<PAGE> 1
- --------------------------------------------------------------------------------
ANNUAL REPORTS NOVEMBER 30, 1995
THE COWEN
FAMILY OF FUNDS
COWEN INCOME+GROWTH FUND, INC.
COWEN FUNDS, INC.
Opportunity Fund
Government Securities Fund
Intermediate Fixed Income Fund
[COWEN & COMPANY LOGO]
- --------------------------------------------------------------------------------
<PAGE> 2
----------------------------
CONTENTS
Chairman's Letter............................................................. 1
Income + Growth Fund.......................................................... 2
Opportunity Fund.............................................................. 5
Intermediate Fixed Income Fund and
Government Securities Fund.................................................... 7
Statements of Investments.....................................................11
Statements of Assets and Liabilities..........................................20
Statements of Operations......................................................22
Statements of Changes in Net Assets...........................................24
Notes to Combined Financial Statements........................................28
Report of Ernst & Young LLP...................................................48
<PAGE> 3
CHAI RMAN'S LETTER JANUARY 22, 1996
To Our Shareholders:
The Cowen Family of Funds' fiscal year ended November 30, 1995 saw a sharp
contrast in performance of the equity and bond markets for the period ending in
1995 versus 1994. Your Cowen fixed income funds took advantage of the bond
market rally while the equity funds provided positive returns consistent with
the prevailing environment for their investment methodologies.
Twelve months ago, the fixed income market had just completed an extremely
difficult year. The Federal Reserve Board had raised interest rates six
times -- causing bonds to decline in price as fears of inflation and an
overheating economy abounded.
During 1995, the bond market rebound, or at least the magnitude of the rally,
surprised many, as the impact of the Federal Reserve Board's policy reversal was
felt faster than anticipated. The economy slowed, inflationary pressures were
reduced, and the yield curve steepened, a normal occurrence for a healthy bond
market where investors earn a higher interest rate for investing in longer-term
bonds. Alan Koepplin, now the portfolio manager of both of our fixed income
funds, describes later in this report how he took advantage of the changing
conditions in 1995 and what he foresees ahead.
The equity market, too, saw dramatic changes. One year ago, rising interest
rates contributed to below average returns in the S&P 500 Index. The Dow Jones
Industrial Average stood at 3739 on November 30, 1994, rising to a close of 5074
one year later.
In 1995, the S&P 500 Index produced strong returns, though it mostly rewarded
certain sectors of the stock market, notably interest-rate sensitive stocks
(which benefited from the rising bond market), large-company growth stocks with
meaningful international operations (which benefited from a weak dollar) and
technology (business in general was robust in this cutting-edge industry). Your
Income + Growth Fund benefited from the rally in interest rate sensitive stocks
and sector allocation. The Opportunity Fund lagged the indexes due to an
underweighting in technology as a result of the fund's disciplined valuation
approach.
As you will see in the commentary from the portfolio managers of our equity
funds, through all of this, the Cowen Opportunity Fund and the Cowen
Income + Growth Fund stayed focused on their long-term financial objectives, the
underlying merits of their investments, and the disciplined strategies designed
to earn competitive returns and capture value. The respective overall course of
both the Government Securities Fund and the Intermediate Fixed Income Fund
continued to be blending only government and high-quality corporate bonds with
the appropriate maturity dates to achieve the correct balance of relative safety
and value.
By adhering to our disciplined investment strategy, we strongly believe that
you, the shareholders, will be rewarded with superior long-term performance in
the Cowen Family of Funds. We appreciate your continued support.
Sincerely,
/s/ JOSEPH M. COHEN
Joseph M. Cohen
Chairman
<PAGE> 4
COWEN INCOME + GROWTH FUND
Focusing on Cash Flow Fundamentals
for Superior Risk-Adjusted Dividend Yields
Throughout this past year of exceptional growth in the stock market, the
Income + Growth Fund achieved competitive risk-adjusted returns by staying true
to its high quality, high yield, low risk discipline. The Fund's Class A Shares
had a positive return of 29.50% for the twelve months ended November 30, 1995.
This performance compares favorably to the S&P 500 Index's return of 36.9%,
especially given the Fund's conservative, dividend-oriented investment criteria.
The Fund also compared well to its competitive category, outperforming the
Equity-Income average of 29.1% for the same period, according to Lipper. Class B
and Class C share performance can be found on page 4.
INVESTMENT REVIEW
The Fund's strong returns during this annual period were primarily due to
outstanding stock and sector selection. The portfolio's holdings continued to
experience improved earnings and cash-flow growth and above-average dividend
growth. More specifically, over the past twelve months, the Fund has:
- Increased allocation in the regional banks and natural gas distribution
sectors -- The appeal of these sectors was outlined in our semi-annual
report. In the last six months, portfolio activity included the sale of Banc
One Corp. and CoreStates Financial Corp., both of which reached our yield
targets for them. We also added First Union Bank to our holdings. Both of
these sectors remain fully weighted.
- Maximized allocation in the regional telephone sector -- We added Pacific
Telesis to our holdings, based on our belief that current legislation under
consideration by Congress favors the regional companies. We are also
attracted to these regional phone companies because of their strong growth
in the areas of access and cellular phone lines and their diversification
into the international market.
- Diversified into the REIT sector -- Real estate investment trusts, such as
the Fund's new holdings New Plan Realty and Weingarten Realty, offer high
yields, a record of steady dividend growth, extremely reasonable valuations,
and, historically, a hedge against inflation.
- Made tactical moves in the oil, electric utilities and financial services
sectors -- Having taken profits earlier in the year in certain oil and
health care companies, in the second half of the Fund's fiscal year, we sold
J.P. Morgan & Co. when it reached its sell criteria target, and to increase
our exposure to the energy area, we added Chevron Corp. to our holdings. In
the electric utilities sector, we continue to hold high quality, low cost
producers that we believe will profit in a deregulated environment. However
given our more modest outlook for this sector compared to this past year, we
may underweight this group in 1996.
To reduce interest rate sensitivity and offer the opportunity for even broader
diversification, we also made some analytical enhancements to the Fund's
investment parameters that we believe more meaningfully reflect a company's real
fundamental strength and dividend-paying capability in a new and changing
business environment. Overall, we shifted the emphasis from reported earnings to
operating cash flow, since we believe the former is now often distorted by
accounting rule changes
--
2
<PAGE> 5
and restructuring, while the latter continues to grow and is, after all, the
source of current dividends and the key to subsequent dividend growth. We also
slightly shifted the yield targets on both the buy and sell sides, while still
maintaining a wide premium over the market. We believe these enhancements will
heighten the portfolio's opportunities for superior risk-adjusted returns over
the long term. We remain committed to our long-standing style, philosophy, and
discipline.
LOOKING AHEAD
In fact, we believe it is this very consistency that is essential to long-term
success. Investment styles favored by the market are, in general, cyclical. But,
for example, the capital appreciation-oriented strategies rewarded by the stock
market through most of 1995 may have tempted some to increase risk levels at
exactly the wrong time. As we look ahead, we believe the low interest rate, low
inflation economic environment will bring the Income + Growth style back into
vogue, and those investors who have maintained or increased their low risk, high
yield, high quality equity portfolios should be well-positioned to reap the
competitive rewards.
By William Rechter
--
3
<PAGE> 6
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN COWEN INCOME + GROWTH FUND, INC.,
CLASS "A" SHARES AND THE S&P 500
<TABLE>
<CAPTION>
COW INC + GROWTH
-------------------------
COWEN INC
+ GWTH
FUND S & P 500
----------- ---------
<S> <C> <C>
9/19/86* $ 10,000 $ 10,000
7/31/87 $ 10,491 $ 14,164
7/31/88 $ 10,167 $ 12,505
7/31/89 $ 13,064 $ 16,499
7/31/90 $ 12,606 $ 17,571
7/31/91 $ 14,043 $ 19,814
7/31/92 $ 16,639 $ 22,348
7/31/93 $ 18,211 $ 24,298
7/31/94 $ 18,263 $ 25,559
11/30/94** $ 17,745 $ 25,572
11/30/95 $ 22,980 $ 35,011
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
- ---------------------------------------------------------------
1 YEAR 5 YEAR INCEPTION*
- ------------------- ------------------- -------------------
<S> <C> <C>
23.35% 13.20% 9.46%
- ---------------------------------------------------------------
</TABLE>
** Fund changed fiscal year to one ending on November 30.
Performance of other classes will be greater than or less than the line shown
based on the differences in loads and fees paid by shareholders investing in the
different classes.
CLASS B AND CLASS C SHARES
ANNUALIZED RETURN OF THE CLASS:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
----------------------------------------
1 YEAR INCEPTION***
---------------------- -------------
<S> <C> <C>
Class "B" shares**** 23.49% 14.94%
Class "C" shares 29.99% 19.19%
</TABLE>
- ---------------
*** Inception dates of Class "B" shares and Class "C" shares are May 17, 1994
and May 9, 1994 respectively.
**** After deduction of Contingent Deferred Sales Charge.
All performance figures assume reinvestment of dividends and capital
gains.
Past performance is not predictive of future results.
--
4
<PAGE> 7
COWEN OPPORTUNITY FUND
Replanting the Portfolio to Find the
Next Wave of Re-Emerging Growth Stocks
For the fiscal year ended November 1995, the Cowen Opportunity Fund lagged most
major indices as the nature of our investment style -- which focuses on
undervalued, re-emerging growth stocks -- did not enjoy popularity. For the
fiscal year, Class "A" shares returned 7.91%. Class B and Class C share
performance can be found on page 6. The S&P 500 Index returned 36.9% during the
same period. December's results were more satisfying. As sectors of the market
that we believed were overvalued continued to correct, evidence emerged that
investors will begin to recognize the values we had already identified.
We tend to look for particular companies or industries that are out of favor
with Wall Street . . . companies that tend to sell at low multiples to book
value, cash flow, and sales, which gives us protection in terms of valuation
when or if there is a market correction. To illustrate this point, beta is a
tool used by portfolio managers to measure one's portfolio risk relative to the
overall market, which has a beta of 1.00. The beta of the Cowen Opportunity Fund
on November 30 was 0.75 -- which meant the fund only carried 75% of the market's
risk according to this measure. By comparison, funds that seek growth tend to
have a beta of more than 1.00, indicating above-average volatility.
To build a portfolio, we identify a catalyst which will lead to a re-emergence
of growth both in terms of sales and earnings for a particular company or
industry. With Maxicare Healthcare Systems, an HMO in our portfolio, that
catalyst is the growth of enrollees. At other times it could be the fact that
general industry conditions are improving. In the United States, the supply and
demand for oil and natural gas are in equilibrium. We have seen a rise in the
price of oil and natural gas due to cold weather across the country during the
last month. This should benefit Oryx, Parker and Parsley, and Coho Energy, which
are efficient producers of these two commodities and consequently holdings in
our portfolio. Better energy prices should lead to an increase in demand for
services and equipment, which help improve production. Thus, Dreco Energy and
Weatherford International should see increased demand for their services and
better-than-expected earnings going forward.
Sometimes having a long-term point of view can be a short-term negative. This
past year the Opportunity Fund has been underweighted in the areas of Technology
and Financials, relative to our peers, which were popular with investors. For
most of the year our weighting in Technology was no more than 10% of the fund
and our weighting in Financials no more than 6%. We saw too much valuation risk
relative to the expected earnings growth to justify larger weightings in these
areas.
As is always the case, good things come to those who have the patience to wait
and search out among the discards of others. As the herd has indiscriminately
reduced its exposure to technology of late due to shortfalls in earnings and
stock prices of certain companies, we have actually increased our exposure. We
have been able to find companies such as Gerber Scientific and Quad Systems,
which are in front of important new product cycles that should lead to improved
earnings and upward revisions of earnings estimates by Wall Street analysts.
Six months ago if you had asked us our opinion of the markets, we would have
probably said neutral-to-bearish, just because our discipline of re-emerging
growth was coming up dry. Also, some of the seeds that we had planted in terms
of stocks in our portfolio hadn't seen the re-emergence of growth that we tend
to expect will happen right away. However, in the past two months that has
changed. Seeds such as Matrix Pharmaceutical, Maxicare Health Systems, Parker
and Parsley, and Weatherford have started to sprout and emerge. Others, such as
Concentra and Platinum Technology, are being planted.
The objective of the fund has remained constant in that we manage a portfolio
of perceived laggards which in the long run turn out to be the stars of tomorrow
and lead to winning performance.
By Jarrod Cohen
--
5
<PAGE> 8
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN COWEN OPPORTUNITY FUND,
CLASS "A" SHARES AND THE S&P 500
<TABLE>
<CAPTION>
COWEN OPPORTUNITY FUND
----------------------------------
COWEN
OPP RUSSELL
FUND S & P 500 2000
--------- --------- ---------
<S> <C> <C> <C>
3/31/88* $ 10,000 $ 10,000 $ 10,000
11/30/88 $ 9,099 $ 10,827 $ 10,094
11/30/89 $ 10,970 $ 14,158 $ 12,145
11/30/90 $ 11,235 $ 13,653 $ 9,442
11/30/91 $ 15,341 $ 16,440 $ 13,680
11/30/92 $ 17,693 $ 19,466 $ 16,908
11/30/93 $ 22,910 $ 21,429 $ 20,112
11/30/94 $ 25,094 $ 21,722 $ 19,890
11/30/95 $ 27,079 $ 29,740 $ 25,557
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
- -----------------------------------------------------------------
1 YEAR 5 YEAR INCEPTION*
- ------------------- ------------------- -------------------
<S> <C> <C>
2.77% 18.08% 13.88%
- -----------------------------------------------------------------
</TABLE>
Performance of other classes will be greater than or less than the line shown
based on the differences in loads and fees paid by shareholders investing in the
different classes.
CLASS B AND CLASS C SHARES
ANNUALIZED RETURN OF THE CLASS:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN
----------------------
1 YEAR INCEPTION**
------ -----------
<S> <C> <C>
Class "B" shares*** 1.97% 5.99%
Class "C" shares 8.40% 9.26%
</TABLE>
- ---------------
** Inception dates of Class "B" shares and Class "C" shares are May 17, 1994
and May 9, 1994 respectively.
*** After deduction of Contingent Deferred Sales Charge.
All performance figures assume reinvestment of dividends and capital gains.
Past performance is not predictive of future results.
--
6
<PAGE> 9
COWEN INTERMEDIATE FIXED INCOME FUND
COWEN GOVERNMENT SECURITIES FUND
Lengthening Maturity to Capture
Appreciation During Major Market Rally
The high portfolio quality and flexibility to adjust maturity and sector
weightings shared by the Cowen Intermediate Fixed Income Fund and Cowen
Government Securities Fund enabled both to capture the strong total returns
produced by the huge bond market rally that lasted through much of the Funds'
fiscal year ended November 30, 1995.
The annual return of the Intermediate Fixed Income Fund's Class A shares was
14.22%, approximately in line with its benchmark, the Lehman Brothers
Intermediate Government/Corporate Index, which had a slightly higher return of
14.54%. Class B and Class C share performance can be found on page 9. The annual
return of the Government Securities Fund's Class A shares was 15.23%. While this
underperformed the Lehman Brothers Aggregate Index, which had a return of
17.64%, once we made portfolio adjustments appropriate to the rally in the
second six months, the Fund did show improved performance relative to its
benchmark. Class B and Class C share performance can be found on page 10.
INVESTMENT REVIEW
Overall, the year was an extremely positive one for the bond market. The impact
of the Federal Reserve Board's monetary policy in 1994 to raise rates was felt
quickly, the economy in fact slowed, and the country entered a period of
declining interest rates. The yield curve went from being "flat" -- where
short-term rates are virtually equal to long-term rates -- to a more normalized
"steep" curve where rates increase with maturities. As was the case six months
ago, it was again the 5-year maturity point that experienced the greatest change
along the yield curve, with yields on 5-year Treasury Notes declining nearly 2.3
percentage points over the Funds' fiscal year.
We lengthened average maturity in the Intermediate Fixed Income Fund,
extending it over the twelve months from 4.3 years to 5.1 years as of November
30. This is longer than the benchmark's average maturity on that date of 4.27
years and was a major factor in the Fund's performance. We basically maintained
the Fund's sector allocation having, at the end of the twelve months, 73.0% in
U.S. Treasury Securities, 21.5% in investment grade corporate securities, and
5.5% in GNMA mortgage securities.
To take advantage of the price appreciation of bonds during this period, we
carried out two major strategies in the Government Securities Fund. First, we
remained overweighted in Treasury Securities, which tend to outperform in a
rally as investors focus on a "pure" investment in the "yield curve" where the
credit quality of the issuer cannot affect the bond's price (budgetary impasses
in Congress notwithstanding). Second, as anticipated in our last report, we
lengthened the Fund's average maturity to 9.3 years and its average duration to
match the benchmark's 5.0 years.
LOOKING AHEAD
Fundamental signs lead us to believe that although the bond market rally has
probably not peaked, we may be entering a period of yield stability, and that we
will need to focus in both Funds on capturing incremental income as the major
contributor to total return in 1996, rather than on price appreciation as in
1995. Diminishing inflationary pressures
--
7
<PAGE> 10
continue to be a positive for the bond market, and economic indicators point to
sub-par economic growth. Although we believe there is little risk of a recession
in the next two quarters, there is still some room for interest rates to come
down further, as the Federal Reserve Board may respond to these lower
inflationary pressures with another cut of rates in the near future.
Based on this outlook, we are maintaining a longer maturity in both Funds. We
also will focus ahead on those sectors that will most likely provide a yield
advantage over U.S. Treasuries. In the Intermediate Fixed Income Fund -- which
was 73% invested in U.S. Treasuries as of November 30 -- our next step will
likely be to shift more assets into both investment grade corporate bonds and
mortgage-backed securities to gain a yield advantage. The Government Securities
portfolio was invested 56% in Treasuries and 44% in GNMAs and FNMAs. We will, of
course, maintain our conservative disciplines and high quality investment
criteria in managing both Funds' portfolios.
By Alan Koepplin
--
8
<PAGE> 11
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN COWEN INTERMEDIATE FIXED INCOME FUND
IN CLASS "A" SHARES AND THE
LEHMAN INTERMEDIATE GOVERNMENT/CORPORATE INDEX
<TABLE>
<CAPTION>
COW INTERMED FIX INC
--------------------------
LEHMAN
COWEN INTERMEDIATE
INTER GOVT/CORP
FIX INC INDEX
------------ ------------
<S> <C> <C>
1/20/93* $ 10,000 $ 10,000
11/30/93 $ 10,316 $ 10,720
11/30/94 $ 10,133 $ 10,521
11/30/95 $ 11,575 $ 12,051
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
- ---------------------------------------------------
1 YEAR INCEPTION*
- ------------------------ ------------------------
<S> <C>
11.53% 5.24%
- ---------------------------------------------------
</TABLE>
Performance of other classes will be greater than or less than the line shown
based on the differences in loads and fees paid by shareholders investing in the
different classes.
CLASS B AND CLASS C SHARES
ANNUALIZED RETURN OF THE CLASS:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN
----------------------
1 YEAR INCEPTION**
------ -----------
<S> <C> <C>
Class "B" shares*** 11.12% 8.28%
Class "C" shares 14.41% 10.07%
</TABLE>
- ---------------
** Inception dates of Class "B" shares and Class "C" shares are July 12, 1994
and July 11, 1994 respectively.
*** After deduction of Contingent Deferred Sales Charge.
All performance figures assume reinvestment of dividends and capital gains.
Past performance is not predictive of future results.
--
9
<PAGE> 12
COMPARISON OF CHANGE IN VALUE OF $10,000
INVESTMENT IN COWEN GOVERNMENT SECURITIES FUND,
CLASS "A" SHARES AND THE LEHMAN AGGREGATE INDEX
<TABLE>
<CAPTION>
COW GOVT SEC
-------------------------
COWEN LEHMAN
GOVT AGGREGATE
SEC INDEX
---------- ------------
<S> <C> <C>
1/20/93* $ 10,000 $ 10,000
11/30/93 $ 10,228 $ 10,799
11/30/94 $ 9,896 $ 10,470
11/30/95 $ 11,404 $ 12,317
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
- ---------------------------------------------------
1 YEAR INCEPTION*
- ------------------------ ------------------------
<S> <C>
9.73% 4.70%
- ---------------------------------------------------
</TABLE>
Performance of other classes will be greater than or less than the line shown
based on the differences in loads and fees paid by shareholders investing in the
different classes.
CLASS B AND CLASS C SHARES
ANNUALIZED RETURN OF THE CLASS:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
-------------------------------------
1 YEAR INCEPTION**
--------------------- -----------
<S> <C> <C>
Class "B" shares*** 10.09% 7.48%
Class "C" shares 16.52% 11.14%
</TABLE>
- ---------------
** Inception dates of Class "B" shares and Class "C" shares are July 15, 1994
and July 11, 1994 respectively.
*** After deduction of Contingent Deferred Sales Charge.
All performance figures assume reinvestment of dividends and capital gains.
Past performance is not predictive of future results.
--
10
<PAGE> 13
COWEN INCOME+GROWTH FUND, INC.
STATEMENT OF INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- 94.9% of total portfolio
BUSINESS SERVICES -- 3.5%
40,000 Dun & Bradstreet $ 2,495,000
------------
CONSUMER DURABLES -- 3.4%
155,000 Hanson PLC ADR 2,363,750
------------
CONSUMER PRODUCTS -- 1.8%
25,000 Tambrands Inc. 1,303,125
------------
ELECTRICAL UTILITIES -- 15.7%
90,000 Baltimore Gas & Electric 2,396,250
70,000 Central & South West Corp. 1,881,250
90,000 Scana Corp. 2,430,000
90,000 Southern Corp. 2,058,750
58,000 Union Electric Corp. 2,327,250
------------
11,093,500
------------
HEALTH CARE -- 3.2%
28,000 Bristol-Myers Squibb 2,247,000
------------
INSURANCE -- 3.5%
65,000 Ohio Casualty Corp. 2,470,000
------------
NATURAL GAS DISTRIBUTORS -- 14.6%
90,000 Brooklyn Union Gas Co. 2,542,500
100,000 MCN Corp. 2,175,000
70,000 National Fuel Gas Co. 2,248,750
60,000 Piedmont Natural Gas Co. 1,410,000
70,000 Utilicorp United Inc. 1,951,250
------------
10,327,500
------------
</TABLE>
See notes to combined financial statements
--
11
<PAGE> 14
COWEN INCOME+GROWTH FUND, INC.
STATEMENT OF INVESTMENTS -- (continued)
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- (Continued)
PETROLEUM -- 10.5%
24,000 Atlantic Richfield $ 2,601,000
50,000 Chevron Corp. 2,468,750
30,000 Exxon Corp. 2,321,250
------------
7,391,000
------------
REAL ESTATE INVESTMENT TRUSTS -- 5.5%
120,000 New Plan Realty Investment Trust 2,520,000
40,000 Weingarten Realty Investment Trust 1,370,000
------------
3,890,000
------------
REGIONAL BANKS -- 15.2%
55,000 AmSouth Bancorp 2,179,375
35,000 First Union Corp. 1,911,875
60,000 KeyCorp 2,212,500
60,000 National City Corp. 1,942,500
85,000 PNC Bank Corp. 2,486,250
------------
10,732,500
------------
RETAIL -- 3.1%
47,000 JC Penney 2,203,125
------------
TELEPHONE -- 11.9%
35,000 Bell Atlantic Corp. 2,205,000
57,000 GTE Corp. 2,429,625
45,000 NYNEX Corp. 2,233,125
50,000 Pacific Telesis Group 1,500,000
------------
8,367,750
------------
TOBACCO -- 3.0%
50,000 American Brands, Inc. 2,087,500
------------
TOTAL COMMON STOCKS (Cost $58,230,804) $ 66,971,750
------------
</TABLE>
See notes to combined financial statements
--
12
<PAGE> 15
COWEN INCOME+GROWTH FUND, INC.
STATEMENT OF INVESTMENTS -- (continued)
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
SHORT TERM INVESTMENTS -- 5.1%
$ 1,210,000 Ford Motor Credit Corp., 5.77%, 12/04/95 $ 1,209,418
2,385,000 General Electric Cap. Corp., 5.74%, 12/05/95 2,383,478
------------
TOTAL SHORT TERM INVESTMENTS (Cost $3,592,896) $ 3,592,896
------------
TOTAL INVESTMENTS -- 100.0%
(Cost $61,823,700) $ 70,564,646
------------
------------
</TABLE>
See notes to combined financial statements
--
13
<PAGE> 16
COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- 84.5% of total portfolio
OIL/GAS PRODUCTION/EXPLORATION -- 15.5%
100,000 Coho Energy Inc.* $ 487,500
20,000 Louisiana Land & Exploration 780,000
270,000 Oryx Energy Co.* 3,543,750
175,000 Parker & Parsley Petroleum 3,281,250
115,000 USX Marathon Group 2,113,125
-----------
10,205,625
-----------
CONSUMER NON-DURABLES -- 9.2%
45,000 Berlitz International Inc.* 708,750
200,000 Chiquita Brands International 2,675,000
150,000 Clearly Canadian Beverage Corp.* 196,875
200,000 Kinder Care Learning Center* 2,450,000
-----------
6,030,625
-----------
OIL/GAS SERVICE -- 8.3%
20,000 BJ Service Co.* 492,500
60,000 Dreco Energy Services* 915,000
300,000 Kaneb Services Inc.* 562,500
50,000 Petroleum Geo Services* 987,500
100,000 Weatherford International* 2,537,500
-----------
5,495,000
-----------
HEALTH SERVICES -- 8.2%
100,000 Maxicare Health Plans* 2,187,500
15,000 Physician's Corp. of America* 226,875
100,000 Rehabcare Corp.* 1,712,500
50,000 Value Health Inc.* 1,256,250
-----------
5,383,125
-----------
MEDICAL SUPPLIES -- 6.9%
40,000 Datascope Corp.* 1,020,000
100,000 Protocol Systems Inc.* 1,037,500
100,000 U.S. Surgical Corp.* 2,512,500
-----------
4,570,000
-----------
</TABLE>
See notes to combined financial statements
--
14
<PAGE> 17
COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS -- (continued)
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- (Continued)
COMPUTER-SOFTWARE -- 6.3%
31,500 Concentra Corp.* $ 322,875
50,000 Control Data Systems Inc.* 850,000
90,400 Gerber Scientific Inc. 1,536,800
40,000 MacNeal-Schwendler Corp. 625,000
63,000 Ross Systems Inc.* 196,875
30,000 Software Artistry Inc.* 555,000
5,000 Teknomatix Technology Ltd.* 67,500
-----------
4,154,050
-----------
RETAIL/APPAREL -- 5.9%
50,000 Brauns Fashions Corp.* 112,500
100,000 Charming Shoppes 231,250
90,000 DM Management Co.* 168,750
109,700 Galoob (Lewis) Toys Inc.* 1,247,838
20,000 Oshkosh B'Gosh Inc. 305,000
80,000 Phillips-Van Heusen 830,000
60,000 Roberds Inc.* 645,000
50,000 Sports & Recreation Inc.* 350,000
-----------
3,890,338
-----------
COMPUTER SYSTEMS -- 5.5%
400,000 Concurrent Computer Corp.* 512,520
75,000 Evans & Sutherland Computer Corp.* 1,800,000
10,000 Lasermasters Technology Inc.* 60,000
85,000 Netframe Systems Inc.* 499,375
50,000 Sequent Computer Systems Inc.* 793,750
-----------
3,665,645
-----------
BIOTECHNOLOGY -- 4.4%
73,300 Collagen Corp. 1,337,725
100,000 Matrix Pharmaceutical* 1,550,000
-----------
2,887,725
-----------
BUILDING MATERIAL -- 2.7%
150,300 Dravo Corp.* 1,803,600
-----------
</TABLE>
See notes to combined financial statements
--
15
<PAGE> 18
COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS -- (continued)
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- (Continued)
ELECTRONICS -- 2.4%
100,000 Videonics Inc.* $ 1,250,000
40,000 Quad Systems Corp.* 335,000
------------
1,585,000
------------
FINANCIAL SERVICES -- 2.2%
54,000 Dime Financial Corp.* 661,500
35,000 RCSB Financial Inc. 835,625
------------
1,497,125
------------
RESTAURANTS -- 1.5%
80,000 Quantum Restaurant Group* 980,000
------------
STEEL/IRON -- 1.4%
90,000 Northwest Pipe Co.* 900,000
------------
MINING -- 1.2%
70,000 Zeigler Coal Holding Co. 787,500
------------
ENVIRONMENT CONTROL -- 1.1%
215,000 ICF Kaiser International Inc.* 725,625
------------
HOME BUILDERS -- .9%
84,900 Hovnanian Enterprises Inc.* 573,075
------------
PHARMACEUTICALS -- .8%
20,000 Ivax Corp. 532,500
------------
TELECOMMUNICATIONS -- .1%
10,000 Telebit Corp.* 42,500
------------
TOTAL COMMON STOCKS (Cost $52,199,459) $ 55,709,058
------------
</TABLE>
See notes to combined financial statements
--
16
<PAGE> 19
COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS -- (continued)
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
SHORT TERM INVESTMENTS -- 15.5%
$ 5,000,000 Ford Motor Credit Corp., 5.77% 12/04/95 $ 5,000,000
5,225,000 General Electric Cap. Corp., 5.74% 12/05/95 5,225,000
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $10,225,000) $ 10,225,000
------------
TOTAL INVESTMENTS (Cost $62,424,459) $ 65,934,058
------------
------------
</TABLE>
- ---------------
* Non-income producing security
See notes to combined financial statements
--
17
<PAGE> 20
COWEN GOVERNMENT SECURITIES FUND
STATEMENT OF INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
MORTGAGE-BACKED SECURITIES -- 44.2% of total
portfolio
FEDERAL NATIONAL MORTGAGE ASS'N (FNMA)
CERTIFICATES:
$ 783,149 7.000%, 12/01/24 $ 782,656
GOVERNMENT NATIONAL MORTGAGE ASS'N (GNMA)
CERTIFICATES:
20,079 9.000%, 05/15/21 21,268
27,517 9.500%, 11/15/21 29,546
279,244 7.000%, 12/15/23 279,854
274,739 8.500%, 03/15/25 286,845
213,121 9.500%, 03/20/25 225,908
195,201 8.000%, 05/15/25 201,971
-----------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $1,794,852) 1,828,048
-----------
U.S. TREASURY OBLIGATIONS -- 55.8%
25,000 U.S. Treasury Notes, 5.500%, 11/15/98 25,063
200,000 U.S. Treasury Notes, 6.750%, 04/30/00 209,344
100,000 U.S. Treasury Notes, 5.750%, 10/31/00 100,844
500,000 U.S. Treasury Notes, 8.000%, 05/15/01 556,170
750,000 U.S. Treasury Bonds, 8.250%, 05/15/05 821,250
500,000 U.S. Treasury Bonds, 7.625%, 02/15/25 594,765
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $2,211,277) 2,307,436
-----------
TOTAL INVESTMENTS (Cost $4,006,129) $ 4,135,484
-----------
-----------
</TABLE>
See notes to combined financial statements
--
18
<PAGE> 21
COWEN INTERMEDIATE FIXED INCOME FUND
STATEMENT OF INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
CORPORATE NOTES -- 21.5% of total portfolio
$ 250,000 American General 8.000%, 02/15/00 $ 267,367
500,000 Ford Capital B 9.875%, 05/15/02 593,555
500,000 GTE Corp. 8.850%, 03/01/98 530,220
500,000 International Paper 9.700%, 03/15/00 567,370
1,000,000 Transamerica Finance 6.750%, 06/01/00 1,026,800
500,000 Union Oil of California 9.125%, 02/15/06 596,235
------------
TOTAL CORPORATE NOTES
(Cost $3,449,755) 3,581,547
------------
MORTGAGE-BACKED SECURITIES -- 5.5%
GOVERNMENT NATIONAL MORTGAGE ASS'N (GNMA)
CERTIFICATES:
230,662 8.000%, 06/15/01 239,455
58,215 9.000%, 12/15/16 61,798
75,051 10.000%, 12/15/18 82,536
59,236 8.500%, 10/15/21 61,846
82,917 8.000%, 06/15/22 85,937
378,019 8.000%, 02/15/23 391,488
------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $909,843) 923,060
------------
U.S. GOVERNMENT AND AGENCIES -- 73.0%
200,000 U.S. Treasury Notes, 5.625%, 10/31/97 200,938
1,330,000 U.S. Treasury Notes, 7.250%, 02/15/98 1,379,662
1,685,000 U.S. Treasury Notes, 9.000%, 05/15/98 1,822,176
250,000 U.S. Treasury Notes, 5.500%, 11/15/98 250,625
1,700,000 U.S. Treasury Notes, 8.875%, 02/15/99 1,867,348
1,200,000 U.S. Treasury Notes, 7.125%, 09/30/99 1,265,808
1,375,000 U.S. Treasury Notes, 7.750%, 01/31/00 1,486,293
1,000,000 U.S. Treasury Notes, 7.125%, 02/29/00 1,059,060
1,150,000 U.S. Treasury Notes, 6.750%, 04/30/00 1,203,728
500,000 U.S. Treasury Notes, 5.750%, 10/31/00 504,220
500,000 U.S. Treasury Notes, 6.500%, 08/15/05 526,170
500,000 U.S. Treasury Bonds, 7.625%, 02/15/25 594,765
------------
TOTAL GOVERNMENT AND AGENCIES
($11,921,751) 12,160,793
------------
TOTAL INVESTMENTS ($16,281,349) $ 16,665,400
------------
------------
</TABLE>
See notes to combined financial statements
--
19
<PAGE> 22
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
INCOME+GROWTH
FUND
<S> <C>
ASSETS:
Investments in securities, at value (cost $61,823,700,
$62,424,459, $4,006,129 and $16,281,349,
respectively -- see statements) $ 70,564,646
Cash 108,355
Receivables:
Cowen & Company --
Subscriptions to Common Stock 124,712
Investment securities sold --
Dividends and interest 313,715
Prepaid expenses, etc. 29,292
Deferred organization expenses -- Note 1(E) --
----------------
TOTAL ASSETS 71,140,720
----------------
LIABILITIES:
Payables:
Cowen & Company 42,803
Redemptions of Common Stock 125,068
Dividends -- Note 1(C) --
Investment securities purchased 887,915
Accrued expenses and other liabilities 24,022
----------------
TOTAL LIABILITIES 1,079,808
----------------
NET ASSETS $ 70,060,912
----------------
----------------
NET ASSETS consist of:
Paid-in Capital $ 58,530,829
Accumulated undistributed net investment income 488,161
Accumulated net realized gain (loss) on investments 2,300,976
Net unrealized appreciation on investments 8,740,946
----------------
NET ASSETS $ 70,060,912
----------------
----------------
CLASS A
Net assets $ 49,298,345
Outstanding shares of common stock, ($.001 par value) 3,736,310
Net asset value per share $ 13.19
Maximum offering price per share $ 13.85
CLASS B
Net assets $ 1,453,070
Outstanding shares of common stock, ($.001 par value) 110,575
Net asset value per share $ 13.14
CLASS C
Net assets $ 19,309,497
Outstanding shares of common stock, ($.001 par value) 1,459,342
Net asset value per share $ 13.23
</TABLE>
See notes to combined financial statements
--
20
<PAGE> 23
<TABLE>
<CAPTION>
GOVERNMENT INTERMEDIATE FIXED
OPPORTUNITY FUND SECURITIES FUND INCOME FUND
<S> <C> <C> <C>
$65,934,058 $4,135,484 $16,665,400
908,129 1,511 172,388
-- 7,306 4,762
13,058 300 3,875
1,511,181 -- --
24,061 28,833 260,973
18,844 21,127 21,954
-- 29,376 29,735
------------------ --------------- ------------------
68,409,331 4,223,937 17,159,087
------------------ --------------- ------------------
49,749 -- --
574,533 51,087 3,000
-- 3,607 9,020
3,263,865 -- --
78,469 25,833 31,346
------------------ --------------- ------------------
3,966,616 80,527 43,366
------------------ --------------- ------------------
$64,442,715 $4,143,410 $17,115,721
------------------ --------------- ------------------
------------------ --------------- ------------------
$59,536,188 $4,020,748 $16,568,181
-- -- --
1,396,928 (6,693) 163,489
3,509,599 129,355 384,051
------------------ --------------- ------------------
$64,442,715 $4,143,410 $17,115,721
------------------ --------------- ------------------
------------------ --------------- ------------------
$38,723,706 $3,944,895 $14,666,883
2,948,618 401,507 1,511,209
$ 13.13 $ 9.83 $ 9.71
$ 13.78 $ 10.32 $ 9.94
$ 6,454,852 $ 153,360 $ 576,740
499,038 15,314 58,959
$ 12.93 $ 10.01 $ 9.78
$19,264,157 $ 45,155 $ 1,872,098
1,459,097 4,543 193,484
$ 13.20 $ 9.94 $ 9.68
</TABLE>
See notes to combined financial statements
--
21
<PAGE> 24
STATEMENTS OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<CAPTION>
INCOME+GROWTH
FUND
<S> <C>
INVESTMENT INCOME:
Dividend income $ 2,743,431
Interest income 96,187
----------------
TOTAL INCOME 2,839,618
----------------
EXPENSES:
Investment management fee -- Note 2(A) 379,702
Service fee -- Class A -- Note 2(C) 102,414
Service and Distribution fees -- Class B -- Note 2(C) 9,341
Professional fees 66,137
Shareholder servicing fees
Class A 67,507
Class B 2,019
Class C 6,251
Directors' fees and expenses -- Note 2(D) 21,995
Federal and state registration fees 39,754
Prospectus and shareholders' reports 31,853
Custodian fees 6,360
Amortization of organization expenses -- Note 1(E) --
Miscellaneous 4,700
----------------
TOTAL EXPENSES 738,033
Less: expenses waived and absorbed --
Notes 2(A, C and D) (98,199)
----------------
NET EXPENSES 639,834
----------------
Net Investment Income (loss) 2,199,784
----------------
Realized and Unrealized Gain on Investments -- Note 3:
Net realized gain on investments 2,758,033
Net unrealized appreciation on investments 8,290,131
----------------
Net Realized and Unrealized Gain on Investments 11,048,164
----------------
Net Increase in Net Assets Resulting from Operations $ 13,247,948
----------------
----------------
</TABLE>
See notes to combined financial statements
--
22
<PAGE> 25
<TABLE>
<CAPTION>
GOVERNMENT INTERMEDIATE FIXED
OPPORTUNITY FUND SECURITIES FUND INCOME FUND
<S> <C> <C> <C>
$ 309,727 $ -- $ --
339,733 223,225 890,049
---------------- --------------- ----------------
649,460 223,225 890,049
---------------- --------------- ----------------
509,283 18,271 60,112
93,590 7,251 25,585
52,019 1,126 2,184
63,426 22,073 22,973
64,197 5,127 12,133
10,677 543 511
8,099 293 834
20,998 20,998 20,998
54,194 40,065 41,963
17,276 11,565 10,950
18,311 4,500 7,694
-- 13,841 14,016
5,178 968 1,291
---------------- --------------- ----------------
917,248 146,621 221,244
(124,503) (139,268) (167,513)
---------------- --------------- ----------------
792,745 7,353 53,731
---------------- --------------- ----------------
(143,285) 215,872 836,318
---------------- --------------- ----------------
1,687,515 28,835 238,072
2,189,742 180,135 475,634
---------------- --------------- ----------------
3,877,257 208,970 713,706
---------------- --------------- ----------------
$ 3,733,972 $ 424,842 $ 1,550,024
---------------- --------------- ----------------
---------------- --------------- ----------------
</TABLE>
See notes to combined financial statements
--
23
<PAGE> 26
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCOME+GROWTH FUND
-----------------------------------------------
11/30/95 11/30/94
(YEAR (4 MONTHS 7/31/94 (YEAR
ENDED) ENDED) ENDED)
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 2,199,784 $ 661,331 $ 1,585,956
Net realized gain (loss) on
investments 2,758,033 (349,437) 665,224
Net unrealized appreciation
(depreciation) on investments 8,290,131 (1,435,863) (1,997,897)
------------ ------------ ------------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS 13,247,948 (1,123,969) 253,283
------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Net investment income
Class A (1,595,862) (399,750) (1,520,221)
Class B (27,580) (1,770) (125)
Class C (326,848) (59,251) (56,632)
Net realized gains on
investments
Class A -- -- (4,048,127)
Class B -- -- --
Class C -- -- --
------------ ------------ ------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS (1,950,290) (460,771) (5,625,105)
------------ ------------ ------------
COMMON STOCK TRANSACTIONS -- NOTE
4
Proceeds from shares sold 25,694,218 2,216,545 10,774,468
Net asset value of shares
issued in reinvestments of
distributions 1,811,615 425,094 5,204,709
Cost of shares redeemed (7,156,525) (2,409,025) (5,857,344)
------------ ------------ ------------
NET INCREASE IN NET ASSETS
FROM COMMON STOCK
TRANSACTIONS 20,349,308 232,614 10,121,833
------------ ------------ ------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS 31,646,966 (1,352,126) 4,750,011
NET ASSETS:
Beginning of period 38,413,946 39,766,072 35,016,061
------------ ------------ ------------
End of period $70,060,912 $38,413,946 $39,766,072
------------ ------------ ------------
------------ ------------ ------------
Undistributed net investment
income $ 488,161 $ 238,667 $ 38,107
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
See notes to combined financial statements
--
24
<PAGE> 27
STATEMENTS OF CHANGES IN NET ASSETS -- (continued)
<TABLE>
<CAPTION>
OPPORTUNITY FUND
--------------------------------
YEAR ENDED
11/30/95 11/30/94
<S> <C> <C>
OPERATIONS:
Net investment loss $ (143,285) $ (213,788)
Net realized gain on investments 1,687,515 2,850,938
Net unrealized appreciation
on investments 2,189,742 91,289
------------- ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 3,733,972 2,728,439
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A -- --
Class B -- --
Class C -- --
Net realized gains on investments
Class A (2,076,944) (4,859,527)
Class B (140,465) --
Class C (495,100) --
------------- ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (2,712,509) (4,859,527)
------------- ------------
COMMON STOCK TRANSACTIONS -- NOTE 4
Proceeds from shares sold 26,834,498 26,262,545
Net asset value of shares issued in
reinvestments of distributions 2,659,316 4,691,824
Cost of shares redeemed (10,917,159) (3,125,566)
------------- ------------
NET INCREASE IN NET ASSETS FROM COMMON
STOCK TRANSACTIONS 18,576,655 27,828,803
------------- ------------
TOTAL INCREASE IN NET ASSETS 19,598,118 25,697,715
NET ASSETS:
Beginning of year 44,844,597 19,146,882
------------- ------------
End of year $ 64,442,715 $44,844,597
------------- ------------
------------- ------------
</TABLE>
See notes to combined financial statements
--
25
<PAGE> 28
STATEMENTS OF CHANGES IN NET ASSETS -- (continued)
<TABLE>
<CAPTION>
GOVERNMENT
SECURITIES FUND
-------------------------------
YEAR ENDED
11/30/95 11/30/94
<S> <C> <C>
OPERATIONS:
Net investment income $ 215,872 $ 34,729
Net realized gain (loss) on investments 28,835 (35,528)
Net unrealized appreciation (depreciation) on
investments 180,135 (17,131)
------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 424,842 (17,930)
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (206,111) (36,403)
Class B (7,476) (548)
Class C (2,285) (313)
Net realized gains on investments
Class A -- (3,174)
Class B -- --
Class C -- --
------------ -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (215,872) (40,438)
------------ -----------
COMMON STOCK TRANSACTIONS -- NOTE 4
Proceeds from shares sold 3,823,786 767,475
Net asset value of shares issued in
reinvestments of distributions 192,488 34,916
Cost of shares redeemed (642,884) (729,790)
------------ -----------
NET INCREASE IN NET ASSETS FROM COMMON
STOCK TRANSACTIONS 3,373,390 72,601
------------ -----------
TOTAL INCREASE IN NET ASSETS 3,582,360 14,233
NET ASSETS:
Beginning of year 561,050 546,817
------------ -----------
End of year $ 4,143,410 $ 561,050
------------ -----------
------------ -----------
</TABLE>
See notes to combined financial statements
--
26
<PAGE> 29
STATEMENTS OF CHANGES IN NET ASSETS -- (continued)
<TABLE>
<CAPTION>
INTERMEDIATE FIXED
INCOME FUND
-------------------------------
YEAR ENDED
11/30/95 11/30/94
<S> <C> <C>
OPERATIONS:
Net investment income $ 836,318 $ 136,684
Net realized gain (loss) on investments 238,072 (75,249)
Net unrealized appreciation (depreciation)
on investments 475,634 (87,673)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,550,024 (26,238)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (708,617) (138,678)
Class B (29,694) (2,585)
Class C (98,007) (1,980)
Net realized gains on investments
Class A -- (22,345)
Class B -- --
Class C -- --
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (836,318) (165,588)
------------ ------------
COMMON STOCK TRANSACTIONS -- NOTE 4
Proceeds from shares sold 14,174,490 2,771,462
Net asset value of shares issued in
reinvestments of dividends 744,437 159,535
Cost of shares redeemed (2,230,224) (692,758)
------------ ------------
NET INCREASE IN NET ASSETS FROM COMMON
STOCK TRANSACTIONS 12,688,703 2,238,239
------------ ------------
TOTAL INCREASE IN NET ASSETS 13,402,409 2,046,413
NET ASSETS:
Beginning of year 3,713,312 1,666,899
------------ ------------
End of year $17,115,721 $ 3,713,312
------------ ------------
------------ ------------
</TABLE>
See notes to combined financial statements
--
27
<PAGE> 30
COWEN FUNDS
NOTES TO COMBINED FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES: Cowen Income + Growth Fund, Inc.
("CIG") and Cowen Funds, Inc. (collectively "the Funds") are registered under
the Investment Company Act of 1940 ("Act") as diversified open-end management
companies. Cowen Funds, Inc. operates as a series company currently issuing
common stock representing its portfolios designated as the Cowen Intermediate
Fixed Income Fund ("CIFIF"), Cowen Government Securities Fund, formerly known as
Cowen Tradition Fixed Income Fund ("CGSF"), and Cowen Opportunity Fund ("COF").
Cowen & Company ("Cowen") acts as the investment manager and distributor of each
of the Funds' shares. These combined financial statements together with the
notes thereto, consist of CIG, COF, CIFIF and CGSF.
On April 19, 1994, shareholders approved amendments to the Funds' Articles of
Incorporation to provide for the issuance of additional classes of shares.
Effective May 9, 1994 (for CIG and COF) and July 11, 1994 (for CIFIF and CGSF),
pursuant to such amendments, the Funds' then existing shares became Class A
shares and the Funds became eligible to issue Class B and Class C shares. Class
A shares are subject to a sales charge imposed at the time of purchase, Class B
shares are subject to a Contingent Deferred Sales Charge and Class C shares are
not subject to a sales charge. Also on April 19, 1994, shareholders approved a
service plan providing for an annual service fee of .25% on Class A and Class B
shares of each fund, and an annual distribution fee of .75% on Class B shares of
CIG, COF and CSGF and of .25% on Class B shares of CIFIF.
(A) Portfolio valuation: Securities whose principal market is on an exchange
are valued at the last sales price on the exchange or, in the absence of
currently reported sales on the exchange, at the most recent bid price in the
over-the-counter market or, in the absence of a recent bid price, the bid
equivalent as obtained from one or more of the major market makers for the
securities to be valued. Securities traded principally in the over-the-counter
market are valued at the most recent bid price. Short-term investments are
carried at amortized cost, which approximates value.
(B) Securities transactions and investment income: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income, including amortization
of discount on investments, is recognized on the accrual basis.
(C) Dividends to shareholders: Dividends for CIG and COF are recorded on the
ex-dividend date. Dividends for CGSF and CIFIF are earned on settled shares
daily and paid monthly. To the extent that net realized capital gain can be
offset by capital loss carryovers, if any, it is the policy of each Fund not to
distribute such gain.
(D) Federal income taxes: It is the policy of each Fund to continue to qualify
as a regulated investment company, if such qualification is in the best
interests of its shareholders, by complying with the provisions available to
certain investment companies, as defined in applicable sections of the Internal
Revenue Code, and to make distributions of taxable income sufficient to relieve
it from all, or substantially all, Federal income taxes.
At November 30, 1995, CGSF had an unused capital loss carryover of
approximately $7,000, available for Federal income tax purposes to be applied
against future securities profits, if any. If not applied, the carryovers expire
in fiscal 2002.
(E) Deferred organization expenses: Organization expenses paid by CGSF and
CIFIF are being
--
28
<PAGE> 31
amortized to operations from January 20, 1993, the date operations commenced,
over the period during which it is expected that a benefit will be realized, not
to exceed five years. In the event that any of the initial shares purchased by
Cowen in connection with the organization of each Fund are redeemed by any
holder thereof prior to the amortization of such expenses, redemption proceeds
will be reduced by a pro rata portion of any unamortized organizational expenses
in the same proportion as the number of initial shares being redeemed bears to
the number of initial shares outstanding at the time of redemption.
(F) During the year ended November 30, 1994, COF adopted Statement of Position
93-2 Determination Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. In
accordance with Federal Income Tax Regulations certain short-term realized gains
are offset against COF's accumulated net investment loss. As of November 30,
1995, $143,285 was reclassified from accumulated undistributed net investment
income to accumulated net realized gain on investments. Net investment income,
net realized gains, and net assets were not affected by this change.
NOTE 2 - INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) Investment Management Fee: Fees paid by the Funds to Cowen pursuant to the
provisions of Investment Management Agreements ("Agreements") are payable
monthly, based on an annual rate of .75%, .90%, .50% and .60% for CIG, COF,
CIFIF and CGSF, respectively, of the average daily value of each Fund's net
assets. The Agreements further provide that if the aggregate expenses of a Fund,
exclusive of interest, taxes, brokerage and, with the prior written consent of
the necessary state securities commissions, extraordinary expenses, exceed the
expense limitation of any state having jurisdiction over that Fund, Cowen will
reimburse the Fund for such excess. The most restrictive state expense
limitation applicable to the Funds requires reimbursement of expenses in any
year that such expenses, excluding distribution expenses, taxes, interest,
brokerage and extraordinary expenses, exceed 2 1/2% of the first $30 million of
average net assets, 2% of the next $70 million, and 1 1/2% of average net assets
in excess of $100 million. There was no expense reimbursement required for any
Fund for the year ended November 30, 1995; however, since May 9, 1994, Cowen has
voluntarily reimbursed the CIG's expenses in an amount equal to an annual rate
of .20% through August 31, 1995, and of .18% after the date, of the average
daily value of its net assets, and the COF's expenses in an amount equal to an
annual rate of .22% of the average daily value of its net assets.
With respect to CGSF and CIFIF, through July 11, 1994, Cowen waived all of
each Fund's Investment Management Fee and has agreed to pay all of each Fund's
expenses. From July 11, 1994 through March 31, 1995, Cowen continued to waive
all of each Fund's Investment Management Fee and to pay all of each Fund's
expenses. With respect to CGSF, Cowen is voluntarily waiving its investment
management fee and service fee and absorbing all other expenses, except for .25%
of other expenses and .50% of the Class B distribution fee. The directors' fees
are being waived by directors. With respect to CIFIF, Cowen is voluntarily
waiving its investment management fee and absorbing all other expenses, except
for .25% of other expenses and its service and distribution fees. The directors'
fees are being waived by directors. Cowen has agreed to maintain these fee and
expense reimbursement arrangements through March 31, 1996 (see "Shareholder
Servicing and Distribution Plan" later in this note).
(B) In acting as distributor during the year ended November 30, 1995, Cowen
earned $51,696, $98,878, $9,014 and $17,067 of commissions on sales of the
shares of CIG, COF, CGSF and CIFIF, respectively.
--
29
<PAGE> 32
(C) Shareholder Servicing and Distribution Plans (the "Plan"): Cowen is paid
monthly fees by each of the Funds 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 each of the Funds pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act"), is calculated at the annual rate of .25% of the value of the average
daily net assets of the Fund attributable to each of Class A and Class B shares
and is used by Cowen to provide compensation for ongoing servicing and/or
maintenance of shareholder accounts with the Funds. Compensation is paid by
Cowen to persons, including Cowen employees, who respond to inquiries of
shareholders of a Fund regarding their ownership of shares or their accounts
with the Fund or who provide other similar services not otherwise required to be
provided by the Fund's investment advisor, transfer agent or other agent of the
Fund.
In addition, pursuant to the Plan, the Funds pay to Cowen a monthly
distribution fee at the annual rate of .75% for CIG, COF and CGSF and of .25%
for CIFIF of the Funds' average daily net assets attributable to Class B shares.
The distribution fee is used by Cowen to provide (1) initial and ongoing sales
compensation to its registered representatives or those of other broker-dealers
that enter into selected dealer agreements with Cowen in respect of sales of
Class B shares; (2) costs of printing and distributing the Funds' Prospectus,
Statement of Additional Information and sales literature to prospective
investors in Class B shares; (3) costs associated with any advertising relating
to Class B shares; and (4) payments to, and expenses of, persons who provide
support services in connection with the distribution of Class B shares.
Payments under the Plan are not tied exclusively to the service and/or
distribution expenses actually incurred by Cowen, and the payments may exceed
expenses actually incurred by Cowen. The Board of Directors evaluates the
appropriateness of the Plan and its payment terms on a continuing basis and in
doing so considers all relevant factors, including expenses borne by Cowen and
amounts it receives under the Plan.
(D) Directors who are not officers, directors, partners, stockholders or
employees of Cowen or its affiliates receive from each Fund a fee of $3,000 per
annum plus $500 per meeting attended and reimbursement for travel and out-
of-pocket expenses; however the Directors have agreed to waive their fees from
CGSF and CIFIF until such time as Cowen ceases to waive its Investment
Management Fee.
NOTE 3 - SECURITIES TRANSACTIONS: The aggregate amount of purchases and sales of
investment securities, excluding short-term securities, during the year ended
November 30, 1995, was as follows:
<TABLE>
<CAPTION>
CIG COF CGSF CIFIF
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
Purchases $ 46,043,978 $ 83,207,579 $ 12,231,306 $ 42,247,090
- -----------------------------------------------------------------------------
Sales $ 35,740,813 $ 74,925,775 $ 8,630,767 $ 29,780,137
- -----------------------------------------------------------------------------
</TABLE>
At November 30, 1995, the cost of investments for Federal tax purposes was
substantially the same as the cost for financial reporting purposes (see the
Statements of Investments).
At November 30, 1995, accumulated net unrealized appreciation on investments
was as follows:
<TABLE>
<CAPTION>
CIG COF CGSF CIFIF
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------
Gross Unrealized
Appreciation $ 9,292,650 $ 5,778,507 $ 129,633 $ 387,189
Gross Unrealized
Depreciation 551,704 2,268,908 278 3,138
- -----------------------------------------------------------------------
Net $ 8,740,946 $ 3,509,599 $ 129,355 $ 384,051
- -----------------------------------------------------------------------
</TABLE>
NOTE 4 - COMMON STOCK TRANSACTIONS: At November 30, 1995, there were authorized
250 million shares, $.001 par value, of each class of each Fund's Common Stock.
Transactions in the Fund's Common Stock were as follows:
--
30
<PAGE> 33
COWEN FUNDS
NOTE 4 -- (continued)
COWEN INCOME + GROWTH FUND
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1995
----------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------- ------------------------ -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ------------ --------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 1,060,509 $ 12,228,736 98,162 $ 1,137,116 976,780 $ 12,328,366
Dividends Reinvested 127,170 1,462,254 2,287 26,830 28,022 322,531
--------- ------------ --------- ----------- --------- ------------
1,187,679 13,690,990 100,449 1,163,946 1,004,802 12,650,897
Shares Redeemed (475,701) (5,554,055) (16,349) (204,964) (113,006) (1,397,506)
--------- ------------ --------- ----------- --------- ------------
Net Increase 711,978 $ 8,136,935 84,100 $ 958,982 891,796 $ 11,253,391
========= =========== ========= ========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
FOUR MONTHS ENDED NOVEMBER 30, 1994
-------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------- ---------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ------------ --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 42,642 $ 467,393 21,266 $233,743 137,685 $ 1,515,409
Dividends Reinvested 33,431 364,728 160 1,740 5,373 58,626
--------- ------------ --------- --------- --------- -----------
76,073 832,121 21,426 235,483 143,058 1,574,035
Shares Redeemed (192,322) (2,112,065) -- -- (26,644) (296,960)
--------- ------------ --------- --------- --------- -----------
Net Increase (Decrease) (116,249) $ (1,279,944) 21,426 $235,483 116,414 $ 1,277,075
========= =========== ========= ========= ========= ==========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JULY 31, 1994
--------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
-------------------------- ---------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ------------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 918,329 $ 10,348,789 5,037 $54,828 32,619 $ 370,851
Dividends Reinvested 442,905 5,149,118 11 126 5,051 55,465
Shares Transferred from
Class A -- -- -- -- 421,908 4,611,425
--------- ------------- --------- --------- --------- -----------
1,361,234 15,497,907 5,048 54,954 459,578 5,037,741
--------- ------------- --------- --------- --------- -----------
Shares Redeemed (499,029) (5,752,307) -- -- (8,447) (105,037)
Shares Transferred to
Class C (421,908) (4,611,425) -- -- -- --
--------- ------------- --------- --------- --------- -----------
(920,937) (10,363,732) -- -- (8,447) (105,037)
--------- ------------- --------- --------- --------- -----------
Net Increase 440,297 $ 5,134,175 5,048 $54,954 451,131 $ 4,932,704
========= ============= ========= ========= ========= ==========
</TABLE>
--
31
<PAGE> 34
COWEN FUNDS
NOTE 4 -- (continued)
COWEN OPPORTUNITY FUND
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1995
-----------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------- ----------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ------------ -------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 612,055 $ 7,910,141 390,219 $ 4,909,991 1,067,202 $ 14,014,366
Dividends Reinvested 173,680 2,028,580 12,026 139,672 42,007 491,064
--------- ------------ -------- ----------- --------- ------------
785,735 9,938,721 402,245 5,049,663 1,109,209 14,505,430
Shares Redeemed (494,999) (6,302,236) (74,159) (956,514) (277,716) (3,658,409)
--------- ------------ -------- ----------- --------- ------------
Net Increase 290,736 $ 3,636,485 328,086 $ 4,093,149 831,493 $ 10,847,021
========= =========== ======== ========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1994
---------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------- ----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ------------ -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 1,765,997 $ 21,958,898 171,015 $ 2,194,994 166,185 $ 2,108,653
Dividends Reinvested 396,269 4,691,824 -- --
Shares Transferred from -- -- -- -- 472,768 5,843,419
Class A --------- ------------ -------- ----------- -------- -----------
2,162,266 26,650,722 171,015 2,194,994 638,953 7,952,072
--------- ------------ -------- ----------- -------- -----------
Shares Redeemed (223,648) (2,981,977) (63) (808) (11,349) (142,781)
Shares Transferred to
Class C (472,768) (5,843,419) -- -- -- --
--------- ------------ -------- ----------- -------- -----------
(696,416) (8,825,396) (63) (808) (11,349) (142,781)
--------- ------------ -------- ----------- -------- -----------
Net Increase 1,465,850 $ 17,825,326 170,952 $ 2,194,186 627,604 $ 7,809,291
========= =========== ======== ========== ======== ==========
</TABLE>
--
32
<PAGE> 35
COWEN FUNDS
NOTE 4 -- (continued)
COWEN GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1995
----------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------ ---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 396,002 $ 3,717,273 8,201 $78,977 2,890 $27,536
Dividends Reinvested 19,120 183,534 687 6,676 235 2,278
--------- ----------- --------- --------- --------- ---------
415,122 3,900,807 8,888 85,653 3,125 29,814
Shares Redeemed (66,867) (642,735) -- -- (15) (149)
--------- ----------- --------- --------- --------- ---------
Net Increase 348,255 $ 3,258,072 8,888 $85,653 3,110 $29,665
========= ========== ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1994
---------------------------------------------------------------------------
CLASS A CLASS B CLASS C
----------------------- ---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 73,425 $ 704,548 6,367 $60,200 289 $ 2,727
Dividends Reinvested 3,539 34,060 59 546 33 310
Shares Transferred from Class A -- -- -- -- 1,110 10,513
--------- ---------- --------- --------- --------- ---------
76,964 738,608 6,426 60,746 1,432 13,550
--------- ---------- --------- --------- --------- ---------
Shares Redeemed (76,699) (729,790) -- -- -- --
Shares Transferred to Class C (1,110) (10,513) -- -- -- --
--------- ---------- --------- --------- --------- ---------
(77,809) (740,303) -- -- -- --
--------- ---------- --------- --------- --------- ---------
Net Increase (Decrease) (845) $ (1,695) 6,426 $60,746 1,432 $13,550
========= ========== ========= ========= ========= =========
</TABLE>
--
33
<PAGE> 36
COWEN FUNDS
NOTE 4 -- (continued)
COWEN INTERMEDIATE FIXED INCOME FUND
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1995
-----------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------------- --------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ------------ -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 1,351,821 $ 12,669,301 24,311 $ 232,218 136,346 $ 1,272,971
Dividends Reinvested 66,831 637,786 1,809 17,211 9,435 89,440
--------- ------------ -------- --------- -------- -----------
1,418,652 13,307,087 26,120 249,429 145,781 1,362,411
Shares Redeemed (218,287) (2,080,755) (1,246) (11,898) (14,385) (137,571)
--------- ------------ -------- --------- -------- -----------
Net Increase 1,200,365 $ 11,226,332 24,874 $ 237,531 131,396 $ 1,224,840
========= =========== ======== ========= ======== ==========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30, 1994
-------------------------------------------------------------------------
CLASS A CLASS B CLASS C
----------------------- --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ----------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 205,997 $ 1,949,545 33,965 $ 315,311 55,417 $ 506,606
Dividends Reinvested 16,525 156,216 145 1,342 214 1,977
Shares Transferred from Class A -- -- -- -- 6,457 60,373
-------- ----------- -------- --------- -------- ---------
222,522 2,105,761 34,110 316,653 62,088 568,956
-------- ----------- -------- --------- -------- ---------
Shares Redeemed (72,788) (692,529) (25) (229) -- --
Shares Transferred to Class C (6,457) (60,373) -- -- -- --
-------- ----------- -------- --------- -------- ---------
(79,245) (752,902) (25) (229) -- --
-------- ----------- -------- --------- -------- ---------
Net Increase 143,277 $ 1,352,859 34,085 $ 316,424 62,088 $ 568,956
======== ========== ======== ========= ======== =========
</TABLE>
--
34
<PAGE> 37
NOTE 5 - ACQUISITION OF EXETER EQUITY TRUST AND EXETER FIXED INCOME TRUST: On
March 29, 1995, CIG acquired all the net assets of Exeter Equity Trust (Equity),
a series of Branch Cabell Investment Trust, pursuant to a plan of reorganization
approved by Equity's shareholders on March 23, 1995.
The acquisition was accomplished by a tax-free exchange of 802,081 shares of
Equity for 722,745 shares of CIG on March 29, 1995. The aggregate net assets of
CIG and Equity immediately before the acquisition were $41,415,373 and
$8,195,936, respectively, of which $194,683 represented unrealized appreciation
of Equity's net assets. Immediately after the acquisition the combined net
assets amounted to $49,611,309.
On March 29, 1995, CGSF acquired all the net assets of Exeter Fixed Income
Trust (Fixed Income), a series of Branch Cabell Investment Trust, pursuant to a
plan of reorganization approved by Fixed Income's shareholders on March 23,
1995.
The acquisition was accomplished by a tax-free exchange of 116,508 shares of
Fixed Income for 115,714 shares of CGSF on March 29, 1995. The aggregate net
assets of CGSF and Fixed Income immediately before the acquisition were
$1,996,507 and $1,086,551, respectively, of which $36,595 represented unrealized
depreciation of Fixed Income's net assets. Immediately after the acquisition the
combined net assets amounted to $3,083,058.
--
35
<PAGE> 38
NOTE 6 -- FINANCIAL HIGHLIGHTS: Selected data for a share of Common Stock
outstanding throughout each period:
<TABLE>
<CAPTION>
COWEN INCOME + GROWTH FUND -- CLASS A
----------------------------------------------------------------------------------
FOUR
MONTHS
YEAR ENDED YEAR ENDED JULY 31,
ENDED NOV. 30, -----------------------------------------------
11/30/95 1994 1994 1993 1992 1991
------------- ------------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 10.62 $ 11.06 $ 12.97 $ 12.85 $ 11.30 $ 10.59
------------- ------------ -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Investment Income -- Net 0.51 0.19 0.52 0.48 0.46 0.44
Net Realized and Unrealized Gains
(Losses) on Investments 2.54 (0.50) (0.44) 0.68 1.57 0.72
------------- ------------ -------- -------- -------- --------
Net from Investment Operations 3.05 (0.31) 0.08 1.16 2.03 1.16
------------- ------------ -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.48) (0.13) (0.52) (0.49) (0.48) (0.44)
Distributions from Net Realized
Gains on Investments -- -- (1.47) (0.55) -- (0.01)
------------- ------------ -------- -------- -------- --------
Total Distributions (0.48) (0.13) (1.99) (1.04) (0.48) (0.45)
------------- ------------ -------- -------- -------- --------
NET ASSET VALUE,
End of Period $ 13.19 $ 10.62 $ 11.06 $ 12.97 $ 12.85 $ 11.30
============ =========== ======= ======= ======= =======
Total Return(5) 29.50% (8.50%)(2) 0.28% 9.45% 18.49% 11.40%
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 omitted) $49,298 $ 32,104 $ 34,722 $ 35,016 $ 32,956 $ 32,098
Ratio of Expenses to Average
Net Assets 1.31% 0.47%(3) 1.26% 1.33% 2.02% 2.26%
Ratio of Investment Income -- Net to
Average Net Assets 4.29% 1.65%(3) 4.32% 3.74% 3.84% 4.07%
Decrease Reflected on Above Ratios
Due to Expense
Reimbursements/Waivers 0.19% 0.07%(3) 0.04% -- -- --
Portfolio Turnover Rate 72% 31% 76% 62% 73% 41%
</TABLE>
--
36
<PAGE> 39
NOTE 6 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN INCOME + GROWTH FUND -- CLASS B
-----------------------------------------------
FOUR
MONTHS PERIOD
ENDED FROM
YEAR NOV. 5/17/94(4)
ENDED 30, THROUGH
11/30/95 1994 7/31/94
------- ------- -------
<S> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 10.58 $ 11.04 $ 10.85(1)
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Investment Income -- Net 0.42 0.16 0.09
Net Realized and Unrealized Gains (Losses) on
Investments 2.54 (0.50) 0.20
------- ------- -------
Net from Investment Operations 2.96 (0.34) 0.29
------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.40) (0.12) (0.10)
Distributions from Net Realized Gains on
Investments -- -- --
------- ------- -------
Total Distributions (0.40) (0.12) (0.10)
------- ------- -------
NET ASSET VALUE,
End of Period $ 13.14 $ 10.58 $ 11.04
====== ====== ======
Total Return(5) 28.49% (9.33%)(2) 13.19%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 omitted) $ 1,453 $ 280 $ 56
Ratio of Expenses to Average Net Assets 2.07% 0.75%(3) 0.57%(3)
Ratio of Investment Income -- Net to Average Net
Assets 3.44% 1.31%(3) 0.45%(3)
Decrease Reflected on Above Ratios Due to
Expense Reimbursements/Waivers 0.19% 0.07%(3) 0.04%(3)
Portfolio Turnover Rate 72% 31% 76%
</TABLE>
--
37
<PAGE> 40
NOTE 6 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN INCOME + GROWTH FUND -- CLASS C
-----------------------------------------------
FOUR
MONTHS PERIOD
ENDED FROM
YEAR NOV. 5/19/94(4)
ENDED 30, THROUGH
11/30/95 1994 7/31/94
-------- ------- -------
<S> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 10.62 $ 11.06 $ 10.91(1)
-------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Investment Income -- Net 0.52 0.20 0.10
Net Realized and Unrealized Gains (Losses) on
Investments 2.59 (0.50) 0.16
-------- ------- -------
Net from Investment Operations 3.11 (0.30) 0.26
-------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.50) (0.14) (0.11)
Distributions from Net Realized Gains on
Investments -- -- --
-------- ------- -------
Total Distributions (0.50) (0.14) (0.11)
-------- ------- -------
NET ASSET VALUE,
End of Period $ 13.23 $ 10.62 $ 11.06
======== ====== ======
Total Return(5) 29.99% (8.37%)(2) 10.63%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 omitted) $ 19,309 $ 6,029 $ 4,988
Ratio of Expenses to Average Net Assets 0.96% 0.40%(3) 0.28%(3)
Ratio of Investment Income -- Net to Average
Net Assets 4.66% 1.68%(3) 1.13%(3)
Decrease Reflected on Above Ratios Due to
Expense Reimbursements/Waivers 0.19% 0.07%(3) 0.05%(3)
Portfolio Turnover Rate 72% 31% 76%
</TABLE>
--
38
<PAGE> 41
NOTE 6 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN OPPORTUNITY FUND -- CLASS A
--------------------------------------------------------
YEAR NOVEMBER 30,
--------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Year $ 12.98 $ 16.06 $ 14.92 $ 14.72 $ 10.78
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Investment Income (Loss) -- Net(6) (0.04) (0.09) (0.16) (0.20) (0.22)
Net Realized and Unrealized Gains (Losses)
on Investments 0.97 1.22 3.79 2.22 4.16
-------- -------- -------- -------- --------
Net from Investment Operations 0.93 1.13 3.63 2.02 3.94
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income -- -- -- -- --
Distributions from Net Realized Gains on
Investments (0.78) (4.21) (2.49) (1.82) --
-------- -------- -------- -------- --------
Total Distributions (0.78) (4.21) (2.49) (1.82) --
-------- -------- -------- -------- --------
NET ASSET VALUE,
End of Year $ 13.13 $ 12.98 $ 16.06 $ 14.92 $ 14.72
======== ======== ======== ======== ========
Total Return(5) 7.91% 9.53% 29.48% 15.33% 36.55%
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $ 38,724 $ 34,487 $ 19,147 $ 13,547 $ 11,672
Ratio of Expenses to Average Net Assets 1.43% 1.47% 1.63% 2.52% 2.80%
Ratio of Investment Loss -- Net to Average
Net Assets (0.28%) (0.66%) (1.10%) (1.43%) (1.42%)
Decrease Reflected on Above Ratios Due to
Expense Reimbursements/Waivers 0.22% 0.14% -- -- --
Portfolio Turnover Rate 148% 152% 167% 145% 97%
</TABLE>
--
39
<PAGE> 42
NOTE 6 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN OPPORTUNITY FUND -- CLASS B
---------------------------------------
PERIOD
FROM
YEAR 5/17/94(4)
ENDED THROUGH
11/30/95 11/30/94
------- -------
<S> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 12.91 $ 12.18(1)
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Investment Income (Loss) -- Net(6) (0.14) (0.09)
Net Realized and Unrealized Gains (Losses) on
Investments 0.94 0.82
------- -------
Net from Investment Operations 0.80 0.73
------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income -- --
Distributions from Net Realized Gains on
Investments (0.78) --
------- -------
Total Distributions (0.78) --
------- -------
NET ASSET VALUE,
End of Year $ 12.93 $ 12.91
====== ======
Total Return(5) 6.97% 11.04%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $ 6,455 $ 2,207
Ratio of Expenses to Average Net Assets 2.19% 1.32%(3)
Ratio of Investment Loss -- Net to Average Net
Assets (1.06%) (0.83%)(3)
Decrease Reflected on Above Ratios Due to Expense
Reimbursements/Waivers 0.22% 0.12%(3)
Portfolio Turnover Rate 148% 152%
</TABLE>
--
40
<PAGE> 43
NOTE 6 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN OPPORTUNITY FUND -- CLASS C
----------------------------------------
PERIOD
FROM
YEAR 5/9/94(4)
ENDED THROUGH
11/30/95 11/30/94
-------- -------
<S> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 12.99 $ 12.36(1)
-------- -------
INCOME FROM INVESTMENT OPERATIONS:
Investment Income (Loss) -- Net(6) 0.01 (0.03)
Net Realized and Unrealized Gains (Losses) on
Investments 0.98 0.66
-------- -------
Net from Investment Operations 0.99 0.63
-------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income -- --
Distributions from Net Realized Gains on
Investments (0.78) --
-------- -------
Total Distributions (0.78) --
-------- -------
NET ASSET VALUE,
End of Year $ 13.20 $ 12.99
======== ======
Total Return(5) 8.40% 9.04%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $ 19,264 $ 8,151
Ratio of Expenses to Average Net Assets 1.03% 0.75%(3)
Ratio of Investment Income (Loss) -- Net to
Average Net Assets 0.11% (0.26%)(3)
Decrease Reflected on Above Ratios Due to Expense
Reimbursements/Waivers 0.22% 0.13%(3)
Portfolio Turnover Rate 148% 152%
</TABLE>
--
41
<PAGE> 44
NOTE 6 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN GOVERNMENT SECURITIES FUND -- CLASS A
-----------------------------------------------------
PERIOD
FROM
1/20/93
(COMMENCEMENT
OF
YEAR YEAR OPERATIONS)
ENDED ENDED THROUGH
11/30/95 11/30/94 11/30/93
------- ------- -------
<S> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 9.17 $ 10.11 $ 9.77
------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Investment Income -- Net 0.69 0.52 0.41
Net Realized and Unrealized
Gains (Losses) on
Investments 0.66 (0.84) 0.30
------- ------- -------
Net from Investment Operations 1.35 (0.32) 0.71
------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment
Income (0.69) (0.56) (0.37)
Distributions from Net
Realized Gains on
Investments -- (0.06) --
------- ------- -------
Total Distributions (0.69) (0.62) (0.37)
------- ------- -------
NET ASSET VALUE,
End of Period $ 9.83 $ 9.17 $ 10.11
====== ====== ======
Total Return(5) 15.23% (3.24%) 8.49%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $ 3,945 $ 488 $ 547
Ratio of Expenses to Average
Net Assets 0.22% -- --
Ratio of Investment Income --
Net to Average Net Assets 7.08% 5.24% 5.06%(3)
Decrease Reflected on Above
Ratios Due to:
Investment Management and
Service Fees Waived by
Cowen 0.85% 0.78% 0.75%(3)
Other Expenses Waived or
Absorbed 3.63% 11.85% 16.94%(3)
Portfolio Turnover Rate 289% 210% 122%
</TABLE>
--
42
<PAGE> 45
NOTE 6 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN GOVERNMENT
SECURITIES FUND -- CLASS B
--------------------------------------
PERIOD
FROM
YEAR 7/15/94(4)
ENDED THROUGH
11/30/95 11/30/94
------- ------
<S> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 9.28 $ 9.52(1)
------- ------
INCOME FROM INVESTMENT OPERATIONS:
Investment Income -- Net 0.63 0.20
Net Realized and Unrealized Gains (Losses) on
Investments 0.73 (0.24)
------- ------
Net from Investment Operations 1.36 (0.04)
------- ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.63) (0.20)
Distributions from Net Realized Gains on
Investments -- --
------- ------
Total Distributions (0.63) (0.20)
------- ------
NET ASSET VALUE,
End of Period $ 10.01 $ 9.28
====== =====
Total Return(5) 15.09% (1.27%)(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $ 153 $ 60
Ratio of Expenses to Average Net Assets 0.75% 0.28%(3)
Ratio of Investment Income -- Net to Average Net
Assets 6.62% 2.02%(3)
Decrease Reflected on Above Ratios Due to:
Investment Management, Service and Distribution
Fees
Waived by Cowen 1.10% 0.30%(3)
Other Expenses Waived or Absorbed 5.29% 6.05%(3)
Portfolio Turnover Rate 289% 210%
</TABLE>
--
43
<PAGE> 46
NOTE 6 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN GOVERNMENT
SECURITIES FUND -- CLASS C
-------------------------------------
PERIOD
FROM
YEAR 7/11/94(4)
ENDED THROUGH
11/30/95 11/30/94
------ ------
<S> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 9.17 $ 9.45(1)
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Investment Income -- Net .70 0.22
Net Realized and Unrealized Gains (Losses) on
Investments .77 (.28)
------ ------
Net from Investment Operations 1.47 (.06)
------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (.70) (.22)
Distributions from Net Realized Gains on
Investments -- --
------ ------
Total Distributions (.70) (.22)
------ ------
NET ASSET VALUE,
End of Period $ 9.94 $ 9.17
===== =====
Total Return(5) 16.52% (1.57%)(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $ 45 $ 13
Ratio of Expenses to Average Net Assets .20% --
Ratio of Investment Income -- Net to Average Net
Assets 7.12% 2.42%(3)
Decrease Reflected on Above Ratios Due to:
Investment Management Fees Waived by Cowen .60% 0.24%(3)
Other Expenses Waived or Absorbed 5.14% 6.26%(3)
Portfolio Turnover Rate 289% 210%
</TABLE>
--
44
<PAGE> 47
NOTE 6 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN INTERMEDIATE FIXED INCOME FUND -- CLASS
A
----------------------------------------------
PERIOD
FROM
1/20/93
(COMMENCEMENT
OF
YEAR YEAR OPERATIONS)
ENDED ENDED THROUGH
11/30/95 11/30/94 11/30/93
-------- ------- -------
<S> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 9.12 $ 9.95 $ 9.77
-------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Investment Income -- Net 0.67 0.51 0.40
Net Realized and Unrealized Gains
(Losses) on Investments 0.59 (0.68) 0.14
-------- ------- -------
Net from Investment Operations 1.26 (0.17) 0.54
-------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.67) (0.53) (0.36)
Distributions from Net Realized Gains
on Investments -- (0.13) --
-------- ------- -------
Total Distributions (0.67) (0.66) (0.36)
-------- ------- -------
NET ASSET VALUE,
End of Period $ 9.71 $ 9.12 $ 9.95
======== ====== ======
Total Return(5) 14.22% (1.77%) 6.50%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $ 14,667 $ 2,836 $ 1,167
Ratio of Expenses to Average Net
Assets 0.47% 0.12% --
Ratio of Investment Income -- Net to
Average Net Assets 6.90% 5.41% 4.93%(3)
Decrease Reflected on Above Ratios
Due to:
Investment Management and Service
Fees Waived by Cowen 0.50% 0.63% 0.75%(3)
Other Expenses Waived or Absorbed 0.86% 3.43% 4.45%(3)
Portfolio Turnover Rate 264% 159% 143%
</TABLE>
--
45
<PAGE> 48
NOTE 6 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN INTERMEDIATE FIXED
INCOME FUND -- CLASS B
----------------------------
PERIOD
FROM
YEAR 7/12/94(4)
ENDED THROUGH
11/30/95 11/30/94
------- ------
<S> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 9.17 $ 9.32(1)
------- ------
INCOME FROM INVESTMENT OPERATIONS:
Investment Income -- Net 0.65 0.20
Net Realized and Unrealized Gains (Losses) on
Investments 0.61 (0.15)
------- ------
Net from Investment Operations 1.26 0.05
------- ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.65) (0.20)
Distributions from Net Realized Gains on
Investments -- --
------- ------
Total Distributions (0.65) (0.20)
------- ------
NET ASSET VALUE,
End of Period $ 9.78 $ 9.17
====== =====
Total Return(5) 14.12% 1.25%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $ 577 $ 313
Ratio of Expenses to Average Net Assets 0.68% 0.19%(3)
Ratio of Investment Income -- Net to Average Net
Assets 6.79% 2.15%(3)
Decrease Reflected on Above Ratios Due to:
Investment Management, Service and Distribution
Fees Waived by Cowen 0.50% 0.18%(3)
Other Expenses Waived or Absorbed 1.25% 1.37%(3)
Portfolio Turnover Rate 264% 159%
</TABLE>
--
46
<PAGE> 49
NOTE 6 -- (CONTINUED)
<TABLE>
<CAPTION>
COWEN INTERMEDIATE FIXED
INCOME FUND -- CLASS C
--------------------------------
PERIOD
FROM
YEAR 7/11/94(4)
ENDED THROUGH
11/30/95 11/30/94
------- ------
<S> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 9.10 $ 9.34(1)
------- ------
INCOME FROM INVESTMENT OPERATIONS:
Investment Income -- Net 0.69 0.23
Net Realized and Unrealized Gains (Losses) on
Investments 0.58 (0.24)
------- ------
Net from Investment Operations 1.27 (0.01)
------- ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.69) (0.23)
Distributions from Net Realized Gains on Investments -- --
------- ------
Total Distributions (0.69) (0.23)
------- ------
NET ASSET VALUE,
End of Period $ 9.68 $ 9.10
====== =====
Total Return(5) 14.41% (0.36%)(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $ 1,872 $ 565
Ratio of Expenses to Average Net Assets 0.20% --
Ratio of Investment Income -- Net to Average Net Assets 7.23% 1.98%(3)
Decrease Reflected on Above Ratios Due to:
Investment Management Fee Waived by Cowen 0.50% 0.16%(3)
Other Expenses Waived or Absorbed 0.97% 1.87%(3)
Portfolio Turnover Rate 264% 159%
</TABLE>
- ---------------
(1) Based upon the Class A Net Asset Value on the day prior to commencement of
distribution
(2) Annualized
(3) Not Annualized
(4) Commencement of Distribution
(5) Exclusive of Sales Charges
(6) Based upon average shares outstanding
--
47
<PAGE> 50
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Stockholders and Boards of Directors
Cowen Income + Growth Fund, Inc. and
Cowen Funds, Inc.
We have audited the accompanying statements of assets and liabilities,
including the statements of investments, of Cowen Income + Growth Fund, Inc. and
Cowen Funds, Inc. (comprising, respectively, Cowen Opportunity Fund, Cowen
Intermediate Fixed Income Fund and Cowen Government Securities Fund) as of
November 30, 1995, and the related statements of operations for the year then
ended and the statement of changes in net assets, and the financial highlights
(see Note 6) for each of the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Cowen
Income + Growth Fund, Inc. and each of the respective portfolios constituting
Cowen Funds, Inc. at November 30, 1995, the results of their operations for the
year then ended, and the changes in their net assets and the financial
highlights for each of the indicated periods, in conformity with generally
accepted accounting principles.
New York, New York
January 3, 1996
--
48
<PAGE> 51
COWEN FAMILY OF FUNDS
Financial Square
New York, NY 10005-3597
DIRECTORS
Joseph M. Cohen, Chairman
James H. Carey
Dr. Peter P. Gil
Dr. Martin J. Gruber
Burton J. Weiss
OFFICERS
Joseph M. Cohen, Chairman of the Board of Directors and Chief Executive Officer
David R. Sarns, President
William Church, Vice President and Senior Investment Officer
Creighton H. Peet, Vice President, Treasurer, Chief Financial Officer and Senior
Investment Officer
William Rechter, Senior Investment Officer(1)
Jarrod Cohen, Investment Officer(2)
Alan Koepplin, Investment Officer(3)
Lawrence S. Liebowitz, Vice President and Assistant Secretary
Rodd M. Baxter, Secretary
Irwood Schlackman, Controller
<TABLE>
<S> <C>
INVESTMENT ADVISER CUSTODIAN
& DISTRIBUTOR & TRANSFER AGENT
Cowen & Company Investors Fiduciary Trust Co.
Financial Square P.O. Box 419111
New York, NY 10005 Kansas City, MO 64141
LEGAL COUNSEL INDEPENDENT AUDITORS
Willkie Farr & Gallagher Ernst & Young LLP
One Citicorp Center 787 Seventh Avenue
153 East 53rd Street New York, NY 10019
New York, NY 10022
</TABLE>
- ---------------
(1) Cowen Income + Growth and Cowen Opportunity
(2) Cowen Opportunity
(3) Cowen Intermediate Fixed Income and Cowen Government Securities
COW/ANN 11/95
