<PAGE> 1
SEMI-ANNUAL REPORTS (UNAUDITED) MAY 31, 1998
THE SG COWEN
FAMILY OF FUNDS
SG COWEN INCOME+GROWTH FUND, INC.
SG COWEN OPPORTUNITY FUND
SG COWEN GOVERNMENT SECURITIES FUND
SG COWEN INTERMEDIATE FIXED INCOME FUND
SG COWEN LARGE CAP VALUE FUND
[SG COWEN LOGO]
<PAGE> 2
----------------------------
CONTENTS
CHAIRMAN'S LETTER............................................................. 1
SG COWEN INCOME + GROWTH FUND................................................. 2
SG COWEN OPPORTUNITY FUND..................................................... 4
SG COWEN INTERMEDIATE FIXED INCOME FUND AND
SG COWEN GOVERNMENT SECURITIES FUND........................................... 6
SG COWEN LARGE CAP VALUE FUND................................................. 8
STATEMENTS OF INVESTMENTS.....................................................10
STATEMENTS OF ASSETS AND LIABILITIES..........................................28
STATEMENTS OF OPERATIONS......................................................30
STATEMENTS OF CHANGES IN NET ASSETS...........................................32
NOTES TO COMBINED FINANCIAL STATEMENTS........................................37
<PAGE> 3
CHAIRMAN'S LETTER JULY 14, 1998
To Our Shareholders:
The U.S. stock market generated double-digit returns during the SG Cowen
Family of Funds semi-annual period ending May 31, 1998. Meanwhile, the U.S.
Treasury bond market served as a safe haven for worldwide investors seeking
safety and liquidity.
The SG Cowen Family of Funds generally posted competitive returns by employing
disciplined investment strategies that come from decades of experience in the
investment field. During the period, we inaugurated a new fund, the Large Cap
Value Fund, managed by Benedict Capaldi. Mr. Capaldi has more than 30 years of
investment experience at several leading asset management firms. Details on the
Funds' performance and portfolio manager commentary can be found on the
following pages.
To participate in the markets with confidence requires intensive fundamental
research, and that requires a great deal of resources. Indeed, the market
volatility both here and abroad reinforces the advantage of a major commitment
of professional investment management.
To bolster our resources -- financial, technological and professional -- we
decided to create a partnership with one of the world's most powerful commercial
and investment banks. In February, Cowen & Company announced that it agreed to
be acquired by Societe Generale, a leading financial institution headquartered
in France. Established in 1864, Societe Generale has a global network of offices
in 80 countries, serving a client base that includes 5 million retail clients
and 4,000 institutional investors. Its assets of $410 billion place it among the
16 largest banks in the world. As a result of this transaction, Cowen and
Societe Generale Securities Corporation, the U.S. securities and investment
banking subsidiary of Societe Generale, were integrated with one another to form
SG Cowen Securities Corporation.
Both Cowen and Societe Generale have demonstrated a commitment to maintaining
the very highest standards of quality and service. As an SG Cowen client, you
will continue to receive the same exceptional level of service that you have
come to expect from the firm.
Your Investment Executive is prepared to discuss how the SG Cowen Family of
Funds, as well as our new association with Societe Generale, can help you meet
your financial objectives.
Sincerely,
/s/ JOSEPH M. COHEN
Joseph M. Cohen
Chairman
<PAGE> 4
SG COWEN INCOME + GROWTH FUND
Seeking to Provide A Cushion
In A Volatile Market
While the Standard & Poor's 500 Index posted double-digit returns for the
period, most of that return came from the 100 largest capitalization stocks.
Although it was a good period for large-cap growth investors, it was a more
challenging period for lower risk, higher-yield value managers.
PERFORMANCE
For the six months ended May 31, 1998, the total cumulative return of the
Income + Growth Fund's Class A Shares was 7.57%. In comparison, the Lipper
Equity-Income Index return was 8.71% while the S&P 500 Index returned 15.05%
during the same period. The Fund's Class B and Class I shares returned 7.20% and
7.71% respectively, for the six months.
Here are some of the highlights of the last six month period:
- Healthcare and Retailing Outperform -- Pharmaceutical companies were big
winners during the first part of 1998. Pfizer has received widespread news
coverage for its development of Viagra, a male impotency drug. However,
that's only one of many successful therapies that the company is in the
process of developing and marketing. Another strong performer was Bausch &
Lomb, a maker of over-the-counter eye products and sunglasses. The company
would be an attractive acquisition for a major drug company.
The retailing area has also been strong, as the U.S. economy continues to
grow at a robust rate and the consumer confidence reaches record levels. At
May 31, 1998, the Fund's largest holding was Sears Roebuck, a company that
has rebounded from problems in its credit card division. Meanwhile, its core
retail business has taken marketshare from rival J.C. Penney in the soft
goods area.
- Energy Hurt By Falling Oil Prices -- Because of falling demand, oil prices
fell sharply during the period, sinking to about $12 per barrel at the end
of May. Share prices of domestic and international energy producers, as well
as oil service companies, were adversely affected. We expect Middle Eastern
countries to cut production to raise prices, because their economies depend
upon the price of oil firming to the high-teens. Therefore, we added to our
positions in Mobil Oil, Schlumberger, Texaco and other energy companies.
- Lightening Up On REITs & Electric Utilities -- Early in the six-month
period, electric utilities and REITs performed very well, buoyed by falling
interest rates. Concerns over the Asian economic crisis, the specter of a
slowdown in U.S. corporate profits and high valuations in growth stocks led
to a surge in defensive issues. Many of these companies reached our target
valuations early in 1998 and we reduced our exposure there.
With the proceeds from the electric utilities and REITs, we added to our
holdings in the food industry. We purchased shares in ConAgra, which is
strong in packaged foods; Dean Foods, a major dairy and vegetable processing
company; and Campbell Soup. Overall, the food group has appeared very
inexpensive to us, because earnings and cash flow appear to be growing
faster than what
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2
<PAGE> 5
has been typical for the industry. At the same time, the food industry is
defensive, in that it performs well in an economic slowdown.
In addition, although financial services did not perform that well during the
period, we continue to hold positions in the banking industry. Even though
NationsBank and Banc One have recently found merger partners in BankAmerica and
First Chicago NBD, we continue to find their valuations attractive. The
NationsBank/BankAmerica merger creates a nationwide banking powerhouse, while
the Banc One/First Chicago combination does the same in the Midwest.
LOOKING FORWARD
Because of its above average dividend yield when compared to the S&P 500 Index,
the SG Cowen Income + Growth Fund is considered a low-risk portfolio. According
to Morningstar, Inc., a mutual fund industry research firm, the Fund's "beta,"
or measure of price volatility, is 0.53. A beta of 1 suggests that a portfolio
has an equal volatility to the stock market as a whole.
We continue to see a market environment characterized by low inflation,
slowing U.S. corporate profits and concerns about Asia's weakening economy and
currencies. Because the portfolio's exposure to Asia is minimal and because it
contains companies that pay high and rising dividends, we believe that we are
well positioned for the balance of 1998 in the event of a sluggish stock market.
--
3
<PAGE> 6
SG COWEN OPPORTUNITY FUND
Small-Cap Stocks Increasingly
Look Like Bargains
The small-capitalization market continues to lag the large market averages in
1998. The Asian economic crisis is leading investors to large U.S. brand name
companies for maximum liquidity. While small-cap stocks have underperformed
large-cap stocks for nearly four years, 60 years of capital market history
suggests that this trend will reverse. Historically, small caps outperform on
average by about 2% per year. However, rather than smooth and predictable
performance, this outperformance comes in waves. Given the recent period of
underperformance and the valuation and growth dynamics in favor of small caps,
we believe the next wave of outperformance is close at hand.
PERFORMANCE
For the six month period ending May 31, 1998, the total cumulative return of the
SG Cowen Opportunity Fund Class A shares was 1.35%. The unmanaged Russell 2000
Index generated a return of 6.54% for the same period, while by contrast the
Standard & Poor's 500 Index was up 15.05%. The Fund's Class B and Class I shares
returned 0.95% and 1.47%, respectively, for the period.
In April 1998, we began our second decade of investing in small-cap stocks in
the SG Cowen Opportunity Fund. During the last ten years we have seen the demand
for small-cap stocks ebb and flow and managers of growth and value rise and fall
as well. Our disciplined approach, which assesses an individual company's basic
business value and then uncovers the catalyst that grows that value, has been
successful through this period, and has led to solid outperformance above the
average small-cap portfolio manager and the Russell 2000 Index.
As of May 31, 1998, the SG Cowen Opportunity Fund has posted an average
annualized return of 15.26% since its inception on March 31, 1988. During this
period, it has outperformed both the Lipper Small Cap Fund Index and the Russell
2000 Index, which had annualized returns of 14.03% and 13.90% respectively.
THE SEARCH FOR COMPANIES
POISED FOR GROWTH
In our continuing search for opportunities, we are finding dozens of companies
poised for growth and with good business value. While many of these stocks have
been recognized by the market and risen, the recent under-appreciation by the
market for smaller companies has led many of these managements to sell their
businesses to other companies in order to realize value for their shareholders.
This is occurring in our portfolio again this year, as nearly a dozen of our
companies have been acquired. While an acquisition at a premium is always good
news, these transactions signify that our investment process is on track. At the
same time, our analysis leads us to attractive industry sectors as well.
ENERGY: FALLING OIL
PRICES CREATES OPPORTUNITY
The Opportunity Fund continues to be strategically invested in small-cap energy
stocks. In periods like 1998 in which oil prices are down, we use our research
and analysis to differentiate between tangible fundamentals and the short-term
psychological effects of a temporary commodity price weakness.
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4
<PAGE> 7
We're optimistic about the energy industry for the following reasons:
1) In late 1995, Congress created tax incentives for boosting domestic
exploration activity. The result has been that companies have rushed in to
find new resources.
2) Despite the warmest winter in history and drilling activity up 25%, natural
gas prices are 10% higher than last year.
3) Greater than expected depletion of existing wells is occurring.
4) The Spring 1998 Gulf of Mexico lease sale drew the highest dollar per acre
of bids ever.
5) OPEC and Mexico are beginning to balance production.
6) In spite of its short-term economic turmoil, Asia covets reserves (e.g.,
China's interest in the Sudan, Venezuela, and Kazakstan).
7) Takeover activity in the oil & gas industry is brisk. The low valuation and
high growth potential of small exploration and production companies make
them very attractive to large energy companies.
BRIGHT SPOTS INCLUDE
HEALTH CARE &
SELECTED TECHNOLOGY
Our health care portfolio has been a bright spot led by Mylan Labs, a generic
drug company, which was up over 40% during the six-month period. In addition,
advances in biotechnology continue to yield good growth opportunities and this
will be an exciting area in which to invest.
In technology, business enterprise software and Internet companies posted
strong results during the period. In general, however, small-cap technology
companies have been poor performers over the last two and a half years, as
shortened product cycles and pressures from large companies have chilled their
prospects. Nonetheless expectations have reached very low levels that can lead
to sharp share price rebounds as businesses succeed.
LOOKING FORWARD
When the SG Cowen Opportunity Fund began in 1988, small-cap stocks were
relatively out of favor as they are today. At the time, there were only about 65
funds specializing in small-cap stocks while today there are more than 500
small-cap funds.
While this increased competition points to the popularity of investing
generally, a constant is our discipline that looks not at day-to-day momentum
swings but to both company specifics and improving industry dynamics with a
focus on long-term performance. We thank you for your support and look forward
to the next ten years.
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5
<PAGE> 8
SG COWEN INTERMEDIATE FIXED INCOME FUND
SG COWEN GOVERNMENT SECURITIES FUND
Bonds Benefit From Slower Global Growth
While the Asian economic crisis quelled inflation fears, it has called into
question U.S. corporate profit growth. Our focus on the highest quality bonds as
well as our decision to extend maturities was key to our performance in the SG
Cowen Intermediate Fixed Income Fund and the SG Cowen Government Securities
Fund.
PERFORMANCE
For the six month period ending May 31, 1998, the total cumulative return of the
Intermediate Fixed Income Fund's Class A shares was 3.40%. In comparison, its
benchmark, the Lehman Brothers Intermediate Government/Corporate Index, an
unmanaged benchmark of intermediate government and corporate bonds, reflected an
increase of 3.63%. The Fund's Class B and Class I shares returned 3.26% and
3.52%, respectively.
The total cumulative return for the Government Securities Fund's Class A
shares was 3.88%. In comparison, its unmanaged benchmark, the Lehman Brothers
Aggregate Index, reflected a return of 4.09%. The Fund's Class I shares returned
3.85%.
Since the Lehman Brothers indexes are unmanaged and have no operating
expenses, we consider the Intermediate Fixed Income Fund and the Government
Securities Fund to have essentially matched or even exceeded their benchmarks
excluding expenses. Two factors were behind the strong performance. One was our
decision to lengthen the Funds' maturities and lighten our exposure to
mortgage-backed securities to reflect a falling interest rate environment. The
second factor was our decision to focus on the highest credit quality, due to
concerns about corporate bonds created by the Asian economic crisis.
FALLING INTEREST RATES
ACROSS THE BOARD
During the period, yields declined 0.25 percentage points on the two-year
Treasury note and 0.32 percentage points on the ten-year Treasury note. Even as
the U.S. economy continued to expand, the rate of inflation continued to move
lower. In addition, the Asian economic crisis showed signs of worsening, as the
yen weakened in relation to the dollar. U.S. corporate profit growth declined to
the low single digits, and U.S. corporate bonds began to underperform U.S.
Treasury securities.
In response to the falling interest rate environment, we elected to lock in
higher rates by extending duration and maturity. For example, the Government
Securities Fund's duration at May 31, 1998 was 5.6 years. In comparison, the
Lehman Brothers Aggregate Index duration was 4.5 years. The Intermediate Fixed
Income Fund's duration at May 31 was 4.5 years, compared to the Lehman Brothers
Intermediate Government/ Corporate Index of 3.5 years.
In addition to lengthening duration and maturity, we increased our emphasis on
U.S. government bonds, the best performing sector during the period. In the
Government Securities Fund, we increased the proportion of U.S. government
bonds, which do not involve credit risk. We also invest in mortgage-backed
securities, which offer higher yields as well as excellent credit quality.
However, in periods of falling interest rates, mortgage-backed securities
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6
<PAGE> 9
tend to underperform due to prepayment risk. As a result, we decreased the
proportion of mortgages during the six-month period. As of May 31, 1998, about
66% of the Government Securities Fund was invested in U.S. government securities
and 34% was invested in mortgage-backed securities. In contrast, the Fund's
weighting of U.S. governments and mortgages was 58%/42% at November 30, 1997.
In the Intermediate Fixed Income Fund, 62% was invested in U.S. government
securities, 18% in mortgage-backed securities and the balance primarily in
corporate bonds and preferred stock as of May 31, 1998. In contrast, 47% was
invested in U.S. government bonds, 26% was invested in mortgages and 27% was
invested in corporate bonds and preferred stock as of November 30, 1997.
Reducing our exposure to corporates and mortgages enhanced our performance
during the six-month period ending May 31, 1998.
JAPAN'S STUBBORN RECESSION
One reason for the Treasury bond's strength is the weakness in Japan's economy.
Japan is in a multi-year recession and the yen has weakened against the dollar.
Our economy, on the other hand, is quite firm, with GDP growth in the first
quarter of 1998 more than 4%. As a result, assets have left Japan and come to
the U.S. looking for a safe haven in our bond market. Even though our interest
rates have declined, they are still substantially higher than the rates offered
on government securities in Japan. The interest rate differential has drawn
assets here, as well as the expectation that the yen will continue to decline
versus the dollar. As a result of booming demand for U.S. Treasury securities,
moderating economic growth and declining inflation, we expect the yield curve to
continue to flatten and perhaps even invert.
During the semi-annual period, we saw the risks increasing for corporate
bonds, so we reduced our allocation to corporate bonds. However, we did maintain
some positions, such as McDonald's preferred stock, an AA credit. Preferred
stock is similar to fixed-income securities, except that preferred shares pay
higher yields than corporate bonds because the preferred's repayment obligation
is junior to that of the senior corporate debt. We continue to hold one BBB
position in Long Island Savings Bank, a credit in which we feel comfortable,
particularly since it matures within a few years. Overall, the portfolio's
credit quality is AA.
LOOKING FORWARD
We expect U.S. economic growth to slow during the balance of 1998. Inflation
expectations continue to decline, suggesting that long-term interest rates are
likely to fall. Investors continue to demand almost no inflation premium to
extend their maturity commitment, resulting in a flat yield curve. The dollar's
continued strength is an additional insurance policy against recurring
inflation.
Our strategy continues to be an emphasis on U.S. Treasury bonds at the expense
of corporate bonds. We are concerned that the Asia economic crisis will exert
negative pressure on corporate profit margins and credit quality, at current
yield spread levels. In addition, we plan to maintain a longer than average
duration in both funds because we believe that long-term interest rates are
likely to fall. Asia's recession has yet to impact the U.S. economy, but we
believe the crisis will not permit the Federal Reserve Board to raise U.S.
interest rates.
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7
<PAGE> 10
SG COWEN LARGE CAP VALUE FUND
Searching For Value In
A Growth-Driven Market
Despite historically high valuations, global investors continue to favor and bid
up the price of large U.S. growth companies. As a result, large-cap value stocks
with strong market positions and consistent dividends are increasingly
attractive from a valuation standpoint.
PERFORMANCE
The SG Cowen Large Cap Value Fund commenced operations on January 2, 1998. For
the five months ending May 31, 1998, the total cumulative return for the Class A
shares was 8.65%. In contrast, the unmanaged Russell 1000 Value Index generated
a return of 10.74% for the same period, while the Standard & Poor's 500 Index
was up 13.11%. The Fund's Class B* and Class I* shares returned -2.43% and
11.26%, respectively, for the period.
The Fund invests in large-capitalization stocks that are statistically cheap
based on four factors of value: price/book, price/cash flow, price/sales and
price/earnings. We then look for stocks within that universe that are selling
below where they normally sell on a valuation basis relative to the market. A
further analysis sifts for companies in which there are catalysts within the
near term that would return the stock price to its normal valuation level.
The portfolio's valuation characteristics are increasingly favorable in
relation to the S&P 500 Index. For example, on May 31, 1998, the Fund's
P/E ratio on 1998 earnings was 15.5 compared to the S&P 500, which was 22x. The
portfolio's price/book ratio was about 2.8 compared to 4.6 for the S&P. The
largest sector in the portfolio was financial services, at 24%, followed by
energy, at 16%.
A good example of our investment style is our decision in early May to
purchase shares of Federal National Mortgage Association (Fannie Mae). The
company's fundamentals were not in question, but the stock sold off because of
rising interest rates. When the interest rate fears dissolved a few weeks later,
the stock rebounded.
The following factors affected the Fund's performance in its inaugural period:
- Overweighting in Retailing -- The Fund's overweighting in retailing was
timely, as the U.S. economy continued to be strong and consumer confidence
was near an all-time high. We purchased one of our largest holdings, Sears
Roebuck, early in the year when it was having trouble with its credit card
operations. Because of the good retailing environment and their success in
turning around its credit card unit, the stock has rebounded sharply.
- Bank mergers -- The Fund's concentration in financial services was rewarded
by several large mergers, including the combination of BankAmerica and
NationsBank, Banc One and First Chicago/NBD, and First Union and CoreStates
Financial.
- Overweighting in Energy -- Because of falling oil prices, a historically
warm winter and the Asian economic crisis, energy stocks were
- ------------------------------------
* The inception date for Class B and Class I shares was April 17, 1998 and
February 2, 1998, respectively.
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8
<PAGE> 11
out of favor during the first five months of 1998. We believe that energy
and oil service stocks have been disproportionately penalized due to
unsustainably low levels of crude oil prices.
LOOKING FORWARD
By accumulating positions in stocks with extremely good value, there are often
periods of underperformance compared to the major market indexes. However, once
an industry group or a company's stock is ignited by a catalyst, the portfolio
can outperform the market. A few years ago, bank stocks were out of favor like
energy is today. By building positions when a group is out of favor, a fund's
performance makes up lost ground and then some.
As value managers, we do not rely heavily on macroeconomic forecasts. However,
we believe that the Asian economic situation is very serious, and we are being
careful with economically sensitive stocks that we might otherwise purchase
under normal circumstances. Companies that have exposure to Asia are likely to
report negative earnings surprises. As a result, we are avoiding Asia-sensitive
stocks and focusing on companies that are out of favor yet have intact earnings
power.
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9
<PAGE> 12
SG COWEN INCOME + GROWTH FUND, INC.
STATEMENT OF INVESTMENTS
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- 99.4% of total portfolio
CHEMICALS -- 3.9%
16,000 Du Pont (E.I.) De Nemours $ 1,232,000
84,000 RMP, Inc./Ohio 1,428,000
-----------
2,660,000
-----------
CONSUMER PRODUCTS -- 8.2%
25,000 Eastman Kodak, Co. 1,784,375
15,000 Fortune Brands, Inc. 576,563
35,000 Kimberly-Clark Corp. 1,734,688
50,000 Readers Digest Association 1,425,000
-----------
5,520,626
-----------
ENERGY -- 23.5%
52,000 Apache Corp. 1,777,750
38,000 Baker Hughes, Inc. 1,368,000
25,000 Coastal Corp. 1,762,500
32,000 Consolidated Natural Gas 1,810,000
17,000 Mobil Corp. 1,326,000
37,000 Murphy Oil Corp. 1,861,562
24,050 Schlumberger Ltd 1,877,403
23,000 Sonat, Inc. 901,312
32,000 Texaco, Inc. 1,848,000
35,000 Tidewater, Inc. 1,330,000
-----------
15,862,527
-----------
FINANCIAL SERVICES -- 6.6%
15,000 Banc One Corp. 826,875
25,000 NationsBank Corp. 1,893,750
35,000 Ohio Casualty Corp. 1,706,250
-----------
4,426,875
-----------
FOOD -- 4.6%
19,000 Campbell Soup Co. 1,035,500
33,000 ConAgra, Inc. 965,250
22,000 Dean Foods Co. 1,083,500
-----------
3,084,250
-----------
</TABLE>
See notes to combined financial statements
--
10
<PAGE> 13
SG COWEN INCOME + GROWTH FUND, INC.
STATEMENT OF INVESTMENTS -- (continued)
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- (Continued)
DIVERSIFIED MANUFACTURING -- 1.7%
55,000 Engelhard Corp. $ 1,144,688
-----------
NATURAL RESOURCES -- 2.0%
87,000 Cyprus Amax Minerals Corp. 1,381,125
-----------
PHARMACEUTICALS/HEALTH CARE -- 5.7%
35,000 Bausch & Lomb, Inc. 1,743,437
7,000 Pfizer, Inc. 733,688
31,000 Pharmacia & Upjohn, Inc. 1,369,812
-----------
3,846,937
-----------
REAL ESTATE INVESTMENT TRUSTS -- 9.3%
40,000 Hospitality Properties Trust 1,250,000
30,000 Kimco Realty Corp. 1,168,125
59,000 New Plan Realty Investment Trust 1,382,813
35,000 United Dominion Realty Trust 494,375
40,000 Washington Real Estate Investment Trust 707,500
30,000 Weingarten Realty Investment Trust 1,282,500
-----------
6,285,313
-----------
RETAIL -- 3.2%
35,000 Sears Roebuck & Co. 2,163,438
-----------
TELEPHONE/COMMUNICATIONS -- 7.1%
11,000 Bell Atlantic Corp. 1,007,875
24,000 GTE Corp. 1,399,500
22,000 SBC Communications Corp. 855,250
21,000 Sprint Corp. 1,506,750
-----------
4,769,375
-----------
</TABLE>
See notes to combined financial statements
--
11
<PAGE> 14
SG COWEN INCOME + GROWTH FUND, INC.
STATEMENT OF INVESTMENTS -- (continued)
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- (Continued)
TOBACCO -- 6.5%
41,000 Phillip Morris Cos. Inc. $ 1,532,375
55,000 RJR Nabisco Holdings Corp. 1,550,312
50,000 UST, Inc. 1,331,250
-----------
4,413,937
-----------
UTILITIES -- 17.1%
18,000 Baltimore Gas & Electric 547,875
22,000 Cinergy Corp. 710,875
30,000 Eastern Enterprises, Inc. 1,203,750
28,000 K N Energy 1,515,500
50,000 Keyspan Energy Corp. 1,684,375
50,000 MCN Energy 1,800,000
35,000 New Century Energies, Inc. 1,610,000
50,000 Utilicorp United, Inc. 1,778,125
27,000 Washington Gas Light Co. 703,687
-----------
11,554,187
-----------
TOTAL COMMON STOCKS (Cost $59,357,527) 67,113,278
-----------
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C>
SHORT TERM INVESTMENTS -- 0.6%
$ 400,000 Prudential Funding Corp., 5.55%, 06/02/1998 400,000
-----------
TOTAL SHORT TERM INVESTMENTS (Cost $400,000) 400,000
-----------
TOTAL INVESTMENTS (Cost $59,757,527) $67,513,278
===========
</TABLE>
See notes to combined financial statements
--
12
<PAGE> 15
SG COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- 87.9% of total portfolio
OIL & GAS EXPLORATION -- 24.7%
34,000 Abraxas Petroleum* $ 331,500
264,000 Arakis Energy* 379,500
44,900 Barrett Resources* 1,563,081
203,700 Canadian 88 Energy* 908,969
15,100 Cliff's Drilling* 622,875
26,300 Devon Energy 964,881
212,000 EEX Corporation* 2,093,500
69,200 Forest Oil* 994,750
68,400 HS Resources* 987,525
104,000 Hurricane Hydrocarbon* 496,207
25,000 Meridian Resources* 179,688
20,000 Nuevo Energy* 650,000
99,140 Ocean Energy* 1,988,996
128,900 Oryx Energy* 3,004,981
242,400 Petromet Resources* 499,228
46,200 Pioneer Natural Res 1,085,700
129,700 Rigel Energy* 1,072,931
12,100 Rio Alto Exploration* 129,585
161,800 Santa Fe Energy* 1,607,888
125,100 Seagull Energy* 2,071,969
92,900 Titan Exploration* 754,812
8,000 Triton Energy* 311,500
14,100 Union Texas Petroleum 387,750
40,000 UTI Energy* 645,000
------------
23,732,816
------------
</TABLE>
See notes to combined financial statements
--
13
<PAGE> 16
SG COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS -- (continued)
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- (Continued)
METALS & MINING -- 9.9%
14,500 Alumax* $ 678,781
61,300 Amax Gold* 195,394
40,400 Armco Steel* 219,675
62,500 Barrick Gold 1,203,125
218,600 Battle Mountain Gold 1,161,313
28,700 Birmingham Steel 401,800
39,400 Cambior 273,338
193,600 Canyon Resources* 181,500
5,600 Getchell Gold* 106,400
56,400 Hecla Mining Co.* 285,525
122,700 Homestake Mining 1,334,363
79,800 Kaiser Aluminum* 827,925
44,800 Newmont Mining 1,117,200
335,200 TVX Gold* 1,089,400
25,100 Worthington Industries 442,386
------------
9,518,125
------------
OIL/GAS EQUIPMENT & SERVICES -- 7.8%
222,000 Black Sea Energy* 137,164
28,000 Canadian Fracmaster* 269,111
34,400 Global Marine* 767,550
11,700 Halter Marine* 219,375
28,000 Hanover Compressor* 726,250
14,000 Nabors* 329,875
34,400 Offshore Logistics* 700,900
44,300 Parker Drilling* 373,780
16,300 Petroleum Geo Services* 1,067,650
54,600 Pride International Inc.* 1,225,088
29,000 R&B Falcon 831,937
39,600 Tuboscope Inc.* 895,950
------------
7,544,630
------------
</TABLE>
See notes to combined financial statements
--
14
<PAGE> 17
SG COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS -- (continued)
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- (Continued)
CONSUMER SERVICES -- 5.5%
16,500 American Safety Razor* $ 196,969
38,900 Berlitz* 1,079,475
90,500 Lo-Jack Corp* 1,136,906
35,300 Marker International* 127,963
58,900 Reader's Digest 1,678,650
46,400 Sotheby's Holdings 1,067,200
------------
5,287,163
------------
UTILITIES -- 4.6%
17,700 Cleco Corp 529,894
5,700 Eastern Enterprises 228,713
11,900 Empire District Elec 243,206
10,700 Keyspan Energy 360,456
14,000 Madison Gas & Electric 297,500
104,000 Niagara Mohawk* 1,287,000
4,000 Nicor Inc. 154,500
4,200 Peoples Energy 154,875
16,600 St Joseph Light & Power 312,288
14,200 TNP Enterprises 462,387
6,000 Washington Gas & Light 156,375
14,400 Western Gas Resources 233,100
------------
4,420,294
------------
HEALTH CARE SERVICES/HMOS -- 4.5%
5,400 Genzyme* 147,825
42,000 Integramed America* 78,750
262,900 Mid Atlantic Medical* 3,401,269
62,200 Physician Reliance Network* 688,087
------------
4,315,931
------------
</TABLE>
See notes to combined financial statements
--
15
<PAGE> 18
SG COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS -- (continued)
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- (Continued)
RETAILERS -- 4.3%
75,900 Ann Taylor* $ 1,655,569
5,700 Brylane* 270,750
15,300 Claire's Stores 287,831
16,300 Homebase* 141,606
47,500 Lechters* 279,063
30,300 Michael Stores* 907,106
14,500 Pier 1 Imports 348,906
95,000 Roberds* 261,250
------------
4,152,081
------------
TECHNOLOGY/SOFTWARE -- 4.1%
19,100 Howmet International* 288,888
18,500 Information Resources* 323,750
175,800 Novell* 1,845,900
155,000 Object Design* 842,813
51,000 Red Brick Systems* 286,875
7,600 Santa Cruz Operation* 37,524
47,700 Versant Object Tech* 268,313
------------
3,894,063
------------
ENVIRONMENTAL -- 3.3%
21,000 ATG Inc.* 182,438
150,100 Dravo Coro* 1,688,625
163,000 ICF Kaiser* 468,625
94,000 Laidlaw Environmental* 364,250
13,800 U.S. Filter* 420,037
------------
3,123,975
------------
PHARMACEUTICALS -- 3.2%
19,400 Alpharma 421,950
95,000 Ibah* 498,750
20,000 KOS Pharmaceuticals* 228,750
58,800 Mylan Labs, Inc. 1,764,000
22,500 Ribogene* 157,500
------------
3,070,950
------------
</TABLE>
See notes to combined financial statements
--
16
<PAGE> 19
SG COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS -- (continued)
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- (Continued)
TECHNOLOGY/HARDWARE/OTHER -- 3.1%
116,300 Oceaneering International* $ 2,500,450
27,300 Tokheim Corp* 435,094
------------
2,935,544
------------
RESTAURANTS/FOOD PRODUCTS -- 3.0%
23,100 Aquapenn Spring Water* 207,900
34,500 Brinker International* 750,375
16,900 CKE Restaurant 536,575
26,750 Flowers Industrial Inc. 551,718
12,600 Friendly Ice Cream* 316,575
40,100 Scheid Vineyards* 330,825
42,200 Shoney's* 187,263
------------
2,881,231
------------
BUILDING CONSTRUCTION -- 2.7%
25,500 American Residential Svcs* 294,844
14,600 American Woodmark 405,150
8,900 Associated Materials* 137,950
10,300 Global Tech Appliances* 193,125
10,900 Group Maintenance* 204,375
5,700 Service Experts Inc.* 178,837
14,000 USG Inc.* 743,750
8,800 Watsco Inc. 258,500
3,700 York International 185,000
------------
2,601,531
------------
FINANCIAL SERVICES -- 2.5%
14,900 Alliance Bancorp* 406,956
46,900 American Banknote* 181,738
4,400 Bank of Commerce (CA) 79,750
17,500 Guaranty Bancshares 260,313
31,435 IBS Financial 589,406
18,500 PBOC Holdings 261,313
9,400 Roslyn Bancorp 221,193
24,800 Sovereign Bancorp 438,650
------------
2,439,319
------------
</TABLE>
See notes to combined financial statements
--
17
<PAGE> 20
SG COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS -- (continued)
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- (Continued)
ELECTRONICS/ELECTRICAL -- 1.5%
1,400 Advantest $ 86,278
20,000 Creative Technology* 363,853
13,000 General Signal 534,625
40,000 Hosiden* 485,241
------------
1,469,997
------------
TRUCKING/TRANSPORT/PARTS -- 1.5%
13,500 Keystone Automotive Inds* 351,000
18,400 Kirby Corporation* 395,600
35,300 Transport Corp of America* 617,750
4,000 Willis Lease Financial* 88,000
------------
1,452,350
------------
MEDICAL SUPPLIES/SERVICES -- 1.4%
32,700 Carter Wallace 582,469
40,000 Fuisz Tech* 470,000
7,400 Healthworld* 104,525
16,900 Neopath* 214,419
------------
1,371,413
------------
REAL ESTATE -- 0.2%
57,200 Atlantic Gulf Communities* 175,175
------------
PAPER PRODUCTS -- 0.1%
7,800 Stone Container* 138,450
------------
TOTAL COMMON STOCKS (Cost $85,453,703) 84,525,038
------------
</TABLE>
See notes to combined financial statements
--
18
<PAGE> 21
SG COWEN OPPORTUNITY FUND
STATEMENT OF INVESTMENTS -- (continued)
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
<S> <C> <C>
SHORT TERM INVESTMENTS -- 12.1%
$1,500,000 Exxon Asset Management, 5.50%, 6/1/98 $ 1,500,000
4,400,000 General Electric Capital Corp., 5.00%, 6/4/98 4,400,000
3,500,000 GMAC, 5.53%, 6/2/98 3,500,000
2,225,000 Household Finance Corp., 5.55%, 6/5/98 2,225,000
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $11,625,000) 11,625,000
------------
TOTAL INVESTMENTS (Cost $97,078,703) $ 96,150,038
------------
------------
</TABLE>
- ---------------
* Non-income producing security
See notes to combined financial statements
--
19
<PAGE> 22
SG COWEN GOVERNMENT SECURITIES FUND
STATEMENT OF INVESTMENTS
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
MORTGAGE-BACKED SECURITIES -- 34.0%
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC)
CERTIFICATES:
$154,597 8.500%, 01/01/10 $ 161,980
FEDERAL NATIONAL MORTGAGE ASS'N (FNMA) CERTIFICATES:
120,975 9.000%, 02/01/15 128,574
GOVERNMENT NATIONAL MORTGAGE ASS'N (GNMA)
CERTIFICATES:
29,450 8.000%, 05/15/02 29,895
8,576 10.000%, 04/15/16 9,440
2,996 10.000%, 07/15/17 3,311
2,539 10.000%, 11/15/17 2,806
6,723 9.000%, 05/15/21 7,257
10,338 9.500%, 11/15/21 11,198
46,133 9.500%, 03/20/25 48,498
130,667 8.000%, 05/15/25 135,854
429,885 8.000%, 11/15/26 446,943
----------
TOTAL MORTGAGE-BACKED SECURITIES 985,756
----------
U.S. TREASURY NOTES -- 66.0%
500,000 5.750%, 08/15/03 503,595
400,000 5.875%, 11/15/05 405,124
300,000 5.625%, 02/15/06 299,298
250,000 5.500%, 02/15/08 248,125
450,000 6.000%, 02/15/26 456,750
----------
TOTAL U.S. TREASURY NOTES 1,912,892
----------
TOTAL INVESTMENTS (Cost $2,856,374) $2,898,648
==========
</TABLE>
See notes to combined financial statements
--
20
<PAGE> 23
SG COWEN INTERMEDIATE FIXED INCOME FUND
STATEMENT OF INVESTMENTS
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
CUMULATIVE PREFERRED STOCK -- 15.4%
of total portfolio
8,600 McDonalds Corp. 7.50%, 09/30/36 $ 222,525
20,000 Merrill Lynch TOPRS 7.750%, 12/31/36 526,250
10,000 Paine Webber Group Capital Trust II, 8.08%, 03/01/37 254,375
20,000 Travelers Capital Trust, 6.85%%, 01/22/38 486,250
----------
TOTAL CUMULATIVE PREFERRED STOCK 1,489,400
----------
PRINCIPAL
AMOUNT
CORPORATE NOTES -- 4.2%
$400,000 Long Island Savings Bank 7.00%, 06/13/02 408,040
----------
TOTAL CORPORATE NOTES 408,040
----------
MORTGAGE-BACKED SECURITIES -- 18.2%
FEDERAL NATIONAL MORTGAGE ASS'N (FNMA) CERTIFICATES:
135,550 9.000%, 02/01/02 139,335
61,800 9.000%, 05/01/09 64,603
75,750 9.500%, 03/01/10 81,417
137,119 7.500%, 09/01/10 141,554
722,351 7.000%, 11/01/10 737,247
53,707 9.000%, 04/01/15 57,103
84,518 9.500%, 07/01/22 91,204
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC)
CERTIFICATES:
133,125 8.000%, 01/01/08 137,697
</TABLE>
See notes to combined financial statements
--
21
<PAGE> 24
SG COWEN INTERMEDIATE FIXED INCOME FUND
STATEMENT OF INVESTMENTS -- (CONTINUED)
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
<C> <S> <C>
MORTGAGE-BACKED SECURITIES -- (Continued)
GOVERNMENT NATIONAL MORTGAGE ASS'N (GNMA)
CERTIFICATES:
$ 62,940 8.000%, 06/15/01 $ 63,891
44,045 9.000%, 12/15/16 47,651
36,858 10.000%, 12/15/18 40,772
36,468 8.500%, 10/15/21 38,736
54,217 8.000%, 06/15/22 56,606
57,778 8.000%, 06/15/27 60,072
----------
TOTAL MORTGAGE-BACKED SECURITIES 1,757,888
----------
U.S. TREASURY NOTES -- 62.2%
350,000 6.625%, 04/30/02 362,142
400,000 6.250%, 06/30/02 409,064
610,000 6.000%, 07/31/02 618,577
450,000 5.750%, 10/31/02 452,250
500,000 5.750%, 11/30/02 502,420
850,000 6.250%, 02/15/03 872,312
800,000 5.750%, 08/15/03 805,752
650,000 5.875%, 11/15/05 658,326
900,000 5.625%, 02/15/06 897,894
400,000 6.500%, 10/15/06 421,876
----------
TOTAL U.S. TREASURY NOTES 6,000,113
----------
TOTAL INVESTMENTS (Cost $9,519,269) $9,655,441
==========
</TABLE>
See notes to combined financial statements
--
22
<PAGE> 25
SG COWEN LARGE CAP VALUE FUND
STATEMENT OF INVESTMENTS
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- 94.7% of total portfolio
ALUMINUM -- 1.3%
3,080 Aluminum Co. of America $ 213,676
-----------
AUTO PARTS & EQUIPMENT -- 3.8%
4,940 Dana Corp. 257,497
10,280 Meritor Automotive Inc. 247,363
2,600 TRW Inc. 139,263
-----------
644,123
-----------
BANKS -- 13.5%
2,220 BankAmerica Corp. 183,566
1,730 Bank of New York 105,746
2,420 BankBoston Corporation 255,008
2,690 Banc One Corp. 148,286
1,830 Chase Manhattan Corp. 248,766
2,890 Crestar Financial Corp. 165,994
3,750 First Chicago NBD Corp. 327,891
4,900 Fleet Financial Group Inc. 401,800
6,160 NationsBank Corporation 466,620
-----------
2,303,677
-----------
CHEMICALS -- 1.9%
1,700 Du Pont (E.I.) De Nemour 130,900
6,160 IMC Global Inc. 200,200
-----------
331,100
-----------
COMPUTER HARDWARE/SERVICES -- .9%
1,350 Int'l Business Machines 158,456
-----------
CONSUMER FINANCE -- 1.4%
5,770 Greentree Financial Corp. 231,882
-----------
ELECTRICAL COMPANIES -- 4.8%
4,620 Cinergy Corp. 149,284
5,290 Dominion Resources 209,947
5,020 New Century Energies Inc. 230,920
7,750 Peco Energy 218,937
-----------
809,088
-----------
</TABLE>
See notes to combined financial statements
--
23
<PAGE> 26
SG COWEN LARGE CAP VALUE FUND
STATEMENT OF INVESTMENTS -- (continued)
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- (Continued)
FINANCIAL (DIVERSIFIED) -- 2.8%
2,450 AMBAC Financial Group $ 133,984
4,580 MBIA Inc. 341,496
-----------
475,480
-----------
HEALTHCARE (MANAGED CARE) -- 1.4%
870 Aetna Inc. 68,023
2,050 Pacificare Health Sys.* 169,381
-----------
237,404
-----------
INSURANCE -- 2.5%
1,350 Allstate Corp. 127,069
6,736 St. Paul Companies 298,910
-----------
425,979
-----------
MACHINERY (DIVERSIFIED) -- 1.3%
3,080 Dover Corp. 115,500
3,560 Harnishfeger Industries 112,140
-----------
227,640
-----------
MANUFACTURING -- 3.3%
3,560 Allied Signal Inc. 152,190
3,560 General Signal Corp. 146,405
5,290 York International Corp. 264,500
-----------
563,095
-----------
MORTGAGE LENDER -- 4.7%
7,700 Freddie Mac 350,350
7,400 Fannie Mae 443,075
-----------
793,425
-----------
NATURAL GAS -- 4.6%
5,580 Consolidated Nat. Gas 315,619
4,330 MCN Energy Group Inc. 155,880
8,090 Sonat Inc. 317,027
-----------
788,526
-----------
</TABLE>
See notes to combined financial statements
--
24
<PAGE> 27
SG COWEN LARGE CAP VALUE FUND
STATEMENT OF INVESTMENTS -- (continued)
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
<C> <S> <C>
COMMON STOCKS -- (Continued)
OIL (DOMESTIC & INTERNATIONAL) -- 7.5%
8,200 Burlington Resources $ 345,425
2,410 Mobil Corp. 187,980
2,890 Phillips Petroleum Co. 144,681
2,700 Royal Dutch-Petroleum 151,369
5,300 Texaco Inc. 306,075
4,600 Ultramar Diamond Shamrock 146,912
-----------
1,282,442
-----------
OIL & GAS (DRILLING & EQUIP.) -- 7.7%
12,460 Ensco International 315,394
6,602 Evi Weatherford, Inc.* 333,839
16,010 R&B Falcon Corp.* 459,287
5,340 Tidewater Inc. 202,920
-----------
1,311,440
-----------
RAILROADS -- 0.7%
2,410 CSX Corp. 114,776
-----------
RESTAURANTS -- 2.2%
15,400 Wendy's International 380,186
-----------
RETAIL -- 7.6%
13,670 Nine West* 385,323
6,830 Sears Roebuck & Co. 422,179
2,570 Tommy Hilfiger Corp.* 172,833
11,650 Toys R Us Inc.* 308,725
-----------
1,289,060
-----------
SEMICONDUCTORS/ELECTRONICS -- 6.9%
10,510 Atmel Corp.* 155,679
6,740 Avnet Inc. 397,660
6,840 DSC Communications* 116,921
5,290 Kemet Corp.* 85,136
3,130 KLA Instruments* 106,029
2,600 Rockwell International 143,000
3,710 Varian Associates Inc. 178,312
-----------
1,182,737
-----------
SERVICE -- 0.9%
3,560 H&R Block 156,640
-----------
</TABLE>
See notes to combined financial statements
--
25
<PAGE> 28
SG COWEN LARGE CAP VALUE FUND
STATEMENT OF INVESTMENTS -- (continued)
MAY 31, 1998
(UNAUDITED)
<TABLE>
<C> <S> <C>
COMMON STOCKS -- (Continued)
TELEPHONE -- 6.5%
2,820 Bell Atlantic Corp. $ 258,383
6,350 GTE Corp. 370,284
4,040 SBC Communications Inc. 157,055
3,080 Sprint Corp. 220,990
2,020 US West Communications Group 102,515
-----------
1,109,227
-----------
TOBACCO -- 6.5%
15,820 Philip Morris Cos. Inc. 591,273
18,160 RJR Nabisco Hldgs. Corp. 511,885
-----------
1,103,158
-----------
TOTAL COMMON STOCKS (Cost $16,118,531) 16,133,217
-----------
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C>
SHORT-TERM INVESTMENTS -- 5.3%
$900,000 General Electric Capital Corp., 5.00%, 06/04/98 900,000
-----------
TOTAL SHORT TERM INVESTMENTS
(Cost $900,000) 900,000
-----------
TOTAL INVESTMENTS -- 100.0%(Cost $17,018,531) $17,033,217
===========
</TABLE>
- ---------------
* Non-income producing security
See notes to combined financial statements
--
26
<PAGE> 29
(This page intentionally left blank)
--
27
<PAGE> 30
STATEMENTS OF ASSETS AND LIABILITIES
MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
INCOME + GROWTH OPPORTUNITY
FUND FUND
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $59,757,527,
$97,078,703, $2,856,374, $9,519,269 and $17,018,531,
respectively -- see statements) $67,513,278 $96,150,038
Cash 31,624 20,682
Receivables:
SG Cowen Securities Corporation -- --
Subscriptions to Common Stock 65,852 3,904
Investment securities sold 1,243,697 281,710
Dividends and interest 184,312 28,632
Prepaid expenses, etc. 18,944 22,303
Deferred organization expenses -- Note 1(E) -- --
------------ -----------
TOTAL ASSETS 69,057,707 96,507,269
------------ -----------
LIABILITIES:
Payables:
SG Cowen Securities Corporation 56,272 89,566
Redemptions of Common Stock 1,119,575 660,692
Investment securities purchased 447,124 2,501,134
Dividends -- Note 1(C) -- --
Accrued expenses and other liabilities 73,277 77,330
------------ -----------
TOTAL LIABILITIES 1,696,248 3,328,722
------------ -----------
NET ASSETS $67,361,459 $93,178,547
============ ===========
NET ASSETS consist of:
Paid-in Capital $55,556,411 $87,827,195
Accumulated undistributed net investment income 227,983 --
Accumulated net realized gain (loss) on investments 3,821,314 6,289,017
Net unrealized appreciation (depreciation) on investments 7,755,751 (928,665)
------------ -----------
NET ASSETS $67,361,459 $93,178,547
============ ===========
CLASS A
Net assets $54,653,553 $47,387,193
Outstanding shares of common stock, ($.001 par value) 4,232,572 3,494,931
Net asset value per share $ 12.91 $ 13.56
Maximum offering price per share $ 13.55 $ 14.24
CLASS B
Net assets $ 4,670,670 $ 9,792,818
Outstanding shares of common stock, ($.001 par value) 364,334 756,440
Net asset value per share $ 12.82 $ 12.95
CLASS I
Net assets $ 8,037,236 $35,998,536
Outstanding shares of common stock, ($.001 par value) 619,716 2,608,181
Net asset value per share $ 12.97 $ 13.80
</TABLE>
See notes to combined financial statements
--
28
<PAGE> 31
<TABLE>
<CAPTION>
GOVERNMENT INTERMEDIATE FIXED LARGE CAP
SECURITIES FUND INCOME FUND VALUE FUND
<S> <C> <C> <C>
$2,898,648 $9,655,441 $17,033,217
2,980 10,935 11,827
3,106 41 --
57 -- 51,143
46,370 1,043 --
33,308 107,273 25,966
13,874 13,934 7,648
-- -- 98,625
------------ ------------- -----------
2,998,343 9,788,667 17,228,426
------------ ------------- -----------
-- -- 6,216
7,143 23,800 17,282
-- -- 85,590
657 5,465 --
17,548 25,780 16,963
------------ ------------- -----------
25,348 55,045 126,051
------------ ------------- -----------
$2,972,995 $9,733,622 $17,102,375
============ ============= ===========
$2,924,715 $9,801,340 $16,740,534
-- -- 27,058
6,006 (203,890) 320,097
42,274 136,172 14,686
------------ ------------- -----------
$2,972,995 $9,733,622 $17,102,375
============ ============= ===========
$2,907,138 $8,482,185 $15,734,773
301,426 890,885 1,450,670
$ 9.64 $ 9.52 $ 10.85
$ 10.12 $ 9.75 $ 11.39
-- $ 525,002 $ 114,855
-- 54,741 10,598
-- $ 9.59 $ 10.84
$ 65,857 $ 726,435 $ 1,252,747
6,747 76,541 115,490
$ 9.76 $ 9.49 $ 10.85
</TABLE>
--
29
<PAGE> 32
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
INCOME + GROWTH OPPORTUNITY
FUND FUND
<S> <C> <C>
INVESTMENT INCOME:
Dividend income $1,167,931 $ 267,332
Interest income 13,877 165,572
------------ -----------
TOTAL INCOME 1,181,808 432,904
------------ -----------
EXPENSES:
Investment management fee -- Note 2(A) 262,068 479,662
Service fee -- Class A -- Note 2(C) 69,407 63,937
Service and Distribution fees -- Class B -- Note
2(C) 23,081 50,855
Professional fees 14,768 17,749
Bookkeeping services -- --
Shareholder servicing fees:
Class A 23,358 28,865
Class B 2,274 7,579
Class I 2,115 7,711
Directors' fees and expenses -- Note 2(D) 12,822 12,221
Federal and state registration fees 17,017 21,142
Prospectus and shareholders' reports 6,258 19,508
Custodian fees 2,795 22,573
Amortization of organization expenses -- Note
1(E) -- --
Miscellaneous 2,826 3,663
------------ -----------
TOTAL EXPENSES 438,789 735,465
Less: expenses waived and absorbed --
Note 2(A, C and D) 32,994 11,012
------------ -----------
NET EXPENSES 405,795 724,453
------------ -----------
Net Investment Income (loss) 776,013 (291,549)
------------ -----------
Realized and Unrealized Gain (Loss) on
Investments -- Note 3:
Net realized gain on investments 4,143,719 6,989,379
Net unrealized appreciation (depreciation) on
investments 211,393 (5,391,865)
------------ -----------
Net Realized and Unrealized Gain (Loss) on
Investments 4,355,112 1,597,514
------------ -----------
Net Increase in Net Assets Resulting from
Operations $5,131,125 $ 1,305,965
============ ===========
</TABLE>
See notes to combined financial statements
--
30
<PAGE> 33
<TABLE>
<CAPTION>
GOVERNMENT INTERMEDIATE FIXED LARGE CAP
SECURITIES FUND INCOME FUND VALUE FUND
<S> <C> <C> <C>
$ -- $ 44,102 $ 67,608
100,237 286,859 20,361
-------- -------- --------
100,237 330,961 87,969
-------- -------- --------
9,745 26,153 29,223
3,980 11,359 8,950
-- 1,501 49
7,496 7,496 7,255
-- -- 4,935
1,928 6,621 1,653
-- 395 36
255 558 46
12,221 12,221 9,731
13,507 13,057 1,097
236 2,177 203
1,915 2,121 12,056
1,732 1,741 9,070
207 634 650
-------- -------- --------
53,222 86,034 84,954
46,725 52,252 38,159
-------- -------- --------
6,497 33,782 46,795
-------- -------- --------
93,740 297,179 41,174
-------- -------- --------
6,007 54,703 320,097
25,089 (1,416) 14,686
-------- -------- --------
31,096 53,287 334,783
-------- -------- --------
$124,836 $350,466 $375,957
======== ======== ========
</TABLE>
--
31
<PAGE> 34
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCOME + GROWTH FUND
---------------------------------
SIX MONTHS
ENDED YEAR
5/31/98 ENDED
(UNAUDITED) 11/30/97
<S> <C> <C>
OPERATIONS:
Net investment income $ 776,013 $ 1,812,540
Net realized gain on investments 4,143,719 11,441,727
Net unrealized appreciation (depreciation)
on investments 211,393 (1,147,980)
----------- ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 5,131,125 12,106,287
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (660,941) (1,400,730)
Class B (37,579) (61,229)
Class I (133,673) (342,805)
Net realized gains on investments
Class A (9,027,631) (6,585,113)
Class B (739,839) (328,686)
Class I (1,694,332) (1,476,639)
----------- ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (12,293,995) (10,195,202)
----------- ------------
COMMON STOCK TRANSACTIONS -- NOTE 4
Proceeds from shares sold 1,385,538 7,271,542
Net asset value of shares issued in
reinvestments of distributions 11,577,287 9,461,206
Cost of shares redeemed (8,743,652) (15,154,516)
----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM COMMON STOCK TRANSACTIONS 4,219,173 1,578,232
----------- ------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS (2,943,697) 3,489,317
NET ASSETS:
Beginning of period 70,305,156 66,815,839
----------- ------------
End of period $67,361,459 $ 70,305,156
=========== ============
Undistributed net investment income $ 227,983 $ 284,184
=========== ============
</TABLE>
See notes to combined financial statements
--
32
<PAGE> 35
STATEMENTS OF CHANGES IN NET ASSETS -- (continued)
<TABLE>
<CAPTION>
OPPORTUNITY FUND
---------------------------------
SIX MONTHS
ENDED YEAR
5/31/98 ENDED
(UNAUDITED) 11/30/97
<S> <C> <C>
OPERATIONS:
Net investment loss $ (291,549) $ (493,389)
Net realized gain on investments 6,989,379 21,161,722
Net unrealized (depreciation)
on investments (5,391,865) (7,282,985)
----------- ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 1,305,965 13,385,348
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gains on investments
Class A (9,734,658) (5,387,688)
Class B (1,954,564) (1,131,024)
Class I (9,241,687) (4,941,727)
----------- ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (20,930,909) (11,460,439)
----------- ------------
COMMON STOCK TRANSACTIONS -- NOTE 4
Proceeds from shares sold 8,200,296 33,576,368
Net asset value of shares issued in
reinvestments of distributions 20,168,020 11,254,779
Cost of shares redeemed (33,946,954) (21,486,018)
----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM COMMON STOCK TRANSACTIONS (5,578,638) 23,345,129
----------- ------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS (25,203,582) 25,270,038
NET ASSETS:
Beginning of period 118,382,129 93,112,091
----------- ------------
End of period $93,178,547 $118,382,129
=========== ============
</TABLE>
See notes to combined financial statements
--
33
<PAGE> 36
STATEMENTS OF CHANGES IN NET ASSETS -- (continued)
<TABLE>
<CAPTION>
GOVERNMENT
SECURITIES FUND
-------------------------------
SIX MONTHS
ENDED YEAR
5/31/98 ENDED
(UNAUDITED) 11/30/97
<S> <C> <C>
OPERATIONS:
Net investment income $ 93,740 $ 192,259
Net realized gain on investments 6,007 22,741
Net unrealized appreciation (depreciation)
on investments 25,089 (15,850)
---------- ----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 124,836 199,150
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (91,879) (186,809)
Class I (1,861) (5,450)
Net realized gains on investments
Class A (10,775) --
Class I (197) --
---------- ----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (104,712) (192,259)
---------- ----------
COMMON STOCK TRANSACTIONS -- NOTE 4
Proceeds from shares sold 37,738 2,808,408
Net asset value of shares issued in
reinvestments of distributions 99,072 176,668
Cost of shares redeemed (680,640) (2,218,648)
---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
FROM COMMON STOCK TRANSACTIONS (543,830) 766,428
---------- ----------
TOTAL INCREASE (DECREASE) IN NET
ASSETS (523,706) 773,319
NET ASSETS:
Beginning of period 3,496,701 2,723,382
---------- ----------
End of period $2,972,995 $3,496,701
========== ==========
</TABLE>
See notes to combined financial statements
--
34
<PAGE> 37
STATEMENTS OF CHANGES IN NET ASSETS -- (continued)
<TABLE>
<CAPTION>
INTERMEDIATE FIXED
INCOME FUND
-------------------------------
SIX MONTHS
ENDED YEAR
5/31/98 ENDED
(UNAUDITED) 11/30/97
<S> <C> <C>
OPERATIONS:
Net investment income $ 297,179 $ 738,978
Net realized gain (loss) on investments 54,703 (108,743)
Net unrealized appreciation (depreciation)
on investments (1,416) 42,946
---------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 350,466 673,181
---------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (257,850) (634,241)
Class B (16,383) (37,105)
Class I (22,946) (67,632)
---------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (297,179) (738,978)
---------- -----------
COMMON STOCK TRANSACTIONS -- NOTE 4
Proceeds from shares sold 411,521 555,972
Net asset value of shares issued in
reinvestments of dividends 252,597 644,002
Cost of shares redeemed (1,655,595) (4,861,788)
---------- -----------
NET (DECREASE) IN NET ASSETS FROM COMMON
STOCK TRANSACTIONS (991,477) (3,661,814)
---------- -----------
TOTAL (DECREASE) IN NET ASSETS (938,190) (3,727,611)
NET ASSETS:
Beginning of period 10,671,812 14,399,423
---------- -----------
End of period $9,733,622 $10,671,812
========== ===========
</TABLE>
See notes to combined financial statements
--
35
<PAGE> 38
STATEMENTS OF CHANGES IN NET ASSETS -- (continued)
<TABLE>
<CAPTION>
LARGE CAP
VALUE FUND
----------------
PERIOD FROM
JANUARY 2, 1998
(COMMENCEMENT
OF OPERATIONS)
TO MAY 31, 1998
(UNAUDITED)
<S> <C>
OPERATIONS:
Net investment income $ 41,174
Net realized gain on investments 320,097
Net unrealized appreciation on investments 14,686
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 375,957
-----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (12,333)
Class B --
Class I (1,783)
-----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (14,116)
-----------
COMMON STOCK TRANSACTIONS -- NOTE 4
Proceeds from shares sold 17,206,716
Net asset value of shares issued in reinvestments of
dividends 14,074
Cost of shares redeemed (480,256)
-----------
NET INCREASE IN NET ASSETS FROM COMMON STOCK
TRANSACTIONS 16,740,534
-----------
TOTAL INCREASE IN NET ASSETS, REPRESENTING NET
ASSETS AT MAY 31, 1998 $17,102,375
===========
UNDISTRIBUTED NET INVESTMENT INCOME $ 27,058
===========
</TABLE>
See notes to combined financial statements
--
36
<PAGE> 39
SG COWEN FUNDS
NOTES TO COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES: SG Cowen Income + Growth Fund, Inc.
("CIG"), SG Cowen Funds, Inc. and SG Cowen Series Funds, Inc. (collectively "the
Funds") are registered under the Investment Company Act of 1940 ("Act") as
diversified open-end management companies. SG Cowen Funds, Inc. operates as a
series company currently issuing common stock representing its portfolios
designated as the SG Cowen Intermediate Fixed Income Fund ("CIFIF"), SG Cowen
Government Securities Fund ("CGSF"), and SG Cowen Opportunity Fund ("COF"). SG
Cowen Series Funds, Inc. operates as a series company currently issuing common
stock representing its portfolio designated as the SG Cowen Large Cap Value Fund
("LgCapValue"). Until July 1, 1998, Cowen & Co. ("Cowen") served as investment
manager and principal underwriter to the above-referenced Funds (the "Funds").
On July 1, 1998, Cowen's business was combined with Societe Generale Securities
Corporation ("SGSC"), a subsidiary of Societe Generale ("SG"), to form SG Cowen
Securities Corporation ("SG Cowen") (the "Acquisition"). SG, a leading
international commercial and investment bank established in 1864, has a global
network of offices in over 80 countries. Since July 1, 1998, SG Cowen has served
as the new investment manager to the Funds, with the existing investment
management personnel of SG Cowen continuing to provide investment management
services to the Funds, and Funds Distributors, Inc. has served as the new
principal underwriter to the Funds. SG Cowen is also a selected dealer of the
Funds' shares. Additionally, effective as of July 1, 1998, the names of the
Funds have been changed, as indicated above, in order to reflect the Funds' new
management by SG Cowen. These combined financial statements together with the
notes thereto, consist of CIG, COF, CIFIF, CGSF and LgCapValue. The Funds'
financial statements are prepared in accordance with generally accepted
accounting principals which may require the use of management estimates and
assumptions. Actual results could differ from these estimates.
(A) PORTFOLIO EVALUATION: 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, COF and LgCapValue 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
--
37
<PAGE> 40
of taxable income sufficient to relieve it from all, or substantially all,
Federal income taxes.
At November 30, 1997, CIFIF had an unused capital loss carryover of
approximately $260,000, respectively, available for Federal income tax purposes
to be applied against future securities profits, if any. If not applied, the
carryovers expire $150,000 in fiscal 2004 and $110,000 in fiscal 2005.
(E) DEFERRED ORGANIZATION EXPENSES: Organization expenses paid by LgCapValue
are being amortized to operations from January 2, 1998, 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 SG Cowen in connection with the organization of the 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) Dividends from net investment income and distributions from realized gains
from investment transactions are determined in accordance with Federal income
tax regulations, which may differ from investment income and realized gains
determined under generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes, but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in capital. As of May 31, 1998, COF reclassified $291,549 from accumulated
undistributed net investment loss to accumulated net realized gain on
investments. Net investment loss, net realized gains, and net assets were not
affected by this change.
(G) OPTIONS TRANSACTIONS: When a Fund writes an option, the premium received
by the Fund is recorded as a liability and is subsequently adjusted to the
current market value of the option written. Premiums received from writing
options which expire unexercised are recorded by the Fund on the expiration date
as realized gains from options written. The difference between the premium and
the amount paid on effecting a closing purchase transaction, including brokerage
commissions, is also treated as a realized gain, or if the premium is less than
the amount paid for the closing purchase transaction, as a realized loss. If a
call option is exercised, the premium is added to the proceeds from the sale of
the underlying security in determining whether the Fund has realized a gain or
loss.
NOTE 2 - INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) INVESTMENT MANAGEMENT FEE: Fees paid by the Funds to SG Cowen pursuant to
the provisions of Investment Management Agreements ("Agreements") are payable
monthly, based on an annual rate of .75%, .90%, .50%, .60% and .75% for CIG,
COF, CIFIF, CGSF and LgCapValue, respectively, of the average daily value of
each Fund's net assets. SG Cowen has voluntarily reimbursed the CIG's expenses
in an amount equal to an annual rate of .14% from December 1, 1996 through March
31, 1998, of the average daily value of its net assets, and the COF's expenses
in an amount equal to an annual rate of .13% from December 1, 1996 through March
31, 1997 and .03% from April 1, 1997 through March 31, 1998.
With respect to LgCapValue, SG Cowen has voluntarily reimbursed all expenses,
other than Investment Management Fee and distribution fees, in excess of .22% of
the average daily value of its net assets since its inception.
With respect to CGSF and CIFIF, SG Cowen has voluntarily waived its Investment
Management Fee for the period from December 1, 1996 through May 31, 1998. With
respect to CGSF, SG Cowen is
--
38
<PAGE> 41
voluntarily absorbing all other expenses, except for .40% of other expenses and
.50% of the Class B distribution fee. With respect to CIFIF, SG Cowen is
voluntarily absorbing all other expenses, except for .40% of other expenses and
its service and distribution fees. The directors fees are being waived by
directors of both Funds.
SG Cowen has agreed to maintain these fee and expense reimbursement
arrangements for each Fund through March 31, 1999 (see "Shareholder Servicing
and Distribution Plan" later in this note).
(B) In acting as distributor during the six months ended May 31, 1998, SG
Cowen earned $5,187, $19,992, $1,292, $4,071 and $10,244 of commissions on sales
of the shares of CIG, COF, CGSF, CIFIF and LgCapValue, respectively.
(C) SHAREHOLDER SERVICING AND DISTRIBUTION PLANS (THE "PLAN"): SG Cowen (until
June 30, 1998 and Funds Distributors, Inc. after that date) 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 SG Cowen
to provide compensation for ongoing servicing and/or maintenance of shareholder
accounts with the Funds. Compensation is paid by SG Cowen to persons, including
SG 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 SG Cowen (until June 30,
1998 and Funds Distributors, Inc. after that date) a monthly distribution fee at
the annual rate of .75% for CIG, COF, CGSF and Large Cap Value and of .25% for
CIFIF of the Funds' average daily net assets attributable to Class B shares. The
distribution fee is used by SG 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 SG 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 SG Cowen, and the payments may exceed
expenses actually incurred by SG 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 SG Cowen
and amounts it receives under the Plan.
(D) Directors who are not officers, directors, partners, stockholders or
employees of SG Cowen or its affiliates receive from each Fund a fee of $3,000
per annum plus $500 per meeting attended and $375 for each audit committee
meeting attended and reimbursement for travel and out-of-pocket expenses;
however the Directors have agreed to waive their fees from CGSF and CIFIF until
such time as SG 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 secu-
--
39
<PAGE> 42
NOTE 3 -- (CONTINUED)
rities, during the period ended May 31, 1998, was as follows:
<TABLE>
<CAPTION>
CIG COF CGSF
- ----------------------------------------------------
<S> <C> <C> <C>
Purchases $17,836,421 $69,153,920 $1,540,641
- ----------------------------------------------------
Sales $22,725,435 $93,955,008 $2,143,670
- ----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CIFIF LGCAPVALUE
- ------------------------------------
<S> <C> <C>
Purchases $4,461,408 $17,899,724
- ------------------------------------
Sales $5,439,454 $ 2,101,290
- ------------------------------------
</TABLE>
At May 31, 1998, 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 May 31, 1998, accumulated net unrealized appreciation (depreciation) on
investments was as follows:
<TABLE>
<CAPTION>
CIG COF CGSF
- ------------------------------------------------------------
<S> <C> <C> <C>
Gross Unrealized
Appreciation $10,157,024 $8,264,233 $42,434
Gross Unrealized
Depreciation 2,401,273 9,192,898 160
- ------------------------------------------------------------
Net $ 7,755,751 $ (928,665) $42,274
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CIFIF LGCAPVALUE
- ---------------------------------------------
<S> <C> <C>
Gross Unrealized
Appreciation $155,846 $661,410
Gross Unrealized
Depreciation 19,674 646,724
- ---------------------------------------------
Net $136,172 $ 14,686
- ---------------------------------------------
</TABLE>
NOTE 4 - COMMON STOCK TRANSACTIONS: At May 31, 1998, there were authorized 250
million shares, $.001 par value, of each class of each Fund's Common Stock.
Transactions in the Funds' Common Stock were as follows:
--
40
<PAGE> 43
NOTE 4 -- (CONTINUED)
SG COWEN INCOME + GROWTH FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED MAY 31, 1998
-------------------------------------------------------------------------
CLASS A CLASS B CLASS I
---------------------- -------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ----------- ------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 46,441 $ 601,009 3,049 $ 38,377 57,486 $ 746,213
Dividends Reinvested 756,178 9,143,368 62,846 754,889 138,297 1,679,029
-------- ----------- ------- ---------- ---------- ------------
802,619 9,744,377 65,895 793,266 195,783 2,425,242
Shares Redeemed (375,440) (4,878,507) (11,118) (141,539) (290,811) (3,723,606)
-------- ----------- ------- ---------- ---------- ------------
Net Increase (Decrease) 427,179 $ 4,865,870 54,777 $ 651,727 (95,028) $ (1,298,364)
======== =========== ======= ========== ========== ============
YEAR ENDED NOVEMBER 30, 1997
-------------------------------------------------------------------------
CLASS A CLASS B CLASS I
---------------------- -------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ----------- ------- ---------- ---------- ------------
Shares Sold 292,820 $ 3,852,077 126,969 $1,667,527 133,903 $ 1,751,938
Dividends Reinvested 604,764 7,459,293 27,818 341,929 134,161 1,659,984
-------- ----------- ------- ---------- ---------- ------------
897,584 11,311,370 154,787 2,009,456 268,064 3,411,922
Shares Redeemed (738,269) (9,849,044) (25,573) (336,753) (365,423) (4,968,719)
-------- ----------- ------- ---------- ---------- ------------
Net Increase (Decrease) 159,315 $ 1,462,326 129,214 $1,672,703 (97,359) $ (1,556,797)
======== =========== ======= ========== ========== ============
</TABLE>
--
41
<PAGE> 44
NOTE 4 -- (CONTINUED)
SG COWEN OPPORTUNITY FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED MAY 31, 1998
----------------------------------------------------------------------------
CLASS A CLASS B CLASS I
----------------------- ---------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- -------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 52,864 $ 700,836 21,321 $ 270,901 518,404 $ 7,228,558
Dividends Reinvested 715,467 9,107,891 155,170 1,893,068 708,428 9,167,061
--------- ----------- -------- ----------- ---------- ------------
768,331 9,808,727 176,491 2,163,969 1,226,832 16,395,619
Shares Redeemed (600,748) (8,145,223) (87,794) (1,141,574) (1,790,728) (24,660,157)
--------- ----------- -------- ----------- ---------- ------------
Net Increase
(Decrease) 167,583 $ 1,663,504 88,697 $ 1,022,395 (563,896) $ (8,264,538)
========= =========== ======== =========== ========== ============
FOR YEAR ENDED NOVEMBER 30, 1997
----------------------------------------------------------------------------
CLASS A CLASS B CLASS I
----------------------- ---------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ----------- -------- ----------- ---------- ------------
Shares Sold 741,851 $11,608,130 163,706 $ 2,491,829 1,236,846 $ 19,476,409
Dividends Reinvested 371,816 5,276,074 78,957 1,090,397 340,886 4,888,308
--------- ----------- -------- ----------- ---------- ------------
1,113,667 16,884,204 242,663 3,582,226 1,577,732 24,364,717
Shares Redeemed (431,730) (6,760,538) (116,660) (1,791,282) (812,964) (12,934,198)
--------- ----------- -------- ----------- ---------- ------------
Net Increase 681,937 $10,123,666 126,003 $ 1,790,944 764,768 $ 11,430,519
========= =========== ======== =========== ========== ============
</TABLE>
--
42
<PAGE> 45
NOTE 4 -- (CONTINUED)
SG COWEN GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED MAY 31, 1998
----------------------------------------------------------------
CLASS A CLASS B CLASS I
---------------------- ------------------- -----------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ----------- ------- --------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 3,279 $ 31,747 -- -- 610 $ 5,991
Dividends Reinvested 10,070 97,017 -- -- 216 2,054
-------- ----------- ------- --------- ------ --------
13,349 128,764 -- -- 826 8,045
Shares Redeemed (70,313) (674,663) -- -- (614) (5,978)
-------- ----------- ------- --------- ------ --------
Net Increase (Decrease) (56,964) $ (545,899) -- -- 212 $ 2,067
======== =========== ======= ========= ====== ========
YEAR ENDED NOVEMBER 30, 1997
----------------------------------------------------------------
CLASS A CLASS B CLASS I
---------------------- ------------------- -----------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ----------- ------- --------- ------ --------
Shares Sold 293,373 $ 2,789,659 -- -- 1,869 $ 18,749
Dividends Reinvested 18,113 171,273 -- -- 564 5,395
-------- ----------- ------- --------- ------ --------
311,486 2,960,932 -- -- 2,433 24,144
Shares Redeemed 227,332 2,165,635 -- -- 5,430 53,013
-------- ----------- ------- --------- ------ --------
Net Increase (Decrease) 84,154 $ 795,297 -- -- (2,997) $(28,869)
======== =========== ======= ========= ====== ========
</TABLE>
--
43
<PAGE> 46
NOTE 4 -- (CONTINUED)
SG COWEN INTERMEDIATE FIXED INCOME FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED MAY 31, 1998
---------------------------------------------------------------------
CLASS A CLASS B CLASS I
---------------------- ------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ----------- ------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 30,126 $ 287,191 2,251 $ 21,772 10,852 $ 102,558
Dividends Reinvested 23,297 221,846 966 9,268 2,263 21,482
-------- ----------- ------- --------- -------- -----------
53,423 509,037 3,217 31,040 13,115 124,040
Shares Redeemed (148,536) (1,414,821) (14,457) (138,539) (10,790) (102,235)
-------- ----------- ------- --------- -------- -----------
Net Increase (Decrease) (95,113) $ (905,784) (11,240) $(107,499) 2,325 $ 21,805
======== =========== ======= ========= ======== ===========
YEAR ENDED NOVEMBER 30, 1997
---------------------------------------------------------------------
CLASS A CLASS B CLASS I
---------------------- ------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ----------- ------- --------- -------- -----------
Shares Sold 30,116 $ 281,334 9,789 $ 92,277 19,548 $ 182,361
Dividends Reinvested 59,500 556,082 2,693 25,340 6,732 62,580
-------- ----------- ------- --------- -------- -----------
89,616 837,416 12,482 117,617 26,280 244,941
Shares Redeemed (358,684) (3,347,408) (27,141) (255,788) (137,044) (1,258,592)
-------- ----------- ------- --------- -------- -----------
Net Increase (Decrease) (269,068) $(2,509,992) (14,659) $(138,171) (110,764) $(1,013,651)
======== =========== ======= ========= ======== ===========
</TABLE>
SG COWEN LARGE CAP VALUE FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED MAY 31, 1998
-------------------------------------------------------------------
CLASS A CLASS B CLASS I
------------------------ ----------------- --------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ------------ ------ -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 1,480,644 $ 15,741,866 10,598 $117,012 128,158 $1,347,836
Dividends Reinvested 1,139 12,292 -- -- 165 1,783
--------- ------------ ------ -------- ------- ----------
1,481,783 15,754,158 10,598 117,012 128,323 1,349,619
Shares Redeemed (31,113) (339,230) -- -- (12,833) (141,026)
--------- ------------ ------ -------- ------- ----------
Net Increase 1,450,670 $ 15,414,928 10,598 $117,012 115,490 $1,208,593
========= ============ ====== ======== ======= ==========
</TABLE>
--
44
<PAGE> 47
NOTE 5 - FINANCIAL HIGHLIGHTS: Selected data for a share of Common Stock
outstanding throughout each period:
<TABLE>
<CAPTION>
SG COWEN INCOME + GROWTH FUND -- CLASS A
-------------------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED FOUR YEAR ENDED
ENDED NOVEMBER 30, MONTHS JULY 31,
MAY 31, 1998 --------------------------------- ENDED --------------------
(UNAUDITED) 1997 1996 1995 11/30/94 1994 1993
------------ ---- ---- ---- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 14.55 $ 14.40 $ 13.19 $ 10.62 $ 11.06 $ 12.97 $ 12.85
------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Investment Income -- Net 0.17 0.36 0.48 0.51 0.19 0.52 0.48
Net Realized and Unrealized
Gains (Losses) on
Investments 0.77 1.97 1.74 2.54 (0.50) (0.44) 0.68
------- ------- ------- ------- ------- ------- -------
Net from Investment Operations 0.94 2.33 2.22 3.05 (0.31) 0.08 1.16
------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net Investment
Income (0.19) (0.36) (0.52) (0.48) (0.13) (0.52) (0.49)
Distributions from Net
Realized Gains on
Investments (2.39) (1.82) (0.49) -- -- (1.47) (0.55)
------- ------- ------- ------- ------- ------- -------
Total Distributions (2.58) (2.18) (1.01) (0.48) (0.13) (1.99) (1.04)
------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE,
End of Period $ 12.91 $ 14.55 $ 14.40 $ 13.19 $ 10.62 $ 11.06 $ 12.97
======= ======= ======= ======= ======= ======= =======
Total Return(5) 7.57%(3) 19.21% 17.86% 29.50% (8.50%)(2) 0.28% 9.45%
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 omitted) $54,654 $55,383 $52,502 $49,298 $32,104 $34,722 $35,016
Ratio of Expenses to Average
Net Assets 0.58%(3) 1.21% 1.24% 1.31% 0.47%(3) 1.26% 1.33%
Ratio of Investment Income --
Net to Average Net Assets 1.12%(3) 2.65% 3.56% 4.29% 1.65%(3) 4.32% 3.74%
Decrease Reflected on Above
Ratios Due to Expense
Reimbursements/Waivers 0.05%(3) 0.14% 0.15% 0.19% 0.07%(3) 0.04% --
Portfolio Turnover Rate 26% 75% 79% 72% 31% 76% 62%
Average Commission Rate
Paid(8) $ .0600 $ .0600 $ .0612
</TABLE>
--
45
<PAGE> 48
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
SG COWEN INCOME + GROWTH FUND -- CLASS B
-------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED FOUR PERIOD FROM
ENDED NOVEMBER 30, MONTHS 5/17/94(4)
MAY 31, 1998 ------------------------------ ENDED THROUGH
(UNAUDITED) 1997 1996 1995 11/30/94 7/31/94
------------ ------ ------ ------ -------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $14.46 $14.31 $13.14 $10.58 $11.04 $10.85(1)
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Investment Income -- Net 0.11 0.27 0.37 0.42 0.16 0.09
Net Realized and
Unrealized Gains
(Losses) on
Investments 0.76 1.95 1.73 2.54 (0.50) 0.20
------ ------ ------ ------ ------ ------
Net from Investment
Operations 0.87 2.22 2.10 2.96 (0.34) 0.29
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net
Investment Income (0.12) (0.25) (0.44) (0.40) (0.12) (0.10)
Distributions from Net
Realized Gains on
Investments (2.39) (1.82) (0.49) -- -- --
------ ------ ------ ------ ------ ------
Total Distributions (2.51) (2.07) (0.93) (0.40) (0.12) (0.10)
------ ------ ------ ------ ------ ------
NET ASSET VALUE,
End of Period $12.82 $14.46 $14.31 $13.14 $10.58 $11.04
====== ====== ====== ====== ====== ======
Total Return(5) 7.20%(3) 18.34% 16.89% 28.49% (9.33%)(2) 13.19%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 omitted) $4,671 $4,478 $2,581 $1,453 $ 280 $ 56
Ratio of Expenses to
Average Net Assets 0.96%(3) 1.99% 2.04% 2.07% 0.75%(3) 0.57%(3)
Ratio of Investment
Income -- Net to
Average Net Assets 0.73%(3) 1.84% 2.76% 3.44% 1.31%(3) 0.45%(3)
Decrease Reflected on
Above Ratios Due to
Expense
Reimbursements/Waivers 0.05%(3) 0.14% 0.15% 0.19% 0.07%(3) 0.04%(3)
Portfolio Turnover Rate 26% 75% 79% 72% 31% 76%
Average Commission Rate
Paid(8) $.0600 $.0600 $.0612
</TABLE>
--
46
<PAGE> 49
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
SG COWEN INCOME + GROWTH FUND -- CLASS I
----------------------------------------------------------------------------------
SIX MONTHS YEAR ENDED FOUR PERIOD FROM
ENDED NOVEMBER 30, MONTHS 5/19/94(4)
MAY 31, 1998 --------------------------------- ENDED THROUGH
(UNAUDITED) 1997 1996 1995 11/30/94 7/31/94
------------ ------- ------- ------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 14.61 $ 14.45 $ 13.23 $ 10.62 $11.06 $10.91(1)
------- ------- ------- ------- ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Investment Income -- Net 0.19 0.41 0.58 0.52 0.20 0.10
Net Realized and
Unrealized Gains
(Losses) on
Investments 0.75 1.97 1.69 2.59 (0.50) 0.16
------- ------- ------- ------- ------ ------
Net from Investment
Operations 0.94 2.38 2.27 3.11 (0.30) 0.26
------- ------- ------- ------- ------ ------
LESS DISTRIBUTIONS:
Dividends from Net
Investment Income (0.19) (0.40) (0.56) (0.50) (0.14) (0.11)
Distributions from Net
Realized Gains on
Investments (2.39) (1.82) (0.49) -- -- --
------- ------- ------- ------- ------ ------
Total Distributions (2.58) (2.22) (1.05) (0.50) (0.14) (0.11)
------- ------- ------- ------- ------ ------
NET ASSET VALUE,
End of Period $ 12.97 $ 14.61 $ 14.45 $ 13.23 $10.62 $11.06
======= ======= ======= ======= ====== ======
Total Return(5) 7.71%(3) 19.57% 18.25% 29.99% (8.37%)(2) 10.63%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 omitted) $ 8,037 $10,444 $11,733 $19,309 $6,029 $4,988
Ratio of Expenses to
Average Net Assets 0.43%(3) 1.05% 0.90% 0.96% 0.40%(3) 0.28%(3)
Ratio of Investment
Income -- Net to
Average Net Assets 1.26%(3) 2.98% 3.90% 4.66% 1.68%(3) 1.13%(3)
Decrease Reflected on
Above Ratios Due to
Expense
Reimbursements/Waivers 0.05%(3) 0.14% 0.16% 0.19% 0.07%(3) 0.05%(3)
Portfolio Turnover Rate 26% 75% 79% 72% 31% 76%
Average Commission Rate
Paid(8) $ .0600 $ .0600 $ .0612
</TABLE>
--
47
<PAGE> 50
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
SG COWEN OPPORTUNITY FUND -- CLASS A
-----------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
MAY 31, 1998 -----------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Year $ 16.47 $ 16.61 $ 13.13 $ 12.98 $ 16.06 $ 14.92
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Investment Income
(Loss) -- Net(6) (0.04) (0.08) (0.07) (0.04) (0.09) (0.16)
Net Realized and Unrealized
Gains (Losses) on
Investments 0.07 2.00 3.86 0.97 1.22 3.79
------- ------- ------- ------- ------- -------
Net from Investment
Operations 0.03 1.92 3.79 0.93 1.13 3.63
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from Net
Investment Income -- -- -- -- -- --
Distributions from Net
Realized Gains on
Investments (2.94) (2.06) (0.31) (0.78) (4.21) (2.49)
------- ------- ------- ------- ------- -------
Total Distributions (2.94) (2.06) (0.31) (0.78) (4.21) (2.49)
------- ------- ------- ------- ------- -------
NET ASSET VALUE,
End of Period $ 13.56 $ 16.47 $ 16.61 $ 13.13 $ 12.98 $ 16.06
======= ======= ======= ======= ======= =======
Total Return(5) 1.35%(3) 13.55% 29.63% 7.91% 9.53% 29.48%
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $47,387 $54,809 $43,950 $38,724 $34,487 $19,147
Ratio of Expenses to
Average Net Assets 0.68%(3) 1.38% 1.39% 1.43% 1.47% 1.63%
Ratio of Investment Loss --
Net to Average Net Assets (0.31%)(3) (0.53%) (0.46%) (0.28%) (0.66%) (1.10%)
Decrease Reflected on Above
Ratios Due to Expense
Reimbursements/Waivers 0.01%(3) 0.06% 0.16% 0.22% 0.14% --
Portfolio Turnover Rate 69% 159% 182% 148% 152% 167%
Average Commission Rate
Paid(8) $ .0411 $ .0252 $ .0575
</TABLE>
--
48
<PAGE> 51
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
SG COWEN OPPORTUNITY FUND -- CLASS B
----------------------------------------------------------------------
SIX MONTHS PERIOD FROM
ENDED YEAR ENDED NOVEMBER 30, 5/17/94(4)
MAY 31, 1998 --------------------------------- THROUGH
(UNAUDITED) 1997 1996 1995 11/30/94
------------ ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 15.92 $ 16.23 $12.93 $12.91 $12.18(1)
------- ------- ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Investment Income
(Loss) -- Net(6) (0.09) (0.20) (0.18) (0.14) (0.09)
Net Realized and
Unrealized Gains
(Losses) on Investments 0.06 1.95 3.79 0.94 0.82
------- ------- ------ ------ ------
Net from Investment
Operations (0.03) 1.75 3.61 0.80 0.73
------- ------- ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from Net
Investment Income -- -- -- -- --
Distributions from Net
Realized Gains on
Investments (2.94) (2.06) (0.31) (0.78) --
------- ------- ------ ------ ------
Total Distributions (2.94) (2.06) (0.31) (0.78) --
------- ------- ------ ------ ------
NET ASSET VALUE,
End of Period $ 12.95 $ 15.92 $16.23 $12.93 $12.91
======= ======= ====== ====== ======
Total Return(5) 0.95%(3) 12.72% 28.67% 6.97% 11.04%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $ 9,793 $10,629 $8,794 $6,455 $2,207
Ratio of Expenses to
Average Net Assets 1.11%(3) 2.15% 2.17% 2.19% 1.32%(3)
Ratio of Investment
Loss -- Net to Average
Net Assets (0.70%)(3) (1.31%) (1.24%) (1.06%) (0.83%)(3)
Decrease Reflected on
Above Ratios Due to
Expense
Reimbursements/Waivers 0.016(3) 0.06% 0.16% 0.22% 0.12%(3)
Portfolio Turnover Rate 69% 159% 182% 148% 152%
Average Commission Rate
Paid(8) $ .0411 $ .0252 $.0575
</TABLE>
--
49
<PAGE> 52
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
SG COWEN OPPORTUNITY FUND -- CLASS I
------------------------------------------------------------------------
SIX MONTHS PERIOD FROM
ENDED YEAR ENDED NOVEMBER 30, 5/9/94(4)
MAY 31, 1998 ----------------------------------- THROUGH
(UNAUDITED) 1997 1996 1995 11/30/94
------------ ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 16.69 $ 16.77 $ 13.20 $ 12.99 $12.36(1)
------- ------- ------- ------- ------
INCOME FROM INVESTMENT
OPERATIONS:
Investment Income
(Loss) -- Net(6) (0.01) (0.03) (0.01) 0.01 (0.03)
Net Realized and
Unrealized Gains
(Losses) on Investments 0.06 2.01 3.89 0.98 0.66
------- ------- ------- ------- ------
Net from Investment
Operations 0.05 1.98 3.88 0.99 0.63
------- ------- ------- ------- ------
LESS DISTRIBUTIONS:
Dividends from Net
Investment Income -- -- -- -- --
Distributions from Net
Realized Gains on
Investments (2.94) (2.06) (0.31) (0.78) --
------- ------- ------- ------- ------
Total Distributions (2.94) (2.06) (0.31) (0.78) --
------- ------- ------- ------- ------
NET ASSET VALUE,
End of Period $ 13.80 $ 16.69 $ 16.77 $ 13.20 $12.99
======= ======= ======= ======= ======
Total Return(5) 1.47%(3) 13.82% 30.17% 8.40% 9.04%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $35,999 $52,944 $40,369 $19,264 $8,151
Ratio of Expenses to
Average Net Assets 0.55%(3) 1.02% 1.01% 1.03% 0.75%(3)
Ratio of Investment
Income (Loss) --
Net Assets (0.14%)(3) (0.19%) (0.07%) 0.11% (0.26%)(3)
Decrease Reflected on
Above Ratios Due to
Expense
Reimbursements/Waivers 0.01%(3) 0.06% 0.15% 0.22% 0.13%(3)
Portfolio Turnover Rate 69% 159% 182% 148% 152%
Average Commission Rate
Paid(8) $ .0411 $ .0252 $ .0575
</TABLE>
--
50
<PAGE> 53
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
SG COWEN GOVERNMENT SECURITIES FUND -- CLASS A
--------------------------------------------------------------------------------
PERIOD FROM
1/20/93
SIX MONTHS (COMMENCEMENT
ENDED YEAR ENDED NOVEMBER 30, OF OPERATIONS)
MAY 31, 1998 ------------------------------------------ THROUGH
(UNAUDITED) 1997 1996 1995 1994 11/30/93
------------ ---- ---- ---- ---- --------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 9.58 $9.59 $9.83 $9.17 $10.11 $ 9.77
------ ----- ----- ----- ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Investment Income -- Net 0.28 0.61 0.64 0.69 0.52 0.41
Net Realized and Unrealized
Gains (Losses) on
Investments 0.09 (0.01) (0.24) 0.66 (0.84) 0.30
------ ----- ----- ----- ------ ------
Net from Investment
Operations 0.37 0.60 0.40 1.35 (0.32) 0.71
------ ----- ----- ----- ------ ------
LESS DISTRIBUTIONS:
Dividends from Net
Investment Income (0.28) (0.61) (0.64) (0.69) (0.56) (0.37)
Distributions from Net
Realized Gains on
Investments (0.03) -- -- -- (0.06) --
------ ----- ----- ----- ------ ------
Total Distributions (0.31) (0.61) (0.64) (0.69) (0.62) (0.37)
------ ----- ----- ----- ------ ------
NET ASSET VALUE,
End of Period $ 9.64 $9.58 $9.59 $9.83 $9.17 $10.11
====== ===== ===== ===== ====== ======
Total Return(5) 3.88%(3) 6.55% 4.34% 15.23% (3.24%) 8.49%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $2,907 $3,433 $2,631 $3,945 $ 488 $ 547
Ratio of Expenses to
Average Net Assets 0.20%(3) 0.40% 0.34% 0.22% -- --
Ratio of Investment
Income -- Net to Average
Net Assets 2.89%(3) 6.47% 6.72% 7.08% 5.24% 5.06%(3)
Decrease Reflected on Above
Ratios Due to:
Investment Management and
Service Fees Waived by
Cowen 0.43%(3) 0.85% 0.85% 0.85% 0.78% 0.75%(3)
Other Expenses Waived or
Absorbed 1.01%(3) 2.70% 2.72% 3.63% 11.85% 16.94%(3)
Portfolio Turnover Rate 47% 184% 107% 289% 210% 122%
</TABLE>
--
51
<PAGE> 54
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
SG COWEN GOVERNMENT
SECURITIES FUND -- CLASS I
------------------------------------------------------------------
SIX MONTHS PERIOD FROM
ENDED YEAR ENDED NOVEMBER 30, 7/11/94(4)
MAY 31, 1998 ----------------------------- THROUGH
(UNAUDITED) 1997 1996 1995 11/30/94
------------ ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $9.70 $9.71 $9.94 $9.17 $9.45(1)
----- ----- ----- ----- -----
INCOME FROM INVESTMENT
OPERATIONS:
Investment Income -- Net 0.28 0.62 0.65 0.70 0.22
Net Realized and Unrealized
Gains (Losses) on
Investments 0.09 (0.01) (0.23) 0.77 (0.28)
----- ----- ----- ----- -----
Net from Investment
Operations 0.37 0.61 0.42 1.47 (0.06)
----- ----- ----- ----- -----
LESS DISTRIBUTIONS:
Dividends from Net
Investment Income (0.28) (0.62) (0.65) (0.70) (0.22)
Distributions from Net
Realized Gains on
Investments (0.03) -- -- -- --
----- ----- ----- ----- -----
Total Distributions (0.31) (0.62) (0.65) (0.70) (0.22)
----- ----- ----- ----- -----
NET ASSET VALUE,
End of Period $9.76 $9.70 $9.71 $9.94 $9.17
===== ===== ===== ===== =====
Total Return(5) 3.85%(3) 6.55% 4.48% 16.52% (1.57%)(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $ 66 $ 63 $ 93 $ 45 $ 13
Ratio of Expenses to
Average Net Assets 0.20%(3) 0.40% 0.36% 0.20% --
Ratio of Investment
Income -- Net to Average
Net Assets 2.88%(3) 6.49% 6.75% 7.12% 2.42%(3)
Decrease Reflected on Above
Ratios Due to:
Investment Management
Fees Waived by Cowen 0.30%(3) 0.60% 0.60% 0.60% 0.24%(3)
Other Expenses Waived or
Absorbed 1.35%(3) 3.06% 3.14% 5.14% 6.26%(3)
Portfolio Turnover Rate 47% 184% 107% 289% 210%
</TABLE>
--
52
<PAGE> 55
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
SG COWEN INTERMEDIATE
FIXED INCOME FUND -- CLASS A
------------------------------------------------------------------------------------
PERIOD FROM
1/20/93
SIX MONTHS (COMMENCEMENT
ENDED YEAR ENDED NOVEMBER 30, OF OPERATIONS)
MAY 31, 1998 --------------------------------------------- THROUGH
(UNAUDITED) 1997 1996 1995 1994 11/30/93
------------ ---- ---- ---- ---- --------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 9.47 $ 9.47 $ 9.71 $ 9.12 $9.95 $ 9.77
------- ------- ------- ------- ----- ------
INCOME FROM INVESTMENT
OPERATIONS:
Investment Income -- Net 0.27 0.59 0.63 0.67 0.51 0.40
Net Realized and Unrealized
Gains (Losses) on
Investments 0.05 -- (0.15) 0.59 (0.68) 0.14
------- ------- ------- ------- ----- ------
Net from Investment
Operations 0.32 0.59 0.48 1.26 (0.17) 0.54
------- ------- ------- ------- ----- ------
LESS DISTRIBUTIONS:
Dividends from Net
Investment Income (0.27) (0.59) (0.63) (0.67) (0.53) (0.36)
Distributions from Net
Realized Gains on
Investments -- -- (0.09) -- (0.13) --
------- ------- ------- ------- ----- ------
Total Distributions (0.27) (0.59) (0.72) (0.67) (0.66) (0.36)
------- ------- ------- ------- ----- ------
NET ASSET VALUE,
End of Period $ 9.52 $ 9.47 $ 9.47 $ 9.71 $9.12 $ 9.95
======= ======= ======= ======= ===== ======
Total Return(5) 3.40% 6.47% 5.21% 14.22% (1.77%) 6.50%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $ 8,482 $ 9,341 $11,885 $14,667 $2,836 $1,167
Ratio of Expenses to Average
Net Assets 0.33%(3) 0.65% 0.59% 0.47% 0.12% --
Ratio of Investment
Income -- Net to Average
Net Assets 2.84%(3) 6.29% 6.61% 6.90% 5.41% 4.93%(3)
Decrease Reflected on Above
Ratios Due to:
Investment Management and
Service Fees Waived by
Cowen 0.25%(3) 0.50% 0.50% 0.50% 0.63% 0.75%(3)
Other Expenses Waived or
Absorbed 0.25%(3) 0.60% 0.52% 0.86% 3.43% 4.45%(3)
Portfolio Turnover Rate 43% 92% 110% 264% 159% 143%
</TABLE>
--
53
<PAGE> 56
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
SG COWEN INTERMEDIATE FIXED
INCOME FUND -- CLASS B
---------------------------------------------------------------------
SIX MONTHS YEAR ENDED PERIOD FROM
ENDED NOVEMBER 30, 7/12/94(4)
MAY 31, 1998 -------------------------------- THROUGH
(UNAUDITED) 1997 1996 1995 11/30/94
------------ ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 9.54 $9.54 $9.78 $9.17 $9.32(1)
------ ----- ----- ----- -----
INCOME FROM INVESTMENT
OPERATIONS:
Investment Income -- Net 0.26 0.53 0.61 0.65 0.20
Net Realized and Unrealized
Gains (Losses) on
Investments 0.05 -- (0.15) 0.61 (0.15)
------ ----- ----- ----- -----
Net from Investment
Operations 0.31 0.53 0.46 1.26 0.05
------ ----- ----- ----- -----
LESS DISTRIBUTIONS:
Dividends from Net
Investment Income (0.26) (0.53) (0.61) (0.65) (0.20)
Distributions from Net
Realized Gains on
Investments -- -- (0.09) -- --
------ ----- ----- ----- -----
Total Distributions (0.26) 0.53 (0.70) (0.65) (0.20)
------ ----- ----- ----- -----
NET ASSET VALUE,
End of Period $ 9.59 $9.54 $9.54 $9.78 $9.17
====== ===== ===== ===== =====
Total Return(5) 3.26%(3) 6.21% 4.96% 14.12% 1.25%(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $ 525 $ 630 $ 769 $ 577 $ 313
Ratio of Expenses to
Average Net Assets 0.45%(3) 0.90% 0.85% 0.68% 0.19%(3)
Ratio of Investment
Income -- Net to Average
Net Assets 2.73%(3) 6.03% 6.40% 6.79% 2.15%(3)
Decrease Reflected on Above
Ratios Due to:
Investment Management,
Service and
Distribution Fees
Waived by Cowen 0.25%(3) 0.50% 0.50% 0.50% 0.18%(3)
Other Expenses Waived or
Absorbed 0.24%(3) 0.54% 0.54% 0.46% 1.25%
Portfolio Turnover Rate 43% 92% 110% 264% 159%
</TABLE>
--
54
<PAGE> 57
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
SG COWEN INTERMEDIATE FIXED
INCOME FUND -- CLASS I
-----------------------------------------------------------------
SIX MONTHS YEAR ENDED PERIOD FROM
ENDED NOVEMBER 30, 7/11/94(4)
MAY 31, 1998 ------------------------------ THROUGH
(UNAUDITED) 1997 1996 1995 11/30/94
------------ ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 9.44 $9.44 $9.68 $9.10 $ 9.34(1)
------ ----- ----- ----- ------
INCOME FROM INVESTMENT
OPERATIONS:
Investment Income -- Net 0.28 0.61 0.65 0.69 0.23
Net Realized and Unrealized
Gains (Losses) on Investments 0.05 -- (0.15) 0.58 (0.24)
------ ----- ----- ----- ------
Net from Investment Operations 0.33 0.61 0.50 1.27 (0.01)
------ ----- ----- ----- ------
LESS DISTRIBUTIONS:
Dividends from Net Investment
Income (0.28) (0.61) (0.65) (0.69) (0.23)
Distributions from Net Realized
Gains on Investments -- -- (0.09) -- --
------ ----- ----- ----- ------
Total Distributions (0.28) (0.61) (0.74) (0.69) (0.23)
------ ----- ----- ----- ------
NET ASSET VALUE,
End of Period $ 9.49 $9.44 $9.44 $9.68 $ 9.10
====== ===== ===== ===== ======
Total Return(5) 3.52%(3) 6.74% 5.46% 14.41% (0.36%)(2)
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $ 726 $ 701 $1,745 $1,872 $ 565
Ratio of Expenses to Average Net
Assets 0.20%(3) 0.40% 0.35% 0.20% --
Ratio of Investment
Income -- Net to Average Net
Assets 2.96%(3) 6.63% 6.87% 7.23% 1.98%(3)
Decrease Reflected on Above
Ratios Due to:
Investment Management Fee
Waived by Cowen 0.25%(3) 0.50% 0.50% 0.50% 0.16%(3)
Other Expenses Waived or
Absorbed 0.25%(3) 0.50% 0.42% 0.97% 1.87%(3)
Portfolio Turnover Rate 43% 92% 110% 264% 159%
</TABLE>
--
55
<PAGE> 58
NOTE 5 -- (CONTINUED)
<TABLE>
<CAPTION>
SG COWEN
LARGE CAP VALUE FUND
-------------------------------------------------
(UNAUDITED)
CLASS A CLASS B CLASS I
-------------- ----------- -----------
PERIOD FROM
1/2/98
(COMMENCEMENT PERIOD FROM PERIOD FROM
OF OPERATIONS) 4/17/98(4) 2/2/98(4)
THROUGH THROUGH THROUGH
5/31/98 5/31/98 5/31/98
-------------- ----------- -----------
<S> <C> <C> <C>
NET ASSET VALUE,
Beginning of Period $ 10.00(1) $11.11(1) $ 9.77(1)
------- ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Investment Income -- Net 0.04 -- 0.04
Net Realized and Unrealized Gains (Losses) on
Investments 0.83 (0.27) 1.06
------- ------ ------
Net from Investment Operations 0.87 (0.27) 1.10
------- ------ ------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income (0.02) -- (0.02)
Distributions from Net Realized Gains on
Investments -- -- --
------- ------ ------
Total Distributions (0.02) -- (0.02)
------- ------ ------
NET ASSET VALUE,
End of Period $ 10.85 $10.84 $10.85
======= ====== ======
Total Return(3)(5) 8.65% (2.43)% 11.26%
RATIOS/SUPPLEMENTARY DATA
Net Assets (000 Omitted) $15,735 $ 115 $1,253
Ratio of Expenses to Average Net Assets 0.49%(3) 0.23%(3) 0.31%(3)
Ratio of Investment Income -- Net to Average
Net Assets 0.42%(3) 0.04%(3) 0.44%(3)
Decrease Reflected on Above Ratios Due to
Expense Reimbursements/Waivers: 0.40%(3) 0.06%(3) 0.28%(3)
Portfolio Turnover Rate 25% 25% 25%
Average Commission Rate Paid(8) $ .0543 $.0543 $.0543
</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
(7) For the period from December 1, 1995 to February 12, 1996, the day on which
all outstanding shares were presented for redemption.
(8) Disclosure required for years beginning after September 1, 1995.
--
56
<PAGE> 59
SG 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, Senior Investment Officer
CREIGHTON H. PEET, Treasurer, Chief Financial Officer and Senior Investment
Officer
WILLIAM RECHTER, Senior Investment Officer(1)
ALAN KOEPPLIN, Investment Officer(2)
BENEDICT CAPALDI, Investment Officer(4)
PAUL D. HOUK, Investment Officer(3)
GORDON G. IFILL, Assistant Investment Officer(2)
RODD M. BAXTER, Secretary
IRWOOD SCHLACKMAN, Controller
INVESTMENT ADVISER CUSTODIAN
SG Cowen Securities Corporation Investors Fiduciary Trust Co.
Financial Square P.O. Box 419111
New York, NY 10005 Kansas City, MO 64141
DISTRIBUTOR TRANSFER AGENT
Funds Distributors, Inc. DST, Inc.
60 State Street, Suite 1300 210 West 10th Street
Boston, MA 02109 Kansas City, MO 64105
LEGAL COUNSEL INDEPENDENT AUDITORS
Willkie Farr & Gallagher Ernst & Young LLP
787 Seventh Avenue 787 Seventh Avenue
New York, NY 10019 New York, NY 10019
- ---------------
(1) SG Cowen Income + Growth and SG Cowen Opportunity
(2) SG Cowen Intermediate Fixed Income and SG Cowen Government Securities
(3) SG Cowen Income + Growth
(4) SG Cowen Income + Growth and SG Cowen Large Cap Value COW/SEMI 5/98
