</TABLE>
- ------------
(1) A purchase of Class A shares at $1 million or more will be made at net asset
value.
(2) If you redeem Class B shares during the first year after you buy them, the
shares will be subject to a contingent deferred sales charge of 5%. The
contingent deferred sales charge is 4% during the second year, 3% during the
third and fourth years, 2% during the fifth year, 1% during the sixth year,
and 0% thereafter.
(3) The Fund currently charges $10.00 per redemption for redemptions payable by
wire.
(4) The above tables do not reflect SGCAM's voluntary reimbursement of expenses.
The total annual operating expenses after considering the reimbursement
would have been 1.22%, 1.97% and 0.97% for Class A, B and I, respectively.
(5) The Fund's actual rate of return may be greater or less than the
hypothetical 5% return we use here.
5
<PAGE>
HOW WE MANAGE THE FUND
OUR INVESTMENT STRATEGIES
Using rigorous and disciplined research, we analyze economic and market
conditions, seeking to identify the stocks that we think bring the greatest
returns. The following is a description of how we pursue the Fund's objectives.
We invest primarily in pursuit of the Fund's investment objective of capital
appreciation. To achieve this goal, we blend a number of investment strategies
to manage the Fund. We generally invest at least 80 percent of the Fund's assets
in companies with market capitalization of over $2 billion. All of the companies
in which we invest will have market capitalizations over $1 billion, and the
average weighted market capitalization of the Fund's portfolio will be over
$20 billion. We emphasize investing in companies with value characteristics
below the Russell 1000 Value Index. We seek companies that we believe are
neglected or out of favor and whose stock prices are low in relation to current
earnings, cash flow, book value and sales. Generally, we seek companies who have
one or more of the following characteristics: price-to-earnings ratios in the
lower 40 percent of the market; price-to-cash flow in the lower 20 percent of
the market; price-to-book in the lower 20 percent; price-to-sales ratios in the
lower 20 percent. We seek those companies we believe have reasonable prospects
for growth even though the expectations for these companies are low and their
valuations temporarily depressed. We may also invest in covered call options and
purchase commercial paper.
THE SECURITIES IN WHICH WE TYPICALLY INVEST
The following is a description of the securities in which we normally
invest. Please see the Statement of Additional Information for additional
descriptions and risk information on these and all the securities in which we
invest.
Equity securities: equity securities include common and preferred stocks;
warrants to purchase common stocks or preferred stocks; securities convertible
into common or preferred stocks, such as convertible bonds and debentures;
American Depository Receipts, commonly known as ADRs, and other securities with
equity characteristics. American Depository Receipts are typically certificates
issued by a U.S. bank which represent a stated number of shares of a foreign
corporation that the bank holds in its vault.
Commercial paper: the short-term, unsecured debt of corporations, usually
maturing in no more than 270 days from date it is issued.
Covered call options: an agreement that gives the buyer the right but not
the obligation to buy a certain amount of a specific security for a specific
price within a certain time period regardless of the market price of the
security. A call option is termed covered when the seller owns the securities
underlying the option.
In particular, the Fund's annual report discusses the relevant market
conditions and investment strategies used by the Fund's investment adviser that
materially affected the Fund's performance during the last fiscal year. You may
obtain these reports at no cost by calling 1-877-293-7298.
TEMPORARY DEFENSIVE POSITION
For temporary defensive purposes, in attempt to respond to adverse market
economic or political conditions, we may invest up to 20% of the Fund's assets
and in excess of that amount when market conditions
6
<PAGE>
warrant, in fixed-income securities such as corporate bonds, commercial paper,
or short-term money market securities such as obligations issued or guaranteed
by the U.S. Government. To the extent we find it necessary to invest in such
securities, we may not achieve the Fund's goal.
THE RISKS OF INVESTING IN THE FUND
Investing in any mutual fund involves risk, including the risk that you may
receive little or no return on your investment, and the risk that you may lose
part or all of the money you invest. Therefore, before you invest in the Fund
you should carefully evaluate the risks. Because of the nature of the Fund's
investment, you should consider an investment in the Fund to be a long-term
investment that typically provides the best results when held for a number of
years. The following are the chief risks you assume when investing in the Fund:
(1) Market risk is the risk that all or a majority of the securities in a
certain market-- like the stock or bond market-- will decline in value because
of factors such as economic conditions, future expectations or investor
confidence; (2) Liquidity risk is the possibility that securities cannot be
readily sold, or can only be sold at a price significantly lower than their
broadly recognized value; and (3) Industry and security risk is the risk that
the value of securities in a particular industry or the value of an individual
stock or bond will decline because of changing expectations for the performance
of that industry or for the individual company issuing the stock or bond.
WHO MANAGES THE FUND
The officers of the Fund conduct the Fund's daily business operations,
subject to the supervision of the Fund's Board of Directors.
INVESTMENT ADVISER
From the Fund's commencement of operations until July 1, 1998, Cowen & Co.
("Cowen") served as investment manager to the Fund. On July 1, 1998, Cowen's
business was combined with Societe Generale Securities Corporation, a subsidiary
of Societe Generale ("SG"), to form SG Cowen Securities Corporation ("SG
Cowen"). SG, a leading international commercial and investment bank established
in 1864, has a global network of offices in over 80 countries. From July 1, 1998
through December 31, 1999 SG Cowen through its SG Cowen Asset Management
Division served as the investment manager to the Fund, with the existing
investment management personnel of Cowen continuing to provide investment
management services to the Fund. In January 2000 as a result of an internal
reorganization, the SG Cowen Asset Management Division of SG Cowen was
transferred to SG Cowen Asset Management, Inc. ("SGCAM"). All officers and
employees engaged in providing investment advisory services to the Fund with SG
Cowen have become officers and employees of SGCAM and they will continue to
provide the same services to the Fund for the same management fees described
below. SGCAM which currently manages approximately $3.5 billion in assets,
manages the Fund's business affairs, including being responsible for the Fund's
investment program and provides daily administrative services.
MANAGEMENT FEES
For managing the Fund and its investments, the adviser is paid a yearly fee
of 0.75% of daily net asset value.
PORTFOLIO MANAGER
Diane Jaffee is primarily responsible for the daily management of the Fund
and has had such responsibility since October 1999. She is an Investment Officer
and has served as a Director and Portfolio Manager at
7
<PAGE>
SG Cowen and then SGCAM since July 1, 1998. She was a Director and Portfolio
Manager of Cowen Asset Management since January 1995. Before joining Cowen, she
was a Vice President and Portfolio Manager for Kidder Peabody & Company. She is
a Chartered Financial Analyst with 17 years of investment experience.
ABOUT YOUR ACCOUNT
You can choose from a number of share classes. Because each share class has
a different combination of sales charges, fees, and other features, you should
consult your financial adviser to determine which class best suits your
investment goals and time frame.
CHOOSING A SHARE CLASS
CLASS A Class A shares have an up-front sales charge of up to 4.75% that
you pay when you buy the shares. If you invest $50,000 or more your front-end
sales charge will be reduced. You may qualify for other reduced sales charges,
as described in "How To Reduce Your Sales Charges," and under certain
circumstances the sales charge may be waived; please see the Fund's Statement of
Additional Information. Class A shares are also subject to an annual 12b-1 fee
no greater than 0.25% of the Fund's average daily net assets, which is lower
than the 12b-1 fee for Class B shares. The 12b-1 plan allows the Fund to pay
distribution fees for the sale and distribution of its shares. Class A shares
are not subject to a contingent deferred sales charge. The offering price
includes a front-end sales charge.
CLASS A SHARES FEES
<TABLE>
<CAPTION>
Sales charge as Sales charge as % Dealer's commission
% of offering of amount as % of offering
Amount of purchase price invested price
- ---------------------------------------- --------------- ----------------- ---------------------
<S> <C> <C> <C>
Up to $49,999........................... 4.75% 5.00% 4.00%
$50,000 to $99,999...................... 4.00% 4.17% 3.25%
$100,000 to $249,999.................... 3.75% 3.90% 3.00%
$250,000 to $499,999.................... 2.50% 2.56% 2.00%
$500,000 to $999,999.................... 2.00% 2.04% 1.50%
$1,000,000 to $2,999,999................ 0% 0% 1.00%
$3,000,000 to $3,999,999................ 0% 0% 0.50%
</TABLE>
If you invest $4 million or more, you will receive Class I shares, which are
not subject to any sales charge or service fee.
CLASS B Class B shares have no up-front sales charge, so the full amount of
your purchase is invested in the Fund. However, you will pay a contingent
deferred sales charge if you redeem your shares within six years after you buy
them. If you redeem Class B shares during the first year after you buy them, the
shares will be subject to a contingent deferred sales charge of 5%. The
contingent deferred sales charge is 4% during the second year, 3% during the
third and fourth years, 2% during the fifth year, 1% during the sixth year, and
0% thereafter. Under certain circumstances the contingent deferred sales charge
may be waived; please see the Fund's Statement of Additional Information.
Class B shares are subject to an annual 12b-1 fee no greater than 1% of the
Fund's average daily net assets, of which 0.75% are distribution fees and 0.25%
are service fees paid for providing services and maintaining shareholder
accounts. The 12b-1 plan allows the Fund to pay distribution fees for the sale
and distribution of its shares.
8
<PAGE>
CLASS I Class I shares have no up-front sales charge, so the full amount of
your purchase is invested in the Fund. Class I shares are not subject to a
contingent deferred sales charge or to an annual 12b-1 fee. Class I shares may
be referred to as institutional shares. They are available exclusively to
certain types of investors such as employee benefit plans of selected dealers of
the Fund, charitable organizations, investment advisory and consulting clients
of SG Cowen, accounts as to which a broker, registered investment adviser, or
bank charges an account management fee and certain omnibus accounts. Please
contact your financial adviser for further information or see the Fund's
Statement of Additional Information.
HOW TO REDUCE YOUR SALES CHARGE
We offer a number of ways to reduce or eliminate the sales charge on shares.
Please refer to the Fund's Statement of Additional Information for detailed
information and eligibility requirements. You can also get additional
information from your financial adviser. You or your financial adviser must
notify us at the time you purchase shares if you are eligible for any of these
programs.
PROGRAM
<TABLE>
<S> <C>
Letter of intent You can use a Letter of Intent to combine all your purchases
of Class A shares in selected SG Cowen Funds over a 13-month
period to qualify for reduced front-end sales charges.
Rights of accumulation You may also combine your previous purchases of Class A shares
in the Fund along with the purchase of Class A shares of
selected other SG Cowen Funds to reduce your front-end sales
charges.
Reinvestment of Up to 30 days after you redeem your Class A shares, you can
redeemed shares reinvest the proceeds without paying a front-end sales charge.
You may use this privilege only once.
Certain individuals, Qualified individuals, organizations, retirement and profit
employees of SG Cowen, sharing plans, and others may qualify for the purchase of
401(k) and other Class A shares without a sales charge.
retirement plans
Please see your financial adviser to determine whether you qualify for any of these
programs, or consult the Statement of Additional Information.
</TABLE>
HOW TO BUY SHARES
Your financial adviser can handle all the details of purchasing shares,
including opening an account. You can also invest in the Fund by mail. Complete
an investment slip indicating the class of shares you wish to purchase, and mail
it with your check payable to the Fund to: DST Systems, Inc. ("DST"), 210 West
10th Street, Kansas City, MO 64105. If you are making an initial purchase by
mail, you must include a completed Investment Application, or an appropriate
retirement plan application if you are opening a retirement account, with your
check. If you want to purchase shares by Federal wire, contact the Fund directly
at 1-877-293-7298. There is no charge for establishing or maintaining an
account.
9
<PAGE>
You can open an account with an initial investment of $1,000 and make
additional investments at any time for as little as $100. The price you pay for
shares will depend on when we receive your purchase order. If you are buying
shares in an IRA, or a retirement plan for self-employed persons, the minimum
initial purchase is $500, and additional investments of only $50 after that.
If your order is received before 4:15 p.m. Eastern time on a business day,
you will pay that day's closing share price which is based on the Fund's net
asset value. If your order is received after 4:15 p.m., you will pay the next
business day's price. A business day is any day that the New York Stock Exchange
is open for business. We reserve the right to reject any purchase order.
Normally, we determine the Fund's net asset value (NAV) per share as of
4:15 p.m. Eastern time each day the New York Stock Exchange is open for
business. We calculate the net asset value per share by adding the market value
of all the securities and other assets in the Fund's portfolio, deducting all
liabilities, and dividing the resulting number by the number of shares
outstanding. We price securities and other assets for which market quotations
are available at their market value. Any short-term investments which have a
maturity of less than 60 days are priced at amortized cost.
HOW TO SELL SHARES
You can sell your shares back to the Fund by mail or by contacting your
financial adviser. Generally, SG Cowen and other authorized dealers will act on
your oral instructions to redeem shares. If you send a written order to DST to
redeem shares, your request must be signed by all owners of the account, and you
must include a signature guarantee for each owner. If you hold your shares in
certificates, you must submit the certificates with your request to sell the
shares.
When a properly completed request to sell or exchange shares is received by
4:15 p.m. Eastern time on any day the New York Stock Exchange is open for
business, you will receive the net asset value as determined on the business day
your request is received. We will pay you normally within three business days,
but no later than seven days after your request to sell your shares is received.
If you purchased your shares by check, we will wait until your check has
cleared, which can take up to 15 days, before we send you the proceeds from the
sale of your shares.
ACCOUNT MINIMUM
If as a result of redemption your account balance falls below the required
minimum amount of $500, you will have 30 days to raise the balance to the
minimum after we notify you in writing. If your account is not at the minimum by
the required time, we may redeem it.
SPECIAL SERVICES
To help make investing with us as easy as possible, and to help you build
your investments, we offer the following special services. You can get further
information about these programs by calling Shareholder Services at
1-877-293-7298.
- - You can exchange all or part of your shares for the same class of shares in
certain other SG Cowen funds without paying a sales charge. When you exchange
shares, you are purchasing shares in another fund, so you should be sure to
get a copy of the Fund's prospectus and read it carefully before buying shares
through an
10
<PAGE>
exchange. For income tax purposes, an exchange is treated as a concurrent sale
and purchase and any gain on the transaction may be subject to income tax.
Therefore, you should consult your tax adviser about the tax consequences of
any exchange.
- - You can automatically invest regular monthly investments of $100 or more
directly from your checking account. No fee is charged for these automatic
transactions, but a service charge of $10.00 will be deducted for checks
returned for insufficient funds. The Fund reserves the right upon notification
to all participants, to impose a fee in the future.
- - You may buy shares in the Fund for your individual or group retirement plan,
including your Individual Retirement Account (IRA), Roth IRA and Education
IRA.
- - Through our Systematic Withdrawal Plan, you can arrange a regular monthly,
quarterly, or annual payment from your account made to you or someone you
designate. If the value of your account is $10,000 or more, you can make
withdrawals of at least $50 monthly.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund declares and pays income dividends quarterly, while any net
realized capital gains are generally distributed annually. We automatically
reinvest all dividends and any capital gains, unless you tell us otherwise.
Tax laws are subject to change, so we urge you to consult your tax adviser
about your particular tax situation and how it might be affected by current tax
law. The tax status of your dividends from this Fund is not affected by whether
you reinvest your dividends or receive them in cash. Dividends from short-term
capital gains and net investment income are generally taxable as ordinary
income; dividends from long-term capital gains are taxable as capital gains. In
addition, you may be subject to state and local taxes on distributions.
We will send you a statement each year detailing the amount and tax status
of all dividends and capital gains that you were paid during the prior year.
11
<PAGE>
FINANCIAL HIGHLIGHTS
These financial highlights tables are intended to help you understand the
Fund's financial performance since its inception. All information reflects
financial results for each class of a single share in the Fund. The following
information for the year ended November 30, 1999 has been audited by KPMG LLP,
independent auditors, whose report thereon appears in the Fund's Annual Report,
which is available upon request by calling (877) 293-7298. The information for
fiscal periods ended prior to November 30, 1999 has been audited by other
independent auditors.
<TABLE>
<CAPTION>
Class A Class B Class I
------------------------------ ------------------------- -------------------------
Period From
1/2/98
(Commencement Period From Period From
Year ended of Operations) Year ended 4/17/98(3) Year ended 2/2/98(3)
November 30, Through November 30, Through November 30, Through
1999 11/30/98 1999 11/30/98 1999 11/30/98
----------- ---------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value
Beginning of Period $ 9.53 $ 10.00 $ 9.53 $11.11(1) $ 9.54 $ 9.77(1)
------ ------- ------ ------ ------ ------
Income from Investment Operations
Investment Income - Net 0.10 0.08 0.01 0.01 0.12 0.10
Net Realized and Unrealized Gains
(Losses) on Investments 0.67 (0.49) 0.70 (1.58) 0.67 (0.25)
------ ------- ------ ------ ------ ------
Net from Investment Operations 0.77 (0.41) 0.71 (1.57) 0.79 (0.15)
------ ------- ------ ------ ------ ------
Less Distributions:
Dividends from Net Investment
Income (0.10) (0.06) (0.03) (0.01) (0.13) (0.08)
------ ------- ------ ------ ------ ------
Total Distributions (0.10) (0.06) (0.03) (0.01) (0.13) (0.08)
------ ------- ------ ------ ------ ------
Net Asset Value
End of Period $10.20 $ 9.53 $10.21 $ 9.53 $10.20 $ 9.54
====== ======= ====== ====== ====== ======
Total Return(3)(4) 8.14% (4.08%)(2) 7.41% (14.15%)(2) 8.27% (1.56%)(2)
Ratios / Supplementary Data
Net Assets (000 omitted) $8,343 $12,044 $ 195 $ 164 $1,264 $1,153
Ratio of Expenses to Average Net
Assets 1.22% 1.11%(2) 1.97% 1.23%(2) 0.97% 0.80%(2)
Ratio of Investment Income - Net
to Average Net Assets 0.96% 0.85%(2) 0.18% 0.10%(2) 1.17% 1.01%(2)
Decrease Reflected on Above
Ratios Due to Expense
Reimbursements/ Waivers 1.19% 0.66%(2) 1.34% 0.53%(2) 1.18% 0.55%(2)
Portfolio Turnover Rate 52% 67%(2) 52% 67%(2) 52% 67%(2)
</TABLE>
- ---------------
(1) Based upon the Class A Net Asset Value on the day prior to commencement of
distribution
(2) Not Annualized
(3) Commencement of Distribution
(4) Exclusive of Sales Charges
12
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(This page has been left blank intentionally.)
13
<PAGE>
Additional information about the Fund's investments is available in the
Fund's annual and semi-annual reports to shareholders. In the Fund's annual
report, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performance during its last
fiscal year. You can find more detailed information about the Fund in its
current Statement of Additional Information, which we have filed electronically
with the Securities and Exchange Commission (SEC) and which is legally a part of
this prospectus. If you want a free copy of the Statement of Additional
Information, the annual or semi-annual report, or if you have any questions
about investing in this Fund, you can write to us at 560 Lexington Avenue, New
York, NY 10022, or Funds Distributor Inc., the Fund's distributor, at 60 State
Street, Boston, MA 02109, or call toll-free 1-877-293-7298.
You can find reports and other information about the Fund on the SEC Web
site (http://www.sec.gov), or you can get copies of this information, after
payment of a duplicating fee, by writing to the Public Reference Section of the
SEC, Washington, D.C. 20549-6009. Information about the Fund, including the
Statement of Additional Information, can be reviewed and copied at the
Securities and Exchange Commission's Public Reference Room in Washington, D. C.
You can get information on the public reference room by calling the SEC at
1-800-SEC-0330.
Investment Company Act file number: 811-8487
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
APRIL 1, 2000
SG COWEN LARGE CAP VALUE FUND
a series of
SG COWEN SERIES FUNDS, INC.
560 Lexington Avenue, New York, NY 10022
(212) 278-4569, (877) 293-7298
<TABLE>
<CAPTION>
Contents Page
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<S> <C>
History ......................................... 2
Investment Objectives and Policies .............. 2
Management of the Fund .......................... 8
Portfolio Transactions .......................... 12
Capital Stock ................................... 13
Net Asset Value ................................. 14
Purchase of Shares .............................. 14
Exchange Privilege .............................. 18
Redemption of Shares ............................ 21
Code of Ethics .................................. 23
Taxation ........................................ 23
Performance Information ......................... 24
Other Information ............................... 26
Financial Statements ............................ 26
</TABLE>
This Statement of Additional Information is meant to be read in
conjunction with the Prospectus of SG Cowen Large Cap Value Fund (the "Fund")
dated April 1, 2000, 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 Funds Distributor, Inc., the Fund's principal underwriter, at (800)
221-7930 or by contacting SG Cowen Securities Corporation ("SG Cowen") at (800)
262-7116 or any of its account representatives.
<PAGE>
The Fund's financial statements and report of independent auditors thereon as of
and for the fiscal year ended November 30, 1999 are incorporated by reference to
the Fund's Annual Report, which may be obtained without charge by calling the
toll-free number above. SG Cowen Asset Management, Inc. ("SG Cowen Asset
Management" or "SGCAM"), is the investment manager to the Fund.
HISTORY
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 and
commenced operation on January 2, 1998. On July 1, 1998, the name of the Fund
was changed from Cowen Large Cap Value Fund to SG Cowen Large Cap Value Fund.
INVESTMENT OBJECTIVES AND POLICIES
The primary investment objective of the Fund, which is a diversified
open-end management investment company, is to provide capital appreciation.
Current income from dividends is a secondary objective of the Fund.
INVESTMENT STRATEGY
Although a consideration in the selection of the Fund's
investments, current income 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. SGCAM 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."
In managing the Fund's assets, SG Cowen Asset Management uses the SG 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.
2
<PAGE>
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 of adding value by selecting those stocks with reasonable
prospects when expectations are low and valuations are temporarily depressed.
SG 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. SG 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.
INFORMATION ON INVESTMENT PRACTICES AND RISKS
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, 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 SG 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 loaned securities including accrued income 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.
3
<PAGE>
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 SGCAM shall determine to be
appropriate. The Fund will only write covered call options on securities held in
the portfolio. 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 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.
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 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 SGCAM
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
4
<PAGE>
unforeseen events, have at times rendered certain of the facilities of the
Clearing Corporation and the national securities exchanges inadequate and
resulted in the institution of special procedures, such as trading rotations,
restrictions on certain types of orders or trading halts or suspensions in one
or more options. There can be no assurance that similar events, or events that
may otherwise interfere with the timely execution of customer orders, will not
recur. In such event, it might not be possible to effect closing purchase
transactions in particular options. If, as a covered call option writer, the
Fund is unable to effect a closing purchase transaction in a secondary market,
it will not be able to sell the underlying securities until the option expires
or it delivers the underlying security upon exercise. The national securities
exchanges have established limitations governing the maximum number of options
of each class which may be held or written, or exercised within certain time
periods, by an investor or group of 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 SG 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. SGCAM, 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
on an ongoing
5
<PAGE>
basis the value of the securities subject to repurchase agreements to ensure
that the value is maintained at the required level.
TEMPORARY INVESTMENTS. The Fund may invest up to 20 percent of its
assets, and in excess of that amount when SGCAM 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.
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
6
<PAGE>
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.
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.
11. Concentrating more than 25% of the Fund's assets in any one industry.
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
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 SGCAM deem it advisable to purchase or sell securities.
7
<PAGE>
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS
The business and affairs of the Fund is managed under the direction of
the Board of Directors, which has overall supervisory responsibility for the
Fund. By virtue of the responsibilities assumed by SGCAM under the Investment
Management Agreement, the Fund will not require executive employees other than
its officers, none of whom will devote full time to the affairs of the Fund.
The names of the directors and officers of the Fund, 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 1940 Act, is indicated by an asterisk; unless noted otherwise, the
business address of each such individual is 560 Lexington Avenue, New York, New
York 10022. Each of the directors is also a director of all of the investment
companies of which SGCAM is Investment Manager.
DIRECTORS OF THE FUNDS
James H. Carey, Director, age 67. Former Chief Executive Officer,
Director and Treasurer of National Capital Benefits Corporation (from
1995-1997). Mr. Carey is also a Director of Airborne Freight Corporation and of
The Midland Company and Vice Chairman of the U.S. Committee for UNICEF. His
address is 39 Village View, Manchester, VT 05255.
*Philippe H. Collas, Chairman of the Funds, age 50. Chairman and Chief
Executive Officer of Societe Generale Asset Management, S.A., Chairman and
Director of SGCAM. Director and Chairman of the SG Cowen Mutual Funds. His
address is 2 Place de la Coupole, La Defense Cedex, Paris France 92078.
Dr. Martin J. Gruber, Director, age 62. Professor of Finance, Leonard
N. Stern School of Business Administration, New York University. He is also a
Trustee of the BT Alex Brown Mutual Funds, Director of Japan Equity Fund, Inc.
and the Taiwan Equity Fund, Inc.; and a Trustee of the T.I.A.A. CREF Board. His
address is New York University, 44 West 4th Street, New York, New York 10012.
Burton J. Weiss, Director, age 69. Self-employed consultant since
March, 1988. His address is 103 Marin Drive, Chapel Hill, North Carolina 27516.
8
<PAGE>
OFFICERS OF THE FUNDS
Philip J. Bafundo, Treasurer, age 37. Managing Director and Treasurer
of SGCAM since January 2000. Prior thereto Chief Administrative Officer of
Societe Generale Asset Management Corp.
Rodd M. Baxter, Secretary, age 49. Director and Senior Counsel of SG
Cowen since July 1, 1998. Prior thereto, he was General Counsel of Cowen Asset
Management and Director of Cowen. . His address is 1221 Avenue of the Americas,
New York, NY 10020.
Hoan Nguyen-Quang, President, age 54. President and Director of SGCAM
since January 2000. From July 1, 1999 through December 31, 1999, he was a
Managing Director of SG Cowen. Prior thereto he held various executive positions
with Societe Generale.
Diane Jaffee, Investment Officer, age 40. Director and Portfolio
Manager of SGCAM since January 2000. She held the same position at Cowen Asset
Management from January 1995 through June 30, 1998 and at SG Cowen from July 1,
1998 through December 31, 1999. Before joining Cowen, she was Vice President and
Portfolio Manager of Kidder Peabody & Company.
William Church, Vice President, Senior Investment Officer, age 53.
Managing Director of SGCAM since January 2000. He held the same position at SG
Cowen from July 1, 1998 through December 31, 1999. Prior thereto, he was Chief
Investment Officer of Cowen Asset Management and a Class I Limited Partner of
Cowen and Managing Director of Cowen Incorporated.
Irwood Schlackman, Controller, age 59. Vice President SGCAM since
January 2000. He held the same position at SG Cowen from July 1, 1998 through
December 31, 1999. Prior thereto, he was a Mutual Fund Administrator of Cowen
and Company.
COMPENSATION
No officer, director, partner or employee of SGCAM 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 SG Cowen or its affiliates receive from the Fund a
fee of $3,000 per annum plus $500 per meeting and $375 for each audit committee
meeting attended and reimbursement for travel and out of pocket expenses.
9
<PAGE>
<TABLE>
<CAPTION>
COMPENSATION TABLE (for fiscal year ended November 30, 1999)
Name of Aggregate Total
Director Compensation Compensation
from Fund From
Fund and Fund
Complex *
<S> <C> <C>
James H. Carey $5,750 $28,750
Peter Gil** $5,750 $28,750
Martin J. Gruber $5,750 $28,750
Burton J. Weiss $5,750 $28,750
</TABLE>
- -------------
*There are seven funds in the complex.
**Mr. Gil retired from the board on October 25, 1999.
PRINCIPAL HOLDER OF SECURITIES
To the knowledge of the Fund and SGCAM, none of the Fund directors and
officers, either individually or as a group, beneficially owned more than 1% of
the Funds' outstanding stock as of the close of business on February 29, 2000.
As of February 29, 2000 the following persons owned 5% or more of a class of the
Fund's securities: Class B -- Lung Chu (26%) 21059 Manita Ct, Cupertino, CA
95014; Richard H. Blackwell IRA (28%) 10629 Forest Lane, Chicago Ridge, IL
60415, Renee Lauria & Alana Lauria, Two Sisters Trust (6%) 28 Felsmere Ave.,
Stoneham, MA 02180-1454, Arthur Pong (6%) 141 42nd Ave., San Mateo, CA 94403.
Class I -- Eugene M. Fine IRA (80%) 30 West 60th Street Apt 14H New York, NY
10023, Leslie Fine IRA (16%) 30 West 60th Street Apt 14H New York, NY 10023.
INVESTMENT MANAGER
Until July 1, 1998, Cowen served as investment manager and principal
underwriter to the Fund. On July 1, 1998, Cowen's business was combined with
Societe Generale Securities Corporation ("SGSC"), a subsidiary of Societe
Generale ("SG"), to form SG Cowen Securities Corporation ("SG Cowen") (the
"Acquisition"). SG, a leading international commercial and investment bank
established in 1864, has a global network of offices in over 80 countries. From
July 1, 1998 through December 31, 1999, SG Cowen, through its SG Cowen Asset
Management Division served as the new investment manager to the Fund, with the
existing investment management personnel of Cowen continuing to provide
investment management services to the Fund. In January 2000 as a result of an
internal reorganization, the SG Cowen Asset Management Division of SG Cowen was
transferred to SGCAM. All officers and employees engaged in providing investment
advisory services to the Funds with SG Cowen have become officers and employees
of SGCAM and they will continue to provide the same services to the Funds.
10
<PAGE>
The management agreement between Cowen and the Fund provided for
automatic termination in the event of its "assignment," which included
consummation of the Acquisition. Accordingly, a new management agreement between
SG Cowen and the Fund (the "New Agreement"), identical in material respects with
the prior management agreement, was approved by the Board of Directors of the
Fund at a meeting held on May 21, 1998. On June 16, 1998, Cowen and SGSC were
granted an exemptive order by the Securities and Exchange Commission pursuant to
which the New Agreement was permitted to be implemented without shareholder
approval beginning on July 1, 1998 and continuing, for a period of up to 150
days, through the date on which the New Agreement is approved or disapproved by
the shareholders of the Fund.
The shareholders of the Fund approved the continuance of the New
Agreement on September 17, 1998. The New Agreement contains substantially the
same terms and conditions as the corresponding prior management agreement,
including the management fee payable by the Fund.
SGCAM is a registered investment adviser. SGCAM's principal address is
560 Lexington Avenue, New York, New York 10022.
Pursuant to the Investment Management Agreement between SGCAM and the
Fund, SGCAM has agreed to be responsible for the Fund's investment program.
Subject to the supervision and direction of the Fund's Boards of Directors,
SGCAM manages the Fund's portfolio in accordance with the stated policies of
that Fund. SGCAM makes investment decisions for the Fund and places the purchase
and sale orders for portfolio transactions. SGCAM also furnishes the Fund
statistical and research data, clerical help, accounting, data processing,
bookkeeping, internal auditing and certain legal and other 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 operations. SGCAM
compensates certain securities dealers whose customers are shareholders of the
Fund for providing administrative services to those shareholders that would
otherwise be provided by SGCAM. Such compensation is paid solely from SGCAM's
resources and is not paid directly or indirectly by the Fund.
Each Class bears its own expenses, which generally includes all costs
not specifically borne by SGCAM. 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 expensed 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.
For the period ended November 30, 1998 and the year ended November 30,
1999 the Fund's Investment Manager received fees for services rendered of
$83,060 and $92,483, respectively. During this same period SGCAM voluntarily
reimbursed all expenses, other than
11
<PAGE>
investment management fee and distribution fees, in excess of .22 of 1% of its
the average daily value of its net assets since its inception.
PRINCIPAL UNDERWRITER
Funds Distributor, Inc. ("FDI"), 60 State Street, Boston, MA 02109, is
the principal underwriter to
the Fund.
CUSTODIAN AND TRANSFER AND DIVIDEND AGENT
State Street Bank and Trust Company, P.O. Box 419111, Kansas City, MO
64141, is the custodian of the Funds' assets.
DST Systems, Inc., 210 West 10th Street, Kansas City, MO 64105, is the
Funds' transfer and dividend disbursing agent.
SHAREHOLDER SERVICING AND DISTRIBUTION PLAN (THE "PLAN")
FDI is paid monthly fees by the Fund in connection with (1) the
servicing of shareholder accounts in Class A and Class B shares and (2)
providing distribution related services in respect of Class B shares. A monthly
service fee, authorized pursuant to the Plan adopted by the Fund pursuant to
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 FDI to provide compensation for ongoing servicing and/or
maintenance of shareholder accounts with the Fund. Compensation paid by FDI
includes amounts paid to SG 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 FDI a monthly
distribution fee at the annual rate of .75% of the Funds average daily net
assets attributable to Class B shares. The distribution fee is used by FDI 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 FDI 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. Because these fees are paid out of the Fund's
assets on an on-going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
Payments under the Plan are not tied exclusively to the service and/or
distribution expenses actually incurred by FDI, and the payments may exceed
expenses actually incurred by FDI. The Board of Directors evaluates the
appropriateness of the Plan and its payment terms on a
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<PAGE>
continuing basis and in doing so considers all relevant factors, including
expenses borne by SG Cowen and amounts it received under the Plan.
Pursuant to the Plan, for the year ended November 30, 1999, Class A and
Class B shares of the Fund paid $26,792 and $2,068, respectively.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities and other financial instruments
for the Fund are made by SGCAM, 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 SGCAM, 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 SGCAM 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 SGCAM 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 SG Cowen if, in
the judgment of SGCAM, the use of SG 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, SG 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
SEC.
In selecting brokers or dealers to execute portfolio transactions on
behalf of the Fund, SGCAM seeks the best overall terms available. In assessing
the best overall terms available for any transaction, SGCAM will consider the
factors it deems relevant, including the breadth of the
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<PAGE>
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, SGCAM 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 SGCAM or its affiliates exercise investment discretion. SGCAM'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 to the Fund.
For the period ended November 30, 1998 and the year ended November 30,
1999 the Fund paid an aggregate of $42,702 and $34,331, respectively in
commissions to broker-dealers for execution of portfolio transactions, of which
$14,410 was paid to SG Cowen during the period ended November 30, 1998.
CAPITAL STOCK
The Fund has an authorized capitalization of 750,000,000 shares with a
par value of $.001 per share and transferable without restriction of which
250,000,000 have been allocated in respect of each Class of the Fund. 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.
NET ASSET VALUE
The net asset value per share of the Fund is calculated as of 4:15 p.m.
Eastern time, or such earlier time when the Exchange closes early, 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 , Martin Luther King
Day (the third Monday in January), Washington's Birthday (the third Monday in
February), Good Friday, Memorial Day (the last Monday in May), July 4th,
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<PAGE>
Labor Day (the first Monday in September), Thanksgiving Day (the fourth Thursday
in November) and December 25th; and (b) the preceding Friday when one of those
holidays falls on a Saturday or the subsequent Monday when one of those holidays
falls on a Sunday. Net asset value per share is computed by dividing the value
of the Fund's net assets by the total number of its shares outstanding. Assets
traded on a securities exchange or other recognized market are valued on the
basis of market quotations. Assets for which quotations are not readily
available are valued at fair value as determined in good faith under procedures
approved by the Board of Directors. High quality money market instruments with
remaining maturities of 60 days or less are valued on the basis of amortized
cost, which involves valuing a portfolio instrument at its market value on the
61st day prior to maturity and thereafter assuming a constant amortization to
maturity of any market discount or premium, generally without regard to the
effect of fluctuating interest rates on the market value of the instrument.
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 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 SG Cowen account representative. Investors 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 DST 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, DST or FDI. Further
information regarding the Automatic Investment Plan may be obtained through any
account representative.
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<PAGE>
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. 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, registered representatives of
broker-dealers that enter into selected dealer agreements with FDI will receive
additional non-cash compensation in the form of gifts or prizes such as
merchandise or trips. When purchasing shares of the Fund, investors must specify
whether the purchase is for Class A shares, Class B shares or Class I 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. The sales charge payable upon the purchase of Class A shares will
vary with the amount of purchase as set forth below.
<TABLE>
<CAPTION>
Sales Charge as a Sales Charge as
Percentage of the a Percentage of
Shares Purchased in Public Offering the Net Amount Dealer
Single Transaction Price Invested Reallowance
- ------------------ ----- -------- -----------
<S> <C> <C> <C>
Up to $49,999 4.75% 5.00% 4.00%
$50,000-$99,999 4.00% 4.17% 3.25%
$100,000-$249,999 3.75% 3.90% 3.00%
$250,000-$499,999 2.50% 2.56% 2.00%
$500,000-$999,999 2.00% 2.04% 1.50%
$1,000,000-$2,999,999 0% 0% 1.00%
$3,000,000-$3,999,999* 0% 0% .50%
</TABLE>
* Investors who purchase $4 million or more of shares will receive Class I
shares, which are not subject to any front-end sales charge or service fee. See
"Class I 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
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<PAGE>
least six months and has some purpose other than the purchase of redeemable
securities of a registered investment company at a discount.
You may benefit from a reduction of the sales charges in accordance
with the above schedule if the cumulative value (at current net asset value) of
Class A shares purchased in a single transaction, together with those Class A
shares previously purchased subject to payment of a sales charge, plus Class A
shares of SG Cowen Opportunity Fund, SG Cowen Income + Growth Fund, Inc., SG
Cowen Intermediate Fixed Income Fund and SG Cowen Government Securities Fund,
each a series of SG 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, SG Cowen Opportunity Fund, SG Cowen Income +
Growth Fund, Inc., SG Cowen Intermediate Fixed Income Fund and SG Cowen
Government Securities Fund from SG Cowen. Class A shares of the Fund, SG Cowen
Opportunity Fund, SG Cowen Income + Growth Fund, Inc., SG Cowen Intermediate
Fixed Income Fund and SG Cowen Government Securities Fund previously purchased
during a 90-day period prior to the date of receipt by FDI 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 SG 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 advised by SGCAM, 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) SG 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 SGCAM 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. SG
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 I shares. SG Cowen reserves the
right to vary these guidelines at any time.
CLASS I SHARES
The public offering price of Class I shares is the net asset value per share
next determined after a purchase order is received without imposition of any
sales charge. Class I shares were previously designated as Class C shares.
Certain dealers may refer to Class I shares as "institutional shares." Class I
shares, which are not subject to any service fee or distribution fee, are
available exclusively to (1) employee benefit plans for employees of SG 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, SCAM, SG
Cowen or any subsidiary of SG 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 SCAM or SG
Cowen relating to investment in the Fund; (6) investors, and their spouses and
minor children, who are investment advisory clients of SGCAM or any of its
subsidiaries or who are affiliated persons or sponsoring companies of those
clients; and (7) purchasers placing orders through a broker that maintains an
omnibus account with the Fund and such purchases are made (i) by investment
advisers or financial planners placing trades for their accounts or the accounts
of their clients, and who charge a fee for their services; (ii) clients of such
investment adviser or financial planner who place trades for their own accounts
if the accounts are linked to a master account of such investment adviser or
financial planner on the books and records of the broker or agent, or (iii) for
retirement and deferred compensation plans and trusts used to fund those plans,
including but not limited to those defined in Section 401 (a), 403 (b) or 457 of
the Internal Revenue Code or "rabbi" Trusts Investors who purchase pursuant to
(7) may be charged a fee by the broker or agent utilized to effect the
transaction. SG Cowen 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.
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<PAGE>
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 SG Cowen serves as a
distributor.
- - SG 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.
- - SG 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.
- - SG Cowen Intermediate Fixed Income Fund, a fund that seeks total return
consistent of current income and stability of principal by investing
primarily in high quality intermediate term fixed income securities. The
fund is a series of SG Cowen Funds, Inc.
- - SG 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 SG
Cowen Funds, Inc.
- - SG Cowen Opportunity Fund, a fund whose investment objectives is
appreciation of capital through investing primarily in equity securities of
small capitalization companies. This fund is a series of SG Cowen Funds,
Inc.
- - SG Cowen Income + Growth Fund, Inc., a fund that seeks a high level of
dividend income to the extent consistent with prudent investment management
by investing primarily in income producing equity securities. This fund is
a series of SG Cowen Series Fund, Inc.
For the purposes of this discussion, SG Cowen Standby Reserve Fund,
Inc. and SG Cowen Standby Tax-Exempt Reserve Fund, Inc. are referred to as
"money market funds" and SG Cowen Opportunity Fund, SG Cowen Intermediate Fixed
Income Fund, SG Cowen Income + Growth Fund, Inc., and SG Cowen Government
Securities Fund 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 FDI, any SG Cowen
account representative, thorough account representatives of SG 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 FDI 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.
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<PAGE>
Under the Multiple Pricing System, an exchange of shares of the Fund
with other SG 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 a share of
a non-money market fund, he may receive Class A shares, Class B shares or Class
I shares (depending on his eligibility for Class I 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 SG Cowen Intermediate Fixed Income Fund will be
exchangeable without the imposition of any additional sales charge.
CLASS B EXCHANGES. As described below under "Redemption of Shares," the
CDSC payable by Class B shareholders upon redemption of their shares will vary
with the period of time that the shares are held (the "CDSC holding period").
For purposes of calculating the CDSC holding period, any Class B shares received
in an exchange will be deemed to have been purchased on the same date as the
Class B shares given in exchange. If, however, a Class B shareholder exchanges
his shares for shares of either money market fund, which do not offer a class of
shares subject to a CDSC, such exchange will toll, or suspend, the running of
the CDSC holding period for as long as the money market fund shares are held
and, if those shares are redeemed, a CDSC will be imposed based on the CDSC
holding period without regard to the period during which the money market fund
shares were held. For example, if a holder of Class B shares of the Fund who has
held those shares for a period of more than four but less than five years
exchanges his shares for shares of a money market fund, holds those shares of
the money market fund for a period of one year, and thereafter exchanges those
shares for Class B shares of the Fund, such shareholder will be deemed to have
held the Class B shares for a period of four full years on the date of the last
exchange. If the shareholder were to then immediately redeem his Class B shares
of the Fund, such redemption would be subject to a 2.00% CDSC. Similarly, the
same CDSC would be imposed if at any time the money market fund shares 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 SG Cowen Intermediate Fixed Income Fund, holders of these shares will
not be able to exchange
20
<PAGE>
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 his
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 SG 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 SG 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 any
CDSC imposed on Class B shares. Any redemption request received prior to 4:15
p.m., New York time, will be transmitted to DST on that day and the proceeds of
such redemption will be transmitted in accordance with the investor's
instructions within seven days. Redemption requests received at or after 4:15
p.m., New York time, will be effected on the next business day. Proceeds of any
redemptions will not be sent until the check (including a certified or cashier's
check) used for investment has been cleared for payment by the investor's bank,
which may take up to 15 days. Pending such clearance, redemption proceeds will
be held 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 at a
participating securities dealer or by transmitting funds to DST by wire
transfer.
FDI, SG Cowen and other selected dealers 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 DST by the shareholder,
DST will require written redemption instructions signed by the shareholder of
record, which signature must be guaranteed by a i 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 FDI, SG Cowen or DST
with the redemption request. FDI, SG Cowen or DST 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 DST 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
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<PAGE>
will first be notified in writing that the account has a value of less than $250
and will be allowed 60 days to make an additional investment before the
redemption is processed by the Fund.
The Fund offers a Systematic Withdrawal Plan under which a shareholder
with $10,000 or more in the Fund may elect to redeem periodic payments to
himself or a designated payee on a monthly, quarterly or annual basis. For
accounts other than qualified retirement plans, the minimum rate of withdrawal
is $50 per month and the maximum monthly withdrawal is one percent of the
current account value in the Fund as of commencement of participation in the
plan. Maintenance of a Systematic Withdrawal Plan concurrently with purchases of
additional shares of the Fund may be disadvantageous to the shareholder because
of the sales 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 FDI 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:
<TABLE>
<CAPTION>
YEAR SINCE PURCHASE IN WHICH
REDEMPTION IS EFFECTED CDSC
---------------------- -----
<S> <C>
Year I .................................................... 5.00%
Year 2..................................................... 4.00%
Year 3..................................................... 3.00%
Year 4 .................................................... 3.00%
Year 5 .................................................... 2.00%
Year 6 .................................................... 1.00%
Thereafter ................................................. None
</TABLE>
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.
22
<PAGE>
For example, assume that an investor owns 100,000 shares that he purchased seven
years ago, 100,000 shares that he purchased more than four but less than five
years ago at $10 per share and 1,000 shares received in respect of reinvestment
of dividends and distributions. The shares now have a net asset value of $20 per
share. The investor may redeem the 100,000 shares he purchased seven years ago
and the 1,000 shares he acquired through reinvestments without paying a CDSC. If
the investor redeems the balance of his shares, he would pay a CDSC based on the
net asset value at the time of purchase ($ 10 per share). Thus, the investor
would pay a CDSC equal to $20,000 (100,000 shares multiplied by $10 per share
times the applicable rate of 2%).
WAIVERS OF CDSC. The CDSC, if any, will be waived in the case of ( 1)
redemptions of Class B shares held at the time a 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 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.
CODE OF ETHICS
The Fund and SGCAM have adopted a code of ethics pursuant to Rule 17j-1
under the 1940 Act with respect to their personnel with access to information
about the purchase or sale of securities by the Fund. The Fund's distributor
will adopt such a code shortly. These codes are designed to protect the
interests of Fund shareholders. While these codes contain provisions reasonably
necessary to prevent personnel subject to the codes from engaging in unlawful
conduct and require compliance review of securities transactions, they do not
prohibit such personnel from investing in securities, including securities that
may be purchased or held by the Fund so long as such investments are made
pursuant to the code's requirements.
TAXATION
The Fund has qualified, and intends to continue to qualify each year,
as a regulated investment company. As such, the Fund will not be subject to
federal income tax on its net investment income and net capital gains, if any,
provided that they distribute all such net investment income and net realized
securities gains to their shareholders in accordance with subchapter M of the
Code. Depending upon the extent to which it is, or is deemed to be, conducting
business in certain states and localities, the Fund may be subject to taxation
in such states or localities.
If for any taxable year the Fund does not qualify for the special
federal income tax treatment afforded regulated investment companies, all of its
taxable income will be subject to
23
<PAGE>
federal income tax at regular corporate rates (without any deductions for
distributions to its shareholders.) In such event, dividend distributions,
including amounts derived from interest on tax-exempt obligations, would be
taxable to shareholders to the extent of current and accumulated earnings and
profits, and would be eligible for the dividends received deductions for
corporations in case of corporate shareholders.
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 31% federal backup withholding tax on dividends, capital gains
distribution 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.
Gain or loss on the sale of a security will generally be long-term
capital gain or loss if the Fund has held the security for more than one year.
If a Fund acquires a debt security at a discount, however, the portion of any
gain upon its sale or redemption that reflects the accrued market discount will
be taxed as ordinary income, rather than capital gain.
In general, when the Fund writes a covered call option on a security,
and either the option expires unexercised or the Fund enters into a closing
purchase transaction, the Fund will normally recognize a short-term capital gain
or loss (except that any losses on certain covered call stock options will be
treated as long-term capital losses). If a call option is exercised, the premium
received will be treated as additional proceeds from the sale of the underlying
security.
Although the Fund expects to be relieved of all or substantially all
federal and state income or franchise taxes, depending upon the extent of its
activities in certain states and localities, that portion of the Fund's income
which is treated as earned in any such state or locality could be subject to
state or local tax.
PERFORMANCE INFORMATION
From time to time, the Fund may advertise its "average annual total
return" for the different Classes over various periods of time. These total
return figures show the average percentage change in value of an 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
24
<PAGE>
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 SG
Cowen account representative.
The Fund's "average annual total return" will be computed in accordance
with the following formula prescribed by the Securities and Exchange Commission:
TOTAL RETURN = P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a hypothetical $1,000 investment made
at the beginning of a 1, 5, or 10 year period at the end of the 1, 5, or 10 year
periods (or fractional portion thereof), assuming reinvestment of all dividends
and distributions.
Class A Shares/Average Annual Total Return for the periods ended November 30,
1999:
1 year = 2.95%
Since inception (January 2, 1998) = -0.63%
Class B Shares/Average Annual Total Return for the periods ended November 30,
1999:
1 year = 2.41%
Since inception (April 16, 1998) = -7.23%
Class I Shares/Average Annual Total Return for the periods ended November 30,
1999:
1 year = 8.27%
Since inception (January 30, 1998) = 3.54%
25
<PAGE>
The Class A total return figures calculated in accordance with the
above formula assumes that the maximum 4.75% sales load has been deducted from
the hypothetical $1,000 initial investment at the time of purchase. The Class B
total return figures calculated in accordance with the above formula assumes the
deduction of the appropriate contingent deferred sales charge at the end of each
period.
The ERV assumes complete redemption of the hypothetical investment at
the end of the measuring period. A Fund's net investment income changes in
response to fluctuations in interest rates and the expenses of the Fund.
OTHER INFORMATION
KPMG LLP, 757 Third Avenue, New York, New York 10017, has been selected
as the Fund's independent auditors.
Willkie Farr & Gallagher, 787 Seventh Avenue, New York, New York 10019,
serves as counsel for the Fund.
FINANCIAL STATEMENTS
The Fund hereby incorporates by reference the financial statements and
related notes and the report of KPMG LLP thereon included in the Fund's Annual
Report to Shareholders for the year ended November 30, 1999. The Fund will
provide copies of the Annual Report to each person who requests a copy of this
Statement of Additional Information. The Fund will also furnish copies of the
Annual Report, without charge, to any shareholder upon request directed to the
Fund, at the address or telephone number given on the cover page of this
Statement of Additional Information.
26
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits:
Exhibit No. Description of Exhibits
- ----------- -----------------------
(a)(1) Articles of Incorporation of Registrant(a)
(a)(2) Articles of Amendment, effective July 1, 1998(c)
(b) By-Laws of Registrant(a)
(c) Not applicable
(d) Investment Management Agreement, July 1, 1998(c)
(e) Distribution Agreement, July 1, 1998(c)
(f) Not Applicable
(g) Custody Agreement with Investors Fiduciary Trust Company(b)
(h) Not applicable
(i)(1) Opinion and consent of Venable Baetjer and Howard(b)
(i)(2) Opinion and consent of Willkie Farr & Gallagher(b)
C-1
<PAGE>
(j) Consent of Independent Auditors
(k) Not Applicable
(l) Not Applicable
(m)(1) Form of Shareholder Servicing and Distribution Plan(a)
(2) Form of Shareholder Servicing Agreement(a)
(3) Form of Distribution Related Services Agreement(a)
(n) Not Applicable
(o) Not Applicable
(p) Code of Ethics
(a) Incorporated by reference to Registrant's Statement on
Form N-1A filed on November 14, 1997
(b) Incorporate by reference to Pre-Effective No. 1 to
Registrant's Statement on Form N-1A filed on December 24, 1997
(c) Incorporated by reference to Post-Effective No. 1 to Registrant's
statement on Form N-1A filed January 26, 1999.
Item 24. NONE
Item 25. Indemnification
Reference is hereby made to Registrant's Registration Statement
filed on November 14, 1997.
Item 26. Business and Other Connections of Investment Manager;
Principal Underwriter
SG Cowen Asset Management, Inc. ("SG Cowen") serves as Investment Manager
to Registrant. SG Cowen is also the Investment Manager of SG Cowen Income +
Growth Fund, Inc. ("CI+G"), SG Cowen Standby Tax-Exempt Reserve Fund, Inc.
("CSTXRF"), SG Cowen Standby Reserve Fund, Inc. ("CSRF"), the series of stock
representing the SG Cowen Opportunity Fund ("COF"), SG Cowen Intermediate
Fixed Income Fund ("CIFIF") and SG Cowen Government Securities Fund ("CGSF")
portfolios of SG Cowen Funds, Inc. ("CFI"). Listed below are the names of all
of the Directors and Executive Officers of SG Cowen as of March 15, 2000, their
positions with SG Cowen, and under the heading "Other Business Activities and
Principal Business Addresses", any business, profession, vocation or employment
of a substantial nature (other than business of SG 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.
C-2
<PAGE>
<TABLE>
<CAPTION>
OTHER BUSINESS
NAME POSITION ACTIVITIES
---- -------- ----------
<S> <C> <C>
Collas, Philippe-Heny Chairman and Director 1/00 - Present
Chairman and CEO 9/95 - Present Societe
Generale Asset Management, S.A.
("SGAM")
Nguyen-Quang, Hoan President and Director 9/99 - Present
Officer 6/99 - 12/99 SG Cowen Securities Corporation
Officer 9/98 - 5/99 SGAM
Officer 1/96 - 8/98 Societe Generale, Paris France
Church, William Director 1/00 - Present
Managing Director 7/98 - 12/99 SG Cowen Securities Corporation
6/82 - 6/98 Cowen & Co.
D'Allest, Christian Director 1/00 - Present
Director 9/95 - Present SGAM
Hauguel, Didier Director 1/00 - Present
Officer 6/95 - Present, Societe Generale, USA.
</TABLE>
SG Cowen Asset Management, Inc.
560 Lexington Avenue
New York, New York 10020
Societe Generale Asset Management, S.A.
2 Place de la Coupole, La Defense Centex
92078 Paris, France
Societe Generale, USA
1221 Avenue of The Americas
New York, NY 10020
C-3
<PAGE>
Item 27. Principal Underwriters.
- -------- -----------------------
(a) Funds Distributor, Inc. (the "Distributor") acts as principal
underwriter for the following investment companies.
American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
The Brinson Funds
CDC MPT+Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Global Funds, Inc.
Dresdner RCM Investment Funds, Inc.
J.P. Morgan Institutional Funds
J.P. Morgan Funds
JPM Series Trust
JPM Series Trust II
LaSalle Partners Funds, Inc.
Merrimac Series
Monetta Fund, Inc.
Monetta Trust
The Montgomery Funds I
The Montgomery Funds II
The Munder Framlington Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.
National Investors Cash Management Fund, Inc.
Nomura Pacific Basin Fund, Inc.
Orbitex Group of Funds
The Saratoga Advantage Trust
SG Cowen Funds, Inc.
SG Cowen Income + Growth Fund, Inc.
C-4
<PAGE>
SG Cowen Standby Reserve Fund, Inc.
SG Cowen Standby Tax-Exempt Reserve Fund, Inc.
SG Cowen Series Funds, Inc.
The Skyline Funds
St. Clair Funds, Inc.
TD Waterhouse Trust
Waterhouse Investors Family of Funds, Inc.
WEBS Index Fund, Inc.
Funds Distributor is registered with the Securities and Exchange
Commission as a broker-dealer and is a member of the National Association of
Securities Dealers. Funds Distributor is located at 60 State Street, Suite
1300, Boston, Massachusetts 02109. Funds Distributor is an indirect
wholly-owned subsidiary of Boston Institutional Group, Inc., a holding
company all of whose outstanding shares are owned by key employees.
(b) The following is a list of the executive officers, directors and
partners of Funds Distributor, Inc.
<TABLE>
<S> <C>
Director, President and Chief - Marie E. Connolly
Executive Officer
Executive Vice President - George A. Rio
Executive Vice President - Donald R. Roberson
Executive Vice President - William S. Nichols
Senior Vice President, General - Margaret W. Chambers
Counsel, Chief Compliance Officer,
Secretary and Clerk
Director, Senior Vice President, - Joseph F. Tower, III
and Treasurer
Senior Vice President - Paula R. David
Senior Vice President - Gary S. MacDonald
Senior Vice President - Judith K. Benson
Chairman and Director - William J. Nutt
Vice President and Chief Financial - William J. Stetter
Officer
</TABLE>
(c) Not applicable.
C-5
<PAGE>
Item 28. Location of Accounts and Records
(1) SG Cowen Series Funds, Inc.
560 Lexington Avenue
New York, New York 10022
(2) State Street Bank and Trust Company
127 West 10th Street
Kansas City, Missouri 64105
Item 29. Management Service
Not applicable.
Item 30. Undertakings
Not applicable.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of the registration statement under
Rule 485(b) under the Securities Act and has duly caused this Amendment 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 22nd day of March, 2000.
SG COWEN SERIES FUNDS, INC.
by Rodd M. Baxter,
Attorney-in-Fact
----------------
Philippe H. Collas, Chairman
Pursuant to the requirements of the Securities Act, this registration
statement has been signed below by the following persons in the capacities
and on the date(s) indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
by Rodd M. Baxter,
Attorney-in-Fact
------------------
Philipp H. Collas Chairman and Director March 22, 2000
(Chief Executive Officer)
by Rodd M. Baxter,
Attorney-in Fact
------------------
Philip J. Bafundo Treasurer (Chief March 22, 2000
Financial and Accounting
Officer)
by Rodd M. Baxter,
Attorney-in Fact
------------------
James H. Carey Director March 22, 2000
by Rodd M. Baxter,
Attorney-in Fact
------------------
Martin J. Gruber Director March 22, 2000
by Rodd M. Baxter,
Attorney-in Fact
------------------
Burton J. Weiss Director March 22, 2000
</TABLE>
C-7
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits
99(j) Consent of Independent Auditors
99(p) Code of Ethics
<PAGE>
INDEPENDENT AUDITORS' CONSENT
To the Shareholders and Board of Directors of
SG Cowen Large Cap Value Fund:
We consent to the incorporation by reference, in the Prospectus and Statement of
Additional Information, of our report dated January 14, 2000, on the statement
of assets and liabilities for the SG Cowen Large Cap Value Fund, Inc. (the Fund)
as of November 30, 1999 and the related statement of operations, the statement
of changes in net assets and the financial highlights for the year then ended.
These financial statements and financial highlights and our report thereon are
included in the Annual Report of the Fund as filed on Form N-30D.
We also consent to the references to our firm under the headings "Financial
Highlights" in the Prospectus and "Other Information" and "Financial Statements"
in the Statement of Additional Information.
KPMG LLP
New York, New York
March 22, 2000
<PAGE>
SG COWEN ASSET MANAGEMENT, INC.
CODE OF ETHICS
The following standards and procedures shall govern the personal investing
activities of SG Cowen Asset Management, Inc. personnel ("SGCAM"):
This Code of Ethics is based on the following principles: (1) the duty at all
times to place the interest of investment advisory clients or investment company
shareholders first; (2) that all personal securities transactions be conducted
consistent with the Code and in such a manner as to avoid any actual or
potential conflict of interest or any abuse of an individual's position of trust
and responsibility; and (3) that personnel should not take inappropriate
advantage of their positions.
I. ACCESS PERSONS
Access persons includes all SGCAM personnel. A list of access persons
as of March 1, 2000 is attached. In addition to applying to an employee's
personal account, this Code of Ethics will apply to the following accounts with
respect to an employee: (i) accounts of an employee's spouse (including IRA and
Keogh accounts), (ii) accounts of an employee's children and children's spouses
provided that such persons live in the employee's home or are financially
dependent upon the employee, (iii) accounts of any other relative who lives in
the employees home or over whose account the employee has control, (iv) accounts
of a trust of which the employee is a trustee or the beneficiary or as to which
the employee otherwise could be expected to control or influence and (v)
accounts of a partnership or corporation whose accounts the employee could be
expected to control.
II. POLICIES AND RESTRICTIONS
A. INITIAL PUBLIC OFFERINGS - Access persons are prohibited from
acquiring any securities in an initial public offering, in order to preclude any
possibility of their profiting improperly from their positions on behalf of any
investment advisory account.
B. PRIVATE PLACEMENTS - Prior approval of any acquisitions of securities by
access persons in a private placement is required. This prior approval will take
into account, among other factors, whether the investment opportunity should be
reserved for an investment advisory account and whether the opportunity is being
offered to an individual by virtue of his or her position with the investment
advisor; (2) access persons who have been authorized to acquire securities in a
private placement must disclose that investment when they play a part in any
subsequent consideration of any investment in the issuer; (3) in such
circumstances, the investment advisory account's decisions to purchase
securities of the issuer will be subject to an independent review by investment
personnel with no personal interest in the issuer.
<PAGE>
C. BLACKOUT PERIODS - an access person is prohibited from executing a
personal securities transaction on a day during which any investment advisory
account has a pending "buy" or "sell" order in that same security until that
order is executed or withdrawn. Any profits realized on trades within the
prescribed period must be disgorged.
D. GIFTS - access persons are prohibited from receiving any gift or
other thing of more than de minimis value from any person or entity that does
business with or on behalf of investment advisory accounts.
E SERVICE AS A DIRECTOR - prior authorization is required for access
persons to serve on the boards of directors of publicly traded companies.
III. COMPLIANCE PROCEDURES
A. PRE-CLEARANCE - All personnel securities transactions by access
persons must be effected through a SG Cowen Securities Corporation ("SG Cowen")
registered representative, the SG Cowen employee trading desk or the Qualified
Brokers listed in the attachments. Access persons are responsible for obtaining
pre-clearance authorization of each transaction. Pre-clearance is not required
for transactions in mutual funds, government securities, money market
instruments and index options.
William Romer will review and approve all transactions prior to their
execution. In his absence, pre-clearance authorization can be given by either
William Church, Philip Bafundo or Rodd Baxter. These people cannot pre-clear
their own transactions.
B. RECORDS OF PRE-CLEARANCE AND SECURITIES TRANSACTIONS - Pre-clearance
authorizations and duplicate copies of confirmations of all personal securities
transactions and copies of periodic statements for all securities accounts
should be sent to SG Cowen's Legal Department at 1221 Avenue of the Americas,
8th Floor, New York, NY 10020, Attention of Cathy Smith-Iadicicco.
C. POST-TRADE MONITORING - SG Cowen's legal department will monitor all
personal investment activity by reviewing confirmations and statements.
D. DISCLOSURE OF PERSONAL HOLDINGS - All access persons employed after
March 1, 2000 must disclose to SG Cowen's legal department all personal holdings
upon commencement of their employment. All current access persons must submit
their personal holdings by January 1, 2001. Thereafter all access persons must
submit their personal holdings on an annual basis.
E. CERTIFICATION OF COMPLIANCE - All access persons shall certify annually to SG
Cowen's Legal Department that they have read and understand the Code of Ethics
and recognize that they are subject thereto.
<PAGE>
SG COWEN ASSET MANAGEMENT, INC.
CODE OF ETHICS
CERTIFICATION FORM
I, _________________________________(print name), hereby certify that I have
read and understand the SG Cowen Asset Management, Inc. Code of Ethics and
understand that I am subject to its terms and conditions.
--------------------------------
Signature
Date:
----------
<PAGE>
SG COWEN ASSET MANAGEMENT
PERSONAL SECURITIES TRANSACTION AUTHORIZATION FORM
EMPLOYEE NAME: ____________________________________________
SECURITY: ____________________________________________
CIRCLE ONE: PURCHASE OR SALE
AUTHORIZED BY: ____________________________________________
DATE: ____________________________________________
