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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SG COWEN STANDBY RESERVE FUND, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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CHAIRMAN'S LETTER
August 5, 1998
Dear SG Cowen Funds Shareholder:
A combined Special Meeting of Shareholders (the "Meeting") of all seven SG Cowen
Funds will be held on September 17, 1998 to consider primarily the approval of
new investment advisory agreements between each of the Funds and SG Cowen
Securities Corporation. Shareholders of record as of July 21, 1998 will be
eligible to vote at the Meeting.
Approval of these new advisory agreements is required as a result of Societe
Generale's acquisition of Cowen & Company ("Cowen"), the former investment
adviser to the Funds, which included Cowen's prior investment advisory
agreements. Cowen's asset management business has been transferred to SG Cowen
Securities Corporation ("SG Cowen"), a subsidiary of Societe Generale. SG Cowen
has acted as the new investment adviser to the Funds since the acquisition and
will continue to serve in this capacity if the new advisory agreements are
approved by each Fund's shareholders.
You should be aware of the following:
- - Advisory fee rates charged to the Funds under the new advisory agreements
will be identical to the fees charged under the prior advisory agreements.
- - SG Cowen has agreed to manage the Funds in strict accordance with each
Fund's investment objective, policies and restrictions as set forth in
their respective prospectuses and statements of additional information.
- - The Board of Directors of each Fund recommends that shareholders vote
"FOR" approval of the new advisory agreements.
- - Not voting your proxy will have the same effect as a vote "AGAINST" the
approval of the new advisory agreements.
Please sign and mail the enclosed proxy cards as soon as possible. If you are a
shareholder of more than one SG Cowen Fund, please sign and mail an enclosed
proxy card for each of those Funds. If you have questions about the new advisory
agreements or about voting your shares, please contact our proxy solicitor,
MacKenzie Partners, Inc. toll-free at (800) 322-2885.
On behalf of the Boards of Directors of each Fund,
Sincerely,
/ sig cut /
Joseph M. Cohen
Chairman
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SG COWEN INCOME + GROWTH FUND, INC.
SG COWEN STANDBY RESERVE FUND, INC.
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
SG COWEN LARGE CAP VALUE FUND (of SG Cowen Series Funds, Inc.)
SG COWEN INTERMEDIATE FIXED INCOME FUND (of SG Cowen Funds, Inc.)
SG COWEN GOVERNMENT SECURITIES FUND (of SG Cowen Funds, Inc.)
SG COWEN OPPORTUNITY FUND (of SG Cowen Funds, Inc.)
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Notice Of The Combined Special Meeting Of Shareholders ^
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To Be Held September 17, 1998
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The combined special meeting of shareholders of each of the funds or
series of a fund listed above (each a "Fund," and collectively, the "Funds")
will be held at the offices of the Funds, Financial Square, New York, New York
10005 on September 17, 1998 commencing at 11:00 a.m. (the "Special Meeting").
The Special Meeting is being held to consider and vote on the following matters
for each Fund, as indicated in the table below and more fully described under
the corresponding Proposals in the accompanying joint proxy statement, and such
other matters as may properly come before the meetings or any adjournments
thereof:
PROPOSAL I: To consider the approval of new investment advisory
agreements between each of the Funds and SG Cowen
Securities Corporation
PROPOSAL II: To consider the ratification of the selection of Ernst
& Young LLP as independent public accountants for the
Funds
The close of business on July 21, 1998 has been fixed as the record
date for the determination of the shareholders of each Fund entitled to notice
of, and to vote at, the Special Meeting. You are cordially invited to attend the
Special Meeting.
This notice and related proxy material are first being mailed to
shareholders on or about August ^ 5, 1998. This proxy is being solicited on
behalf of the Board of Directors of each Fund.
By Order of the Board of Directors of each Fund,
Rodd M. Baxter
^ Secretary
New York, N.Y.
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August 5, 1998
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WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED VOTER INSTRUCTION CARD AND MAIL IT PROMPTLY IN THE
ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE
NEED BE AFFIXED IF THE VOTER INSTRUCTION CARD IS MAILED IN THE UNITED STATES.
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^ SG COWEN INCOME + GROWTH FUND, INC.
SG COWEN STANDBY RESERVE FUND, INC.
SG COWEN STANDBY TAX-EXEMPT RESERVE FUND, INC.
SG COWEN LARGE CAP VALUE FUND (of SG Cowen Series Funds, Inc.)
SG COWEN INTERMEDIATE FIXED INCOME FUND (of SG Cowen Funds, Inc.)
SG COWEN GOVERNMENT SECURITIES FUND (of SG Cowen Funds, Inc.)
SG COWEN OPPORTUNITY FUND (of SG Cowen Funds, Inc.)
Financial Square
New York, New York 10005
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JOINT PROXY STATEMENT FOR THE COMBINED
SPECIAL MEETING OF SHAREHOLDERS
To Be Held September 17, 1998
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This joint proxy statement ("Joint Proxy Statement") is being furnished
in connection with the solicitation of proxies by the Board of Directors (each a
"Board" and collectively the "Boards") of SG Cowen Income + Growth Fund, Inc.
(the "Income + Growth Fund"), SG Cowen Standby Reserve Fund, Inc. (the "Standby
Fund"), SG Cowen Standby Tax-Exempt Reserve Fund, Inc. (the "Tax-Exempt Fund"),
SG Cowen Large Cap Value Fund (the "Large Cap Fund) (a separate series of SG
Cowen Series Funds, Inc.), SG Cowen Intermediate Fixed Income Fund (the "Income
Fund"), SG Cowen Government Securities Fund (the "Government Fund") and SG Cowen
Opportunity Fund (the "Opportunity Fund") (the latter three Funds each being a
separate series of SG Cowen Funds, Inc.) (each a "Fund," and collectively, the
"Funds") for use at the combined special meeting of the respective shareholders
of each Fund to be held at the offices of the Funds, Financial Square, New York,
New York 10005 on September 17, 1998, at 11:00 a.m. (the "Special Meeting") and
at any adjournments of the Special Meeting. This Joint Proxy Statement ^,
accompanying proxy card or cards ("Proxy") ^, and voting by telephone
instructions are expected to be mailed to shareholders on or about August ^ 5,
1998.
The Special Meeting is being held to consider and vote on the following
matters for each Fund, as indicated in the table below and described more fully
under the corresponding Proposals discussed herein, and such other matters as
may properly come before the meetings or any adjournments thereof:
PROPOSAL I: To consider the approval of new investment advisory agreements
between each of the Funds and SG Cowen Securities Corporation
PROPOSAL II: To consider the ratification of the selection of Ernst &
Young LLP as independent public accountants for the Funds
A Notice of the Special Meeting of shareholders and Proxy accompany
this Joint Proxy Statement. Proxy solicitations will be made primarily by mail,
but solicitations may also be made by telephone, telegraph or in person by
officers or agents of the Funds. All costs of solicitation, including (a)
printing and mailing of this Joint Proxy Statement and accompanying material,
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(b) the reimbursement of brokerage firms and others for their expenses in
forwarding solicitation material to the beneficial owners of the Funds' shares,
(c) payment of MacKenzie Partners, Inc. for its services in soliciting Proxies
(approximately $35,000), and (d) supplementary solicitations to submit Proxies,
will be borne by SG Cowen Securities Corporation.
The Annual Report of each Fund containing audited financial statements
for the fiscal year ended September 30, 1997 (the Standby Fund and the
Tax-Exempt Fund only) or November 30, 1997 (all other Funds) and the Semi-Annual
Report of each Fund (collectively, the "Reports") have previously been furnished
to the shareholders of the respective Funds. An additional copy of each Report
will be furnished without charge upon request by writing to the Funds at the
address set forth on the cover of this Joint Proxy Statement or by calling
1-800-262-7116.
If the enclosed Proxy is properly executed and returned in time to be
voted at the Special Meeting, the shares represented thereby will be voted in
accordance with the instructions marked on the Proxy. If no instructions are
marked on the Proxy with respect to a specific Proposal, the Proxy will be voted
"FOR" the approval of such Proposal and in accordance with the judgment of the
persons appointed as proxies upon any other matter that may properly come before
the Special Meeting. Any shareholder giving a Proxy has the right to attend the
Special Meeting to vote his or her shares in person (thereby revoking any prior
Proxy) and also the right to revoke the Proxy at any time by written notice
received by the applicable Fund prior to the time it is voted.
In the event that a quorum is present at the Special Meeting with
respect to a Fund but sufficient votes to approve the Proposal are not received,
the persons named as proxies may propose one or more adjournments of the Special
Meeting to permit further solicitation of Proxies. Any such adjournment will
require the affirmative vote of a majority of those shares represented at the
Special Meeting in person or by Proxy. If a quorum is present, the persons named
as proxies will vote those Proxies that they are entitled to vote "FOR" any
Proposal in favor of an adjournment and will vote those Proxies required to be
voted "AGAINST" any such Proposal against any adjournment. A shareholder vote
may be taken on one or more of the Proposals in the Joint Proxy Statement prior
to any adjournment if sufficient votes have been received and it is otherwise
appropriate. A quorum of shareholders is constituted by the presence in person
or by Proxy of the holders of a majority of the outstanding shares of a Fund
entitled to vote at the Special Meeting. For purposes of determining the
presence of a quorum for transacting business at the Special Meeting,
abstentions and broker "non-votes" (that is, Proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other persons entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be treated as shares that are present but which have not been voted.
Shareholders of record at the close of business on July 21, 1998 (the
"Record Date") are entitled to notice of, and to vote at, the Special Meeting.
As of the Record Date, the following number of shares of each Fund were issued
and outstanding:
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Shares
Income + Growth Fund.................................... 4,816,465 ^
Standby Fund............................................ 1,486,119,560 ^
Tax-Exempt Fund ........................................ 194,060,532 ^
Large Cap Fund.......................................... 1,479,245 ^
Income Fund............................................. 1,006,095 ^
Government Fund......................................... 186,715 ^
Opportunity Fund........................................ 6,400,770 ^
Information regarding the beneficial ownership of the Funds' shares, as of July
21, 1998, by the only persons known by each Fund to beneficially own more than
five percent of the outstanding shares of the Fund is set forth in Schedule A to
this Joint Proxy Statement. The officers and directors collectively own less
than 1% of each Fund's outstanding shares.
This Joint Proxy Statement is being used in order to reduce the
preparation, printing, handling and postage expenses that would result from the
use of a separate statement for each Fund and, because shareholders may own
shares of more than one Fund, to avoid burdening shareholders with more than one
proxy statement. Shares of a Fund are entitled to one vote each at the Special
Meeting and fractional shares are entitled to proportionate shares of one vote.
To the extent information relating to common ownership is available to the
Funds, a shareholder that owns of record shares in two or more of the Funds will
receive a package containing a Joint Proxy Statement and Proxies for the Funds
in which such shareholder is a record owner. If the information relating to
common ownership is not available to the Funds, a shareholder that beneficially
owns shares in two or more Funds may receive two or more packages each
containing a Joint Proxy Statement and a Proxy for each Fund in which such
shareholder is a beneficial owner. Thus, if a Proposal is approved by
shareholders of one Fund and disapproved by shareholders of other Funds, the
Proposal will be implemented for the Fund that approved the Proposal and will
not be implemented for any Fund that did not approve the Proposal. Therefore, it
is essential that shareholders complete, date, sign and return each enclosed
Proxy.
In order that your shares may be represented, you are requested to:
- indicate your instructions on the Proxy or Proxies;
- date and sign
- the Proxy or Proxies; mail the Proxy or Proxies promptly in the
enclosed envelope; and
- allow sufficient time for the Proxy or Proxies to be received
before the commencement of the Special Meeting on September 17,
1998.
PROPOSAL I:^ APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENTS
BETWEEN EACH OF THE FUNDS AND THE "NEW ADVISER"
Background
The Funds. Each of the Income + Growth Fund, the Standby Fund, the
Tax-Exempt Fund, SG Cowen Series Funds, Inc. and SG Cowen Funds, Inc. is a
registered management investment company organized under the laws of the
State of Maryland. The Large Cap Value Fund is a separate series of SG Cowen
Series Funds, Inc. and the Income Fund, the Government Fund and the
Opportunity Fund are each separate series of SG Cowen Funds, Inc. SG Cowen
Securities Corporation, located at Financial Square, New York, N.Y. 10005,
serves as the current investment adviser of each Fund. Funds ^ Distributor,
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Inc., located at 60 State Street, Suite 1300, Boston, MA 02109, serves as each
Fund's principal underwriter. For the fiscal year ended November 30, 1997, the
Opportunity Fund paid $245 in commissions to Cowen & Company, an "affiliated
broker" of the Fund (as defined in Schedule 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")). Such amount constituted .03% of
the Fund's aggregate commissions paid for that year.
The Prior Advisory Agreements. Prior to July 1, 1998, Cowen & Company
(the "Prior Adviser"), through its asset management division, Cowen Asset
Management, served as investment adviser to each of the Funds pursuant to
separate investment advisory agreements with the Funds (the "Prior Advisory
Agreements"). The Prior Advisory Agreements with respect to the Opportunity
Fund, dated May 9, 1994, and the Government Fund and the Income Fund, each dated
July 11, 1994, were initially approved by the applicable Fund's Board, including
a majority of the directors who are not "interested persons" of the Fund (as
defined under the Investment Company Act of 1940, as amended (the "1940 Act"))
(the "Independent Directors"), on February 3, 1994, and were last renewed by
vote of the Board on November 13, 1997. The Prior Advisory Agreements with
respect to the Income + Growth Fund and the Tax-Exempt Fund, each dated March
29, 1991, were initially approved by the applicable Fund's Board, including a
majority of the Independent Directors, on November 15, 1990, and were last
renewed by vote of the Board on November 13, 1997. The Prior Advisory Agreement
with respect to the Large Cap Fund, dated November 14, 1997, was initially
approved by the Fund's Board, including a majority of the Independent Directors,
on November 13, 1997. The Prior Advisory Agreement with respect to the Standby
Fund, dated June 1, 1998, was initially approved by the Fund's Board, including
a majority of the Independent Directors, with a reduced advisory fee structure
on May 21, 1998. The Prior Advisory Agreements for the Income + Growth Fund, the
Income Fund, the Government Fund and the Opportunity Fund were last submitted
for approval by the respective shareholders of the Funds on April 19, 1994.
For the fiscal year ended November 30, 1997, the Income + Growth Fund
and the Opportunity Fund paid the Prior Adviser $509,586 and $981,026,
respectively, for services rendered pursuant to the applicable Prior Advisory
Agreements. For the fiscal year ended September 30, 1997, the Standby Fund and
the Tax-Exempt Fund paid the Prior Adviser $6,144,043 and ^ $724,399,
respectively, for services rendered pursuant to the applicable Prior Advisory
Agreements. The Prior Adviser waived all investment advisory fees payable by the
Income Fund and the Government Fund for services rendered pursuant to the
applicable Prior Advisory Agreements for the fiscal year ended November 30,
1997.
The Acquisition. On July 1, 1998, pursuant to an Acquisition Agreement
totaling $540 million, dated as of February 22, 1998, by and among the Prior
Adviser and Cowen Incorporated, the general partner of the Prior Adviser
(collectively, "Cowen"), and Societe Generale, a banking corporation organized
under the laws of France ("SG"), SG purchased certain assets, including the
Prior Advisory Agreements, and assumed certain liabilities of Cowen (the
"Acquisition"). Under the terms of the Acquisition, the Prior Adviser's business
was transferred to Societe Generale Securities Corporation ("SGSC"), a
subsidiary of SG, and SGSC was renamed SG Cowen Securities Corporation (the "New
Adviser").
Impact of the Acquisition on the Prior Advisory Agreements. Section
15(a) of the 1940 Act provides, in pertinent part, that "[i]t shall be unlawful
for any person to serve or act as investment adviser of a registered investment
company, except pursuant to a written contract, which contract, whether with
such registered company or with an investment adviser of such registered
company, has been approved by the vote of a majority of the outstanding voting
securities of such registered company . . . ." Section 15(a)(4) of the 1940 Act
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further requires that such written contract provide for automatic termination in
the event of its assignment. Section 2(a)(4) of the 1940 Act defines
"assignment" to include any direct or indirect transfer of a contract by the
assignor.
As discussed above, under the terms of the Acquisition, Cowen
transferred certain of its assets, including the Prior Advisory Agreements, to
SG. As such, the Acquisition resulted in an "assignment" of the Prior Advisory
Agreements within the meaning of Section 2(a)(4) of the 1940 Act, terminating
such agreements according to their respective terms and the 1940 Act as of July
1, 1998.
On June 16, 1998, Cowen & Company and SGSC were granted an exemptive
order (the "Exemptive Order") by the Securities and Exchange Commission pursuant
to which new investment advisory agreements between each of the Funds and the
New Adviser (the "New Advisory Agreements") were 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 each of the New Advisory
Agreements are approved or disapproved by the respective shareholders of each
Fund. Under the terms of the Exemptive Order, the New Adviser was allowed to
receive advisory fees pursuant to the New Advisory Agreements, provided that
such fees would be held in escrow pending shareholder approval of the New
Advisory Agreements. In accordance with the Exemptive Order, the advisory fees
paid by the Funds to the New Adviser under the New Advisory Agreements have been
held in escrow, and the Funds expect to continue to deposit such fees in escrow
until approval of the New Advisory Agreements by the respective shareholders of
the Funds has been obtained.
Shareholders of the Funds are not being asked to approve or disapprove
the Acquisition; rather, they are being asked under this Proposal to approve and
continue the New Advisory Agreements for the Funds. Other than identification of
the New Adviser, and the execution and termination dates of the agreements, the
New Advisory Agreements (which have been in effect since July 1, 1998) are
identical in ^ all material respects to the Prior Advisory Agreements. The
advisory fee rate charged to the Funds under the Prior Advisory Agreements have
continued to apply under the New Advisory Agreements. In addition, the Funds can
expect to continue to receive the same level of services under the New Advisory
Agreements as they received under the Prior Advisory Agreements. The New Adviser
does not anticipate any changes, nor have there been any changes, in the
investment management personnel who currently provide investment advisory
services to the Funds under the New Advisory Agreements as compared to the
personnel who provided investment advisory services to the Funds under the Prior
Advisory Agreements.
The New Advisory Agreements
Each of the New Advisory Agreements, a form of which is attached to
this Joint Proxy Statement as Exhibit A, became effective as of July 1, 1998,
the date of the consummation of the Acquisition. If shareholders approve the New
Advisory Agreements, each of the agreements will remain in effect for an initial
term of two years from its effective date (unless sooner terminated), and
thereafter shall continue in effect so long as its continuance is specifically
approved at least annually by (i) the Board of the applicable Fund or (ii) a
vote of a majority of the applicable Fund's outstanding voting securities,
provided that in either event the continuance is also approved by a majority of
the Board who are not "interested persons" (as defined in the 1940 Act) of any
party to the agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. All of the terms and provisions of the New
Advisory Agreements, other than identification of the New Adviser, the effective
date and termination date, are the same as those of the Prior Advisory
Agreements.
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Under the terms of the New Advisory Agreements, as under the Prior
Advisory Agreements, the New Adviser has agreed to furnish the Funds with
investment advisory services in connection with a continuous investment program
for the Funds, which is to be managed in accordance with the investment
objective, policies and restrictions of the Funds as set forth in each Fund's
respective Prospectus and Statement of Additional Information and in accordance
with each Fund's respective Articles of Incorporation and By-laws. Subject to
the supervision and control of the Boards, the New Adviser has agreed to (a) act
in strict conformity with the Funds' Articles of Incorporation and By-laws, the
1940 Act and the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), (b) manage the portfolio of the Funds in accordance with the Funds'
investment objectives, policies and restrictions, as stated in the Funds'
Prospectuses and Statements of Additional Information as amended from time to
time, (c) make general investment decisions for the Funds, including decisions
concerning (i) the specific types of securities to be held by the Funds and the
proportion of the Funds' assets that should be allocated to such investments
during particular market cycles and (ii) the specific issuers whose securities
will be purchased or sold by the Funds, and (d) supply administrative, clerical
and professional support and general assistance in all aspects of the Funds'
operations. In providing these services, the New Adviser will supervise the
Funds' investments generally and conduct a continual program of evaluation of
the Funds' assets. Under the New Advisory Agreements, as under the Prior
Advisory Agreements, the New Adviser will keep the Funds informed of
developments materially affecting the Funds' investments, and will, on its own
initiative, furnish the Funds from time to time with whatever information the
New Adviser believes is appropriate for this purpose.
The advisory fee rate charged to the Funds under the New Advisory
Agreements is identical to the advisory fee rate charged under the Prior
Advisory Agreements. Under the New Advisory Agreements, the New Adviser is paid
a monthly fee, calculated daily, at the annual rates set forth below:
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Fund Rate
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The Income + Growth Fund .75 of 1.00%
The Standby Fund .50 of 1.00% of assets not in
excess of $1.5 billion; .475 of
1.00% of assets over $1.5 billion
but not in excess of $2.5 billion;
and .45 of 1.00% of assets over
$2.5 billion
The Tax-Exempt Fund .50 of 1.00%
The Large Cap Fund .75 of 1.00%
The Income Fund .50 of 1.00%
The Government Fund .60 of 1.00%
The Opportunity Fund .90 of 1.00%
Under the New Advisory Agreements, the New Adviser shall exercise its
best judgment in rendering its advisory services. The New Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Funds in connection with the matters to which the New Advisory Agreements
relate, provided that nothing therein shall be deemed to protect or purport to
protect the New Adviser against any liability to the Funds or to its
shareholders to which the New Adviser could otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence on its part in the
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performance of its duties or by reason of the New Adviser's reckless disregard
of its obligations and duties under the New Advisory Agreements.
If approved, each New Advisory Agreement will remain in effect for an
initial two year term (unless sooner terminated), and thereafter shall continue
in effect so long as its continuance is specifically approved at least annually
by (i) the Board of the applicable Fund or (ii) a vote of a majority of the
applicable Fund's outstanding voting securities, provided that in either event
the continuance is also approved by a majority of the Board who are not
"interested persons" (as defined in the 1940 Act) of any party to the agreement,
by vote cast in person at a meeting called for the purpose of voting on such
approval. Like the Prior Advisory Agreements, each New Advisory Agreement will
terminate upon assignment by any party and is terminable, without penalty, on 60
days' written notice by the Board or by a "majority" vote of the shareholders of
the Fund (as defined in the 1940 Act) or upon 90 days' written notice by the New
Adviser.
The New Adviser now acts and will continue to act as investment adviser
to fiduciary and other managed accounts and as investment manager, investment
adviser, sub-investment adviser and/or administrator to one or more other
investment companies, and the Funds have no objection to the New Adviser so
acting. In addition, the New Adviser is obligated to pay certain expenses
associated with providing the services contemplated by the New Advisory
Agreements. The Funds bear certain other expenses including compensation of, and
office space for, its officers and employees and the fees of the Boards. The
Funds pay any extraordinary expenses incurred.
The New Adviser
The New Adviser, a corporation organized under the laws of the State of
New York, is an investment adviser registered under the Advisers Act, a
broker-dealer registered under the Exchange Act and a member of several U.S.
stock exchanges, the National Association of Securities Dealers, Inc. and the
Securities Investors Protection Corporation. The New Adviser is a wholly-owned
subsidiary of SG which is located at Tour Societe Generale, 17 Cours Valmy,
92972 Paris - La Defense, France. SG, an international banking corporation
organized under the laws of France, is among the largest banks in the world with
offices in over 80 countries. SG also operates a separate investment management
subsidiary in the U.S. (Societe Generale Asset Management Corp., located at 1221
Avenue of the Americas, New York, New York 10020) which advises the SoGen
International Fund, Inc. and the SoGen Funds, Inc. SG has no present intention
to merge the investment management business of Societe Generale Asset Management
Corp. with that of the New Adviser. The New Adviser serves as the U.S.
investment banking and securities underwriting, dealing and brokerage arm of SG,
and provides full-service execution, clearing, deal structuring and
administrative services for its customer base, which is widely distributed
across Europe and the United States. The New Adviser is involved in a broad
range of financial services, including corporate underwriting and strategic
advisory services, institutional sales and trading coverage, industry research
and asset management.
The names, titles and principal occupations of the current directors
and executive officers of the New Adviser are set forth below. Except as
indicated, the business address of the individuals and entities named below is
Financial Square, New York, N.Y. 10005.
Mr. Joseph M. Cohen is a Director and Chairman of the Board of the
New Adviser. Mr. Cohen's principal occupation is to serve as the Chairman of
the Board of the New Adviser.
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Mr. Curtis Welling is the Chief Executive Officer and President
of the New Adviser. Mr. Welling's principal occupation is to serve as the
Chief Executive Officer and President of the New Adviser.
Mr. James Kelly is the Chief Operating Officer of the New Adviser.
Mr. Kelly's principal occupation is to serve as the Chief Operating Officer
of the New Adviser.
Mr. Ray Moran is the Senior Managing Director of the New Adviser.
Mr. Moran's principal occupation is to serve as the Senior Managing Director
of the New Adviser.
Mr. James M. Walsh is a Director of the New Adviser. Mr. Walsh's
principal occupation is to serve as the Head of the Private Client and
Industry Services Group of the New Adviser.
Mr. Jacques Bouhet is a Director of the New Adviser. Mr. Bouhet's
principal occupation is to serve as the Deputy Chief Executive Officer,
International & Finance Division and a member of the Management Committee of
SG.
Mr. Jean-Bernard Guillebert is a Director of the New Adviser.
Mr. Guillebert's principal occupation is to serve as the Counselor to the
President of SG.
Mr. Jean Huet is a Director of the New Adviser. Mr. Huet's
principal occupation is to serve as the Chief Executive Officer of SG Americas
and a member of the Management Committee of SG.
Mr. Alain Joyet is a Director of the New Adviser. Mr. Joyet's
principal occupation is to serve as President of SG (Canada) Montreal.
Mr. Gerald Lacaze is a Director of the New Adviser. Mr. Lacaze's
principal occupation is to serve as a Deputy Director of SG.
Mr. Robert Le Roux is a Director of the New Adviser. Mr. Le Roux's
principal occupation is to serve as a Director of SG.
Mr. Jean-Paul Oudet is a Director of the New Adviser. Mr. Oudet's
principal occupation is to serve as a Director of SG and a member of the
Management Committee of SG.
Mr. Yves Tuloup is a Director of the New Adviser. Mr. Tuloup's
principal occupation is to serve as the Chief Executive Officer of the
International & Finance Division of SG and a member of the Management Committee
of SG.
The officers and directors of each Fund, other than James H. Carey,
Peter P. ^ Gil, Martin J. Gruber and Burton J. Weiss, are either officers,
directors or employees of the New Adviser.
Prior to the Acquisition, Joseph M. Cohen, a Director of each Fund, was
Chairman of the Board of Directors and a principal shareholder of Cowen, and a
limited partner of Cowen & Company. Creighton H. Peet and Gerald Kaminsky, who
until May 20, 1998 were Directors of the Cowen Standby Reserve Fund, Inc. and
the Cowen Standby Tax-Exempt Reserve Fund, Inc. (now, the "Standby Fund" and the
"Tax Exempt Fund," respectively), were shareholders of Cowen and limited
partners of Cowen & Company prior to the Acquisition.
-8-
<PAGE>
Section 15(f) of the 1940 Act
Section 15 of the 1940 Act provides that when a change of control of an
investment adviser to an investment company occurs, the investment adviser or
any of its affiliated persons may receive an amount or benefit in connection
therewith as long as two conditions are satisfied.
First, no "unfair burden" may be imposed on the Funds as a result of
the transaction relating to the change of control, or any express or implied
terms, conditions or understandings applicable thereto. As defined in the 1940
Act, the term "unfair burden" includes any arrangement during the two year
period after the change in control whereby the New Adviser (or predecessor or
successor adviser), or any "interested person" (as defined in the 1940 Act) of
the New Adviser, receives or is entitled to receive any compensation, directly
or indirectly, from the Funds or their respective shareholders (other than fees
for bona fide investment advisory or other services), or from any person in
connection with the purchase or sale or other property to, or on behalf of the
Funds (other than fees for bona fide brokerage and principal underwriting
services). The ^ New Adviser has advised the Boards that it is not aware of any
circumstances arising from the Acquisition that might result in an unfair burden
being imposed on the Funds.
The second condition is that, during the three year period immediately
following the Acquisition, at least 75% of the members of the Boards of the
Funds must not be "interested persons" (as defined in the 1940 Act) of the New
Adviser (after the Acquisition) or the Prior Adviser within the meaning of the
1940 Act. Since the Acquisition, 75% of the directors of the Funds are not
"interested persons" of the New Adviser or the Prior Adviser.
Recommendation of the Boards
At a meeting of the Boards held on May 21, 1998 called for the purpose
of, among other things, voting on approval of the New Advisory Agreements, the
Boards, including the Independent Directors, unanimously approved the New
Advisory Agreements. In reaching this conclusion, the Boards obtained from the
New Adviser such information as they deemed reasonably necessary to approve the
New Adviser as investment adviser to the Funds and considered a number of
factors, including, among other things, the continuity of the management of the
Funds after the Acquisition; the continuity of personnel from the Prior Adviser
to the New Adviser; the nature, scope and quality of services that the New
Adviser will provide to the Funds; the quality of the personnel of the New
Adviser; the New Adviser's commitment to continue to provide such services in
the future; the maintenance of the identical advisory fee rate that was
incorporated in the Prior Advisory Agreements; the materially and substantively
identical nature of the Prior Advisory Agreements and New Advisory Agreements;
and the potential impact of the Acquisition on the foregoing.
^ Because the New Advisory Agreements are identical in all material
respects to the Prior Advisory Agreements (other than the identification of the
New Adviser and the execution and termination dates of the agreements) and the
advisory fee rate charged to the Funds under the Prior Advisory Agreements have
continued to apply under the New Advisory Agreements, the Boards determined that
the New Advisory Agreements are fair and reasonable and in the best interest of
the Funds and their respective shareholders. Therefore, after careful
consideration, the Board of each Fund, including the Independent Directors,
recommends that the respective shareholders of the Funds vote "FOR" the approval
of the New Advisory Agreements as set forth in this Proposal. If the New
Advisory Agreements are approved by the shareholders, such approval will ratify
the approval by the Boards on May 21, 1998.
-9-
<PAGE>
Vote Required
Approval of each New Advisory Agreement requires the affirmative vote
of a "majority" of the outstanding shares of the applicable Fund. "Majority" (as
defined in the 1940 Act) means the lesser of (a) 67% or more of the shares of
the applicable Fund present at the Special Meeting if the holders of more than
50% of the outstanding shares of the applicable Fund are present in person or by
proxy, or (b) more than 50% of the outstanding shares of the applicable Fund.
Because abstentions and broker non-votes are not treated as shares voted, any
abstentions and broker non-votes would have no impact on approval of this
Proposal.
If the New Advisory Agreements are approved by the Funds' respective
shareholders, each agreement will terminate two years after its effective date
absent annual continuance. If a New Advisory Agreement is not approved at the
Special Meeting, the advisory fees held in escrow with respect to such agreement
will be paid over to the applicable Fund and the Fund's Board will consider
appropriate action.
THE BOARD OF EACH FUND, INCLUDING THE INDEPENDENT DIRECTORS,
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" APPROVAL
OF PROPOSAL I. ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL II:^ RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FUNDS
The second Proposal to be submitted at the Special Meeting is the
ratification or rejection of the selection by the Boards of Ernst & Young LLP as
independent public accountants for the Funds for the current fiscal year. At a
meeting held on May 21, 1998, the Board of each Fund, including the Independent
Directors, approved the selection of Ernst & Young LLP as independent public
accountants for the Funds for the current fiscal year. Ernst & Young LLP has
served as independent public accountants for each of the Funds since
commencement of the Funds' respective operations and has informed the Funds that
it has no material direct or indirect financial interest in any Fund. A
representative of Ernst & Young LLP will be available by telephone at the
Special Meeting and will be available to respond to appropriate questions.
Vote Required
Ratification of the selection of Ernst & Young LLP as independent
public accountants for the Funds requires the affirmative vote of a "majority"
of each Fund (as defined under Proposal I above).
THE BOARD OF EACH FUND, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMENDS
THAT THE SHAREHOLDERS VOTE "FOR" RATIFICATION OF PROPOSAL II.
ANY UNMARKED PROXIES WILL BE SO VOTED.
OTHER MATTERS WHICH MAY COME BEFORE THE SPECIAL MEETING;
SHAREHOLDER PROPOSALS
The Boards are not aware of any other matters that will come before the
Special Meeting. Should any other matter properly come before the Special
Meeting, it is the intention of the persons named in the accompanying Proxy to
vote the Proxy in accordance with their judgment on such matters.
-10-
<PAGE>
The Funds do not hold regular shareholders' meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a subsequent
shareholders' meeting should send their written proposals to the Secretary of
the respective Fund, as appropriate, at the address set forth on the cover of
this Joint Proxy Statement. Proposals must be received at a reasonable time
prior to the date of a meeting of shareholders to be considered for inclusion in
the materials for the applicable Fund's meeting. Timely submission of a proposal
does not, however, necessarily mean that the proposal will be included.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE SPECIAL MEETING
AND WHO WISH TO HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN
THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
By Order of each Board of Directors,
Rodd M. Baxter
^ Secretary
August ^ 5, 1998
THE BOARD OF DIRECTORS OF EACH FUND HOPES THAT SHAREHOLDERS WILL ATTEND THE
SPECIAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY OR VOTING INSTRUCTION CARD IN THE
ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR
THE SPECIAL MEETING AND YOUR COOPERATION WILL BE APPRECIATED.
-11-
<PAGE>
SCHEDULE A
OWNERS OF MORE THAN 5% OF THE
OUTSTANDING SHARES OF A CLASS OF THE FUND
INCOME + GROWTH FUND
^
Class B Shares
Silicon Valley Bank F/B/O Eli Porat, located at 3003 Tasman Drive Santa Clara,
CA 95054-1191, Attn: Herman White Sr., beneficially owns 14,486 Class B shares
which total 5.78% of the outstanding Class B shares of the Income + Growth Fund.
Class I Shares
*Guadi & Co., located at c/o Bankers Trust Co., PO Box 9005, Church Street
Station, New York, NY 10006, Attn: Maria Martinez, owns 54,964 Class I shares
which total 10.17% of the outstanding Class I shares of the Income + Growth
Fund.
*Batrus & Co. located at c/o Bankers Trust Co., PO Box 9005 Mail Stop 2174,
Church Street Station, New York, NY 10008 , Attn: Maria Martinez, owns 57,238
Class I shares which total 10.59% of the outstanding Class I shares of the
Income + Growth Fund.
*Eure & Co., located at c/o Strong Retirement Plan Services, PO Box 1408,
Milwaukee, WI 53201-1408, Attn: 401(K) Administration, owns 320,626 Class I
shares which total 59.34% of the outstanding Class I shares of the Income +
Growth Fund.
- ------------------
* The Fund believes that these entities are not the beneficial owners of
shares held of record by them.
<PAGE>
LARGE CAP FUND
--------------
Class B Shares
Thomas E. Peeling, Ind. Ret. Acct., Cowen & Co. Cust., located at 28509
Lincoln Rd., Bay Village, OH 44140-1952 beneficially owns 1,448 Class B shares
which total 11.93% of the outstanding Class B shares of the Large Cap Fund.
FEDCOMP Inc., located at 10300 Eaton Place, Ste. 330, Fairfax, VA 22030-2239
beneficially owns 11,352 Class B shares which total 68.77% of the outstanding
Class B shares of the Large Cap Fund.
Renee Lauria & Alana Lauria, CO-TTEES, Two Sisters Trust U/A DTD 5/5/88, located
at 20 Felsmere Ave., Stoneham, MA 02180-1454 beneficially own 1,262 Class B
shares which total 10.39% of the outstanding Class B shares of the Large Cap
Fund.
Class I Shares
*Emre & Co., located at c/o Strong Retirement Plan Services, PO Box 1408,
Milwaukee, WI 53201-1408, Attn: 401(K) Administration, owns 103,152 Class
I shares which total 89.04% of the Large Cap Fund. ^
- ------------------
* The Fund believes that these entities are not the beneficial owners of
shares held of record by them.
-2-
<PAGE>
^ INCOME FUND
^ Class B Shares
Barbara B. Enfield, located at 501 Latane Drive, Richmond, VA 23238-4102,
beneficially owns 9,415 Class B shares which total 17.48% of the outstanding
Class B shares of the Income Fund.
Celia R. Klein, located at 215 Beaumont St., Brooklyn, NY 11235-4120,
beneficially owns 24,859 Class B shares which total 46.34% of the outstanding
Class B shares of the Income Fund.
*Donaldson Lufkin Jenrette Securities Corporation Inc., located at PO Box 2052
Jersey City, NJ 07303-2052, owns 5,725 Class B shares which total 10.63% of the
outstanding Class B shares of the Income Fund.
Class I Shares
*Caponegro Urological Assoc. Pension Trust, located at 1 Toms Point Lane - Apt
17B, Building #B, Port Washington, NY 11050-2101, owns 3,837 Class I shares
which total 5.17% of the outstanding Class I shares of the Income Fund.
Tripp Diedrichs TTEE For The 1994 Revocable TR UAD 5/6/94, FBO Betty
Hittenberger, located at 2828 Pierce Street, San Francisco, CA 94120-3819,
beneficially owns 6,481 Class I shares which total 8.74% of the outstanding
Class I shares of the Income Fund.
Doris J. Folberg TTEE, FBO Folberg Family Trust C, Exempt U/A DTD 11/3/83,
located at 13 Gateway Plaza, San Francisco, CA 94111-2011, beneficially owns
5,867 Class I shares which total 7.91% of the outstanding Class I
shares of the Income Fund.
Guarantee & Trust Co. TTEE, FBO Albert R. Olds Jr. - IRA, located at 1B408
Cotton Ct., Castro Valley, CA 94552-1808, beneficially owns 4,589 Class I
shares which total 6.18% of the outstanding Class I shares of the Income Fund.
Guarantee & Trust Co. TTEE, FBO Christopher Walsh P/ADM, located at 735
Washington St., Wellesley, MA 02181-5742, beneficially owns 6,427 Class I shares
which total 8.66% of the outstanding Class I shares of the Income Fund.
Valerie N. Solomon, 20 Pine Tree Lane, Albany, NY 12208-1604, beneficially owns
4,281 Class I shares which total 5.77% of the outstanding Class I shares of the
Income Fund.
Carl Ritson & Diane Y. Ritson JT TEN, located at 1537 Montellano Drive, San
Jose, CA 95120-4803, beneficially own 5,556 Class I shares of which total 7.49%
of the outstanding Class I shares of the Income Fund.
William Schoen, Ind Ret Acct. Cowen & Co. Cust. located at 18041 SW Cardinal
Drive, Lake Oswego, OR 97034-6641, beneficially owns 10,962 Class I shares
which total 14.77% of the outstanding Class I shares of the Income Fund.
- ------------------
* The Fund believes that these entities are not the beneficial owners of
shares held of record by them.
-3-
<PAGE>
GOVERNMENT FUND
---------------
Class A Shares
Emily H. Layne Fam. Limited Partn., Joseph H. McGee III Gen. Partn., located at
1901 Briarcliff Road, Richmond, VA 23225-2307, beneficially owns 12,882 Class A
shares which total 7.17% of the outstanding Class A shares of the Government
Fund.
Class I Shares
Salvatore F. Cimbolo, Jr., Ind. Ret. Acct. Cowen & Co. Cust., located at 2241
Sacramento St. #3, San Francisco, CA 94115-2326, beneficially owns 660 Class I
shares which total 9.42% of the outstanding Class I shares of the Government
Fund.
Judith Love Cimbolo, Ind. Ret. Acct. Cowen & Co. Cust., located at 2241
Sacramento St. #3, San Francisco, CA 94115-2326, beneficially owns 660 Class I
shares which total 9.42% of the outstanding Class I shares of the
Government Fund.
* Pump Services Profit Sharing Trust DTD 01/01/82, located at 303 State Street,
North Haven, CT 06473-2131, Attn: John Namnoum, Controller, owns 5,074 Class I
shares which total 72.44% of the outstanding Class I shares of the Government
Fund
*National Home Health Care 401K Plan, located at 700 White Plains Road, Suite
363, Scarsdale, NY 10583-5013, Attn: Robert Heller, Treasurer, owns 586 Class I
Shares which total 8.37% of the outstanding Class I shares of the Government
Fund.
- ------------------
* The Fund believes that these entities are not the beneficial owners of
shares held of record by them.
<
-4-
<PAGE>
OPPORTUNITY FUND
----------------
Class A Shares
*Citizens Holding Corporation, located 530 Atlantic Avenue, Boston, MA
02210-2218, Attn: Joseph Moran, III, owns 288,399 Class A shares which total
8.95% of the outstanding Class A shares of the Opportunity Fund.
Class B Shares
Stanley Levine Fixed Income Account, located at 17071 White Haven Drive, Boca
Raton, FL 33496-5922, beneficially owns 39,480 Class B shares which total 5.48%
of the outstanding Class B shares of the Opportunity Fund.
Class I Shares
*Bank of New York TTEE For JT Comm Accreditation HC Org. Ret.
Plan/20-201-3500523 Ret. Pl/Attn. Sandy Szajkovics, located at One Renaissance
Boulevard, Oakbrook Terrace, IL 60181-4294, owns 133,088 Class I shares
which total 5.41% of the outstanding Class I shares of the Opportunity Fund.
*Joint Commission Operating Fnd., located at One Renaissance Boulevard, Oakbrook
Terrace, IL 60181-4294, Attn: Sandy Szajkovics, owns 231,468 Class I shares
which total 9.41% of the outstanding Class I shares of the Opportunity Fund.
*EMRE & Co., c/o Strong Retirement Plan Services, located at PO Box 1408,
Milwaukee, WI 53201-1408, Attn: 401(K) Administration, owns 544,042 Class I
shares which total 22.13% of the outstanding Class I shares of the
Opportunity Fund.
*MAC & Co., A/C APPF8520082, located at P. O. Box 3198, Pittsburgh,
PA 15230-3198, owns 541,834 Class I shares which total 22.04% of the
outstanding Class I shares of the Opportunity Fund.
* VMMC Retirement Plan, Webster Trust Company NA, Attn: Trust Operations,
located at 450 Main Street, New Britain, CT 06051-1810 owns 161,597 Class I
shares which total 6.57% of the outstanding Class I shares of the Opportunity
Fund.
*Charles Schwab & Co. Inc., Special Custody Acct. For the Exclusive Benefit of
Customers, located at 101 Montgomery Street, San Francisco, CA 94104-4122,
Attn: Mutual Funds, owns 505,714 Class I shares which total 20.57% of the
outstanding Class I shares of the Opportunity Fund.
- ------------------
* The Fund believes that these entities are not the beneficial owners of
shares held of record by them.
-5-
<PAGE>
[PROXY CARD]
SG COWEN
PROXY SOLICITED BY BOARD OF DIRECTORS FOR SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 17, 1998
The undersigned owner of Common Stock of the SG Cowen Fund indicated on the
reverse side of this card hereby instructs David R. Sarns and Rodd M. Baxter
(Proxies), and each of them, with full power of substitution, to vote the shares
of the Common Stock which the undersigned is entitled in any capacity to vote at
the Special Meeting of Shareholders of the Fund to be held at 11:00 a.m., local
time, on September 17, 1998 at Financial Square, New York, NY 10005 and at any
adjournment thereof, in the manner directed on the reverse side with respect to
the matters referred to in the Proxy Statement for the Meeting, receipt of which
is hereby acknowledged, and to the Proxies' discretion, upon such matters as may
properly come before the meeting or any adjournment thereof.
Please vote, sign and date this voting instruction and return it in the
enclosed envelope.
These voting instructions will be voted as specified. If no specification
is made for any proposal, this voting instruction will be voted FOR such
proposal.
- -------------------------------------------------------------------------------
IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE STRONGLY
URGE YOU TO REVIEW, COMPLETE AND RETURN YOUR BALLOT AS SOON AS POSSIBLE. YOUR
VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
- -------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? IF YES, PLEASE NOTE NEW ADDRESS BELOW.
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
-1-
<PAGE>
[REVERSE SIDE]
PLEASE MARK VOTES
AS IN THIS EXAMPLE
* THIS VOTING INSTRUCTION CARD IS VALID ONLY WHEN SIGNED AND DATED *
___________________________ THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSALS 1 AND 2.
SG COWEN [ ] FUND
___________________________ For Against Abstain
[ ] [ ] [ ]
Account Number: 1) To approve or disapprove a new
Shares: Investment Advisory Agreement
Control Number: between the Fund and SG Cowen
Tax ID Number: Securities Corporation.
For Against Abstain
[ ] [ ] [ ]
2) To ratify the selection of Ernst &
Young LLP as independent public
accountants for the Fund.
For Against Abstain
[ ] [ ] [ ]
3) To transact such other
business as may properly
come before the Meeting
or any adjournment
thereof.
Mark box at right if an [ ]
address change has been
noted on the reverse
side of this card.
This voting instruction card shall
be signed exactly as your name(s)
Please be sure to sign and date this appear(s) hereon. If signing as an
Voting Instruction Card. Date attorney, executor, guardian or
other repesentative capacity or as
an officer of a corporation, please
add titles as such.
- ------------------------------------
Shareholder sign here
-2-
<PAGE>
- --------------------------------------------------------------------------------
VOTE BY TELEPHONE
QUICK *** EASY *** IMMEDIATE
Available to stockholders in the United States and Canada. All other
stockholders should vote by returning their proxy cards.
1. Dial 1-800 ___-____ as shown in the lower left-hand corner of this form.
2. When prompted, enter the Control Number located in the upper left-hand
corner of your proxy card.
3. Vote you shares as follows:
Option #1: To vote as the Board of
Directors recommends on ALL
proposals, Press 1. When asked,
please confirm your vote by pressing 1.
Option #2: If you choose to vote on each proposal
separately, Press 0. You will hear these
instructions: Proposal 1: To vote FOR,
Press 1; AGAINST, Press 9; ABSTAIN, Press
0 The instructions are the same for all
proposals. When asked, please confirm your
vote by pressing 1.
- --------------------------------------------------------------------------------
PLEASE DO NOT RETURN THE PROXY CARD IF YOU VOTED BY PHONE.
- --------------------------------------------------------------------------------
Call "Toll Free" On a Touch Tone Telephone
1-800-___-____ ANYTIME
There is NO CHARGE to you for this call.
- --------------------------------------------------------------------------------
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
[FUND]
[^ date]
SG Cowen Securities Corporation
[address]
Dear Sirs:
_______________ (the "Fund"), a corporation organized under the laws of
the State of Maryland, herewith confirms its agreement with SG Cowen Securities
Corporation ("SG Cowen"), as follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in its
Articles of Incorporation, as amended, and in its Prospectuses and Statements of
Additional Information as from time to time in effect, and in such manner and to
such extent as may from time to time be approved by the Board of Directors of
the Fund. Copies of the Fund's Prospectuses, Statements of Additional
Information and Articles of Incorporation, as amended, have been or will be
submitted to SG Cowen. The Fund desires to employ and hereby appoints SG Cowen
to act as investment manager to its portfolio (the "Portfolio"). SG Cowen
accepts the appointment and agrees to furnish the services set forth below for
the compensation set forth below.
2. Services as Investment Manager
Subject to the supervision and direction of the Board of Directors of
the Fund, SG Cowen will (a) act in strict conformity with the Fund's Articles of
Incorporation and By-laws, the Investment Company Act of 1940 (the "Act") and
the Investment Advisers Act of 1940, as the same may from time to time be
amended, (b) manage the Portfolio in accordance with the Fund's investment
objective and policies as stated in the Fund's Prospectus and Statement of
Additional Information as from time to time in effect, (c) make general
investment decisions for the Fund including decisions concerning (i) the
specific types of securities to be held by the Fund and the proportion of the
Fund's assets that should be allocated to such investments during particular
market cycles and (ii) the specific issuers whose securities will be purchased
or sold by the Fund, [(iii) the extent to which taxable securities will be
purchased for and held by the Fund, (iv) the appropriate maturity of its
portfolio investments and (v) the appropriate average weighted maturity of its
portfolio in light of current market conditions]* and (d) supply office
facilities (which may be in SG Cowen's own offices); statistical and research
- ------------------
* Note that the bracketed text is omitted from both the New Advisory
Agreement and the Prior Advisory Agreement for each Fund except the
Tax-Exempt Fund.
<PAGE>
data; data processing services; clerical, [accounting and bookkeeping]*
services; internal auditing and legal services; internal executive and
administrative services; stationery and office supplies; preparation of reports
to shareholders of the Fund; preparation of tax returns, reports to and filings
with the Securities and Exchange Commission and state Blue Sky authorities;
calculation of the net asset value of shares of the Fund; and general assistance
in all aspects of the Fund's operations. In providing those services, SG Cowen
will supervise the Fund's investments generally and conduct a continual program
of evaluation of the Fund's assets.
In connection with the performance of its duties under this Agreement,
it is understood that SG Cowen will from time to time employ or associate with
itself such person or persons as SG Cowen may believe to be particularly fitted
to assist it in the performance of this Agreement, it being understood that the
compensation of such person or persons shall be paid by SG Cowen and that no
obligation may be incurred on the Fund's behalf in any such respect.^
3. Information Provided to the Fund; Books and Records
(a) SG Cowen will keep the Fund informed of developments materially
affecting the Fund, and will, on its own initiative, furnish the Fund from time
to time with whatever information SG Cowen believes is appropriate for this
purpose.
(b) In compliance with the requirements of Rule 31a-3 under the Act, SG
Cowen hereby agrees that all records which it maintains for the Fund are the
property of the Fund and further agrees to surrender promptly to the Fund any of
such records upon the Fund's request.
4. Standard of Care
SG Cowen shall exercise its best judgment in rendering the services
listed in paragraph 2 above. SG Cowen shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, provided that nothing herein
shall be deemed to protect or purport to protect SG Cowen against any liability
to the Fund or to its shareholders to which SG Cowen could otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or by reason of SG Cowen's reckless disregard of
its obligations and duties under this Agreement.
Any person, even though also a partner, officer, employee, or agent of
SG Cowen, who may be or become a Director, officer, employee or agent of the
Fund, shall be deemed, when rendering services to the Fund or acting on any
business of the Fund, to be rendering such services to or acting solely for the
Fund and not as a Director, officer, employee, or agent or one under the control
or direction of SG Cowen even though paid by it.
5. Compensation
In consideration of the services rendered pursuant to this Agreement,
the Fund will pay SG Cowen on the first business day of each month a fee for the
previous month, calculated daily, at the annual rate of __________% of the
Fund's average daily net assets. The fee for the period from the
- -------------------
* Note that the bracketed text is omitted from both the New Advisory
Agreement and the Prior Advisory Agreement for the Large Cap Fund.
-2-
<PAGE>
date the Fund commences investment operations to the end of the month
during which the Fund commences investment operations shall be prorated
according to the proportion that such period bears to the full monthly period.
Upon any termination of this Agreement before the end of a month, the fee for
such part of that month shall be prorated according to the proportion that such
period bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees payable to SG
Cowen, the value of the Fund's net assets shall be computed at the times and in
the manner specified in the Fund's Prospectus and the Statement of Additional
Information as from time to time in effect.
6. Expenses
SG Cowen will bear all expenses in connection with the performance of
its services under this Agreement. The Fund will bear certain other expenses to
be incurred in its operation, including: taxes, interest, brokerage fees and
commissions, if any; fees of directors of the Fund who are not officers or
employees of SG Cowen; Securities and Exchange Commission fees and state Blue
Sky qualification fees; management, advisory and administration fees; charges of
custodians and transfer and dividend disbursing agents; [outside accounting and
bookkeeping expenses;]* certain insurance premiums; outside auditing and legal
expenses; costs of maintenance of corporate existence; costs attributable to
investor services, including, without limitation, telephone and personnel
expenses; costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for distribution to existing
shareholders; costs of shareholders' reports and meetings of the shareholders,
officers or Board of Directors of the Fund; and any extraordinary expenses.
7. Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Fund (including
fees pursuant to this Agreement, but excluding interest, taxes, brokerage
expenses, an applicable portion of distribution expenses and, with the prior
written consent of the appropriate state securities commissions, extraordinary
expenses) exceed the applicable expense limitation of any state having
jurisdiction over the Fund, SG Cowen will reimburse the excess expense. SG
Cowen's expense reimbursement obligation will be limited to the amount of its
fees received pursuant to this Agreement, however, SG Cowen shall reimburse the
Fund for such excess expenses regardless of the amount of fees paid to it during
such fiscal year to the extent that the securities regulations of any state in
which Fund shares are registered and qualified for sale so require. This expense
reimbursement, if any, will be estimated, reconciled and paid on a monthly
basis. From time to time SG Cowen, in its sole discretion and as it deems
appropriate, may assume certain expenses of the Fund while retaining the ability
to be reimbursed by the Fund for such amounts prior to the end of the fiscal
year.
8. Services to Other Companies or Accounts
The Fund understands that SG Cowen now acts and will continue to act as
investment adviser to fiduciary and other managed accounts and now acts and will
continue to act as investment manager, investment adviser, sub-investment
adviser and/or administrator to one or more other investment companies, and the
Fund has no objection to SG Cowen's so acting, provided that whenever the Fund
and one or more other accounts or investment companies advised by SG Cowen have
available funds for investment, investments suitable and appropriate for each
- -------------------
* Note that the bracketed text is omitted from both the New Advisory
Agreement and the Prior Advisory Agreement for each Fund except the
Large Cap Fund.
-3-
<PAGE>
will be allocated in a manner believed to be equitable to each entity. The Fund
recognizes that in some cases this procedure may adversely affect the size of
the position obtainable for the Fund. In addition, the Fund understands that the
persons employed by SG Cowen to assist in the performance of SG Cowen's duties
hereunder will not devote their full time to such service and nothing contained
herein shall be deemed to limit or restrict the right of SG Cowen or any
affiliate of SG Cowen to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature.
9. Term of Agreement
This Agreement shall become effective on the date first written above
and shall continue for an initial two year term and thereafter shall continue
automatically, provided such continuance is specifically approved at least
annually by (a) the Board of Directors of the Fund or (b) a vote of a "majority"
(as defined in the Act) of the Fund's outstanding voting securities, provided
that in either event the continuance is also approved by a majority of the Board
of Directors who are not "interested persons" (as defined in that Act) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable, without
penalty, on 60 days' written notice, by the Board of Directors of the Fund or by
vote of holders of a majority of the Fund's shares, or upon 90 days' written
notice, by SG Cowen. This Agreement will also terminate automatically in the
event of its assignment (as defined in the Act and the Rules thereunder).
10. Amendment of this Agreement
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no material amendment of this Agreement shall be effective until
approved by vote of the holders of a majority of the outstanding voting
securities of the Fund.
11. Miscellaneous
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be invalidated or rendered
unenforceable thereby. This Agreement shall inure to the benefit of the parties
hereto and their respective successors and shall be governed by New York law
without giving effect to the conflict of law provisions thereof.
-4-
<PAGE>
If the foregoing is in accordance with your understanding indicate your
acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
[FUND]
By:----------------------------
Name:
Title:
Accepted and Agreed:
SG COWEN SECURITIES CORPORATION
By:------------------------------
Name:
Title:
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